Fisher v Kirby - [2012] NZCA 310

IN THE COURT OF APPEAL OF NEW ZEALAND

CA613/2011
[2012] NZCA 310

BETWEEN CARMEL MIRINGA FISHER, PETER WAKEM AND MELANIE WAKEM
Appellants

AND MELISSA TANIA KIRBY
First Respondent

AND NATHAN HAMMOND MURRAY
Second Respondent

AND JOHN LESLIE BIRCH
Third Respondent

Hearing: 6 June 2012

Court: Randerson, White and Miller JJ

Counsel: I R Millard QC and A G MacDonald for Appellants
G W D Manktelow for First and Third Respondents
P J Reardon for Second Respondent
G Mason for the Estate of Irma Murray (excused from attendance)

Judgment: 16 July 2012 at 12.30 p.m.

JUDGMENT OF THE COURT

AThe appeal against the High Court’s substantive judgment is dismissed.
BThe cross-appeal by the second respondent is dismissed.
CThe cross-appeal by the third respondent is allowed. The award is increased to A$500,000 in place of the NZ$50,000 discretionary fund under the will of the deceased Irma Murray.
DThe appeal against the costs award to the first respondent is dismissed.
EThe appeal against the costs award to the second respondent is allowed. The costs award of $70,000 is reduced to $35,000.
FThe first respondent is entitled to costs in this Court against the appellants as for a standard appeal on a band A basis with usual disbursements.
GCosts between the appellants and the second respondent in this Court will lie where they fall.
HThe third respondent is entitled to costs against the appellants as for a standard appeal on a band A basis with usual disbursements in relation to the appeal up to the point it was abandoned against him. The third respondent is also entitled to costs against the appellants on the cross-appeal as for a standard cross-appeal on a band A basis with usual disbursements.

___________________________________________________________________

REASONS OF THE COURT

(Given by Randerson J)

Table of Contents

Para No
Introduction	[1]
Background	[6]
The largely undisputed facts
Events prior to 1994	[10]
Donald’s estate and will	[16]
Irma’s claims in 1995 against Donald’s estate	[27]
Events between 1996 and 1999	[28]
Irma’s estate and will	[32]
Areas of disputed fact	[37]
Whether Wanda was generous to Donald in the settlement of the Family Protection proceedings after the death of their father in 1962	[38]
Whether Nathan and Melissa were generous to Irma in the settlement of her Family Court proceedings against Donald’s estate in 1995	[41]
The relationship between Nathan, Melissa and Irma	[52]

Nathan’s farming abilities and responsibility for the indebtedness of the farming enterprise	[61]
The Judge’s findings in relation to the claims
Nathan	[76]
Melissa	[89]
John	[99]
Family Protection Act principles	[106]
Appellants’ submissions	[121]
Discussion	[124]
Nathan’s award	[133]
Nathan’s cross-appeal	[138]
Melissa’s award	[141]
John’s cross-appeal	[143]
The costs appeal	[147]
Result	[154]

Introduction

This appeal arises from awards made to the respondents by Clifford J under the Family Protection Act 1955.[1] The respondents are the three children of the late Irma Murray, who died in 2009 leaving a substantial estate. Irma left almost all of her estate to the appellants who are three of her four nieces and nephews: Carmel Fisher, Peter Wakem and Melanie Wakem.
[1]Kirby v Sims HC Wellington CIV-2010-485-794, 22 August 2011; Kirby v Fisher HC Wellington CIV-2010-485-1019, 22 August 2011.
The awards to the respondents were:
(a)Nathan Murray:   $600,000
(b)Melissa Murray:   $700,000
(c)John Birch:   A$350,000
The appellants (to whom we will refer as the Wakem children) accept that Irma breached her moral duty to her three children but contend that the awards made to Nathan and Melissa were too high. They no longer contest the award made to John. Nathan and John have cross-appealed, submitting that the awards made to them were too low.
The specific grounds of appeal raised on behalf of the Wakem children are numerous and are dealt with in more detail later in this judgment. In broad terms, the issues are:
(a)Was Nathan’s award too high as the Wakem children contend, or too low as Nathan contends?
(b)Was Melissa’s award too high?
(c)Was John’s award too low?
Further challenges are made to the costs subsequently awarded against the Wakem children.

Background

The Murray family have owned land known as the Papaitonga farm near Levin for four generations. Nathan is presently farming the land, having inherited half of it through the estate of his father, the late Donald Murray, who died in 1994. Donald clearly intended Nathan to continue farming the land, giving him the option under his will to acquire on generous terms the other half of the farm as well as the associated livestock and plant. Nathan has acquired the stock and plant but has not yet exercised the option to acquire the other half of the farm. In terms of Donald’s will, the other half of the farm is bequeathed to Melissa (as to one-eighth of the farm) and the Wakem children (as to three-eighths of the farm).
Donald’s estate was also substantial. In the Court below, and before us, the parties proceeded on the footing that the assets and dispositions in both Donald’s and Irma’s estates were to be taken into account. At the date of Irma’s death in 2009, the combined net assets of the two estates were valued at approximately $6.87 million. Since the claims were brought against Irma’s estate, the question in the High Court was whether Irma had breached her moral duty to her three children and, if so, the extent of any award which should be made for their proper maintenance and support.[2]
[2]Melissa was also given leave to bring a claim against Donald’s estate out of time but that claim was dismissed in the High Court.
The case has an unusual feature. The family connection of the Wakem children is through their mother, Wanda Wakem, who died only a matter of weeks after Donald in 1994. Wanda was Donald’s sister. The contest is therefore between Irma’s children on the one hand, and her two nieces and a nephew on the other. As the Judge noted, nieces and nephews have no ability to make a claim in their own right under the Family Protection Act. Nevertheless, there may be moral obligations owed by the deceased which may be taken into account in the overall assessment of the claims by Irma’s children.
We deal with the facts in two parts: first, the largely undisputed facts and then the main areas of dispute.

The largely undisputed facts

Events prior to 1994

Much of the following summary of the facts is drawn from the High Court judgment for which we are grateful. Donald and Wanda were the only two children of Hammond and Millie Murray. Hammond inherited the Murray family farm and, upon his death in 1962, he left it to Wanda. At that time, Hammond was estranged from Donald.
Soon afterwards, both Donald and Millie commenced Family Protection Act proceedings against Wanda. Those proceedings were settled so that half of the land Wanda inherited went to Donald and half of a smaller block that Hammond had given Donald during his lifetime, went to Wanda. In 1969, Donald acquired Wanda’s half-share of the farm. The Wakem children maintained that the settlement of these proceedings represented an act of generosity by Wanda. They also suggested that the terms upon which Wanda later sold her half-share of the farm to Donald were so favourable as to amount effectively to a gift.
Donald and Irma married in 1963. At that time, John was about 15. He was Irma’s child of a former marriage. Donald and Irma adopted Nathan and Melissa in 1965 and 1969 respectively.
For a period after their marriage, Donald and Irma worked overseas and returned to New Zealand in 1972. In the same year, they incorporated a company named Papaitonga Cattle Co Ltd (the Company). Donald and Irma each held 26 per cent of the shares and Nathan and Melissa each held 24 per cent of the shares. The Company did not immediately acquire any land, but in 1981 it acquired a block of land described in the proceedings as the Kuku Road land. The Papaitonga farm and the Kuku Road land were farmed together as a single enterprise. Ultimately Irma acquired full ownership of the Company, in part by a Family Court order after Donald’s death and the remainder through purchasing the shares owned by Nathan and Melissa.
After completing their schooling, all three children left home. John was born in Australia and returned there about 1978; Nathan went to Australia about 1981 and Melissa commenced a course of training after leaving home around 1984. Although Nathan and Melissa each returned home for a period between 1985 and 1987, both of them left for Australia about 1987.
Nathan married Michelle in 1993. From that time they began working on the Papaitonga farm. There were difficulties in the relationship between Irma, Nathan and Michelle. It is common ground that Irma and Nathan were estranged. It appears these difficulties worsened after Nathan married Michelle. Relationships between Irma and Melissa were also strained, although not to the extent of an estrangement. There was a good deal of contested evidence about the nature, timing and causes of these difficulties to which we will return later in this judgment.

