Carson v Lane
[2019] NZHC 3259
•11 December 2019
IN THE HIGH COURT OF NEW ZEALAND NELSON REGISTRY
I TE KŌTI MATUA O AOTEAROA WHAKATŪ ROHE
CIV-2018-442-42
[2019] NZHC 3259
UNDER the Family Proceedings Act 1955 IN THE MATTER
of an application for further provision from the estate of the late DAVID WAYDE CARSON
BETWEEN
WAYDE DAVID CARSON, MELANIE JANIS BROWN, KERI LEA CROSSAN, TONI ROBYN TWOMEY
First Plaintiffs
CONNOR ALAN TWOMEY, KIERAN JAMES TWOMEY, CASSIDY JANESSA CARSON, MOLLIE LEE BROWN, SAMUEL MICHAEL BROWN AND LUCY SOPHIA BROWN
Second Plaintiffs
AND
ROBERT ALAN LANE AND ANISSA
JEAN BAIN in their capacity as trustees and executors of the estate of the late DAVID WAYDE CARSON
Defendants
Hearing: 2–3 December 2019 Counsel:
G A Cooper and A L Bodman for First Plaintiffs (the Children) P F Whiteside QC for Second Plaintiffs (the Grandchildren)
J B Ormsby for Defendants
G F Kelly and K H Lawrence for TrusteesJudgment:
11 December 2019
JUDGMENT OF THOMAS J
CARSON v LANE [2019] NZHC 3259 [11 December 2019]
Table of contents
Introduction [1]
Background [4]
Mr Carson’s wills [8]
The Trust [10]
Memorandum of guidance [12]
The Estate [18]
The claims [23]
The evidence [30]
The Children [32]
Children’s personal and financial circumstances [45]
The Grandchildren [50]
Farm properties and Galloway cattle [51]
Observations [61]
The law [62]
The Act [62]
Is the testator’s past behaviour, including estrangement, relevant? [84]
Relevance of the Trust [88]
Should a percentage-based approach be taken? [93]
The Law relating to grandchildren [96]
What provision should be made for the Children? [104]
The Trust [115]
Award [117]
The Grandchildren [123]
Result [127]
Costs [128]
Introduction
[1] What moral duty does a father owe on his death to his four adult children and six grandchildren when he leaves an estate of $17 million, makes no provision for them in his will, but names them as discretionary beneficiaries under a trust that inherits the residue of his estate?
[2] That is the issue in these proceedings brought by the children and grandchildren of the late David Wayde Carson under the Family Protection Act 1955 (the Act). The executors of the will abide the decision of the Court. The trustees of the trust formed by Mr Carson acknowledge he breached his moral duty but disagree with the plaintiffs as to the correct provision to be made.
[3] The claims were brought outside the period of 12 months following the grant of probate as required under the Act.1 The strength of the claims, particularly of the children, the fact the delay is excusable as the children and grandchildren were not notified of Mr Carson’s death for about two and a half years, and the lack of prejudice to any other beneficiaries, means leave to apply out of time is granted by consent.
Background
[4] Mr Carson had four children, Toni Twomey, Keri Crossan, Wayde Carson and Melanie Brown (the Children). They are the only natural children of Mr Carson. They are now aged in their late 40s and early 50s. For ease and without meaning any disrespect to them, I refer to the Children, and others, by their first names when discussing them individually.
[5] Mr Carson had six grandchildren (the Grandchildren). Connor and Kieran Twomey, aged 24 and 21 respectively, are the children of Toni. Mollie, Samuel and Lucy Brown are aged 23, 18 and 11 respectively and are the children of Melanie. Cassidy, aged 10, is the only child of Wayde. She is the only grandchild to live in New Zealand. The others all live in Australia.
[6]Mr Carson has adult step-children, Raymond and Ruth Kremmer.
[7]Mr Carson died on 28 June 2015.
Mr Carson’s wills
[8] In August 2010, Mr Carson made a will. He bequeathed $500,000 each to his niece Michelle Sutherland and another niece, and his residuary estate to his step-son Raymond. Mr Carson refused to provide his lawyers with any details about his natural born children other than to say they were not interested in contact and “had been paid out many years prior”.
[9] Mr Carson made a new will on 29 August 2014 (the Will). He bequeathed Michelle, $500,000. He bequeathed Raymond a house situated at Panorama Drive,
1 Family Proceedings Act 1955, s 9.
Nelson and $500,000. After payment of his debts and expenses, he left the residue to the Carson Family Trust (the Trust).
The Trust
[10] The Trust deed is dated 18 November 2014. The trustees are P&M Trustee (Carson) Ltd and Michelle (the Trustees). P&M Trustee (Carson) Ltd is a corporate trustee, two of the six directors being Anissa Bain and Robert Lane, partners in the law firm, Pitt & Moore, who are the executors under the Will. The other directors are also partners in Pitt & Moore.
The beneficiaries of the Trust are:
(a)Lincoln University;
(b)the children of Wayde (including stepchildren);
(c)the grandchildren of Wayde (including the children of the stepchildren);
(d)spouses and partners of the children;
(e)nephews and nieces of Wayde;
(f)trustees of any trust for a beneficiary;
(g)any charity nominated by the trustees; and
(h)any other persons, trusts, or other entities as determined by the trustees provided such beneficiary is in keeping with Wayde’s wish that preference be given for the Trust Fund to be used for the research and development of the Galloway breed of cattle.
Memorandum of guidance
[12] Mr Carson left a memorandum of guidance dated 20 October 2014 (the Memorandum) for the Trustees. Relevant provisions of the Memorandum are:
1.2 I have set up the Trust for the general purpose of ensuring that members of my family are able to benefit from the capital and income of the Trust from time to time. In addition it is my wish that for so long as possible the Trust assets be retained and used in the furtherance of research and development of the Galloway breed of cattle (“the Farm”).
2Specific beneficiaries
2.1It is my wish that provided there is sufficient income available after consideration of capital or other expenses required for the efficient operation of the Farm, then the Trust distributes per annum:
(a)The sum of $50,000.00 to my step-son Raymond; and
(b)The sum of $25,000.00 to my niece Michelle.
…
3General principles regarding discretions
3.1My general wishes are as follows:
(a)For so long as my trustees consider viable I would like the Farm to continue with an emphasis on research and development including collaboration and joint venture activities with Lincoln University or similar training and research facility
(b)Benefits should be made available for the purposes of education, health, general welfare, maintenance, well-being and general recreation needs of the beneficiaries.
(c)As much as possible distributions to beneficiaries should be sourced from the income of the Trust, although capital advances may be made by the Trust if, in your opinion, such capital advances will be used for proper or productive purposes.
…
4Winding up
4.1It is my preference that if the Farm is proving to be a useful research and development tool that consideration be given to gifting the entire assets comprising the Farm to Lincoln University or similar training and research facility.
