Farquharson v Farquharson
[2021] NZHC 222
•19 February 2021
IN THE HIGH COURT OF NEW ZEALAND ROTORUA REGISTRY
I TE KŌTI MATUA O AOTEAROA
TE ROTORUA-NUI-A-KAHUMATAMOMOE ROHE
CIV-2020-463-000035
[2020] NZHC 222
IN THE MATTER Of The Family Protection Act 1955 BETWEEN
DAVID KAHAWAI FARQUHARSON
Appellant
AND
OPAL ADA MARIE FARQUHARSON AS ADMINISTRATOR IN THE ESTATE OF IAN CHARLES FARQUHARSON
Respondent
Hearing: 28 September 2020 Appearances:
J R Hosking for Appellant R D Clark for Respondent
Judgment:
19 February 2021
JUDGMENT OF PAUL DAVISON J
This judgment was delivered by me on 19 February 2021 at 2:30 pm pursuant to r 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Solicitors:
Anderson Creagh Lai, Auckland Lewis Lawyers, Cambridge.
FARQUHARSON v FARQUHARSON [2020] NZHC 222 [19 February 2021]
Introduction
[1] This is an appeal by David Farquharson (the appellant) from a decision of Judge J F Munro delivered in the Family Court at Rotorua on 19 February 2020 in which her Honour determined his application under the Family Protection Act 1955 (the Act) for provision from the estate of his late father Ian Charles Farquharson (Ian) who died on 2 June 2017.1
[2] By his Will dated 30 March 2005, Ian left the whole of his estate to his former wife Opal Ada Marie Farquharson (Opal), who is the appellant’s mother, and the sole executor and trustee of Ian’s Will.
[3] The appellant (who is 45 years’ old) is Ian and Opal’s only son. He claims that his late father failed to discharge his moral duty him by failing to make any provision for his proper maintenance and support for him his Will.
[4] Judge Munro found that Ian had not breached his moral duty to the appellant to provide him with financial maintenance, but considered that as he was Ian’s only child, “a modest award is appropriate to recognise his place in the family”, which she determined to be 10 per cent of the value of Ian’s estate. Finding the value of Ian’s estate to be $288,682 and the appellant’s notional entitlement to be $28,868, the Judge then deducted $22,912 to allow for the value of a motor vehicle and a sum of cash already received by the appellant from his father, and made an award in his favour in the sum of $6000 to be paid to him from the estate.2
[5] The appellant appeals saying that the Judge’s award is “niggardly” and insufficient to remedy Ian’s failure to discharge the moral duty he owed. He says that the Judge erred in her determination of his claim and that an appropriate award would be approximately 46 per cent of the value of the estate and equate to the cash sum of
$207,100 held by the estate as at the date of the hearing of the appeal.
[6] Opal disputes the substance of the appeal and says that Ian did not breach his moral duty to the appellant by not making provision for him in his Will and she
1 Farquharson v Farquharson [2020] NZFC 1103.
2 At [23].
supports the Judge’s determination. However, she accepts that the Judge erred in her calculation of the present value of the estate by failing to take into account that Opal had already received her half share of the value of Ian’s employee superannuation payment and Kiwisaver account and had not accounted for the estate’s liabilities.
[7]The principal issues on appeal are:
(a)Whether Ian had a moral duty to make proper provision for the appellant’s maintenance and support; and if so,
(b)Whether the Judge erred in finding that an award of 10 per cent of the value of the estate - discounted by the amount of money representing the value of what the appellant had already received - was appropriate to discharge Ian’s moral duty to the appellant.
Background
[8] Ian and Opal met and commenced their relationship in 1972. The appellant was born on 17 April 1973. Opal had previously been married and already had three children: a daughter, Dorothy, born in 1964 who was living with her; and twin sons Alan and Harry, born in 1965, who were living with their paternal grandmother. Ian and Opal were married on 6 October 1975 and the twins commenced living with them around 1978.
