Chin v Payne
[2022] NZHC 3095
•24 November 2022
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE
CIV-2021-485-000350
[2022] NZHC 3095
BETWEEN SANDRA CHIN (PAYNE)
Plaintiff
AND
STEVEN PAYNE as the executor of the estate of Donald Gordon Payne
First Defendant
AND
STEVEN PAYNE
Second Defendant
Hearing: 25 – 26 October 2022 Appearances:
P R W Chisnall and D P MacKenzie for the Plaintiff G E Sleven for the First Defendant
B J J Sheehan and S D Balloch for the Second Defendant
Judgment:
24 November 2022
JUDGMENT OF GENDALL J
Introduction
[1] This proceeding concerns the estate of Donald Gordon Payne (Donald), who died on 22 December 2020. In his last will, dated 16 March 2017, (the 2017 Will) Donald appointed his son, the first defendant Steven Payne (Steven), as executor of his estate, and gave all his estate to Steven.
[2] Donald’s estate primarily comprised two residential properties, together with monies held in a bank account. As at 15 August 2022, that estate was valued at approximately $4,070,000.
SANDRA CHIN (PAYNE) v STEVEN PAYNE as the executor of the estate of Donald Gordon Payne [2022] NZHC 3095 [24 November 2022]
[3] Donald had two children, Steven, born in 1966, and the plaintiff, Sandra Chin (née Payne) (Sandra), born in 1961. Donald left nothing to his daughter Sandra in the 2017 Will.
[4]Sandra brings this proceeding under three heads of claim:
(a)Firstly, Sandra seeks Court-ordered provision from Donald’s estate under the Family Protection Act 1955 (the FPA).
(b)Secondly, Sandra also makes a claim that earlier wills made by Donald and his late wife Peggie Payne (Peggie), dated 13 February 2009,1 were mutual wills in accordance with s 30 of the Wills Act 2007.
(c)Finally, Sandra brings a third claim alleging that one of the properties owned by Donald at the date of his death (and in which she has been residing as her home rent-free for the last 40 years) was held on constructive trust for her in its entirety.
Background facts
[5] In the early days when Sandra and Steven were young, all parties seem to accept that the Payne family was a loving one. In his affidavit evidence, Steven has described it in the following way:2
My family was a loving and warm family and we were close to our extended family on my Mother’s side as Donald’s family were all living overseas.
[6] Donald was an electrician and started his and Peggie’s business, known as Don Payne Ltd, in 1974, when the two children were young.
[7] Initially, the family lived in their family home at 3 Dominion Park Street, Johnsonville (the Johnsonville property), a home which the parents had built. In 1978, the family moved from the Johnsonville property to 58 Moana Road, Plimmerton (the Plimmerton property). Sandra then left home in around 1982, at the age of 21, to be
1 Donald’s 2009 will I refer to hereafter as “the 2009 Will”.
2 Affidavit of Steven Payne, 14 September 2021, at [9].
with her first husband. Sandra, having moved into the Johnsonville property around 1982, has lived there ever since rent-free, although it seems largely she has paid the rates and at times occasionally the insurance premiums on the property.
[8] After Sandra’s first marriage ended, she lived in the Johnsonville property on her own until in 1995 she met and began a relationship with Trevor Chin (Trevor). She and Trevor married in 1999.
Sandra maintains that Donald became estranged from her after she met Trevor in 1995. In her evidence, Sandra says he did not speak to Trevor again, nor did he attend Sandra’s wedding to Trevor in 1999. On this, Steven confirms in his evidence that unfortunately “Donald did not like Trevor from the outset” and that “Donald never discussed with me why he didn’t go to Sandra’s wedding but I can only assume it was due to his dislike of Trevor.”3 Sandra maintains that the reason why Donald disinherited her entirely is the extremely sad and abhorrent fact that it related, essentially, to Donald’s racism, Trevor being Chinese. On this aspect, however, Steven disagrees and maintains his father was not racist. He does explain in his evidence, however, that Donald “had very little filters”, and suggested that because of Donald’s age, “he was entitled to hold his own views as to whom he liked and whom he disliked.”4
[9] Sandra says that her own relationship with her brother Steven fell apart in 1996 because of what she says were racist comments Steven had made about Trevor then, which she had overheard and challenged Steven on. This occurred prior to Sandra and Trevor’s marriage in 1999. Steven and his wife Suzanne, along with Donald, did not attend that wedding, although Peggie did.
[10] What does appear clear from the evidence, however, is that, despite her estrangement from her father Donald, Sandra remained close to her mother Peggie right up to at least 2006.
3 At [30]–[31].
4 At [30]–[31].
[11] Sandra says her allegation that Donald held racist views is not an attempt to attack Donald’s character, but is, simply and somewhat sadly, the reality as to why she and her father became estranged. This estrangement, Sandra maintains, was caused by Donald for no good reason. In her evidence, Sandra says “[t]he sad truth is that my father did not like the fact that I was marrying a man of Asian descent.”5 She also stated:6
In addition, our father’s oldest brother (Vic) was married to a woman of Malaysian descent. All through my childhood I remember my father referring to his sister-in-law as a “wog”. He had nothing to do with his brother or his wife. To me, my father always came across as racist.
[12] Independent evidence is before the Court in the affidavit of Ms Linda Phelan (Ms Phelan), provided in support of Sandra’s claim.7 Ms Phelan says she has known Sandra (whom she refers to as Sande) since about the late 1980s/early 1990s, having known Trevor for a short time before and right up to his death in 2014. Ms Phelan deposes that she is half Malaysian/half Irish and that after she had met Trevor and Sandra she became good friends with them from the early 1990s. She states in her affidavit, however:8
… I was very much aware of Sande’s father’s racism. He was shocking. He was racist, without any doubt. Being half-Asian myself I was very conscious of it …
… what was extremely sad to observe was that as soon as Sande started dating Trever her father disowned her. Sande’s mother was lovely and if it was not for her then Sande would have had an even harder time from her father about her relationship with Trevor.
