Estate of Keast
[2015] NZHC 1072
•20 May 2015
IN THE HIGH COURT OF NEW ZEALAND INVERCARGILL REGISTRY
CIV-2014-485-007847 [2015] NZHC 1072
UNDER THE ADMINISTRATION ACT 1969 IN THE MATTER OF
THE WILL OF
WILLIAM ROBERT KEAST
Hearing: 5-6 May 2015 Appearances:
JNP Young for the Estate
J G French for Caveator
A J Woods for the BeneficiariesJudgment:
20 May 2015
JUDGMENT OF DUNNINGHAM J
Introduction
[1] William Robert Keast (“Bill Keast”) died on 14 July 2013 aged 86. He was a widower. His wife Heather, the mother of his five children, had died some 17 years earlier. Bill Keast’s most recent will was executed by him on 28 November 2012 (“the 2012 will”). Unfortunately it has been the cause of division between the five children.
[2] Under the 2012 will the residue of the estate is to be shared equally between the children. The estate is comprised almost entirely of one asset, being the debt owed to the late Bill Keast by his son Alexander Lance Keast (Lance) and his
daughter-in-law, Leane.1 At the date of death the balance owing was $862,067.29.
1 As trustees of their family trust.
[3] The 2012 will differed from Bill Keast’s previous will which was executed on
23 June 2011 (“the 2011 will”). The principal difference between the two wills was that in the 2011 will, Bill Keast left each of his four daughters (Zilda, Christina, Dianne and Tracey) the sum of $100,000 (to be inflation adjusted) and the balance of the estate to Lance, while in the 2012 will, the estate is to be divided equally between the five children.
[4] In round figures, the difference between the 2011 will and the 2012 will, as it affects Lance, is that he is now required to repay the estate the sum of $690,000, whereas under the 2011 will, the amount required to be repaid was $400,000 (with an inflation adjustment).
[5] Bill Keast’s son, Lance, opposes the application for a grant of probate in respect of the 2012 will upon the grounds that it resulted from undue influence on the testator by his daughter, Zilda Frances Harvey (Zilda).
[6] The sole issue for me to determine is whether Lance is able to establish on the balance of probabilities that the 28 November 2012 will was executed by Bill Keast as a consequence of undue influence exerted on him by his daughter Zilda and therefore did not reflect his true wishes.
Relevant legal principles
[7] There was no dispute between the parties as to the legal test for undue influence. I was referred to the decision in Re Dudley (deceased), where the relevant principles for determining a proceeding such as this were summarised by Fisher J as follows:2
(a) The key question is whether, because of extraneous pressure from others, the will-maker has signed a will contrary to his or her own wishes.
(b) Persuasion which has left the final choice to the will-maker is not undue influence. Where there is evidence of strong influence or pressure, the Court will approach the question of the will-maker's own wishes with suspicion. However, if satisfied that the will- maker's wishes have not been overborne, and that in the end he or
2 Re Dudley (deceased) HC Auckland P1042/92, 14 May 1993 at 11-12.
she wanted the will in that form, the Court must uphold the will. In those circumstances the ultimate source of the will is not the external pressures but the exercise of the will-maker's own free judgment.
(c) The onus of proof lies upon the proponent of undue influence.
However direct evidence of undue influence is not to be expected. These cases usually turn upon the strength of the circumstantial evidence. The question is whether from all the surrounding circumstances, with particular emphasis upon the result of the will and the circumstances in which it was actually executed, undue influence is to be inferred.
(d) For this purpose all the circumstances bearing directly or indirectly upon the free will of the will-maker at the time of execution are relevant. These include illness, pain and suffering, physical weakness and mental deterioration falling short of testamentary incapacity. They also include dependency upon others in legal, business, social, medical and/or domestic matters. One should view with special care any powerful need, obligation, or vulnerability on the part of the deceased which others might be in a position to exploit.
(e) However, it is not enough to show that others had the means and opportunity to unduly influence the deceased and that there has been a recent testamentary disposition in their favour. The Court must be satisfied both that the power was exercised and that the will would not have resulted but for that exercise.
[8] I was also referred to the Court of Appeal’s decision in Carey v Norton, where the head note of the case recorded:3
1. Where influence arises out of an actual or presumed relationship of confidence, the better view is that influence (whether actual or presumed influence) was “undue” even if not accompanied by “malign intent”. “Undue” related to impairment of judgment rather than to improper conduct on the part of the person possessing influence.
[9] In summary, therefore, for Lance, as caveator of the will to succeed, he must satisfy me, on the balance of probabilities, that his sister Zilda was able to influence her father to execute the 2012 will when that did not reflect his own wishes. In determining whether it is reasonable to infer that she unduly influenced her father I should look at all the surrounding circumstances, including any special dependency the father had on Zilda, the circumstances in which the will was executed, and the
result of the will.
3 Carey v Norton [1998] 1 NZLR 661 (CA).
The evidence
[10] The bulk of the evidence was given by way of affidavit. There were affidavits from Lance and his wife, Leane, from each of the four daughters, and from Warwick Cambridge, the lawyer for Preston Russell who met with Bill Keast when Bill executed the 2012 will. Given the factual disputes arising, all witnesses were also subjected to cross-examination.
