Annett v Nurmela

[2018] NZHC 2841

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2018-404-001110

[2018] NZHC 2841

UNDER

the Law Reform (Testamentary Promises) Act 1949

IN THE MATTER

of an appeal against a decision of the Family Court at Auckland

BETWEEN

PAULINE GLYNN ANNETT
Appellant

AND

PENTTI JUHANI NURMELA

First Respondent

PENTTI JUHANI NURMELA as

administrator in the ESTATE OF ANTTI MATIAS NURMELA

Hearing:

30 October 2018

Appearances:

PJ Wright for Appellant

SL Robertson QC for First Respondent

Judgment:

5 November 2018

JUDGMENT OF DOWNS J

This judgment was delivered by me on Monday, 5 November 2018 at 1 pm pursuant to r 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Solicitors/Counsel:

Stainton Chellew, Auckland.

Cinque Oakley Senior, Australia. SL Robertson QC, Auckland.

ANNETT v NURMELA [2018] NZHC 2841 [5 November 2018]

The appeal

[1]    Mr Andy Nurmela died on 18 January 2015.1 In the seven or so months before his death, Ms Pauline Annett provided Andy intermittent care by, for example, visiting with meals and organising appointments.2 Andy died without a will. His estate was worth approximately $1.4 million. Ms Annett brought a claim for 90 per cent of the estate. Judge L de Jong upheld the claim under the Law Reform (Testamentary Promises) Act 1949, but only to the value of $25,000.3

[2]    Ms Annett appeals. She contends the Judge erred in assessing quantum. Section 3(1) of that Act invests a Judge with a broad discretion to award “such amount as may be reasonable, having regard to all the circumstances of the case”.4 Ms Annett argues the award should have been much higher; now $700,000.

[3]    Andy’s brother, Mr Peter Nurmela,5 is the sole beneficiary of the estate. Remaining facts are best explored through the decision and grounds of appeal.

The decision

[4]    The Judge “had the benefit of hearing from a wide range of witnesses about Ms Annett’s friendship with Andy”.6

[5]    He found that friendship “likely began” in the 1970s when Ms Annett and Andy were  neighbours  in  a  block  of  flats.7  The  Judge  noted  their  lifestyles  were   “... completely different. Andy grew cannabis, drank alcohol, had poor hygiene, and lived in squalid conditions Ms Annett … tolerated his way of life.”8

1      Antti Matias Nurmela.

2      I use Andy’s Christian name to distinguish him from his brother, and vice versa.

3      Chen v Nurmela [2018] NZFC 3810.

4      Law Reform (Testamentary Promises) Act 1949, s 3(1).

5      Pentti Juhani Nurmela.

6      Chen v Nurmela, above n 3, at [56].

7 At [56].

8 At [56].

[6]    In or about 2010, Ms Annett had an accident. Because of it, she stopped work. The Judge found Ms Annett and Andy “developed a closer friendship” from then, albeit perhaps “not … as close as Ms Annett suggests.”9

[7]    On 29 May 2014, Andy had a car accident. He was badly injured. When released from hospital, Andy stayed with another friend for approximately six weeks.

After a “falling out” with this friend, Andy moved back into his home.10

[8]    The Judge found Ms Annett provided Andy “intensive support from around June 2014”. In this period:11

... Andy relied on Ms Annett to provide support and services when he moved back home. Ms Annett’s own injuries meant she could not lift Andy. She helped him where she could as he progressed from two crutches to one. She organised and got him to a variety of appointments to see doctors, specialists, associated xray/scan appointments, the Bank, lawyers and building supply premises. She also made and delivered meals to him. This is confirmed by others. However, he confided in one of those friends that Ms Annett “annoyed” him and even though it was frustrating for him, Andy knew he had “to bite the bullet”.

Although Ms Annett deposes that she was “his sole companion” during this period, the evidence suggests otherwise. In particular, there were two friends of Andy’s who visited him regularly after his accident.

