Estate of Gallais
[2017] NZHC 1405
•23 June 2017
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2016-404-1788 [2017] NZHC 1405
IN THE ESTATE OF PHILIPPE ALAIN ROBERT GALLAIS
Deceased
IN THE MATTER OF
Part 19 of the High Court Rules, s 31 of the Wills Act 2007 and the inherent jurisdiction of the High Court
AND
IN THE MATTER OFAn application by DAVID WARWICK SNEDDEN and BENJAMIN NESBIT SNEDDEN as executors of the estate of the late PHILIPPE ALAIN ROBERT GALLAIS
Applicants
Hearing: 1 December 2016 and further submissions to 7 December 2016 Appearances:
EMR Heaney for the Applicants
R von Keisenberg for Ms S L Reid
G Jenkin for Mrs Y T GallaisJudgment:
23 June 2017
JUDGMENT OF WOODHOUSE J
This judgment was delivered by me on 23 June 2017 at 10:00 a.m. pursuant to r 11.5 of the High Court Rules 1985.
Registrar/Deputy Registrar
……………………………………
Solicitors:
Ms EMR Heaney, TGT Legal, Solicitors, Auckland
Mr R von Keisenberg, Barrister, Auckland
Mr G Jenkin, Barrister, Auckland
RE ESTATE OF GALLAIS [2017] NZHC 1405 [23 June 2017]
Introduction
[1] The applicants, as executors of the estate of Philippe Alain Robert Gallais, have applied for an order correcting two clauses in Mr Gallais’ will. The application is made pursuant to s 31 of the Wills Act 2007 (the Act).
[2] Mr Gallais died on 26 June 2014. His last will, dated 20 March 2014, includes the following provisions:
6. I GIVE to my partner SUSAN LYNETTE REID the property owned by Gallais Investments Limited at E1/50 Keeling Rd, Henderson, Auckland subject to all mortgages, charges and any tax owing at my death.
7. I GIVE all my household chattels, personal effects including all jewellery, motor vehicles and antiques owned by me in New Zealand personally and by Gallais Investments Limited in New Zealand to my partner SUSAN LYNETTE REID.
[3] Clause 6 in its entirety, and clause 7 in relation to assets owned by Gallais Investments Ltd (the company), are ineffective to pass the identified assets to Ms Reid because they were not assets owned by Mr Gallais but by the company. Although Mr Gallais was the sole shareholder and director of the company, there is no provision in the will expressly disposing of the shares. In consequence, on a literal interpretation of the will, the shares form part of the residue. The residue, after payment of debts, passes not to Ms Reid but to the Gallais Family Trust (the trust).
[4] The first-named applicant, David Snedden (Mr Snedden), is the principal of an Auckland law firm. Mr Snedden acted for Mr Gallais in relation to Mr Gallais’ business and personal affairs from around 1996 until Mr Gallais died. This included taking instructions on and preparing seven wills between 1997 and 2014. Mr Snedden, who has provided unchallenged affidavit evidence, for himself and for his co-executor Benjamin Snedden, says that clauses 6 and 7 of the will as drafted do not give effect to Mr Gallais’ instructions. Mr Snedden says that, to give effect to Mr Gallais’ instructions, there should have been a gift to Ms Reid of all of Mr Gallais’ shares in the company.
[5] The corrections sought by the executors are to delete clause 6, to delete from clause 7 the words “and by Gallais Investments Limited”, and to add a clause by which there is a gift of all the shares to Ms Reid.
[6] The executors have applied, in the alternative, for a direction that the will is to be interpreted as meaning that all the shares are to go to Ms Reid.
[7] The application is supported by Ms Reid. It is opposed by You Tai Gallais. Mrs Gallais was legally married to Mr Gallais at the date of his death, but they had separated by 1996. They entered into a settlement agreement under the Matrimonial Property Act 1976 (as it then was) in October 1996. Mrs Gallais is not a beneficiary under the will. I will note the reason for Mrs Gallais’ opposition when considering questions of costs.