[13] Ms Bain acted for Mr Carson when he made the Will. She provided affidavit evidence. She explained that she had two particular concerns – first, that Mr Carson had made no provision for the Children and, secondly, that Raymond’s interest was substantially reduced from that provided for under the will made in 2010. Ms Bain recorded her recollections of dealings in file notes dated 24 October 2014 and 23 March 2017.
[14] Ms Bain had regular conversations with Mr Carson about his estate, those conversations becoming more frequent around 2014 as Mr Carson’s cancer progressed
and he received treatment. She said she explained to him many times that he had a moral obligation towards the Children and the risk of claims after his death if he did not provide for them. Ms Bain said Mr Carson refused to budge from his position that they would not be named in the Will, saying he did not want to leave any assets to them directly. He told Ms Bain that, in his mind, the Children “were paid out years ago” and “had wanted nothing to do with him over many many years”. Ms Bain said:
However, it was this reiteration of his moral obligation to the Children and the consequences of excluding them that led him to decide to make his natural Children discretionary beneficiaries under the Trust. His view was that the issue of his Children and their needs would then be the problem of the trustees to look after.
[15] Ms Bain also described Mr Carson’s thinking behind the provisions of the Trust and the Memorandum. She said Mr Carson expressed a desire to leave a legacy that would last beyond him. He loved his farm (the farm properties discussed below) and the animals. He thought he could achieve a legacy through enabling research and development with Galloway cattle, potentially in conjunction with Lincoln University.
[16] Ms Bain described Mr Carson having a close relationship with Raymond, who helped him cope with the loss of his second wife and who was apparently the only person who knew Mr Carson had won Lotto. She said Mr Carson spoke regularly to Michelle and he paid her rent and other basic living expenses.
[17] Although there was some suggestion that Mr Carson had other assets prior to his 2009 Lotto win of $16.7 million (property in the United States, $4 million from the sale of a business), there was no evidence to substantiate that. Indeed, the evidence was to the contrary. Ms Bain, despite efforts, was unable to locate any assets in the United States. Others spoke of Mr Carson’s tendency to fabrication, one brother saying he “could not lie straight in bed”. I put any suggestions of other assets to one side. It is clear to me that Mr Carson’s wealth was derived from his Lotto win in 2009.
The Estate
[18] Assisted by advice from a registered valuer, the executors provided the Court with a market valuation of Mr Carson’s estate (the Estate) as at 28 June 2015, the date of death (when the breach is assessed), and as it stands today. As at the date of death,
the Estate was valued at $17,301,460.33. It is valued as at 26 November 2019 at
$15,651,691.09. The reduction in value is attributable to the executors having paid the bequests under the Will to Raymond and Michelle. In the case of Raymond, this includes the house at Panorama Drive. There is no dispute about these dispositions, which occurred prior to the date of the claims under the Act. Notably, the Estate still includes a property at Whangamata worth $555,000. This property is subject to a separate claim by Michelle, which is scheduled to be heard in March 2020.
[19] The Estate includes three parcels of land in Pugh Road, Richmond, totalling approximately 41.8 ha (the farm properties). They are currently valued at $5,685,000. There is one additional property at Horton Road, Tasman, valued at $486,000. The executors are taking steps to market for sale the Horton Road property and related brewery plant and equipment.
[20] Some assets, for example vehicles, have been realised. One vehicle remains for use on the farm and there is general farm equipment and machinery worth
$225,000. $8,345,691 is on deposit. There is $300,000 worth of shares and current account funds in a brewery.
[21] The executors have taken the step of renewing resource consents in respect of water rights to the farm properties. They have received an offer from a local market gardener to lease 16.5 hectares of the farm properties for market garden purposes, which they consider provides a significant increase in rental return in comparison to renting the land for grazing. The executors obtained a report from a farm consultant addressing the viability of the farm properties and their use for the purpose of research and development of Galloway cattle. This is discussed in more detail below.
[22] Some payments have been made out of the Estate by consent, including funding the costs of this litigation. Approximately AUD100,000 has been advanced to the Trust for distribution to Toni, taking into account her circumstances and ill health (discussed below). Up to $1 million was authorised by this Court.2
2 Re Carson [2017] NZHC 3144.
The claims
[23] The Children say that Mr Carson had a moral obligation to provide for their proper maintenance and support on his death. By failing to make any provision for them in the Will, he breached his moral obligation, having regard to the size of the Estate, lack of competing moral claims on the Estate and the Children’s personal circumstances.
[24] The Children seek an order for provision to be made out of the Estate for their proper maintenance and support or such other relief as the Court deems just, plus costs. At the hearing, the Children’s counsel, Mr Cooper, submitted that the Children have a claim to an award equivalent to 20 per cent each of the Estate. He submitted that a wise and just testator standing in Mr Carson’s shoes, properly acknowledging the Children’s financial, health and emotional needs, would find such an award appropriate in all the circumstances.
[25] In their statement of defence, the executors note that the Children are discretionary beneficiaries of the Trust to which Mr Carson’s residuary estate passes. The Trustees filed a statement of defence to like effect. Mr Kelly, for the Trustees, said at the hearing that an award of $1 million to each of the Children would appropriately recognise their claims.
[26] The Grandchildren claim Mr Carson had a moral obligation to provide for their proper maintenance and support on his death and he breached that moral obligation having regard to the size of the Estate, lack of competing moral claims on the Estate and the Grandchildren’s personal circumstances. They seek an order for such provision as the Court thinks fit for their proper maintenance and support, such other relief as the Court deems just, plus costs. Mr Whiteside QC, counsel for the Grandchildren,3 submitted that it was appropriate all the Grandchildren receive
$200,000 to assist them in making a start in life and that the executors should retain that attributable to the three minor Grandchildren to be paid to them, together with accumulated income, on attaining 20 years of age.
3 Mr Whiteside was originally appointed by the Court as counsel assisting before the Children had been notified of Mr Carson’s death. At a later stage, the Grandchildren filed a statement of claim and Mr Whiteside has since acted for them.
[27] The executors note the Grandchildren are discretionary beneficiaries of the Trust and hold expectancies and contingent determinable interests in the Trust property. The executors abide the decision of the Court but note their reluctance to become long-term trustees for the Grandchildren with attendant investment and other responsibilities, noting that small funds would be difficult to diversify and this was not envisaged by them when accepting the role of executors and trustees under the Will.
[28] The Trustees note that the Grandchildren are both discretionary beneficiaries and the final beneficiaries of the Trust and that Mr Carson provided for them through the Trust. Mr Kelly submitted that a total of $1 million should be set aside for the Grandchildren in equal shares and a class fund was the appropriate vehicle to manage and oversee the distribution of those funds.4
[29] Both Raymond and Michelle filed a notice of appearance reserving their rights. They did not oppose the plaintiffs seeking further provision from the Estate but reserved their rights in case another person became party to the proceedings. Notably, those notices were filed on 20 and 31 August 2018 respectively. The statement of claim by the Grandchildren was not filed until 12 November 2018. Neither Raymond nor Michelle have taken any further steps and I conclude therefore they take the same position as regards the claim by the Grandchildren. I note that Raymond attended the hearing and Michelle is a Trustee of the Trust, so both are well aware of the proceedings.
