Carswell v Carswell
[2013] NZHC 3562
•20 December 2013
IN THE HIGH COURT OF NEW ZEALAND PALMERSTON NORTH REGISTRY
CIV 2013-454-031 [2013] NZHC 3562
UNDER the Family Protection Act 1955 IN THE MATTER OF
the estate of Hazel Franci Shand
BETWEEN
ANNABEL HAZEL CARSWELL Plaintiff
AND
WILLIAM HENRY CARSWELL and ALISON CLEMENCY FULLERTON- SMITH
Defendants
Hearing: 3 December 2013 Appearances:
D Sheppard for the Plaintiff
T Cleary for William Carswell
No appearance for Alison Fullerton-SmithJudgment:
20 December 2013
JUDGMENT OF MALLON J
Introduction
[1] Annabel Carswell claims against the estate of her late mother, Hazel Franci
Shand, under s 4 of the Family Protection Act 1955 (FPA). Hazel had three children
– William, Alison and Annabel. Under Hazel’s will William receives a much larger share of her estate than Annabel or Alison. Annabel says that the will failed to make provision for the fact that she is very ill, and has a dependant adult son. Annabel seeks an order that the estate pay her a sum sufficient for her proper maintenance and support, interest and costs. William opposes Annabel’s claim. Alison has taken no
part in the proceeding and abides the Court’s decision.
CARSWELL v CARSWELL [2013] NZHC 3562 [20 December 2013]
Background facts
The estate
[2] Hazel died, aged 96, on 21 December 2011. Hazel’s first husband (William Carswell) died in 1971. He was Annabel, Alison and William’s father. Hazel’s second husband died in 1983. There were no children from her second marriage. Hazel did not have another partner after her second husband’s death. Hazel’s last will is dated 30 August 2005. The executors are her son, William, and her daughter, Alison. At the time of Hazel’s death, the value of her estate amounted to approximately $1.2m. Its current value is in the order of $1,325,000. Under her will William receives property worth approximately $980,000 (that is, approximately
74 per cent of the estate), whereas Alison and Annabel each receive property worth approximately $173,000 (that is, approximately 13 per cent of the estate).1
[3] The difference in what Hazel’s children receive arises mainly because William receives a property near Himatangi known as “the Swamp” and used as a shooting lodge (valued at $550,000). He also receives a pine forest that William planted and tended on the Swamp (value of $177,000) and forgiveness of debts owed to Hazel by companies associated with William (value $78,605). Apart from those items, Hazel distributed her estate equally between her children. Each receives
$50,000 (Alison and Annabel in cash, William by way of forgiveness of all debts he owed personally to Hazel which amounts to $50,000). They also each receive a one third share of the residue, less funeral and administration expenses (approximately
$432,000 of investments, of which a one third share is $123,140). All of Hazel’s personal and domestic chattels are to be divided by Alison amongst the siblings in accordance with Hazel’s known wishes (value unclear).
Annabel’s circumstances
[4] Annabel is 59 years old. She divorced in 1995. She has four children to her former husband who are now aged between 18 and 25. Two of the older children are tertiary students and the third is an apprentice builder. Annabel’s youngest child is
employed part-time as a waiter. He suffers from anxiety disorder. He lives with her
1 The figures in this paragraph and paragraph [3] are taken from the plaintiff ’s submissions.
and will continue to be dependent on her for the foreseeable future. Annabel owns her home in Taupo (mortgage-free) which is valued at $600,000. She purchased this in 2001. Her car is valued at around $16,000, she has $4,000 in savings and domestic chattels insured at $125,000. She has an income of $204 per week as a sickness beneficiary. She also receives $4,500 per year in child support arrears.
[5] Annabel looked after her children fulltime. After her divorce she received
$800 per year from her husband in child support. Annabel lived off the proceeds of the sale of her matrimonial home, and payment she received from the Carswell family businesses. In particular she received a $1,500 per month dividend from one of the Carswell family’s businesses (Carswell Property Partnership) until 1994, as did William and Alison. That Partnership owned a large commercial building in Palmerston North and distributions were made from its income. Each sibling also received a third share when the Partnership sold the building for $1.04m in 1994. From 1994 onwards, another family business (Collinson Holdings Ltd), which owned other properties in Palmerston North, paid each sibling $3,000 per month until that company was voluntarily liquidated in 2005. At that time each sibling received approximately $541,000. Prior to the liquidation Annabel also received a
cash advance of $136,000 in 2004.2
[6] Annabel says her relationship with Hazel was good. She says she spoke with her mother on the phone most nights until the day she died. She would visit Hazel at least once per month while her children were at boarding school, and for many years they shared Christmas together. When Hazel became ill Annabel suggested she move to Taupo, but Hazel did not want to do that. Annabel continued to visit her mother as often as she could and took her on outings. Annabel last spoke to her mother the night before she died. She asked the nurse at the resthome to hold the telephone receiver up to her mother’s ear and told her that she loved her.