Factual background
[8] The following outline of the factual background records my findings of fact based on the unchallenged evidence from Mr Snedden. In making findings of fact I have taken account of submissions on Mr Snedden’s evidence from Mr Jenkin, for Mrs Gallais and, in particular, submissions that there is no evidence that Mr Gallais intended that the shares go to Ms Reid.
[9] Mr Gallais and Ms Reid entered into a de facto relationship in 2009. At that date Mr Gallais was operating an antique business through the company, which had been incorporated in 1988. Mr Gallais and Ms Reid remained together until he died. Ms Reid worked with Mr Gallais in the antique business.
[10] In April 2010 Mr Gallais gave instructions to Mr Snedden for a new will. Mr Gallais explained that he wanted a new will because he wanted to provide for Ms Reid after his death. To achieve this he wanted to leave to Ms Reid his entire interest in the company. That primary objective did not change in relation to subsequent wills.
[11] Following these instructions a will was made by Mr Gallais in 2010 which included clause 6, as follows:
I GIVE all my household chattels, personal effects including all jewellery, motor vehicles and antiques owned by me personally or by any business entity which I control in New Zealand to my friend Susan Lynette Reid.
[12] When the 2010 draft was prepared, the company’s only assets were antiques, two motor vehicles and two bank accounts. It did not own any real property. Mr Snedden said that he considered that, because Ms Reid was a signatory on the company’s bank accounts, the signing power coupled with clause 6 would result in Ms Reid’s receiving all of the assets of the company.
[13] Mr Snedden also said that Mr Gallais’ decision to gift to Ms Reid, on his death, his entire interest in the company made sense in practical terms. This was because Mr Gallais and Ms Reid operated the company’s trading business together and, by gifting the entire interest to Ms Reid, Mr Gallais could ensure that Ms Reid would be able to continue operating and benefiting from ownership of the business. If Ms Reid was unable to deal with the company’s assets she would be unable to maintain her position in the business and support herself.
[14] In October 2013 Mr Snedden and his co-executor Benjamin Snedden (who was then working as a staff solicitor for Mr Snedden) received instructions from Mr Gallais to prepare a new will gifting to Ms Reid all of the assets owned by the company subject to any debts owed by the company. By then the company had purchased a storage unit in Henderson.
[15] In conjunction with the instructions for the new will there were instructions to draft an agreement between Mr Gallais and Ms Reid under the Property (Relationships) Act 1976. The relationship property agreement was entered into on
31 October 2013. It includes the following clauses:
12.3IF at the time of Philippe’s death the parties are still co-habiting Philippe will provided [sic] under his Will as the shareholder of Gallais Investments Limited to transfer to Susan the property owned by Gallais Investments Limited at E1/50 Keeling Rd, Henderson, Auckland subject to all mortgages, charges and any tax owing thereon.
12.4IF at the time of Philippe’s death the parties are still co-habiting Philippe will under his Will bequeath to Susan all his household chattels, personal effects including all jewellery, motor vehicles and
antiques owned by Philippe in New Zealand personally and by
Gallais Investments Limited in New Zealand.
[16] The instructions for the new will were given having regard to the provisions of the relationship property agreement. The new will had to be drafted in urgent circumstances because what amounted to a provisional agreement between Mr Gallais and Ms Reid relating to relationship property was about to expire. The new will was signed by Mr Gallais on 20 November 2013. Clauses 6 and 7 of the 2013 will are identical to clauses 6 and 7 of the 2014 will (recorded above at [2]).
[17] Mr Snedden said, and I accept, that the 2013 will was drafted with clauses 6 and 7 in the form they were drafted, rather than with a provision for Mr Gallais’ shares in the company to be gifted to Ms Reid, because of the urgency he and Benjamin Snedden were under to finalise the drafting of the will. The urgency resulted in copying and pasting most of clauses 12.3 and 12.4 of the relationship property agreement, without giving attention to the legal means by which company assets would go to Ms Reid.
