Estate of Andrews
[2021] NZHC 2721
•12 October 2021
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2021-404-001023
[2021] NZHC 2721
UNDER Section 140 of the TRUSTS ACT 2019 IN THE MATTER
AND
of the Estate of ROBYN MARGARET ANDREWS
IN THE MATTER
of an application by EVAN WILLIAM ANDREWS, RICHARD JOHN ANDREWS and DAVID BRUCE BELL
Applicants
Hearing: 6 October 2021 Appearances:
A Sorrell for the Applicants
D O’Neill for Stephen Andrews (party to be served)
Judgment:
12 October 2021
JUDGMENT OF WALKER J
This judgment was delivered by me on 12 October 2021 at 3 pm Pursuant to Rule 11.5 High Court Rules
Registrar/Deputy Registrar
Estate of R M Andrews [2021] NZHC 2721
Introduction
[1] In this proceeding, the executors and trustees of the estate of Robyn Margaret Andrews (the Estate) seek directions to resolve a difference between them regarding the meaning and effect of the will or, alternatively, correcting the will to reflect the testatrix’s testamentary intentions.
[2] There are three executors and trustees.1 The first and second named applicants, Richard and Evan, are two of the three adult sons of the testatrix. The third named applicant, David Bell, is the testatrix’s solicitor. The party contesting the originating application is the third son of the testatrix, Stephen Andrews. I will refer to him by his first name to avoid confusion and intend no disrespect in doing so.
[3] The three brothers are the residuary beneficiaries of the Estate, albeit in Stephen’s case through a trust named the Andrews-Runnymede Trust. The administration of the Estate is largely completed. The remaining substantive issue is an accounting between the Estate and the beneficiaries. KPMG has been engaged to calculate the amounts due to the Estate by Stephen and Richard.
[4] Stephen contends that any debts provable in his bankruptcy are not able to be brought to account in calculating the amounts outstanding because a bankrupt’s debts are extinguished, whether proven in the bankruptcy or not. The trustees and executors take a contrary view. They argue that these amounts are properly brought to account to ensure equal and fair provision in terms of the will consistent with the testamentary instructions. Thus the construction issue is one which must be decided against the backdrop of the provisions of the Insolvency Act 2006.
[5] If the way in which the trustees and executors construe the will is not upheld by this Court, then they seek correction of the will by insertion of the words “irrespective of whether the capital or interest of any loans remain due in law other than as a consequence of my gift or their repayment” in cl 9 at the end of the first
1 Probate of the will was granted on 21 August 2020 however I will continue to refer to the applicants as executors/trustees.
sentence and/or a correction using words that will carry out the will-maker’s intentions or correct a clerical error.
[6] The substantive application has been brought under pt 19 of the High Court Rules 2016 by consent. It is to be heard on 10 November 2021. The applicants’ affidavit evidence has been filed.2 Stephen’s affidavit evidence in opposition has been filed, along with the evidence of Dennis Parsons, a forensic accountant engaged by Stephen.
[7] Reply evidence on the part of the applicants is now due. They however challenge the admissibility of parts of the evidence of Stephen and the entirety of the expert evidence of Mr Parsons. This interlocutory argument will determine then the ambit of the reply evidence. The applicants argue that evidentiary discipline is necessary to meet the objective of the pt 19 procedure, being the speedy and inexpensive determination of the proceeding. This means strictly limiting the evidence to that relevant to the question of construction or correction of the will.
[8] Stephen opposes the application to strike out parts of his affidavit and that Mr Parsons’s affidavit not be read. His counsel submits that the challenge is pedantic; the challenged portions of Stephen’s affidavit respond to Mr Bell’s evidence to provide context or matrix and Mr Parsons’s evidence is necessary for the ultimate resolution of the contested issues.
Background
[9] A brief background suffices to provide the necessary context. The will is dated 22 March 2017. Stephen was bankrupted on 15 March 2017, seven days before the will was signed. It is contended that the testatrix was not aware of the fact of bankruptcy. Stephen was discharged from bankruptcy on 15 March 2020.
[10] The testatrix died on 15 June 2020. The will was admitted to probate on 21 August 2020.
