Connolly v Eckhout
[2021] NZHC 1400
•15 June 2021
IN THE HIGH COURT OF NEW ZEALAND ROTORUA REGISTRY
I TE KŌTI MATUA O AOTEAROA
TE ROTORUA-NUI-A-KAHUMATAMOMOE ROHE
CIV-2019-463-000018
[2021] NZHC 1400
UNDER the Family Protection Act 1955 IN THE MATTER
of the estate of JAN DANIEL ECKHOUT
BETWEEN
MICHELLE LEE CONNOLLY
PlaintiffAND
KAREN ELIZABETH ECKHOUT
Defendant
Hearing: 3 June 2021 Counsel:
SRG Judd for Plaintiff C Jiang for Defendant
Judgment:
15 June 2021
JUDGMENT OF DOWNS J
This judgment was delivered by me on Tuesday, 15 June 2021 at 10 am pursuant to r 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Solicitors/Counsel:
Morrison Kent, Auckland. Glaister Ennor, Auckland. SRG Judd, Auckland.
CONNOLLY v ECKHOUT [2021] NZHC 1400 [15 June 2021]
A narrowing of issues after a blackening of character
[1] Jan Daniel Eckhout died 11 October 2017.1 Dan left almost all his estate to his wife, Karen Eckhout. Dan and Karen married 1994. Dan has five adult children and an adult stepdaughter from two earlier marriages.2 Michelle Connolly, one of Dan’s children, claims against his estate under the Family Protection Act 1955. The other children have been served with the claim but make no claim of their own.
[2] Michelle’s claim and Karen’s response have produced voluminous evidence— and much acrimony. The 900-page evidence bundle is replete with allegation; counter- allegation; material of marginal, if any, relevance; and emotive language. No one was mindful of Wild CJ’s admonition “that from the early days of the family protection jurisdiction the Court has disapproved attempts by litigants to blacken each other’s character”.3
[3] Fortunately, the issues narrowed as the hearing approached, and at the hearing itself. Karen now acknowledges Dan breached his moral duty to provide for Michelle. Michelle says the breach warrants an award of $850,000. Karen says that figure is unrealistic, and $228,000 would be “more than sufficient to repair any breach of moral duty”.
[4] The belated focus is welcome. It is reflected in this judgment, which is directed at quantum.
Background
[5] Dan was born 1943 in Natal, South Africa. Karen was born 1962 in New South Wales.
[6]In 1964, Dan married Sandra Smith. They had two children:
(a)Vanessa Tantum, born 1968.
1 Mr Eckhout was known as Dan Eckhout. With this exception, I use Christian names for convenience.
2 The children.
3 Re Meier (deceased) [1976] 1 NZLR 257 (HC) at 258.
(b)Michelle—the plaintiff—born 1971.
[7] Dan and Sandra divorced 1973. Thereafter, Michelle and Vanessa lived with their mother.
[8] In 1976, Dan married Jeanine Eckhout. Jeanine had an infant daughter from an earlier relationship, Melissa Allen. The same year, Dan, Jeanine and Melissa moved to Norway, where Dan worked on an oil rig. Dan ultimately became a drilling fluids engineer; hence family moves between Norway, England and Scotland.
Dan and Jeanine had three children:
(a)Nicola Schommer, born 1979.
(b)Gareth Eckhout, born 1981.
(c)Sean Eckhout, born 1984.
[10] Dan and Jeanine separated 1993. Jeanine returned to South Africa with the four children. Dan moved to Singapore.
[11] In 1993, Dan travelled to Perth for a conference. There, he met Karen. Dan invited Karen to visit Singapore. She did. Later that year, Dan invited Karen to move to Singapore. She did.
[12]In 1994, Dan and Karen moved to South Africa. They married 22 March 1994.
[13] On 6 April 1994, Dan made his will. As observed, it leaves almost all his estate to Karen. Thereafter, Dan and Karen moved to Perth.
[14]In 1998, Dan and Karen moved to Vietnam.
[15] In 2004, Dan and Karen resolved to retire in New Zealand. They established the Eckhout Family Trust4 and bought property in Tirau. In the meantime, they remained in Vietnam.
[16]In 2005, Michelle married Laurence Connolly.
[17] In 2011, Michelle suffered breast cancer. She had chemotherapy and a double mastectomy.
[18]In 2012, Dan was diagnosed with lung cancer.
[19]In 2015, Dan and Karen left Vietnam for New Zealand.
[20] In 2016, Michelle and Laurence left South Africa for the United Kingdom because of increasing social disorder and crime.