[7] As is often the way when proceedings of this kind are brought, there is an element of William pointing out issues that arose between Hazel and Annabel and
2 I have taken these details from William’s affidavit. Annabel’s affidavit provides slightly different details but William was employed to manage the family properties and so is likely to have more direct knowledge of the details. Annabel accepts that William may be correct about those details.
tending to minimise Annabel’s relationship with her mother. I do not need to detail this because there is nothing in that evidence that is relevant to assessing Annabel’s claim. In any family relationship some “ups and downs” are normal. Overall the evidence indicates a loving and generous mother and a loving and dutiful daughter. Counsel for William does not suggest otherwise.
[8] Annabel was diagnosed with cancer in November 2011. She did not tell Hazel because she did not want to worry her mother, who was ill herself. The medical diagnosis for Annabel is a “metastatic small intestinal neuroendocrine tumour”. Surgical removal has been discounted because of technical difficulty. Annabel is prescribed injections to control her symptoms and these are covered by the public health system. The medical evidence is that Annabel should have a scan and, depending on the results of that, a type of radiation therapy (“PRRT”) could be used to treat her. PRRT is not available in New Zealand. She would have to travel to Melbourne on four occasions to receive it. Excluding the costs of air travel and accommodation, the total costs of PRRT would be around $40,000. Annabel’s prognosis is in the order of five years, but more if she can receive further treatment.
William’s circumstances
[9] William is 53. He is married with three children aged between 15 and 21. The oldest two children are in tertiary education. The youngest is in secondary school. William is not currently employed, although he was last employed as a project manager earning approximately $70,000 per year. His wife has a monthly income of $1,900 from her employment as a nurse. William’s family trust owns his house which is valued at $760,000 with a $260,000 mortgage.
[10] William received interest free loans from Hazel amounting to $306,000 in the early 1990s. They appear to have been largely repaid. William received $347,000 from the winding up of the Carswell Property Partnership, as well as $541,000 from the winding up of Collinson Holdings Ltd, like each of the siblings. He also received a retainer for managing those properties.
[11] William says his relationship with Hazel was very close. William cared for
Hazel after her stroke in 2006. He visited her every weekend for four months while
she was recovering in Levin, bringing her dog to visit and taking her out to lunch. William also spent many hours helping Hazel prepare to re-sit her driver’s licence so that she could regain independence following her stroke. Hazel was unable to live independently, so William arranged a place for her at Masonic Court rest home in Palmerston North. William is chairman of the group that runs Masonic Court and would visit her every day when he was there for work, and twice a day towards the end of her life. William would also take Hazel to his house or “the Swamp” for lunch every Sunday.
[12] William and Hazel had a close affinity with the Swamp. William paid the rates and maintenance bills and also managed the pine plantation on “the Swamp” for 20 years. He took Hazel duck hunting at “the Swamp” every year until she was
90. After her stroke in 2006 he would take her to the Swamp for picnics. It was a place of great sentimental value to her. The family had owned it for decades. Hazel buried her beloved dog there. Hazel always intended “the Swamp” to go to William and went so far as to have her lawyers draft papers to gift it to William in her lifetime. It was ultimately not done for tax reasons.
Alison’s circumstances
[13] Alison is 62 years old. She has three children aged between 30 and 35. Alison owns a farm in Marton with her husband who is a farmer (value unknown). Alison also has a family trust that owns a bach near Taupo worth $379,000. There is no information on her relationship with Hazel.