The evidence
[30] The evidence in the main was by affidavit. Each of the Children and adult Grandchildren provided an affidavit. The executors both provided affidavits.
[31] The executors also produced an affidavit and report from Donald Sheppard, farm consultant. The Trustees produced an affidavit and report from Dr Long Cheng, a livestock production and research consultant. Their evidence pertained to Mr Carson’s wish that the farm properties continue to be used for research and
4 Family Protection Act 1955, s 6(1).
development of Galloway cattle. Both deponents were required for cross-examination at the hearing.
The Children
[32] Each of the Children provided an affidavit deposing as to their childhood memories of Mr Carson, the impact of their parents’ separation and the contact they had with Mr Carson after that. They also gave evidence as to their personal and financial circumstances.
[33] All the Children spoke of a relatively happy early childhood, living first in North Beach and subsequently on a farm in the Oxford region when their parents were married. In saying that, the older Children had some not so fond memories of Mr Carson’s behaviour, which, in hindsight, they attribute to his use of alcohol. Following their parents’ separation, they and their mother moved into a state housing area in Aranui, Christchurch. Their impression was that their financial situation had dramatically declined, which they attribute to the loss of their father’s income. The children received no advance warning of their parents’ separation, which came as a shock to them. There was a brief period when Mr Carson returned to the family home, but the attempted reconciliation was short-lived.
[34] The Children had an extremely good relationship with their paternal grandparents, who were a significant support to them both emotionally and financially, also providing at times a place of refuge. They contrast their grandparents’ behaviour with that of Mr Carson.
[35] There is no direct evidence as to the financial arrangements reached between the Children’s parents when they separated. Toni deposes that her mother told her that, following the sale of the Oxford farm, the net proceeds were split evenly and she ended up with around $40,000 to $50,000. She recollects her mother telling her that Mr Carson was ordered to pay $5 towards the care of the Children but cannot remember the frequency of the payments. Keri says the frequency was monthly. In any event, both Toni and Keri say their mother told them that Mr Carson never made any payments. Mr Carson appeared to believe he had made financial provision for the Children – at least he said as much to Ms Bain when making the Will. Mr Kelly
suggested that Mr Carson had perhaps misunderstood that the matrimonial property division included future provision for the Children. All that can be said is that the Children felt they were living in somewhat impoverished circumstances — supported by evidence of their paternal grandparents’ financial assistance to them.
[36] The Children’s mother then remarried. That was not a happy outcome for the Children. Their stepfather was described as “controlling and paranoid”. Wayde in particular suffered terribly (and literally) at his hands — his stepfather was physically abusive towards him. This culminated in a particularly serious assault and his mother decided Wayde needed to leave the home. It seems he was around 15 years old at the time. Wayde understands from his mother that she contacted Mr Carson, told him Wayde was in danger and asked if Wayde could live with him. Apparently, Mr Carson refused. Again, there is no direct evidence of this. In any event, Wayde ended up in foster care and eventually Keri, when she was 19 years old, became his guardian.
[37] When Toni’s first child, Connor, was born, she wrote to Mr Carson and sent him a photograph. He responded with a Christmas card, saying he really appreciated the photo. She heard no more from him.
[38] Toni reached out to Mr Carson again when her second son was born. She made a video of the two children and sent it to him. Again, Mr Carson responded with a Christmas card. He congratulated her, thanked her for the video and said:
… You have got no idea how you have brightened my life.
I watched and cried with joy, looking at your two wee men, great stuff.
…
P.S. I would like to write again soon if that’s alright with you.
Toni did not hear from him again.
[39] Like Toni, Keri had to leave school after obtaining University Entrance, given the family’s financial constraints. She worked in a bank. Mr Carson appeared one day and they were warm and affectionate towards one another. They arranged to meet again but Mr Carson did not show up. When she attended her paternal grandfather’s
funeral in 1994, Mr Carson arrived late and did not stay after the service. Keri says her Uncle Les told her Mr Carson had not expected to see the Children and it was too much for him. When Keri was 30, her paternal grandmother died. Mr Carson attended the funeral and Keri approached him. She said he told her that he thought of the Children all the time and never stopped loving them. She saw him again the next day and then began writing and calling him. She received some letters and cards in return. Keri says that, although she had limited contact with Mr Carson, she was confident he loved and cared for her.
[40] At the time of the Christchurch earthquakes in 2011, Keri and Wayde were living in Christchurch. Neither were contacted by Mr Carson, nor offered any assistance (remembering Mr Carson won Lotto in 2009). They moved to Australia, where all the Children now life.
[41] Given his age when his parents separated, Wayde has fewer memories of their time as a family. He confirms the difficult financial situation the family lived in post-separation and the treatment he suffered at his stepfather’s hands.
[42] Melanie was very young when her parents separated. She saw her father again when she was about 12 when he told her that “he had fought so hard for me in Court and that he had hired so many lawyers to get us kids”. Whether this was true seems doubtful. Melanie received a card from Mr Carson on her marriage in 1997. Several letters back and forth followed and Mr Carson sent her some clothing on her daughter’s first birthday. At one point, Melanie tried to resolve her feelings about her relationship with her father and called him, hoping to have a discussion about it. He told her:
It hasn’t affected my life at all, get over it.
[43] There was some suggestion of a difficult relationship between the Children’s mother and one of Mr Carson’s brothers, Les. The evidence includes file notes of Les’ discussions with Ms Bain where he apparently told her that Mr Carson did not want the Children informed of his death. There was also some suggestion that the Children’s mother had taken steps to prevent contact between the Children and Mr Carson.
[44] Toni refutes this, saying that her mother encouraged the Children’s relationships with their paternal grandparents and wider family and that their mother never told the Children that Mr Carson was a bad person, only that he had issues with alcohol and was “a bit useless”.
Children’s personal and financial circumstances
[45] Toni is sadly terminally ill with cancer diagnosed in February 2017. She is undergoing chemotherapy and is unable to work. Her husband has recently given up work to care for her full-time. He previously earned a good salary. Their two young adult sons live at home. Toni and her husband own two properties in which their equity totals around AUD500,000. Their financial obligations are now becoming a struggle.
[46] Following Toni’s diagnosis, Keri was found to have some pre-cancerous growths that require monitoring. She also suffers from another health issue that impacts her day-to-day life, meaning she is limited in her ability to walk, cannot sleep and struggles to function. She is on a pain management programme. Keri is employed. She and her husband own their own home, which is heavily mortgaged. She has other borrowings. She has foster children. Her husband’s income was not disclosed.
[47] Wayde earns a modest income and rents a room in a shared boarding house. He pays child support and travel costs to Australia for his daughter. He has no significant assets or savings.