[11] I am satisfied all the key parties endeavoured to accurately recall events as they remembered them, but at times, it was clear they were acting on incomplete information and drew conclusions accordingly. Having heard about the key events from a number of witnesses, all bringing their own perspectives, it was easier for me to gain a complete picture of the events which were pivotal to the issues in dispute.
[12] Lance also called evidence from a number of people who were friends or business acquaintances of the family to attest that he and his father had an amicable relationship (albeit they might converse in strident language at times) and that he was not someone who would have bullied or taken advantage of his father. However, as cross-examination revealed, I am satisfied that none of these people were privy to the financial arrangements between father and son, nor Bill Keast’s intentions in his will. Most of them had had little contact with Bill in the critical last two years of his life when he was being cared for by Zilda. Accordingly, while this evidence reinforced my view that Lance was a hardworking and forthright person, it did not assist with the issue of whether there had been undue influence on Bill Keast when he made the decision to change his will.
[13] Importantly, I also heard recordings (and read accompanying transcriptions) of two conversations which occurred at critical times. The first recording was of the first 30 minutes of a discussion which took place on 25 November 2012 between Lance and his father following what I will refer to as the tractor incident. This occurred when Tracey sought to uplift a tractor from Lance’s farm which she understood belonged to her father to sell it for cash, but Lance ordered her off the property and told her not to come back unless she had his permission.
[14] The second recording was of a discussion which took place on
21 December 2012 when Lance arrived at his father’s place for a visit. The conversation involved Zilda, Lance and Bill, although Zilda’s daughter Tyleigh was also present. This conversation recorded Bill Keast’s request for $50,000 to be repaid by Lance, and Lance’s response to that request.
[15] These tapes, while not of perfect quality, provided an insight not normally available in estate litigation to hear the interactions between the deceased and other family members during the deceased’s lifetime.
[16] That said, I have been cautious about placing too much weight on the tenor of these two conversations, which took place in more volatile circumstances towards the end of Bill’s life, because I must still stand back and look at the totality of the evidence about the relationship between Bill and his children over many decades. However, they did bring to life some of the family interaction and assisted in supporting some of the evidence which had been given and tested in cross-examination.
The background circumstances
[17] Bill and Heather Keast were married in 1954. Their five children were born over the next 13 years and were brought up on the family farm at Wairio in Southland. Lance, the only son, was the second to last child and was born in 1962. The family farm comprised two separate blocks, being part section 118, comprising approximately 74 hectares, and part section 114 comprising approximately
77 hectares. Lance worked on the farm alongside his father from the time he left school.
[18] In 1990, Lance and his wife Leane purchased section 118 from Bill Keast. Lance’s evidence is that, at this stage, Bill Keast was “in a relatively poor financial situation and was living beyond his means” largely because of the money he spent on owning and training race horses. Lance and his wife financed the purchase through the Southland Building Society and ANZ, buying the land, livestock and plant, and this allowed Bill Keast to repay debt. Lance and Leane then built their own home on that property.
[19] The four daughters also played their part on the farm and in family life even after they left home. This was particularly so when their mother got ill in 1996, when three of the daughters, Dianne, Tracey and Christina, took shifts helping their father nurse their terminally ill mother, especially at night.
[20] Heather Keast died on 15 November 1996 and Leane and Lance then leased his other farm block, that is section 114, at a rent of $1,541 per month. The lease was agreed to be a precursor to purchasing the property.
[21] Significantly, Lance’s evidence is that at this time Bill Keast said to Lance
that he had total assets of $60,000. Lance says that the will Bill made on
14 November 1997 provided that each of the sisters was to receive $12,000, which was a one-fifth share each, with the residue of the estate left to him. He also accepted in cross-examination that, at least at that stage, his father was intending to treat them all equally.
[22] In 2007, as trustees of their family trust, Leane and Lance purchased the balance of the farm, being part section 114. The debt presently owed to the estate is the balance of the purchase price in relation to that 2007 purchase.
[23] Lance’s evidence is that, at the time of purchase, Bill told him that he was going to increase the amount payable to the four sisters from $12,000 to $40,000 each, and Lance and Leane took on the borrowings required at the time with the expectation that $160,000 would be the amount required to pay out Lance’s sisters on their father’s death.
[24] It is also not disputed that, as part of the agreed arrangements in respect of the 2007 transaction, Bill Keast was able to continue to occupy his house on the farm free of charge, his horses were grazed on the farm free of charge and a modest sum of interest was paid to him on the loan. The interest amounted to a net payment of
$750 per month to Bill (with Lance meeting the RWT requirement on the payment).
[25] For many years Bill Keast had suffered from diabetes and he became progressively dependent on medication. By 2011 he was developing serious
mobility problems and had become quite frail. His right eye also deteriorated in his last years. The family met to discuss what to do after Bill had had a serious fall in September and it was decided it would be better if Bill was no longer living on his own. It was agreed that Zilda, who was living in the North Island, would come down to look after him. At the time Zilda was a solo mother receiving the domestic purposes benefit. In return she was to receive free accommodation for herself and her daughter Tyleigh.
[26] Zilda arrived at Wairio in October 2011. She, too, shared her father’s love of horses and she enjoyed the benefits of free grazing for her horses on Lance’s farm. Because by that stage Bill Keast was no longer mobile or able to drive, Zilda did his grocery shopping and ran all his errands. She also fed and groomed his horses and foals, looked after the hens and did the garden. Even when she found a part-time job, she prepared her father’s breakfast and left lunch for him and arranged for a home carer to come in the mornings to shower him.