[21] In early 2017, Dan’s cancer returned. Michelle visited Dan in July and August. Dan and Michelle discussed a new will, in which half of his estate would go to Karen, and the other half to the children, Melissa included.
The estate
[22] Dan died from cancer 11 October 2017. He neither amended his 1994 will, nor made a new one. It left:
(a)120,000 South African Rand, or NZ$12,000, in trust for the benefit of Nicola, Sean and Gareth.
(b)Sports equipment, watches and personal items to Gareth and Sean.
(c)The balance of his estate to Karen.
[23] Karen was not executor; a South African-based person was. He renounced that role and Karen was appointed administrator 3 October 2018.
4 The Trust.
[24] Karen has not been an enthusiastic financial chronicler, either in relation to the estate or her own position. This Court has intervened more than once, directing she provide financial information.5 That which she has given is imperfect, albeit a clear enough picture emerges.
[25] The estate’s primary asset comprised funds and investments in Switzerland. Karen said, as at 21 November 2018, these were worth NZ$1,676,746.13.
[26] It is almost certain these funds and investments were worth more when Dan died. A portfolio statement dated 3 August 2017, hence two months before his death, provides a figure of US$1,349,900.74, or NZ$1,956,377.88.6 I adopt this figure as an index.
[27] I add the more modest assets identified by Karen, then subtract the liabilities she identifies. This produces $1,939,000 as the approximate value of the estate at 21 November 2018.7
Eckhout Family Trust
[28] Dan and Karen settled the Trust 6 April 2004. Its trustees were Dan, Karen and Kevin Booth, a Hamilton-based lawyer. Beneficiaries were discretionary. These included Dan, Karen and the children. The trustees enjoyed broad discretions. After Dan’s death, Karen and Mr Booth retired as trustees. Eckhout Trustees Ltd, a company controlled by Karen, became sole trustee. The Trust’s assets were worth approximately $2,180,000.8 These included the Tirau property and sale proceeds from its subdivision. All assets ultimately came to Karen. The Trust is now dissolved.
5 For example Connolly v Eckhout [2021] NZHC 727.
6 I was told the exchange rate at the time was NZ$0.69 to US$1.
7 For ease of reference, the figure is rounded to the nearest thousand. On behalf of Michelle, Mr Judd argues a further $50,000 should be added given the appearance of this sum in trust records. To do so risks double-counting; the sum could have formed part of the balance above.
8 The figure presupposes Michelle sold the remaining Tirau section for the asking price of $950,000, less four percent commission. Michelle has not disclosed the sale price. As with the figure for the estate, I round to the nearest thousand.
A new will?
[29] Much evidence concerned Dan’s apparent preparedness to make a new will, including when Michelle visited in July and August of 2017. Dan was then, of course, terminally ill. The evidence includes draft instructions to Mr Booth. These instructions envisaged half of the estate going to Karen; the other half being divided equally between the children; and the Trust’s assets being divided in the same way as the estate.9
[30] I say “apparent” preparedness because there is also evidence Dan told people external to the family he did not want to leave his children anything, and their only concern was his money. Michelle responded Karen had manipulated these witnesses to fabricate.
[31] Unsurprisingly, on behalf of Michelle, Mr Judd placed little weight on the new will evidence. The will, if made in accordance with the draft instructions, would not have left Michelle anything like $850,000. In any event, Dan did not make a new will.10 He was unwell, but not so unwell as to be unable to. It follows Dan’s decision reflects choice, not circumstance.
Help to buy a home
[32] Michelle says during the same trip, Dan offered to provide her and her husband a 50 percent deposit for a home in the United Kingdom. Michelle says Dan had earlier suggested she and her husband look for properties worth £250,000.
[33] Karen says Dan would not have offered to pay for half of the home, as he was worried about income in his retirement. Karen says Dan would “more likely” have offered to pay half of a 20 percent deposit, that is, 10 percent of the purchase price. So, Karen appears to accept Dan gave an offer of financial assistance, albeit on different terms. I return to this topic later.
9 The draft instructions can be read as wrongly presupposing the Trust’s assets were part of Dan’s estate. However, Michelle also says Dan contemplated dissolving the Trust.
10 Michelle says Dan must have forgotten about his 1994 will, as he never mentioned it. Karen says Dan referred to it the day he died.
Personal circumstances
[34] Karen is 59. After Dan died, she worked in a factory for a modest income. Karen now lives in Perth where, I was told, she looks after her sick parents. Karen is not entitled to the New Zealand superannuation scheme when she turns 65.
[35] Michelle is 50. She and her husband live in Guernsey. Michelle is a qualified journalist but works as an adult disability support worker. Michelle says her income is £22,000 per annum, though her employment agreement records a slightly higher figure of £25,627. Laurence has the same role. Michelle says he earns £15,000 per annum, though his employment agreement records a figure of £21,485.