[18] When the 2014 will was drafted, being the final will, clauses 6 and 7 of the
2013 will were again simply copied and pasted into the 2014 will. The instructions for the 2014 will were given on 20 March 2014 when Mr Gallais was very ill with cancer. His instructions for the new will involved two changes. Neither of those changes involved any alteration to clauses 6 and 7. Mr Snedden said he did not review clauses not directly affected by the new instructions because the new instructions were limited in scope and there was urgency because of Mr Gallais’ health. However, one of the new instructions does have an indirect bearing on Mr Gallais’ intentions in relation to Ms Reid. Under the 2014 will she also became a beneficiary of all of Mr Gallais’ assets in France which, in the 2013 will, had been left to another beneficiary.
[19] Under the 2014 will, as under the 2013 will, the residue of Mr Gallais’ estate passes to the Gallais Family Trust. The Gallais Family Trust was settled by Mr Gallais in 2005. The trust was varied in 2014 by making Ms Reid one of three
primary beneficiaries in place of five primary beneficiaries provided for in the original deed of trust.1
Evaluation
[20] Section 31 of the Act is as follows:
31 Correction
(1) This section applies when the High Court is satisfied that a will does not carry out the will-maker's intentions because it—
(a) contains a clerical error; or
(b) does not give effect to the will-maker's instructions.
(2) The Court may make an order correcting the will to carry out the will-maker's intentions.
[21] Mr Jenkin submitted, in effect, that the starting point is not an enquiry whether s 31 applies, but one of interpretation in accordance with well settled principles coupled with s 32 of the Act.
[22] Mr Jenkin referred, first, to a decision of the United Kingdom Supreme Court in Marley v Rawlings.2 Lord Neuberger, delivering the principal judgment, after summarising the approach to interpretation of a contract, said that the approach to interpreting wills should be the same. Referring to contracts he said that “the aim is to identify the intention of the party or parties to the document by interpreting the words used in their documentary, factual and commercial context”.3
[23] Section 32 of the Act contains provisions relating to the interpretation of wills, as follows:
1 Following the hearing, Mr Jenkin filed a further memorandum for Mrs Gallais relating to a question whether Mrs Gallais was a beneficiary of the trust. He noted that, although Mrs Gallais is not named expressly as a beneficiary of the trust, the trustees of the trust had power to declare trusts for the benefit of, amongst others, any widow of the settlor. No issue had been raised by the executors or Ms Reid in that regard. The point raised by Mr Jenkin has no relevance to the substantive issues under the Act.
2 Marley v Rawlings [2014] UKSC 2, [2015] AC 129 at [17]-[26].
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).
[24] Mr Jenkin submitted that, unless paragraphs (a), (b) or (c) of s 32(1) apply, the Court cannot have regard to the will-maker’s testamentary intentions. He further submitted that, interpreting the words in clauses 6 and 7 in the manner outlined in Marley v Rawlings, it cannot be said that the words are meaningless, ambiguous on the face of the will, or uncertain on the face of the will. From this Mr Jenkin argued that, in this case, external evidence of Mr Gallais’ testamentary intentions is inadmissible.
[25] Mr Jenkin appeared to submit that this approach is consistent with a decision of this Court in Sutton v Public Trust.4 In that case Simon France J, after recording the provisions of s 32, said that it “is necessary for the plaintiff to establish ambiguity or uncertainty before recourse to the extrinsic evidence can be had”.5
[26] The primary issue being addressed in Sutton was one of interpretation of the words used in a will. If the issue is one of interpretation and one (or more) of the circumstances specified in s 32(1) arises, the further provisions of s 32 plainly apply.
But that was the limit, as I understand it, of the observation in Sutton.