Sande’s father’s racist attitude had a significant impact on Trevor. From conversations I had with Trevor when he was alive, I know that he thought about breaking off his relationship with Sande due to her father’s prejudice and the effect it had on Sande. He mentioned this to me several times and we discussed it. Sande’s mum was okay with Trevor, but she almost had to choose between her husband and Sande. It was a sad situation. Trevor did not want Sande’s father’s racism (against him) to affect Sande.
[13] Although in his evidence Steven endeavoured to reject any suggestion that his father was racist, this evidence of Ms Phelan appears largely uncontested. It would
5 Affidavit of Sandra Chin, 7 July 2021, at [12].
6 Affidavit of Sandra Chin in reply, 17 September 2021, at [9].
7 Affidavit of Linda Phelan, 24 September 2021.
8 At [3]–[5].
seem also to support Sandra’s evidence that Donald disowned her because of Trevor’s ethnicity.
[14] Sandra and Trevor were married in 1999. The wedding was attended by Peggie, who, it seems, had made Sandra’s wedding dress. It appears clear, however, in particular from the wedding photos before the Court, that Donald did not attend the wedding, nor did Steven and his wife. Those photos show Peggie and her sister Bettie at the wedding, including one where they are embracing Trevor.
[15] And, as to the Johnsonville property, Sandra and Trevor continued to live there after the wedding until, sadly, Trevor was diagnosed with motor neurone disease (MND) in late 2010. In 2012 he stopped work because of this illness and Sandra nursed him until Trevor died in July 2014. From that point Sandra was left a widow. Sandra says that none of her immediate family attended Trevor’s funeral, and that neither Donald nor Steven reached out to repair their respective estrangements with her, even in this time of need on her part.
[16] So far as her mother Peggie is concerned, Sandra in her evidence says that she and her mother remained close and that she called Peggie almost every night after she left home at the age of 21. She explained in her evidence that despite Donald’s feelings towards Trevor, she remained close with her mother, stating:9
Mum, Trevor and I used to go out for lunches and shopping most Saturdays. I always considered I had a good relationship with my mother. We did normal mother daughter things …
[17] It is clear also that Sandra was close to Peggie’s sister, her aunt Bettie. Sandra was the sole beneficiary of Bettie’s estate after she died on 22 September 201610 and inherited from her aunt’s estate a total of approximately $590,000.
[18] Sandra in her evidence says that her relationship with her mother Peggie became more difficult from 2006 and that it was essentially lost from that point.
9 Affidavit of Sandra Chin, 7 July 2021, at [15]–[16].
10 This was two weeks before Peggie died on 7 October 2016, she at that time being totally affected by Alzheimer’s disease.
Peggie, it seems, first started experiencing the symptoms of Alzheimer’s disease around that time. She was finally diagnosed with Alzheimer’s in 2014.
[19] In March 2007, Donald stepped back from his electrical business, where Steven had worked from his early days as an apprentice straight from school. Donald and Peggie then transferred the business to Steven (on favourable terms, according to Sandra). Steven disputes that the business was in any way sold at an undervalue. What is clear, however, is that of the total purchase price for the business of around $92,000, Donald and Peggie at that point gifted to Steven $50,000.
[20] Sandra also maintains in her evidence that sadly for her, from around 2006 Donald prevented her from having much to do with Peggie, who was beginning to be unwell with early Alzheimer’s disease, and this continued from that point on.
[21] Donald and Peggie changed their wills in February 2009, resulting in the 2009 Wills. They saw their solicitor at the time, Mr Ken Sampson, who explained their reasoning in a letter addressed to them dated 10 February 2009.11 Sandra contends that from the reasons provided in that letter, it is clear that Peggie must already have been suffering from the effects of her yet-to-be-diagnosed Alzheimer’s disease. She points in this respect to the following comments made in the letter as to the reasons for explaining the bequests they had made in these 2009 Wills, namely that “[y]ou have had very little to do with your daughter Sandra for over 20 years” and that “Sandra has not assisted you in any way since you left Dominion Park Street either personally or with your business.” Sandra maintains this was simply wrong and quite offensive to her.
[22] Nevertheless, however, both of the 2009 Wills still provided an inheritance for Sandra, namely that she was to receive the Johnsonville property, together with
$100,000. The letter from the lawyer also explained:
You consider even though Sandra is your daughter that you have provided a roof over her head for 20 years without rent and she would be left that property in your wills together with $100,000.00 for living expenses.
11 Letter from Ken Sampson to Donald and Peggie regarding their draft wills for approval (10 February 2009) [the 10 February 2009 letter].
[23] As I have noted above, Peggie died some seven years later on 7 October 2016, at which time it seems the full effect of Alzheimer’s disease had taken hold. Despite what Sandra maintains are the promises made by her parents around their 2009 Wills, in March 2017, some five months after Peggie’s death, Donald changed his will to the 2017 Will, in which he disinherited Sandra entirely. The impact of Donald doing this, it is clear, is that he effectively caused Peggie to also not recognise and to totally disinherit Sandra too.
[24] Donald appears to have explained his reasoning relating to the 2017 Will in a Memorandum of Wishes he signed on 16 March 2017. In that Memorandum of Wishes, the only additional reason given for Sandra’s disentitlement in his new will, from the lawyers’ earlier reasons in the 10 February 2009 letter explaining the 2009 Wills, was that this disentitlement also related to Sandra’s inheritance from Aunt Bettie. Donald had otherwise repeated all the reasons, almost verbatim, that he had given for the 2009 Will.
[25] So far as Sandra’s present position is concerned, from the evidence before the Court it is clear she now suffers from primary lateral sclerosis (PLS), a form of MND. Although she was only finally diagnosed in March 2019, she was required to stop working in September 2017 due to this illness, and was unable to work again. Sandra explains in her evidence that:12
… [PLS] is a rare, neuromuscular disease that affects the strength and flexibility of my legs. It is a progressive disease. Eventually I will be unable to walk and will need full-time care …
[26] Sandra in her evidence also contends that her health outlook is bleak and the future grim for her. This seems to be confirmed in records from her general practitioner which are before the Court in evidence.