[9]    The Judge found while there were “issues with some aspects of Ms Annett’s evidence”,12 Andy promised his home to Ms Annett on three occasions in November and December 2014. This promise “was likely made ... when [Andy] was recovering from significant painful injuries that restricted his mobility and ability to attend some daily tasks”.13

[10]   The Judge was satisfied there was a “sufficient nexus” between Andy’s promise and Ms Annett’s services over the seven-and-a-half-month period before Andy’s death:14

9      Chen v Nurmela, above n 3, at [57].

10 At [58].

11     At [63]–[64] (footnotes omitted).

12 At [65].

13 At [66].

14     At [68] (footnotes omitted).

Andy’s life changed dramatically [because] of his accident. He experienced ongoing pain and injuries. He was resisting his addiction to drugs and alcohol. He was reliant on Ms Annett. He told Ms Annett that his mother would have no need for his house or his money and he had not been in touch with his brother for many years. In light of this, and as he contemplated his future, it is likely he reflected on the importance of his friendship with Ms Annett and what she was doing for him. I find he made the promise with his own free will despite the difficult circumstances.

[11]   The Judge found Andy failed to make good this promise. And as observed, concluded an award of $25,000 was reasonable:15

The reality of this case is that the relevant work and services were focussed on the relatively short period between June 2014 and Andy’s death in January 2015. Ms Annett gave evidence about the number of occasions she drove Andy to appointments she had organised, the meals she provided and the companionship she offered. While Ms Annett told this Court she did what any friend would have done without the promise of reward, she is entitled to have the Court’s discretion exercised in her favour having regard to all the circumstances of this case.

The evidence before the Court is that the hourly rate for a caregiver in 2014 was about $16.50 per hour (about $17,000 for 6 months at 40 hours per week) or up to $1000 per week for rest home care ($26,000 over 6 months). This evidence is not determinative but it is helpful.

The reality for Andy is that he was not in a position to pay for care but it is likely he would have been entitled to ACC care and support because his injuries were sustained as a result of an accident. This may have meant he could not have chosen his own caregiver. This would not have suited Andy at all and probably would not have suited the ACC allocated caregiver. In my view, this is relevant in this case.

Ms Annett’s case

[12]   Multiple appeal grounds are advanced. However, these overlap, and reduce to three.

[13]   Ms Annett contends the Judge failed to have adequate regard to the totality of her services to Andy over her long friendship with him. Ms Annett also argues the Judge failed to have adequate regard to Andy’s promise to her; he promised her his home, the only significant asset in his estate. Finally, Ms Annett contends the award was “plainly wrong”, especially as the relationship between Andy and the only beneficiary—his brother Peter—was not close. For ease of reference, I refer to these

15     Chen v Nurmela, above n 3, at [73]–[75].

grounds as A, B and C. For reasons that will become apparent, the only significant ground is C.

Analysis

[14]   Three preliminary observations are important. First, Ms Annett does not challenge the Judge’s factual findings.16

[15]   Second, while the Act’s concept of services is construed broadly, and can thus encompass friendship, companionship, affection and emotional support, services of this nature must exhibit “something extra”.17 So, the friendship, companionship, affection and emotional support must exceed “what is normally to be expected of a relative, a member of the same household, a neighbour or a friend” to constitute services.18

[16]   Third, relief in this context continues to attract “ordinary constraints [of] appeals against the exercise of a discretion”.19 Consequently, an appellate Court may not substitute its own view on relief.20 Focus instead remains reversible error.

Ground A

[17]   The Judge was mindful—indeed found—Ms Annett and Andy had a longstanding friendship dating back to the 1970s. But, the Judge found Ms Annett’s services were confined to the period between Andy’s return home and his death. The Judge succinctly explained why:21

I find that up to June 2014 the “services” or “work” were undertaken by    Ms Annett and Andy in the context of their friendship in a way that was mutually beneficial. There was nothing remarkable about this and it was not “beyond the normal expectations of ... social interaction”. In fact Ms Annett’s first affidavit recognises this by focussing on events from June 2014.

16 Ms Annett contends the Judge erred in his assessment of Peter’s evidence. This complaint is addressed in passing at [34]–[41]; “in passing” because the Judge made few, if any, material factual findings in relation to Peter.

