In re the Estate of Shiu Shankar; Nand v Ram [1997] FJHC 265; HPP0015j.1994s (10 December 1997)

IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION

PROBATE ACTION NO. 0015 OF 1994

Between:

PARMA NAND
f/n Shiu Shankar
Plaintiff

and

SHIU RAM
f/n Shiu Shankar
Defendant

Mr. H.M. Patel for the Plaintiff
Mr. M.V. Bhai for the Defendant

JUDGMENT

In this action the Plaintiff who is the younger brother of the Defendant is seeking the following relief:

(1) The Defendant who is the sole Executor and Trustee of the Estate of Shiu Shankar do execute a transfer of half share in Certificate of Title No. 6277 and as required under Section 38 and 41 of the Succession Probate and Administration Act, Cap. 60.

(2) The Defendant do file within 28 days an inventory and accounts in the Estate of Shiu Shankar f/n Ram Nandan as required under Section 39 of the said Act.

The Plaintiff's father Shiu Shankar (the 'deceased') died on 17 March 1983 and the mother Ram Pati died on 19 January 1994. The Plaintiff's claim arises out of the deceased's Will dated 31 January 1981 under clause 5 whereof the deceased directed, inter alia, that the defendant (the trustee) shall "hold upon trust and to distribute the residual estate to my two sons SHIU RAM and PARMA NAND equally in the event of the death of my wife RAM PATI d/o Gangaram of Suva, Fiji, Domestic Duties".

At the conclusion of the hearing I ordered that both counsel file written submissions.

Mr. H. M. Patel (now deceased) for the Plaintiff dealt with the issues under the captions (a) DISTRIBUTION OF THE RESIDUAL ESTATE and (b) FILING OF INVENTORY AND ACCOUNTS. I shall consider the issues under the said two heads incorporating the submissions under them.

Before I commence to deal with the issues I ought to mention at this stage that I am surprised that Mr. Bhai has seen fit to include in his submission on pages 12 to 15 on the procedure adopted in instituting the present proceedings by way of Motion instead of by Originating Summons despite the fact that I had already on 26 January 1995 given my decision covering his contention and gave directions as to future course of action to which Mr. Bhai agreed and the case proceeded to hearing. In the circumstances it was unwise of Mr. Bhai to sneak this aspect of the case again in his submission which was not even raised at the hearing. In fact Mr. Bhai had appealed to Fiji Court of Appeal against my decision but that was dismissed on 31 July 1995. Thereafter the matter was set down for hearing before me without any further objection from Mr. Bhai as to the procedural aspect. I therefore disregard all that he had to submit in this connection.

Plaintiff's evidence

At the hearing the plaintiff PARMA NAND (PWI) gave evidence. He called MAHENDRA NAIR (PW2) a bank officer and ARUN KUMAR NARSEY (PW3) a chartered accountant to testify on his behalf.

He said that at the time of his death on 17 March 1983 the deceased ran a curio vendor's business which he operated from a stall in the Suva Municipal Market and paid $4 per day stall fee. The Plaintiff helped his father in the business and was not paid any wages. He lived with him at 88 High Street Toorak which is the property in question. At the time when the property was built the Plaintiff was only 16 years old. To build a third flat the deceased borrowed $20,000.00 from the ANZ Bank. The defendant collected the rent from the flats after father's death. On his death he came to know that there was a Will and he had half share under it. The Plaintiff and the defendant continued to reside in the said house when the sister got married in 1975 while the father was still alive.

The defendant did not obtain Probate until 1988. Mother died in 1993 and it was then that he asked for accounts and half share in the property. Account was not supplied which gave rise to this action.

The Plaintiff ran the same business in his own name until 1990 and paid the stall charges.

The Plaintiff denied that he was provided with meals by either the defendant or anyone else. He was 33 years old then (in 1984).

He said that he has seen the Accounts prepared by Mr. Narsey but he is not satisfied with them. He knows nothing about the 'drawings'. He denies all the claims made against him in the accounts but he does not dispute the Bank loan except that he does not object to defendant as Trustee being paid remuneration.

Mr. Mahendra Nair, a bank officer testified that loan was given in 1973 in the sum of $12,000.00. The sum of $7064.24 was the principal sum owing as at the date of hearing. He said he is aware that rent was collected from the property but it was not deposited with the Bank. The last loan was in 1992 being for repairs and maintenance.

