Fitzgerald v Mills
[2018] NZHC 2480
•21 September 2018
IN THE HIGH COURT OF NEW ZEALAND NEW PLYMOUTH REGISTRY
I TE KŌTI MATUA O AOTEAROA NGĀMOTU ROHE
CIV-2015-443-054
[2018] NZHC 2480
IN THE MATTER OF the estate of DOREEN MARY FITZGERALD UNDER
the Law Reform (Testamentary Promises) Act 1949
BETWEEN
ARNOLD GERARD FITZGERALD
Plaintiff
AND
MARIE ROSA MILLS, ANGELA MARY KISER and LOUISE MARY BUHLER as
executrices of DOREEN MARY FITZGERALD
Defendants
CIV-2017-443-022 IN THE MATTER OF
the estate of DANIEL JAMES FITZGERALD
UNDER
the Family Protection Act 1955
BETWEEN
MARIE ROSA MILLS, ANGELA MARY KISER and LOUISE MARY BUHLER
Plaintiffs
AND
ARNOLD GERARD FITZGERALD and THERESE MARY MUGGERIDGE as
remaining executors of the estate of DANIEL JAMES FITZGERALD
Defendants
Hearing: 30 July-3 August; 6-10 August; 17 August 2018 Counsel:
R T Wilson for plaintiff/defendants
R C Laurenson and M E M Walden for defendants/plaintiffs
Judgment:
21 September 2018
FITZGERALD v MILLS [2018] NZHC 2480 [21 September 2018]
RESERVED JUDGMENT OF DOBSON J
Contents
Background [1]
The claims [9]
The family history [13]
Proceedings commenced out of time [41]
The legal elements [50]
Assessment of the evidence [58]
Doreen’s wills [62]
Arnold’s TPA claim [75]
The promise [75]
Provision of work and services for Doreen [84]
Values of the promise, and the services [93]
Lawfulness of the sale and gifting of proceeds of the Rowan Road property [100]
Relief from unlawful gifting transactions [114]
Doreen’s alleged mal-administration of DJ’s estate [129] Who was the lessee of the Mary Fitzgerald estate land prior to DJ’s death? [135] The extent of Arnold’s life interest in DJ’s estate [158]
Quantifying Arnold’s TPA claim [167]
Arnold’s FPA claims [181]
Disentitling conduct affecting Arnold’s FPA claim [192]
Daniel’s FPA claim [198]
Claim for Arnold to pay rent for the homestead [203]
The three daughters’ FPA claim against DJ’s estate [212]
Outcome [217]
Costs [218]
Background
[1] The protagonists in this litigation are six of the seven children of Daniel James Fitzgerald (DJ) and Doreen Mary Fitzgerald (Doreen) who spent their working lives as Taranaki dairy farmers whilst bringing up their family.
[2] The major protagonist, Arnold Fitzgerald, is the younger of DJ and Doreen’s two sons, who has taken over the dairy farm that was previously farmed by DJ. It comprised three areas of farmland with different ownership histories and now comprises some 253 acres in Kaponga. The family home in which DJ and Doreen brought up their children, and which is now occupied by Arnold and his family, is on part of this land.
[3] Doreen owned a separate block of 125 acres some six kilometres away from the family home, which she acquired prior to her marriage to DJ (the Rowan Road property). It was used as a separate dairy farming operation during her lifetime.
[4] DJ died in December 1983, approximately 31 years before Doreen. With a focus on providing for the next male generation that would take over the farming business, DJ’s will left to Arnold a life interest in a 90 acre component of the family farm that he owned personally, with a gift over to Arnold’s children. This constituted unequal provision for Arnold, when compared with virtually no provision for his five daughters.1
[5] DJ and Doreen’s older son, Daniel, moved to Australia in his early 20s, having indicated that he had no wish to spend his life as a dairy farmer. DJ left Daniel the proceeds of a life insurance policy on his life, valued at DJ’s death at approximately
$21,000.
[6] It is common ground that since approximately 2009 Doreen was suffering from dementia and was not competent to manage her own affairs. In 2011, two of her daughters, Marie Rosa Mills (Marie) and Angela Mary Kiser (Angela), sold the Rowan Road property to a third daughter, Louise Mary Buhler (Louise), and her husband,
1 DJ provided for three of his daughters (in addition to Doreen) to have rights to occupy the homestead until they each married.
Peter Buhler. Marie and Angela completed the transaction relying on an enduring power of attorney that Doreen had granted in their favour in April 2001. The sale was for $2.26 million, with settlement occurring on 1 June 2011. At that time, Marie and Angela, again acting under the enduring power of attorney, procured advances by Doreen of $450,974.86 to each of her five daughters, Marie, Angela, Therese, Patricia and Louise.
[7] In December 2011, after the abolition of gift duty, Marie and Angela completed deeds of release of those debts owed by each of the five daughters to Doreen.
[8] Doreen died in August 2014. In her will, she left legacies of $50,000 each to Daniel and Arnold, with all of the residue going equally to her five daughters. On the administration of the estate by its executrices, the estate comprised some $970,000. However, Daniel and Arnold contend that forgiveness of the debts owed by each of the five daughters was unlawful so that those debts remain owing by each of them, with the result that Doreen’s estate would comprise somewhere between $3.3 and
$3.35 million.2
The claims
[9] The first part of the litigation is Arnold’s claim against Doreen’s estate under the Law Reform (Testamentary Promises) Act 1949 (TPA) for testamentary promises allegedly made by Doreen that he would take over the Rowan Road property after her death.
[10] The second of Arnold’s claims against Doreen’s estate is brought under the Family Protection Act 1955 (FPA). It claims he is entitled to an award for support on the basis of an estate of $3.35 million. Daniel has also brought a claim against Doreen’s estate under the FPA on the same basis as Arnold.
[11] In response to Arnold’s claims, Marie, Angela and Louise have more recently brought family protection claims against DJ’s estate, alleging that he failed to provide adequate support for each of them.3 They have also brought a claim as executrices of
2 This range is reflected in briefs of evidence, compared with closing submissions.
3 See [212]–[216] below.
Doreen’s will, seeking an account for rent allegedly owed by Arnold for occupation of the homestead from the time Doreen moved out of it, until her death.4 These claims are brought contingently, in that awards are only sought if the dispositions in Doreen’s will are altered by any relief granted to Arnold or Daniel.
[12] The two proceedings have not been formally consolidated, but by consent they were heard together, with evidence in each being evidence admissible in the other. Each of the family protection claims were commenced out of time, and leave was sought to do so.
