Estate executors Marilyn Simpson and Keith Greenwood were personally liable after selling their late father’s home to Marilyn’s son for less than market price. They thought they were carrying out their late father’s wishes, but the words of his will took priority over any other intentions expressed orally before he died.
The High Court was told Marilyn’s son, Andrew, had been told by his grandfather in 2008 that the Greenwood family home at Torquay Place in the Christchurch suburb of Bryndwr was his ‘for about $300,000’ when he died. This arrangement was confirmed four years later when insurers agreed Torquay Place would be rebuilt after the series of Christchurch earthquakes. Mr Greenwood snr died in 2015. The rebuild did not take place until after he died. Andrew took occupation and ownership, paying to his grandfather’s estate $326,900: $320,000 agreed as honouring his grandfather’s wishes plus $6900 reflecting changes made to the original floor plan when rebuilding. The rebuilt home had a value then of some $570,000.
Kelvin Greenwood, as a residuary beneficiary in his late father’s estate, sued his two siblings as executors. By selling cheap they had made a gift to grandson Andrew and short-changed him as a beneficiary, he said.
Justice Dunningham ruled executors are trustees. They are obliged to act diligently and in a prudent manner. This means selling property for market value. Executors cannot make gifts out of estate property, unless expressly permitted by the will. Intentions expressed prior to death by Mr Greenwood snr could be used to interpret any ambiguous provisions in the will, but there was no ambiguity here, Justice Dunningham said. The will made no mention of a sale to Andrew at a reduced price. The executors were ordered to pay Kelvin $60,600 being the amount his payout was reduced by reason of the improper gift to Andrew.
re Estate of Greenwood – High Court (30.04.18)
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