[27] From a financial perspective, the evidence before the Court also shows that Sandra currently receives a benefit of $359 per week plus a winter energy payment of
$20.46, but otherwise she is living off her modest capital reserves including from her inheritance from her aunt Bettie. From this evidence, it seems that as at 31 May 2022,
12 Affidavit of Sandra Chin, 7 July 2021, at [20].
Sandra has available cash of $132,952, with investments (including KiwiSaver) of
$186,951. She says she has modest personal effects, which have an insured value of
$300,000. She also bears the cost of this proceeding. In short, she says she is generally running out of money. She rejects any suggestion that she is being wasteful in managing her limited reserves, having been required to live off her capital for some years up to now.
Issues
[28]As I have noted above, Sandra brings three claims:
(a)Firstly, under the FPA, in which she is seeking Court-ordered provision from Donald’s estate.
(b)An alternate and additional claim that the earlier 2009 Wills made by Donald and Peggie were mutual wills under s 30 of the Wills Act.
(c)A further alternate and additional claim that the Johnsonville property is held in trust for her as beneficiary under a constructive trust relating to this property.
[29] Before considering Sandra’s claim under the FPA, it is appropriate that I should first turn to her second and third claims, being the claims brought under the Wills Act and as beneficiary under a constructive trust. I now do so.
Second cause of action – claim under s 30 of the Wills Act 2007
[30]Section 30 of the Wills Act relevantly provides:
30 Mutual wills
(1)This section applies when—
(a)2 persons make wills in which each—
(i)disposes of property on which the 2 persons have agreed; and
(ii)makes the disposition in a way on which the 2 persons have agreed; and
(b)each promises the other that he or she will not—
(i)revoke the will without making another will that keeps the agreement in the same or a better way; or
(ii)change the will in a way that fails to keep the agreement in the same or a better way; or
(iii)dispose, during his or her life, of some or all of an item of property that the will specifically disposes of; and
(c)the first of them to die (person A) keeps the promise; and
(d)the second of them to die (person B) does not keep the promise.
(2)A person who would have received a benefit from person B’s will if person B had kept the promise may claim from person B’s estate any part of the benefit that person B’s estate does not provide.
…
[31] The leading case on the doctrine of mutual wills is Lewis v Cotton where the Court of Appeal said:13
[48] Any such commitment is unlikely and undesirable in modern times, which explains why true “mutual wills” are now so very infrequently found. Indeed, they have never been at all common. There are preferable ways of achieving the intended result without the unfortunate inflexibility which might, if found to exist, fail to allow for significant changes in circumstances, including the impost of changes to duties and taxes.
[49] As a result, the Courts are very slow to find “mutual wills” just because the parties have made corresponding wills. We agree with Anderson J’s view about the assumption normally underlying the wills of married couples in this country.
[32] At first instance in that case, Anderson J had expressed this view in the following way:14
At the time of the wills and until appropriate new wills might be made in the light of the circumstances, the provision would be as the wills described. This is the assumption which probably underlies all wills made by married couples at the same time after discussing their testamentary plans. It is not a tenable proposition that in so doing they intended irrevocability.
13 Lewis v Cotton [2001] 2 NZLR 21 (CA).
14 Re Cotton (dec'd) Lewis v Cotton [2000] NZFLR 799 (HC) at 809.
[33] The evidence in the present case indicates that Donald and Peggie made corresponding wills in 2009. These provided that the surviving spouse respectively would take all their partner’s estate but that on the death of the survivor, irrespective of who died first, Sandra would receive the Johnsonville property, together with
$100,000 in cash, and Steven would receive the Plimmerton property and various chattels, with the residue going directly to Steven’s children when they reached the age of 20.
[34] As I see the position, the fact that the 2009 Wills disposed of Donald and Peggie’s estate, including their residue in an agreed manner, does not make these wills “mutual” or irrevocable. It is clear they were corresponding wills. There was nothing expressed in the wills, however, nor any documentation accompanying them, nor any other independent evidence, to indicate that Donald and Peggie intended their 2009 wills would be irrevocable, meaning that the survivor would have no opportunity at all to revisit their testamentary intentions had they wished to.
[35] The question to be answered in determining the Wills Act claim here is whether Donald and Peggie each made an enforceable promise to the other, whether at the time of making their corresponding wills or subsequently, that neither of them would, if they survived the other, change their will to the disadvantage of their agreed beneficiaries.
[36] As to evidence of the commitment or promise of irrevocability in this case, Sandra maintains the promise and agreement between Donald and Peggie is evident from a letter that Donald and Peggie’s solicitor wrote to them in 2009 when the wills were made. Sandra contends that alleged agreement is referred to twice in the solicitor’s letter:15
(a)firstly, that: “You consider even though Sandra is your daughter that you have provided a roof over her head for 20 years without rent and she would be left that property in your wills together with $100,000.00 for living expenses”;16 and
15 The 10 February 2009 letter, above n 11 (emphasis added).
16 At [4].
(b)secondly, that: “It is your son Steven through his hard work and efforts working in the business and promoting the Don Payne Electrical business that have resulted in you being able to save and establish your retirement savings and investments, which apart from the house and money to Sandra you wish to leave to Steve’s children Kaitlin and Jack if they survive you.”17
[37] Sandra also contends that the promise was communicated to her by Peggie many times before then and afterwards. As Sandra says in her evidence:18
I always believed that I would inherit my parents’ house at 3 Dominion Park Street, which I have lived in since I think around 1982. This is because whenever I would speak to my mother about any form of ordinary maintenance that was required for the house, such as rotten cladding or roof repairs, she would say that it would be mine when she and my father were gone so I should simply do what needs to be done and pay for it. That [is] what Trevor and I did.
In terms of a specific example, the best that I can recall is when my mother was working for Trevor and me at the farm one day, probably in about 2005. I mentioned to her that the bathroom needed renovating as it was getting mouldy and damp. Her comment to me then was that, because the house was going to be mine one day, I could do what I liked to upgrade it as long as I paid for it. When I discussed this with Trevor we decided to do it once and do it right to give us a really nice warm bathroom. We replaced all the Gib board with new GIB Aqualine and insulated the walls as well. I have also invested a lot of money in the back garden. I simply would not have upgraded the property if I did not believe that I would eventually own it.
Also, before Aunt Betty died she told me [at some point between 2014 and 2016] the house would be mine. She told me that my parents had both left me with the house and some money in their wills …
[38] According to Sandra, that promise was hardly surprising given that she had lived in the Johnsonville property since 1982. It was and is her home. Until Donald died, she says she had no reason to believe her security of tenure at the Johnsonville property was somehow in doubt.