17     Samuels v Atkinson [2010] NZFLR 980 (CA) at [53].

18     Byrne v Bishop [2001] 3 NZLR 780; (2001) 20 FRNZ 609 (CA) at [6].

19     Ireland v Grant [2014] NZHC 1523 at [10]; Busch v Ireland [2016] NZCA 391.

20     See Ireland v Grant and the cases cited therein at [10].

21     Chen v Nurmela, above n 3, at [61].

[18]   Contrary to Mrs Wright’s submission, the Judge did not err. Ms Annett’s friendship, companionship, affection and emotional support before June 2014 did not exhibit anything additional to constitute services within the Act. Like Judge de Jong, I consider it significant Ms Annett’s first affidavit focussed on the seven-and-a-half- month period preceding Andy’s death, not earlier events. Nothing significant emerges from them.

[19]   Powell v Public Trustee22 and Re Archer23 do not assist Ms Annett. Neither detracts from identified principle. In Powell, the Court of Appeal concluded the first- instance Judge placed inadequate weight on “companionship and allied points”.24 But, this was because that Court concluded  these  aspects  “materially  contributed  to  Mr Birdling’s ability to remain on the farm until his death”, a central feature of the case.25 In Re Archer, Hillyer J concluded “a warm and almost family-like relationship” existed between the claimant and deceased over many years,26 and hence constituted services. But, Ms Annett’s friendship with Andy did not exhibit these characteristics, if at all, outside of the brief period between his accident and death.

[20]   To this analysis must be added the submission of Ms Robertson QC, which I accept: Ms Annett enjoyed benefits from her friendship with Andy, and only after his 2014 accident did that friendship become somewhat one-sided.

Ground B

[21]   Mrs Wright observes Andy promised his home to Ms Annett, and in so doing, his entire estate.  Plainly, this (repeated) promise reflected Andy’s appreciation of  Ms Annett’s services. However, it does not follow the Judge erred in awarding a much lesser amount.

[22]   History is instructive. In 1961 the Act was amended to discard “the provision to the effect that, when the promise specified an amount, it was automatically that

22     Powell v Public Trustee [2003] 1 NZLR 381 (CA).

23     Re Archer [1990] 3 NZLR 737, (1990) 8 FRNZ 83.

24     Powell v Public Trustee, above n 22, at [21].

25 At [20].

26     Re Archer, above n 23, at 743.

amount for which the claim was enforceable against the estate”.27 Rather, and as observed by Sir Robin Cooke for the Privy Council:28

Instead, in all cases where a claim lies it is enforceable as if there has been a promise for payment by the deceased in his lifetime of such amount as may be reasonable, having regard to all of the circumstances of the case ...”.

[23]Sir Robin noted their Lordships did not find this approach surprising:29

To give only one hypothetical example, if there were a promise of the whole estate prompted by gratitude, in perhaps an emotional moment, for a single act of rescue or kindness, it would not necessarily be reasonable to enforce that promise to the full.

[24]   As Judge de Jong observed, Andy’s promise was made while he was “recovering from significant painful injuries”.30 Ms Annett’s first affidavit notes as much. It refers to Andy’s then “chronic” shoulder pain, and to the onset of “extreme back pain”. It describes dressing as “a major struggle”, and Andy as lacking “energy and motivation”. Only “slowly” did he begin walking again.

[25]   The timeline is also important. Andy first promised his home to Ms Annett in late November 2014, a month-and-a-half before he died. The evidence implies his health was then deteriorating. There is no evidence Andy mentioned his intention to anyone else, or that he took steps to enforce it through making a will.

[26]   To recapitulate, the deceased’s view of the value of the claimant’s services is relevant but not determinative. Ms Annett’s relevant services were confined to a brief period before Andy’s death after his debilitating accident. Andy’s related promise was made in circumstances of vulnerability. While repeated to Ms Annett, his promise was not articulated to a broader audience, recorded, or otherwise acted on. All this mirrors the Judge’s approach, which is unimpeachable:31

If the Court finds there has been a testamentary promise, s 3(1) confers upon the Court a broad discretion to award an amount that is reasonable having regard to the circumstances of the case. The value of the services or work provided is assessed from the deceased’s perspective but is also a matter of

27     Re Welch [1990] 3 NZLR 1 at 6; (1990) 7 FRNZ 536 (PC).

28     At 6 (emphasis in original).

29     At 6.

30     Chen v Nurmela, above n 3, at [66].

31     At [49] (footnotes omitted).

judgment by considering the particular circumstances of the case and determining what is reasonable.