2 Affidavits of David Bruce Bell sworn 1 June 2021, 19 July 2021 and 6 August 2021.
[11] Clause 9 of the will directs the trustees to establish the amount outstanding under loans, the professional costs incurred by the testatrix in respect of Stephen, and interest unpaid by Stephen to the testatrix (the Debt).
[12] By cls 12, 13 and 18, the will directs that what otherwise would have been the net share of Stephen in the residuary estate (after deduction of the Debt) must be distributed to an inheritance trust known as the Andrews-Runnymede Trust established by the testatrix for that purpose.
[13] The testatrix declared by cl 15 that the provisions of the will are to benefit the siblings equally and fairly among them having regard to their different personal circumstances.
[14] To complete the background context, Stephen has commenced another proceeding in the High Court. I am informed by counsel that this collateral proceeding is to determine quantification of any alleged debt owed. By agreement, that proceeding is in abeyance pending determination of this application for directions. There is also a claim in the Family Court by other family members under the Family Protection Act 1955 which I understand has been filed but not yet served.
Discussion
[15] The challenged parts of Stephen’s affidavit are extensive (although Mr Sorrell at the hearing withdrew objection to paragraphs 57 and 58). If successful, only paragraphs 1–4, 31–45, 48, 57–60 and the second sentence of paragraph 61 would remain. The grounds advanced are variously that the statements are irrelevant or hearsay or unnecessarily set forth argumentative matter and document extracts contrary to the High Court Rules.
[16] The challenge to Mr Parsons’s affidavit is also lack of relevance and the requirement of s 25 of the Evidence Act 2006. Mr Sorrell acknowledges that Mr Parsons is a well-regarded expert in his field. It is only because of the narrow scope of the issues before the Court at this time that the fact-finder is not likely to obtain substantial help from Mr Parsons’s opinion.
Principles
[17] It is fundamental that evidence that is not relevant is not admissible in a proceeding.3 Relevant evidence is that which has a tendency to prove or disprove anything that is of consequence to the determination of the proceeding.4 Materially, it is the determination of the proceeding which defines the ambit of relevance rather than determination of the dispute of which the proceeding may only be part.
[18] Expert opinion evidence must also meet the test in s 25 of the Evidence Act. It is admissible if the fact-finder is likely to obtain substantial help from the opinion in understanding other evidence in the proceeding or in ascertaining any fact that is of consequence to the determination of the proceeding.5 Whether expert opinion evidence is substantially helpful is assessed by reference to relevance, probative value and reliability.6
[19] Rule 9.76(1)(d)(i) of the High Court Rules provides that affidavits must be confined to matters that would be admissible if their contents were given at trial by the witness. It also provides that the court may refuse to read an affidavit that unnecessarily sets forth any argumentative matter or copies of or extracts from documents. This provision applies to originating applications, as does r 7.30 which softens this rule on a limited basis. It provides that the court may accept statements of belief in an affidavit, where the grounds of belief are stated, if the interests of no other party are affected or the application concerns a routine matter or it is in the interests of justice. It is self-evident that disputed factual matters cannot by their very nature be routine matters.
[20] Relevance must be defined by reference to the pleadings. The originating application seeks directions as to the interpretation of the will. In particular whether Stephen’s bankruptcy renders loans owed by him as at that date no longer correctly brought to account in calculating the net amount due to him from the Estate.
3 Evidence Act 2006, s 7(2).
4 Section 7(3).
5 Section 25(1).
6 Mahomed v R [2010] NZCA 419 at [35].
Alternatively, it seeks correction of the will by insertion of additional words to carry out the will-maker’s intentions or correct a clerical error.
[21] Interpretation of a will is not a “four corners” exercise which depends merely on the plain meaning of the words. Sections 31 and 32 of the Wills Act 2007 apply when there are interpretation issues with a will or a will does not reflect the will- maker’s intentions.7 Section 32 reflects the principle known as the ‘armchair’ principle in statutory form. It provides:
32 External evidence
(1)This section applies when words used in a will make the will, or part of it,—
(a)meaningless; or
(b)ambiguous on its face; or
(c)uncertain on its face; or
(d)ambiguous in the light of the surrounding circumstances; or
(e)uncertain in the light of the surrounding circumstances.
(2)The High Court may use external evidence to interpret the words in the will that make the will or part meaningless, ambiguous, or uncertain.
(3)External evidence includes evidence of the will-maker’s testamentary intentions.