[39] Before me, Sandra maintained that undoubtedly there was an agreement between Peggie and Donald that she would receive the Johnsonville property and
$100,000, and that, in terms of the requirements of s 30 of the Wills Act, it must be
17 At [5].
18 Updating affidavit of Sandra Chin, 16 August 2022, at [3]–[5].
seen as not contentious that Peggie died keeping the promise but Donald died without doing so.
[40] While I accept Sandra may have understood from her discussions with Peggie that there was a mutual expectation or desire between them that Sandra would receive the Johnsonville property, there is little before me to suggest Donald shared that same view to an extent that would never change.19
[41] The 2009 Wills do not record any promises not to subsequently alter or revoke them. They were prepared by a solicitor experienced in the area who could very easily have added a sentence confirming that these were mutual wills not to be altered or revoked. That solicitor, as I understand it, had acted for Donald and Peggie for some time, and he would have been duty-bound to record such promises if they had been made. The solicitor’s reporting letter before the Court I have referred to above records the reasons for the unequal distribution they each made. However, it does not say the wills were “mutual wills” or that they were unusual in any way restricting the usual ability of Donald and Peggie to change those wills if they wished to do so.
[42] Evidence from Sandra of statements Peggie had made to her that the Johnsonville property would eventually be hers in my view is also not sufficient here to establish that she and Donald had taken the unusual step of making “mutual wills”.
[43] Moreover, in his evidence before the Court, Donald’s later solicitor, Mr Damien Smith, said that when he took instructions in 2017 for Donald’s new will, Donald assured him that no agreement had ever been made to preserve the benefit in favour of Sandra conferred by his 2009 Will, nor that the earlier will would never be changed in any way.
[44] I conclude here therefore, by a reasonably clear margin, that this is not a case where the 2009 Wills of Donald and Peggie could properly be seen as “mutual wills”. It is not the situation that this is a case of agreed irrevocability in respect of any benefit for Sandra or any other beneficiary under the 2009 Wills. There is no plausible
19 See McNeish v McArthur [2019] NZHC 3281 at [24].
evidence here that in 2009 or subsequently Donald and Peggie agreed to restrict their later testamentary freedom in any real way.
[45] It necessarily follows Sandra’s claim under s 30 of the Wills Act must be dismissed. I now do so.
Third cause of action: constructive trust claim
[46] As a second alternative and additional claim to Sandra’s principal FPA claim here, she contends that the Johnsonville property has been (and is being) held on constructive trust for her. This trust is said to have arisen because:
(a)Sandra has occupied the Johnsonville property for some 40 years;
(b)she has at times expended her own money to pay rates and insurance premiums and to maintain and upgrade this property on the understanding that it was hers and she would certainly inherit it; and
(c)Donald and Peggie both provided in their respective 2009 Wills that she would inherit the Johnsonville property.
[47] Sandra maintains Donald has breached this constructive trust by leaving the property to Steven instead of her in his 2017 Will. By way of remedy, Sandra seeks an order that Steven, as Donald’s personal representative and executor of his estate, transfer the Johnsonville property to her absolutely.
[48] The leading case on institutional constructive trusts is Lankow v Rose.20 In that case, the Court of Appeal said there are two broad requirements to establish a constructive trust of this kind:21
(a)firstly, that the plaintiff contributed in more than a minor way to the acquisition, preservation or enhancement of the defendant’s assets in question, whether directly or indirectly; and
20 Lankow v Rose [1995] 1 NZLR 277 (CA).
21 At 282.
(b)secondly, that in all the circumstances the parties must be taken reasonably to have expected that the plaintiff would share in the assets in question as a result.
[49] More recently, in Wakenshaw v Wakenshaw the Court of Appeal summarised the applicable principles relating to claims of constructive trust based on contributions to property.22 The Court said that a person who makes such a claim must establish that:23
(a)more than a minor contribution was made to the acquisition, preservation or enhancement of the defendant’s assets, whether directly or indirectly;
(b)in all the circumstances, both parties must be taken reasonably to have expected that the claimant would share in the assets as a result;
(c)there must be a causal relationship between the contributions and the acquisition, preservation or enhancement of the defendant’s assets; and
(d)the contributions that are made must manifestly exceed any benefits that the claimant derives from the arrangement.
[50] In this case, Mr Chisnall, counsel for Sandra, maintains that the focus of Sandra’s claim to a constructive trust here rests on principles of unconscionability. He suggests that any denial of Sandra’s claim to a constructive trust interest in the Johnsonville property would be unconscionable in equity and the Court should declare that trust based on all the evidence which is before it.
[51] In this respect, Sandra’s position is that her evidence shows clearly that Peggie always promised the Johnsonville property to her. Sandra points out this is recorded in the 2009 Wills of both Peggie and Donald. Sandra maintains that she had a real expectation to this property throughout, and that such an expectation was entirely reasonable in circumstances where she has lived at the property, and looked after and treated it as her home, for some 40 years.
[52] Sandra says too that her contributions to the Johnsonville property have been significant. Her evidence confirms that she has spent sizeable sums on the property,
22 Wakenshaw v Wakenshaw [2017] NZCA 252, [2018] NZAR 532 at [25].
23 At [25].
renovating it and making it more comfortable to live in. She maintains she simply would not have done so had she not believed (including on the basis of having been told) that she was one day to inherit it as her own. On this aspect, in her unchallenged evidence, Sandra deposes:24
… I have made numerous improvements to the house over the years. For example I have installed gas to the property (including a gas hot water system, gas heating and a gas oven), converted the old hot water cupboard into a pantry, installed a new log burner, re-wired the house, added a new deck (measuring approximately 30m2) and carried out landscaping work (including a smaller deck and paving) and revamped the bathroom. Although I do not have receipts for all this work, I estimate that the total cost is in the vicinity of
$150,000. My mother knew that I made these improvements at my cost. Whenever I would raise the fact that I was paying to improve her house, my mother would tell me not to worry as I would get my inheritance, so would be able to recover it then.
