Kwan v Kwan [2015] FJHC 381; HPP14.2014 (27 May 2015)

IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION

HPP No.: 14 of 2014

IN THE MATTER of AN APPLICATION
FOR REMOVAL OF EXECUTORS AND TRUSTEES

BETWEEN :

BYRON KWAN
88 Milverton Road, Raiwaqa, Suva, Beneficiary
APPLICANT

AND :

NELSON KWAN,

88 Milverton Road, Raiwaqa, Suva, Trustee

AND :

GERARD SEETO,
19 Helsen Street, Samabula, Suva, Trustee
RESPONDENTS

Counsel : The Applicant In Person
Ms. M. Rakai for the Respondents

Date of Hearing : 4 May 2015
Date of Judgment : 27 May 2015

JUDGMENT

INTRODUCTION

1 The Plaintiff instituted this action by way of a motion seeking removal of a trustees and executors of the estate of Kwan Chew Kuvan. Late Kwan Chew Kuvan died in 2002 and more than 13 years passed since his demise but no accounts of the estate were provided by the trustees even after institution of this action. The affidavit in opposition only state that the rental income received by one executor was distributed without stating any details.

FACTS

2. The applicant instituted this action by way of 'Notice of Motion for Application for Removal of Executors and Trustees' supported by an affidavit.

3. In the affidavit in support the main allegation of the Applicant is to that the executors and trustees of the estate of his father, were not distributing the income of the estate. The main income of the estate was the rental income of the estate property. This income was admitted by the Respondents, but failed to give details.

4. In terms of the last will of late Kwan Chew Kuvan the trustees were Nelson Kwan and Girard Seeto who are the Respondents in this application.

5. The said last will of late Kwan Chew Kuvan, inter alia stated as follows

'I direct my trustees to maintain my invalid wife Jei Oi Larn and my invalid daughter namely Karen Kwan to the standard that they have become accustomed to during my lifetime.

I give and devise and bequeath all my real and personal property of whatsoever nature and whosoever situate to and unto my wife Je Oi Larn and my children namely Byron Kwan, Nelson Kwan and Karen Kwan in equal shares and share alike for their enjoyment and benefit absolutely'

6. In the affidavit in opposition of Byron Kwan states inter alia as follows

That all rents collected by me have been regularly distributed to the Applicant.

Being the Executors and Trustees of the Estate, the Respondents have been discharging their duties to look after and administer the Estate in the interest of all the beneficiaries by the Applicant has failed to appreciate this ....' (emphasis added)

7. The affidavit in opposition is silent about all the rentals collected by the estate and only speaks about money collected by the deponent, and he also did not state how much was collected and how much was distributed. According to the affidavit in opposition one beneficiary is of unsound mind, and if so what happened to her entitlement from the rentals collected is not known. The affidavit in opposition lacks transparency regarding the management of the estate namely any account of receipts of the rentals and any disbursement of that if any.

8. The Plaintiff and the said deponent of the affidavit accuse each other of their improper mental status without adducing any evidence.

9. At the moment the 3 children of late Kwan Chew Kuvan are the only beneficiaries of the estate.

ANALYSIS

10. At the outset the counsel for the Respondents raised two preliminary objections to this application and they were as follows

1. The Applicant had adopted wrong procedure for the institution of this action.
2. In terms of Order 76 rule 2 of the High Court Rules this action must be instituted by a writ of summons.
   

11. Before considering the merits of the application it is worth to consider the preliminary objections.

12. The Applicant, who is appearing in person, instituted this action by way of 'Notice of Motion for Application for Removal of Executors and Trustees' supported by an affidavit of the said Motion.

13. Order 8 of the High Court Rules of 1988 which deals with general provision regarding motions states as follows;

'1. The provision of this Order apply to all motions subject, in the case of originating motions of any particular class, to any special provision relating to motions of that class made by these Rules or by or under any Act.

2.(1) Except where an application by motion may properly be made ex parte, no motion shall be made without previous notice to the parties affected thereby.

14. The Supreme Court Practice (White Book) (UK) (1988) at p 61 states

'8/1-5/2

Originating motion- Proceedings by originating motion are in the main, applications and appeals to the High Court under various statutes. Where in a statute provision is made for such an application either specifically prescribing the use of an originating motion or without specifying procedure, an originating motion is the appropriate means of approaching the Court.'

