Bean v Bean
[2019] NZHC 20
•22 January 2019
IN THE HIGH COURT OF NEW ZEALAND ROTORUA REGISTRY
I TE KŌTI MATUA O AOTEAROA
TE ROTORUA-NUI-A-KAHUMATAMOMOE ROHE
CIV-2017-463-97
[2019] NZHC 20
BETWEEN WARREN ONSLOW BEAN
Appellant
AND
CHERIE MARION BEAN
First Respondent
CHERIE MARION BEAN WARREN ONSLOW BEAN WILLIAM JOHN LYNCH
Second Respondents
Hearing: 5 December 2018 Counsel:
J Hosking for appellant S Scott for respondents
Judgment:
22 January 2019
JUDGMENT OF KATZ J
This judgment was delivered by me on 22 January 2019 at 4.30 pm Pursuant to Rule 11.5 High Court Rules
Registrar/Deputy Registrar
Solicitors: The Law Shop, Rotorua
Chris Rejthar & Associates, Tauranga
Counsel: J Hosking, Barrister, Rotorua
S Scott, Barrister, Tauranga
BEAN v BEAN [2019] NZHC 20 [22 January 2019]
Introduction
[1] Cherie Bean seeks further provision from the estate of her late mother, Marion Bean. She has filed proceedings in the Family Court under the Family Protection Act 1955.
[2] Cherie’s brother, Warren Bean, applied to strike out the proceeding on the ground that it discloses no reasonable basis for the application.1 Judge Brown declined the strike-out application.2 Warren now appeals that decision.
Background
[3] In 1999 Marion and her husband Fredrick Bean (“Fred”) purchased a lifestyle property near Rotorua and moved there (“the home”). Cherie and her partner Richard built a small cottage on the property in 1999, at Marion and Fred’s invitation, and have lived there since.
[4] Over the years there was talk of acquiring the 10-acre block next door. When it came on the market in 2010, Marion, Fred, Cherie and Richard purchased it. A fairly comprehensive co-ownership deed was drawn up by solicitors. It recorded that the four owners owned the property as tenants in common in equal shares (namely one quarter each). There is no suggestion in that document that Marion or Fred would leave Cherie their respective interests in the 10-acre block on their deaths. However, in her affidavit in support of her claim, Cherie deposes that:
Despite the wording of the document entered into, I had always understood from discussions with my parents that they would leave my partner and I the 10 acre block.
[5] They did not. On 1 September 2015, Marion and Fred made new wills, which largely mirrored each other. Fred was gravely ill at the time, and died nine days later. In his will he made various specific bequests and also forgave all monies owed to him by Cherie as at the date of his death (there was apparently a joint loan from Marion
1 Family Court Rules 2002, r 193(1)(a).
2 Bean v Bean [2018] NZFC 5920.
and Fred to Cherie, in the sum of approximately $150,000). Fred gave Marion a life interest in his share of the home. He directed that after her death:
(a)Cherie was to be given the option to purchase the home, with the purchase price to be determined by an independent valuer;
(b)his son from a previous relationship was to be given a specific bequest of $50,000; and
(c)the balance of the sale proceeds of the home were to be divided equally between Cherie and Warren.
[6]The residue of Fred’s estate (which comprised cash and his quarter interest in
a 10-acre block) passed to Marion.
[7] Marion died less than a year later, on 25 June 2016. She made a specific bequest of jewellery and other items to Cherie. She also forgave all monies owed to her by Cherie as at the date of her death. (This was a reference to the joint loan of approximately $150,000). The sale proceeds of the home were to be divided equally between Cherie and Warren, albeit Cherie was given the option to purchase the home, with the purchase price to be determined by an independent valuer. The residue of Marion’s estate (comprising cash and her half interest in the 10-acre block)3 was to be divided equally between Cherie and Warren. Hence, save for the forgiveness of debt to Cherie and some personal bequests to both Cherie and Warren, Marion and Fred treated their two children equally.
[8] Probate of both wills was granted to Cherie, Warren, and the family’s accountant, William Lynch. Almost a year after probate was granted in respect of Marion’s will, Cherie filed an application seeking further provision under the Family Protection Act. The application alleged that Marion had failed to make adequate provision for Cherie in her will. In particular, Cherie asserted that Marion had
3 Marion had been bequeathed Fred’s quarter interest in his will, and accordingly now owned half of the 10-acre block.
intended to give Cherie her interest in the 10-acre block, but failed to make the necessary change to her will before she died.