[27] During that period of his life, Bill Keast was living on his superannuation (which amounted to approximately $660 a fortnight) plus the $750 per month he received from Lance as interest on the loan. Financial statements from Bill Keast’s accountants, Malloch McLean, show his personal expenditure4 over those three years was approximately $20,000, $28,000 and $25,000 respectively. It was clear that Bill Keast’s income did not meet his expenditure. This was reflected in a dwindling
bank balance in his Westpac bank account. On 14 March 2011 it stood at around
$15,000. By late October 2011, when Zilda arrived, it stood at around $10,000 and by late December 2012 it had dropped to around $1,500.
[28] It is at this juncture, following Zilda’s arrival, that the parties’ views about what happened start to depart in a material way. From Lance’s perspective, Zilda “began spending a lot of Bill’s money” and the expenditure seemed to be “more than what was required to meet reasonable living expenses”. Lance was concerned when his father contacted him saying “Lance, she says I need more money, I’ve got none”. Lance’s suspicions increased when he learnt that Zilda operated Bill’s EFTPOS card
and he became convinced that she was overspending as prior to this, his father
4 Excluding farm related expenses such as stock feed and veterinary bills for his horses.
seemed to have enough money for his needs. When Lance began making inquiries of Zilda, she lost her temper at him and said Lance should give their father his money.
[29] By 2013, relations had become so mistrustful that Lance opened a separate ANZ bank account so that the interest payments he made to his father would go into that account, and he could directly control which expenses of his father were met from that account. It is in these circumstances that the events which I now go on to discuss arose.
The triggering events
[30] Much of the evidence at the hearing focused on three events which occurred in late 2012 and early 2013. The first is the tractor incident already referred to. The second relates to Bill Keast making, and then retracting, a request for repayment of
$50,000 and the third is, of course, the circumstances of 28 November 2012 when
Bill Keast went in to his lawyers and changed his will.
[31] These events are significant because the daughters argue that their father changed his will as a consequence of the tractor incident. That occurred on
25 November 2012 and the will was amended on 28 November 2012. They also say that their father’s decision was reinforced by later events, including Lance putting his interest payments into an ANZ account which only he controlled, so that his father would have to come to him to obtain money to pay accounts. The daughters say these events explained why their father changed his will and why he did not, in the ensuing six months before he died, take steps to alter it back.
[32] From Lance’s perspective, these incidents are also important. His view is that the relationship between him and his father was fine until Zilda arrived and it was only after that that his father seemed to be short of money. It was then that pressure came on him to provide Bill with further sources of funds, including taking the tractor to sell and demanding the repayment of $50,000 of the debt owed by his family trust. He says the instructions to the lawyer on 28 November 2012 were influenced by Zilda and that this was demonstrated by the fact that his father subsequently retracted the $50,000 demand.
[33] Consequently, my findings about the tractor incident and the $50,000 demand are relevant to the key issue of whether undue influence was used to get Bill to change his will.
The tractor incident
[34] Bill’s daughter, Tracey, was an accountant and she assisted her father with his finances while he still ran the farm and, even after that, she helped him with putting information together for his accountants. In 2012 she became aware that her father was running out of funds. He had already used up the term deposits he had, which he had earmarked to fund his funeral, to buy a replacement car when his old car broke down in 2010. She was concerned that with her father’s medical and living expenses, his obligations to maintain the house he occupied on the farm and his desire to keep and train horses, he was rapidly running out of funds.
[35] She looked for various ways to increase her father’s financial position. First,
she suggested that her father ask Lance to increase the interest rate he paid on the
$860,000 debt or, alternatively, that he call on some of the debt to be repaid. Because her father told her that Lance would resist this, she then proposed that her sisters and Lance all put in money towards the training of her father’s horse. However, that required getting all the siblings to agree to do that and that would not be easy given the limited disposable income of some of the sisters and Lance’s indifference to horses. She then looked at her father’s statements of assets and saw that he still owned a Ford tractor. She proposed either buying it herself or selling the tractor so that her father would have those funds available to put his horse into work.
[36] She then organised with Lance for her and a friend to come and pick the tractor up on 25 November 2012. However, when Lance started getting the tractor out and putting diesel in it, he became “very aggressive and mad”. The friend who accompanied her was able to drive the tractor away, but Lance turned on Tracey saying “don’t ever set fucking foot on this property again without my permission”.
[37] Tracey was upset at this response and went around to her father’s place. She told her father she thought she had done everything right and that her idea was to buy the tractor so he could have money for training fees. Her father had also
checked with Lance in advance that Tracey could pick up the tractor so he, too, could not understand why Lance had responded so angrily.
[38] Bill Keast wanted to know why Tracey had got the reception she did and so had Zilda drive him around to Lance’s place. It is the first half hour of the ensuing conversation which was recorded by Zilda and presented as evidence at the hearing. Bill Keast explained to Lance that Tracey had come to his place “weeping and wailing” and, because she was so upset, Bill said “I thought I’d come round and ask you”. Lance confirmed that he told Tracey not to set foot on the property again without his permission. He went on to accept that it was his father’s tractor, but then itemised all the work that he had paid for in relation to the tractor, presumably to explain why he was unhappy about it being taken.
