Courteney v Pratley
[2017] NZHC 1761
•28 July 2017
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
CIV-2013-485-5912 [2017] NZHC 1761
UNDER THE FAMILY PROTECTION ACT 1955 IN THE MATTER OF
THE ESTATE OF JOAN AYLEEN COURTENEY
BETWEEN
STEVEN COURTENEY First Plaintiff
AND
KLAUDIA ARIANE COURTENEY Second Plaintiff
AND
LANCE HOWARD PRATLEY AS TRUSTEE AND EXECUTOR OF THE ESTATE, REPLACING STUART COURTENEY, FORMER EXEXUTOR Defendant
Hearing: 23 May 2017 Counsel:
P W Michalik for Plaintiffs
L Pratley for DefendantJudgment:
28 July 2017
JUDGMENT OF CULL J
[1] Excluded from his mother’s will less than a year before her death, a son and his daughter make claims against her estate for breaches of moral duty under the Family Protection Act 1955.
[2] The late Joan Courteney was the mother of Steven and Stuart Courteney and grandmother of Steven’s daughter Klaudia. In her last will, Joan removed Steven and his family as beneficiaries in her will and replaced Steven with Stuart, as the executor and trustee of her will.
[3] The key issues for this proceeding are:
COURTENEY v PRATLEY [2017] NZHC 1761 [28 July 2017]
(a) Did Joan Courteney breach her moral duty to Steven and her granddaughter, by failing to provide for them in her will?
(b) If so, what provision should be awarded to remedy the breach? (c) How should the costs of the estate be met in this case?
[4] Stuart Courteney, Joan’s other son, was the sole executor of Joan’s estate. Following difficulties with discovery and other matters, Steven and Klaudia applied for an order recalling probate and appointing an independent executor, Mr Lance Pratley, in place of the defendant. On 20 October 2015 this Court appointed Mr Pratley as executor of Joan’s estate.1 Mr Pratley has taken a neutral stance in these proceedings and will abide the decision of the Court.
Factual background
[5] Steven, the first plaintiff, and Stuart Courteney are the only children of the deceased, Joan Courteney, and her late husband Ron. The brothers are middle-aged and have supported themselves independently for their adult lives.
[6] The second plaintiff, Klaudia Courteney, is Steven’s only child and is now an independent adult. Klaudia is the only grandchild of the deceased and her late husband.
[7] The Courteney family lived in England where both Steven and Stuart were born and grew up. Joan was a geography teacher and her husband Ron was an art teacher and an artist.
[8] Steven has worked as a geologist in the international oil and gas industry. After his marriage to Karen, his wife, they emigrated with their daughter Klaudia
from England to New Zealand in 1995.
1 Courteney v Courteney [2015] NZHC 2563.
[9] Joan and Ron followed Steven and his family to New Zealand and lived on a neighbouring property from July 1997. Steven sponsored their move to New Zealand.
[10] With Steven’s assistance, by gifting a portion of the land owned by he and his wife, Joan and Ron were able to acquire the neighbouring land, by way of a subdivision and built. Steven deposes that:
The land gift made it possible for mum to live as she had always wanted, close to the next two generations of her family in her retirement. That was something she had wanted for her mother, and had not been able to achieve. That was why, in the previous wills of my parents, I was to be left their house property in New Zealand. It is next door to my own home here, and it was my family’s gift of land to my parents that made the house possible.
[11] By way of extensive affidavit evidence, Steven has described a close association with his parents, who visited him in various international locations where Steven worked. He returned to England regularly to visit his parents and his surviving grandmother, as often as he could. In New Zealand, he describes his parents and his family looking after each other as one extended family. Numerous examples abound in the affidavits filed by Steven, of his ongoing assistance to his parents to help them settle comfortably in their new home.
[12] Stuart, however, did not enjoy a close relationship with Joan and Ron, as they had difficulty accepting that Stuart was gay. Between 1988 and 2010, Stuart lived in Germany with his partner and had very little contact with Joan and Ron.