[53] Sandra maintains, therefore, that her contributions are significant and the benefit she has received from living in the Johnsonville property rent-free over the period is not manifestly in excess of those contributions. Sandra also argues that she has undoubtedly acted entirely to her detriment in contributing to the property as she has done, if now she is denied any interest to it (a matter she says was seen as being of some significance by the Court of Appeal in Lankow v Rose).
[54] In his evidence in response, Steven challenges some of Sandra’s claims relating to the Johnsonville property, which I deal with in more detail below.
[55] What is clear to me on the evidence is that any prior expectation on Sandra’s part relating to the Johnsonville property would necessarily have been created by comments made to her by Peggie about her eventually inheriting the house. It might very well have followed from this that she was thus expected to pay for maintenance and any improvements that Peggie and Donald might have wished to make to the property, or, indeed, that Sandra herself intended to make.
[56] Peggie’s expectations in this respect were evidently shared by Donald in around 2009 because Sandra’s inheritance of the Johnsonville property was recorded in the 2009 Wills. That expectation, however, could only have been that Sandra was
24 Affidavit of Sandra Chin in reply, 17 September 2021, at [25].
expecting the inheritance to occur upon the death of her parents, and perhaps also subject to any further change in circumstances that might occur. I note there is also no evidence before the Court of any kind of Donald ever saying anything to Sandra himself, or acting in any other particular way which would create in Sandra an expectation that the Johnsonville property was hers. I consider this might be understandable too in light of the clear estrangement between Donald and Sandra over at least the last 25 years of his life.
[57] Clearly, in 2009, when Donald made his 2009 Will, he did intend that eventually the Johnsonville property would on his and Peggie’s death go to Sandra. Mr Slevin, as counsel for the estate, suggests however that Donald, firstly, was at liberty to change his mind about that aspect, and secondly, that he did so after Sandra received her substantial inheritance from her aunt Bettie. Absent any conduct by Donald that would make it unconscionable for him to have done so in light of Sandra’s contributions to the property, Mr Slevin contends there cannot be any basis for this Court to impose a constructive trust over the property for Sandra’s benefit. Mr Slevin adds too that there is no basis on the evidence to suggest that Donald encouraged Sandra to expend substantial sums of her money on the property at all, nor that he created any expectation that in response to this alone she would absolutely acquire the property in return. He notes too that there is no evidence, firstly, that Donald knew of any particular expenditure made on the property, and secondly, that with that knowledge, Donald simply stood by, accepting that Sandra would acquire an interest in the property as a result of it. Mr Slevin also places some emphasis on the fact of Sandra and Donald’s estrangement. He says this negates any suggestion that Sandra’s contributions to her family relationship with Donald could support a claim for any interest on her part in the property, in contrast to the simple arrangement that was the situation in reality, namely that she would occupy it rent-free, paying rates and possibly insurance, and making certain payments towards maintenance and any minor improvements she wished to make.
[58] What is clear here is that the parties accept it is common ground that Sandra did make some contributions to the Johnsonville property, although the extent and value of those contributions is disputed. In her evidence Sandra estimates that the total cost of significant improvements she made to the property, in addition to normal rates
and insurance payments, was in the vicinity of $150,000. In response, Steven says the invoices Sandra has put in evidence show total expenditure of some $73,000, of which more than $45,000 was spent simply on landscaping and garden work. Mr Slevin suggests these figures would need to define the upper limit of any contributions-based claim by Sandra here.
[59] Further, as the Court of Appeal has emphasised, any contributions made to a property must manifestly exceed any benefits that a claimant derives from their arrangements with the legal owner of the property. Here, Steven’s position is that Sandra’s expenditure on the Johnsonville property was manifestly for her own benefit and that benefit was enjoyed by her through her ongoing occupation of the property. He suggests, too, that it is doubtful whether her expenditure has enhanced in any substantial way the value of the Johnsonville property, given, as he claims, it appears not to have been properly maintained and, further, that the landscaping undertaken might in any event require more ongoing investment simply to maintain it.
[60] As to the value of benefits Sandra has received under the 40-year rent-free occupation arrangement reached with her parents, Mr Slevin suggests the evidence before the Court shows this is assessed at a value of some $1.4 million. It is said this vastly exceeds the value of the property, let alone Sandra’s contributions to it. Mr Slevin maintains too that even a current weekly rental of $600 per week for the property since Donald’s death would by itself amount to approximately $46,800 by way of benefit to Sandra.
[61] On all these aspects, I agree that Sandra’s rent-free occupation of the Johnsonville property for some 40 years must mean that the significant benefit she has received from her parents over the years is likely to have significantly exceeded the contributions she made to the property.
[62] I do accept without question however that, in living in the Johnsonville property for some 40 years as her home, Sandra has a particular affiliation with, and attachment to, this property. Given her lengthy period of time of occupation, it does seem reasonable that an expectation on her part of inheriting this property on the death of her parents was appropriate. Notwithstanding this, however, this is a somewhat
unusual case. Certainly, Sandra has received the significant benefit of rent-free occupation of this property for a long period of time.
[63] By a fine margin, I find that Sandra’s constructive trust claim here must fail. This claim largely restates her claim under s 30 of the Wills Act. It will be apparent from the final outcome I have reached in this case, however, that this conclusion will make little difference to the ultimate position. Nevertheless, and with some general reluctance, noting overall equity concerns here, I dismiss Sandra’s claim to any constructive trust interest over the Johnsonville property.
First cause of action — Family Protection Act 1955 claim
[64]I now turn to consider Sandra’s primary claim under the FPA.
[65] The FPA allows the Court a discretion to make an order for the provision of proper maintenance and support of certain family members where a deceased has failed to do so.
[66]Section 4(1) of the FPA provides:
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.
[67] The broad principles applying to claims under the FPA are well-established. The starting position, as recognised in the decision of the Court of Appeal in Williams v Aucutt, is that testamentary freedom remains, except to the extent that there has been a failure to make proper provision for the maintenance and support of those entitled to it.25
25 Williams v Aucutt [2000] NZLR 479 (CA) at [33].
[68] In summarising the assessment of whether a will-maker has breached his or her moral duty, the Court of Appeal in Williams v Aucutt adopted the observations from Little v Angus, an earlier decision of that Court, as follows:26
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.