The accountant Mr. Narsey testified that "all income could not be reconciled with rentals received". How the business was run is not supported by evidence. He could not obtain instruction and source document to show how they came into being. On drawings no supporting documents were produced to show quantum of expenditure. He said that there was no control over income recorded on the books. On the account that has been filed he said that "I would simply say couldn't rely without sufficient evidence provided".

In cross-examination he said that for example $260 was recorded in Receipt Book but $540 was collected. More rent was collected "but receipted for lesser amount".

This witness is unable to say if all income is properly reflected as there was no control over rent received. Income could have been understated. His instruction was to perform audit but he was unable to do so as there was "no instruction to reconstruct account".

Defendant's evidence

The defendant's claims are dealt with in Mr. Bhai's written submissions and I propose to deal with them when I consider the issues before me; suffice it to say that to testify on his behalf the defendant called his sister AMRIT KUMARI SHARMA (DW2) (who alleged she lent money to the Estate), NIRMALA DEVI who did 'domestic duties', testified as to the work she did for the Plaintiff as a 'house maid' and the accountant BHIKABHAI PARSHOTAM.

Consideration of the issue

I shall now deal with the issues before me.

1. Distribution of Estate

There cannot be any doubt nor is there any dispute that the Plaintiff is entitled to half share in the residual estate of the deceased for that is the provision in the Will itself. The only real property in the estate is land comprised in Certificate of Title No. 6277 (exhibit 2).

The estate was sworn at $71,333.39 and Probate No. 23564 was granted to PARMA NAND (the defendant) on 21 June 1988.

The Plaintiff wrote to the defendant as executor and trustee to distribute the residual estate and supply accounts pertaining to the estate. The defendant did not accede to this request whereupon the Plaintiff commenced this action.

Under section 37 of the Succession, Probate and Administration Act Cap. 60 (hereafter referred to as the "Act") an executor or administrator is not bound to distribute the estate before the expiration of one year from the date of grant of Probate or Administration.

The following provisions of section 38 of the Act empowers a devisee to apply to Court for an Order requiring the executor to comply with the request:

38. Subject to the provisions of section 37, if an executor who has obtained probate, or an administration with the will annexed, after request in writing neglects or refuses to -

(a) execute a transfer of land devised to a devisee; or

(b) transfer, pay or deliver to the person entitled any bequest, legacy or residuary bequest,

such devisee or person may apply for an order upon such executor or administrator to comply with such request, and the court may make such order as it thinks fit."

As empowered under s.38 the Plaintiff is seeking a transfer of his half share. The defendant says that he is willing to do so provided that (a) the "Plaintiff pays all his debt to the Estate" and (b) he "pays half the debt of the Estate".

The Plaintiff knows and admits that he is liable to pay his share of money secured by the mortgage namely $10,868.62.

Because it is accepted by both counsel that the Plaintiff is entitled to his half share in the estate, there is no difficulty in making such an order. Therefore, subject to what I say hereafter the Plaintiff's half share in the property should be transferred to him by the defendant/trustee.

2. Second issue: Filing of Inventory and Accounts

There remains for my determination as to what is the Plaintiff's debt to the estate. A lot of evidence has been adduced by the defendant on this aspect and I shall now deal with it as the second issue.

This second issue gives rise to a consideration of the duties of a trustee in a situation such as the present. Then I have to consider what sum of money is owed by the Plaintiff to the defendant in the administration of the estate. The defendant has already made certain claims against the Plaintiff in this action.

Mr. Patel makes reference to the following passage from PHILIP NEVILL'S text book on the Concise Law of Trust, Wills and Administration in New Zealand (3rd Ed) regarding the keeping of 'full and clear' accounts which I accept. He states:

"A trustee must keep full and clear accounts and must render to the beneficiaries or their authorised agents when so required. If he does not do so action can be taken to compel him and he will then have to pay the costs of the action." (See Devey v Thornton [1851] EngR 788; 68 E.R. 483, Springett v Dashwood [1860] EngR 1267; (1861) 2 Giff 521).

It is borne out by evidence of the Defendant that the reason for not providing accounts yearly to the Plaintiff or not filing yearly tax Returns for the Estate was because the Plaintiff did not ask for accounts until after this action commenced.