Donald’s estate and will

Donald died on 17 June 1994 aged 60. His principal assets were the Papaitonga farm and the shares in the Company. In addition, there were investments and other associated property. The dairy herd was owned by Donald and Irma as tenants in common in equal shares pursuant to a matrimonial property agreement they signed in October 1984. At the date of Donald’s death, his estate had a value of approximately $2.47 million.
Under Donald’s will, Irma received:
(a)Cash of $100,000;
(b)Donald’s interest in their residence and adjoining land on the family farm (the homestead) and in their household furniture and effects, along with his principal motor car; and
(c)The free use, occupation and income of the residuary estate until her death or until Nathan turned 50 (defined in the will as the annuity date).
Donald’s residuary estate was to be held on trust:
(a)To pay Wanda an annual income of $10,000 per year and to provide her with a residential property for herself and her family up to $120,000 in value to use during her lifetime;
(b)To pay the farm manager $100 per week from his retirement until his death;
(c)To permit Melissa, during her lifetime, to occupy the cottage on the farm rent free (the maintenance to be paid from the farm income) with a gift over to her children; and
(d)To provide for Irma’s life interest.
On the annuity date, the Papaitonga farm, including associated Maori land, was to vest as follows:
(a)A one-half share to Nathan;
(b)One-eighth to Melissa; and
(c)Three-eighths to Wanda with a gift over in equal shares to the Wakem children (and a fourth nephew, Gregory, who took no part in the proceeding).
The balance of the residuary estate was to be divided two-thirds to Nathan and one-third to Melissa.
Nathan had two further entitlements under Donald’s will. The first was that, at any time after his father’s death, he was entitled to farm the combined Papaitonga farm and Kuku Road land properties as a 50/50 sharemilker with Irma. At his election, he could purchase all the farm plant, machinery and chattels and his father’s half of the dairy herd at valuation, paying for those assets over a seven year period without interest.
The second right received by Nathan under Donald’s will was the option, exercisable at any time after the annuity date, to purchase the other half of the farm, subject to the life interests granted to Irma and to Melissa (in relation to the cottage). The purchase price was to be determined by special valuation. If Nathan exercised the option, the following provisions of Donald’s will would apply:
8.(a) I AUTHORISE and empower my Trustees upon the transfer of my farm to my said son in terms of the previous clause to leave the one-eighth (1/8th) value thereof bequeathed to MELISSA and the three-eighths (3/8ths) value thereof bequeathed to WANDA as a loan to my son repayable over a period of fifteen (15) years after the date of exercise of the option by him such purchase money to be repaid by fifteen (15) equal annual instalments the first instalment to be paid one year after the exercise of the option and on condition that in the event of non-payment of any instalment on due date interest shall be paid on the amount of such instalment from the due date until the date of payment at such rate as my Trustees shall determine AND I DIRECT that otherwise no interest shall be payable on such proportion of the purchase money as may be owing from time to time AND I DECLARE that repayment of such loan shall at the discretion of my Trustees be secured by either a first mortgage or a second mortgage but in no case shall my Trustees be empowered to take a mortgage of lower priority than a second mortgage.
8.(b) IN the event of my son NATHAN electing not to purchase the farm and wishing to sell his interests, or having done so, deciding to sell the entire property, he is directed to first give an option to any one or more of Wanda’s family as listed earlier and/or Melissa to purchase on similar terms to that offered him in Clause 7 (ii) and Clause B of this my Will so that the farm will remain in the family.
In consequence of Wanda’s death soon after Donald’s death, the Wakem children and Gregory are to receive (under the gift over provision) the three-eighths share in the Papaitonga farm to which their mother was entitled. Under Donald’s will, the date of Irma’s death constitutes the annuity date since Nathan is not yet 50. Nathan therefore has the right to exercise the option to purchase the farm but has not yet done so. We were told by his counsel that he wishes to await the outcome of this appeal before deciding whether to exercise the option.
By clause 8(a), the Trustees are authorised and empowered to leave owing (as a loan to Nathan) the value of the remaining half of the farm to which Melissa and the Wakem children are entitled. The loan would be repayable over a 15 year period after the date of exercise of the option by 15 equal annual instalments. No interest is payable unless there is a failure to pay any of the annual instalments.
By clause 8(b), if Nathan elects not to purchase the other half of the farm and wishes to sell his interest in it, he is required to give an option to the Wakem children and/or Melissa to purchase on similar terms “so that the farm will remain in the family”. He is also required to give them an option to purchase if, having purchased the other half-share, he decides to sell the entire property.
An issue to which we will return is whether a specific value ought to be attributed to Nathan’s rights under these provisions.

Irma’s claims in 1995 against Donald’s estate

In 1995, Irma applied to the Family Court in Levin for further provision from Donald’s estate under the Matrimonial Property Act 1963 and the Family Protection Act. According to the Family Court order, Nathan and Melissa, as the residuary beneficiaries in Donald’s estate, consented to an order for the transfer to Irma of two items which would otherwise have formed part of Donald’s residuary estate:
(a)The sum of $191,629.64, being the balance of the proceeds of life insurance policies which had been used to pay the specific bequest to Irma of $100,000; and
(b)Donald’s 26 per cent shareholding in the Company which the Family Court was informed was then worth about $96,000.

Events between 1996 and 1999

In 1996, Nathan exercised the option to purchase the plant, equipment and half the dairy herd on the terms provided by Donald’s will. He also purchased Irma’s half-share of the herd. The bulk of the funding required for these purchases came from the sale by Nathan to Irma of his 24 per cent interest in the Company for $126,000. Around this time, Melissa sold her 24 per cent interest in the Company to Irma for $109,000. Irma then owned 100 per cent of the shares in the Company. Nathan then farmed the Papaitonga and Kuku Road land under the 50/50 sharemilking agreement with Irma.
In 1997, a deed of family arrangement was entered into between Nathan, Melissa and the Wakem children as beneficiaries of Donald’s estate. Under the deed, they gifted to Irma an additional 1,465 square metres of land adjoining the homestead block.
In 1999, by agreement with Donald’s estate, Nathan surrendered the sharemilking arrangement in exchange for a lease of the family farm, excluding the Kuku Road land. It appears that the strained relationship between Irma and Nathan led to this change. The effect of these changed arrangements was that the Kuku Road land was no longer available to Nathan for farming purposes. And, as the life tenant in Donald’s estate, Irma received the rental income from Nathan. Initially, this was $80,000 per annum in 2000, rising to a peak of $103,000 in 2008. In the year ending 31 March 2010 the rent was $90,125 according to draft accounts produced in the High Court. Nathan continues to operate the dairy farm on the Papaitonga farm through a family trust established by himself and his wife.
In 2007, Melissa returned to the Papaitonga farm and has occupied the cottage since with her husband, Peter Kirby.

Irma’s estate and will

Irma died on 12 May 2009, at the age of 79. At the time of her death, her estate had a value of approximately $3.8 million. The principal assets were the homestead and its contents, all the shares in the Company, and various investments she had accumulated over time. The Kuku Road land was sold in September 2009 for $1.874 million (excluding GST). The homestead was included in the estate’s assets at a figure of $590,000. The estate’s solicitor, Mr O’Donnell, has deposed that the executors have been advised to expect a sale price below $500,000. Commission and other sale costs would also need to be paid. With those adjustments, it is reasonable to adopt a net present value for the estate of approximately $3.7 million.[3]
[3]Some costs incurred by the Wakem children in their capacity as beneficiaries were deducted from the estate and some interim payments have been made to the respondents on account of the awards made to them. However, these figures have been added back in arriving at the figure of $3.7 million.
The Judge summarised the overall position at the date of Irma’s death in the following terms:
(a)Irma owned the Homestead, Papaitonga Cattle Company Limited, was the life tenant of Donald’s estate and had considerable liquid assets in her own name;
(b)Melissa occupied the Cottage, which was to be maintained by income from “my farm”; and
(c)Nathan farmed the Papaitonga Farm through the Papaitonga Trust; but
(d)No part of Donald’s residuary estate had vested, as Irma’s life tenancy had survived to her death and, likewise, her annuity had never become payable.
By her will, Irma’s estate of $3.7 million is to be divided equally between the three Wakem children, subject only to specific bequests of approximately $121,000 and any sums actually advanced to John out of a special fund of $50,000 provided for him. The specific bequests are:
(a)The proceeds of life insurance policies ($21,000) to Nathan and Michelle’s children;
(b)The balance in any offshore bank accounts ($10,000) to Melissa;
(c)$50,000 to Melissa when she turns 50 but with no gift over;
(d)Bequests totalling $40,000 to two charities;
(e)The special fund of $50,000 subject to a discretionary power of advancement to John. If the fund is not advanced, it goes to the Wakem children with a gift over to their children.