Joan’s changing state of mind
[13] Joan and Ron visited Steven in Kuala Lumpur at Christmas in 2008. Steven describes the first time that he believed “things might not be quite right with” Joan. As a result of Joan’s behaviour towards Ron, Steven and his wife believed that Joan’s mental state was deteriorating.
[14] In an effort to reconnect with Stuart, Joan and Ron visited Stuart in Germany in 2009. This trip was exhausting, with numerous changes of aeroplane, delays and missed connections. Ron was frail, experiencing periods of delirium, which were misconstrued as dementia.
[15] Ron was taken into hospital by the police in a state of delirium on 27 March
2010. Steven, who was working overseas at the time, returned from Malaysia to see his father and to help his mother between 20 April 2010 and 9 May 2010. He then became very concerned about his mother’s state of mind and her behaviour. Most concerning was the way she was treating Ron.
[16] Steven’s attempts to assist his ailing father and to help his mother, however, were viewed adversely by Joan. Steven arranged private care for Ron, because of his concerns at the treatment his father was receiving at the hospital. Joan considered that the additional care was unnecessary and expensive and that Steven was excluding her from decisions he made involving Ron. She believed Steven was deliberately abusive towards her.
The Wills
[17] Ron and Joan Courteney made their wills together with mirror terms on
8 April 2002 (the 2002 Wills). Both appointed the other as their executor and left that person the whole of their estate. The will of the survivor disposes of their whole combined estate.
[18] On the death of the last surviving spouse, the 2002 Wills appointed Steven as the executor and contained the following provisions:
(a) all financial assets held overseas were left to Stuart Courteney;
(b) personal chattels were to be divided between Steven, Stuart, Steven’s
wife Karen, and their daughter Klaudia; and
(c) the residual estate (including Joan and Ron’s house in Masterton) was
left to Steven.
[19] However, as described, since 2010, tensions arose between Joan and Steven over the care of Ron. Joan became convinced that Steven was her enemy. Considerable affidavit evidence was adduced by Steven detailing the numerous
examples of Joan’s behaviour towards Ron, from whom she was withdrawing favourite foods and gifts and behaving aggressively towards him.
[20] Both Steven and Klaudia submit that Joan’s belief that Steven was deliberately abusing her and excluding her from decision making was “irrational”, as none of those allegations were true.
[21] Having discussed his father’s situation with his brother Stuart, Steven arranged alternative care, which was expensive, on the understanding that he and his brother would share the expense. Steven maintains that his support and assistance (financial and otherwise) in arranging care for Ron was nothing other than normal for any son. Stuart’s later refusal to make any financial contribution led to Steven ultimately commencing proceedings to recoup his financial assistance from his
father’s estate. This matter is canvassed further under costs.2
The 2011 Will
[22] On 8 June 2011, Joan made a new will (the 2011 Will), which makes no provision at all for Steven or any member of his family. The 2011 Will appointed Stuart as Joan’s executor and in the event her husband Ron predeceased her, the whole of her estate (being the joint assets of Joan and Ron) is left to Stuart.
[23] The 2011 Will was made five weeks before Ron died on 17 July 2011. It should be recorded that Joan was subject to a mini-mental state examination on
25 January 2011. With a score of 23 out of 30, it is described as a failure and a certificate of Joan’s capacity was never issued. She was referred to a gerontologist, but no follow up appointment was made.
[24] Joan died on 21 May 2012 and her 2011 Will took effect as her last will.
[25] Stuart was the original named defendant in these proceedings. Stuart filed a statement of defence denying that Joan owed any moral duty to provide anything for Steven because of Steven’s behaviour towards her. No affidavit evidence was filed
in support of Stuart’s defence and he did not take part in the hearing. He did
2 See paragraphs [59] – [71] of this judgment.
however file a statement of defence to Steven’s proceedings in the District Court to recover the costs of Ron’s care. Stuart also opposed Steven’s applications for further discovery and the replacement of Stuart as executor in the High Court, filing evidence in support of his opposition to the disclosure of Joan’s medical evidence and other estate information.
The value of the estate
[26] Mr Pratley provided a statement of the estate’s assets and liabilities, specifically noting that he has not verified the information deposed by Stuart about the overseas assets. Mr Pratley did, however, make enquiries of the English creditors and a Swiss bank to verify some of the overseas assets.