[48] Melanie suffered an accident at work in September 2017, as a result of which she has been on workers’ compensation payments. That was her only form of income and has now terminated. She also receives a family tax credit. She has three children and no significant assets or savings. She is divorced.
[49] The Children’s mother is still alive but unlikely to leave an estate of any significant size.
The Grandchildren
[50] Connor and Kieran both live at home with their parents. Connor has completed an apprenticeship and is working. He has a trade support debt of $20,000. Kieran is still studying and works part-time. Mollie suffers from mental health issues and has learning disabilities. She works part-time as a labourer. Samuel is a full-time student, financially supported by his parents. His father earns a modest salary. Lucy is still at school and subject to the same financial support arrangements as Samuel. Cassidy lives with her mother in New Zealand and is still at primary school.
Farm properties and Galloway cattle
[51]Mr Sheppard was asked to report on:
(a)The current viability of the farm properties as an economic unit with and without support from other trust funds;
(b)The ability of the farm properties to continue as an economic unit for the purpose of research and development of Belted Galloway cattle;
(c)Whether or not the sale of any smaller parcels of land will have a material effect on the farm properties as an economic unit;
(d)What capital requirements the farm properties may require in the future to support them in this manner and whether or not such funding is likely to require assistance from other estate/trust assets;
(e)What other economic uses exist for the land and any higher and better uses available for the land;
(f)Whether or not the land and any differentiated configuration of it would enable the will-maker’s wishes to be accomplished. For example, should part of the farm be leased for another purpose generating income to support the wishes of the will-maker; and
(g)Any other relevant matters that may assist the Court to determine what impact an award from the estate may have on the ability to continue the farm in the manner expressed by the will-maker.
[52]There is no dispute as to his expertise in farm management.
[53] Mr Sheppard described the current state of the farm as “tidy”, needing some improvement in areas, for example fencing. At 41.8 hectares, subdivision can create approximately 20 paddocks. In his opinion, winter grazing rotation requires about
40 paddocks. Soil fertility ranges from moderate to good. The buildings are adequate, the yards being to a very good standard.
[54] Galloway cattle are not considered a mainstream commercial breed and are largely sought by lifestyle block holders. Approximately $115,000 of capital value is tied up in stock.
[55] Mr Sheppard provided a farm management plan and budget, which showed an annual operating loss of $22,000. He referred to the potential of obtaining funding for research into Galloway cattle, although he described sources of funding into Galloway as potentially very limited. He discussed other potential uses of the land, for example sheep milking.
[56] Mr Sheppard said the sale of any of the smaller parcels of land would have a negative effect on the viability of any future business, although the smaller parcels contribute to the business through rental income. There are some capital requirements of a relatively modest amount.
[57] In Mr Sheppard’s opinion, the largest issue facing the future operation of the farm properties is securing quality and reliable labour and management to undertake Mr Carson’s livestock farming wishes.
[58] It was put to Mr Sheppard that a sale of the farm properties could realise between $5.7 million to $6.17 million and that money could be used to establish a viable Galloway farm elsewhere, where land values are lower. He accepted that proposition.
[59] Mr Sheppard agreed there was a limited demand for the Galloway breed and in his opinion it will not become a dominant breed in New Zealand.
[60] Dr Cheng provided an independent report into the value of research into the Galloway breed. He described it as a breed capable of surviving in a hardy environment and one that can efficiently convert feed into meat as a saleable product. In his opinion, farming a breed such as Galloway may provide an opportunity to
mitigate pollution and improve feed efficiency. That is, feed cost can be reduced but more product obtained and pollution reduced as a consequence. Such benefits can only be recognised through proper scientific research.
Observations
[61] Whether or not Galloway cattle will become more popular in New Zealand, whether they could be more efficiently farmed in a different location and the viability of farming them on the farm properties, is in large part irrelevant to my consideration. Mr Carson’s wishes as reflected in the Will, Trust and Memorandum are to be disturbed to the least extent possible after making proper provision for the Children and Grandchildren pursuant to the Act. The only relevance of this evidence is any bearing it might have as to whether Mr Carson’s wishes can still be respected after making the proper provision for the Children and Grandchildren.
The law
The Act
[62] Section 3(1) of the Act lists those who are entitled to apply for provision out of the estate of any deceased person. The Children and the Grandchildren fall into this category.
[63]The basis of claims is set out in s 4(1) as follows:
(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.
[64] The Court therefore has a discretion to order that a deceased’s estate provide for those persons entitled to make a claim.
[65] Counsel referred to various cases. There is no doubt, however, that the 2000 decision of a full bench of the Court of Appeal in Williams v Aucutt is the seminal
decision.5 There, the Court took the opportunity to restate the correct approach to awards under the Act. The Court referred to what it described as “an expansive view
… of the power of the Court to refashion the will of the deceased” that had occurred in the decades preceding the decision. The Court agreed there was substance to the criticisms of the way in which the courts had been applying the law.6
[66] Richardson P, writing for the majority, outlined the general principles applying to claims under the Act. He noted that testamentary freedom remains except to the extent there has been a failure to make proper provision for the maintenance and support of those entitled to it.7
[67] The Court endorsed the comments in Little v Angus, which summarised well-settled principles applied by the courts as follows:8
The principles and practice which our Courts follow in Family Protection cases are well settled. The inquiry is as to 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. Experience in administering this legislation has established the approach in this Court that on an appeal the Court will not substitute its discretion for that of the Judge at first instance unless there be made out some reasonably plain ground upon which the order should be varied. All this is so familiar that authorities need not be cited.
[68] Richardson P endorsed the comment in Re Leonard that mere unfairness is not sufficient and it must be shown in a broad sense that the applicant has a need of maintenance and support.9
[69] What is “proper” is different from what is “adequate”, so the amount to be provided is not to be measured solely by the need of maintenance with which the Court would be concerned if the question were merely what was adequate.10
5 Williams v Aucutt [2000] 2 NZLR 479 (CA).
6 At [68].
7 At [33].
8 At [35], citing Little v Angus [1981] 1 NZLR 126 (CA) at 127.
9 At [37], citing Re Leonard [1985] 2 NZLR 88 (CA) at 92.
10 At [38].
[70] There can be a moral obligation to make provision, even if the child is comfortably situated financially, as a result of moral and ethical considerations.11
[71] Richardson P observed that it was common to speak of two classes of estate: the first where, given the smallness of the estate and nature of testamentary dispositions, the applicant is competing with others who also have a moral claim. The second is where, given the largeness of the estate or nature of testamentary dispositions, the applicant is complaining of the failure of the testator to make sufficient provision for the proper maintenance of the claimant out of the abundance of his or her resources.12
[72] Richardson P then considered law reform material and analyses in overseas jurisdictions, academic writing and the New Zealand Law Commission’s proposals in discussing the exercise by the courts of their jurisdiction in favour of adult children who are not asserting economic need. He noted indications that the Act was being used to recognise the special bond between parent and child as well as noting some judicial criticism to the effect that there was no presumption as to what testators should do with their property.13
[73] Finally, in this part of the decision, Richardson P discussed what he described as the important decision of the Court of Appeal in Re Shirley, where one son had been preferred over three others under the testator’s will.14 The Court of Appeal held that the High Court’s emphasis on the disparity of benefits was not appropriate and that the issue was whether the provision made for each son was adequate in the context of his own means, obligations and other relevant circumstances.