[9] Ian and Opal and the four children then resided in Mangere where they purchased a house. In 1979, Ian sold his printing business and the family relocated to Mangakino, where Ian obtained employment at Forest Products. Ian worked at Forest Products for almost 39 years. The appellant attended primary school at Whakamaru near Mangakino, and later boarded during his secondary school years at St Stephen’s School at Bombay. From Mangakino, Ian and Opal subsequently relocated to Tokoroa and in November 1997 they purchased a house in Kelso Street, in Tokoroa.
[10] While still a young man, the appellant had two children with his first partner. Crystal was born in 1993 and Quintin was born in 1995. Ian and Opal had and have maintained a close relationship with their two grandchildren. However, the appellant’s
relationship with the children’s mother ended, and the appellant entered into another relationship. He and his second partner were married and had two children together.
[11] Around 2003, Ian and Opal assisted the appellant with a deposit to enable him to purchase a house in Manurewa, Auckland. As a consequence of the financial contribution he had made, Ian and the appellant were both named on the title as equal owners of the property.
[12] Ian made what was to be his last Will on 30 March 2005. In it he appointed Opal as his sole executor and gave the whole of his estate to her. The Will further provided that in the event of Opal not surviving Ian, he made several specific bequests including leaving his half share in an Auckland house to Dorothy, and his half share in the Manurewa house to the appellant, with the residue of his estate to be divided equally between Dorothy, Alan, Harry, and the appellant.
[13] However, some four years after the Manurewa house was purchased, the BNZ threatened a mortgagee sale and to avoid that taking place, the house was sold. After repayment of Ian’s contribution to the purchase of the house and legal costs, the appellant’s share of the proceeds of sale was $15,000. In 2007 and following the sale of the Manurewa house, the appellant went to live in Australia. While living there he maintained contact with his father over the telephone, and on a number of occasions he requested and received financial assistance from him. The appellant also maintained contact with his father by email and occasionally returned to visit his father in Tokoroa when he was visiting from Australia. Apart from once when Opal took the two older children to Australia to see him, the appellant did not see his children during the time he was living there. Ian and Opal nevertheless maintained close contact with Crystal and Quintin and provided them with financial assistance and a home at times.
[14] In November 2009, Ian and Opal separated. Opal moved away from Tokoroa to reside in a house in Opotiki, which they had earlier purchased with a view to retiring there. Their amicable separation was a result of Ian’s excessive consumption of alcohol. Ian remained residing in the Kelso Street property in Tokoroa. They continued to operate a joint bank account. On 28 November 2012, they entered into a written agreement recording a full and final settlement and division of their
relationship property. Their agreement provided that Ian was to retain the Kelso Street property, and Opal was to retain the Opotiki house, as their separate property respectively. The agreement further provided that Opal was to have a half share of Ian’s superannuation scheme funds, and that he would retain the “Great Wall” motor vehicle as his separate property and Opal would retain two other vehicles as her separate property. They also acknowledged that they had divided the chattels and furniture existing at the date of their separation between them pursuant to the agreement and stipulated that all bank accounts and insurance policies would remain in the ownership of whichever of them had legal title to them.
[15] Despite their formal separation and division of property and assets, Ian and Opal maintained contact with one another. Ian would visit Opal at Opotiki to see their family and he and Opal’s son Alan undertook work to build a garage at the Opotiki property which was intended to be turned into a utility area when he retired. Opal would go to Tokoroa and stay with Ian while there.
[16] At the time of Ian and Opal’s separation, the appellant and Opal had a serious falling out resulting in them not speaking to each other during the following eight years. The appellant says the reason for their falling out was because he did not accept Opal’s criticisms of his father and her explanation of the reasons for their separation.
[17] Around 2016, Ian and Opal discussed the prospect of her moving from Opotiki back to Tokoroa. At that time, Ian was experiencing pain in one of his legs and was having trouble walking. They decided it would be best if they were both living in Tokoroa, and so Opal’s Opotiki property was sold. Opal purchased Kelso Street from Ian and moved back to live at the property. Ian then purchased a retirement unit for himself in Walnut Place, Tokoroa. Ian deposited the funds he received from Opal for his Kelso Street property into the joint bank account he and Opal operated, thereby enabling her to also have access to those funds.