Mr. Patel submits that there is ample provision in section 39 of the Act for the filing of an inventory and supply of accounts. It was not until 12 July 1994 that the defendant annexed the Accounts from his accountant (DW4) to his affidavit.

On the evidence before me I find that the defendant prepared the estate account for the period 1984 to 1994 at one and the same time and not yearly. I therefore reject any suggestion by the Defendant and his witness to the effect that they were prepared regularly.

It has been brought out in evidence that there is a house on the said land and substantial improvements have been effected by the trustee (the defendant) by building additional flats. When the deceased died there were only two flats and when the mother died there were five; one flat was occupied by the Plaintiff and the Defendant, and the others by tenants. A lot of expenditure was incurred by the trustee in extending and maintaining the property. The defendant asserts that he borrowed various sums of money from time to time to carry out the said works. It is not in dispute that the defendant collected rent himself from the tenants on the property.

I shall deal in fuller detail later in this judgment when I consider each and every item of the defendant's claim.

The alleged claim by the defendant against the plaintiff is as follows:

(i) Curio Business $20103

(ii) Meals to Plaintiff $11125

(iii) Bank's debts $10868.67

(iv) Loan from Amrit Kumari

(½ of ($18567.12) $9288.56

(v) Loan to Estate by Shiu Ram

(½ of $6798.06) $ 3399.02

(vi) Trustee's remuneration

(½ of $12000.00) $ 6000.00

I shall now consider the Estate's alleged claim against the Plaintiff under the above heads in the same order.

(i) Curio business

There is ample specific provisions in the deceased's Will for the defendant to "carry on any business carried on by me". On the evidence before me I accept the Plaintiff's evidence that he took over the deceased's curio vendor's business immediately after his death. I prefer to accept the Plaintiff's version in this regard to that of the defendant. The defendant has admitted that he let the Plaintiff carry on the business. On the evidence before me I am satisfied that there is nothing for the Plaintiff to account for as far as the running of the curio business is concerned after father's death. There is no question of the Plaintiff accounting for whatever assets the deceased had in his business which I find the Plaintiff operated as if it was his own.

This item of the defendant's claim is therefore disallowed.

(ii) Meals and other living advantage

The sum of $11,125.00 is claimed under this head.

It is the defendant's contention that, for the "Plaintiff who was single all along", this is the "benefit or advancement given to the Plaintiff by the defendant Trustee in the form of meals etc." as testified by defendant's witnesses 1, 2 & 3. The amount estimated is $30.00 per week making a total of $11,125.00 for the period 1984 - 1994.

The Plaintiff denies this claim. At the time of death of the deceased the Plaintiff was 36 years old and lived in one room. I find on the evidence before me that he was quite capable of looking after himself.

I have given careful consideration to this aspect of the case and I am not satisfied on a balance of probabilities that there were any such expenditure or services rendered. No agreement or any documentary evidence has been produced to substantiate such a huge claim. Why did the defendant have to wait for 10 years before making this claim? There does not appear to be any agreement or contract that the estate will pay for this claim. The defendant is claiming for the whole of the 10 year period as if Plaintiff never missed a meal, if meals were supplied.

Even if someone did provide meals then the Limitation Act will apply.

I do not need to waste any further time dealing with this frivolous, malicious and unfounded claim. I therefore dismiss it out of hand.

(iii) Bank debt

At the time of the hearing the Bank Officer testified that the sum of $7000 exclusive of all interest and charges is owed to the Bank.

I find the claim for half the amount owing to the Bank justifiable and is payable by the Plaintiff. This in fact is accepted by the Plaintiff. The exact amount will have to be worked out at the time of transfer of the half share of the Plaintiff.

(vi) Trustee's remuneration

There is no provision in the Will regarding remuneration of the trustee. The trustee has charged the sum of $100.00 per month as his remuneration and he has charged this to the estate amounting to $12,000.00.

Although the accounts have not been properly maintained, the Trustee was required to run the business albeit for a short while, he had to collect rent and did a lot of running about extending and maintaining the property.

The Plaintiff does not in his evidence object to him being paid some remuneration.

In the exercise of my discretion I allow him this claim at the rate he has stated as his remuneration towards the administration of the Estate from the time of obtaining Probate until the date of this judgment.