4 Sutton v Public Trust [2015] NZHC 1844, (2015) 30 FRNZ 643 at [31]-[33].
[27] In this case the primary application is not for interpretation of the will, but for correction pursuant to s 31. The particular rules for interpretation in s 32 do not limit the scope of s 31. Section 31(1)(b) provides a power of correction if a will does not carry out the will-maker’s intentions because it does not give effect to the will- maker’s instructions. If the Court is required to determine whether a will gives effect to the will-maker’s instructions, the Court is bound to admit evidence as to what the will-maker’s instructions were. In many cases evidence of those instructions will include direct evidence of the will-maker’s intentions. The evidence of the instructions is then to be compared with the provisions of the will. Following this the Court may make an order correcting the will if the will has not given effect to the will-maker’s intentions.
[28] This conclusion seems to me to follow from a straightforward interpretation of s 31. A contrary conclusion would be likely to render s 31(1)(b) of limited, and possibly of no, effect. My conclusion is also an interpretation consistent with the underlying purposes of the major reforms to the law of wills contained in the Act. These were explained by the Hon. Clayton Gosgrove in moving that the Wills Bill be read for the first time:6
Wills are of practical day-to-day significance for all New Zealanders. A will is an instrument that expresses a person's wishes after he or she dies, and enables that person to take care of his or her loved ones and property and assets. The proposed reforms will improve the legal framework for will- making. They will make the law easier for people to understand, and reduce the risk of a will-maker’s wishes being defeated by a badly drafted or incorrectly executed will, and will also allow better effect to be given to a will-maker's intentions.
[29] Section 31 is a statutory provision for rectification of wills. As noted by Lord Neuberger in Marley v Rawlings, it had always been assumed that, except in limited circumstances, the Courts had no power to rectify a will.7 The law was altered in the United Kingdom by s 20(1) of the Administration of Justice Act 1982, a provision which was the subject of extensive discussion in Marley v Rawlings. Section 20(1) is, in substance, the same as s 31 of the Act. The result is that a broad equivalent of
the equitable rules for rectification of contracts are now available to rectify wills.
6 (10 October 2006) 634 NZPD 5558 (emphasis added).
[30] The primary point that flows from this, in relation to the approach to ss 31 and 32 of the Act, is that it had long been settled that evidence of actual intention of the parties was admissible in proceedings for rectification of contracts.8 In making provision for rectification of wills, Parliament cannot have intended that evidence admissible under the general law of rectification could not be admissible for the purpose of the substantial reform in respect of wills effected by s 31.
[31] For these reasons I am satisfied that the evidence of Mr Gallais’ instructions to Mr Snedden, including any evidence, direct or indirect, of Mr Gallais’ intentions, is all admissible to determine under s 31 whether correction is required, and that no restriction on the admissible evidence arises from s 32.
[32] The evidence clearly establishes that the will does not carry out Mr Gallais’ intentions because it did not give effect to Mr Gallais’ instructions. Mr Gallais’ explicit instructions were that all of the assets of the company were to go to Ms Reid, but the will is not effective to transfer the assets to her.
[33] Mr Jenkin submitted that Mr Snedden’s evidence did not establish that Mr Gallais’ intention was for the shares in the company to go to Ms Reid. That argument was based on the fact that there was no evidence from Mr Snedden that Mr Gallais gave him an explicit instruction that all of his shares were to go to Ms Reid. For reasons I come to, that is not at all determinative of the question whether s 31(1)(b) applies. There is, on the other hand, evidence from Mr Snedden explaining why Mr Gallais talked in terms of the assets of the company rather than the shares. Mr Snedden said that, based on a lengthy discussion he had with Mr Gallais not long before he died, it was apparent to Mr Snedden that Mr Gallais treated assets owned by the company as being property which he could deal with as if it was property he held in his own name.
[34] The primary point in relation to Mr Jenkin’s submission is, however, that the
submission does not address all the questions that have to be answered under s 31. The first question is whether the will gave effect to the will-maker’s instructions. Mr
8 John Burrows, Jeremy Finn and Stephen Todd Law of Contract in New Zealand (5th ed, LexisNexis, Wellington, 2016) at 337.