[18] In early 2017, Ian’s health deteriorated to the stage where he needed assistance to continue living at Walnut Place. When the appellant learned about his father’s situation and deteriorating health, he resigned from his employment in Australia and arranged to return to New Zealand in order to care for him. Prior to the appellant’s
arrival, Opal’s daughter Dorothy cared for Ian at Walnut Place. The appellant arrived in New Zealand around 15 March 2017 and lived at Walnut Place caring for his father. Although the appellant was his father’s primary caregiver during the period prior to Ian’s death, Opal and other members of the family were also involved in providing some care for him during this time. While he was caring for his father, Ian gave the appellant some money and the use of his vehicle.
[19] Following Ian’s death on 2 June 2017, the appellant remained living at Walnut Place on his own for a period before returning to live in Australia. He explains that following his separation from the mother of his children, he made child support payments to her until some five years ago when his son Vance went to live with him. At that point he ceased making further child support payments as Vance was financially dependent upon him until recently when he left home to live with his girlfriend.
[20] The appellant’s current financial position is modest. He resides in rented accommodation in Queensland paying $300 per week, and his only significant assets are a motorcycle valued at $6000 and his superannuation fund of $11,868. He states he works as a labourer lining underground pipes and he earns a net weekly income of approximately $1000 after tax is deducted. He also receives board payments from his partner of $200 per week, and previously received $100 per week from his son Vance when he was living with him. He has outstanding child support liabilities totalling nearly AU$80,000, and outstanding legal fees of $30,000. The appellant says that he would like to be able to purchase a house in Australia and pay off a mortgage rather than paying rent.
[21] Because of the mistrust and poor relationship between him and his mother, the appellant considers that he is unlikely to benefit from his mother’s estate.
[22] Opal’s financial and asset position is substantially secure. She is now 76 years old and does not enjoy good health. She owns the house at Kelso Street in Tokoroa and has approximately $55,000 in cash held in bank accounts. She also owns a 2016 motor vehicle which is valued at around $20,000. She receives National Superannuation of $22,900 per annum, has living expenses including rates and
insurances, and vehicle operating and registration expenses assessed at $25,300 per annum.
[23] The appellant also made a Testamentary Promises claim in the Family Court which was resolved shortly before the Family Protection proceeding was heard. Pursuant to the settlement the appellant retained the sum of $6,912 which he had previously received from the joint bank account held by Ian and Opal. The terms of settlement further provided that while he would retain possession of his father’s motor vehicle valued at $13,500, it would be included as an asset of the estate for the purposes of the Family Protection proceedings.
Family Protection Act claims and general principles
[24]Section 4(1) of the Act provides:
If any person (referred to in this Act as the deceased) dies, whether testate or intestate, and in terms of his or her will or as a result of his or her intestacy adequate provision is not available from his or her estate for the proper maintenance and support of the persons by whom or on whose behalf application may be made under this Act, the court may, at its discretion on application so made, order that any provision the court thinks fit be made out of the deceased’s estate for all or any of those persons.
[25] The approach to be adopted and principles to be applied by the Court in deciding whether a testator or testatrix has breached their moral duty to provide for the proper maintenance and support of a claimant and the appropriate remedies, are summarised in the following statement in Little v Angus.3
The principles and practice which our Courts follow in Family Protection cases are well settled. The inquiry is as to whether there has been a breach of moral duty judged by the standards of a wise and just testator or testatrix; and, if so, what is appropriate to remedy that breach. Only to that extent is the will to be disturbed. The size of the estate and any other moral claims on the deceased’s bounty are highly relevant. Changing social attitudes must have their influence on the existence and extent of moral duties. Whether there has been a breach of moral duty is customarily tested as at the date of the testator’s death; but in deciding how a breach should be remedied regard is had to later events. Experience in administering this legislation has established the approach in this Court that on an appeal the Court will not substitute its discretion for that of the Judge at first instance unless there be made out some reasonably plain ground upon which the order should be varied. All this is so familiar that authorities need not be cited.