[27] The New Zealand assets are as follows:
Lance Pratley trust account 30 April 2017 $7,880.07 10 Burnetts Road, Masterton $552,089.81 Offset costs award to Steven Courteney ($38,884.24) Sub-total $513,205.57 Chattels at above house - value unknown Total estimated assets $521,085.64
[28] In an explanatory note, Mr Pratley deposes the sale price of 10 Burnetts Road is $575,000.00 and the purchaser is Steven Courteney. It was agreed to offset against the purchase price, the costs award to Steven in the District Court in relation to the estate of Ron Courteney, the sum of $36,735.80 plus interest at the statutory rate of five per cent per annum, $2,148.44 to 24 May 2017, being a total of
$38,884.24.
The overseas assets
[29] No overseas assets had been realised by Mr Pratley, but he refers to Stuart’s affidavit of 18 December 2014, deposing that the Jersey estate was NZ$320,933.18 and the German estate was NZ$24,586.28. This is a total of $345,519.46.
[30] In addition, further overseas assets are:
(a) a bank account in Switzerland with CHF6,940.30 (approximately
NZ$9,200.00 as at December 2016); and
(b) claims from creditors in England of GBP£1,672.43 (approximately
NZ$3,259.00 as at 8 May 2017).
Household chattels
[31] In addition to the financial assets in New Zealand and overseas, Joan owned household chattels. These have not been itemised and nor have they been valued, despite requests and formal applications by Steven.
Liabilities
[32] Mr Pratley deposes that the liabilities of the estate are as follows:3
Mr G Barkle barrister (retained to advise Stuart) $8,703.69 Department for Work and Pensions (UK) $1,471.68 Duncan Cotterall fees (Stuart’s legal costs to defend the Family
Protection claim, deducted from sale proceeds of Burnetts Road)
$32,151.82 Inland Revenue Department $13,266.19 Lance Pratley $52,723.20 Teachers pensions (UK)4 $1,787.62 Thomas Dewar Sziranyi Letts (Stuart’s legal costs to defend
Steven’s District Court claim)
$29,565.26 Total known liabilities $139,669.46 Plus estimated income tax for year ended 31 March 2017 $2,500.00 Total $142,169.46
[33] Mr Pratley estimates the net value of the estate as $378,916.18, being
$521,085.64, less $142,169.46 in liabilities.5
3 These figures are given in New Zealand dollars.
4 Teachers Pensions UK have claimed £918.28 for pensions paid after Joan Courteney died. This converts to NZD$1,767.62 plus $20.00 bank fee for telegraphic transfers. The total claimed is NZD$1,787.62
5 This estimate does not include the value of overseas assets or household chattels, as Mr Pratley
has not valued or realised these.
Plaintiffs’ position
[34] Steven (first plaintiff), and his daughter Klaudia (second plaintiff), argue that Joan’s last will is a breach Joan’s moral duty to provide for Steven, as her son, and for Klaudia, as her granddaughter.
[35] Steven’s claim is based on his status as Joan’s child and the substantial and loving relationship he maintained till 2010. He also made substantial contributions to the wellbeing of both his parents. Steven submits that Joan owed a moral duty to him and seeks proper recognition for the part he has played in both his parents’ lives.
[36] Klaudia acknowledges that her claim is subsidiary to her father’s and if his claim is successful, Klaudia’s would be treated as subsumed by any provision made for Steven. She submits, however, that Joan still owed a moral duty to provide for her, as Joan’s granddaughter.
Legal principles
[37] The plaintiffs primarily rely on the well established principle that a parent normally owes a moral duty to provide for each of his or her children, at least by way of recognition. Counsel submits that it is a prima facie breach of this moral duty to wholly exclude a child from the provisions made in a parent’s will, even where the excluded child is of age and financially independent.
[38] In Fry v Fry, Moore J held that family recognition alone, can give rise to a duty to provide for an adult child.6 In that case, the plaintiff was the son from his father’s first marriage. The respondent was his father’s second wife and had excluded the plaintiff from her will in the event that his father predeceased her. Moore J considered that a number of circumstances in the relationship between the plaintiff and his father created a moral duty based on parental recognition, including:7
(a) A close family relationship between Jason and his father.