The family history
[13] A basic chronological narrative of the family history is appropriate to introduce the relatively extensive sequence of issues required to be determined. DJ’s grandmother, Mary Fitzgerald, owned 110 acres of land in Kaponga. She died in 1938 and by her will left a life interest in her 110 acres to her son, Daniel Thomas Fitzgerald. On his death, this land was to go to his two sons, DJ and Scean, or the survivor of them.
[14] Daniel Thomas was not a farmer and the Mary Fitzgerald estate leased that block to DJ in 1953. A further lease was executed in 1964. Mary’s estate accounted to Daniel Thomas for rent received.
[15] In 1966, Doreen’s father, Arnold Engelberger, settled a trust, the beneficiaries of which were all of Doreen and DJ’s seven children. It was known as the Maryland Trust. The initial trustee was a Hawera accountant. DJ and Doreen enjoyed a power of appointment of trustees during their lifetimes.
[16] Two years earlier in 1964, DJ had formed the D Fitzgerald Trust, which apparently had similar purposes to the Maryland Trust. No trust deed has survived, nor are there documentary records of the terms on which assets it may have owned were disposed of. There is no record of the D Fitzgerald Trust having formally been
4 See [203]–[211] below.
wound up. The evidence does not include any suggestion that any assets it may have held were distributed to beneficiaries.5
[17] By 1970, DJ owned 90 acres, which was near to, but not adjoining, the block owned by the Mary Fitzgerald estate. A further block of 53.5 acres adjacent to DJ’s 90 acres was owned by the Maryland Trust. The 53.5 acres was sufficiently contiguous to the other blocks to afford access between DJ’s 90 acres and the 110 acres leased from the Mary Fitzgerald estate. Between 1970 (at the latest) and his death in December 1983, DJ ran his own 90 acres as a sheep and beef farm. He also ran a herd of cows on the Mary Fitzgerald estate and Maryland Trust blocks. Those cows were milked on the Mary Fitzgerald estate land.
[18] Throughout this period, Doreen operated a separate dairying operation on the Rowan Road property. There were various ownership arrangements for stock, and transfers of legal ownership in part of the property were deployed at various times, but under Doreen’s ultimate control. Similar arrangements were utilised for the blocks DJ was farming.
[19] Doreen was surprised and disappointed that DJ made no substantial provision for her in his will. The exception was granting her a right of occupancy of the family homestead located on part of his 90 acres for her lifetime, on terms that Arnold (as life tenant of the 90 acres) would pay a rental for the remainder of the 90 acres in amounts assessed by DJ’s trustees as sufficient to maintain and improve the homestead. Rights to continue living in the homestead were also provided for three of the daughters as long as they remained unmarried.
[20] In June 1986, Gavin O’Dea as the family’s accountant and the trustee of the Maryland Trust, liaised with his cousin, the local solicitor Peter O’Dea, who also acted for the Fitzgerald family, to complete the terms of a deed of family arrangement. The deed dealt with ownership of 83 cattle, 23 calves and 300 sheep that had been owned by DJ and bailed to the Maryland Trust, and which, by DJ’s will, he had gifted to
5 The financial statements for the Maryland Trust to 31 March 1985 include as an investment a loan to the D J Fitzgerald Trust of $2,484, but it appears to have been repaid in the following financial year and was not included in the 1986 balance sheet. There was no evidence on the point.
Arnold. The deed recorded Arnold’s gifting of 83 cattle and 23 calves to Doreen. The value of that livestock was specified at $41,030, which Arnold was to gift by way of forgiveness of debt over a period of two years.
[21] That deed also provided for the Maryland Trust to transfer ownership of 33 heifers and 10 calves to Doreen. In a similar structure, they were valued at $16,000, which the Maryland Trust forgave Doreen by way of gift. In addition, the deed recorded the forgiveness by the Maryland Trust of a debt owed by DJ during his lifetime of $68,145. That forgiveness was to occur over a period of four years. In their capacity as beneficiaries of the Maryland Trust and DJ’s estate, all seven siblings consented to the transactions.
[22] At the end of his life, DJ appears to have been aware that if he died before his father (Daniel Thomas) then his brother Scean would take the whole of the interest in the 110 acre block as the sole residuary beneficiary in the Mary Fitzgerald estate. Scean and his family lived in the South Island and had taken no interest in farming the property. DJ predeceased his father by some 12 years, and after the death of Daniel Thomas in April 1995 a dispute arose between DJ’s family (the Taranaki Fitzgeralds) and Scean’s family (the South Island Fitzgeralds) as to their respective entitlements to the Mary Fitzgerald estate land.
[23] Scean did survive his father, but died some months later in October 1995. His estate maintained his claim to the Mary Fitzgerald estate land and the dispute between the two branches of the Fitzgerald family was the subject of a mediation conducted in Wellington in March 1996.
[24] Doreen and Arnold, supported by the rest of their family, contended that the land should not go entirely to Scean as survivor. They cited the extent of improvements that DJ’s family had made to the land, and played on the importance of the on-going connection between their branch of the family and the land.
[25] The aspiration of the Taranaki Fitzgeralds going into the mediation was that the land be kept in their family. Arnold hoped to purchase the Mary Fitzgerald estate
land in his own and his wife Edith’s names, but the South Island Fitzgeralds held out for a price that was beyond their means at the time.
[26] By the conclusion of the two-day mediation, conditional terms of settlement were agreed. A contingency about liability for GST required an opinion to be obtained and the initial terms of settlement had to be amended to deal with the consequences. On 21 June 1996, a formal deed of settlement with the estate of Scean Fitzgerald was concluded.
[27] The Mary Fitzgerald estate land was in two titles. The Maryland Trust, with the benefit of an advance from Doreen, purchased the larger block of about 60 acres (Block I). Arnold purchased the smaller block of about 50 acres (Block II) in his and Edith’s names.
[28] Others of the Taranaki Fitzgeralds were unhappy that the proportionate contributions to the purchase price were out of kilter with the areas registered in the names respectively of Arnold and Edith, and the trustees of the Maryland Trust. In a deed of family arrangement that was also dated 21 June 1996 but completed several months later, the trustees of the Maryland Trust, Arnold and his wife Edith, and each of his siblings agreed that Arnold and Edith’s share in Block II would be held as to an undivided 60 per cent share for themselves and 40 per cent for the Maryland Trust.