[69] From Williams v Aucutt, it is also clear that, in considering concepts of maintenance for and support of a claimant, the notion of support is wider than that of maintenance.27 It is also clear that supporting a family member’s path through life is not simply a matter of financial provision but also requires recognition of a sense of belonging to a family.28 Where the size of an estate is more than sufficient to meet other needs, then a provision so small as to leave a justifiable sense of exclusion from participation in the family estate might not amount to proper support for that family member.29
[70] Subsequent authorities have again identified key principles that apply in relation to claims under s 4 of the FPA. A helpful summary from the decision of Randerson J in Vincent v Lewis explains:30
(a)The test is whether, objectively considered, there has been a breach of moral duty by [the deceased] judged by the standards of a wise and just [will-maker].
(b)Moral duty is a composite expression which is not restricted to mere financial need but includes moral and ethical considerations.
(c)Whether there has been such a breach is to be assessed in all the circumstances of the case including changing social attitudes.
(d)The size of the estate and any other moral claims on [it] are relevant considerations.
26 At [35], quoting Little v Angus [1981] 1 NZLR 126 (CA) at 127.
27 At [52].
28 At [52].
29 At [52].
30 Vincent v Lewis [2006] NZFLR 812 (HC) at [81].
(e)It is not sufficient merely to show unfairness. It must be shown in a broad sense that the applicant has need of maintenance and support.
(f)Mere disparity in the treatment of beneficiaries is not sufficient to establish a claim.
(g)If a breach of moral duty is established, it is not for the court to be generous with the testator’s property beyond ordering such provision as is sufficient to repair the breach.
(h)The court’s power does not extend to rewriting a will because of a perception it is unfair.
(i)Although the relationship of parent and child is important and carries with it a moral obligation reflected in the Family Protection Act, it is nevertheless an obligation largely defined by the relationship which actually exists between parent and child during their joint lives.
[71] It is clear, too, from s 11 of the FPA that the Court may have regard to the deceased’s reasons for the disposition the deceased made in their will and may receive such evidence of those reasons (whether or not admissible in a court) as it thinks fit.
[72] On this aspect, as I have noted at [24] above, Donald also signed a Memorandum of Wishes along with his final will, the 2017 Will. Steven contends this specifically records the reasons why Donald deliberately left Sandra out of his will. This Memorandum of Wishes relevantly states:
2.1.I have deliberately left my daughter Sandra Payne out of my Will. I acknowledge I have been advised, Sandra may be able to make a claim under the Family Protection Act 1955 or the Wills Act 2007. The reasons I believe I have met my moral duty to my daughter are as follows:
2.1.1.I have had very little to do with my daughter Sandra for almost 30 years;
2.1.2.When we moved out of the property at 3 Dominion Park Street and shifted to Plimmerton, My late wife and I let Sandra move into the property;
2.1.3.Since Sandra shifted into Dominion Park Street, apart from her paying the council rates and insurance on the property for about 28 years. Even if the rates equate to some $30,000.00 in outgoings that is offset by the fact that we did not charge Sandra rent for 28 years and at a modest rental of say $250.00 per week, that equates to some $364,000.00.
2.1.4.It is our son Steven, through his hard work and efforts working in the business and promoting the Don Payne Electrical business, that have resulted in me being able to save
and establish my retirement savings and investments and I wish to leave a legacy to Steven’s children Kaitlin and Jack;
2.1.5.Sandra has not assisted me, nor did she assist her mother, in any way since we left Dominion Park Street, either personally or with my business; and
2.1.6.Sandra was the sole beneficiary of her aunt Bettie Mary Welsh’s estate, which I believe was worth approximately
$600,00[0].00 from house sale at Waikanae plus contents.
[73] As an aside, however, I simply repeat at this point that the reasons outlined in Donald’s March 2017 Memorandum of Wishes are almost identical to the reasons recorded in a letter to both Donald and Peggie from their then lawyer, Mr Sampson, dated 10 February 2009 (referred to at [24] above), when they signed their earlier 2009 wills. The only difference appears to be that Mr Sampson’s letter does not record details about Sandra’s inheritance from her aunt Bettie.
My analysis
[74] I begin my consideration here with the acknowledged estrangement between Sandra and her father Donald. Donald mentioned this in his March 2017 Memorandum of Wishes noted above, where he stated he had had very little to do with his daughter Sandra for almost 30 years and she had not assisted either him or Peggie in any way since they left the Johnsonville property.
[75] The fact of the long-standing estrangement between Sandra and Donald is not in any way contested. The reasons for that estrangement, however, are hotly disputed.
[76] So far as the estrangement alleged between Sandra and her mother Peggie is concerned, the evidence of Sandra and her friend Ms Phelan before the Court is clear that there was no estrangement of any kind between these two until sometime after 2006. Certainly it does seem clear that Sandra was very close to her mother, at least up until this time, and probably thereafter. Sandra accepts that this changed when Peggie became ill. She says, however, that this only occurred because of the strong influence exerted on Peggie by Donald.
[77] Despite this claim, what is clear is that in 2009 when Donald and Peggie entered into new wills, both at that time provided in those wills for a continuing benefit
for Sandra, giving her the Johnsonville property and $100,000 on the death of the survivor. It was not until after Peggie’s death that these testamentary arrangements were altered. This was when Donald, some five months after his wife’s death, altered his will to disinherit Sandra entirely.
[78] Sandra disputes, therefore, that she was at any time actually estranged from her mother Peggie, or that any significant change in their earlier relationship that might have occurred was in any way brought about by actions on her part.
[79] So far as the estrangement between Donald and Sandra is concerned, Sandra’s position in her evidence is that Donald was extremely racist. Largely, she maintains this caused his estrangement from her in 1996 when she began her relationship with and later (in 1999) married Trevor, who was Chinese. This allegation of racism on the part of Donald is disputed by Steven. No conclusive and definitive finding on that aspect is possible here, particularly given that Donald is not able to give his own evidence on this allegation. Nevertheless, what is plain is that from around that point in 1996, Donald had little to do with his daughter Sandra, although it is clear that he and Peggie continued to allow Sandra to live rent-free in the Johnsonville property after that time and for many years thereafter from her early twenties right up to the time of their respective deaths.