3 Little v Angus [1981] 1 NZLR 126 (CA) at 127.
[26] In Williams v Aucutt the Court of Appeal addressed the phrase “proper maintenance and support” as it appears in s 4(1). Richardson P said:4
…we reject the argument that the Court must expressly find a need for proper maintenance and support. The test is whether adequate provision has been made for the proper and support of the claimant. “Support” is an additional and wider term than “maintenance”. In using the composite expression, and requiring “proper” maintenance and support, the legislation recognises that a broader approach is required and the authorities referred to establish that moral and ethical considerations are to be taken into account in determining the scope of the duty. “Support” is used in its wider dictionary sense of “sustaining, providing comfort”. A child’s path through life is supported not simply by financial provision to meet economic needs and contingencies but also by recognition of belonging to the family and of having been an important part of the overall life of the deceased. Just what provision will constitute proper support in this latter respect is a matter of judgment in all the circumstances of the particular case. It may take the form of lifetime gifts or a bequest of family possessions precious to its members and often part of the family history. And where there is no economic need it may also be met by a legacy of a moderate amount. On the other hand, where the estate comprises the accumulation of the family assets and is more than sufficient to meet other needs, provision so small as to leave a justifiable sense of exclusion from participation in the family estate might not amount to proper support for a family member.
[27]The Court of Appeal in Henry v Henry further explained:5
…a mere perception of unfairness is not good enough reason to disturb the will: the Court must conclude that the claimant has established that he or she has not received adequate provision for proper maintenance and support. That assessment must be made applying the test enunciated by Richardson P in Williams v Aucutt at para [52] (quoted at para [44] above). In making the assessment, however, the Judge must remind him or herself that there is no basis for the Court to override the testamentary freedom of the testator or testatrix if that test is not met, even if it appears to the Judge that a fairer distribution of the estate would have been desirable.
[28] Where the Court finds there to have been a breach of moral duty, in deciding the extent to which the testator’s testamentary freedom should be interfered with, it has a broad discretion to order any provision it thinks fit to be made out of the deceased’s estate. In Fisher v Kirby the Court of Appeal observed:6
The more recent decisions of this Court have re-emphasised what has always been understood: that mere unfairness is not sufficient warrant disturbing a testamentary disposition and that, where a breach of moral duty is established,
4 Williams v Aucutt [2000] 2 NZLR 479 (CA) at [52].
5 Henry v Henry [2007] NZCA 42, [2007] NZFLR 640, at [55].
6 Fisher v Kirby [2012] NZCA 310, [2013] NZFLR 463, at [119] – [120].
the award should be no more than is necessary to repair the breach by making adequate provision for the applicant’s proper maintenance and support.
The decisions of this Court from and including Little v Angus are properly viewed as a timely reminder that awards should not be unduly generous. But, in our view, neither should they be unduly niggardly, particularly where the estate is large and it is not necessary to endeavour to satisfy a number of deserving recipients from an inadequate estate. A broad judicial discretion is to be exercised in the particular circumstances of each case having regard to the factors identified in the authorities.
Submissions
Appellant’s submissions
[29] Ms Hosking for the appellant submits that Ian breached his moral duty to his only son by making no provision for him in his Will unless Opal had predeceased him. Counsel says that following their separation in November 2009 and their subsequent property agreement dated 28 November 2012, by which they divided their property, Ian and Opal had lived financially independent of each other. Ms Hosking notes that Ian’s Will was executed on 30 March 2005 several years before his separation from Opal, and that he and she were not living together in the period prior to his death, and they had not done so for many years.
[30] Ms Hosking notes that Opal is both executor and sole beneficiary under Ian’s Will. However, she notes that although Opal is saying that she is acting in her role as an executor and not opposing the claim in her role as a beneficiary, her opposition has in effect been that of an affected beneficiary, and not of a disinterested executor willing to abide the decision of the Court.
[31] Counsel submits that this approach was evident by Opal maintaining until shortly before the Family Court hearing that she had not received her half share of Ian’s superannuation entitlements as provided for in their 28 November 2012 agreement for division of property. She notes that Opal initially resisted making disclosure of her files and documents regarding implementation of the property agreement, however when the file was eventually disclosed it was found to contain copies of correspondence confirming that Opal had made a request to be paid a half share of Ian’s superannuation, and that it had been paid to her. Ms Hosking further
notes that when Opal was cross-examined in the Family Court, she was initially adamant that she had not received her half-share of Ian’s superannuation funds.