[29] Tensions built up within the family up to and in early 2001. By then, Arnold was operating a dairy farm on the 90 acres in which he had a life interest from DJ’s estate, plus the 110 acres acquired from the Mary Fitzgerald estate and the further 53.5 acres owned by the Maryland Trust. In 1997, Arnold had commenced an agricultural contracting business. Others within the family were concerned that he was focusing on that and neglecting the dairying operation, thereby jeopardising the return to the Maryland Trust from the proceeds of sale of the milk.
[30] Suppliers of milk to co-operative dairy companies were required to be shareholders to qualify as suppliers. By 2001, meaningful value was attributed to the shares in the Kiwi Co-operative Dairy Company to which Arnold supplied his milk. He obtained advice that such shareholdings ought to be allocated to different interests
making up one supplier, in proportion to each contributor’s holding of land as a part of the total area from which the milk was supplied. Such a division would involve his having 60 per cent or more of the shares allocated by Kiwi Co-operative Dairy Company. However, the shares were all held in the name of the trustees of the Maryland Trust. Doreen opposed the transfer of any of the shares.
[31] In addition, the sale proceeds of milk from Arnold’s dairy farming operation had, for a period, been apportioned 60 per cent to Arnold and 40 per cent to the Maryland Trust. Arnold considered that his entitlement ought to be proportionately more. Doreen disagreed and procured a re-allocation of payment of the milk cheques to 50:50 between Arnold and the Maryland Trust.
[32] In February 2001, a family meeting was convened at Doreen’s home. She had by then moved out of the family homestead and into a new home built on a quarter acre section subdivided off part of the 90 acre block. All of Doreen’s children except Daniel (who was in Australia) were present. Daniel instructed Mr Wilson to attend on his behalf. Mr Wilson may also have been there to advance Arnold’s interests. Although the various topics on which there were disputes had been simmering for some time, this is a point from which the family battle lines can be drawn. In particular, animosity between Doreen and Arnold was certainly apparent from then.
[33] Numerous Court proceedings were commenced by Arnold. In one, an injunction application resulted in division of the milk cheque reverting to 60:40 in Arnold’s favour. He also applied, in separate proceedings, for the removal and replacement of the trustees in the Maryland Trust and in DJ’s estate. In other proceedings commenced by the then trustees of the Maryland Trust,6 a 2003 Court of Appeal judgment clarified that none of the siblings had a vested interest in any of the retained income or capital of the Maryland Trust (including assets acquired with that money).7
[34] In February 2004, all of the siblings and Doreen participated in a mediation that was intended to address the various grievances that had been raised by members
6 The trustees of the Maryland Trust were by then Doreen and a local solicitor, Rodney Mills.
7 Fitzgerald v Fitzgerald CA86/03, 17 December 2003.
of the family. The outcome was a heads of agreement that did resolve numerous issues. Arnold purchased all of the Maryland Trust’s land for $1.7 million and that trust was wound up, with its assets being divided equally among the seven children. The agreement provided that it was in full settlement of all claims arising between DJ’s estate and the Maryland Trust, and between any beneficiary and that trust.
[35] There are competing versions of who provided companionship for Doreen and cared for her in her later years. She had open heart surgery in 1989, but lived relatively independently for many years after moving from the homestead to her new home in 1991. By about 2005, she was losing confidence in being alone at night. In about the middle of 2008, she moved into Annie Brydon, a Hawera residential village. Medical analysis certified that she was incapable of managing her property affairs in December 2009 and she was subsequently diagnosed with stage three dementia. In May 2011, she was moved from Annie Brydon to a dementia unit in a rest home with hospital facilities.
[36] In April 2001, Doreen had completed an enduring power of attorney in respect of property matters in favour of Marie and Angela. There is no evidence that Marie and Angela exercised that power until it was used by them to sell the Rowan Road property in April 2011. Their sister Louise, and her husband Peter Buhler, had at various times since 2003 been sharemilkers on the Rowan Road property, and it was agreed that they would purchase it at a valuation, obtained for that purpose, of
$2.26 million. That transaction was settled on 1 June 2011, on which date Marie and Angela advanced $450,974.86 to each of themselves and their three sisters. In the case of Therese, Marie and Angela deducted an amount of $38,000, which they claimed should be withheld to take account of an advance that had been made by their mother to Therese and not repaid. Therese disputed the retention of that amount and, after she had commenced District Court proceedings, her claim was settled on the basis that most of the amount withheld was paid to her.
[37] The payments to all the daughters were structured as loans, on the basis that when gift duty was abolished later that year, the debts would be forgiven by the attorneys on Doreen’s behalf. That duly occurred with deeds of forgiveness completed
by the attorneys in December 2011. No aspect of the Rowan Road property transaction or forgiveness of the debts was notified to Arnold or Daniel.
[38] After Doreen’s death in August 2014, probate of her last will (made in March 2007) was granted in September 2014 to Marie, Angela and Louise. Doreen’s will provided legacies of $50,000 to each of Daniel and Arnold, with all of the residue to be distributed equally to Doreen’s five daughters. The will included an explanation as to why Doreen was not making any greater provision for her two sons.8
[39] In March 2015, the executrices paid out the legacies to Daniel and Arnold and made interim distributions to the five daughters of $100,000 each. Arnold filed his testamentary promises claim in September 2015 and no further distributions have been made from the estate since then, although substantial amounts have been paid in legal expenses incurred in the present litigation.
[40] In the early part of 2016, in the course of inspection of discovered documents in the testamentary promises claim, Arnold became aware of the terms of the 2011 gifting to the five daughters of the proceeds of sale of the Rowan Road property. On the basis that those gifts were unlawful and should be clawed back into the estate, he commenced a family protection claim in June 2016. Daniel followed suit in December 2016.
Proceedings commenced out of time
[41] Arnold’s testamentary promises action was brought within time in September 2015. Once the matters relevant to that claim have to be aired, a somewhat artificial imbalance in the scope of the issues to be determined would arise if all of the FPA claims are not determined as well.
[42] Proceedings under the FPA are required to be commenced within 12 months from the date of the grant of administration in the estate.9 Probate in Doreen’s estate was granted on 15 September 2014. Arnold added his family protection claim in an
8 The terms of the will and numerous of Doreen’s previous wills are reviewed at [62]–[74] below.
9 Family Protection Act 1955, s 9.
amended statement of claim filed on 3 June 2016. Daniel filed his own FPA claim on 9 December 2016.
[43] Arnold and Daniel’s explanation for the delay in commencement of their FPA claims is that they only learned of the significant gifts to the five daughters of the proceeds of the sale of the Rowan Road property in the course of discovery in the testamentary promises claim. They had earlier been advised that the size of Doreen’s estate rendered any FPA claim futile. They took the view that the bequests to each of them could not be challenged successfully because they represented a more substantial portion of what they then understood the extent of Doreen’s estate to be. Arnold’s and Daniel’s FPA claims are therefore advanced on the premise that the executrices are obliged to claw back those gifts totalling some $2.26 million.