15. I was not pointed out any statute or law that required the proceedings to be instituted in a particular manner in relation to removal of trustees or executors. The Trustee Act (Cap 65) of Succession Probate and Administration Act (Cap 60) deals with appointment and removal of trustees and or executors. The learned counsel for the Defendants was unable to provide such specifically prescribed provision in law. In the circumstances the 'Originating Motion' could be an appropriate means of approaching the Court for the removal of trustee and or executor in the absence of specifying procedure. This should not be considered as the exclusive manner in approaching the Court, but this is an option available to any litigant including the Applicant in this matter. The next issue is that the Applicant had not mentioned the motion as an 'Originating Motion' in its heading.

16. There is 'Notice of Motion for Application for Removal of Executors and Trustees' instead of 'Originating Motion' filed in this court. The objection of the counsel for the Defendants was more of a technical nature. Order 2 rule 1 of the High Court Rules of 1988 specifically deals with irregularities and non compliance and states that such an act would not nullify the proceedings. A fortiori, it is late in the day to make such a technical objection and Order 2 rule 2 expressly deals with such situation and states as follows.

'2(1) An application to set aside for irregularity any proceedings, any step taken in any proceedings or any documents, judgment or order therein shall not be allowed unless it is made within a reasonable time and before the party applying has taken any fresh step after becoming aware of the irregularity.

(2) An application under this rule may be made by summons or motion and the grounds of objection must be stated in the summons or notice of motion.'(emphasis added)

17. Firstly, there was no summons seeking striking out of the 'Notice of Motion' for alleged irregularity or any specific non-compliance and secondly such application to set aside the 'Notice of Motion' for irregularity should have been made within a reasonable time and before the Defendants had taken any fresh step after becoming aware of the irregularity. In this matter the Defendants had opted to file an affidavit in opposition, and the matter was fixed for hearing. Now, the Defendants cannot raise objection regarding the alleged irregularity of the title being 'Notice of Motion for Application for Removal of Executors and Trustees'.

18. There was no prejudice or misapprehension due to the heading been a 'Notice of Motion for Application for Removal of Executors and Trustees' instead of 'Originating Motion'. The request of the Applicant is only for an order for Removal of executors and trustees from the estate of Kwan Chew Kuvan and this was clear enough for the parties who had acknowledged the service and had also retained a solicitors firm to act on their behalf. The Applicant is appearing in person, hence the alleged irregularity in the 'Notice of Motion' cannot be considered as fatal irregularity to deny a party's access to justice. If the Respondents desired to raise this issue as an irregularity they should have filed such an application prior to taking any step as required in the law. The first preliminary objection is overruled.

19. The Second preliminary objection is based on the mode of institution action. The Defendants state that the only manner in which removal of trustees or executors are done was through a writ of summons in terms of Order 76 rule 2.

20. Order 76 rule 2 (1) states as follows

'A probate action must be begun by writ, and the writ must be issued out of the Registry.' (emphasis is mine)

21. The definition of 'probate action' is contained in Order 76 rule 1(2) and states as follows

'(2) In these Rules "probate action' means an action for the grant of probate of the will, or letters of administration of the estate, of a deceased person or for the revocation of such a grant or for a decree pronouncing for or against the validity of an alleged will, not being an action which is non contentious or common form probate business. (emphasis is mine)

22. The definition of the phrase 'probate action' is exclusive as it had used the word 'means' so it has to be interpreted exclusive manner as defined . The counsel for the Respondents submitted the unreported ruling of the Swamy v Arumugam (6th April2010) (Lautoka High Court), but this was a matter that dealt with transfer of case to High Court Registry at Suva and the ratio of the case was not the interpretation of 'probate action' and I could not find such discussion and any submissions made regarding that issue. The obiter statements in the said ruling cannot be taken out of context to mean something different. The issue in the said case was relating to interpretation of a Practice Direction No 2 of 1994 where it stated 'all probate business ...' as opposed to 'probate action' in terms of the Order 76 rule 1(2).

