Russet v Russet

 

1. Hopefully this judgement will conclude long-running litigation over the entitlement to, and distribution of, the estate of the late Henri Edmond Russet who died intestate on 17 December 2019. At the time of his death he was married to the appellant Mrs Li Ya Huang. He owned substantial assets.

 

2. The following early history of this litigation is taken from the reasons of Andrée Wiltens J in Russet v Li Ya Huang [2022] VUSC 244:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3. Then followed the proceedings which culminated in the judgment of Andrée Wiltens J in 2022. It was there held at [134] that the substantial farming operation at Tagabe which had been operated by the deceased was held by way of an equitable constructive trust in favour of Mr Russet by the deceased at the time of his death and it must now in law be passed to the Administrator as an asset of the estate, for the Administrator to ultimately distribute the entirety of it to Mr Russet on the winding up of the Administration.

 

4. However the judge found at [132] that Mr Russet held the farming operation subject to the deceased’s promise to Mrs Huang to provide for his widow beyond his lifetime. In the result it was adjudged:

 

 

 

 

 

 

 

5. The decision of Andrée Wiltens J went on appeal: Li Ya Huang v Russet [2022] VUCA 32. The Court of Appeal at [181] upheld the finding in the Supreme Court that the Tagabe farming enterprise was held by the deceased subject to a constructive trust in favour of Mr Russet and therefore did not fall into the deceased’s residuary estate. Paragraph [134] in the judgment below was not disturbed. However, the Court of Appeal at [182] held that the monthly allowance of VT300,000 to Mrs Huang could not be sustained, and the order at [135(c)] was set aside.

 

6. Following the Court of Appeal decision the Administrator filed an application for directions under section 42 (1) of the Succession, Probate and Administration Regulation No. 7 of 1997 which states:

 

 

7. The administrator posed six issues on which he sought advice and direction, in particular:

 

a. Prado Vehicle ownership 

 

b. Costs of the Administrator

 

c.  Bank Accounts 

 

d. 5,000 shares in the Quarry Business

 

e. Personal drawings by Mr Russet

 

f. Distribution of chattels

 

8. This application blossomed into a full scale contest before Saksak J between Mrs Huang and Mr Russet over several of the issues. The parties filed evidence and cross-examined each other on their evidence. The Court heard evidence from the Administrator, then from Mrs Huang remotely by video-link, and from Mr Russet over a period of two days .Objections were raised and ruled on as to parts of sworn statements. The Court allowed some objections and disallowed others. Finally, the Court received both oral and written submissions. In written reasons the Judge made the following rulings:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9. Following the rulings of Saksak J, Mrs Huang filed a notice of appeal seeking to overturn the ruling that the chattels are part of the farming operation. When written submissions were filed by her in support of the appeal, her challenge had been extended to the Prado contending that it was her vehicle, not part of the farming operation.

 

10. Mr Russet’s response to the appeal seeks to uphold the Prado ruling in his favour, and raises a cross appeal against the ruling that he must repay the estate personal drawings.

 

11. Neither the appeal nor the cross-appeal contest the ruling about the Administrator’s costs, the bank accounts or the 5,000 quarry shares. However, before the appeal and cross-appeal were listed for hearing the Administrator filed an application seeking further directions from this Court under s.42 of the Succession, Probate and Administration Regulations. An application of this kind direct to the Court of Appeal rather than first to the Supreme Court is irregular but in the circumstances of this long running litigation the Court accepts the application and will deal with it. The Administrator is seeking directions to enable him to finally wind up his administration and distribute substantial monies held by him. He is anxious to avoid incurring further administrative expenses.

 

12. This Court is anxious to deal with all the outstanding issues at the one hearing, deciding the appeals and giving directions to the Administrator on the other issues raised by him. 

 

13. The matters requiring our attention now are:

 

 

14. The ruling under challenge is to the effect that applying [134] of Supreme Court judgement, upheld by the Court of Appeal, all the chattels are part of the farming operation. Mrs Huang complains that no attempt has been made in any of the rulings to apportion the chattels to those connected to the farming operation and those of a personal nature that she needs to furnish and make liveable the main homestead which is available for her residence under [135]. She argues that she is entitled to the chattels in the homestead which should be classified as personal chattels which pass to her under r.6 of the Queens Regulations. She argues that she needs the furniture that has been identified by her in a schedule before the Court, but it seems to us obvious that she would also need a wide range of lesser items to make the homestead liveable, including items commonly in use on a day to day basis – things like crockery, cutlery, cooking utensils, linen, towels and so on. There is force in this argument, but it immediately raises questions about how to make the division between farming chattels and personal chattels. The argument has brought a response of a different kind from Mr Russet that also has force. He says some of the contents of the house have always been his - some by inheritance or gift from grandparents, and some as items moved into the homestead for safekeeping from other properties he owns.

 

15. To resolve these competing contentions would require yet more litigation, more evidence and more expense. The material presently before the Court does not permit it.  If the appeal on this issue is decided by the Court accepting the arguments of either Mr Russet or Mrs Huang the losing party will remain dissatisfied with the result. 

 

16. The argument over the chattels does not concern the Administrator as they are not items of monetary value that must be reflected in his final accounts. The estate can be wound up without a ruling about the chattels from this Court, but unless the issue is settled in some practical way now, arguments over chattels have the potential to remain a festering issue between Mr Russet and Mrs Huang.

 

17. In an attempt to impose a practical outcome on the parties, the Court pressured Mr Russet into identifying those items which he claims are sentimental family items he has inherited or are his from other properties we urged that he removes those items, whilst leaving everything else in the homestead for Mrs Huang. 