[39] The conversation then turned to the training of Bill Keast’s horses, and it was made very clear that Lance did not consider he should have to contribute to his father’s horse being trained. He also stated that his father always appeared to have enough money until 12 months ago and that “what’s coming through [is] that we’re taking you to the cleaners”. Leane, too, expressed concern that the sisters’ view was that she and Lance have “taken everything” but, as Lance then reminded his father, “We’ve bought the farms off you. We’ve bought the stock off you and we’ve bought the plant off you. Yes, have we not.”
[40] The conversation culminates with Lance saying:
it gets our fucking blood boiling when we hear that we are fucking rape (sic) and pillage … [Tracey] said that Zilda, Zilda that at the table round there said “How dare us buy the farm”. It wasn’t for us, you would have been in fucking Winton but as you know [you are] in the house.”
[41] In other words, he reminds his father that by having Lance and Leane buy the farm, Bill was able to stay in the house rather than move to the nearby town of Winton.
[42] The conversation is then wide ranging but returns to the request for siblings
to put in money to help train her father’s horse, however, Lance rejects that idea,
saying “why would we want to put money into training for for (sic) the fucking thing”.
[43] The tenor of Lance’s conversation is very aggressive, and while I accept that the anger was not directed at Bill Keast, it was certainly clear that Bill was not welcome to challenge anything that Lance said for fear that the same aggression that was directed at Tracey would be directed at him. For example, Lance warns his father “No just fucking, I have been pushed into a corner, don’t fucking push me into a corner. Or else I’ll fuck fucking”.
[44] Much was made of the fact that the coarse language used was typical of the language used between Lance and his father, and it was just the way the father and son spoke to each other. However, it is clear from the entirety of the transcript that this is not the way that Bill was responding to Lance. Indeed, when Lance recounts that Tracey objected to him swearing at her, he says “We always talk like that don’t we?”, but his father simply responds saying “No”.
[45] However, it is not the use of repeated swear words that strikes me as making Lance the dominant force in the conversation as recorded, it is his domineering tone of voice and the way he rarely lets his father get a word in edgewise. Bill seldom gets to complete a sentence nor does he get a real explanation of why Lance got so angry about Tracey coming to take the tractor when he had not objected earlier. In the end, it appears his father resignedly accepts the way Lance sees things and makes no headway in the conversation even though he is concerned to defend Tracey.
[46] The daughters say that the significance of this conversation is that in the aftermath, their father made a decision to change the will and to seek some money by way of part repayment of the loan to Lance and Leane. Zilda says that after they left Lance’s, her father said to her, “I don’t own anything do I?” She also said that her father was “very surprised that Leane agreed with Lance and immediately said that he wanted to go to a lawyer”. As it was Sunday, Zilda explained that she would arrange an appointment the next day.
[47] Similarly, Tracey said that in one of her telephone calls to her father after the tractor incident, he told her that Lance had said to him that he “had nothing and owned nothing to his name”, and that Leane did not say anything to contradict this. Dianne also says that after the tractor incident, her father said “after all the years of working I have nothing and done nothing”. When she asked him what he wanted to do, he said “what is the point, I have to live here?” He also said he could not understand why Leane never said anything to Lance to stop him.
[48] I am satisfied from the consistent reports the daughters gave of how their father felt after the tractor incident, that he realised he had no assets of his own to call on and he was beholden to his son in order to stay living in the house on the property. His sense of defeat and disappointment may well have been the prompt for him to go in on 28 November 2012 and change his will so that Lance had no special advantage over his sisters.
The $50,000 demand
[49] When Zilda took Bill Keast in to amend his will on 28 November 2012, he also discussed asking Lance for repayment of a lump sum of the $860,000 debt. I accept that the idea of seeking repayment of some of the loan was initially suggested by Tracey and Zilda. They saw that their father’s financial status was getting parlous and felt it was unfair that he had a significant asset of $860,000, but was only being paid an annual rate of 1.3 per cent interest on it. They suggested to him that he seek repayment of some of the loan, so that he could invest this at a reasonable rate of interest and have money at his disposal without having to ask for it.
[50] It is clear that Bill Keast made inquiries about this when he went into see his lawyer on 28 November 2012. Mr Cambridge records in his file note that he:
Then followed up on his question relating to amounts owing under the Deed. Confirmed that the Deed, as far as I was aware, was upon demand and he thought that he needed to have some more cash in his hand and the figure suggested was, after discussion, $50,000.
[51] The fact that this was recorded as Bill Keast’s question, not Zilda’s, supports my view that Bill Keast was keen to pursue this. However, the lawyer was not given instructions to seek repayment at the time. Instead, Bill Keast raised it in a
discussion with his son. This can be heard in the second recorded conversation which occurred on 21 December 2012 when Lance came around to visit his father.
[52] In the conversation Bill says that he had discussed with his lawyer a proposal to get $50,000 from Lance, and thought the lawyer was going to ring Lance directly about this. Lance says “so what do you want $50,000 for?”, saying that his father “always had money in his account”. His father explains that this was because “I always had some income coming in”. Lance protests that he will have to get a mortgage to pay that amount of money and then his father raises the fact Lance is only paying nominal interest on the existing loan, mistakenly saying that he is paying “less than one eighth of a per cent now”. Lance corrects him and then says “everything is changing too much. I’m going to have to think on this. I’m maybe I might be better off fucking paying the whole lot back”. His father, appears resigned at this somewhat petulant response, saying “Righteo it’s up to you. I’m poked. Forget that I mentioned it”.