Jenkin’s submission is directed only to the evidence of the instructions. This is evidence of what the client said to the lawyer, but there must also be an enquiry as to whether the lawyer gave effect to the instructions. The answer to that enquiry is recorded in the introduction to this judgment: no effect was given to the clear instructions because the shares passed to the trust, not to Ms Reid; clauses 6 and 7 in relation to company assets are of no effect at all.
[35] The task of the lawyer is to put into legal effect the instructions that have been given, not simply to record the instructions more or less verbatim in the will.
[36] Mr Jenkin’s submission, however, would give primacy to the latter approach. Indeed, his submissions on s 32 were essentially to that effect. This is because, when advancing submissions on the interpretation of clauses 6 and 7, the primary submission was that those clauses are neither meaningless, nor ambiguous or uncertain on the face of the will. Section 32 is not to be interpreted narrowly. The issues do not need to be determined under s 32 but I am satisfied that clauses 6 and
7, in relation to property owned by the company, are meaningless, for the reasons just stated, or uncertain because under clauses 6 and 7 the assets of the company go to one beneficiary, but under the clause disposing of residue they go to a different beneficiary.
[37] Mr Snedden’s evidence was that, given the instructions he received, the will should have contained a gift of the shares to Ms Reid. In my judgment, that evidence can be taken into account and supports the application. However, the conclusion I have reached is not dependent on Mr Snedden’s opinion, although I agree with it. The conclusion is plain from the evidence of the instructions given when compared with the terms of the will as drafted.
[38] Ms Heaney, for the executors, submitted that the Court’s power under s 31 is broad enough to permit the Court to make the specific orders sought by the executors, as recorded above at [6]. I agree, and for the reasons already recorded as to the purpose and scope and effect of s 31.
[39] Given this conclusion it is not strictly necessary to consider the alternative arguments for the executors which were that s 31(1)(a) may be applied because clauses 6 and 7 are the result of a clerical error, or that the will is to be interpreted as meaning that the shares were gifted to Ms Reid. I nevertheless note that I agree with Ms Heaney’s submissions that clauses 6 and 7 were also the result of clerical error which meant that Mr Gallais’ intentions were not carried out. This arose from the cutting and pasting of provisions from the matrimonial property agreement into the
2013 will and then cutting and pasting clauses 6 and 7 from the 2013 will into the
2014 will verbatim. The meaning of the expression “clerical error” was discussed at some length by Lord Neuberger in Marley v Rawlings.9 The Supreme Court held that the expression is to be given a wide meaning. On the facts of that case mirror wills were made by a husband and wife, but as a result of a mistake by the solicitor each signed the other’s will. This error was held to be a clerical error. In the course of his discussion, Lord Neuberger also said, by way of example, that errors arising
from cutting and pasting are clerical errors.
Costs
[40] There is no agreement between the parties on questions of costs.
[41] For the executors, Ms Heaney submitted that the correct balance in this case would be struck if the executors’ costs are paid from the estate and Mrs Gallais meets her own costs. In support she referred to Winterburn v Wilson10 which cited Harris v Taylor.11
[42] Mr Jenkin advised that Mrs Gallais seeks an order that her costs be paid personally by the applicants, rather than by the estate, and that she objects to the costs of the executors, as applicants, being paid by the estate.
[43] Mr Jenkin cited two decisions in support of the submission that the applicants should bear their own costs.12 He further advised that Mrs Gallais’ objection was
founded on the fact that she is a claimant against Mr Gallais’ estate in proceedings
9 Marley v Rawlings, above n 2, at [68]-[85].
10 Winterburn v Wilson [2016] NZHC 2687 at [7].
11 Harris v Taylor [2016] NZHC 483 at [16]-[18].
12 Re Ion [2013] NZHC 1333 at [9]; Re Bryce [2013] NZHC 2089 at [10]-[11].
she commenced in the Family Court. In that proceeding Mrs Gallais seeks an order under the Property (Relationships) Act 1976 setting aside the matrimonial property agreement she made with Mr Gallais in October 1996 and one or more of the following orders: for division of property under the Property (Relationships) Act, for provision pursuant to the Family Protection Act 1955, and for compensation under s 3 of the Law Reform (Testamentary Promises) Act 1949.