Approach to appeal and strike-out application
[9] The appeal is a general appeal, and the approach in Austin Nichols & Co Inc v Stichting Lodestar is to be followed.4 Accordingly, this Court must consider the strike-out application afresh and form its own view.
[10] Rule 193 of the Family Court Rules 2002 provides that the Court may order that all or part of an application or defence or other proceeding may be struck out. Such an order may be made where the pleading or part of it:
(a)discloses no reasonable basis for the application;
(b)is likely to cause prejudice, embarrassment or delay in the proceedings; or
(c)is otherwise an abuse of the Court’s process.
[11] In this case it is argued that the pleading disclosed no reasonable basis for the application, which is analogous to the “no reasonable cause of action” ground for striking out proceedings under r 15.1 of the High Court Rules 2016. In determining whether a pleading discloses no reasonable cause of action, the following principles apply:5
(a)pleaded facts, whether or not admitted, are assumed to be true (unless they are entirely speculative and without foundation);
(b)facts asserted in the application or other documents may be supplemented by affidavit, but the Court will not attempt to resolve
4 Austin Nichols & Co Inc v Stichting Lodestar [2007] NZSC 103, [2008] 2 NZLR 141 at [16].
5 Attorney-General v Prince [1998] 1 NZLR 262 (CA) at 267-268; see also Couch v Attorney-General [2008] NZSC 45, [2008] 3 NZLR 725 and Telecom New Zealand Ltd v Clear Communications Ltd (1997) 6 NZBLC 102,325 (HC).
genuinely disputed issues of fact or consider evidence inconsistent with the pleading;
(c)the cause of action or defence must be clearly untenable;
(d)the jurisdiction is to be exercised sparingly, and only in clear cases;
(e)the jurisdiction should not be exercised if the application could be sustained by appropriate amendment, or if there remains a realistic possibility that at trial evidence could emerge to overcome what appears to be a gap or flaw in the applicant’s case.
(f)the jurisdiction is not excluded by the need to decide difficult questions of law, requiring extensive argument; and
(g)the Court should be particularly slow to strike out a claim in any developing area of the law.
[12] In the High Court, Family Protection Act proceedings must be commenced by way of statement of claim.6 Full particulars of the claim, and the facts relied on in support, are therefore set out in the pleading. The Family Court Rules, however, provide for claims under the Family Protection Act in the Family Court to be made by way of application, rather than statement of claim.7 Such applications are usually accompanied by a supporting affidavit setting out details of the facts relied on. Accordingly, the formal application itself may be somewhat sparse. That is certainly the case here, where the formal application, in its entirety, is only one page long.
[13]Associate Judge Bell observed in Re Moffatt:8
A cause of action under the Family Protection Act is an unlikely target for a striking out application. It is usually sufficient to plead the death of the deceased, the grant of administration, the relationship between the claimant and the deceased, the provisions of the will, the known assets and liabilities of the estate, the provision made for the claimant (if any), and that the deceased
6 High Court Rules 2016, r 5.25.
7 Family Court Rules 2002, r 19.
8 Re Moffat HC Auckland CIV-2010-404-7116, 12 September 2011.
breached the duty to make adequate provision for proper maintenance and support.
[14] In that case, however, although the plaintiff’s pleading included all of those elements, his Honour struck the proceeding out on the basis that it was untenable, as the plaintiff had no prospect of being able to obtain an award under the Family Protection Act on his “best case” (as assessed from both his pleading and his supporting affidavit).
[15] In this case, Cherie’s application does not plead the provisions of the will, the known assets and liabilities of the estate, or the provision made for the claimant. Those matters are, however, covered in Cherie’s supporting affidavit, and are non- contentious. Given the skeletal nature of Cherie’s application, I propose to take the same approach that Associate Judge Bell did in Moffat, and extrapolate her “best case” from her application and supporting affidavit. I will then apply the relevant legal principles to that case.
Family Protection Act claims — the law
[16] In order to determine whether Cherie has a tenable claim under the Family Protection Act, it is first necessary to set out the legal principles applying to such a claim.