In summary therefore, virtually all of Irma’s estate went to the Wakem children. Her own children received very little. Melissa was bequeathed $60,000, most of which she was not to receive until her 50th birthday; the $50,000 special discretionary fund was available to John; and Nathan received nothing at all. Some minor provision was made for Nathan and Melissa’s children. Irma’s will stated that “I wish it to be known that I have allowed my half-share of the farm to be distributed through the estate of my late husband”. That statement needs to be understood, however, on the basis that 37.5 per cent of the farm went to the Wakem children and Gregory under Donald’s will.
Donald’s estate at the date of Irma’s death comprised the Papaitonga farm with a value of $2.76 million and Fonterra shares and Peak Notes worth approximately $410,000. The Judge noted that these figures included a figure of $430,000 for the cottage which was subject to Melissa’s life interest. The approximate combined net value of the two estates at the date of Irma’s death was:
Irma’s estate  $3.70 million
Donald’s estate
   Farm  $2.76 million
   Shares & Notes     .41 million
$6.87 million

Areas of disputed fact

The areas of disputed fact are:
(a)Whether Wanda was generous to Donald in the settlement of the Family Protection proceedings after the death of their father in 1962.
(b)Whether Nathan and Melissa were generous to Irma in the settlement of her Family Court proceedings against Donald’s estate in 1995.
(c)The relationship between Nathan, Melissa and Irma.
(d)Nathan’s farming abilities and responsibility for the debt in relation to the farming enterprise.

Whether Wanda was generous to Donald in the settlement of the Family Protection proceedings after the death of their father in 1962

The Wakem children contended that Wanda was generous to Donald in the settlement in 1964 of Donald’s Family Protection proceedings against his father’s estate. The Judge determined that it was simply not possible on the evidence to draw any firm inference as to the circumstances in which the claim was settled taking into account that Donald was reasonably able to support himself at that time. The Judge also found that the evidence did not support Carmel Fisher’s assertion that Donald exploited Wanda’s vulnerability when he later purchased the other half of the farm. He accepted evidence from Mr Edward Sims, an executor and trustee of Donald’s estate and an old friend of both Donald and Irma. His evidence was that Donald had given financial assistance to Wanda over the years and that it would be entirely inconsistent with his character and behaviour towards his sister if he had taken advantage of her in that way. Mr Sims’ evidence was that the suggestion Donald had purchased Wanda’s half-share of the farm on very favourable terms was mistaken.
Nevertheless, as the Judge observed, Donald may well have had a sense of gratitude to his sister since he left three-eighths of the farm to her, with a gift over to the Wakem children and Gregory. It is possible, the Judge said, that Donald’s sense of gratitude may have originated in the circumstances in which he obtained half the farm.
We see no reason to disturb the Judge’s findings on these issues.

Whether Nathan and Melissa were generous to Irma in the settlement of her Family Court proceedings against Donald’s estate in 1995

In their claim against Irma’s estate, Nathan and Melissa contended that their agreement to the making of the Family Court orders in 1995 was a factor the Court should take into account when assessing Irma’s moral duty to them. Some limited material was placed before the Court as to the circumstances in which the 1995 order was made. Irma’s supporting affidavit filed in the Family Court at that time said, amongst other things:
[16]My marriage to Donald was a long and happy one. We were involved in a number of commercial activities before settling on the farm in about 1972.
[17]The original farm had been acquired by Don’s grandmother about 80 years ago. This was inherited by Don’s father, he purchasing the interest of his two sisters. Don and his father fell out. Don travelled overseas where he met me. After Don’s father died, Don successfully claimed half of the farm. We married after Don’s father died and then went overseas together where we were involved together in a number of business enterprises. We returned and then completed over time the purchase of Wanda’s share in the farm, applying the monies we had earned. The farm was run down but by hard work, by returning profits to it and applying our overseas earnings it has been improved to the valuable entity it is today. Further land has been acquired, including the land owned by Papaitonga Cattle Company Ltd.
[18]It is not proposed to go further into details of our marriage or of the contributions I made because I do not believe that there will be opposition to my claim in the way in which it has been limited. However, if this is not the case or if the Court requires further particulars then these can be given prior to trial. I confirm that I wish to limit my claim as set out in my Statement of Claim.
It is evident from this material that the joint efforts of Donald and Irma enabled them to acquire Wanda’s half-share in the farm; that they had built up the value of the farm by hard work and by financial contributions; and had been able to acquire the land owned by the Company. However, it also appears that Irma and her legal advisers at the time did not see it to be necessary to go into further detail because they anticipated there would be no opposition to the claim. The formal court order makes it clear that Nathan and Melissa were represented by counsel (Mr Comber). The supporting memorandum by Irma’s counsel (Mr Walshaw) stated that Mr Comber had instructions to consent to the orders.
A statement of assets and liabilities prepared by Mr Walshaw at the time of the 1995 order detailed net assets in Donald’s estate of $2.3 million. The principal assets were land ($1.9 million); livestock ($184,000); Donald’s 26 per cent shareholding in the Company ($96,000); and life policies ($291,000). Clifford J noted that it was not clear whether the land value included the homestead.
Mr Walshaw’s memorandum stated:
Plaintiff has received:
Homestead (of which owned half)                  $550,000
Cash  $100,000
Motor Vehicles  $ 38,199
Plaintiff seeks orders granting her:
Balance of Life Policies  $191,629
Shares in Papaitonga Cattle Co Ltd                 $ 96,428
TOTAL  $975,256
Irma also acknowledged in her affidavit receiving $122,512 being the proceeds of another life policy omitted from Mr Walshaw’s memorandum. This policy was owned by her and not by Donald’s estate. Mr Reardon also submitted that Irma owned a half-share in the dairy herd ($184,000) and had a credit in Donald’s estate of $330,216. These figures were not disputed in the reply submissions filed by the Wakem children.
While it is difficult to assess without full information, it appears that Irma received additional provision from Donald’s estate totalling $288,057:
(a)Balance of Donald’s life policies $191,629
(b)Donald’s 26 per cent share in the Company $ 96,428
$288,057
In addition she received under Donald’s will his half-share of the homestead ($275,000); $100,000 in cash; and a life interest in the residuary estate. She also had her own 26 per cent share in the Company and the additional life insurance proceeds of $122,512. On the face of the documents, it does not appear that the life interest or her own shares in the Company were disclosed to the Family Court.
The Family Court order does not specify whether the order was made under the Matrimonial Property Act 1963 or the Family Protection Act 1955 or both. Both would have required full disclosure of Irma’s assets to the Court, which did not occur. The correct approach would have been to determine the Matrimonial Property Act claim first. That would have required proof of contributions to specific assets. There was no such evidence in relation to the life policies or the shares in the Company. In relation to the Papaitonga farm, it would have been necessary for the Family Court to acknowledge Donald’s entitlement to a substantial share in that asset.
The overall result from Irma’s perspective was very satisfactory. She owned the homestead outright, a majority interest in the Company which owned the valuable Kuku Road land, and substantial cash funds. Her total assets in 1995 amounted to $975,256 according to Mr Walshaw’s calculations. This should be increased by the other sums identified at [45] above to a total of just over $1.6 million. Mr Millard QC for the Wakem children calculated the assets Irma received in 1995 under Donald’s will and her Family Protection Act claim amounted to 39.5 per cent of Donald’s entire estate.
Somewhat surprisingly, Nathan and Melissa maintained that they had only limited involvement at the time of the 1995 Family Court proceedings and may not have had a full understanding of what was entailed. It seems that their evidence to this effect was addressing the question of whether Melissa was estopped from bringing a claim against Donald’s estate. The Judge found she was not estopped. Nathan accepted he was present at the Family Court hearing. We consider it must be accepted on the evidence that Nathan and Melissa, through their counsel, agreed to the orders made. Whether they were fully aware of the implications of doing so is not material.
We acknowledge that, at this distance in time, a full assessment of the significance of what occurred has its difficulties, but we conclude that, at the very least, the co-operation afforded by Nathan and Melissa in 1995 enabled Irma promptly to obtain a very satisfactory financial outcome which gave her certainty as well as security for the future following the death of her husband. We also conclude that, in all probability, Irma would not have obtained the outcome she did without Nathan and Melissa’s consent to the Family Court order. Donald’s 26 per cent share in the Kuku Road land which Irma had secured under the Family Court order has proved to be very valuable. When the land was sold in 2009, it realised $1.874 million. By then, Irma had been able to purchase the remaining shares in the Company from Nathan and Melissa.

