In the High Court of Fiji at Suva
Probate Jurisdiction

Probate Action No. 26 of 2012

Between:

Lavinia Rose Bernadette aka Bernadette Rounds Ganilau on her own behalf and on behalf of Jordana Nicolai Mei Vikatoria Kainona Ganilau(a minor)
Plaintiffs

And:

Josefa Ganilau aka Ratu Josefa Lalabalavu Vanaaliali Sukuna Ganilau and Isoa Ganilau aka Ratu Isoa Fugawai Goleanavanua Ganilau
Defendants

Appearances: Ms Marie Chan for the plaintiff
The defendants absent and unrepresented

Date of hearing: 29th July,2014

Judgment

1.	The plaintiffs are the residuary legatees of the estate of Ratu Jone Atonio Rabici Rabaraba Ganilau, who passed away on 18 September,2011. The first plaintiff is his wife. The second plaintiff is their daughter. The defendants, brothers of the testator are the executors and trustees, in terms of his Will. The plaintiffs allege that the defendants have breached their duties as trustees. The plaintiffs seek that the defendants:(i) provide full accounts to the plaintiffs for monies received and sums expended, in respect of the residue of the estate;(ii) trace and monies received in respect of the residue of the estate to an interest bearing account; and (iii) be removed as trustees. The plaintiffs also seek that the first plaintiff and another be appointed as trustees, damages for breach of fiduciary duty, costs and interest.

2.	The statement of claim 

a)	The statement of claim recites that the "Beneficiaries" of the estate of Ratu Jone Atonio Rabici Rabaraba Ganilau are the "Plaintiffs,(as to the residue of the Estate..)and the Ganilau Trustees,(as to Natasa Estate in Natewa Bay,.). 

b)	The "Particulars of Residue" are stated as follows:

 Natasa Estate in Natewa Bay, Vanua Levu
 2000 B shares in South Sea Towage Ltd (SSTL). 

c)	The first plaintiff has requested the defendants through their counsel "Naco Chambers",to discuss the Ganilau Trust, payment of debts and distribution of assets, but the defendants have failed to do so.

d)	The defendants owed a fiduciary duty to the plaintiffs, to settle the plaintiffs in a timely manner. In breach of their duty, the defendants have caused dissipation of the assets of the estate and loss to the plaintiffs.

3.	The determination 

a)	 The Will of the testator, so far as material, provides in clause 3 for a specific bequest as follows:

I GIVE DEVISE and BEQUEATH Natasa Estate in Natewa Bay, Vanua Levu to the GANILUAU TRUSTEES for the benefit of its Beneficiaries;

b)	Clause 4 contains the gift of residue and reads:

I GIVE DEVISE and BEQUEATH the rest and residue of my estate of whatsoever kind and wheresoever situate and of which I shall have disposing power at the time of my death unto my wife BERNADETTE ROUNDS GANILAU and our daughter ADI MEI VIKATORIA KAININA also known as JORDANA GANILAU for their own use and benefit absolutely.

c)	Ms Chan, counsel for the plaintiff quite correctly submits in her closing submissions that the plaintiffs' entitlement to the estate according to the Will is the rest and residue. 

d)	At the hearing, the first plaintiff, in her evidence, said that her late husband wanted to ensure that she and their daughter are the beneficiaries of his one fourth share in South Sea Towage Ltd (SSTL).

e)	The particulars of breach pleaded in the statement of claim are as follows:

•	Failed to consult the beneficiaries as to disposal of 4.5% of shareholding in South Sea Towage Ltd (SSTL).

•	Appointed a director to the Board of South Sea Towage Ltd (SSTL), in full knowledge of his conflict as a director of the company wishing to purchase 4.5% shares in South Sea Towage Ltd (SSTL).

•	Failed to account to the Plaintiffs beneficiaries the monies received from the residue of the Estate.

•	Failed to account to the Plaintiffs beneficiaries the monies received as dividends from South Sea Towage Ltd (SSTL), due to the Plaintiffs.

•	Failed to ensure the transmission of shares in South Sea Towage Ltd (SSTL) from the Estate of Ratu Jone Atonio Rabici Rabaraba Ganilau to the Plaintiffs, according to Will.