6 Fry v Fry [2014] NZHC 2256.
(b) A close working bond between Jason and his father having worked together, on and off, for 10 years commencing, initially on a part-time basis, and ending in the role of national sales manager, a position he held at the time of his father's death.
[39] The Judge identified two relevant cases to determine whether the moral duty had been met in that case:
[17] Cooke P in Little v Angus sets out the principles relating to family protection cases:8
The inquity 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.
[18] In determining whether a parent met their moral duty to their child, Richardson P in Williams v Aucutt sets out the appropriate test:9
… The test is whether adequate provision has been made for the proper maintenance and support of the claimant. Support is an additional and wider term than maintenance. In using the composite expression, and requiring ‘proper’ maintenance and support, the legislation recognises that a broader approach is required … Support is used in its wider dictionary sense of ‘sustaining, providing comfort’. A child's path through life is supported not simply by financial provision to meet economic needs and contingencies but also by recognition of belonging to the family and of having been an important part of the overall life of the deceased. Just what provision will constitute proper support … is a matter of judgment in all the circumstances of the particular case. It may take the form of lifetime gifts or a bequest of family possessions precious to its members and often part of the family history. And where there is no economic need it may also be met by a legacy of a moderate amount. On the other hand where the estate comprises the accumulation of the family assets and is more than sufficient to meet other needs, provision so small as to leave a justifiable sense of exclusion from participation in the family estate might not amount to proper support for a family member.
[40] The Judge concluded that there had been a “real possibility” that the plaintiff would receive nothing from his father’s estate, which meant that the moral duty owed by father to son had not been met.10 The plaintiff was granted a lump sum
payment of $175,000 in recognition of this moral duty owed.
8 Lyttle v Angus [1981] 1 NZLR 126 (CA) at 127.
9 Williams v Aucutt [2000] 2 NZLR 479 (CA) at [52].
10 Fry, above n 6, at [26].
[41] Of relevance to this case, the Court of Appeal in Flathaug v Weaver
confirmed the relationship of parent and child as being primary in our society.11
Although that case concerned an ex-nuptial daughter of the deceased, who was excluded from the testator’s will, the moral obligation highlighted by the Court of Appeal is relevant. The relationship of parent and child attaches to it a moral obligation, which is embedded in our value system and underpinned by the law. As the Court states:12
The Family Protection Act recognises that a parent’s obligation to provide for both the emotional and material needs of his or her children is an ongoing one. Though founded on natural or assumed parenthood, it is, however, an obligation which is largely defined by the relationship which exists between parent and child during their joint lives.
[42] Because insufficient weight had been given to the limited nature of the relationship between the testator and the ex-nuptial daughter, the Court of Appeal reduced the award to the daughter to $40,000.00 out of an estate worth $550,000.00.
[43] In Chambers v Chambers, the Court considered the distribution of the estate of the late Sir Robert Chambers (which was shared with his second wife, Lady Chambers QC) to his adult son from his first marriage.13 Mallon J phrased the inquiry as “whether there has been a breach of moral duty in this respect [recognition], as judged by the standards of a wise and just testator.”14 The Judge noted that:15
How often an adult child keeps in touch with their parent is not the only, nor necessarily most accurate, measure of closeness between a parent and child. The special nature of the father/son relationship may not always be apparent from its outward manifestations. As David says, although he was living an independent adult life, that did not mean he ceased being Sir Robert's son.
[44] As part of her assessment in the case, the Judge determined that the plaintiff
was entitled to proper support and recognition from Sir Robert’s estate, at the time of
his death or within a reasonable time thereafter.16
11 Flathaug v Weaver [2003] NZFLR 730 (CA).
12 At [32].
13 Chambers v Chambers [2016] NZHC 583.
14 At [89].
15 At [91].
[45] In the present case, the plaintiffs also emphasise that a “recognition” award to an independent adult is readily made by the courts. This award is made on the basis that the court will interfere as little as possible with testamentary freedom and the award will provide the minimum recognition to the child, in light of the size of the estate and the competing moral claims on the estate.17
[46] The plaintiffs further submit that this is a case of deliberate but wrongful exclusion. In such circumstances, this Court has previously disregarded the reasons of the testator.18 Counsel submits that Joan’s reasons for excluding Steven from her will should be disregarded, as should her dispositions that were made based only on those reasons.