[17]Section s 4(1) of the Family Protection Act provides as follows:
4 Claims against estate of deceased person for maintenance
(1) If any person (referred to in this Act as the deceased) dies, whether testate or intestate, and in terms of his or her will or as a result of his or her intestacy adequate provision is not available from his or her estate for the proper maintenance and support of the persons by whom or on whose behalf application may be made under this Act, the Court may, at its discretion on application so made, order that any provision the court thinks fit be made out of the deceased’s estate for all or any of those persons.
[18] The Family Protection Act accordingly confers a discretion on the court to order that provision be made from an estate in favour of certain family members, if the deceased’s will does not make adequate provision for their “proper maintenance
and support”. In Little v Angus the Court of Appeal summarised the proper approach to a claim under the Family Protection Act as follows:9
The inquiry is to be whether there has been a breach of moral duty judged by the standards of a wise and just testator or testatrix; and if so, what is appropriate to remedy that breach. Only to that extent is the will to be disturbed. The size of the estate and any other moral claims on the deceased’s bounty are highly relevant. Changing social attitudes must have their influence on the existence and extent of moral duties. Whether there has been a breach of moral duty is customarily tested as at the date of the testator’s death; but in deciding how a breach should be remedied regard is had to later events.
[19] Although the phrase “moral duty” does not appear in the statute itself, it has, in effect, been grafted onto the statutory wording10 and is now recognised as being “too deeply embedded in the administration of the Family Protection Act to be open to judicial reconsideration”.11
[20] A number of cases, including the decisions of the Court of Appeal in Williams v Aucutt;12 Auckland City Mission v Brown;13 and Henry v Henry14 have informed the modern approach to claims under the Family Protection Act. The key principles include that:
(a)“Proper maintenance and support” requires a broad approach that includes the need to recognise the child as a valued member of the family and other social and ethical factors. “Support” is a wider term than “maintenance” and is used in its wider dictionary sense of “sustaining, providing comfort”. A child’s path through life is supported not simply by financial provision to meet economic needs and contingencies but also by recognition of belonging to the family and of having been an important part of the overall life of the deceased.15
9 Little v Angus [1981] 1 NZLR 126 (CA) at 127.
10 Re McGregor (deceased) [1961] NZLR 1077 (CA) at 1085.
11 Re Z (deceased) [1979] 2 NZLR 495 (CA) at 506.
12 Williams v Aucutt [2000] 2 NZLR 479 (CA).
13 Auckland City Mission v Brown [2002] NZCA 33, [2002] 2 NZLR 650.
14 Henry v Henry [2007] NZCA 42, [2007] NZFLR 640.15 Williams v Aucutt, above n 12, at [52].
(b)“Proper” denotes something different from “adequate” and the amount of an award is accordingly not to be measured solely by the need of maintenance which would be so if the court were concerned merely with adequacy.16
(c)Assessing what provision will constitute proper support is a matter of judgment in all the circumstances of the particular case. Where there is no economic need it may be met by a legacy of a moderate amount. On the other hand, where the estate comprises the accumulation of the family assets and is more than sufficient to meet other needs, provision so small as to leave a justifiable sense of exclusion from participation in the family estate might not amount to proper support for a family member.17
(d)In cases of financial need, the amount necessary to remedy the failure to make adequate provision in the will, will be able to be determined with greater precision than in cases where the need is more of a moral kind.18
(e)The size of the estate and any other moral claims on the deceased’s bounty are relevant factors.19
(f)In assessing whether the deceased has made appropriate provision for the claimant’s proper maintenance and support, and what would be required to remedy a failure, the court should do no more than the minimum to redress a testator’s breach of moral duty. Beyond that point the testator’s wishes should prevail, even if the individual Judge might, sitting in the testator’s armchair, have seen the matter differently.20 Testators are at liberty to do what they like with their
16 Williams v Aucutt, above n 12, at [38], as cited in Fisher v Kirby [2012] NZCA 310 at [111]; and
Bosch v Perpetual Trustees Company Ltd [1938] AC 463 (PC) at 479.