[36] Michelle and Laurence do not own a home or have other assets of significance after leaving South Africa. Michelle says their retirement savings “are non-existent”. Michelle has no medical insurance. She is anxious, for, there is a risk her cancer may return.
[37]The couple have no children.
Principle
[38] The Family Protection Act allows a defined class of affected persons, including children of the deceased,11 to seek provision from the estate for their “proper maintenance and support”.12 The Act has attracted a great deal of case law. Principle is well known. The Court of Appeal’s decision in Little v Angus contains this crisp summary:13
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.
11 Family Protection Act 1955, s 3(1).
12 Section 4(1).
13 Little v Angus [1981] 1 NZLR 126 (CA) at 127.
[39]Another appears in Randerson J’s decision in Vincent v Lewis:14
(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.
(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.
[40] To these statements of principle must be added another. A beneficiary need not justify the share left to them. Relatedly, breach of a moral duty should not result in an award more than sufficient to remedy the breach.15
[41] An alleged breach of moral duty is determined according to the situation at the will-maker’s death.16 But, a Court may consider “subsequent events in determining what order should be made to satisfy … need or whether any award remains appropriate”.17
14 Vincent v Lewis [2006] NZFLR 812 (HC) at [81].
15 Williams v Aucutt [2000] 2 NZLR 479 (CA) at [68]–[70]; and Auckland City Mission v Brown
[2002] 2 NZLR 650 (CA) at [32]–[33].
16 Bill Patterson Law of Family Protection and Testamentary Promises (5th ed, LexisNexis, Wellington, 2021) at 49 (footnote omitted).
17 At 49.
A précis of Michelle’s case for a substantial award
[42] Mr Judd emphasises four matters in seeking $850,000, or as he put it at the hearing, “something of that order”.
[43] First, the chronology. Dan separated from Sandra when Michelle was only two. He provided some financial support but was an absent father. Michelle reconnected with Dan when she was 18. They had a close relationship thereafter. For example, Michelle provided emotional support when Dan and Jeanine separated; attended Dan and Karen’s wedding in 1994; spent time with Dan when they battled cancer in a Mexico clinic in 2013; and visited Dan shortly before his death in 2017. The two saw each other reasonably frequently despite distance. Mr Judd describes Michelle as a “dutiful” daughter.
[44] Second, Dan’s intentions. Mr Judd contends Dan intended to provide Michelle (and Laurence) substantial financial assistance in buying a home. Relying on figures provided by Mr Jiang on behalf of Karen—because Michelle provided none—Mr Judd observes the average cost of a home in Guernsey is £500,000, or NZ$1,000,000. Mr Judd argues a wise and just will-maker would have provided Michelle a substantial amount towards a home.
[45] Third, Michelle’s financial circumstances; see [35]–[36]. Mr Judd describes Michelle as “vulnerable”, particularly given her age and Laurence’s (he is 60).18
[46] Fourth, the resources available to Karen through the estate and now dissolved Trust. Using the figures at [27]–[28], these totalled $4,119,000.
A précis of Karen’s case for a smaller award
[47] Mr Jiang contends $228,000 would be “more than sufficient to repair any breach of moral duty”.
18 Mr Judd also said the award should recognise Dan did not adequately provide for Michelle when she was young. However, the point was not really developed.
[48] He observes Karen and Dan were married 23 years, and the couple had a close, loving relationship. Mr Jiang notes Michelle acknowledges Dan “wasn’t always the easiest person in the world to live with”.
[49] Mr Jiang accepts the significance of the totality of resources available to Karen.19 However, he emphasises Karen need not justify what Dan left her. Mr Jiang also emphasises the curative nature of an award.
[50] Mr Jiang accepts Michelle has some financial need. But, he notes she and Laurence now live in Guernsey, a more expensive part of the United Kingdom than where the couple lived when Dan offered financial assistance. Mr Jiang observes whatever Dan said to Michelle about helping her to buy a home, his remarks were not directed at a home in Guernsey.
[51] Finally, while Mr Jiang accepts Karen has not been as forthcoming as she should have been in relation to financial matters,20 he notes Michelle has not been entirely accurate about her income or her husband’s income; has failed to provide detailed information about her cost of living in Guernsey; and has not explained what public healthcare she can obtain through the National Health Service.21
Analysis
[52] I begin with the obvious: it is common ground Dan breached his moral duty to Michelle by not providing for her from his estate. Michelle and Dan had a close, mutually supportive relationship from when she turned 18. Dan offered monetary support in relation to a home shortly before his death, and Michelle has some financial need.