[32] Counsel says that as a consequence of the approach Opal has, in her capacity as the executor of Ian’s estate, incurred and expended a large sum for legal expenses which in substance relate to defending her position as sole beneficiary. As a result, the value of the estate has been reduced, and counsel submits the value of the legal costs incurred and paid should be added back as they properly represent the value of the estate.
[33] Ms Hosking says that once Opal’s legal fees are added back, the proper value of Walnut Place is adopted, and the superannuation is included, the estate’s total value is $477,100. Counsel notes that is a significantly greater sum than the $288.682.54 determined by the Judge as being the value of the estate.
[34] Ms Hosking submits that the Judge also erred by taking into account the sum of $6,912 which related to the settlement of the appellant’s testamentary promises claim. Ms Hosking says that sum of $6,912 was not intended by the parties to be included in any assessment of the appellant’s claim under the Act.
[35] Counsel further submits that although the Judge expressly found that the appellant had not engaged in any disentitling conduct,7 she nevertheless found that his modest financial situation was the result of his lifestyle and choices over the years.8
[36] Counsel submits that there is no evidence that the appellant received anything more in terms of financial advancement than the $15,000 he received for his half share of the Manurewa property and several payments he received from his father to assist him to meet outstanding rent. Ms Hosking submits that the Judge erred by taking account of what she described as the appellant’s minimal contact with his father during the ten years prior to his death and his total lack of support for this father.9 Counsel submits that the Judge failed to take proper account of the appellant’s poor financial situation. She submits that there is no evidence to support or justify the Judge’s finding
7 Farquharson v Farquharson, above n 1, at [19].
8 At [15].
9 At [22].
that there had been a “total lack of support” by the appellant for his father, or that there had been only minimal contact between the two of them. She notes that the evidence was that the appellant and his father had continued to maintain contact with one another via telephone and that frequency of their contact was increased during the rugby season, and of the appellant’s care for his father during the last months of his life, he having resigned from his employment and returned from Australia to do so.
[37] Counsel submits that the Judge erred by failing to objectively consider the appellant’s circumstances and by failing to recognise that at 45 years of age, the appellant has no significant assets or financial security. Ms Hosking submits that the presence of those circumstances alone is sufficient to find that Ian had a moral duty to make proper provision in his Will for his son’s maintenance and support. Counsel submits that as a consequence of that error the Judge proceeded to make only a modest award in the appellant’s favour in order to recognise his position in the family, rather than recognising that Ian’s moral duty extended to both maintenance and support.
[38] Ms Hosking submits that these errors also led the Judge to err in her assessment of the quantum of the award. She submits that the Judge also failed to take proper account of the unusual situation whereby Ian and Opal had already divided their property pursuant to a formal written agreement, had implemented its terms, and were financially independent of each other at the time of Ian’s death. Counsel submits that Ian’s separation from Opal and their concluded division of property meant that Ian’s moral duty to Opal was negligible, and consequently Ian’s moral duty to the appellant should take primacy. Furthermore, counsel submits the Judge erred in her finding that it could be inferred that Ian intended that Opal would make provision from her estate for the appellant’s inheritance upon her death.10
[39] Ms Hosking notes that since shortly after Ian’s death Opal has been residing at the Walnut Place property, which need not be disturbed by any order made to rectify the breach of moral duty. She submits that an appropriate order to remedy the breach of moral duty would award the appellant the cash component of Ian’s estate
10 Farquharson v Farquharson, above n 1, at [12].
(approximately $207,500), which would provide him with a modest sum with which to make a deposit to purchase a home.
Respondent’s submissions
[40] Mr Clark for the respondent supports the Judge’s finding that there was no breach of Ian’s moral duty to provide financial maintenance for the appellant. He says that although the Judge made an award of 10 per cent of the value of the estate to recognise the appellant’s place in the family, the evidence established that the appellant had always been accepted as being a member of the family.