The disposal of 4.5% of shareholding in SSTL

f)	The first breach takes issue that the plaintiffs were not consulted, as to the disposal of 4.5% of shareholding in South Sea Towage Ltd(SSTL).

g)	Ms Chan cites the following passage from the judgment of Wati J in Matai v Uluilakeba,[2011] FJHC 761:

The question therefore, is, should the trustee have consulted the beneficiaries .. and by no means, I answer the same in the affirmative.The trustee is appointed to administer the estate for the benefit of the beneficiaries and what is in their interest is most easily worked out after a discussion and dialogue ... The trustee does have the final management of the funds but that too should be in the interest of the beneficiaries. Here, the defendant continued using the funds on estate and did not even discuss the payment of large amount of monies for apparently small and simple legal transcriptions. The beneficiaries were entitled to know how the funds were being used. 

h)	In my view, there was an obligation on the part of the defendants to consult with the plaintiffs, before they disposed of the shares. 

i)	I do not find however, that the estate has suffered loss, as a result of non-consultation for the reasons given later in my judgment. 

j)	The plaintiffs, in the closing submissions claim $ 215,483, as the value of 4.5% of the shareholding. A sum of $ 20,000 is claimed for mental anguish suffered by the second defendant, on the basis that the plaintiffs lost the opportunity to invest dividends, had the shares been transferred to the plaintiffs.

k)	In an interlocutory judgment I delivered on the trilogy of summons filed by the plaintiffs in these proceedings, I held that that the plaintiffs, as residuary legatees, did not have a proprietary interest in any particular asset, but a "chose in action, viz., a right to require the deceased's estate to be duly administered, whereby he can protect those rights to which he hopes to become entitled in possession in the due course of the administration of the deceased's estate"-Buckley J in Re Leight's Will Trusts,[1969] 3 All ER 432 at pg 434. 

l)	I referred to several cases, including the case of Sherani v Jagroop,(1973)19 FLR 85 where Tuivaga J (as he then was) at page 89 said:

 It is clear from the authorities that until the residuary estate has been ascertained in the course of administration and distributed a residuary legatee or devisee under a will has no claim or any right whatsoever of dealing with his share.

Tuivaga J cited the following passages from the judgment in Bernado's Homes v IRC, (1921) 2 A C 1. Viscount Cave at page 10 observed:

When the personal estate of a testator has been fully administered by his executors and the net residue ascertained, the residuary legatee is entitled to have the residue as so ascertained, with any accrued income, transferred and paid to him; but until that time he has no property in any specific investment forming part of the estate or in the income from any such investment, and both corpus and income are the property of the executors and are applicable by them as a mixed fund for the purposes of administration.(emphasis added)

Lord Atkinson at page 11 said:

The case of Lord Sudeley v Attorney General [1897] A C 11 decided in this House conclusively established that until the claims against the testator's estate for debts, legacies, testamentary expenses, etc, have been satisfied, the residue does not come into actual existence. It is non existent thing until that event has occurred. The probability that there will be a residue is not enough. It must be actually ascertained.(emphasis added)

m)	I found that a component of the shares of SSTL had to be sold by the defendants, to pay the mortgage of Natasa Estate, in order to give effect to the specific bequest to Ganiluau Trustees, in clause 3 of the Will. It follows that the plaintiffs' claim to 4.5% of shareholding in SSTL, fails.

n)	There was no evidence before me that the first plaintiff advised the defendants that she had located funds to pay the mortgage, as contended in the closing submissions.

o)	The closing submissions state that the defendants sold the share at $435.56 per share, when the value of the shares as at the date of probate was $ 478.85 per share, as noted in the Financial statement of 2013. This resulted in a loss of $19,483. It is submitted that the defendants " knowingly caused the loss to occur, either in collusion with the purchaser of the shares to deprive the plaintiffs of additional profit from sale of shares or by carelessly selling at undervalue, knowingly the value is much higher".

p)	No evidence was led of the alleged dishonesty, collusion or negligence on the part of the defendants, which in any event, is not pleaded as a breach. It may well have been that the defendants sold the shares at the market price prevailing at the time of the sale.

q)	Accordingly, the claim for loss on the sale of shares and the alleged mental anguish suffered by the second plaintiff, as testified by the first plaintiff, cannot be maintained. 