The relationship between Nathan, Melissa and Irma

It is common ground that there was an estrangement between Irma and Nathan. However, there was a strong difference of view as to the causes of the breakdown in their relationship, who was responsible for that, and when it arose. In the High Court, the Wakem children submitted that Nathan’s part in the estrangement was such as to amount to disentitling conduct under s 5 of the Family Protection Act. That submission was not advanced before us but Nathan’s role in the estrangement was nevertheless relied upon as a factor relevant to the extent of Irma’s moral duty towards Nathan and to the quantum of the award made in his favour.
The Wakem children made similar allegations of an estrangement between Irma and Melissa. It was also alleged that the relationship between both Donald and Irma and their children deteriorated as the children reached adulthood.
For his part, Nathan attributed his estrangement from his mother to difficulties he experienced with her from a young age. He considered this was due in part to the fact that he was an adopted child. He saw these difficulties in their relationship as being compounded by Irma having what he described as a serious drinking problem. Nathan’s evidence on that issue was supported by other evidence but strongly disputed by other deponents called by the Wakem children. Nathan believed Irma was prejudiced against himself and Melissa and, instead, favoured their cousins Carmel Fisher and Peter Wakem as being “real blood”. In consequence, he and Melissa had left home as soon as they were able in order to escape the tensions in the home caused principally by their mother’s behaviour towards them. When eventually Nathan married Michelle, he returned home but the difficulties earlier experienced were exacerbated due to Michelle’s refusal to accept Irma’s behaviour.
Melissa was much more muted about these difficulties. However, she acknowledged tensions in the relationship which she and Nathan had with Irma and supported Nathan’s evidence that Irma’s difficulties with alcohol were a contributing factor to the breakdown in his relationship with his mother.
The Judge accurately characterised the exchanges in the affidavits as having become increasingly bitter. The Judge, rightly in our view, declined to trawl through the detail of the views and opinions expressed in the myriad of affidavits. Acknowledging the difficulty of reconciling material of this kind on the basis of affidavit evidence alone, the Judge observed that the truth probably lay somewhere in the middle. However, he found there was simply no reliable evidence to find that Melissa or Nathan were estranged from their father, or that Melissa was estranged from her mother. While there may have been difficulties, that was not unusual in the Judge’s view. He saw the real issue as being the significance of Nathan’s undeniable estrangement from Irma.
It is undoubtedly the case that Irma was a strong-willed person who did not hesitate to speak her mind. In concluding that Nathan’s estrangement from Irma did not constitute disentitling conduct, the Judge noted Nathan’s strong sense of grievance about the way his mother had treated him over time. He doubted whether the Wakem children were in a position to fully appreciate the private dynamics within the Murray family.
The Judge placed particular reliance on the affidavit of Irma’s friend, Mrs Maureen Madsen. In her will, Irma had forgiven any debts owing by Mrs Madsen in consideration of the “natural love and affection” she bore towards Mrs Madsen. The Judge described Mrs Madsen’s evidence as providing considerable support for Nathan’s account of his relationship with his mother. Mrs Madsen said Irma was a cold and dispassionate mother who would berate and criticise both Nathan and Melissa for the slightest misdemeanour. Mrs Madsen also stated that Irma always had an issue with the fact that Nathan and Melissa were adopted; and she considered Irma’s excessive drinking was “a huge issue”.
Yet, as the Judge observed, Nathan returned to the family farm and, at Irma’s request, Melissa returned to live on the farm and look after her when she fell ill in her later years. Despite the difficulties Nathan had with his mother, the Judge did not consider that Nathan was estranged from his mother at the point when he returned to live on the farm. However, he considered this changed after Nathan’s marriage to Michelle. He inferred on the evidence that the tense relationship that had previously existed between Nathan and his mother broke down and that they became truly estranged. The Judge considered the fact that Michelle and Nathan did not foster relationships between their children and Irma after 2004 was unfortunate but was, perhaps, understandable.
Having read the affidavit evidence, we see no reason to differ from the conclusions reached by the Judge on this issue. Given the friendship between Irma and Mrs Madsen, the Judge was entitled to place reliance on the latter’s evidence. However, while we can understand Nathan’s sense of grievance about his mother’s attitude towards him, responsibility for that state of affairs cannot be attributed to Irma alone. There was, we think, likely to have been a degree of fault on both sides. While there were also tensions in the relationship between Irma and Melissa, the evidence does not show a breakdown in their relationship of the kind Nathan experienced.

Nathan’s farming abilities and responsibility for the indebtedness of the farming enterprise

There is no doubt that, in recent years, the farming trust operated by Nathan and Michelle has incurred losses and has had an increasing level of indebtedness to the bank. Draft accounts for the trust for the year ended 31 March 2010 showed a net loss of $60,000 and an excess of $670,000 of liabilities over assets. Bank debt totalled $1.6 million against total assets of $1.4 million.
Nathan attributed the trust’s financial position to the inherent limitations of the Papaitonga farm and its lack of profitability, notwithstanding his best efforts as a competent farmer. He also pointed to the loss of the Kuku Road land after the sharemilking arrangement was terminated and the change to leasing the farm in 1999. This deprived him of the ability to use the Kuku Road land.
On the other hand, the Wakem children attributed the farm’s relatively poor performance to Nathan’s inadequacy as a farmer and also alleged that the lack of profitability was partly attributable to an expensive lifestyle led by Nathan and Michelle.
The Wakem children relied on an affidavit from Mr R W Eglinton, a Palmerston North chartered accountant. He made a number of criticisms based on an analysis of the accounts of the farming enterprise over the period 2000 to 2009. He maintained that it was more profitable for Nathan to pay rent over the nine year period than to operate the farming business as a sharemilker; that the expenses of the farming trust were excessive; the farm was burdened by debt in order to fund losses from farming as well as high drawings; milk production had decreased during the period when the farm was operated under the sharemilking agreement and did not increase when the lease arrangement was made; and there was no support for the view that the reduced farm production during the sharemilking period was due to the failure of Donald’s estate to maintain the farm properly while the agreement was in place.
The Wakem children also relied on an affidavit by a rural valuer, a Mr S A Jones, who expressed the view that the farm had not been maintained or managed by Nathan as the lessee as well as it should have been and that this was the reason why production levels were low.
Nathan responded to these criticisms by pointing out that when he lost the use of the Kuku Road land from 1999, Irma had leased it to others at a rental which was then $32,000 per annum. He did not know whether the rental was later increased. Effectively, the total productive land of the Papaitonga farm and the Kuku Road land was 190 hectares. This had been reduced to 150 hectares from 1999. Mr Eglinton’s figures had failed to take into account the rent of not less than $32,000 per annum which Irma received from leasing the Kuku Road land over the period 2000 to 2009. This was a benefit to her and also represented a corresponding loss of benefit to the farming enterprise. In consequence, Nathan’s evidence was that Irma was better off overall under the lease arrangement despite the loss of the Kuku Road land to his farming enterprise.
The Judge found that the loss of the Kuku Road run-off block had been an important part of the management of the total farming enterprise.
Nathan denied any excess expenditure. In response to Mr Eglinton’s view that wages and vehicle expenses were higher than expected, Nathan pointed out that the farm business employed two milkers which he said was normal for a farm of the size at issue. He also said that the vehicle expenses criticised by Mr Eglinton went well beyond those relating to cars or utility vehicles. We note that the level of drawings during the 2000 to 2009 period does not appear to have been excessive, ranging from $41,000 in 2000 to a peak of $104,000 in 2008. In the draft accounts for the year ended 31 March 2010, the drawings were approximately $80,000.
As to the criticisms made by Mr Jones, Nathan pointed out that Mr Jones had only looked at the 77 hectare freehold area of the farm whereas its total effective area was 150 hectares. He had compared milk production from the farm with a report prepared by a Mr Halford in 1986. This was a false comparison, Nathan said, because Mr Halford’s report dealt with production from two farms whereas Mr Jones was dealing with production from the Papaitonga farm alone.

The Judge placed considerable reliance on the evidence of Mr Sims whose evidence was that Nathan had improved the farm enormously over the years with a great deal of hard work. He saw no justification for Irma’s criticism that Nathan had mismanaged the farm and observed that she had no interest in farming herself. Given Mr Sims’ close association with the farm and family, the Judge preferred his evidence to that of Mr Eglinton and Mr Jones. Mr Eglinton’s evidence had been based on an analysis of the accounts with no personal knowledge of the facts and circumstances. While Mr Jones had visited the Papaitonga farm, it was not clear to the Judge how one visit could provide a proper basis for the expansive views that, as a valuer, he provided.
The Judge concluded that:
[103] Nathan may not be the best farmer in the world and may, as in my view is evidenced by his interest in hot air balloons, have inherited – albeit not by blood – something of his father’s penchant for unusual and expensive hobbies. …
On our assessment of the evidence, Nathan may have been able to increase production by greater application of fertiliser and by being more assiduous in respect of the maintenance of the farm, its plant and its equipment. He might also, as Mr Millard pointed out, have leased other grazing land to make up for the loss of the Kuku Road land and he did in fact do so in the 2008/2009 financial year. But these steps would also have increased expenditure, a factor which does not appear to have been considered in the evidence given by Mr Eglinton. On the evidence, the allegation of excessive expenditure on hot air ballooning or otherwise was not established.
Mr Eglinton went so far as to label as reckless Nathan’s continued farming on an unprofitable basis with increasing bank indebtedness. We reject Mr Eglinton’s opinion as extravagant and surprising given the absence of any personal knowledge by him of the farm and the complicating features of the conditions under which it had to be operated.
What stands out is that Nathan (supported by Michelle) has been personally responsible for the farming enterprise from 1993 continuously until the present, a period of some 19 years. He has done so despite the difficulties of attempting to operate a sharemilking agreement with Irma (from whom he was estranged) and later, without the benefit of the Kuku Road land which had been an important part of the overall farming operation until 1999.
In addition, due to Irma’s life interest in the land, he has had the burden of paying rent to her over the 10 year period from 1999 until her death. By Nathan’s efforts alone, the farm has been maintained and preserved for the considerable benefit of the wider family including Irma and the Wakem children. That is a factor which, on any view, the Judge was entitled to weigh in Nathan’s favour.