[44] The three daughters’ FPA claim against DJ’s estate was commenced on 24 April 2017, where probate of his estate was granted on 27 February 1984. Their claim is only brought as a response to the claims by Arnold and Daniel. They seek greater provision from DJ’s estate in the event that the allocation of their mother’s estate is altered by orders in favour of Arnold or Daniel or both of them.
[45] The usual considerations taken into account when considering an application to bring proceedings under the FPA out of time are of limited relevance, given the combination of circumstances here. Arnold and Daniel’s claims are advanced on the limited basis that Doreen’s estate is substantially more than they were initially led to believe. Arguably therefore there is an excuse for the delay in Arnold commencing his claim.
[46] Prejudice to the remaining beneficiaries, if confined to detriment to all the daughters’ interests in the delay in having final distributions, is relatively limited. More significant prejudice would need to be recognised if it included the detriment to their interests from any order requiring repayment of all or part of the 2011 gifts to each of them. I am not persuaded that is an appropriate form of prejudice in this case.
[47] On the other hand, I am also not persuaded that this is a case where Arnold (or Daniel) could make out a clear case of manifest injustice if their FPA claims were not
entertained. There is a measure of reciprocity in the way Arnold’s parents treated him in their very different wills, and the case does not involve any potential claimants who could make out need for greater distributions from their parents’ estates. All the participants are, to varying degrees, comfortably off in financial terms.10
[48] These usual considerations are therefore not as helpful as they might be in other cases. The overriding consideration is that if part of the criticisms of the parents’ testamentary conduct is in issue, then any basic reciprocity of interests requires them all to be heard.
[49] Accordingly, I am satisfied in the particular circumstances here that each application for leave to bring the FPA claims out of time should be granted. That is very much a fact-dependent determination, reflecting the circumstances of this family dispute.
The legal elements
[50] The elements required to be proved by claimants under the TPA and under the FPA are well settled and not controversial.
[51] For Arnold to succeed in his testamentary promises claim, he has to make out an express or implied promise that Doreen would reward him for work done by making provision in her will that would facilitate his taking over of the Rowan Road property. He needs to establish the terms of the promise and that the services provided in return for it were out of the ordinary and beyond the services that would ordinarily be provided, given the nature of his relationship with Doreen.11
[52] The essence of a family protection claim arises under s 4 of the FPA, which empowers the Court to make provision out of a deceased person’s estate where inadequate provision is available for the applicant for their proper maintenance and support. The statutory power is cast in general terms and its application is guided by numerous precedents.
10 An accurate analysis is neither possible nor necessary. My impression from the evidence is that Therese and Patricia are less well-off than the other siblings.
11 Law Reform (Testamentary Promises) Act 1949, s 3.
[53] Applications under the FPA may be made on two grounds. First, that the estate has not made provision for proper maintenance of an applicant, where financial need has to be made out. None of the claimants in these two sets of proceedings rely on that ground as none of them could claim to be in need of maintenance. All of the siblings are either well off, or moderately well off.
[54] The second ground is that a testator or testatrix has an obligation to support those to whom a moral duty is owed. Each of the claims under the FPA in these proceedings is advanced on that premise.
[55] Whether a testator or testatrix has been in breach of a moral duty to an adult child is to be assessed in light of all of the circumstances of the claimants and other beneficiaries for whom provision is made. The Court is to take into account the social attitudes of the day. As at the time of DJ’s will and death in 1983, the 1985 Court of Appeal decision in Re Leonard provides an example of the Court’s response to what was treated by then as an old-fashioned attitude that once daughters were married, they were “off [their father’s] hands”.12 That decision questioned the adequacy of an approach to disposition of assets that favoured sons to ensure continuity of family farming operations. It upheld the High Court’s increase in provision for the daughters in the family involved.
[56] In assessing the surrounding circumstances of Doreen’s will, any findings I make on her attitude to unfairness or errors by DJ in his testamentary provisions are potentially within the circumstances to be taken into account in assessing claims against her estate.
[57] The Court is not to embark on a comparison of how it perceives a wise testator or testatrix would have allocated provisions between those to whom some duty was owed. Rather, the enquiry is whether adequate provision was made for the proper maintenance and support of any claimant, which is to be decided taking into account the claimant’s means and obligations and all other relevant circumstances.13 The
12 Re Leonard [1985] 2 NZLR 88 (CA).
13 Williams v Aucutt [2000] 2 NZLR 479 (CA).
concept of support, as used in s 4 of the FPA, has been interpreted by the Court of Appeal in the following terms:14
… The test is whether adequate provision has been made for the proper maintenance 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. …
Assessment of the evidence
[58] The evidence occupied 10 full hearing days. The opposing camps of Arnold and Daniel, supported by their sister Therese, on the one side, and Marie, Angela and Louise on the other (collectively referred to as the three daughters), have become increasingly entrenched since about 2001.15 The entrenched views have coloured the recollections for those on each side of the divide as to earlier family history.
[59] There are numerous entirely contradictory recollections of specific interactions between some of the parties. Each of them has lived with heart-felt complaints for so long in emotionally invested terms that belief in diametrically opposed recollections of some of those events is not entirely surprising. It is not a case where a finding that I prefer the recollection of one witness as to a particular event can reliably lead to my preferring that witness’s recollection on all other events where there are clashes. Even where I am satisfied that a witness was deliberately untruthful on a particular point, I am not persuaded such a finding warrants a uniformly adverse view of that witness’s credibility.
[60] Some aspects of the dispute raise matters going back to the 1960s, for which documentary records are sparse. In a number of respects, the character to be attributed
14 At [52].
15 The fifth daughter, Patricia, lives in Australia and has taken no active part in the proceedings.
to the conduct of the family’s affairs depends on interpretation of the effect of legal documents, about which the lay witnesses took diametrically opposed views.