[53] Lance then again protests that there used to be money in his father’s account and he “always had money” and repeatedly asks him what he wants $50,000 for. Zilda intervenes at this point explaining that there is the cost of the horses. Lance says at least twice that “the hawks” (presumably referring to his sisters), have come in and things have changed, suggesting that they are “not too good with money”, but his father responds saying he can account for every withdrawal in his bank statements.
[54] The conversation continues to return to the father’s request for $50,000, with Lance saying sarcastically “do you reckon that will be enough, you don’t want more?” and that his sisters will have it “gone in no time”. Bill suggests that Lance rings Warwick Cambridge, the lawyer, about repayment of the $50,000 and then, finally, Lance realises that his father has already been in to take advice from Cambridge and has altered something. When he asks repeatedly “what have you altered”, his father turns to Zilda saying “what did I have to alter with Cambridge?” and Zilda responds saying “whatever I heard in there I am not allowed to say”. The conversation ends with Bill repeatedly urging Lance to ring the lawyer.
[55] Lance then telephones Warwick Cambridge on the same day. He is told that his father made changes to his will and in addition that he required $50,000 of the loan advance to be repaid so that he would have funds available to himself. Lance enquires about the terms of the changes to the will but of course, that is not disclosed. Mr Cambridge confirms that he was satisfied of Bill Keast’s abililty to make a will and confirms that Bill was free to make further changes to the will. He suggests that Lance discuss the request for $50,000 to be paid with Bill and come to some arrangement over it.
[56] It appears likely there was at least one other occasion when Bill asked his son Lance for the $50,000 in this period. In Lance’s affidavit evidence, he recalls a conversation in February 2013 about this and he confirmed in cross-examination that he had been verbally asked for the money twice by his father before he got a letter from Preston Russell although, when re-examined, he could only recall the one request. However, Lance did subsequently pay his father $2,000 which suggests there was a further conversation about the need for money.
[57] When no real progress had been made on the payment of $50,000 by early March, Zilda rang Preston Russell, along with her father, and asked them to send a letter to Lance requesting payment of the balance of the $50,000,5 by
31 March 2013, failing which formal demand would be made under the deed of acknowledgment of debt dated 31 October 2007.
[58] While much was made of the fact that Zilda made the telephone calls, Zilda explained that she did this because “Dad had trouble talking and hearing on the phone, and as Dad would say, “I have run out of puff”. Dad didn’t like being on the phone because he could not always hear what people were saying”. Even though she made telephone calls for Bill Keast, he would stand alongside her giving instructions and Mr Cambridge confirmed that it was clear that Bill Keast was alongside Zilda giving instructions on this occasion.
[59] When Lance received the letter from Preston Russell requiring payment of
$48,000, he says he was shocked. On the day he received this letter, his
5 Which, taking into account the payment of $2,000, was $48,000.
Rural Bank Manager, Mr Mark Wells, had arranged to come around and pick up some blue cod. When Mr Wells arrived, Lance explained the situation to him and said “I thought it would be advisable if [Mr Wells] accompanied me when I went to see my father”, particularly as the bank would be involved because he would need to borrow the money. Mr Wells’ recollection was that Lance “was quite distressed at having received this demand” and Mr Wells was given the impression it was an “unexpected liability” when in fact both Bill and Mr Cambridge had discussed it with Lance on previous occasions.
[60] When Lance arrived along with his bank manager, his father recanted his earlier position. He said that Warwick Cambridge should not have sent the letter and that he “did not want this to happen”. Lance then asked his father to cancel the demand and Leane typed up a letter revoking the instruction. The letter was addressed to Mr Cambridge and said that
I would like to convey to you that this matter [of the $50,000 repayment] has been resolved between both parties, therefore no further action/demand will be necessary on your behalf.
I would also like to instruct you, that from the above date Zilda Harvey does not have any authority to act on my behalf, in any legal capacity whatsoever.
[61] Lance suggested it would be good to have a witness present to sign the letter and Mr Neil Irwin, who was one of his father’s long-standing friends, agreed to be the witness. Lance met with Mr Irwin on 16 March 2013 and the two of them drove to Bill Keast’s place where the letter was signed and Mr Irwin witnessed it.
[62] When Mr Cambridge received this letter on 18 March 2013, he rang Bill Keast as, of course, this reversed his earlier instructions. The response he received from Bill Keast was that “he wouldn’t do this to his son”. In order there be no misunderstanding, Mr Cambridge confirmed in writing to Bill Keast that “no further action is required”.
[63] Despite submissions on Lance’s behalf to the effect that the letter dated
16 March 2013 represented Bill Keast’s true wishes, and the earlier demand for
$50,000 was something Zilda had put him up to, I do not share this view. It is clear that Bill Keast’s financial resources were depleted and his expenditure, including
food, medical expenses, power and home maintenance, along with the cost of maintaining some horses, exceeded his income. On 21 December 2012, he had firmly and repeatedly requested a sum of $50,000 from Lance, despite Lance’s protestations that this was something he had been put up to and breached earlier understandings between them. This demonstrates he did want access to these funds.