[47] Steven submits that his brother Stuart has been obstructive throughout the proceedings, engaging in an unsuccessful litigation strategy, such as failing to disclose medical records and the source documentation of Joan’s chattels and their overseas investments. Steven says Stuart should bear the full cost of his approach to the litigation.
Discussion
[48] The hearing of this claim proceeded by way of formal proof. Although initially named as a party to the proceedings in his role as executor, Stuart took no part in the hearing in his capacity as a beneficiary.
[49] Voluminous affidavit evidence was filed by and on behalf of Steven and his family, attesting to the close relationship he had with both of his parents and the frequent visits and holidays enjoyed with them in various countries, where Steven and his family were located for Steven’s work. As testament to that relationship, when Steven and his family emigrated to New Zealand, his parents followed, with his help and patronage. I am satisfied that the descriptions provided by Steven and his family of an extended family relationship with Joan and Ron was a strong and loving one.
[50] Unfortunately, with the onset of age and ill-health, the relationship changed.
[51] Although Joan was referred by her doctor to a gerontologist, no such final assessment was undertaken. From the descriptions and indeed, a tape recording of an interaction between Joan and Ron, it is sadly evident that Joan’s mental state changed from 2009 to the time of her death.
[52] Stuart appears to take issue with any suggested frailty of his mother’s health or mental state. However, the abundant examples provided to the Court in the affidavits of Steven, his wife and his daughter, paint a sad picture of a deteriorating relationship between Joan and Steven’s family.
[53] In addition, Joan’s behaviour and her actions towards Ron were not only unfortunate, but concerning and, in some instances, alarming. As the matter has proceeded by formal proof, I do not need to detail the examples, which are troubling. I consider there was every justification for Steven to remove his father from the hospital into more appropriate and compassionate care, with appropriate safe-guards in place.
[54] I am also satisfied that both Joan and Ron were agreed, in happier times, that their estate should be left to each of their sons, on the terms set out in their mirror wills. In the event of neither spouse surviving, Stuart was to retain the overseas funds and investments and Steven was to receive the New Zealand assets. The fact that Steven and his wife provided land to enable Joan and Ron to build their house next door reinforces the wisdom of his parents wishing to leave the neighbouring building and land to Steven. Steven has now purchased his parents’ home, as the assets of the estate reveal, with the sale proceeds forming the bulk of the New Zealand assets of the estate.
[55] The Supreme Court reinforced the importance of family connection over testamentary intention in Wood-Luxford v Wood.19 In discussing the Family Protection Act, the Court said:20
That statute permits a claim against an estate on the basis of family connection, irrespective of the intentions or attitude of the deceased. The statutory liability of the estate is a matter of social policy and arises out of a legislative judgment that those within the categories identified may have moral claims to provision which should displace any testamentary intention.
[56] Taking into account the principles enunciated in the cases canvassed above, the close family relationship between Steven, his family, and Joan; the long standing and close relationship that they enjoyed over many years; and the deliberate but wrongful exclusion of Steven by Joan in her latest will, I find that Joan did breach her moral duty to Steven and her grandchild Klaudia.
[57] Joan’s reasons for excluding Steven in her last year of life should be disregarded, clouded as they were by an irrational perception of Steven’s actions, making his exclusion from her will deliberate and wrongful.
Remedying the breach
[58] To remedy the breach of moral duty by Joan, I find that Steven should receive the New Zealand assets held by the estate, namely the sale proceeds of 10 Burnetts Road, Masterton, and the sum retained in the Lance Pratley trust account totalling
$513,205.57 together with any interest. In making the award to Steven, Klaudia’s claim is also met, as her claim is subsidiary to Steven’s and is subsumed by the award made to her father.
Estate liabilities
[59] I turn then to consider how the liabilities of the estate are to be deducted.