[80] What is also not disputed is that Donald and Sandra’s estrangement from that time in the mid-1990s is reflected in Donald’s non-appearance at Sandra’s wedding with Trevor in 1999.
[81] It must also be a matter of some concern if Donald did indeed endeavour from around 2006 to change what was a close relationship between Sandra and her mother Peggie, especially when Peggie became ill. There is no unequivocal evidence of this before the Court however, although some possible aspects supporting this position do arise. Nevertheless, I will leave this aspect on one side.
[82] So far as this estrangement aspect is concerned, Bill Patterson in Law of Family Protection and Testamentary Promises makes the following comments:31
4.17 Estrangement not amounting to disentitling behaviour
Disentitling behaviour may be a complete bar to an applicant’s right to relief but there are circumstances short of disentitling behaviour that, while not precluding the relief entirely, have an adverse effect on the quantum of such relief. A common situation is an estrangement between the applicant and the deceased. In some cases the estrangement has resulted almost solely from the actions of the deceased and either no fault can be attributed to the applicant or such fault as there may be is completely overshadowed by the greater fault of the deceased. In this type of case the moral duty of the deceased may be increased rather than reduced so as to demonstrate contrition for his or her neglect …
The variety of circumstances that may arise are, of course, very wide, and the way in which the court exercises its discretion will depend to a large extent on its assessment of where fault, if any, lies. At one end of the scale there will be those cases where the deceased has been almost entirely responsible for the estrangement and at the other end those cases where the applicant has acted in an “unfilial” way. Between these two extremes there will be a wide range of circumstances and in many cases it will be found that there has simply been a “loosening of the bonds” caused not so much by a serious or violent disagreement but as the inevitable result of disinterest or perhaps as the unintended result of the parties making their own way in life …
[83]On these aspects, Hardie Boys J in Croswell v Jenkins usefully said:32
… 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 …
[84] On this threshold question of whether a breach of moral duty has occurred here, Mr Chisnall, counsel for Sandra, states from the outset that Donald caused the estrangement from Sandra and made no attempts at any time to “exercise his particular ability and responsibility to heal it” and therefore unquestionably has breached his duty here. This breach of moral duty on Donald’s part, be it because of his allegedly racist attitudes or otherwise, Sandra maintains is a particularly egregious one here,
31 Bill Patterson Law of Family Protection and Testamentary Promises (5th ed, LexisNexis, Wellington, 2021) (footnotes omitted).
32 Croswell v Jenkins (1985) 3 NZFLR 570 (HC) at 575.
especially considering the fact that Donald knowingly changed his will shortly after Peggie died to ensure that Sandra had no recognition by way of inheritance either from Donald or, indeed, from her mother Peggie.
[85] That breach of duty, according to Mr Chisnall, was effectively acknowledged on behalf of Donald’s estate following his death when, in February 2021, lawyers for the estate wrote to Sandra asking her to enter into a deed of family arrangement, whereby she would retain a life interest in the Johnsonville property and no more in return for a waiver of any claims she might make against Donald’s estate.
[86] Sandra’s position, too, is that there is no question here of any disentitling conduct on her part, given her evidence of continued attempts to maintain a relationship with her mother Peggie, even well after 2006, and her other rebuffed attempts to re-establish some arrangement with both her parents, which were met negatively with a vehement and angry response from her father.
[87] From all the evidence before me I am satisfied that, despite the long-time provision of a rent-free home for Sandra by both Peggie and Donald, there has been a clear breach of moral duty on Donald’s part in his prompt decision following Peggie’s death to change his will to disinherit Sandra entirely.
[88] I reach this conclusion also on the basis of what is a clear failure by Donald here to recognise Sandra’s familial connection and belonging to the family as well as issues over possible financial needs here which Sandra has.
[89]As to the familial relationship in this case, the Court of Appeal in
Flathaug v Weaver said:33
The relationship of parent and child has primacy in our society. The moral obligation which attaches to it is embedded in our value system and underpinned by the law. The Family Protection Act recognises that a parent’s obligation to provide both the emotional and material needs of his or her children is an ongoing one.
33 Flathaug v Weaver [2003] NZFLR 730 (CA) at [32].
[90] It is clear that these claims by children are often placed by the Court into one of two categories:34
(a)claims by infant and/or adult children who by reason of sickness or disability cannot support themselves; and
(b)claims by adult children known as familial recognition claims, who are able to support themselves.
[91]Here, as I see it, Sandra’s claim falls into both categories.
[92] As to financial need, the Court of Appeal in Henry v Henry indicated that the emphasis of the Court must always be on what is proper to satisfy the needs of that parent’s children during periods of disability or incapacity.35
[93] Similarly, in exercising the discretion it has to repair a breach of moral duty under the FPA, it is clear from the authorities that the Court is to look at a wide range of circumstances, including the age and state of health of a claimant, their ability to earn a living, their financial position and changes in circumstances after the death of the will-maker, including any questions over deteriorating health. Changing social attitudes and positions over the will-maker’s views, as well as other competing claims, are also to be taken into account.
[94] In the present case, Steven has said clearly that he does not make a claim. I mention in passing also that he has refused to disclose his own financial position during interlocutory argument, although he was not required to do so.
34 See the recent report on this topic Te Aka Matua o te Ture | Law Commission He arotake i te āheinga ki ngā rawa a te tangata ka mate ana | Review of succession law: rights to a person’s property on death (NZLC R145, 2021). The Commission stated that the policy basis for the second category “rests on the expectation that most parents should provide for their children on their death, either to ensure they have a reasonable standard of living or simply to recognise the parent-child relationship”: at [5.137].
35 Henry v Henry [2007] NZCA 42 (CA) at [60]–[61].
[95] On all of this, what is clear is that, in considering the evaluative question of whether or not there has been a breach of moral duty, cases such as the present invariably turn on their own “frequently idiosyncratic” facts.36
[96] With all these matters in mind I am satisfied that there has been a clear breach by Donald of his moral duty towards his daughter Sandra here.
[97] This is not a case of “loosening of the bonds” between father and daughter and with neither party at fault. In many ways, as I see it, it is more akin to a case where Donald has abdicated his role as a father and taken no initiative to reconcile with Sandra at any time, including following the death of her late husband Trevor.