[27]This ground of appeal also fails.

Ground C

[28]   As will be recalled, Mrs Wright argues the award was “plainly wrong”, especially as the relationship between Andy and Peter was not close. Andy owed “no moral duty” to his brother, so Peter can have “no competing moral claim” to Andy’s estate. Mrs Wright submits the Judge did not address this point, and therefore overlooked a relevant consideration under s 3(1), which expressly refers to “the nature and amounts of the claims of other persons in respect of the estate, whether as creditors, beneficiaries, wife, husband, civil union partner, children, next-of-kin, or otherwise”.

[29]   Ms Robertson accepts Peter’s claim was a relevant consideration. She submits the Judge addressed this point, albeit implicitly.

[30]The Judge was cognisant of Peter’s position, for, he recorded it:32

Peter does not recall meeting Ms Annett prior to Andy’s death nor [does] he have any recollection of Andy talking about Ms Annett. This is most likely because of the reasons referred to earlier in this judgment.

In general terms, it is accepted by Peter that Ms Annett provided work and services for Andy but that much of the work or services “did not exceed those associated with a friendship between them”.

Peter also challenges the alleged promises as “tenuous”, “uncorroborated” and based on a “false understanding”. Even if this Court finds “work” and “services” were undertaken, and promises made, it is submitted on behalf of Peter that the claim for 90% of the gross estate is “completely disproportionate”.

[31]   However, the Judge did not evaluate Ms Annett’s claim vis-à-vis Peter’s, nor the related consideration of Peter’s relationship with Andy. Consequently, the Judge omitted to assess the totality of circumstances envisaged by s 3(1).33 Does this affect quantum? To answer this question, it is necessary to say more about the facts.

32     Chen v Nurmela, above n 3, at [53]–[55] (footnotes omitted).

33     See, for example, Bryne v Bishop, above n 18.

[32]   Andy was born in 1954, a year before Peter. The brothers spent most of their childhood in Australia. Andy moved to New Zealand at the age of 21. He did not have children. Peter remained in Australia, and has two adult sons. He supports one financially, who cannot work because of a medical condition.

[33]   Money appears to have been tight. Peter said his father would have been buried in a “pauper’s grave” but for a relative’s intervention.

[34]   Peter visited Andy in New Zealand in the 1980s, and stayed with him for a fortnight. Contact thereafter was a matter of debate at trial.

[35]   In his first affidavit, Peter said he spoke to Andy twice a year by telephone. At the beginning of his evidence-in-chief, Peter said he believed the phone calls stopped in 2012. In cross-examination, Peter said he and Andy might not have spoken for as much as 10 years before Andy’s death. Peter also referred to contact between Andy and their mother, and correspondence through Peter’s then wife. An exhibited letter dated 19 July 2012 supported the latter. In re-examination, Peter said he had been “losing” his memory over the last 12 months, and their mother died of memory loss.

Presumably Peter meant dementia, or a condition associated with dementia.34

[36]   The Judge questioned Peter. In so-doing, the Judge expressed concern about Peter’s health, noting he “seemed confused” during testimony. The Judge later cited Peter’s evidence as “a good example of the difficulty faced by witnesses relying on their memory of events between ten and twenty years ago”.35

[37]   It appears to have been common ground Peter attempted to attend Andy’s funeral but could not, because he could not obtain a passport in time.

[38]   Mrs Wright contends Peter’s evidence reflects on his credibility. I disagree. It is clear from the record Peter struggled to answer questions. His testimony is likely the product of confusion, not deceit. This conclusion is supported by the nature of the Judge’s questions to Peter, his Honour’s evident concern for the witness, and the

34     The 19 July letter refers to dementia, and its effect on their mother’s health. Ms Annett also said Andy spoke of his mother’s dementia.