[61] A particular issue arose towards the end of hearing when Marie was unable to complete her evidence on account of illness. I recorded the sequence of events and relevant considerations about her evidence in Ruling 3, issued after a post-hearing telephone conference with counsel on 14 August 2018. A copy of that ruling is annexed as an appendix to this judgment. In assessing the evidence on various topics, I have been mindful as to whether there had been effective (and likely complete) cross- examination of her on any particular topics. Ultimately, I am not persuaded that the three daughters’ case is materially harmed by their inability to rely on Marie’s evidence on any given topics. Equally, however, I am not satisfied that the absence of her evidence makes a material difference to Arnold and Daniel making out their claims. On the important issue of motives for Angela and Marie to complete the sale of the Rowan Road property and the gifting of its proceeds, I am satisfied that the issue was thoroughly tested with Angela, and that she and Marie were sufficiently aligned for me to form a view about their conduct on the basis of that thorough cross- examination.16
Doreen’s wills
[62] Doreen was a relatively prolific writer of wills. The evidence included eight completed wills between April 2001 and March 2007, two unsigned wills prepared for her in November 2000 and April 2005, and two handwritten notes recording testamentary wishes that are likely both to have been made in 2004.
[63] The earliest of the executed wills in evidence was completed in April 2001, some two months after the divisive meeting at Doreen’s home in which trenchant criticisms were made of her. That will left her Rowan Road property to all seven children as tenants in common in equal shares, with a wish that the property be retained in the family. She left any house that she owned, together with vehicles and contents, to her five daughters, with the residue of her estate to all seven children.
16 See [104]–[112] below.
[64]Her next will completed six months later in October 2001 made bequests of
$75,000 each to Arnold and Daniel, with the residue to be held on trust for all five daughters. She stated as reasons for the different treatment of her sons:
… because I have had to endure abuse and threats from my sons and attempts to turn members of the family against each other and also the benefits they have had over the years.
[65] Neither the October 2001 will, nor any of her later wills, expressed any wish that the Rowan Road property be retained within the family.
[66] One of the handwritten notes containing testamentary wishes was dated 7 April 2004. Its provisions were similar to the other, undated handwritten note also adduced in evidence. It provided for gifts of either $20,000 or $30,000 to each of her sons (the handwriting is difficult to discern), with the reason for the size of those bequests being “because of the way they have treated me”. That note left the Rowan Road property to her three daughters, Marie, Angela and Louise “who stood by me through a very stressful three years”. The residue of her estate, including any house she owned, was to go equally to her five daughters.
[67] The next executed will was dated 26 May 2004. It left $50,000 to each of her sons, with an explanation for the limit of that gift being expressed in similar terms to the October 2001 will. This will left the Rowan Road property, together with livestock, dairy company shares and implements to Marie, Angela and Louise. Other assets were given at the trustees’ discretion among the five daughters so that amounts and items received by them, when valued, would result in Marie, Angela and Louise sharing 80 per cent, and Therese and Patricia sharing 20 per cent. If necessary, the three daughters acquiring the Rowan Road property and associated assets were to raise money to make payments to the other two to achieve those proportions. In that will, Doreen explained the different treatment of the two groups of daughters as being because the three had supported her and the two had not.
[68] Doreen completed a further will in September 2004, the relevant provisions of which were materially the same, except in relation to the limited bequests to her sons. That provision stated slightly different reasons for treating them differently from the girls, namely:
[They] have been antagonistic to me for many years and have not provided any help or support for me.
[69]An unsigned will prepared in April 2005 contained the same provision for
$50,000 gifts to each of the sons, and repeated the September 2004 explanation for the limited gifts.
[70] Shortly thereafter, a further will was executed in May 2005, which maintained the same level of bequests to each of her sons and the same reasons for unequal treatment. The provisions relating to Rowan Road and associated assets, and the residue of her estate, were along the same lines as the May 2004 division between the daughters, with the adjustment that Marie, Angela and Louise as the three preferred daughters were to share seven tenths of value of the estate, and Therese and Patricia three tenths.
[71]The next completed will was executed in December 2005. It provided
$100,000 for Daniel and retained the gift of $50,000 for Arnold. In addition, Daniel and Arnold were to get the residence in Fitzgerald Avenue that Doreen was then occupying, with the residue of her estate to go to the five daughters equally, after taking into account certain gifts to some of her daughters. The reasons for differential treatment of her sons were expressed in more temperate terms, with no reference to animosity:
(i)both of my said sons are very well off financially.
(ii)my son Arnold has benefited very considerably under the Will of my late husband Daniel James Fitzgerald and from financial concessions made to him by other members of our family.
(iii)my son Arnold has had my homestead rent-free for some ten years.
[72] The next will was executed in March 2006. This reverted to gifts of $50,000 each to Daniel and Arnold, but was otherwise in materially similar terms to the December 2005 will.
[73]Doreen’s final will was completed in March 2007. It also provided for gifts of
$50,000 each to Daniel and Arnold, which were explained in the same terms as in the
December 2005 and March 2006 wills. It did not provide a gift to them of the Fitzgerald Avenue residence.
[74] The final will released any debts owing by Doreen’s daughters at the time of her death, and made provisional gifts of $50,000 to each of Marie and Patricia (that is, if Doreen had not made the gifts to them during her lifetime to equate to gifts made to the others). The residue was to go to all five daughters.
Arnold’s TPA claim
The promise
[75] Arnold’s evidence was that he received a pattern of assurances from Doreen to the effect that the Rowan Road property would be his one day, and that he need not worry about that as it would be dealt with in her will. Variants on such promises included that he was, when doing work at Rowan Road, working in his own interests. Arnold recalled such promises over the period when he worked full-time for his parents, and at least up until his father’s death in 1983. Arnold’s evidence was that promises to the same effect continued after his father died, but he was not as clear on the terms and timing of any promises after Doreen became aware of the terms of DJ’s will following his death in December 1983.
[76] The promise was not that Doreen would gift the Rowan Road property to Arnold, but rather that she would provide for a process by which he could buy out all his siblings on appropriate terms. Although Arnold was not aware at the time of a draft will prepared for Doreen in November 2000, he agreed in cross-examination that the arrangement spelt out in that will was one variant on arrangements that were consistent with the promises he had received from Doreen. That provision would have afforded Arnold a period of up to five years from the date of Doreen’s death to pay out his siblings on a valuation applying at the date of her death (without interest being charged), so long as Arnold exercised the option to acquire the Rowan Road property within one month of the date of Doreen’s death.
[77] That draft will also provided for Doreen’s trustees to farm the Rowan Road property for up to five years, with any net profit to be applied by her trustees in paying
a one seventh share to each of the children, with the farm not being transferred to Arnold until he had paid out each of the other children their one seventh share.
[78] On the terms of that draft will, Doreen was preferring Arnold to the extent that he had the first option to acquire Rowan Road. If he did not take up the option, then a subsequent clause in the draft will directed Doreen’s trustees to allow each of her other children an option to purchase the Rowan Road property on the same terms, except that any other child purchasing if Arnold did not would be required to pay within 12 months of exercising their option.