Conflict of interest by appointment of Director

r)	The second alleged breach is the appointment of a director to the Board of SSTL, in conflict of interest. I also note that the Trustees Report for 2012, states that the testator had "personally nominated" the Director challenged by the plaintiffs, to the Board of SSTL. This statement was not refuted by the plaintiffs

Failure to account to the plaintiffs

s)	The third and fourth breaches pleaded take issue with the failure of the defendants to account to the plaintiffs, monies received including dividends from the residue of the estate.

t)	On the duty to keep accounts, 17(2) Halsbury, Laws of England, (4th edn) para 801 provides: 

Duty to keep accounts. It is the duty of personal representatives to keep clear and accurate accounts, and always to be ready to render such accounts when called upon to do so. It is no excuse that they are inexperienced in 

keeping accounts, for in that case it would be their duty to employ a competent accountant to keep them. Where they are required by the beneficiaries to furnish accounts, they may demand to have the costs of doing so paid or guaranteed before complying with the request. A legatee is not entitled to a copy of the accounts at the expenses of the 
estate, but he is entitled to inspect the accounts kept by the representative. (emphasis added)(footnotes omitted)

A personal representative is liable to be ordered by the court to account either generally in proceedings for general administration of the estate or under the court's jurisdiction to order specific accounts. 

u)	Fatiaki J(as he then was) in Vosailagi v Mara and others,(Civil Action no.569 of 1991) cited the following passage from the judgment in Re Watson,(1904) 49 Sol.Jo.54:

The duty of a trustee is three-fold: there is the duty to keep accounts, the duty to deliver accounts, and the duty to vouch accounts. The duty to keep accounts is an essential duty, he must keep such accounts, so as to be able to deliver a proper account within a reasonable time showing what he has received and paid.

v)	In response to the plaintiffs' summons for an account of monies received and expended in respect of the residue of the estate, the defendants filed the Trustees Report for six months ending 18th December,2012, and financial statements for the years ended 31 March, 2013, and 30 May,2014, prepared by Anthony Ho & Associates, Chartered Accountants. Ms Chan points out that the Trustees Report was prepared by an "unqualified person". 

w)	Consequent to my order for the defendants to give the plaintiffs invoices, receipts and payment vouchers for all expenses incurred from grant of probate to date, the first plaintiff states that the defendants supplied a bundle of payment vouchers with some statutory declarations, but not all receipts and invoices on which payment vouchers were raised. It is contended out that a full account has not been provided and some payment vouchers such as the defendants' accommodation in hotels in Suva, are unwarranted. 

x)	The closing submissions filed on behalf of the plaintiffs challenge the items of expenditure charged to the estate account. The first plaintiff stated that the she was only aware of a debt due to George Ben, for rugby jerseys of $5,000. The closing submissions goes on to state that the first plaintiff would also allow mediation fees and an invoice of preparing probate, which is disputed as excessive. 

y)	I do not accept the contention that the defendants did not incur other expenses in the administration of the estate. Nor that period set out in the advertisement for debtors and creditors to make their claims is an intransigent rule. In my view, the trustees in their discretion, can extend the time to accept claims, subject of course, to the principle that an estate has to be administered in a timely manner. 

z)	I have closely examined the Trustees Report of 2012 and the financial statements of 2013 and 2014. I find that several items of expenditure fall outside the ambit of administration expenses. 

aa)	In my view, the estate has been wrongly administered by the defendants, in breach of their duties as trustees, at the expense of the plaintiffs. 

bb)	The testator reposed confidence in the defendants, not being strangers in blood, to effect the specific bequest to the Ganiluau Trustees and the rest and residue to the plaintiffs. The failure of the defendants to file statement of defence and appear at the hearing fortifies my findings of breach.

cc)	Returning to the accounts, I have allowed the legal costs of obtaining probate, trustees' allowance, bank charges, service fees and reasonable incidental expenses.

