Kath’s husband Dave died suddenly in 2017. Kath had the experience and expertise to be able to manage the administration of Dave’s estate herself, but in his will Dave had appointed a professional trustee to act as the executor. Kath was not happy about this. She had several complaints about the service provided by the trustee, including how much time everything was taking and how much it was costing. She was also concerned about a lack of communication.
However, Kath’s main concern was that the trustee had given her incorrect information about the value of some UK shares. The trustee’s staff member, Judy, had made a mistake when she calculated the approximate value of the shares, multiplying by pounds rather than pence. From late 2017, Kath had been under the impression that she would be receiving over NZD 1,000,000 from the sale of the shares. But when the trustee finally sold the shares in 2019, Kath received only around NZD 24,000.
Kath complained to FSCL.
Kath told us that she had bought a property, at least in part in reliance on what she thought she would get for the UK shares. Kath considered the trustee’s service to be so bad that she wanted all fees to be refunded.
The trustee’s view
The trustee apologised for the calculation error that led to it giving Kath an incorrect value for the shares. However, it declined to refund any of its fees.
When we reviewed the trustee’s administration file, we saw that Judy had realised her mistake back in September 2017. However, for some reason she did not tell Kath of the mistake. Kath did not find out the actual value of the shares until February 2019.
We considered that, theoretically, Kath could sell her property and recoup what she had paid for it. In that sense, Judy’s negligence had not caused any actual ‘loss’. We also considered that shares are an inherently risky investment and their values can fluctuate, so Kath probably should not have bought anything in reliance on the shares’ value until they had actually been sold. However, we recognised how upsetting the whole situation must have been for Kath, who was still grieving the loss of her husband. Our view was that the trustee’s service had fallen below an acceptable standard and we invited it to make a settlement offer to Kath.
The trustee offered Kath the sum of $10,000 in settlement of her complaint. As this was more than the maximum award we can make for stress and inconvenience ($2,000), we encouraged Kath to accept the offer, and she did so.
Key insights for the participant
‘Sunlight is the best disinfectant’, as they say. In other words, if you make a mistake, it may be best to own up to it with your client straight away.