[74] In applying the law to the facts, Richardson P neatly summarised the required analysis as follows:15
The test is whether adequate provision has been made for the proper maintenance and support of the claimant. “Support” is an additional and wider term than “maintenance”. In using the composite expression, and requiring
11 At [39].
12 At [40].
13 At [47].
14 Re Shirley CA155/85, 6 July 1987.
15 At [52].
“proper” maintenance and support, the legislation recognises that a broader approach is required and the authorities referred to establish that moral and ethical considerations are to be taken into account in determining the scope of the duty. “Support” 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. Just what provision will constitute proper support in this latter respect is a matter of judgment in all the circumstances of the particular case. It may take the form of lifetime gifts or a bequest of family possessions precious to its members and often part of the family history. And where there is no economic need it may also 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.
[75] Blanchard J agreed with Richardson P’s decision but added some observations of his own. This included a reminder that the Court is not authorised to re-write a will merely because of perceived unfairness and that it is not for a beneficiary to have to justify the share that has been given.16 Furthermore, it is not for the Court to be generous with the testator’s property beyond ordering such provision as is sufficient to repair any breach of moral duty and that testators remain at liberty to do what they like with their assets once they have made such provision as is necessary to discharge their moral duty to those entitled to bring claims under the Act.17
[76] Richardson P again wrote the judgment of the Court of Appeal in the 2002 case, Auckland City Mission v Brown.18 That case concerned a relatively large estate ($4.6 million) where the testator left his daughter assets worth approximately
$190,000. Specific bequests were made to a friend, employees, a nephew and the Cancer Society and the residue of the estate was divided between the Auckland City Mission and the Salvation Army. Provision had been made for the daughter during the testator’s life, including assistance in setting up a business, which continued to provide employment for the daughter and her husband. At the date of hearing, the daughter was in a reasonable financial position and there was no suggestion of any health problems or special needs. The testator provided reasons for leaving his assets as he did, including expressing an adverse view of the daughter’s husband and
16 At [68].
17 At [70].
18 Auckland City Mission v Brown [2002] 2 NZLR 650 (CA).
reasoning that, by providing for the daughter’s children, that removed the need for her to provide for them.
[77] In the High Court, the Judge had decided that the appropriate award was not to be fixed by reference to a percentage of the estate, given its size. He decided a wise and just testator would have wanted to ensure his daughter and family were adequately housed, to secure business premises for her and provide an income independent of the business. He set that sum at $1.6 million.
[78] The Court of Appeal considered the Judge erred in principle and the award was far in excess of what was required to remedy the breach under the Act.19 Richardson P criticised the Judge’s interpretation of Williams v Aucott and noted the concerns that orders in recent years may have been out of line with current social attitudes to testamentary freedom relative to claims by adult children. In particular, Richardson P referred to a survey, concluding that in larger estates where the testator is able to satisfy all moral claims, the courts were generally awarding between 12.5 per cent and 20 per cent of an estate to a dutiful child not in financial need and that the Act was more often being used to recognise the special bond between parent and child.20 Richardson P observed that in many cases the question as to adequate provision is likely to involve a compendious inquiry. He emphasised that the order had to be limited to the amount required to repair the breach of moral duty and it was only to that extent that the will would be disturbed.21 He confirmed it was not for a beneficiary to justify his share.22
[79] The Court of Appeal concluded that a wise and just testator would have ensured the family had the means to acquire a more substantial house debt-free and to clear any loan, plus a sum (which was relatively modest) to supplement their business income and provide a reasonably substantial contingency fund. They reduced the award to $850,000 plus an amount to clear a loan. This amounted to just under 20 per cent of the net estate.23
19 At [32].
20 At [33].
21 At [36].
22 At [39].
23 At [45].
[80] Mr Cooper relied on this case as the most analogous in the context of there being no competing moral claims. He emphasised that (in contrast to the present case) the daughter was not estranged from her father, had no financial or medical need, had not been neglected by her father and had received assistance during his life. Out of a substantial estate, the daughter received just under 20 per cent.
[81] The final Court of Appeal decision that requires some discussion is the 2006 decision in Henry v Henry.24 That case emphasised that Auckland City Mission v Brown was not to be taken as authority for the proposition that provision of sufficient money to purchase a home and provide a contingency fund is some kind of benchmark or default standard.25 Indeed, the Court emphasised that the award to the claimant should be no more than is necessary to remedy the failure. The Court made a call for conservatism, saying that also applied to the issue of whether adequate provision had been made. A mere perception of unfairness was not enough; the Court must conclude that a claimant has established that he or she has not received adequate provision for proper maintenance and support. The Judge must remind him or herself that the Court is not to override the testamentary freedom of the testator or testatrix if the test is not met, even if it appears that a fairer distribution of the estate would have been desirable.26
[82] The approach is no different in a case of financial need – again the principle is that the will is disturbed no more than necessary to make adequate provision for the proper maintenance and support of the claimant. This applies whether the case is based on financial need, the need for broader support or both.27
[83] Finally, of relevance to this case, is the Court’s observations on a change in circumstances after the death of the testator. The Court confirmed that events subsequent to the death of the testator can be taken into account in assessing the appropriate remedy where there has been a breach of moral duty assessed as at the
24 Henry v Henry [2007] NZCA 42, [2007] NZFLR 640.
25 At [78].
26 At [55].
27 At [56].
date of death. This was important in that case given one of the sons was recently diagnosed with motor neuron disease.28
Is the testator’s past behaviour, including estrangement, relevant?
[84] Mr Cooper relied on Crosswell v Jenkins in support of his submission that where an estrangement has been brought about by the deceased’s own making, the moral duty to repair it can be compelling.29 The case involved a claim by children against the deceased’s estate where paternity was disputed. Hardie Boys J said:30
Each claimant must of course show in a broad sense a need of maintenance and support. But the concept of need is not a narrow one and moral and ethical considerations are to be taken into account. The claim of a child from whom the deceased has had a long estrangement cannot be as strong as that of one with whom he has had a close relationship. On the other hand where the estrangement is of the deceased’s making, either because he has actively brought it about, or because he has not exercised his particular ability and responsibility to heal it, the need and the moral duty are compelling. What the deceased has failed to do in his lifetime to accord recognition to his own family he ought to do in his will. And if he does not the Court ought to do it for him.
[85] A similar approach was taken by Gendall J in Re Watson, where he held that the Court can look at breaches of duty or neglect to a child in the past and absence of contact and support in an emotional and psychological sense may be taken into account.31 He said:32
But there can be no question that neglect of a child’s needs from an early age so that estrangement arises and continues, with no real relationship occurring in some circumstances heightens the moral duty or obligation to make proper testamentary provision.