dd)	The first plaintiff's evidence that she paid the funeral expenses was uncontroverted, so I have disallowed that item. I have disallowed the statutory debts itemized in the Trustees Report, as it has been pointed out that the debts have been claimed by relatives of the testator. I have disallowed legal expenses, in defending this action. The other expenses I have considered improper, are set out in the table below.

ee)	The Trustees Report provides that a sum of $ 23,000 received as a "cash advance" from Viti Management & Consultancy Services. Accordingly, this would not constitute income earned for 2012, since this amount has to be "paid back", as stated in the Report. 

ff)	In a subsequent submission filed on income received, Ms Chan argues that a Westpac cheque dated 7th February,2012, for $ 26000 drawn out to the defendants constitutes Director's fees, and the same amount should be allowed for 2013 and 2014, albeit this is not shown in the corresponding financial statements.

gg)	That contention is refuted in the Trustees Report of 2012 itself, which provides in a table titled " Cashflow as @ 13/3/2012- 18/12/2012" that dividends were received from SSTL, in two installments of $26,000 in February,2012 and $16,000 in September,2012, totaling $ 42,000.

hh)	In my judgment, the plaintiffs are entitled to a sum of $127480.86, being a total of $68809.86+$3022.00+$55649.00 for the years 2012,2013 and 2014 calculated as follows:

13/3/2012 – 18/12/2012

Dividends SSTL $ 42,000.00
Uluda Holdings $ 50,025. 00		$92025.00	
Expenses 			
Legal Cost (Disallowed)	$18000.00			
JAR Funeral (Disallowed)	$4,341.47			
Passage (Disallowed)	$1,481.65			
Stat/Declaration (Disallowed)	$31400.00			
Accommodation (Disallowed)	$10522.26			
Legal cost(Probate) (Allowed)		$5840.00		
Incidental Expenses (Allowed)		$280.00		
Trustees Allowance (Allowed)		$16630.00		
MH Finance (Allowed)		$410.00		
Bank Fees (Allowed)		$17.50		
Maintenance Fees (Allowed)		$37.64		
Total Expenses Allowed		 	$23,215.14	
Net Profit
			$68809.86	
2013
Dividend – SSTL		$42,000	
Expenses 			
Accounting Fees(Allowed) 		$12,972.00		
Accommodation (Disallowed)	$132.00			
Bank Charges (Allowed)		$4,751.00		
Funeral Expenses (Disallowed)	$620.00			
Incidental Expenses (Disallowed)	$24,450.00			
Legal Fees (Disallowed)	$1,304.00			
Meal Allowance (Disallowed)	$610.00			
Mediation Fees(Allowed) 		$2,255.00		
Passage Cost (Disallowed)	$18,830.00			
Trustees Allowance (Allowed)		$19,000.00		
VPMS-Service Fees (Allowed)		-		
Total Expenses Allowed		 	$38,978.00	
Net Profit
			$3.022.00	
2014
Dividend – SSTL		$77,500.00	
Expenses 			
Accounting Fees (Allowed)		$598.00		
Legal Fees (Disallowed)	$10,153.00			
Passage Cost ( Disallowed)	$830.00			
Trustees Allowance (Allowed)		$4,800.00		
VPMS-Service Fees (Allowed)		$16,453.00		
Total Expenses Allowed		 	$21,851.00	
Net Income
			$55,649.00	

a)	The plaintiff is entitled to interest on the sum of $127480.86 at 4% from 31st December 2014, to date of this judgment.

b)	I note the legitimate concern of the plaintiffs that a period exceeding three years has lapsed, since the passing on of the testator and the administration of the estate remains incomplete. 

c)	 As 17(2) Halsbury, (4th Ed), paragraph 534 states a "residuary legatee has a right to insist that the executor pay the debts, legacies and funeral and testamentary expenses with due diligence, so that the clear residue may be ascertained and paid over to him. (emphasis added).

d)	In my judgment, the delay in concluding the administration of the estate constitutes a breach of the defendants' duties, as trustees.