The Judge’s findings in relation to the claims

Nathan

Nathan was born on 13 March 1965 and adopted by Donald and Irma when he was three months old. He was 44 at the time of Irma’s death. The Judge noted that Nathan had moved to Australia in 1981 when he was aged 16. He later returned home and worked for about a year on the farm in 1986. Then he went back to Australia before marrying Michelle in 1993 and returning to operate the Papaitonga farm and associated land. Thereafter, he has farmed the property continuously until the present day, assisted by Michelle.
From 2004 onwards, the Judge found that Irma had very little contact with Nathan and Michelle’s two children. While Nathan attributed to Irma the entire responsibility for the estrangement between them, the Judge thought it unavoidable that Nathan must bear some responsibility for what he described as the very sad state of affairs that existed at the time of his mother’s death. That was, in the Judge’s view, a relevant consideration in assessing whether Irma had discharged her moral duty to Nathan.
In relation to Nathan’s financial circumstances at Irma’s death, all parties accepted it was appropriate to treat Nathan’s financial position as reflected by Nathan and Melissa’s family trust through which the dairy farm was operated. Although this showed a negative equity resulting from the substantial indebtedness to the bank, adjustments needed to be made to take into account the trust’s advances to Nathan and Michelle, as well as the net value of land known as the Orchard Block which Donald had purchased for Nathan about 1980. The net value was $1 million. After making these adjustments and adding the value of Nathan’s interest in Donald’s estate, Nathan’s overall assets totalled $2,368,823:
50 per cent of the Papaitonga Farm ($2.76 million)    1,381,750.00
Two-thirds of the Fonterra shares  246,780.00
Two-thirds of the Peak Notes  40,000.00
  $1,668,530.00
Plus adjusted net value of Papaitonga Trust
(taking into account the net value of the Orchard)      $700,293.00
$2,368,823.00
In the year ended 31 March 2010, the draft accounts for Nathan’s family trust showed a trading loss of $60,146. Nathan’s stipend as a member of a local body amounted to $17,100 per annum.
The Judge did not attribute any specific value to Nathan’s option under Donald’s will to acquire the other half of the Papaitonga farm. However, he accepted it did have some value, observing that:
Depending on how the trustees exercise the somewhat uncertain discretion given to them under Donald’s will, Nathan may do so [exercise the option] on the very favourable term of equal payments over 15 years interest free.
Mr Millard submitted that the value of the buy-out arrangement could be estimated using the tables in the second schedule to the Estate and Gift Duty Act 1968. He calculated that the value of paying for half the present value of the farm over a 15 year period was $425,841. Mr Millard acknowledged that clause 8(a) of Donald’s will appeared to give the trustees a discretion as to whether to allow Nathan to exercise the option on the terms there stated. However, he submitted that any refusal by the trustees to allow Nathan to proceed on this basis would inevitably be challenged.
During the hearing we invited Mr Millard to obtain instructions as to whether, in the event of Nathan choosing to exercise the option, the Wakem children would agree that the option should be exercised by the trustees on the terms specified in Donald’s will. After taking instructions, Mr Millard advised that the Wakem children would agree that, in the event of Nathan exercising the option, he could do so on the terms specified in clause 8(a) of Donald’s will.
Despite this concession, uncertainties remain over the option. First, the concession was not made on behalf of all the residuary beneficiaries under Donald’s will. The view of Irma’s nephew Gregory is unknown. Melissa is entitled to a one-eighth share in the Papaitonga farm and has an obvious interest in when the option is exercised and, if so, on what terms. Her view is also unknown. Finally, we were told that changes in the current trustees (Carmel Fisher and Mr Sims) are proposed but have not yet occurred. We do not know what view the existing or any new trustees may have on this issue.
The value of the option must take these uncertainties into account. Moreover, as Mr Millard acknowledged, there are the reciprocal rights and obligations in favour of the residuary beneficiaries under clause 8(b) of Donald’s will. If the option in clause 8(a) is said to have value to Nathan then, by the same token, the option in clause 8(b) in favour of the other residuary beneficiaries (including the Wakem children) may be said to have value too.
Our assessment is that Nathan’s option has some value to him since it is on favourable terms and may be exercised at any time. However, whether he will exercise the option and whether he has the capacity to do so is unclear. The exercise of the option is also subject to a number of other contingencies and uncertainties as discussed. To attribute any specific value to the option would be purely arbitrary.
The Judge noted that, by New Zealand standards, Nathan was a wealthy man. At the same time he had not received any significant distribution of cash from the estates of his father or his mother. As the Judge understood the evidence, it appeared that at least some of the Fonterra shares, forming the bulk of Donald’s residuary estate, may have been funded by Nathan as the lessee farmer of the Papaitonga farm.
Clifford J attached weight to the intention expressed in Donald’s will that Nathan was the person who was to farm the Papaitonga property and to keep it in the family. It was he who acquired the herd and farming equipment. Reviewing all the circumstances, the Judge considered that a wise and just testator in Irma’s position, while acknowledging the relevance of the circumstances of Nathan’s estrangement, would take into account that significant cash assets were removed from Donald’s residuary estate by the consent orders made by the Family Court in 1995. As well, Nathan was effectively the custodian for the family of the Papaitonga farm and this should be recognised in the form of a cash bequest to support him and his family in doing so.
The Judge concluded:
[164] In my view a wise and just testator might well look to the debt that Nathan has accumulated in the Papaitonga Trust as a measure of cash assistance that would be appropriate. That external debt currently amounts to some $1.6 million. I think a wise and just testator, in Irma’s position, would therefore have provided a cash bequest to Nathan to enable him to pay off a material part of that debt. On that basis, I consider that an award to Nathan from his mother’s estate of $600,000 would be sufficient to discharge Irma’s moral duty to her son Nathan, noting that the amount of that award – relative to the award to Melissa – does reflect the circumstances as I have assessed them of Nathan’s estrangement from his mother.