[86] This approach was followed in the Family Court in the decision of LAC v NJC.33 In that case, the children of the deceased were aged between four and 15 at the time their parents separated, after which their father rejected them and estranged himself from them. As a result, the children suffered emotionally. The Court awarded the children 75 per cent of the residue, although in saying that, the
28 At [61].
29 Crosswell v Jenkins (1985) 3 NZFLR 570 (HC).
30 At 575.
31 Re Watson HC Napier CP23/2000, 22 February 2002 at [24]–[25].
32 At [26].
33 LAC v NJC FC Auckland FAM-2007-004-773, 26 July 2010.
testator in that case had transferred assets into an inter-vivos trust and the Court was able to deal only with the assets in the estate.34
[87] In my assessment, some care has to be taken in applying the cases discussed above. The question remains the same. The claim must be considered in accordance with the Act, assisted by guidance from the Court of Appeal decisions discussed above. The focus is to adequately provide for the proper maintenance and support of the claimants. This incorporates a consideration of their particular circumstances and includes the background relationship between the claimant and the testator. The focus of the Act is not, however, to somehow punish the testator or to right past wrongs.
Relevance of the Trust
[88] Mr Cooper submitted that the fact Mr Carson had established the Trust should be taken as evidence he had deliberately tried to prevent the Children having a claim on his Estate. He referred to the decision of LAC v NJC in support of that submission. The Judge’s observations in that case were, however, restricted to recording counsel’s submission that the deceased had deliberately used a trust structure so as to defeat any claim by his children.35 The Court took it into account to the extent of acknowledging that the testator’s estate was larger than simply those assets covered by his will.
[89] Mr Kelly emphasised the need to distinguish between cases where a testator had established an inter-vivos trust and transferred significant assets into the trust and a case, such as the present one, where a trust had been established close to death with no assets in it except as a result of the Will. He disputed the plaintiffs’ submissions that Mr Carson actively tried to prevent his Children claiming against the Estate. He referred to Ms Bain’s evidence that Mr Carson was aware the Children could make a claim and that he included them as beneficiaries of the Trust after receiving legal advice that he owed them a moral obligation. In Mr Kelly’s submission, had Mr Carson wanted to prevent a claim against his estate, he would have put his assets in trust inter-vivos and therefore avoided these proceedings. There is some merit to that submission to which I will return below.
34 At [83].
35 At [82].
[90] Mr Cooper relied on Re Wilson for the proposition that a testator cannot avoid his moral responsibilities by establishing a discretionary trust.36
[91] However, in Flathaug v Weaver the Court of Appeal said that Re Wilson was not authority for any wider proposition and:37
We see no reason why, in a proper case, an entitlement to benefit under a trust, even of a fully discretionary nature, should not be taken into account in assessing a testator’s duty to make provision.
[92] I am satisfied the correct position is that any case must be considered in its particular circumstances. In this case, the plaintiffs’ position as discretionary beneficiaries under the Trust is something to be taken into account, although, as discussed below, this must be assessed in the context of what the Trust in fact provides.
Should a percentage-based approach be taken?
[93] The Children’s claim, as articulated at the hearing, is for an amount equivalent to 20 per cent of the Estate each. Part of the rationale for that approach came from Mr Cooper’s analysis of awards made in cases involving the parent-child relationship as summarised recently in Kinney v Pardington.38 It must be observed, however, that the majority of the cases referred to in that analysis were decided prior to the Court of Appeal decisions discussed above, starting with Williams v Aucutt where, as noted, the Court of Appeal criticised the tendency before that case of the courts assuming the power to refashion a will on the perception it was unfair.39
[94] My reading of the various cases suggests that a percentage approach is often taken in cases of small estates (the first category of cases discussed in Williams v Aucutt) and where there is a number of disadvantaged claimants. I cannot accept that the percentage approach is appropriate in the case of a large estate such as this one. That does not fit with the duty under the Act to assess what is adequate for the proper maintenance and support of the claimant. Reliance on percentages taken in other cases can also create a misleading impression – for example when there is a
36 Re Wilson [1973] 2 NZLR 359 (CA) at 362 and 363.
37 Flathaug v Weaver CA237/02, 13 May 2003 at [36].
38 Kinney v Pardington [2019] NZHC 317.
39 Williams v Aucutt, above n 5.
separate inter-vivos trust, as in the case of LAC v NJC discussed above. Percentages should neither be treated as placing some sort of cap on awards,40 nor used as a means to inflate an award in the case of a large estate.
[95] In the case of Wightman v Public Trust, the grandchildren made a claim in an estate worth in excess of $11 million.41 The Court held it was inappropriate to apply a percentage analysis and focused on what was required to repair the breach.42
The Law relating to grandchildren
[96] The Act specifically provides for cases when grandchildren make a claim where their parents also claim. Section 3(2) of the Act provides:
(2)In considering any application by a grandchild of any deceased person for provision out of the estate of that person, the court, in considering the moral duty of the deceased at the date of his death, shall have regard to all the circumstances of the case, and shall have regard to any provision made by the deceased, or by the court in pursuance of this Act, in favour of either or both of the grandchild’s parents.
[97] Mr Whiteside relied on this passage by the learned author of Law of Family Protection and Testamentary Promises:43
In the case of a large estate, more than sufficient to provide for the needs of all claimants, the Courts have to express a statement of general principle. In Re Allen, Sir John Salmond had referred to the difficult function the court had, in a large estate, “of determining the absolute scope and limit of the moral duty of a wealthy husband or father to make testamentary provision for the maintenance of his wife and children”. Support for the view that claims by grandchildren at least in large estates, should now be treated more liberally can be found from a consideration of the legislative history. Under the 1947 legislation a grandchild could claim only if his or her parent had died before the deceased. Under the original provisions of s 3(c) of the Family Protection Act 1955 this restriction was modified but one of five alternative circumstances had to be established. These were that the parent through whom the grandchild was related to the deceased must have been dead, or have deserted or failed to maintain the grandchild, or have been missing, an undischarged bankrupt or a mentally defective person. In each case the existence of one of the qualifying circumstances was likely to mean that the grandchild was in less advantageous financial circumstances than would normally be expected.
40 Moon v Carlin HC Auckland CIV-2010-404-5486, 23 February 2011 at [40].
41 Wightman v Public Trust [2014] NZHC 3124.
42 At [82] and [84].
43 Bill Patterson Law of Family Protection and Testamentary Promises (4th ed, LexisNexis, Wellington, 2013) at 176–177 (footnotes omitted).