e)	In the circumstances, I find that the defendants have breached their duties as trustees, and are not fit and proper persons to continue to administer the estate. 

f)	The plaintiffs seek that the first plaintiff and Arieta Koila Costello-Olsson replace the defendants, as executors and trustees of the estate. The plaintiffs support their claim with the curriculum vitae of Arieta Koila Costello-Olsson.

g)	 Section 35 of the Succession, Probate and Administration Act empowers the Court to remove executors of a Will from office and revoke a grant of probate. 

h)	The Court may also make an order for the substitution of existing trustees. Section 73 (1) of the Trustee Act,(cap 65) titled "Power of Court to appoint new trustees" reads:

The Court may, whenever it is expedient to appoint a new trustee or new trustees, and it is inexpedient, difficult or impracticable so to do without the assistance of the Court, make an order for the appointment of a new trustee or new trustees, either in substitution for or in addition to any existing trustee or trustees, or although there is not existing trustee.

i)	Of the jurisdiction of court in this regard, Scott J. in Chellaram v Chellaram, [1985] 1 Ch D 409 at page 428 said:

The jurisdiction of the court to administer trusts to which the jurisdiction to remove trustees and appoint new ones is ancillary, is an in personam jurisdiction. In the exercise of it, the court will inquire what personal obligations are binding upon the trustees and will enforce those obligations… The trustees can be ordered to pay, to sell, to buy, to invest, whatever may be necessary to give effect to the rights of the beneficiaries, which are binding on them. 

If the court is satisfied that in order to give effect to or to protect the rights of the beneficiaries, trustees ought to be replaced by others, I can see no reason in principle why the court should not make in personam orders against the trustees requiring them to resign and to vest the trust assets in the new trustees."

j)	 In the exercise of my powers under the aforesaid provisions of law, I remove the defendants as trustees and appoint the first plaintiff and Arieta Koila Costello-Olsson, as the new trustees of the estate .

k)	There remains in the defendants' hands, 15.5 % shares in SSTL. The failure of the defendants to transfer these shares to the plaintiffs constitutes a breach of thir duties as trustees. The plaintiffs have not claimed any loss, in this regard, in their closing submissions.

l)	I now come to the question of costs. Ms Chan submits that the plaintiffs are entitled to indemnity costs. She relies on the case of In re the Estate of Shiu Shankar, Parma Nand v Shiu Ram, (1997) HPP 15 J94S, (10 December 1997) where Pathik J referred to the following passage from Phillip Nevill, Concise Law of Trust, Wills and Administration in New Zealand (3rd Ed):

A trustee must keep full and clear accounts and must render to the beneficiaries or their authorized 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 Davey v Thornton (185) Eng R 788; 68 E R 483; Springett v Dashwood (186) 3 Giff 521).

m)	In my view, the plaintiffs' costs of litigation have been occasioned by the defendants . The correct order will be to grant indemnity costs.

4.	Orders

I make orders as follows:

a)	The defendants shall provide on oath, a full account to the plaintiffs of monies, dividends or interest received and any sums expended, in respect of the residue of the estate.

b)	The defendants shall trace and pay any monies, dividends or interest received into Court in respect of the residue of the estate, to be deposited in the Chief Registrar's account forthwith.

c)	The defendants shall personally pay the plaintiffs a sum of $ 127480.86 .

d)	The defendants shall personally pay the plaintiffs interest on the sum of $127480.86 at 4 % from 31st December,2014, till date of judgment and thereafter post judgment interest.

e)	The defendants are removed as executors and trustees of the estate of Ratu Jone Atonio Rabici Rabaraba Ganilau.

f)	The probate granted on 27th January,2012, is cancelled.

g)	The first plaintiff and Arieta Koila Costello-Olsson are appointed as the new executors and trustees of the estate of Ratu Jone Atonio Rabici Rabaraba Ganilau.

h)	The plaintiffs are entitled to the remaining 15.5 % shares of the testator in SSTL

i)	The plaintiffs are entitled to be indemnified their costs of bringing this action. The costs to be assessed by the Master.

29th May,2015
Judge

A.L.B.Brito-Mutunayagam