17 Williams v Aucutt, above n 12, at [52].
18 Henry v Henry, above n 14, at [58].
19 Little v Angus, above n 9, at 127.
20 Williams v Aucutt, above n 12, at [70]; see also Auckland City Mission v Brown, above n 13, at [36]; Henry v Henry, above n 14, at [55] and [58].
assets and to treat their children differently or to benefit others once they have made such provisions as are necessary to discharge their moral duty to those entitled to bring claims under the Family Protection Act.21
(g)The Court’s power does not extend to rewriting a will because of a perception that it is unfair. Nor is disparity in the treatment of beneficiaries sufficient, in itself, to establish a claim.22
(h)Although awards should not be unduly generous, nor should they be unduly niggardly particularly where the estate is large and it is not necessary to endeavour to satisfy a number of deserving recipients from an inadequate estate.23
Cherie’s claim
[21] Taking Cherie’s application and supporting affidavit together, the key thrust of her claim is as follows.
[22] Marion was confused about the terms of her will and, in any event, wished to change it to leave the 10-acre block to Cherie. The aim in doing this would be to enable Cherie to use the proceeds of the sale of that block to purchase Warren’s share of the family home. On 19 February 2016 Marion phoned her accountant, Mr Lynch, advising of her wish to change her will. Mr Lynch passed that information on to Marion’s solicitor by email, albeit noting that:
I had obviously not heard of that little plan before & of course it was not raised/discussed in any way when the wills were done with some urgency last year.
[23] No codicil or updated will was prepared prior to Marion’s death on 25 June 2016, despite Marion’s wish to change her will in Cherie’s favour.
21 Williams v Aucutt, above n 12, at [70].
22 Re Leonard [1985] 2 NZLR 88 (CA) at 92; Williams v Aucutt, above n 12, Henry v Henry, above n 14, at [55].
23 Fisher v Kirby, above n 16, at [120].
The Family Court judgment
[24] Judge Brown noted that Cherie had received at least a half share of her mother’s property (and more than a half share of the overall estate of her parents, taking into account the forgiveness of debt). In his view, Cherie “would be hard pressed on the true tests in the Family Protection Act to have that increased”. He noted, however, that the authorities do not allow a claim to be struck out on the basis of an appraisal of the relative merits of the case. Such merits are a matter for trial. His Honour concluded that:
On the authorities Cherie Bean’s case is blurred and definitely weak but I could not say that she will undoubtedly lose or that a loss is inevitable.
[25]The strike-out application was accordingly dismissed.
Did the Judge err in finding that Cherie had a tenable cause of action under the Family Protection Act?
[26] The key issue on appeal is whether the Judge erred in concluding that Cherie had a tenable (if weak) claim under the Family Protection Act.
[27] Ms Hosking submitted that it is beyond reasonable argument that Marion fulfilled her moral duty under the Family Protection Act to make adequate provision for Cherie. Cherie’s loss in the substantive proceeding is therefore inevitable. Mr Scott, on the other hand, submitted that Judge Brown was correct to conclude that it was not possible to be sure at this preliminary stage that Cherie’s claim is doomed to failure at trial.
[28] It is arguable that the debt of $150,000 or so owed by Cherie to her parents jointly was fully forgiven in Fred’s will. However, even if that is so, Ms Hosking submitted that it forms a relevant part of the background when considering whether it is arguable that Marion breached her moral duty to Cherie. Taking the forgiveness of debt into account, Cherie received a greater share of their parents’ overall estate than Warren did. If the forgiveness of debt is put to one side, Cherie and Warren were treated equally in their mother’s will. In addition, Cherie’s attachment to the family property was recognised in a provision in both her parents’ wills that gave her the right to exercise an option to purchase the family property within six months of the death
of the survivor of Marion or Fred. In such circumstances, Ms Hosking submitted, there is no reasonable prospect of Cherie’s claim succeeding.
[29] Ms Hosking further submitted that, on the basis of a rateable values (which she suggested are conservative), Cherie stands to inherit a total of $947,500 from her mother, in addition to the $150,000 she has received by way of forgiveness of debt. The $947,500 is comprised of:
(a)a half-share of the family home, at least $550,000 at rateable value;
(b)her half of the half-share of Marion’s interest in the 10-acre block, at a rateable value of $132,500.00;
(c)a half-share of the cash held at Cooney Lees Morgan, ie $215,000; and
(d)a half-share of an advance of $100,000 that was made to Warren, being
$50,000.