(4)The court may not use the will-maker’s testamentary intentions as surrounding circumstances under subsection (1)(d) or (e).
[22] Courts have recognised that the armchair principle involves the same approach as that which applies when construing a contract save that s 32(3) explicitly goes further in permitting evidence of the will-maker’s testamentary intentions.8 Background circumstances can be used to interpret words in the will that make the will or part of it meaningless, ambiguous or uncertain.9
7 Wilson v Davidson [2017] NZCA 468 at [10].
8 At [18]. See also Marley v Rawlings [2014] UKSC 2, [2015] AC 129 at [20].
9 At [18].
[23] The challenge to the evidence must be assessed having regard to those principles.
[24] Having set out the framework, I turn to the challenged evidence, beginning with the affidavit of Mr Parsons.
[25] The notice of opposition dated 14 September 2021 describes the evidence given by Mr Parsons in these terms:
(i)Mr Parsons is giving his evidence as an expert and in particular his past work with the Official Assignee.
(ii)Mr Parsons is additionally making reference to the KPMG report, a report commissioned by the executors in relation to [Stephen’s] indebtedness to the estate, if such indebtedness exists.
(iii)Mr Parsons is also giving his opinion in relation to matters that are [of] substantial assistance to the Court, in relation to provable debts and where they rank in regard to [Stephen’s] inheritance.
(iv)The report by Mr Parsons critiques the KPMG report which the applicants rely upon to establish the indebtedness of [Stephen].
[26] Mr O’Neill submits that because the executors are seeking a direction from the Court in relation to Stephen’s claimed indebtedness, that must include the amount of indebtedness. There is little point he says in making such an order without giving a direction about the amount owed otherwise there would need to be another hearing on the quantum.
[27] I accept that the wider dispute potentially includes a contest about the quantum of any amount owed if the Court determines that it must be taken into account. But this is not the dispute before the Court on the present application. The originating application is narrow in scope and, as I apprehend it, deliberately so. It is only whether any debt (whatever the sum) existing at the time of bankruptcy must be taken into account. If Stephen’s interpretation is correct, the dispute as to the quantum is otiose. If the executors and trustees’ view is correct, quantum will need to be resolved. Quantum, by its nature, is inherently more likely to involve disputed areas of fact which will need to be the subject of cross-examination.
[28] I therefore conclude that Mr Parsons’s affidavit is not relevant to the confined issues of this originating application and not admissible.
Affidavit of Stephen Andrews
[29]I turn to Stephen’s affidavit.
[30] Paragraphs 1–4 of the affidavit are not contentious and introduce the family. They are not challenged.
[31] Paragraphs 5–6 are described by Mr O’Neill as background matters. They refer to a medical condition suffered by Stephen in the “last few years” which he apparently shared with his mother. Mr O’Neill submits this is relevant to Stephen’s bankruptcy and therefore part of the factual matrix. The submission does not persuade me that this has any bearing on the narrow issue of this application. I strike out these paragraphs.
[32] Paragraphs 7–13 inclusive refer to clauses of the will which are “pertinent” from Stephen’s perspective. Mr Sorrell submits that paraphrasing the clauses is not evidence of fact and unnecessarily sets forth extracts from a document contrary to r 9.76 (1)(d)(i) and 9.76(2)(a)(ii).
[33] There is nothing inherently objectionable about the witness identifying those provisions in the will which he maintains directly impact him. It is however unnecessary to paraphrase. As Mr O’Neill acknowledges, he can and will make submissions to the same effect. The challenge is a technical one. It is a practice commonly adopted in affidavits. However, Mr Sorrell is correct that the risk of paraphrasing is that, shorn of context and precise language, the paraphrasing may unwittingly misrepresent meaning. I strike out those paragraphs.
[34] Paragraphs 14–30 comprise a high level summary narrative of events in Stephen’s life and relationship with his mother from his perspective, including a reference to money loaned to Stephen’s company and speculation as to the cause of any rift between the two of them. By way of example:
[18] I was also very close to my mother and thus was the last son to leave home. After my father’s death, my mother and I would go out for dinner and go to the movies once a week.
…
[26] I tried to assist my mother as much as I could and, for example, when she inherited a lot of money from family, we looked at investing that in commercial buildings in Auckland. She became stressed because of it, so I took over negotiations for her and ultimately, she purchased two commercial buildings in Auckland, which now form part of her estate.