35     Chen v Nurmela, above n 3, at [42].

Judge’s observation memory was the operative problem for Peter and other witnesses too.

[39]   Mrs Wright also contends the brothers were estranged. She notes on Christmas day 2014, Ms Annett asked Andy if he wanted to call his mother and brother. He did not. Another witness said he did not know Andy had a brother until after Andy’s death.

[40]   Again, I disagree. Andy does not appear to have been a prolific correspondent with anybody. He was described as “eccentric”. And, as “a bit of a recluse”. Andy’s friendships appear to have been compartmentalised. His lifestyle was unconventional. Andy grew cannabis, and used that drug heavily. He also drank a lot. His home was dilapidated. Tenants occupied the front part; he the latter. His part had no hot water, no flushing toilet, and no stove or fridge. It was cluttered and untidy. Andy did not want home-help after his accident as he was concerned his home would be declared uninhabitable. The concern presents as well-founded.

[41]   Andy’s relationship with Peter needs to be assessed in this light. That the pair ceased contact at some point is hardly surprising. Peter’s wife’s letter of 2012 suggests this occurred later rather sooner, but nothing turns on this. The short point is that the brothers led different lives in different places—but were still family.

[42]   All this implies the Judge was right to award Ms Annett only a modest sum, but wrong not to consider the importance of Ms Annett’s services at a time when Andy either would not or could not call on his only surviving family member for help. The Judge measured Ms Annett’s services by reference to the cost of a caregiver or     rest home care (see [11]), but did not also assess their significance in the context of Andy’s familial isolation. True, that isolation appears to have been the product of choice. However, this does not diminish the significance of Ms Annett’s services in a time of need.

Given this, what should the award be?

[43]   Powell v Public Trustee is the leading case.36 In Powell, independent evidence supported Mr Birdling’s intention to leave Mrs Powell his entire estate of $360,000. Mrs Powell worked at Mr Birdling’s home and farm, and provided companionship and support over the decade before his death. On appeal, the award was increased to

$120,000. As observed earlier, the Court of Appeal found Mrs Powell “materially contributed to Mr Birdling’s ability to remain on the farm until his death.37

[44]   Ms Annett relies on Bryne v Bishop,38 in which “some quite extraordinary features … justified an award going well beyond the normal range, even for a claim against a large estate”.39 The claimants were awarded $1.4 million from an estate of

$2.5 million: they had provided 19 years of services to an elderly neighbour, effectively adopting him as a family member.

[45]   Ms Annett also relies on Re Berkett,40 in which qualifying services endured for 20 years. Over the last 10, the claimant provided services akin to a caregiver. The claimant was awarded the full value of her claim; $220,000 from an estate of

$1.1 million.

[46]   Unsurprisingly, these and other cases cited in argument reflect their facts.41 The key features here remain those identified: provision of material services in a time of need but over a brief period; a promise (of the entire estate) in circumstances of vulnerability; and familial isolation absent estrangement. Together, these imply the award was too low, but again, one that should remain modest. A figure of $75,000 captures the aspects the Judge did not (see [31]–[42]). This conclusion should not obscure the obvious. Ms Annett’s claim for almost the entire estate, and then $700,000 on appeal, was unrealistic.

36     Powell v Public Trustee, above n 22.

37 At [20].

38     Bryne v Bishop, above n 18.

39 At [52].

40     Re Berkett HC Christchurch M232/97, 2 November 1999.

41     Re Archer, above n 23; Samuels v Atkinson, above n 17; Re Welch, above n 27;

Watt-Ryers v Glover [2016] NZFC 1011.

Orders

[47]   The  appeal  is  allowed.    The award of $25,000 is quashed and $75,000 substituted.

Costs

[48]   Agreement is encouraged on a 2B basis, and on the basis Ms Annett has had some appellate success. But, if agreement cannot be reached, Ms Annett may file a memorandum of not more than five pages by Monday, 26 November 2018. Peter may  respond  with  a  memorandum  of  not  more  than  five  pages  by  Monday,  3 December 2018.

……………………………..

Downs J