23. The counsel for the Respondents also submitted Fiji Court of Appeal decision of Singh v Krishna (unreported) decided on 14th May, 1999. Again the issue in that case was not the issue before me and this is clear from following quotation from the said judgment.

'The sole question argued by counsel was whether the application for respondent's appointment as administrator along with her bother is to be regarded as "non contentious or common (2 words) from probate business"(emphasis added)

24. The abovementioned Fiji Court of Appeal decision did not at any stage interpret'probate action' as defined in Order 76 rule 1(2). So again, this Court of Appeal decision cannot apply to the present scenario.

25. It is pertinent to note that the definition found in Order 76 rule 1(2) does not include an action for removal of executors and or trustees. So the contention that the removal of trustee should only through writ of summons cannot be accepted. This is against the practice in Fiji where Originating Summons are resorted for removal of trustees as it is a 'question arising in the administration of estate of the deceased person or in the execution of the trust'. (See O 85r.2). It should be borne in mind that prolonged writ action would not be required when executors are not exercising their duties properly as in this case.

26. The removal of trustees or administrators is not the same as removal of grant of probate or letters of administration for which a writ action is required under the said Order 72 rule 2(1) of the High Court Rules of 1988.

27. Order 85 rule 4 of the High Court Rules of 1988 states that a Plaintiff can bring an action by way of Originating Summons for relief for any action referred in O.85 r.2. Any question arising in the administration of the estate of the deceased person or in the execution of a trust is one such question that is referred in O.85 r.2 of the High Court Rules of 1988. The 'Notice of Motion for Application for Removal of Executors and Trustees' can be considered as an Originating Summons in terms of Order 85 rule 2and 4 of the High Court Rules of 1988 and it can be considered as proper method of institution of action for a question arising in the administration of the estate. Accordingly, the second preliminary objection is overruled and I proceed to consider the merits of the action.

28. In terms of the Section 73 of the Trustee Act (Cap 65) the court is entrusted with the removal of trustee 'whenever it is expedient' to do so. What constitutes 'expedient' may differ depending on the circumstances of the case.

29. Halsbury's Laws of England/WILLS AND INTESTACY (VOLUME 102 (2010), PARAS 1-564; VOLUME 103 (2010), PARAS 565-1304)/10 under the heading of 1165. Power of the High Court to substitute or remove personal representatives states as follows;

'When exercising its discretion the court is governed by the same principles that govern the removal of trustees[1]. The overriding considerations are whether the trusts are being properly executed and the welfare of the beneficiaries.[2]

30. The court is not precluded from considering the admitted facts and also facts which are stated in the affidavit in opposition filed by the trustees to ascertain the conduct and due administration of the estate.

31. In Letterstedt v Broers [1881–5] All ER Rep 882 at 886-7 Lord Blackburn dealt the issue of conflicts between the trustee and beneficiary and said

''As soon as all questions of character are as far settled as the nature of the case admits, if it appears clear that the continuance of the trustee would be detrimental to the execution of the trusts, even if for no other reason than that human infirmity would prevent those beneficially interested, or those who act for them, from working in harmony with the trustee, and if there is no reason to the contrary from the intentions of the framer of the trust to give this trustee a benefit or otherwise, the trustee is always advised by his own counsel to resign, and does so. If, without any reasonable ground, he refused to do so, it seems to their Lordships that the Court might think it proper to remove him; but cases involving the necessity of deciding this, if they ever arise, do so without getting reported.'

32. The Respondents are the executors of the estate and the affidavit in opposition state at least one beneficiary is mentally unsound, but the executors have failed even to state what they have done to her share of the estate income.

33. The allegation of the Applicant in this case was the failure on the part of the trustees to provide any accounts of the due administration of the estate of late Kwan Chew Kuvan. The Respondents do not dispute the collection of rents from the estate property. How much rent was collected and how often it was collected, was not stated. How the money was expended was not revealed. In fact there is no evidence of proper administration of money due to the estate.

34. Only the 1st named Respondent had sworn an affidavit in opposition and in his affidavit at paragraph 4(ii), he stated that all rentals collected by him had been regularly distributed to the Applicant. There are few things that can be deduced from that sworn statement. Firstly there is an admission that rental income accruing to the estate of late Kwan Chew Kuvan, but how much and what interval such income accrued to the estate for more than a decade was not disclosed by the trustees. Secondly, the second named Respondent only state about rentals collected by him, and not all the rentals collected by the trustees on behalf of the estate. He is silent about all the rentals collected by the trustees on behalf of the estate for more than a decade without any accounts.