[41] Mr Clark says however that the Judge erred in her assessment of the value of the estate by failing to take account of the estate’s liabilities which total $42,327.52. Counsel notes that Opal accepts that the net value of the estate also needs to account for the sum of $89,155 which she received as her half-share of Ian’s superannuation and Kiwisaver funds.
[42] The respondent says that by the terms of his Will it is apparent that Ian took steps to provide for his wife, Opal, to ensure that she would have sufficient funds for her retirement years and to possibly be in a position to assist the family in various ways. Mr Clark submits that in making his Will Ian can be seen to have carefully considered his relationship with “his wife”, and to have taken into account the financial benefits that the appellant had received during his lifetime. Ian would also have taken into account that the appellant and his partner were both employed and earning income and would have expected that the appellant would eventually be provided for in Opal’s estate.
[43] Mr Clark for the respondent submits that Ian, as a wise and just testator, can be seen to have been aware of and taken all the relevant circumstances into consideration in making his Will, including his moral duty to his son. He submits that there is scant evidence of the appellant providing any support to his father during his life apart from the two and a half months prior to Ian’s death when the appellant was living with and caring for him.
[44] Mr Clark says that it is clear from Ian’s Will that right up to the time of his death he continued to maintain a close relationship with Opal, that he trusted her with financial matters, and that he accordingly left all his estate to her. He submits that Opal, as the appellant’s mother, is to be given priority over the appellant and Opal’s three other children with whom he maintained a close relationship.
[45] Counsel says that should the Court nevertheless find there to have been a breach of moral duty, it is not for the Court to be generous with the testator’s property beyond ordering such provision as necessary to repair the breach.
[46] Mr Clark says that the appellant was previously given significant financial assistance by Ian to enable him to purchase the Manurewa house. However, when the appellant failed to keep the mortgage payments current, the house had to be sold. He notes that Ian and Opal also assisted the appellant financially on several occasions when he was living in Australia. On one occasion, Opal advanced the appellant $1000 to enable him to pay his rent, and on another the appellant asked his father for $3000 to cover the payment of a rental bond. Counsel also notes the evidence that the appellant had expended money on overseas trips to Thailand and Costa Rica with his partner and had thereby demonstrated his willingness to spend his money on lifestyle rather than saving his money for the more essential matter of purchasing a house.
[47] In regard to the size of the estate, Mr Clark produced a schedule detailing the assets and liabilities of the estate as at 15 September 2020. This schedule included an adjustment to recognise that Opal had received her share of Ian’s superannuation and Kiwisaver funds and also recognised the updated valuation of the Walnut Place property. The net assets of the estate pursuant to this schedule are calculated as being
$422,748.72. However, included in the total liabilities are Mr Clark’s counsel’s fees totalling 43,526.00.
[48] In response to the appellant’s submission that Opal has not adopted an executor’s independent position in respect of his claim, and has opposed his claim in defence of her personal interests as the sole beneficiary of the estate, Mr Clark says that Opal’s opposition is the result of the unusual situation in which the sole claimant is the appellant and his mother is the sole beneficiary. Mr Clark explains that Opal’s
opposition to the appellant’s claim is based on the estate’s lawyer’s assessment of the merit of the appellant’s claim and says that consequently the estate funds have to date been used to meet Opal’s legal costs.
Discussion
The value of the estate
[49] Both parties agree that the Judge erred in her finding that the value of the estate is $288,682.54. That calculation omitted to recognise the estate’s liabilities and the adjustment required to account for Opal having already received a half share of Ian’s superannuation and Kiwisaver funds.
[50] Further, as a result of the Court’s direction that an updated valuation of the Walnut Place property be obtained prior to the hearing, the valuation report prepared by Greenland Valuers assesses the market value of the property at $265,000 excluding chattels, and $270,000 including chattels. This valuation differs from the estimated value of the Walnut Place property at the date of the hearing in the Family Court of
$160,900.