[79] In closing submissions, Mr Wilson attempted to downplay the effect of Arnold’s answers during his cross-examination as to the nature of Doreen’s promises. Mr Wilson submitted the effect of Doreen’s promises was that she would gift Rowan Road to Arnold. However, I am satisfied that Arnold understood the impact of the questions he was asked and answered them deliberately. In an answer about the arrangements contemplated in the November 2000 draft will, Arnold agreed:17
Yeah, I’m a fair-minded person … what I see there is consistent with what I understand how mother was thinking. … I wasn’t thinking, you know, this is mine and to hell with the rest, no.
[80] The evidence of other witnesses who supported Arnold’s testamentary promises claim was equivocal on the extent of concession from a straightforward purchase of the Rowan Road property that was intended by Doreen in her assurances about it going to Arnold. Daniel’s recollection was to the effect that Doreen had said Arnold would get Rowan Road after she died. Therese recalled their mother saying that “Rowan Road would be Arnie’s one day”. More generally, Peter O’Dea, the family solicitor throughout part of the relevant period, recalled the family dynamic was that Arnold was going to take over all of the family farmland.
[81] All of the evidence on this topic is consistent with an understanding that Doreen intended to enable Arnold to acquire the Rowan Road property, but not on terms that she would be gifting it to him. To prefer one sibling to the exclusion of six others entirely because of that sibling’s work for the promisor, when it would comprise
17 Notes of Evidence at 122.
such a significant part of the promisor’s estate, is not a promise that could readily be inferred. That is especially so when the logically more likely commitment was to facilitate purchase by Arnold on appropriately friendly, intra-family terms that would require him to account to each of his six siblings for their one seventh share of its value.
[82] The nature of the testamentary promise allegedly breached is therefore not a promise to gift the Rowan Road property to Arnold on her death. Rather, it is a promise to give him the opportunity to buy the property at valuation at her death without having to compete on the open market, and likely on some concessionary terms affording an interest-free period in which to pay out his six siblings.
[83] Instead, Doreen’s operative will completed in March 2007 made no specific reference to the Rowan Road property. At the time of that will, and had it remained in her ownership at the time of her death, it would have comprised part of her residuary estate, which was to be distributed equally to her five daughters.
Provision of work and services for Doreen
[84] To make out his testamentary promises claim, Arnold has to establish that he undertook an appropriate level of work on behalf of Doreen at least substantially in response to her promises.18
[85] From a young age, Daniel and Arnold were expected to help out with tasks around the farm, to the extent their capacity at various ages enabled them to do so. They both boarded at St Patrick’s College in Silverstream for their secondary school years and were expected to commit fully to work tasks during the school holidays. After leaving school, each of the boys began working full-time on the farming operation conducted by their father, and also worked on tasks on Doreen’s Rowan Road property. DJ initially contemplated that Daniel would take over the farming operation but, after periods working elsewhere in Taranaki, Daniel departed for Australia and his absence has been permanent except for occasional family visits.
18 As a matter of law, the promise may be made after the service is rendered, but that was not contended on the facts in this case.
[86] Arnold committed himself to working full-time on the farm operated by DJ, and additionally as directed by Doreen. He carried out a variety of work tasks at Doreen’s Rowan Road property. Arnold cited a list of 20 specific tasks he had undertaken for Doreen at Rowan Road between 1971 and 1995 as instances of the services above and beyond his normal farm worker’s tasks. Arnold was challenged in cross-examination that some of the identified tasks were no more than routine work for a dairy farm. Arguably these were reasonably expected of him, either as part of all family members pitching in to get the work done, or otherwise within his responsibilities as an employee of the family farming business.
[87] I find that Doreen and DJ were committed to enlarging and succeeding in their farming operations. To varying degrees and in different appropriate ways, each of the children contributed to maintaining and improving the farming operation and the running of the family home. It is difficult to define a clear line in Arnold’s contributions between, on the one hand, those that were relatively extensive contributions he was reasonably expected to make as a family member and employee of a hard-working farming business and, on the other hand, additional tasks over and above that which would not reasonably have been expected of him but for a promise from Doreen in return for which he carried out those additional tasks.
[88] Mr Wilson suggested that at least tasks that were capital improvements rather than maintenance should be treated as beyond the scope of tasks of a farm worker and should count as services provided in return for Doreen’s promise. These included:
· building a three-bale hay barn at Rowan Road with DJ in 1977;
· lifting the milk stand roof at Rowan Road in 1979;
· building a four-bale hay barn at Rowan Road in 1982;
· refurbishing the cow yards at Rowan Road in 1984;
· assisting with new effluent ponds at Rowan Road in 1987;
· organising the major work on a new cow shed built by others at Rowan Road in 1987; and
· re-fencing the main farm race in 1987/1988.
[89] Throughout much of the 1970s and 1980s, and possibly for longer, Arnold was Doreen’s “go to man”. Although there were sharemilkers at various times at Rowan Road, Arnold was the capable pair of hands who was available and able to be directed. My clear impression from the evidence is that Doreen was a forceful personality and, in the context of assurances such as that Arnold was working in his own interests at Rowan Road, he would have responded positively to her demands. Arnold was capable in terms of building and mechanical skills and clearly took some pride in completing tasks for Doreen. I accept Edith’s evidence that in the early years of their marriage, he quite often neglected domestic duties to complete demanding tasks for Doreen.
[90] I am satisfied that the full extent of work described by Arnold provided contributions both separately to Doreen’s property at Rowan Road, and also to the wider family farming business including the blocks farmed by DJ and the homestead, to an extent that was “above and beyond” anything reasonably expected of him as an employee. Arnold can legitimately claim that he did that work because of Doreen’s promises.
[91] Within the family, once the older son had signalled his decision not to take over the farming operation, Arnold’s involvement reflected a commitment that he would do so. Doreen was right in observing during the period to which the promises related that, in undertaking the range of tasks he did, Arnold was indeed working in his own interests. At least until his father died, those interests included a mechanism, not precisely defined, by which he would be enabled to take over Doreen’s Rowan Road farm on terms that would be fair both to him and to all his siblings. They would need to be paid for their interests in the property on an appropriate basis for an intra-family transaction.
[92] I am accordingly satisfied that Arnold has made out both a requisite testamentary promise on the terms I have described, and the provision of services for Doreen in reliance on it beyond what could otherwise be expected of him.