Law
[14] Children of a deceased can make a claim under the FPA.3 On that claim, the Court may, in its discretion, order that a provision be made to the claimant out of the deceased’s estate if adequate provision is not available from the estate for the
claimant’s “proper maintenance and support”.4
3 Family Protection Act 1955, s 3(1)(b).
4 Family Protection Act 1955, s 4.
[15] The first question in this kind of claim is whether there is adequate provision from Hazel’s estate for Annabel’s proper maintenance and support. That is an inquiry that encompasses not just economic needs and contingencies, but also a recognition of belonging to the family and of being an important part of the overall life of the deceased.5 The Court considers whether there has been a breach of moral duty as
judged by the standard of a wise and just testator as at the time of his or her death.6
That “wise and just testator” is imputed with the knowledge of all the circumstances existing or reasonably foreseeable at the time of death.7
[16] For William it is submitted that whether there is a breach of moral duty depends on a testator’s “actual and prospective knowledge” at the time of her death. It is submitted that it is therefore not relevant to take into account Annabel’s cancer diagnosis because Annabel chose to keep this to herself (albeit for good reasons). This submission is incorrect. It is based on a passage in Law of Family Protection and
Testamentary Promises.8 However this passage is about prospective knowledge (that
is, what facts are within the range of foreseeability). It is well established that the breach is “judged in the light of the circumstances existing at the date of death – actually in existence whether known to [her] or not – with as well as an obligation to take into account what might reasonably be foreseen as likely to happen”.9
[17] If there has been a breach of moral duty then the Court considers what is required. Although the Court may order “any provision the Court thinks fit”,10 an award to repair the breach of moral duty must be the minimum necessary because it is not for the Court to rewrite the will.11 A claimant’s previous standard of living, unless artificially high or low, is regarded as a reasonable indication of the appropriate
standard of maintenance.12 However the size of the estate and competing moral claims
5 Williams v Aucutt [2000] 2 NZLR 479 (CA) at [52].
6 Little v Angus [1981] 1 NZLR 126 (CA) at 127.
7 Re McGregor [1961] NZLR 1077 (CA) at 1086 per Gresson P.
8 Bill Patterson Law of Family Protection and Testamentary Promises (4th ed, LexisNexis, Wellington, 2013) at [2.3].
9 Re McGregor per Gresson P; see also Re Allen (deceased) [1922] NZLR 218 (SC) at 220-221;
Haines v Chellew HC Auckland CIV-2004-404-4556, 21 October 2008 at [61]; O’Connor v
Denee HC Rotorua CIV-2008-363-96, 22 December 2008 at [49]-[50].
10 Family Protection Act 1955, s 4.
11 Auckland City Mission v Brown [2002] 2 NZLR 650 (CA) at [36], referring to Williams v Aucutt, above n 5, and Little v Angus, above n 6.
12 Allardice v Allardice (1910) 29 NZLR 959 (CA) at 969.
upon the testator must also be taken into account.13 A broad judicial discretion is to be exercised in the particular circumstances of each case.14
Should the Court make a provision for Annabel
[18] For Annabel it is submitted that Hazel’s bequests are all that she has to live on for the rest of her life. Her sickness benefit is to be disregarded.15 She should not be expected to sell her house. As matters presently stand, therefore, Annabel has in the order of $173,000 to live on. Deducting the costs of the radiation therapy of $40,000, plus say $10,000 for the costs of travel and accommodation for the trips, and deducting Annabel’s credit card debt of approximately $8,500, leaves her with
$114,500. That amount stretched over five years, gives Annabel $22,900 each year to live off. If her prognosis improved by just a couple of years, she will have $16,000 per annum to live off.
[19] It is submitted that Annabel’s current financial position establishes that a livelihood of $22,900 per year or thereabouts is woefully insufficient to meet her needs. From her benefit payments of $257 a week, plus savings of $4,000, Annabel has found herself with little money to pay for groceries each week. She has been unable to afford fuel, has had to accept donations from friends, and has sold items on TradeMe to register her car. She has already cancelled her rubbish pick up service and her newspaper subscription, and will cancel her telephone landline to reduce her expenses. Her house is falling into disrepair in that (for example) she cannot afford a plumber to unblock the drain from her toilet. She cannot afford firewood or the cost of gas to heat her home. Additionally, she has started using a credit card and now has a debt of $8,500.
[20] It is submitted in these circumstances a wise and just testator would have provided more for Annabel than Hazel did. This is said to be particularly so when the estate is sufficiently large that this does not have to be the case, and when the other claimants are in a significantly more comfortable position than Annabel. It is
submitted that an increase in the total provision that Annabel is to receive from the
13 Williams v Aucutt, above n 5, at [40].
14 Fisher v Kirby [2012] NZCA 310 at [120].
15 Family Protection Act 1955, s 13.
estate to $350,000 would be appropriate. The submissions for Annabel set out how that could be done. Essentially it would involve Annabel receiving William’s one third share of the residue of the estate. Alison would still receive the $50,000 bequest made to her and her one third share of the residue of the estate, but a small part of that might need to be funded from the pine plantation. William would still receive the Swamp. He would also still receive the forgiveness of nearly $130,000 of debt he and his companies owe the estate. He would also receive the value of the pine plantation at the Swamp, just less any amount required to be paid to Alison to bring her up to her $173,000 share of the total estate.