[51] In regard to the issue of whether Opal’s counsel’s fees should be treated as a liability of the estate and deducted for the purposes of determining the estate’s current value, I find that they should be excluded from the list of liabilities. As the executor of the estate, Opal has a responsibility to adopt an even-handed approach to dealing with the appellant’s Family Protection claim.11 Of course as the sole beneficiary and someone who stands to be adversely affected by any order of the Court granting the appellant provision from the estate, Opal has had reason to oppose the claim and the appeal in her own interests. However, the legal costs she has incurred in engaging counsel to represent her in her personal capacity are not properly expenses to be treated as liabilities of the estate.
[52] I accordingly find that Opal’s counsel’s fees should be excluded from the calculation of the current value of the estate. I also note that the list of liabilities
11 Irvine v Public Trustee [1989] 1 NZLR 67 (CA) at 70.
includes an invoice rendered by Lewis Lawyers for $6,129. This invoice would appear to have substantially related to the administration of the estate. Although that fee may also include attendances undertaken for Opal’s benefit personally rather than as executor, I do not consider that it is necessary to make any adjustment on that account.
[53] Applying these findings to the statement of the estate’s assets and liabilities as at 15 September 2020 as set out in the statement produced by Mr Clark, I find the current value of the estate to be $472,147.16.12 Of that sum the total held in cash is
$207,441.
Did Ian breach his moral duty to the appellant?
[54] A significant and unusual feature of the circumstances relevant to the issue of whether Ian failed to discharge his moral duty to the appellant is the fact that in the period following the making of his Will, Ian separated from Opal and they divided their relationship property. When Ian made his Will on 30 March 2005, he and Opal were living together, and it is clear that the terms of the Will were based on Ian’s expectation that he and Opal would remain cohabiting as husband and wife when he died. The Will appoints Opal as sole executor and trustee of the estate, and provides that in the event of Opal not surviving him, his estate would be distributed in accordance with a number of specific bequests, which include a bequest to the appellant of Ian’s half-share in the Manurewa house which he then owned in equal shares with the appellant. The Will further provided that the residue of Ian’s estate was to be divided equally between the appellant and Opal’s three children.
[55] However, two years later in 2007, the Manurewa house was sold, and the appellant received his share of the net proceeds. Then in November 2009, Ian and Opal separated and Opal relocated to Opotiki. Subsequently in November 2012, they entered into the written agreement for the division of their property which they proceeded to implement by transferring ownership of properties and dividing other assets, including Ian’s superannuation and Kiwisaver funds. Accordingly, by the time of his death in June 2017, Ian’s family situation had changed significantly, and with it
12 Pursuant to the Statement of Assets and Liabilities as at 15 September 2020 the net value of the estate is $422,748.72. Adding back counsel’s fees of $49,398.44, yields a current value of the estate of $472,147.16.
the nature and extent of his moral duty to make testamentary provision for the maintenance and support of his family members.
[56] Although it appears that over a period of several years prior to his death, Ian and Opal had established a relationship characterised by co-operation and a significant measure of trust, they had not reconciled in terms of their personal relationship. They also had not resumed cohabitation, notwithstanding that on occasion they visited one another’s residences and at times Opal stayed at Ian’s home. Despite their co- operation with one another, the close relationship of marriage had ceased to exist, and they were living independent lives in separate homes. Having regard to the division of their property, I consider that Ian’s moral duty to make testamentary provision for Opal had been effectively extinguished. While Ian’s testamentary freedom to distribute his property as he saw fit must be recognised, the fact that Opal and he were no longer married and had divided their property, while during his lifetime Ian had made some comparatively limited contributions to his only son’s maintenance and support, informs the existence and extent of the moral duty he owed to the appellant as at the date of his death.
[57] As the Judge found, there is no evidence of any disentitling conduct by the appellant. With the appellant residing in Australia, he was not in a position to maintain close contact with his father by personal visits, but it is clear that he nevertheless did maintain contact by telephone and email. The fact that the appellant and his father did not see one another often is not necessarily a reliable indication of the closeness of their relationship. It is frequently the case that family members are separated as a result of living in different parts of the world and maintain their connection with one another by various electronic communications and telephone calls. The closeness of relationships between family members is not necessarily demonstrated by the nature and frequency of their communications. Furthermore, the fact that the appellant went on two overseas holidays while living in rental accommodation is no indication that he is financially irresponsible or imprudent such as would materially bear upon the extent of Ian’s moral duty.