Melissa

Melissa was born on 4 October 1967 and was 41 at the time of Irma’s death in 2009. She was adopted by Donald and Irma when she was two years of age. The family went overseas for a period, returning to New Zealand in 1972. She grew up on the family farm and left home in 1984 after completing her schooling. After a period of work in New Zealand, she went to Australia returning to New Zealand for about six months in 1993 during which time she assisted her father who had created a hippodrome on his farm for racing chariots.
She returned to New Zealand for several months about the time of her father’s death in 1994 before travelling to Europe where she met her husband, Peter. Thereafter they lived in Perth for a period and were married in 2002. They have one child born in January 2008.
In 2004, Irma visited Melissa and Peter in Perth and asked them to return to New Zealand to be near her and to be available for any care she may require. Melissa and Peter sold their house in Perth and returned to New Zealand permanently in October 2005. Initially, they had a house in Karori but, in June 2007, they moved into the cottage on the Papaitonga farm to be near Irma, again at her request. There is no dispute that Melissa cooked the evening meals for her mother and attended to other tasks on her behalf.
By October 2008, Irma’s health was failing and she required full-time care. There is no dispute that Melissa took responsibility for Irma’s care on Thursdays and Fridays while Melanie Wakem and private carers took responsibility for the remainder of the week. Irma’s state of health was such that intensive care was required. She continued living on the farm in the homestead until her death in May 2009.
The Judge considered that, leaving aside Melissa’s inheritance under Donald’s will and the provision made for her by Irma, she and Peter were of modest means. Peter is a draughtsman and was earning approximately $48,000 per annum after tax. Melissa earned $10,000 as a shop assistant. They had about $1,500 in a bank account and household and personal effects totalling $10,000.
When Melissa sold her 24 per cent interest in the Company, she invested the proceeds. Some of this had been spent on maintaining and repairing the cottage. The remaining $50,000 was invested through Carmel Fisher in the Fisher Investment Fund. Melissa’s one-eighth share in the Papaitonga farm was worth $345,000 and her one-third interest in the Fonterra shares and Peak Notes amounted to a further $136,000. Her life interest in the cottage was valued at $351,000.
The Judge said Melissa was not poor but, at the same time, her cash position was not strong. While she was entitled to a one-eighth share of the profits of the farm (or for so long as the lease remained in place, one-eighth of the rental payments under the lease), she would not realise the capital value of her expectancy unless and until Nathan exercised his option to buy the remaining half-share in the farm. If he did, her interest would be subject to the terms of any finance the trustees of Donald’s estate might agree to.
The Judge accepted that Irma considered adequate provision had been made for both Melissa and Nathan through Donald’s estate. However, the Judge also accepted, in the light of Mrs Madsen’s evidence in particular, that Irma may well have been influenced in part by the fact that Melissa and Nathan were adopted. While these were Irma’s reasons, that did not answer the claim that Melissa had brought. The question was whether a wise and just testator would have only left Melissa some $10,000 and a bequest of $50,000 when she reached the age of 50.
Clifford J considered that a wise and just testator in Irma’s position would undoubtedly have made further provision for Melissa. He took into account three considerations:
(a)Recognition should have been given to Melissa (and Nathan’s) generosity in respect of the 1995 Family Court proceedings. Through that generosity, assets had been received by Irma during her lifetime which would otherwise have fallen to Melissa and Nathan as part of Donald’s residuary estate.
(b)The substantial wealth at Irma’s disposal had come to her through the Murray family, particularly from the family lands at Papaitonga. While Irma had, through her marriage to Donald, contributed to their financial position, Donald’s provision for Irma under his will had resulted in her receiving significant cash assets.
(c)Given the relationship Melissa had with both her parents, it should have been recognised that, on Irma’s death, Melissa would have very limited cash resources beyond the funds that might eventually come to her through Donald’s estate. In that respect, Donald’s will did not distribute significant cash resources to either of the children. Recognition should also have been given to the fact that Melissa had spent money on the maintenance of the cottage even though Donald’s will made it clear that it was to be maintained from the farm income. Melissa had been adversely affected by this.
The Judge expressed his conclusions in this way:
[146] Therefore, in my view, a wise and just testator would have recognised that to provide adequately, in the context of Irma’s significant, and largely cashed-up, estate of $3.8 million, for Melissa’s maintenance and support – as those terms are properly understood – required some, not insubstantial, cash bequest. In my view, a wise and just testator would have provided for Melissa’s maintenance and support by a cash bequest of $750,000. Wisely invested, as Melissa’s decision to invest her surplus funds from the Karori residence with Carmel’s firm Fisher Funds shows that Melissa can do, that bequest would provide Melissa, Peter and Olivia with support to supplement appropriately their relatively modest cash means.
[147] I therefore consider that Irma did breach her moral duty to Melissa in the terms of her will and order that the bequest of $50,000 at the age of 50 vest immediately, together with a further bequest of $700,000, in addition to the proceeds of the overseas bank accounts.

John

As already noted, John was a child of Irma’s previous marriage. He was born in Australia on 10 September 1948. As a young child, he was looked after by his grandmother. Later, he was placed by Irma in boarding houses for children on a temporary basis and then attended boarding school. He saw his mother infrequently during that time. He was 15 when Irma married Donald and he moved to New Zealand to complete his last year of secondary education.
From the age of 16 onwards he has had little to do with Irma, a situation which the Judge described as being largely Irma’s doing. The affidavit evidence discloses that Irma encouraged John to move to Australia in 1978 and effectively told him not to return to New Zealand. John moved to Australia and married. His wife died in 2002.
Addressing John’s personal circumstances, the Judge said:
[168] John can only be described as poor. He lives alone some two hours north west of Toowoomba on a six acre block of scrub land worth A$16,000 in a kitset house worth A$15,000. He is a beneficiary. It was, as I said during the hearing, a somewhat remarkable proposition that the Wakem Children advanced when they submitted that John was a person who wanted little. That a person is poor, and has little, does not equate to them wanting little. Having said that, John is now 60 years old. He has no children of his own.
John’s evidence was that he was having health difficulties but was contemplating a move to Bundaberg in Queensland where he hoped to find work leading to his retirement. His inquiries showed that the cost of buying a reasonable house in Bundaberg would be about A$300,000. He needed a new motor car to replace a very old model and some funds to give him a measure of financial security since he did not have any private superannuation.
Clifford J concluded that Irma had clearly breached her moral duty to John. The extent of that moral duty had to be assessed in the context, first, that Irma’s estate came to her “very much by reason of her marriage to Donald” and secondly, the nature of the relationship between Irma and John. A wise and just testator, the Judge thought, would take into account his or her responsibility for the lack of contact with John. The Judge accepted that John’s largely uncontested affidavit evidence established that Irma was responsible for this state of affairs.
The Judge concluded:
[171] In my view, a wise and just testator in Irma’s position would have recognised their moral duty to John in the following manner:
(a)She would have enabled John to acquire a house of the type he has identified, that is, one with an approximate value of A$300,000.
(b)Further, I think such a wise and just testator would have provided John with an additional cash sum to support him. I think the appropriate amount for such a cash sum, being as I emphasise again the minimum to discharge the moral duty, is A$50,000.
The total sum awarded of A$350,000 was to be in place of the NZ$50,000 discretionary fund Irma had provided in John’s favour.

Family Protection Act principles

Clifford J set out the principles applicable to claims under the Family Protection Act in some detail. Those principles are not in dispute. The starting point is s 4(1) of the Family Protection Act which provides:
4 Claims against estate of deceased person for maintenance
(1)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.

The basic principles are long-established, beginning with authorities under the Testators’ Family Maintenance Act 1900.[4] In more recent times, the following statement of principle from the decision of this Court in Little v Angus[5] has been consistently followed:
… 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.
[4] See, for example, Allardice v Allardice (1910) 29 NZLR 959 (CA) at 969 per Edwards J.
[5] Little v Angus [1981] 1 NZLR 126 (CA) at 127.
These principles were subsequently endorsed by this Court in Williams v Aucutt[6] and in Henry v Henry.[7]
[6] Williams v Aucutt [2000] 2 NZLR 479 (CA) at [35].
[7] Henry v Henry [2007] NZFLR 640 (CA) at [43].
Williams v Aucutt was preceded by another decision of this Court in Re Leonard.[8] The Court emphasised that mere unfairness is not sufficient. It must be shown in a broad sense that the applicant has need of maintenance and support. However, an applicant need not be in necessitous circumstances. These considerations are captured in this passage:[9]
The question of whether the testator was in breach of his moral duty to his daughters as claimants on his bounty must be determined in the light of all the circumstances and against the social attitudes of the day. Mere unfairness is not sufficient and it must be shown that in a broad sense the applicant has need of maintenance and support. But an applicant need not be in necessitous circumstances: the size of the estate and the existence of any other moral claims on the testator’s bounty are highly relevant and due regard must be had to ethical and moral considerations, and to contemporary social attitudes as to what should be expected of a wise and just testator in the particular circumstances.
[8] Re Leonard [1985] 2 NZLR 88 (CA).
[9] At 92.
This passage was also approved by this Court in Williams v Aucutt.[10]
[10] At [37].
Section 4(1) refers to “adequate” provision for the “proper” maintenance and support of any claimant. As this Court noted in Williams v Aucutt,[11] the judgment of the Privy Council in Bosch v Perpetual Trustee Company Ltd[12] emphasised that “proper” denotes something different from “adequate” and that the amount to be provided is not to be measured solely by the need of maintenance which would be so if the Court were concerned merely with adequacy.
[11] At [38].
[12] Bosch v Perpetual Trustee Company Ltd [1938] AC 463 (PC).
On the same topic, this Court in Williams v Aucutt confirmed[13] its earlier judgment in Re Harrison (deceased).[14] That decision emphasised the breadth of the statutory inquiry and said that the need of an applicant is not to be considered in isolation. As Gresson P put it:[15]
What has to be assessed are the merits of the claim having regard to the applicant’s circumstances as at the date of the death of the testator; relations between the testator and the applicant in the past; and the extent of his estate and the strength of other claims.
[13] At [39].
[14] Re Harrison (deceased) [1962] NZLR 6 (CA).
[15] At 13.
In Williams v Aucutt, this Court emphasised that “support” is to be distinguished from “maintenance”. The Court said:[16]
… 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.
[16] At [52].
This Court also emphasised in Williams v Aucutt that a different approach may be justified depending on the size of the estate.[17] In small estates, the applicant may commonly be competing with other persons who also have a moral claim upon the testator. However, in large estates, the applicant is complaining not of the unjust distribution of an inadequate fund amongst dependants, all of whom have a moral claim upon the testator, but of the failure of the testator to make out of the abundance of his or her resources a provision sufficient for the proper maintenance of the claimant.
[17] At [40].
In his submissions, Mr Millard placed heavy emphasis on observations in this Court suggesting a conservative approach should be taken in Family Protection Act cases. We have already mentioned Re Leonard for the proposition that mere unfairness is not sufficient to amount to a breach of moral duty. This Court in Williams v Aucutt addressed the difficulties for courts in making unaided assessments of current community attitudes in a complex and changing social environment.[18] The leading judgment of the Court was delivered by Richardson P,[19] who said there were pointers to concerns that awards in some recent cases may have been out of line with current social attitudes to testamentary freedom relative to claims by adult children.[20] The Court discussed a report by the New Zealand Law Commission[21] and a survey of a number of cases conducted through the University of Otago.[22]
[18] At [44].
[19]      On behalf of himself as well as Gault, Keith and Tipping JJ.
[20] At [45].
[21]      Report of the Working Group on Matrimonial Property and Family Protection (October 1998).
[22]      Nicola S Peart “Awards for Children under the Family Protection Act” (1995) 1 BFLJ 224.
In a separate judgment, Blanchard J remarked that, in the last few decades, an expansive view appeared to have been taken of the power of the Court to refashion the will of a deceased in order to fulfil what has been regarded as his or her moral duty.[23] He re-emphasised that the Court is not authorised to rewrite a will merely because it may be perceived as being unfair to a family member, and that a beneficiary was not required to justify the interest given to him or her. He added it was not for the Court to be generous with the testator’s property beyond ordering such provision as was sufficient to repair any breach of moral duty.[24]
[23] At [68].
[24] At [70].
These observations were reiterated by this Court in Auckland City Mission v Brown[25] and again in Henry v Henry.[26]
[25] Auckland City Mission v Brown [2002] 2 NZLR 650 (CA) at [33].
[26] At [54], [55] and [58].
We do not view the more recent decisions of this Court as suggesting any departure from the well-settled approach in Family Protection Act cases from as long ago as 1910 in Allardice v Allardice and subsequently endorsed in Little v Angus and Williams v Aucutt. The question remains 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.
The more recent decisions of this Court have re-emphasised what has always been understood: that mere unfairness is not sufficient to warrant disturbing a testamentary disposition and that, where a breach of moral duty is established, 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.