[64] However, it is clear to me that Bill Keast found it hard to stand up to his son, particularly in those last two years. He realised that he was living on the farm, rent free, and he wanted to avoid conflict with Lance and Leane. When his own direct requests of Lance did not have the desired result, he hoped that a letter from the lawyer would. Instead, it prompted a visit from Lance accompanied by his bank manager, which emphasised the complications that repayment of the money would create for Lance. I am satisfied that Bill revoked the instruction, to avoid any further discord with his son which pursuing the demand would incur.
[65] While Mr Irwin gave evidence confirming that Bill was “pleased to sign the document” and was “happy that this would remove the stress which he had been feeling”, he was not aware of the background circumstances which prompted the demand, nor the fact that Bill had already made this demand of his son in person. It is clear to me that the stress Bill Keast was feeling was in a large part as a result of the friction which the letter of demand created between him and his son, and it was simply easier for him to allow the status quo to remain, than to persist with the request for repayment.
The circumstances of making the will
[66] The request for repayment of the $50,000 is relied on by Lance as an illustration of the purported undue influence that Zilda had on her father at the time of making the will, and I now turn to discuss the evidence about that event.
[67] As already noted, the will was altered on 28 November 2012, only three days after the tractor incident. The first contact with Preston Russell regarding the instructions to amend the will, was on 27 November 2012, when a file note records that:
Zilda Harvey phoned on behalf Bill Keast (her father). Would like to change will (over phone) and then come in and sign. Wants to sort Lance’s mortgage. Zilda away at 3.00 pm. Please phone before then.
[68] This note was recorded by Mr Cambridge’s personal assistant. He now cannot recollect whether he rang back or someone else from the firm did, but it is clear that the call was returned and instructions taken for an amended will. In fact, it was common ground between Mr Cambridge and Zilda that there were two versions of the will prepared for the appointment when Bill Keast came in so that the two options could be discussed and he could sign on that day without having to make a
second trip in.6
[69] Mr Cambridge made a comprehensive file note of the attendance. He enquired as to whether Bill Keast was happy for his daughter Zilda Harvey to remain with him during the interview and Bill confirmed that he was. Mr Cambridge went through the existing will and through the amended will and explained the change from the previous will which benefited Lance unequally, to a will where the residue was to be divided between all of the children equally. They also discussed a proviso which meant that if Zilda predeceased her two sons, her sons would not be entitled to receive her share and got confirmation from Bill that he wished to leave the proviso in the will. Mr Cambridge then asked a range of questions to satisfy himself that Mr Keast had capacity to make the will.
[70] The file note then recorded the discussion on the proposal to seek repayment of $50,000 and on Zilda’s queries regarding the valuation which was used at the time of the purchase of the second block of the farm in 2007.
[71] At the end of the interview, the discussion returned to the will and the trustees which were named in it, including Lance. Mr Cambridge noted the advice he gave about Lance remaining as a trustee which was “if [Lance] did not accept the will and wanted to dispute the terms of it he would, as a trustee, probably have to resign as you cannot act as Judge and jury of your own cause in such a situation”. The file
note records “Bill was happy that Lance therefore remain”.
6 It seems likely from Mr Cambridge and Zilda’s evidence that the two versions respectively included and excluded a proviso that meant Zilda’s two sons would not inherit her share if she pre-deceased Bill.
[72] The will was then executed. No further changes were made to the will before
Bill’s death in July 2013, although Bill did speak to Mr Cambridge personally, on
4 June 2013 about removing Lance from holding his enduring power of attorney, but then decided not to make that change.
Did Zilda exercise undue influence on Bill Keast in order to get him to change his will?
[73] In the context of this factual background, the submissions made on behalf of Lance pointed to “the strength of the circumstantial evidence” which it was said, should lead the Court to infer that undue influence had been exercised. This evidence fell generally into the following categories:
(a) Bill Keast’s poor state of health at the relevant times and his dependence on Zilda to manage all aspects of her father’s life including his financial affairs;
(b)the obvious and ongoing dissatisfaction of Zilda and her sisters in relation to the 2007 transfer of the balance of their father’s farm to Lance and Leane Keast Family Trust which was a motive for seeking the change;
(c) the circumstances in which the change to the will was made including that Zilda gave the instructions and was present during the consultation and there was no reason given for the change even though it constituted a major alteration as compared to the 2011 will;
(d)at the same meeting as the will was changed, instructions were given to make demand for payment of $50,000 from Lance and Leane Keast when on 25 November, Bill had said he did not require any money and he subsequently cancelled the demand.
[74] I discuss each of these circumstances in turn.
Bill Keast’s health and his dependency on Zilda Harvey
[75] There is no doubt that Bill Keast was in a poor state of health at the relevant times. He could not drive himself and eventually could not sign cheques so instead had an EFTPOS card issued which he allowed Zilda to use. Bill was therefore dependent on Zilda for his day to day care and welfare and for the management of his financial affairs and she was living with him throughout the relevant time. However, the issue is not simply the dependence, but whether this leads to an inference that she could, at the material time, have overborne his will to the extent that he would have made a will which did not reflect his true wishes, but hers.
[76] I am satisfied from the totality of the evidence that Zilda, supported by her sisters, did no more than a dutiful daughter would have done. Zilda undertook her role conscientiously and, although she was entrusted by her father to manage his financial affairs, and to make telephone calls on his behalf, she did so with his best interests in mind. Any suggestion that she had personally benefited from Bill’s money or would otherwise abuse the trust he reposed in her, was not sustained on the evidence. Instead, the hands-on role Zilda played in the management of her father’s financial affairs (and that played by his daughter Tracey) meant they were in a better position than Lance to see that his income exceeded his outgoings and that by 2012, he had exhausted his cash reserves and needed a further source of income, which is why they looked for ways of achieving this for him.