[21] Deducting the $40,000 for the radiation therapy that Annabel would need to pay for, deducting $10,000 for the travel and accommodation associated with that treatment, and deducting Annabel’s credit card debt of $8,500, would leave her with less than $40,000 per annum to live off over five years. If her prognosis increased by just one year, the amount would be less than $50,000 per year. Such provision is less than Annabel has previously enjoyed. Without accounting for any income that may have been earned from investing the $700,000, Annabel lived on average on
$63,000 per annum. That annual amount would have been higher if income had been earned on the funds.
[22] For William it is submitted that it is relevant to focus, not on Annabel’s current circumstances, but on her circumstances as at December 2011. It is submitted that it is also relevant to consider that Annabel received significant gifting through Hazel’s lifetime which would have been sufficient to provide for Annabel into the future had Annabel invested it. Instead Annabel did not work and sent her children to private schools. It is also said that the estate is not a large one, because the Swamp forms a large part of it and it is clear that Hazel intended that to go to William. It is said that the estate is not sufficiently abundant to maintain Annabel’s lifestyle. If the Court considers that further provision is to be made for Annabel, then an amount to cover the treatment in Australia would be appropriate and fit with the minimum level of intervention that its required in these kinds of claims.
[23] In my view, a wise and just testator would have made further provision for
Annabel if she was aware of Annabel’s health condition. I accept that this is to be
assessed at December 2011 rather than now. But the diagnosis was a grim one and it is foreseeable that there may be treatment costs over and above what is funded through the public health system. It was also foreseeable that Annabel, who has never been in paid employment, would have difficult in meeting any such costs. The evidence about Hazel that is before the Court shows that she was generous in looking after her children’s financial needs throughout her lifetime. Had she been aware of Annabel’s health condition it is clear that she would have wished to make sure she could pay for the treatment that might improve Annabel’s life expectancy. A wise and just testator aware of Annabel’s circumstances would also recognise that Annabel’s health condition was likely to make it more difficult to look after her dependent son. The provision for Annabel under the will is insufficient for her proper maintenance and support in the circumstances as they existed and were foreseeable as at December 2011.
[24] The question then is what provision is necessary to repair the breach of moral duty. The starting point is that any further provision to Annabel should not come from the Swamp. Evidence was provided by Mr Hart, the solicitor who acted for Hazel for many years. Mr Hart’s evidence is that Hazel was an astute businesswoman who would have been aware of the value of the Swamp and that she understood that, in leaving the Swamp to William, she was creating an unequal division of her assets. This evidence was given in response to Annabel’s view that Hazel thought the Swamp was only worth $50,000. I accept Mr Hart’s evidence. It would not be appropriate to interfere with Hazel’s intention in relation to the Swamp and counsel for Annabel does not seek that I do.
[25] All members of the family received substantial gifts during Hazel’s lifetime. While they might not have been completely even, the evidence suggests that Hazel largely intended to treat the children even-handedly but would also make particular provision if a child had a particular need. This fits with the provision in the will to forgive William’s company debts. Otherwise the will is even-handed.
[26] I agree with the approach put forward by Annabel in that further provision for her proper maintenance and support should come from William’s one third share of the residuary estate. A wise and just testator, in Hazel’s position, would have wished
to ensure that Annabel could at least be sure she could fund additional treatment costs and that she might have something a bit more than that to seek to ensure that she was comfortable over the next few years. Recognising that minimal interference is appropriate, I consider that further provision in the sum of $85,000 should be made for Annabel. That would leave William with around $33,000 from the residuary estate, whilst keeping all the other bequests in tact.
Result
[27] The application is granted. Further provision from Hazel’s estate is to be made to Annabel in the sum of $85,000. That provision is to be made by increasing her share of the residuary and correspondingly decreasing William’s share by that amount. I trust that the parties will be able to resolve costs but, if not, brief memoranda (limited to no more than three pages each and on the issue(s) in dispute) may be submitted within two months of today’s date.
Mallon J