Appellants’ submissions

Mr Millard’s broad submission in relation to the awards made to Nathan and Melissa was that they were much too high and amounted to a rewriting of Irma’s will which did not reflect the conservative approach reflected in the authorities.
Nathan was a relatively wealthy man who had been well provided for in Donald’s will; he was not in financial need; too much weight had been given to Nathan’s debt and not enough to the causes of that debt; excessive weight had been given to the alleged generosity by Nathan and Melissa in relation to the 1995 Family Court proceedings and not enough to Wanda’s generosity to Donald; insufficient weight was given to the provision made for Nathan during Donald’s lifetime and to the moral claims of the Wakem children; and the Judge should have taken into account the strength of Nathan’s attack on Irma as the reason for their estrangement. It was submitted that an appropriate award for Nathan would have been $250,000.
Mr Millard acknowledged that Melissa’s financial position was more modest than that of Nathan. However, in general terms, Melissa had been well provided for in Donald’s estate and an award of $400,000 would have been sufficient to repair the breach of moral duty in her case.

Discussion

It is well settled and not in dispute that, on appeal, this Court will not substitute its discretion for that of the Judge at first instance unless some reasonably plain ground is made out to vary the order made.[27]
[27] Little v Angus, above n 5, at 127.
Before dealing with the individual awards, we mention several key features of the case. The first we mentioned at the outset. The contest over Irma’s substantial estate was between her children and three of her nieces and nephews. When weighing the moral duty owed by a parent, the Court will ordinarily conclude that the duty to make adequate provision for the proper maintenance and support of one’s children should take priority over any duty to nieces and nephews.
This distinction is recognised in the Family Protection Act itself. The spouse, partner, children or grandchildren of the deceased may make a claim under the Act but not siblings, nieces or nephews. Parents of the deceased and stepchildren may claim but only in restricted circumstances. This reflects Parliament’s intention that the ability of the Court to override the usual freedom of testamentary disposition is limited to claims by close family members. That is not to say that there may not be moral duties owed to other family members or, indeed, to non-family members. But Irma’s primary obligation in the present case was towards her children. We add that anyone may make a claim against a deceased person’s estate under the Law Reform (Testamentary Persons) Act 1949 but no basis for any such claim was made here.
The second feature is the significance of the Papaitonga farm and Nathan’s contribution to its preservation and improvement. While acknowledging that Irma’s contribution through her marriage to Donald was entitled to proper recognition, it is to be remembered that the farm has been in the Murray family for four generations and that her estate has been derived in large measure from the wealth generated from that enterprise. She did not bring any property of her own to the marriage and gained substantial benefits from the income earned from the farm and the generosity extended to her by Nathan and Melissa in 1995 after Donald’s death. That settlement, the income derived from her life interest in the farm since 1994 and the assets to which she was already entitled under Donald’s will (such as the homestead), placed her in a very comfortable position and enabled her to retain the valuable Kuku Road property which, when sold, realised about half the value of her $3.7 million estate.
Importantly, as earlier noted, Nathan and Michelle’s work on the Papaitonga farm over a period of nearly 20 years since 1993 has meant that the farm has been preserved for the benefit of all those entitled to an interest in it, including the Wakem children. Nathan has continued to farm the land despite the difficulties in his relationship with Irma and thereby enabled the beneficiaries under Donald and Irma’s wills to reap the rewards of his work by providing income to Irma during her lifetime and by the improvement in the farm’s capital value over this lengthy period.
The third feature of this case is that the assertion by the Wakem children that Irma had a moral duty to them is weak when contrasted with the duty she owed her own children. The Wakem children do not assert that they made any contribution towards Irma’s or Donald’s estates. We accept that the Wakem children maintained a relationship with Irma but none has suggested that he or she provided any but minor services to Irma other than Melanie who, we accept, assisted Irma materially by helping to care for her in the period leading up to her death.
We have already mentioned the reliance by the Wakem children on a moral duty said to be owed by Donald and Irma by reason of the claimed generosity their mother had shown towards Donald in relation to the estate of their father. This is a bridge too far. We agree with the Judge that there can be no justification for any concept of inherited moral duty. If Donald owed a moral duty to his sister Wanda, it does not follow that Wanda’s children are entitled to contend that the duty extends to them. In any event, any moral duty owed by Donald to Wanda was amply satisfied by the bequest to Wanda under Donald’s will of the 37.5 per cent interest in the Papaitonga farm. The Wakem children have succeeded to that bequest by virtue of the gift over.
We accept that the Wakem children are not required to justify the provision made for them in Irma’s will, nor are they obliged to give the Court details of their respective financial positions. But the fact that they did not do so in this case meant that the High Court was entitled to proceed on the basis that they were not in need of maintenance or support.
The final feature of general application in this case is the absence of legitimate reasons for Irma largely excluding her children under her will. The stated reason that she had allowed her half-share of the farm to be distributed through Donald’s estate overlooks that 37.5 per cent of the farm went to the Wakem children and Gregory, not to her own children. Moreover, the evidence of Mrs Madsen suggested that the fact that Nathan and Melissa were adopted was likely to have been a factor in Irma’s considerations. It is difficult to see how that could have been a justifiable reason for failing to make adequate provision for them.

Nathan’s award

The Judge was right to recognise Nathan’s major contributions to the farm and Donald’s obvious intention that Nathan should, if possible, continue his role as the custodian of the family farm. We also agree with the Judge that it was appropriate to make an award to Nathan which would assist him to achieve the goal of retaining the family farm by reducing debt so he would be in the best position to buy out the other half of the farm as Donald clearly hoped he would. The half-share of the farm at current value is approximately $1.38 million. On Mr Millard’s calculations, this would require payments of approximately $92,000 per annum over the 15 year period envisaged under the buy-out option if Nathan is able to exercise it. The Judge recognised that Nathan has received little in the way of readily realisable cash resources and, despite the benefits he has received, Nathan will have to borrow to reduce debt or to purchase the other half of the farm if he decides to do so.
We see no reason to differ from the Judge as to the quantum of the award Nathan received. For the reasons already canvassed, we have rejected the submission that he was at fault for the extent of the indebtedness of his farming trust. The Judge was entitled in all the circumstances of this case to make a broad assessment of the amount required for Nathan’s proper maintenance and support. We view Irma’s acknowledged breach of moral duty as serious; Nathan’s direct and indirect contributions to Irma’s estate were significant; and any moral duty owed to the Wakem children was weak in relative terms. Nathan’s award amounted to approximately 16 per cent of the value of Irma’s estate which we do not regard as excessive or disproportionate.
Of course, the Court was obliged to take into account the provision made for Nathan under Donald’s estate and during his lifetime. Nathan has received substantial benefits in the form of the shares in the Company, the orchard land and the half-share of the Papaitonga farm. But these benefits are to be weighed with all the other relevant circumstances. Nathan’s capital position is relatively strong but it was the need for working capital that the Judge correctly identified.
The Judge took into account the estrangement between Nathan and Irma and his partial responsibility for that state of affairs. But it is no longer suggested this was a disentitling factor. As we view it, this was not a matter to which the Judge was required to give substantial weight in the overall assessment given the responsibility Irma must accept for what occurred and the fact that the difficulties began when Nathan was still a child.
Finally, Irma’s estate is sufficiently large to fall into the second category of those discussed in Williams v Aucutt. The complaint here was not about the unjust distribution of an inadequate fund. Rather, it was one alleging Irma’s failure to make adequate provision for her children’s proper maintenance and support out of the abundance of her resources. In these circumstances, the view the Court could take as to the amount which was adequate to provide “proper” maintenance and support was not constrained by a lack of resources or by the potential unduly to diminish the provision made to the beneficiaries under the will.