[58] I reject the respondent’s submission that Ian could reasonably have expected Opal to ultimately make provision for the appellant from her estate, with the
consequence that Ian owed no duty to the appellant to make testamentary provision for him. Whether or not Opal may be minded to make provision for the appellant from her estate, it is not a factor that would discharge the existence of, or even diminish the extent of, the moral duty owed by Ian to his son. Ian was however well aware that for a period of some eight years before his health deteriorated, Opal and the appellant had not been on speaking terms, and in light of that disharmony, there could be no reasonable expectation that she would be making provision for the appellant in her will.
[59] The appellant’s financial situation is also relevant to an assessment of Ian’s moral duty. Ian was aware that the appellant did not own a house and was renting his accommodation in Queensland. He also knew that at times the appellant got behind in his rent and had requested financial assistance from his father. The appellant was clearly in a poor financial position, working as a labourer and having no significant assets, and moreover at age 45, no apparent means of accumulating any capital funds with which to improve his position by purchasing a house.
[60] The appellants’ action of resigning from his employment in Australia, and returning to New Zealand to care for his father over the period of several months prior to Ian’s death, confirms the existence of the bond they maintained notwithstanding the years during which the appellant had lived in Australia. There is nothing to indicate that the appellant was motivated to return to care for his father by anything other than his genuine love and affection for him, and by caring for his father during the latter stages of his life he demonstrated his affection for him in a practical and humane manner. His actions support his claim that his father had a moral obligation to provide for him from his estate.
[61] I accordingly find that there was a moral obligation upon Ian as at the date of his death to make adequate provision from his estate for his son’s maintenance and support, and I find that by failing to make any provision in his Will for the appellant, Ian was in breach of his duty.
[62] Although the value of Ian’s estate was not substantial, it was nevertheless sufficient to enable Ian to discharge his moral duty. The extent of the provision
required to discharge the duty is in my view substantially informed by the fact that the appellant was Ian’s only son, and by the appellant’s modest financial situation and poor prospects of ever being able to accumulate sufficient capital with which to purchase a home for himself, to better secure his future. The extent to which Ian was able to make provision for the appellant to discharge his moral duty is also informed by the fact that he and Opal had already divided their property assets. Opal owned her own home and had cash assets following that division, leaving effectively half of their previously jointly held assets as comprising Ian’s estate.
[63] Having regard to these circumstances and context at the time of Ian’s death, I consider that the minimum required to discharge his moral duty to the appellant is an order directing that he receive a sum and property, together comprising somewhat less than half of the value of the estate. The appellant presently has possession of the “Great Wall” motor vehicle belonging to the estate valued at $13,500.00 and also has possession of some electronic equipment belonging to the estate which is valued at
$2,500.
[64] I agree with Ms Hosking that it would not be appropriate if the orders made by the Court disturbed Opal’s continued occupation of the Walnut Place property where she has been living since shortly after Ian’s death.
[65] I shall accordingly make an order awarding the appellant the sum of $200,000 to be paid to him from Ian’s estate. In addition, the appellant shall have ownership of Ian’s “Great Wall” motor vehicle valued at $13,500 and the electronic equipment valued at $2,500 presently in his possession. The total value of this award being
$216,000 which is approximately 46 per cent of the total value of the estate.
Result
[66] I make an order directing that the appellant be paid the sum of $200,000 from the estate of Ian Charles Farquharson. I further order that the appellant shall have ownership of and retain Ian’s “Great Wall” motor vehicle valued at $13,500 and the electronic equipment valued at $2,500 presently in his possession.
[67] The appellant having succeeded with his appeal is entitled to costs and reasonable disbursements to be paid out of funds held by the estate.
[68] I direct counsel for the appellant to file and serve a costs memorandum not to exceed three pages in length, excluding annexures, by 5.00pm on 26 February 2021. I direct counsel for the respondent to file and serve a costs memorandum not to exceed three pages in length by 5.00pm on 5 March 2021. Following the receipt of the memoranda I shall determine the appellant’s costs on the papers.
Paul Davison J
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