It was submitted in the first edition of this text that the extent of the legislative change made by the Family Protection Amendment Act 1967 was such that, despite what was said in Re Horton, it was no longer appropriate to state, as a general principle, that the claim of grandchildren whose parents are alive is ordinarily not a strong one or that the need of grandchildren for provision must be measured in light, inter alia, of the ability of their own parents to provide for them. It was submitted that the most that could be said was that the existence of such circumstances is a relevant factor to which the Court must have regard pursuant to s 3(2). That might well be a dominant factor in a small estate or in an estate where there are substantial competing claims, but a finding that a grandchild’s parent does have the ability to provide for him or her in an adequate way does not necessarily mean that there was no moral duty on the grandparent also to make some provision, even some liberal provision, for the grandchild, if the grandparent’s assets were large enough. The cases since Re Horton, referred to above appear to support this submission.
[98] In Re Horton, the Court of Appeal said that, prior to the enactment of the Family Protection Amendment Act 1967, which removed restrictions on the eligibly of grandchildren to apply under the Act:44
… the tenor of the decisions was that ordinarily it was not easy for a grandchild to establish a breach of moral duty, especially perhaps if the parent was living or if the grandchild was claiming in competition with a child having a family of his or her own to support; but there was no presumption against grandchildren and all the circumstances had to be considered.
The Court then said that the relevant amendments did not imply any change in the basic philosophy of the Act.
[99] Mr Whiteside also referred to the observations of the Court of Appeal in Fisher v Kirby that, while awards should not be unduly generous, neither 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.45
[100] That observation must be read, however, in the context of the guidance in the Court of Appeal decisions discussed above. That is, a claim under the Act is not an opportunity to rewrite the will.
44 Re Horton [1976] 1 NZLR 251 (CA) at 254.
45 Fisher v Kirby [2012] NZCA 310, [2013] NZFLR 463 at [120].
[101] Another case to which I was referred was Re Watson, where provision was made for grandchildren but that was in relation to the children of a deceased daughter.46
[102] The case of Wightman v Public Trust, discussed above, resulted in a distribution of $150,000 to each of the claimants who were the deceased’s grandchildren. That case, however, must be considered on its facts. The deceased’s eldest daughter had been left with the responsibility to distribute the residuary estate to “all or any” of the deceased’s grandchildren. The context of their claim was that the deceased failed to discharge his moral duty by delegating an unfettered discretion to the daughter. Whata J decided there were five factors that in combination took the case well outside the normal run, including that the testator plainly intended to make some provision for the grandchildren and that several grandchildren had significantly benefited in other ways.47 He referred to Williamson J in Re Ward, who said:48
Under the principles which are contained in those various decisions, it is necessary to consider a number of factors applying to grandchildren; including the ability of their own parents to provide for them; the closeness of any association between the testator and the grandchildren; the prospect of any inheritance they have from other grandparents; the size of the estate; the amount of competing claims; and any provision made for the children of the grandchild or grandchildren.
[103] My reservation with these differing approaches is that they seek to introduce new considerations outside of the specific direction in s 3(2). Despite the remarks in Law of Family Protection and Testamentary Promises, there is no reason why the considerations in s 3(2) ought not apply equally in cases involving a large estate. Where both grandchildren and their parents are claimants under the Act, and adequate provision can be made for the proper maintenance and support of all parent claimants, there should be some particular circumstance identified before it would be appropriate to grant provision directly to the grandchildren.
46 Re Watson, above n 31.
47 Wightman v Public Trust, above n 41, at [77].
48 At [69], citing Re Ward (deceased) (1990) 7 FRNZ 586 (HC) at 591.
What provision should be made for the Children?
[104] Having considered the background, the evidence and the law, I now turn to consider what provision should be made for the Children, it being acknowledged by the executors and Trustees that Mr Carson breached his moral duty to provide for them.
[105] In Mr Cooper’s submission, the breach was two-fold. First, there was a breach of moral duty during Mr Carson’s lifetime by effectively abandoning the Children and providing them no emotional or financial support, something which has had ongoing consequences for them during their lives. Secondly, the breach of duty under the Will was compounded when Mr Carson established the Trust, which, in Mr Cooper’s submission, was done for the purpose of preventing the Children claiming against the Estate. Mr Cooper contended that the Trust was set up for the primary purpose of researching Galloway cattle and ensuring the Children were not notified of his death in order to impede their ability to claim against the Estate. In Mr Cooper’s submission, the determination of the award should reflect parental neglect and estrangement.
[106] Mr Cooper submitted it was relevant that Mr Carson left a total bequest to Raymond now valued at approximately $1.4 million with what he called an annuity in addition even though, he submitted, Mr Carson did not owe Raymond a moral duty. Furthermore, there are no other moral claims against the Estate, the Trust in his submission being in a similar position as a charity. Finally, he referred to the size of the Estate, saying there were sufficient funds to be generous in light of the Children’s personal circumstances, while still giving effect to the deceased’s testamentary intentions.
[107] In Mr Cooper’s submission, the Children ought to be placed in a position where they can purchase a suitable home mortgage-free (or pay off their existing mortgages); attend to their health issues; repay their existing debts; support themselves in the future; have a fund for contingencies; and adequately recognise Mr Carson’s parental neglect.
[108] In his submission, an award equivalent to 20 per cent of the Estate should be made.
[109] As discussed above, an award under the Act is not for the purpose of holding a deceased to account for unacceptable behaviour during his or her lifetime. It is certainly relevant that Mr Carson made no provision for the Children during his lifetime, it being the other side of the coin from cases such as Auckland City Mission v Brown where substantial support to a claimant during the deceased’s lifetime was a relevant consideration in deciding on the appropriate provision to be made for her.
[110] Similarly, it is not for this Court to punish Mr Carson should it be found that he deliberately tried to prevent the Children claiming against the Estate. I have already discussed this evidence and am not satisfied it is established to the balance of probabilities in any event.
[111] What can fairly be said is that Mr Carson exhibited disinterest in the Children although, when prompted by contact from them, appeared interested and loving. What happened at the time of the separation and any dealings between Mr Carson and his first wife after separation is unknown. It appears unlikely that the Children’s mother actively sought to prevent contact, given she was evidently happy and supportive of the Children’s relationship with their paternal grandparents. The most likely situation is that Mr Carson moved on with his life, remarried and established a good emotional relationship with his step-children, particularly Raymond.
[112] The consequences for the Children, however, were understandably devastating and left them with feelings of abandonment. Quite naturally, the fact no provision was made for them in the Will exacerbates those feelings.
[113] Mr Carson was advised of his moral duty to the Children. He recognised that by the creation of the Trust, saying in the Memorandum that it was set up for “the general purpose of ensuring that members of my family are able to benefit from the capital and income of the Trust from time to time”. In effect, he abdicated his responsibilities to the Trustees. He made no attempt to establish the financial and physical health of his Children. He maintained that they had been “paid out” many years ago. There is some force in Mr Kelly’s submission that Mr Carson may well have assumed that his financial settlement with the Children’s mother absolved him of his duties. That is, of course, incorrect.
[114] Finally, neither Mr Carson nor Raymond are to be punished for the provision Mr Carson made for Raymond. Mr Carson was entitled to do so. He clearly had a good relationship with Raymond. It is not for a beneficiary to justify any bequest.