[30] Warren’s case on appeal is that it is simply untenable that such a provision could be found to be inadequate for Cherie’s “proper maintenance and support.”
[31] I share Judge Brown’s view that Cherie’s claim is a weak one. The issue before me, however, is not whether it is weak, but whether it is clearly untenable. That is a high threshold.
[32] The first major difficulty with Cherie’s claim is that her primary complaint does not appear to be that her mother failed to make adequate provision for her, but that Marion’s will (prepared in haste) did not reflect her true testamentary intention and she intended to change it (in Cherie’s favour) prior to her death. Cherie’s primary aim is, in effect, to persuade the Court to rewrite her mother’s will to accord with what Cherie believes was Marion’s true testamentary intention, namely to leave her interest in the 10-acre block to Cherie. This aim rests somewhat uneasily with the fact that Cherie, as one of the executors of her mother’s will, sought and obtained probate for her mother’s will, in common form.
[33] In Re Hawke, the deceased had intended to alter his will before his death, but his health soon deteriorated such that he could not execute a further will.24 The Court considered that it could not make an order under the Family Protection Act making the provision the deceased would have made had he been able to do so. That would have amounted to overriding the provisions of the Wills Act 2007 under the guise of exercising jurisdiction under the Family Protection Act. The Court did, however, state that as a general principle, if it appeared the provision made by the existing will did not discharge the moral duty then the Court could be encouraged, and not deterred, by its knowledge of the testator’s views. Ultimately, however, the touchstone for a claim under the Family Protection Act is breach of moral duty. If such a breach cannot be established, then even if a testator may have intended some different provision, the Court will have no jurisdiction to grant relief.25
[34] The second difficulty with Cherie’s claim is that she does not plead in her application that she has any financial need that would require maintenance or support over and above the million dollars or so already bequeathed to her in her mother’s will. Nor does she provide any evidence of financial need in her affidavit, or indeed provide any material information at all regarding her financial circumstances. This is presumably because Cherie’s “real” claim is not that her mother has failed to make adequate provision for her maintenance and support, but that her mother’s true testamentary intentions regarding the 10-acre block are not reflected in her will. A claim under the Family Protection Act is not, however, the proper forum for addressing such issues. Viewed through the lens of that legislation, the present claim is untenable. It would be highly unusual, and probably unprecedented, for an able-bodied adult child, with no demonstrated financial hardship, to successfully establish a breach of moral duty in circumstances where their parent has left them slightly more than half of their estate, comprising assets valued at close to a million dollars. Although Cherie’s concerns that her mother’s will do not reflect her true testamentary intentions may provide a basis for a claim, it is not a claim under the Family Protection Act.
24 Re Hawke(deceased) [1935] NZLR s157 (SC).
25 Sheehan v Public Trustee [1930] NZLR 1 (SC); Re Downing (deceased) [1975] 1 NZLR 385 (SC) and Re Fuller (1917) 17 SR (NSW) 348; as cited in Bill Patterson Law of Family Protection and Testamentary Promises (4th ed, Lexis Nexis, Wellington, 2013) at 4.13.
[35] Taking all of these matters into account, I have concluded that the Judge erred in dismissing the strike out application, and that the appeal should accordingly be allowed.
[36] For completeness, I note that issues were raised at the appeal hearing (albeit not fully explored) regarding the cottage that Cherie and her partner have built on her parents’ property. Neither Fred nor Marion made any provision in their will to recognise Cherie’s financial investment in that cottage. Ms Hosking acknowledged, on behalf of Warren, that Cherie may well have a constructive trust claim against Marion’s estate in relation to that issue. Ms Hosking further advised that her clear instructions were that Warren fully intended to give his sister “credit” for the value of the cottage in any valuation undertaken of their parent’s property. This issue may therefore be capable of ready resolution. If it is not, however, the existence of this issue would not “save” the current proceeding. Rather, a separate constructive trust claim would need to be brought.
Result
[37] The appeal is allowed. The application brought by Cherie Bean in the Family Court (FAM:2017-063-000331) is struck out.
[38] If costs cannot be agreed between counsel, then any memorandum on behalf of Warren Bean is to be filed by 8 February 2019. Any memorandum in response on behalf of Cherie Bean is to be filed by 15 February 2019. A decision on costs will then be made on the papers, unless further input from counsel is required.
Katz J
4
4
1