[77] Bill Keast was also beholden to Lance and Leane to allow him to stay in the house on the farm and to keep his horses there and he was anxious not to offend them. Any influence exercised by Zilda or Tracey was exercised for the purpose of supporting their father in the face of his sense of obligation to Lance and Leane. It is the tension between following his daughters’ advice on what was in his best interests, and yet not wanting to upset Lance, that created the problems which arose in the last year of his life. In this regard, Bill was able to and did defy his daughters’ advice at times to keep the peace.
[78] In short, while there is no denying Bill’s dependence on Zilda for his day-to-day care and welfare, it does not follow that she did, or even could, exercise undue influence on him.
The dissatisfaction with the 2007 transfer of Bill Keast’s farm
[79] Zilda, Dianne and Tracey all expressed concerns about the 2007 transfer of the balance of Bill’s farm to Lance and Leane Keast’s family trust. The reason for their concern was that, at the time, the land’s rating valuation was $1,575,000, but the valuation obtained by Lance, and used for the purchase, was $960,000. On the face of it, there was such a significant discrepancy between the two that Dianne raised it with Preston Russell when she took her father in to make a will in April 2010.
[80] This dissatisfaction was also reflected in the affidavit evidence. For example, Tracey records that Lance has two farms (the family farm and another), a house in Te Anau and a house in Winton and a large boat designed and built for at least
$100,000. In cross-examination Lance acknowledged that, based on rating valuations, he had assets totalling some $8 million. There is a sense that she and her sisters feel their brother’s financial success is based, at least in part, on purchasing from their father the farm at undervalue, and also the ongoing arrangements which meant Lance was not paying a true interest rate on the balance owed to his father.
[81] The issue, however, is whether this dissatisfaction motivated Zilda to pressure her father into changing his will so it was less beneficial to Lance. While Lance focused on Zilda’s dissatisfaction, the evidence shows that all of the sisters, to a greater or lesser degree, had some misgivings about the fairness of the transaction, including the terms on which interest was being paid on the debt Lance and Leane paid to their father.
[82] However, I am satisfied that the dissatisfaction focused on the detriment this caused to their father, rather than any personal sense of grievance they had about this. The concern was that their father had been short changed in the transaction, and was unable to live as comfortably as they would have liked in the last years of his life because of the financial assistance he was still giving Lance and Leane. Their
primary concern was to see their father get a better deal, either by repayment of some of the loan, or by an increased return on the money he had lent to Lance and Leane.
[83] There is nothing in the evidence which suggested to me that Zilda, or any of the other daughters, sought to even up the distribution of their father’s will between them and their brother. Indeed, Zilda goes so far as to say that “I did suggest that he gives it all away, but he actually told me off for that”. I therefore do not consider it provides a basis for suggesting Zilda exercised undue influence on her father to change his will.
The circumstances in which the change to the will was made
[84] Much was made of the fact that Zilda made the initial call to the lawyers to discuss the alteration to the will, and remained present throughout the appointment with Mr Cambridge, when she was someone who benefited from the change, and where the change was otherwise unexplained.
[85] I have already explained why Bill Keast’s hearing problems meant he preferred that telephone calls on his behalf were made by his daughter, although he would be present and would relay instructions on these occasions. I therefore do not find it surprising that the arrangements to go into Preston Russell were initiated by her.
[86] She was also present throughout the consultation over the will, but this was because, when asked by his solicitor, Bill himself said he was comfortable with her staying. It is noteworthy that Bill did not feel uncomfortable about discussing the proviso which disinherited Zilda’s sons in front of Zilda which suggests her presence did not inhibit him from speaking frankly to Mr Cambridge. Bill was also conscious that his change might not be well received by Lance given the discussion he had with Mr Cambridge at the end of the consultation about Lance continuing on as a trustee.
[87] Mr Cambridge was emphatic that he did not discern any undue influence by Zilda in terms of the will and he confirmed on more than one occasion in cross-examination that he was satisfied, having gone through the will very carefully
with Bill, that it reflected his instructions and that the questions he asked and the things that he had explained to him, ensured that the will reflected what Bill wanted.
[88] The final point which makes me satisfied that the will reflected Bill’s wishes was that there had clearly been a history of Bill trying to balance his desire to be fair to all his children, while assisting Lance to acquire and maintain the family farm. An earlier will he had made in 1997 had endeavoured to split his assets equally.7 That was confirmed by Mr Cambridge who said that the change:
followed through from a long period of time over a long number of years where many of the discussions with Bill had been relating to how did he cater for the interests of all of his children … at various times he wanted to provide for Lance in different ways and then at other times he just wanted them to all share equally. So the format of the change … [going from] … a provision relating to just Lance alone for the residue but with large legacies going out, to one where he wanted to share equally was not a surprise at all when I considered the number of discussions over the years.
[89] This evidence was critical in satisfying me that the decision to revert to a will which benefited all his children equally, was a decision which Bill was comfortable with, and which reflected an outcome which he had previously considered appropriate and had been embodied in a will before Zilda was living with him.