[53] The matrix warrants an award beyond that offered by Karen, particularly as Michelle’s cancer may return. A wise and just will-maker would recognise as much, irrespective of what public healthcare resources may be available through the NHS.
19 Flathaug v Weaver [2003] NZFLR 730 (CA) at [36]–[39]; and Moon v Carlin HC Auckland CIV-2010-404-5486, 23 February 2011.
20 Mr Jiang was instructed only recently.
21 The NHS.
[54] Dan’s intentions support this conclusion. Dan’s timely offer of financial support is unlikely to have been confined to 10 percent of the purchase price of a home, for, Dan would almost certainly have appreciated a lender would require a greater deposit from a 50-year-old than from a younger purchaser. An immediate caveat is required though. Dan was not referring to Guernsey real estate. There was no reason to; Michelle had not then moved there. This explains Michelle’s testimony of her father’s encouragement to look for a home “worth about £250,000”, a figure based in part on Dan’s web-research, and what I find was an offer to pay half that sum.
[55] I recapitulate. Michelle’s relationship with her father; his intentions; and Michelle’s financial needs warrant an award greater than that offered by Karen. Beyond this, there are difficulties with Michelle’s case for an award in the order of
$850,000.
[56]First, there is no evidence Dan intended to buy Michelle a home outright.
[57] Second, a wise and just will-maker would not presuppose that responsibility, and nothing in the case law suggests they should. The high point for Michelle is arguably Auckland City Mission v Brown, in which the Court of Appeal observed “… a wise and just testator would have ensured [the plaintiff] had the means to acquire a more substantial house for their family debt-free …”.22 However, it is quite clear the Court of Appeal did not intend this observation as a principle of general application. The Court substantially reduced the award to the plaintiff (to a little under 20 percent of the estate). Moreover, realty is much more expensive now than it was when Brown was decided, even allowing for inflation. The idea a parent has a moral obligation to buy a home for an adult child is outdated and, frankly, unrealistic.
[58] Third, as Mr Jiang emphasises in his submissions, it is not open to the Court to refashion a will based on perceptions of fairness. Rather, the Court must do no more than remedy the breach. The family protection jurisdiction is remedial, not redistributive. So, while Michelle is in need, she is not entitled to a windfall.
22 Auckland City Mission v Brown, above n 15, at [45].
[59] Fourth, while quantum must be assessed according to totality of circumstance, including the resources available to Karen, it is important to remember the claim is confined to the estate. There is no claim to, or about, the Trust. What Karen did in relation to the Trust is not impugned.
[60] Fifth, Dan’s pre-eminent moral duty was to his wife of 23 years. Karen followed Dan around the world; tolerated his idiosyncrasies; and looked after him well when he was sick. Moreover, Dan wanted Karen to have everything. Again, that intention should be disturbed no more than to remedy the breach.
[61] I fix $350,000. This amount recognises the features at [52], including an offer to pay £125,000, or approximately NZ$250,000, towards a home, and the financial security that would provide. It includes an additional sum in recognition of Michelle’s potential ill-health. It represents 18 percent of Dan’s estate, and is the minimum required to remedy the breach.
[62] A final point. Mr Judd and Mr Jiang cited many cases. It is not necessary to refer to these because Courts in this context have repeatedly warned against extensive case citation, noting each case turns on its facts; more particularly, application of settled principle to individual cases.
Costs
[63]The parties’ submissions helpfully addressed costs, so I decide these now.
[64] Mr Jiang argues I should not follow the practice of ordering all of Michelle’s costs be paid from the estate.23 He observes the practice is not always followed and says it should not be here, for, the amount sought was unrealistic.24
[65]I am not persuaded to depart from the practice because:
(a)Michelle was successful. It is an orthodox costs principle the successful party is ordinarily entitled to costs.
23 Keelan v Peach [2003] NZFLR 727 (CA) at [7].
24 Koroheke v Te Whau [2020] NZHC 863 at [142].
(b)Karen would be liable for increased costs in any event given her repeated failure to provide a detailed financial picture.
(c)There is nothing to suggest Karen would have settled if Michelle had sought a reasonable amount. Karen’s first settlement offer was made 25 May 2021, just over a week before the hearing.25
(d)Michelle’s costs of approximately $95,000 appear reasonable. Karen had incurred $140,000 in legal costs by February this year.
Result and orders
[66]Michelle’s claim is upheld to the extent of $350,000.
[67]Michelle’s legal costs are to be met from the estate.
……………………………..
Downs J
25 Through her submissions, which suggested $228,000 as an award.
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