[60] The estate liabilities are itemised at paragraph [32] above. The liabilities fall into two categories:
(a) The tax liabilities and pensions repayments totalling $19,025.49;
(b)Legal costs totalling $123,143.97, associated with the provision of advice to Stuart; the litigation costs in respect of his opposition to Steven’s High Court applications for disclosure of estate information and other matters; and Mr Pratley’s costs incurred on Stuart’s behalf
in his defence of Steven’s claim in the District Court against their father’s estate. Duncan Cotterall’s costs of $32,151.82 were deducted from the sale proceeds of Burnett Road. It is unclear on whose authority this was done.
[61] At the time of hearing, the plaintiffs submitted that it was unfair to deduct from Steven’s share of the estate, all of the legal and litigation costs incurred by Stuart. If these costs are met by the estate, this would be a further penalty to Steven, as it represents a substantial deduction from his share of the estate, when Steven had to take the litigation steps to obtain the relevant information and obtain repayment, as agreed with Stuart, from his father’s estate.
[62] It appears to me that the first category of costs totalling $19,025.49, are costs arising in the expected administration of an estate. Those costs would normally be deducted from the estate. Although they appear to be the full costs of the administration of the estate, I am minded to order that those costs in the sum of
$19,025.49 be deducted from Steven’s award.
[63] Of the remaining liabilities in the second category however, they are all expenses arising in respect of Stuart’s response to litigation, both in the District Court and in the High Court. The most significant cost is that of Mr Pratley in the sum of $52,723.20, which was incurred defending Steven’s claim for his father’s expenses out of his father’s estate on Stuart’s behalf.
[64] From the affidavit filed by Mr Pratley and his submissions, Stuart did not take any further part in defending those proceedings, leaving it to Mr Pratley as the newly appointed executor to deal with the extant civil proceedings and the impending District Court fixture.
[65] Similarly, the $8,703.69 owed to Mr G Barkle, barrister, was as a result of the Court requiring Mr Barkle to give advice to Stuart. This was following the minutes of MacKenzie J, in which MacKenzie J found that Stuart was in a conflict of interest,
as a defending beneficiary and the estate’s executor and directed that Stuart be given legal assistance.21
[66] The third legal cost liability is that of Thomas Dewar Sziranyi Letts of
$29,565.26, being the costs of defending Steven’s District Court claim on Stuart’s
instructions.
[67] The fourth legal cost liability is Duncan Cotterall’s fees of $32,151.82, which were the costs of defending the plaintiffs’ Family Protection proceeding, on Stuart’s instructions. These costs, as noted earlier, were deducted from the estate’s sale proceeds and consequently, have been deducted from Steven’s share of the estate.
[68] In the absence of knowing precisely what the overseas assets and chattels are, together with their value as at the date of hearing, I am unable to assess the full extent of the share of the estate received by Stuart. Stuart, however, had the information available to him but took no part in his hearing.
[69] From the history of these proceedings, which commenced in 2013, I consider that it is not appropriate or fair for all the liabilities to be deducted out of the estate’s funds. I accept the submission that to do so would penalise Steven further, by making such a substantial deduction from his award or share of the estate.
[70] My provisional view therefore is that the legal expenses and fees incurred by Stuart in the sum of $123,143.97, including the Duncan Cotterall fees, should be paid by him. The sum of $32,151.82 should now be paid to Steven. I note that Stuart is currently residing in Switzerland. He has been a party to these proceedings and has participated in the litigation in the High Court as well as in the District Court in New Zealand.
[71] If any party wishes to make submissions on my provisional views on the payment of the estate’s liabilities, they should do so within 10 days of the date of this
judgment.
21 Minutes of MacKenzie J dated 16 April, 28 April, 7 May and 12 August 2015.
Result
[72] The plaintiffs’ claim is upheld. Steven is awarded the estate’s New Zealand assets in the sum of $513,205.57 together with any accrued interest and such chattels that remained in the property at 10 Burnetts Road, Masterton.
[73] Leave is granted to the parties to make submissions on my provisional view
of the respective deductions and the estate’s liabilities.
Cull J
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