Nathan’s cross-appeal

Mr Reardon submitted on Nathan’s behalf that the award of $600,000 was manifestly inadequate. The arguments he advanced were essentially the opposite of those relied upon by Mr Millard to support a reduction of the award. In essence, Mr Reardon contended that the Judge had given inadequate weight to Nathan’s consent to the 1995 Family Court order; had failed to take into account the gift of land Nathan and Melissa made to Irma under the 1997 deed of family arrangements; should have given greater weight to the derivation of Irma’s estate through the Murray family’s assets; had wrongly found that Nathan should bear some responsibility for the estrangement; and failed to give sufficient weight to Irma’s exclusion of Nathan from her will on the ground that he was adopted.
In Nathan’s submission, the Judge was wrong to wrap all considerations into one global figure. It was contended that Irma’s moral obligation was to repay Nathan $460,000, a sum calculated to reflect the reduction of Nathan’s entitlement to the residue of Donald’s estate by his generosity in respect of the 1995 Family Court order (adjusted to its current day value). To allow only an additional $140,000 in Nathan’s award was insufficient to meet this debt and to assist him in buying out his cousins’ interest in the Papaitonga farm.

We do not intend to lengthen this judgment by a detailed examination of these grounds. We have taken them into account in reaching our view that there is no basis to disturb the Judge’s award to Nathan. We see no reason to differ from the award by way of increase or decrease.

Melissa’s award

The broader considerations we have taken into account in Nathan’s case also apply to Melissa. It is accepted that her financial circumstances were less favourable than Nathan’s and that the provision made for her in Donald’s will was much less than Nathan received. The Judge rightly identified that Melissa lacked sufficient cash resources and that the realisation of her one-eighth share in the Papaitonga farm under Donald’s will might be delayed for a significant period.
Melissa was entitled to recognition for her role in assisting Irma during the illness which ultimately led to her death. There was no estrangement between Melissa and Irma such as to require any reduction or moderation of the award in her favour. The amount of the award was about 20 per cent of Irma’s estate which was, we consider, reasonable in the circumstances. We are not persuaded there is any ground to reduce it.

John’s cross-appeal

We share the Judge’s concern that the Wakem children saw fit to dispute that Irma breached her moral duty to John. It was not until part way through the hearing in the High Court that the Wakem children accepted there had been a breach. Unlike Nathan and Melissa, John received nothing under Donald’s estate and had no expectation from his natural father. Irma’s failure to provide anything for John in her will beyond the $50,000 discretionary fund was an obvious and serious breach of moral duty.
John’s needs were obvious. At the age of 60 and in poor health, he had inadequate accommodation in a remote country area in Australia and few assets beyond an aging motor vehicle and his personal possessions. His only income was a social welfare benefit. There is no challenge to his evidence that Irma excluded him from a relationship with her by telling him to stay away.
There is no appeal against John’s award of A$350,000, but Mr Manktelow’s submission on the cross-appeal is that the award was too low to meet John’s needs. We agree. On the evidence, A$300,000 was necessary to enable him to obtain reasonable accommodation. To allow only A$50,000 on top of that to meet his other needs was, in our view, inadequate.
We consider John is entitled to A$150,000 in addition to the award of A$350,000. The award should total A$500,000 which is to replace the NZ$50,000 discretionary fund under Irma’s will. At current exchange rates (0.78), this would amount to approximately NZ$640,000. That sum is necessary to enable John to meet his reasonable needs and to provide him with the level of support which is appropriate in the circumstances. The increased award also reflects a greater degree of parity with the awards made in favour of Nathan and Melissa.

The costs appeal

The Judge made the following increased costs awards against the Wakem children:
Nathan  $70,000.00
Melissa  $70,000.00
John  $54,786.26
The Wakem children appeal against the awards made to Nathan and Melissa but do not challenge the award made to John. They submit that no more than scale costs ought to have been awarded. Scale costs would amount to $17,766 for Nathan and $15,096 for Melissa.
There were two principal factors relied upon by the Judge to justify the increased awards. First, he considered the Wakem children should take principal responsibility for the voluminous affidavits of the type repeatedly criticised by the courts. Secondly, he took into account that Carmel Fisher and her husband, as trustees of Irma’s estate, had advanced substantial funds from the estate to cover the legal costs of the beneficiaries in the proceedings.
Mr Millard submitted that neither of these reasons justified an increased award. He accepted there could be some criticism of aspects of Carmel Fisher’s affidavits but the greater responsibility should be borne by Nathan who, he said, had launched a strong attack on Irma’s character which justified a response from the Wakem children.
We have read the affidavits. They do not reflect favourably on either Nathan or the Wakem children and contain substantial allegations of a personal character which did little to advance the real issues. The courts have repeatedly criticised the participants in Family Protection Act cases who persist in trawling through material of this kind.[28] Nathan and Carmel Fisher in particular must bear responsibility for that as the principal deponents. However, it must be borne in mind that Carmel Fisher was the first to raise the issue of an estrangement between Irma and Melissa. She also alleged that the relationship between Donald and Irma and their children deteriorated as the children reached adulthood. This provoked a strong response from Nathan. As well, the Wakem children ultimately failed in their contention that Nathan was guilty of disentitling conduct, a submission which is rarely successful and ordinarily generates more heat than light. By raising these allegations, the preparation and hearing time was unnecessarily prolonged and this should be reflected in the costs awards for Nathan and Melissa as the successful parties. The costs awards are borne by the Wakem children as residuary beneficiaries.
[28] Little v Angus, above n 5, at [71].
While it was plainly inappropriate to advance funds from Irma’s estate for the legal costs of the beneficiaries without the agreement of the respondents or the approval of the court, an increased costs award was not justified on that account. In terms of r 14.6(3)(b) of the High Court Rules, an increased costs award may be justified by steps which have contributed unneces`sarily to the time or expense of the proceeding. Matters outside the litigation which do not have the effect of increasing cost and delay are not generally relevant.[29]
[29] Paper Reclaim Ltd v Aotearoa International Ltd [2006] 3 NZLR 188 (CA) at [160].
In the circumstances, the costs award to Nathan will be reduced to $35,000. Melissa did not join to any degree in the personal attacks and we see no reason to interfere with the award in relation to her.

Result

The appeal against the High Court’s substantive judgment is dismissed.
The cross-appeal by the second respondent is dismissed.
The cross-appeal by the third respondent is allowed. The award in his favour is increased to A$500,000 in place of the NZ$50,000 discretionary fund under the will of the deceased Irma Murray.
The appeal against the costs award to the first respondent is dismissed.
The appeal against the costs award to the second respondent is allowed. The costs award of $70,000 is reduced to $35,000.
In respect of the costs in this Court:
(a)The first respondent is entitled to costs against the appellants as for a standard appeal on a band A basis with usual disbursements.
(b)Costs between the appellants and the second respondent will lie where they fall.
(c)The third respondent is entitled to costs against the appellants as for a standard appeal on a band A basis with usual disbursements in relation to the appeal up to the point it was abandoned against him. The third respondent is also entitled to costs against the appellants on the cross-appeal as for a standard cross-appeal on a band A basis with usual disbursements.
Finally, Mr Millard raised issues about the forgiveness of debts and possible claims against Irma’s estate in relation to the maintenance of the cottage. It is not appropriate to resolve such matters in proceedings of this kind. We would expect the parties to resolve these issues themselves or, if necessary, they can be pursued in appropriate proceedings.

Solicitors:
Hornabrook Macdonald, Auckland for Appellants
Guy & Toby Manktelow, Lower Hutt for First and Third Respondents
Cooper Rapley, Palmerston North for Second Respondent
Grant O’Donnell, Palmerston North for Estate of Irma Murray