(v) Loans from Amrit Kumari Sharma & Shiu Ram (defendant/executor)

According to the Accounts, as at 30 August 1994 loans of $18,567.12 and $6798.06 stand in the names of Amrit Kumari and Shiu Ram (the defendant) respectively. There are no record or documentary evidence of these loans.

The onus is on the lenders to prove the loan, which onus has not been discharged in this case although they testified.

I agree with Mr. Patel that under s26 of the Trustee Act Cap. 65 any borrowing of $10,000 by the Trustee for development or improvement of property requires sanction from the High Court. He therefore submits that these alleged loans are ultra vires and void. Evidence is not clear as to the purpose of the said loans. These could presumably have been for additional flats but the evidence falls short of proving these claims.

When one looks at the estate income which was derived mainly from rent amounting to $55,000.00 approximately and alleged nett profit from the Curio Shop one wonders what was the necessity to borrow from Amrit Kumari and for the defendant to give a loan which totals $25,000.00 approximately. This I would say amounts to mismanagement and expenditure being beyond any powers which the trustee may has under the deceased's Will.

Subject to what I have to say hereafter I disallow the alleged loan amounts.

(vi) Accounting fee

The sum of $1350.00 is accounting fees of the accountant (DW4) for the ten year period is understandable and allowable.

Conclusion

In the outcome, for the above reasons, I disallow the defendant's claims for "curio business" and for "meals to plaintiff" and these are therefore dismissed. Also subject to what I say in the orders which I am about to make herein the alleged loans to the Estate by AMRIT KUMARI and SHIU RAM are also disallowed and hence the claim is dismissed.

However, I allow the amount owing to the Bank under the Mortgage and this is to be shared equally by parties. I also allow the trustee his remuneration for administering the estate.

The Plaintiff is entitled to the transfer to him of his half share in the land in question and an order will be made accordingly.

As far as the accounts of the Estate are concerned, although certain accounts were exhibited during the trial, they were unsatisfactory in some respects. It will therefore be necessary to obtain from the defendant/trustee a full and proper account in respect of certain items so as to ascertain whether all the income from the Estate property and expenditure have been properly accounted or not, particularly in the interest of the beneficiary (plaintiff).

I might mention at this stage that whilst I have disallowed the loans allegedly made to the Estate by Amrit Kumari and Shiu Ram, it would be in their own interest if the Defendant could give a full and proper account of the expenditure incurred in making additional flats to the dwelling-house bulk of which has been rented out to tenants. Upon receipt of accounts it will then be possible to ascertain whether the expenditure was legitimate or not. Thereby it will be possible to say whether the alleged loans were warranted or not.

All this boils down to saying that proper accounts should be furnished by the defendant so as to enable the Court to decide the Plaintiff's liability, if any, to the Estate in respect of these loans. I therefore propose to make certain orders in respect of accounts.

Orders:

1. It is ordered that as provided under the Will of the said SHIU SHANKAR (the deceased) the defendant SHIU RAM as the executor and trustee of the Estate of SHIU SHANKAR do execute a document of transfer transferring to PARMA NAND the Plaintiff's half interest to him in the Certificate of Title No. 6277 after the accounts that are ordered to be filed herein are finalised.
   
2. It is further ordered that the Plaintiff be responsible to pay half the amount owing under the Mortgage over the said Certificate of Title. Consequently the Mortgage document to be varied accordingly.
   
3. It is further ordered and to which the Plaintiff has consented that the Plaintiff pay the defendant remuneration for acting as the trustee in the administration of the Estate in the sum of $6000.00 as at the date of instituting this action (15 March 1994) upon finalisation of accounts.
   
4. It is further ordered that the defendant as trustee file in Court within two months of this judgment a full and proper audited accounts in the Estate particularly in respect of the following matters:
   

(a) The details of all rent collected from tenants and all other income from estate property since the death of deceased to date.

(b) Details of all expenditure on estate property including details of expenditure on additional flats.

(c) Details showing the amount of the mortgage debt and how it has been paid from the date of death to date.

5. Liberty is reserved to parties to apply to Court generally.
   
6. Costs of this action is to be paid from the estate.
   

D. Pathik
Judge

At Suva
10 December 1997

HPP0015J.94S