35. If the trustees and executors are genuine they should at least reveal the amount of rentals collected and their disbursements in last 13 years and more specifically the present situation. No account of estate income was revealed by them and this is very unsatisfactory situation of the estate for 13 years, to say the least. This is required, considering that at least one beneficiary, namely Karen Kwan is mentally unstable according to the affidavit in opposition. There is also an allegation that the Applicant is also mentally unstable, but this fact had not been proved but remains an allegation. If so that cannot be a reason to misuse the income of the estate without providing any details of the income of the estate and how it was disbursed. In my judgment this conduct alone would be sufficient to remove them as executors of the estate.

36. The "Notice of Motion" only seeks the removal of trustees and administrators, but in the affidavit in support had sought further orders as to appointment of the Applicant as the 'executor and trustee of the estate'. I do not wish to labour more on the latter part of the request to reject it as it was not sought in the motion of the applicant. The affidavit in support only supports what was initially sought in the motion.

37. The trustees have failed to submit evidence of proper administration of the estate, and the preliminary thing is submission of proper accounts of the estate. The death of late Kwan Chew Kuvan was in 2002 and the probate was also obtained in 2002 and more than 13 years have passed. Admittedly rental income accrued to the estate for last 13 years and there is no evidence of disbursement of the same.

38. Perusal of title of estate property C78586 (Annexed 8 to affidavit in support of said title) revealed transfer of shares to the beneficiaries. But strangely rental income from said property is not accounted and collected by executors..

39. The mental incapacity or the disability of the beneficiary is not a reason for misuse of the estate funds. If one or more person who is to benefit from the estate are of unsound mind that is an additional reason for the executors and trustees to be more transparent in their activities so that no allegation of embezzlement of estate income can be made against trustees or executors. It is a duty cast on the executors and trustees to account for all the income and expenditure of the estate. Any incapacity or unsoundness of mind of beneficiary cast the burden of the executors or trustees to be above board in relation to the expenditure of the income of estate. An unsound minded person cannot question the dealings of the estate as a person of a sound mind, hence the trustees and executors needed to explain the activities of the estate to the court whenever required to do so. Unfortunately, the executors of the estate of Kwan Chen Kuvan are unable to account for the rental income that they collected! This is very unsatisfactory behaviour on the part of the both executors and they should be removed forthwith as the executors and trustees of the estate of Kwan Chen Kuvan. Any rental income from the estate property in which the ownership is transferred to 3 beneficiaries should be distributed equally among the 3 owners of the property. The costs of this application is summarily assessed at $500.

FINAL ORDERS

1. The executors and trustees namely Nelson Kwan and Girard Seeto are hereby removed as executors and trustees of the estate of late Kwan Chew Kuvan.
   
2. The cost of this application is summarily assessed at $500 to be paid by the Respondents jointly and or severally.
   

Dated at Suva this 27th day of May, 2015.

.....................................
Justice Deepthi Amaratunga
High Court, Suva

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^[1]See Thomas and Agnes Carvel Foundation v Carvel [2007] EWHC 1314 (Ch), [2008] Ch 395, [2007] 4 All ER 81
^[2]Letterstedt v Broers (1884) 9 App Cas 371 (friction or hostility between trustees and beneficiaries is not of itself a reason for the removal of the trustees, but where the hostility is grounded on the mode in which the trust has been administered, it is not to be disregarded). See also Thomas and Agnes Carvel Foundation v Carvel [2007] EWHC 1314 (Ch), [2008] Ch 395, [2007] 4 All ER 81; Re Loftus, Green v Gaul [2006] EWCA Civ 1124, [2006] 4 All ER 1110, [2007] 1 WLR 591; Heyman v Dobson [2007] EWHC 3503 (Ch), [2007] All ER (D) 275 (Dec). The power to remove and replace personal representatives is not limited to cases of misconduct: see Angus v Emmott [2010] EWHC 154 (Ch), [2010] All ER (D) 70 (Feb) (application to remove executors based on their hostile relationship).