Values of the promise, and the services
[93] Values that might be attributed to the promises Doreen made to Arnold, and the services provided by Arnold for Doreen that were over and above his “normal” responsibilities, can be approached in a range of ways. Any one approach would arguably be no better than a number of others. Certainly, any attempt at arithmetic precision would be impossible. However, a sense of relativity may be relevant.
[94] Doreen’s promise was not for the value of the Rowan Road property. Instead, it was to give Arnold a first option to acquire the property on more friendly terms than a commercial arm’s length purchase of the property. The terms proposed in the November 2000 draft of a will for Doreen suggest one of a range of intra-family arrangements that may have been an appropriate reflection of Doreen’s promise. Starting from the valuation applied by the sisters for the sale transaction in 2011 of
$2.26 million, and increasing that by, say, 10 per cent to reflect a likely valuation in 2014, the value at the date of Doreen’s death could be about $2.5 million. If Arnold had then committed to a proposition along the lines of that in the draft will, then Rowan Road would continue to be operated, presumably by a sharemilker, under the control of the trustees for five years. The valuation at date of death would fix the price he had to pay so that he would avoid the risk of increases in value of the property over the period of up to five years before he settled the purchase by buying out his six siblings. The extent of that concession would depend on the appreciation in land prices throughout the period between Doreen’s death and the date, up to five years thereafter, on which Arnold was in the position to complete the acquisition.
[95] The defendants called John Patrick Larmer, a specialist rural valuer, on the value of Doreen’s life interest in the homestead and the value of her use of the section on which her separate home was built. Cross-examination of Mr Larmer extended to values of dairying land in Taranaki at various points in time. Appreciating from his evidence the unpredictability of movements in land prices, and accepting also that the
formula contemplated by Doreen in the November 2000 draft will is only one of a wide variety of concessionary arrangements she might have made in her will that complied with the promises made to Arnold, one indicative measure of the value of the promise is to assume that a purchase on such terms would avoid a, say, 10 per cent appreciation in the value of the land. That would suggest an advantage to Arnold of some $250,000.
[96] As to the value of the services Arnold provided for Doreen, he acknowledged in cross-examination that it was impossible for him to put a value on the services he provided which were over and above those that could legitimately have been expected in the context of the family’s working arrangements. I accept that it is impossible to put a figure on it, but do not agree with Mr Laurenson’s submission that impossibility of precise quantification requires the services to be disregarded.
[97] Again, a variety of valid approaches might be suggested for attempting some approximation of the value of what Arnold did for Doreen. An indicative but somewhat arbitrary example might be to take an average of six hours per week for 50 weeks per year, over 25 years. Applying a current hourly rate of, say, $18 to the range of skilled and unskilled extra tasks Arnold carried out would give those services a value of some $135,000.19 If the period involved was 20 years, then the value is some $108,000.
[98] A comparison of values along these lines can only ever be illustrative and is to be relied on with considerable caution. I consider that if assessed on a range of approaches, such quantification exercises would demonstrate that both the promise and the services were of substantial value and that a reasonable range of approaches on valuing the promise would value it more highly than a range of approaches to valuing the services.
[99] Before determining the extent of Arnold’s testamentary promises claim against Doreen’s estate, it is appropriate to make findings on two issues that assumed
19 This is one way of accounting for the time value of money: if Doreen had to pay to get the work done, it would have been at the lower rates applying in the years when the services were performed. However, the provider of the services would then have had the use of the money from then until now.
prominence in the proceeding, even though the second of them appears not to have a direct bearing on resolution of a claim under the TPA. The first issue is Arnold and Daniel’s challenge to the legality of the sale of the Rowan Road property and the subsequent gifting of the proceeds distributed to the five daughters. The second is the claim advanced by Daniel and Arnold that Doreen mal-administered DJ’s estate by failing to treat the lease of the Mary Fitzgerald estate land as an asset comprising part of Arnold’s life interest.
Lawfulness of the sale and gifting of proceeds of the Rowan Road property
[100] This issue assumed relevance in a number of contexts. The three daughters insisted that it was Doreen’s wish that the farm be acquired by one of her daughters and Louise and her husband were dairy farmers who were familiar with it by virtue of having been sharemilkers on the property.
[101] The three daughters claimed that it provided peace of mind for Doreen to know that a sale transaction had occurred consistently with their understanding of her wishes. Superficially at least, this proposition is something of a non-sequitur: once Doreen suffered stage three dementia, she would be unable to understand the consequences of what she was told and would supposedly be unable to take satisfaction from advice that a disposition she had wanted to occur after her death had already been arranged. Angela’s refinement on the proposition was that whilst Doreen was not consistently and reliably able to comprehend matters told to her, there were still occasional periods of lucidity where she might understand and draw comfort from being told that the transaction had occurred.
[102] Marie and Angela relied on the enduring power of attorney to complete the sale of Rowan Road, make advances to themselves and the three other sisters of one fifth of the net proceeds each, and subsequently to forgive those amounts that were owing. Those actions were in breach of s 107 of the Protection of Personal and Property Rights Act 1988 (the PPPRA), which provides:
107 Attorney’s power to benefit self and others
(1)An attorney under an enduring power of attorney must not, at any time while the donor is mentally incapable, act to the benefit of the attorney
or of a person other than the donor, or recover any expenses from the donor’s property, unless and only to the extent that—
(a)the donor has specified a power to so act in the enduring power of attorney; or
(b)the court authorises the attorney to so act in an order under section 102(2)(g) or (ga); or
(c)the attorney’s actions relate to 1 or more of the following matters and the enduring power of attorney does not expressly provide otherwise:
(i)if the attorney and donor are married to, or in a civil union or de facto relationship with, each other, and are living together and sharing their incomes, any action taken by the attorney in respect of real or personal property that the donor and the attorney own jointly and not as tenants in common:
(ii)any payments of a kind described in subsection (2):
(iii)if acting under an enduring power of attorney in relation to the donor’s property, any loan or advance or other investment of the donor’s property that a trustee could make of trust funds under section 13A of the Trustee Act 1956.
…
[103] I accept Mr Wilson’s submissions that gifting some $2.26 million out of Doreen’s assets was not for her benefit, and clearly was for the benefit of the attorneys and others.
[104] Marie and Angela claimed that they undertook the transactions because they were comfortable it was what Doreen wanted and because they did so in accordance with legal advice that did not raise any issue about the lawfulness of their doing so. A Hawera solicitor, Mr Preston Bulfin, who acted for them in these transactions gave evidence and confirmed that he did not bring to mind the restriction on use of an enduring power of attorney for transactions that benefited persons other than the donor of the power. Mr Bulfin had the impression that the transaction was consistent with Doreen’s wishes, and that the attorneys were carrying out her wishes in good faith.