Alleged influence of Zilda on the $50,000 demand for repayment
[90] The last category of evidence relied on to support the assertion that Zilda exercised undue influence on Bill was the fact that the demand for repayment of
$50,000 was initiated at the consultation on 28 November 2012 when the will was changed, when Bill had only three days earlier said he did not require any money, and when he subsequently cancelled the demand that was made by the lawyers.
[91] The evidence relied on to say that Bill did not need the money was based on two segments of the recorded conversation about the tractor incident. The first went as follows:
Lance- … you always had fucking money you always had your horses did
you not.
7 While the beneficiaries submissions referred to other earlier wills which split the estate equally, I
did not have evidence of that before me.
Bill – Well I had all I I (sic) had all I required to live on any way. Lance – You needed a new car.
Bill – What more do I want?
Lance – You needed a new car so what happened? Ray and Dianne fucking organised a new car over there. You had money for your car yeah.
Dad – What more do I need?
[92] Later on in the same conversation, when discussing Tracey’s proposal that the siblings all put money in for their father’s horse, there is an exchange as follows:
Zilda – There’s not much money in your bank account. Yeah there not.
Bill – There’s not. I don’t want a lot of money in my account. Why would I
want a lot of money in my account when I die?
Lance – Well fucked if I know. I’m just telling you the truth.
Bill – There’s enough money in there to cover that bloody horse.
[93] However, like all parts of a conversation, these extracts need to be seen in context. It is clear the first exchange deals with circumstances as they had been where Bill’s financial reserves and income meant he did have all he required to live on. However, the reality by late 2012 is that he had depleted those resources and, unless his standard of living reduced, he did need more money.
[94] In the second exchange, Bill is simply emphasising that he is not seeking to be greedy or to take charity from his children. However, even having said that he has enough money to cover his horse, he then goes on to discuss either putting the horse on the market or hoping that it would win a race. Neither exchange changes the fact that he was in need of money if he wanted to maintain his lifestyle.
[95] Bill did subsequently ask Lance to repay $50,000 in the conversation on
21 December 2012, and Lance also spoke to Warwick Cambridge about his father’s request. It is clear to me that Bill was hoping that Lance would voluntarily repay the funds requested. When that had not happened by early March, instructions were given to Preston Russell to seek repayment.
[96] Although Preston Russell’s letter of 11 March 2013 is referred to as a demand, it is in fact carefully worded as a request, albeit signalling the possibility of a formal demand being made if the request is not responded to. However, Lance clearly took exception to the lawyer’s letter requesting payment, and when his bank manager arrived shortly after the letter was received, it was Lance’s proposal that the two of them go to Bill’s place to check that it was what Bill wanted. Bill then withdrew the demand, saying it was not what he wanted, and Lance arranged for a letter to be typed up, signed and witnessed, to go to Preston Russell confirming the withdrawal of the instruction.
[97] The impression I gained was that Bill withdrew the demand because the formal nature of it had caused a rift between him and Lance, and he was more concerned to maintain the peace than press Lance for payment when Lance did not want that to happen. I do not think it reflects the fact that his father had not genuinely wanted repayment of some of the money to give him some financial flexibility, but he had hoped to achieve that on an informal basis through his own verbal request of Lance, or through his lawyer’s verbal request.
[98] More importantly though, I do not think Bill’s change of instruction on the request for repayment can be used to infer that he had not intended to alter his will. If, in fact, the request for repayment of the $50,000 was procured by Zilda, Bill Keast revoked it when he realised how upset his son was about this request. He could have done the same if he was unhappy with the will. He had opportunity to do so when he had further communications with his lawyer in the telephone call on
18 March 2013 and in early June 2013. Instead, the only change he did discuss with Warwick Cambridge was having Lance removed as a trustee and from enduring power of attorney, but the conclusion of that conversation was that he did not want to proceed further.
[99] In all the circumstances, I categorise the withdrawal of the $50,000 request for payment, as a positive decision not to pursue that issue given the damage it was doing to his relationship with Lance. It did not change the fact that the instructions given on 28 November, both to change the will and to enquire of Lance as to the
repayment of a lump sum, were instructions which, at the time, accorded with Bill
Keast’s own wishes.
Outcome
[100] It should be evident from the above that the caveator, Lance Keast, has not discharged the onus on him to show that the will executed on 28 November 2012 was the product of undue influence on the deceased by his daughter, Zilda Harvey. Instead, I am satisfied, by some margin, that the 2012 will was a reflection of Bill Keast’s own wishes.
[101] Accordingly, the order sought by the trustees James Gordon Lawrence, Christina Rae Hunt and Tracey Arleen McMaster granting probate of the
28 November 2012 will is granted as sought.
Costs
[102] As the successful parties, the beneficiaries are entitled to costs in opposing the caveat lodged by Lance Keast, and, in the normal course, 2B costs would be appropriate.
[103] However, I will reserve the issue of costs, but trust they can be resolved without further resort to the Court.
[104] If costs cannot be resolved then:
(a) the beneficiaries are to file submissions on costs, not exceeding five pages, within 20 working days of the date of this decision;
(b)the caveator is to file any submissions as to costs, again not exceeding five pages, within 25 working days;
(c) any submissions in reply are to be submitted 30 working days from the date of this decision; and
(d)costs will be dealt with on the papers unless I require to hear from any party on the matter.
Solicitors:
Preston Russell Law, Invercargill
French Burt Partners, Invercargill
Smith Wood & Woods, Gore
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