[44] Ms Reid seeks costs.
[45] I have taken account of the submissions for the parties, and the cases they have referred to. Except to a limited extent I do not consider it necessary to summarise these matters. I note that the decision in Harris v Taylor contains a helpful summary of principles.13
[46] In respect of the executors’ costs, I have concluded that they should be paid out of the estate.
[47] The factual foundation for Mrs Gallais’ contention that the applicants should bear their own costs is that the application for correction would not have been required if the applicants, practising as lawyers rather than acting as executors, had given effect to Mr Gallais’ instructions. If there were no other circumstances to be taken into account, this point made for Mrs Gallais might have justified an order that the applicants personally bear the costs for preparation of the originating application and the filing fee but, for reasons which follow, no costs beyond those costs.
[48] There are other circumstances. First, I am satisfied, from the evidence, that the unusual way in which clauses 6 and 7 were drafted resulted to a considerable extent from a combination of pressure on the lawyers, for which they were not responsible, and the fact that Mr Gallais treated and referred to assets of the company in the same way that he treated and referred to his own assets. A second consideration is that, but for Mrs Gallais’ opposition, the costs would have been
relatively modest. Third, there is no objection from Ms Reid, as the only beneficiary
13 Harris v Taylor, above n 11, at [16]-[18]. See also Andrew Beck and others McGechan on
Procedure (online looseleaf ed, Brookers) at [HRPt14.15].
who has taken part in this proceeding, to the applicants’ costs being met by the estate. It is to be noted that Ms Reid is the only beneficiary under the will other than the trust. The primary beneficiaries of the trust, other than Ms Reid, were served and have taken no steps to oppose the order. Another party, who has filed proceedings against the estate in the Family Court, was also served and has taken no steps. The fourth and principal consideration is that the costs of this proceeding have been increased substantially by Mrs Gallais’ opposition and Mrs Gallais has not succeeded in her opposition.
[49] For these reasons I am satisfied that there is no merit in Mrs Gallais’ objection and that the applicants are entitled to an order for their actual and reasonable costs to be paid by the estate.
[50] In respect of the application by Mrs Gallais for payment of her own costs by the applicants personally, there is no justification for such an order for the reasons just noted and because Mrs Gallais is the unsuccessful party.
[51] I am also satisfied that there is no justification for an order that Mrs Gallais’ costs be met by the estate. In some cases relating to wills orders are made for the costs of an unsuccessful party to be met by the estate. This is not such a case. It could in fact reasonably be argued that, because Mrs Gallais is the unsuccessful party, with the general rule being that the unsuccessful party pays the costs of the successful party, and because I consider that Mrs Gallais’ opposition to the application was not reasonable, there should be an order that she pay the applicants’ costs. However, because the applicants did not seek an order against Mrs Gallais the appropriate outcome is that Mrs Gallais meet her own costs.
[52] In respect of Ms Reid’s costs, Ms von Keisenberg advised that Ms Reid took an active role to support the application only because of the opposition advanced by Mrs Gallais. I am satisfied that Ms Reid is entitled to an order for her costs to be paid out of the estate.
Result
[53] There is an order that the will of Philippe Alain Robert Gallais dated 20
March 2014 granted probate on 31 July 2014 be corrected by: (a) Deleting clause 6.
(b) Deleting from clause 7 the words “and by Gallais Investments
Limited”.
(c) Substituting for clause 6 the following:
I GIVE to my partner SUSAN LYNETTE REID my shares in Gallais Investments Limited.
[54] There is an order that the actual and reasonable costs, including disbursements, of the applicants and of Susan Lynette Reid be paid out of the residue
of the estate.
Woodhouse J
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