The Trust
[115] As discussed, I do not accept the submission that the Trust was for the purpose of defeating the Children’s claim. The Memorandum makes it clear the purpose is for members of Mr Carson’s family and in addition the retention of assets to further research and development of Galloway cattle. Given the Trustees’ obligations, it is inconceivable they would not take steps to locate the Children and provide for them in accordance with the Trust.
[116] That said, I am not persuaded that the position is as clear cut as Mr Kelly would have it. In his submission, the appropriate provision for the Children is $1 million each and that is on the basis they remain discretionary beneficiaries under the Trust and therefore their interests will be provided for on an ongoing basis. That might be the case were the Trust’s only purpose to provide for Mr Carson’s family, but it is not. The Memorandum in particular stresses the importance of the farm properties and Galloway cattle. The first of Mr Carson’s general wishes are that, as long as it is viable, the farm should continue with an emphasis on research and development. On the Trust’s winding up, Mr Carson’s preference is that the farm assets be transferred to Lincoln University. The Trustees are, of course, not bound to follow the Memorandum but trustees will generally act in accordance with a memorandum, provided it is not inconsistent with the trust.
Award
[117] The 20 per cent advocated by Mr Cooper would amount to $3 million for each of the Children and would clearly amount to a rewriting of the Will. It would leave only 20 per cent ($3 million) in the Trust. That would effectively defeat Mr Carson’s wish regarding the farm properties and Galloway cattle. The farm properties are valued at $5.685 million and would have to be sold were Mr Cooper’s proposal accepted. Such an award would not be in accordance with the Act.
[118] Except when they were very young, the Children received no financial support from Mr Carson during their lifetime. None of the Children is now in a particularly healthy financial position and retirement is not too far away.49 Neither Melanie nor Wayde own their own home and Toni and Keri have significant mortgages on their homes. Toni is in the best position with her and her husband having between them equity of around AUD500,000. All the Children have dependents (Keri having foster children). At least three of the Children have significant health issues and Wayde has decided not to investigate whether he is afflicted by the condition affecting Toni and Keri. Although most of these problems have manifested themselves after the date Mr Carson died, they are still to be taken into account when deciding on appropriate provision under the Act.
[119] In my assessment, a wise and just testator in Mr Carson’s position would have made provision of $1,250,000 for each of the Children in light of these circumstances. The Children will remain discretionary beneficiaries under the Trust. The Trustees must therefore assess the Children’s needs in the future and provide for them in accordance with their obligations as Trustees.
[120] That sum would be life-changing for the Children but would not defeat Mr Carson’s wishes. It would take a total of $5 million from the Estate, leaving just over $10 million, about half of which is tied up in the farm properties.50 However, leaving the Trust with other assets worth about $5 million would enable the Trustees to cover the annual operating loss of $22,000 on the farm properties as well as providing for Mr Carson’s family in accordance with the Trust and Memorandum. The Research Management Office at Lincoln University estimates that a research programme could cost $280,000 – $320,000 per annum. It will be for the Trustees to consider the level of research that the Trust is able properly to fund in accordance with its obligations and whether other grants might be available to offset that cost.
[121] Mr Kelly suggested that with assets valued at approximately $9–10 million to invest, and at an interest rate of five per cent over the long term, the Trustees may net
49 The Children are all resident in Australia. Whether or not they will be entitled to an Australian state pension was not addressed in the evidence.
50 Subject to the outcome of Michelle’s claim on the Whangamata property.
approximately $300,000 per annum. Of course, the Estate includes the farm properties, which are valued at $5.685 million, so barring a sale of those properties, the Trust would only have around $5 million in liquid funds to invest. The Trustees would have to make decisions and cut the Trust’s cloth accordingly.
[122] The award would represent the minimum necessary to make adequate provision for the proper maintenance and support of the Children in accordance with the Act. While in percentage terms it amounts to slightly over seven per cent of the value of the estate at the time of Mr Carson’s death, as discussed, a percentage approach is inappropriate in an estate of this size and indeed the result demonstrates that proposition. It also happens to be consistent with the bequest to Raymond, which was valued at $1.22 million at the time of Mr Carson’s death.
The Grandchildren
[123] The award made to the Children must be taken into account in considering whether the Grandchildren should receive any provision. As may be evident from my comments above, I do not consider they should. While a loving grandfather might well make some provision for his grandchildren in his will, that does not mean he fails in his moral duty towards them if he does not do so.
[124] With each of the Children receiving $1.25 million, their financial positions will be significantly improved and they can be expected to provide for their own children. There is nothing to suggest the Grandchildren’s parents will not support and provide for the Grandchildren, indeed the evidence is to the contrary — two of the adult Grandchildren still live at home. Mollie is in the most need in terms of her health and earning capacity. She lives with her partner, about whom there is no evidence.
[125] While it is true that, despite what he said in cards, Mr Carson exhibited disinterest in the Grandchildren, it is putting it too high and ignoring wider contextual considerations to say he “abandoned” them. They are discretionary beneficiaries and final beneficiaries under the Trust. In that regard, I note Mr Carson’s wish in the Memorandum that, on winding up, the farm properties should, if possible, go to Lincoln University but those properties represent only about half of the Estate
remaining after this award to the Children. There will, therefore, remain a significant pool of assets from which the Grandchildren might benefit.
[126] The Trustees suggested the sum of $1 million should be put in a separate trust for the Grandchildren, to be distributed equally on each attaining 20 years of age. To give over $160,000 to young adults who have no dependants, yet maintain that
$1 million to each of the Children in their particular circumstances is generous (as the Trustees did) is, in my assessment, somewhat inconsistent. In any event, I disagree with the Trustees for the reasons given. That said, I agree with Mr Whiteside, that the older Grandchildren have commendably been focused on obtaining qualifications and working. I also note Mollie’s health issues. It would be entirely appropriate for the Trustees to make a distribution to the adult Grandchildren, at least, in the circumstances. That is a matter for the Trustees to decide in accordance with their duties.
Result
[127] For the reasons given, pursuant to the Act, an award of $1.25 million is made to each of the Children. There is no award to the Grandchildren.
Costs
[128] I raised the question of costs at the end of the hearing. Mr Kelly requested leave to file a memorandum once the result was known.
[129] The award to the Children is on the basis it is net of any costs. It would be an irony indeed if, in order to rectify Mr Carson’s dereliction of duty towards his Children, their award were reduced by the cost incurred by them in obtaining their entitlement. I would take quite some persuading to award any costs against them in the particular circumstances of this case. I would also be concerned if the Estate’s assets are further depleted by legal costs incurred in seeking recovery of costs. In my
preliminary assessment, the Estate should bear the reasonable costs of all parties. If any party wishes to be heard to the contrary, they are to file a memorandum by 30 January 2020.
Thomas J
Solicitors:
Cavell Leitch, Christchurch for Plaintiffs (Children) Wynn Williams, Christchurch for Defendants
Greg Kelly Law Ltd, Wellington for Trustees
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