[98]Tellingly, in my view, Sandra in her evidence deposes:37
When she was very ill, I tried to see my mother again. I went to see her when she was in [the rest home] on her birthday, on 27 July 2016, (which turned out to be her last birthday). I went during the day in the hope that my father would not be there. Unfortunately, he was there and he yelled at me. It was an awful experience. Suzanne [Steven’s wife] was there that day too and told my father not to yell at me. Unfortunately, that was the last time I saw my mother. I did not go back again. I would have liked to have done more to care for my mother when she was dying but regrettably that was just not possible, due to how my father treated me. I was scared to go back again in case I was yelled at and intimidated again by my father.
[99] Overall, I accept that Sandra, from her evidence, could not reasonably be seen to be in a proper place to seek a reconciliation with Donald following this interaction in July 2016.
[100] Sandra herself was suffering from PLS from about 2017 onwards and her health and financial position was deteriorating all that time. There is some merit in the argument advanced by Mr Chisnall that a just and wise will-maker would, if relying on grounds such as Sandra previously inheriting money from her aunt Bettie, suggesting, therefore, she had no proper needs to be fulfilled) might have made some effort to then ascertain a daughter’s true financial and other circumstances.
36 Brown v Brown [2022] NZCA 476 at [51].
37 Affidavit of Sandra Chin in reply, 17 September 2021, at [20].
[101] Having concluded that Donald breached his moral duty to Sandra here, I now turn to what by way of quantum or otherwise is necessary to remedy that breach.
[102] On this aspect, this Court is required to order “such provision as is sufficient to repair the breach”.38 As the Court stated in Fisher v Kirby, awards should be neither unduly generous nor ungenerous.39 Rather, the courts should exercise discretion in the particular circumstances of a case, having regard to the factors identified in the authorities.40
[103] First, I am satisfied that with Sandra having lived in the Johnsonville property for around 40 years as her home and noting her long-standing connection with and desire to acquire this property, it is appropriate here that it be transferred into her name. This would provide her with the security of tenure which, given her long-term occupation of the property, it is fair to say her parents likely always intended her to have. This security of tenure is also necessary in light of her progressive PLS illness from which she suffers. Any alternative to providing this property to her would mean that it remained as an estate asset, on which she would be staying unlawfully and have no option but to leave and find alternative accommodation. This is simply not a palatable option in my view in all the circumstances here. I am satisfied therefore that the Johnsonville property should be transferred outright to Sandra.
[104] Independent valuation evidence before the Court indicates that the Johnsonville property has a value of some $840,000. Given the total estate value of
$4.1 million, this amounts to approximately 20 per cent of the total estate value. In my view, and particularly given Sandra’s progressing PLS and MND affliction, some further monetary allowance from the estate for her future care and financial needs is warranted in addition.
[105] In this respect, I consider that, in endeavouring to do no more here than is necessary to remedy Donald’s failure to satisfy his moral duty to Sandra, a reasonably
38 Vincent v Lewis, above n 30, at [81(g)].
39 Fisher v Kirby [2012] NZCA 310, [2013] NZFLR 463 at [120].
40 At [120]; and see Te Aka Matua o te Ture | Law Commission, above n 34, at [5.10].
conservative award is necessary. As the Court of Appeal said in Henry v Henry in making clear that a “conservative approach” should be adopted:41
… The law is clear … the award to the claimant should be no more than is necessary to remedy the failure … So, in that context, conservative means simply “no more than the minimum necessary to make the adequate provision” … The principle is the same: the amount by which the will is disturbed should be no more than is necessary to make adequate provision for the maintenance and support of the claimant …
[106] But what is also clear is that under the FPA a proper approach is to assess what is adequate for proper maintenance and support of a claimant. It is therefore well-established that a percentage-based approach can create a misleading impression and is not appropriate, especially where the estate is a large one.42
[107] In this case there is actuarial evidence before the Court which, according to Mr Chisnall, suggests that a payment of something over $1.7 million is required for Sandra here, on top of the Johnsonville property, to provide a level of personal care required for her in the future as her current illness worsens. This, it seems, according to the calculations, would not amount to ultimately full-time care. Nevertheless, in my view in all the circumstances here, a payment of this sum from the estate would be excessive. I say this acknowledging, too, the not inconsiderable provision made for Sandra in her aunt’s will.
[108] Sandra, too, has some other cash savings and assets and once the Johnsonville property is transferred into her name would have mortgage and debt-free accommodation.
[109] In all these circumstances, I am satisfied that a further payment of $600,000 from the cash resources of the estate to Sandra is justified here. Orders to this effect will follow.
41 Henry v Henry, above n 35, at [54] and [56].
42 Carson v Lane [2019] NZHC 3259 at [94].
Orders
[110] Given that Sandra has largely succeeded in her claims under the FPA for Donald’s breach of moral duty both to support and maintain her, orders are now made as follows:
(a)within 20 working days of the date of this judgment, the Johnsonville property is to be transferred unencumbered to Sandra to become her sole property; and
(b)an award of $600,000 from Donald’s residuary estate is made to Sandra, to be paid to her within 20 working days of the date of this judgment.
Costs
[111] As to costs on this proceeding, Sandra has effectively succeeded in her major FPA claim here and I see no reason why she should not be entitled to costs in the usual way. It is true that she has not succeeded in her other claims but as I see it this is relatively minor in the overall scheme of all issues at stake here.
[112] And I accept also, first, that scale costs are appropriate here, secondly, that the importance of this matter to the opposing parties and the need to resolve an unfortunate impasse between sister and brother does mean that an award of costs to Sandra on a category 3C scale basis is warranted, and thirdly that these costs should be met out of Donald’s estate.
[113] An order is now made that Sandra is entitled to an award of costs on this proceeding on a category 3C scale basis (with an allowance for second counsel) together with reasonable disbursements, all as approved by the Registrar, all such costs and disbursements to be met by Donald’s estate.
Gendall J
Solicitors:
Paul Chisnall Barrister and Duncan Mackenzie for the Plaintiff Grant Slevin Barrister for the First Defendant
A R L Lawyers for the Second Defendant
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