 

18. The outcome of the Court’s discussion with counsel for Mr Russet is that the chattels issue is to be resolved by him removing from the farmhouse and keeping for his own enjoyment the following items identified as follows on exhibit HLY4:

 

In the lounge room, items.  1, 5, 23, and 25;

In the kitchen items.  14 and 15:

Outside the house items   1 (four items) and 2:

In the garage and laundry item     2 (three items);

In the guest bedroom no 3 item     6 (two desks); and

In the master bedroom items   231/9, 229/10 and 231/11.    

 

 

19. Extensive evidence and cross examination took place in the lower Court relating to these items. Essentially for both items it was the word of Mr Russet against that of Mrs Huang or the other way about. We have considered the submissions of both parties which argue why they should have been the successful litigant but there is no striking documentary or independent evidence that helps decide credit. The outcome on each issue depended on which of the parties the judge preferred. This is the type of case where it is important for an appellate court to pay particular respect to the views of the trial judge who has seen and heard the parties give their evidence. We are not persuaded that the finding of the judge on either topic should be disturbed. Accordingly, the appeal against the finding that the Prado is owned by Mr Russet as part of the farming operation is dismissed as is the cross-appeal against the ruling that Mr Russet must repay the sum of VT4,441,276. 

 

 

20. After an explanation was given in Court by the Administrator about the proposed treatment of this item in the final accounts the parties agreed there was no issue requiring the Court’s attention.

 

 

21. These shares held by the estate comprise 167 shares of 3,303,002 issued shares in Vanuatu Abattoirs Ltd and 2 shares of 76,197 shares in Ballande Vanuatu Limited. The parties agree that there is little or no value in these shareholdings. The name of the first company suggests it is related to farming activities. We consider the shares should be transferred to Mr Russet.

 

 

22. Both Mr Russet and Mrs Huang agree that these costs of the Administrator should be met by the estate.

 

 

23. This issue was raised for the first time by Mrs Huang after this Appeals Session commenced on 6 May 2024. It was first raised before the Court after the hearing of this appeal commenced.

 

24. Mrs Huang has advised Mr Russet and the Administrator that she is now contemplating making an application under s.47A of the Administration of Estates Act 1925 UK to redeem her life interest in the homestead granted by the order in [135 (a)] of the Supreme Court, upheld by the Court of Appeal at [185]. Section 47A provides:

 

 

 

25. Order [135] provides that Mrs Huang “is permitted to reside in the main homestead of the farm at Tagabe so long as she remains single or unmarried”. Mrs Huang contends that this order is a life interest in the homestead charged against the residuary estate of the deceased and if she elects to have it redeemed her application should be considered before the estate is wound up and the residuary estate distributed.

 

26. The Administrator seeks the advice of the Court as to how he should now proceed.

 

27. Mrs Huang’s application immediately foreshadows a host of questions. Is the UK Act one of general application such that it could be part of the inherited law of Vanuatu under Article 95(2) of the Constitution? Is the interest held by Mrs Huang under [138(a)] a life interest within the meaning of s.47A? If the UK Act can apply in Vanuatu, is s.47A over-ridden by the Queens Regulations No. 7 of 1972? If so, is the proposed claim for redemption now out of time under the limitation period specified in s.47A (5) or otherwise barred by the principle in Henderson v Henderson (1843) 67 ER 313?

 

28. Mr Russet contends that the UK Act is not one of general application and in any event is overridden by the Queens Regulation and that time has defeated any claim that may have existed.

 

29. However, in our view the proposed claim must fail for another reason without the need to answer any of these questions. The right of a surviving wife to elect under s.47A to have the personal representative purchase or redeem a life interest arises only where the surviving wife is “entitled to a life interest in the part of the residuary estate” of the deceased. In the present case the interest which Mrs Huang holds in respect of the homestead is not such an interest. The interest ordered in her favour under [135(a)] is an equitable interest awarded as an incident of the constructive trust in favour of Mr Russet over the Tagabe farm. It is an obligation imposed on Mr Russet, or until distribution on the Administrator, not on the residuary estate. The order in [135(a)] is explained by the reasons of the Supreme Court at [131]–[132] which we repeat:

 

 

 

30. Accordingly, we find, and so advise the Administrator that the proposed claim by Mrs Huang cannot succeed, and he may disregard it for the purpose of distributing the deceased’s estate.

 

31. Although we have ruled against the possibility of a claim by Mrs Huang under s.47A, she does have an interest in the homestead enforceable against Mr Russet once the distribution happens. That is an interest that could be protected by a caveat over the leasehold interest covering the homestead, and it is an interest that she could sell to Mr Russet if the parties can reach agreement. That would be a sensible course to end the obvious bitterness between them over the continuing interest of Mrs Huang in the homestead and its contents.

 

32. Mr Russet and Mrs Huang acknowledge that the Administrator is entitled to his costs of and incidental to the matters now before the Court of Appeal to be charged against the estate.

 

33. The Court is grateful for the assistance given in this matter by counsel for each of the parties.

 

34. The formal orders of the Court are:

 

1. The appeal against the order in the Court below as to the Prado vehicle is dismissed;

 

2. The cross appeal against the order for repayment by Mr Russet of VT4,41,267 is dismissed:

 

3. The Administrator may distribute the estate notwithstanding the dispute between Mrs Huang and Mr Russet over chattels;

 

4. The Court notes the acknowledgement of Mr Russet that on taking the items identified in paragraph [18] of these reasons, Mrs Huang is to retain for her exclusive use and enjoyment all other chattels in the homestead;

 

5. The shares in Vanuatu Abattoirs Ltd and Ballande Vanuatu Ltd are to be transferred to Mr Russet;

 

6. The Administrator is entitled to his costs of and incidental to the matters before this Court; and

 

7. No order as to costs as between Mr Russet and Mrs Huang.