[35] Mr O’Neill was unable to say specifically how this bears on the construction issues other than providing relationship context. Family relationships are inevitably deeply nuanced and layered. It is understandable that Stephen wishes to provide colour to what must appear to a lay person to be a relatively sterile exercise of interpretation. But the appropriate test here is only relevance through a legal lens.
[36] I therefore strike out paragraphs 14–30 inclusive whilst observing that the content of these paragraphs may well be relevant to any claim under the family protection legislation.
[37]Paragraphs 46–47 refer to statements in Mr Bell’s affidavit. They read:
[46] Mr Bell has said in his affidavit that my mother produced this letter notifying her of my bankruptcy at a meeting on 26 April 2017.
[47] He says that from the discussion he had with my mother, he believed she was not aware of my bankruptcy until she received this letter.
[48] Prior to that and notably commented on several times from Mr Bell in his affidavit of 19 July 2021, my mother went to some lengths to ensure that any inheritance that was to come to me was to be protected from, amongst other things, the Official Assignee.
[49] It appears that this is the reason why she left the one third of the residue to the Andrews-Runnymede Trust, which was a trust set up by my mother for the benefit of myself and my children.
[38] Mr Sorrell does not object to paragraph 48 but submits that paragraphs 46 and 47 are hearsay as they merely recite or paraphrase Mr Bell’s evidence. The objection to paragraph 49 is that it comprises submission rather than evidence.
[39] Mr O’Neill counters that the first two paragraphs are at the heart of the issue leading into Stephen’s comment in paragraph 48 that “[his] mother went to some lengths to ensure that any inheritance that was to come to [him] was to be protected from, amongst other things, the Official Assignee” and his conclusion that the Andrews-Runnymede Trust was set up to protect his inheritance.
[40] Paragraph 49 might be characterised as conclusory opinion, submission or a statement of belief as to why Stephen’s mother set up the Andrews-Runnymede Trust and left one third of the residue to that trust. The former is not permissible but the latter is arguably acceptable provided the grounds for the belief are set out. On balance, I am not prepared to strike out paragraphs 46, 47 and 49 in view of their connection to the unchallenged paragraph 48.
[41] Paragraphs 50–55 inclusive summarise Stephen’s response to the quantum of claims of debt owed by Stephen or his companies to his mother. Mr O’Neill submits that the trustees should receive direction from the Court not only as to whether the discharge from bankruptcy extinguishes Stephen’s debt but also provide some checks and balances as to the correct amount. I have acknowledged above that there is a contest as to quantum. That particular aspect of the wider dispute is not however part of this substantive application. I strike these paragraphs with the exception of paragraph 55 which I consider leads into the next section referring to the exchange of correspondence.
[42] Paragraph 56 annexes correspondence between the solicitors for the executors and for Stephen and comments on that correspondence. The objection is that the correspondence is already in evidence and this section unnecessarily sets forth extracts from the documents. Mr Sorrell also points out while the notice of opposition describes the content, it does not actually address this aspect of admissibility. While I accept this point, the filed synopsis does respond and no prejudice follows. While the correspondence speaks for itself, retaining this paragraph does not affect the task of reply evidence. I accept that this material is at least relevant to costs in that Stephen repeatedly seeks explanation for the steps taken by the executors in the light of his discharge from bankruptcy. I decline to strike out this paragraph.
[43] With respect to paragraph 61, the objection is limited to the first sentence which references spending considerable sums of money engaging Mr Parsons to review the KPMG report. Mr Sorrell submits that it is irrelevant. I decline to strike out this paragraph on the same basis set out in paragraph [42] above.
Result
[44]In summary:
(a)I find that Mr Parsons’s affidavit is not admissible on the originating application as currently framed; and
(b)I strike out the following paragraphs of Stephen’s affidavit for the reasons discussed:
(i)Paragraphs 5–6;
(ii)Paragraphs 7–13;
(iii)Paragraphs 14–30;
(iv)Paragraphs 50–54.
[45] The parties seek to be heard on costs. If there is no agreement on costs, memoranda may be filed within 10 working days with any response within five working days after.
[46]Orders accordingly.
............................................................
Walker J