[105] In anticipation of the transaction, Mr Bulfin’s firm, Halliwells, prepared a deed recording loan arrangements and an intent to gift that was dated 27 May 2011. Its
recitals included a statement that Doreen had agreed to sell her farm to her daughter Louise and her husband. There was no evidence that, whilst competent, Doreen had made any such agreement. The deed is to be read as Marie and Angela standing in Doreen’s shoes. Those involved in that deed are presumed to have known the terms of Doreen’s then will because the terms of the deed included:
That Doreen enters into this document already knowing that she has made a provision in her will whereby the daughters share either the said farm property or the net sale proceeds thereof, equally.
[106] Reference to the daughters is to all five of them. The deed committed Marie and Angela to undertaking these transactions on the premise that they were aware of the content of Doreen’s will. The deed recorded that Doreen was to lend one fifth of the net sale proceeds to each of the five daughters and that her intention was, once gift duty had been abolished, to gift the balance outstanding, which were to be interest- free loans in the meantime. The document made provision for signature by all five daughters but only the three daughters signed it.
[107] Angela denied that they undertook the transactions in 2011 to take the Rowan Road property out of Doreen’s estate and thereby preclude any claims in respect of that property or its value being brought against Doreen’s estate. Marie was not cross- examined on this topic prior to her becoming unavailable as a witness. I disregard Marie’s evidence on this topic. I am satisfied that she was aligned with Angela who gave evidence first and assumed the major responsibility for defending their actions as attorneys for Doreen. It is clear that they acted together, with a shared understanding of what was to be done, and a shared commitment to advance what they saw as Doreen’s intention to prefer the daughters over the sons.
[108] Louise’s evidence-in-chief on her position as purchaser is that the transaction was completed on legal advice and she never thought it was other than an appropriate one. She was not pressed on cross-examination about it being contrary to Doreen’s interests, and to the benefit of the attorneys.
[109] Angela showed a firm resolve in denying a number of propositions put to her in cross-examination. She was adamant in maintaining her denial that Arnold could have had any arguments to claim any interest in the dairy company shares held by the
Maryland Trust. This defied commercial common sense. I am also satisfied that she misrepresented the purpose of an advertisement she placed for a 50:50 sharemilker in the Taranaki Daily News in 2001. In her brief she stated:
It is alleged that I placed an advertisement for sharemilker for the Maryland Trust. I did not do this.
[110] In cross-examination, she accepted that she did place the advertisement that caused concern. She claimed it was placed in relation to a potential purchase she and her husband were considering undertaking, but was unconvincing when the preferable view of all evidence on the topic supported Arnold’s concern that the advertisement had been placed to find a replacement for him as sharemilker on the Maryland Trust land.
[111] Angela was equally unconvincing in denying that one reason for completing the Rowan Road transaction and subsequent gifting of the proceeds was to avoid any claim in relation to the Rowan Road property if it remained in Doreen’s estate at the time of her death. None of the other four siblings were advised that the transactions were going to occur. To the extent that Angela’s explanation for selling the farm repeatedly included an awareness that Doreen’s will included the wish that the property was to stay in the family, that had not been mentioned in Doreen’s last three wills executed since May 2005.
[112] Reflecting on all the evidence, including the extent of the enmity between the three daughters and Arnold and Daniel, and Angela’s acknowledgement that in 2011 she would have seen a claim by Arnold against Doreen’s estate as likely, I am satisfied that a material motivation for completing the Rowan Road transaction as and when they did was to remove that asset from their mother’s estate. This had the consequence that it would presumptively preclude any claims against Doreen’s estate on the basis that it included the Rowan Road property or proceeds of a sale of it.
[113] In 2011, relationships between the three daughters and their brothers remained strained. I find they were conscious of the prospect that Arnold, and possibly Daniel, would contest any substantially unequal treatment in their mother’s will. Mr Bulfin’s assumption of good faith on the part of the attorneys was made being unaware of the
extent of animosity that existed. He was not aware of the detailed background to the family arrangements because other firms of solicitors and accountants had previously acted for family members and, for example, Peter and Gavin O’Dea (both solicitor and accountant) would have been far more aware of the sensitivity of disposing of the Rowan Road property.
Relief from unlawful gifting transactions
[114] The three daughters raised a number of grounds for seeking relief from the unlawfulness of the October 2011 gifting by the attorneys, in the event those transactions were found to be unlawful because the attorneys completed them contrary to s 107 of the PPPRA. The primary consequences of the unlawfulness of the deeds of gift is that they are unenforceable as against the donor. Once on notice of that, the executrices are obliged to recover the debts that continue to be owing. The consequences of such wrongful transactions are sometimes treated as breaches of fiduciary duties owed by the donees of the power. That may have consequences for the relationship between the attorneys and the remaining daughters, but that is not a relevant issue here.
[115] Substantially the same grounds were relied on for seeking validation by various means, namely that the attorneys had entered into the transactions in good faith and were unaware of the constraint preventing them lawfully completing such transactions. Further, they argued that the gifts effected transactions that were consistent with Doreen’s wishes and would have been carried out in any event by the executrices of her will.
[116] First, the Court was invited to exercise jurisdiction under s 102 of the PPPRA to authorise actions by the attorneys that were for the benefit of the attorneys or persons other than the donor. That power is provided for “a court” under s 102(2)(g) of the PPPRA. Mr Wilson took a jurisdictional objection to this aspect of the application because “a court” is defined in the PPPRA as meaning a Family Court. Mr Wilson submitted that s 102 contemplates a statutory power being exercised by a court of statutory jurisdiction, which is not shared with the High Court. If at all, he
argued that the High Court could only exercise jurisdiction under this section in the context of an appeal from a matter dealt with originally in the Family Court.
[117] I agree with Mr Wilson that the jurisdiction contemplated is not one available to the High Court. In addition to that point, I have a reservation that the terms of s 102(2)(g) are intended to be exercised retrospectively. The Court’s power is to “authorise the attorney to act, otherwise than in accordance with section 107 … but subject to any conditions or restrictions contained in the instrument”. In the conduct of affairs for the donor of an enduring power of attorney, matters are likely to be presented with quite different interests once a transaction has occurred. It is unnecessary to decide the point but I am not satisfied that if jurisdiction was shared by the High Court, it could invoke this power retrospectively.
[118] The second ground for validation raised for the three daughters was that the deeds of forgiveness could be validated under either s 17 of the Judicature Act 1908 or s 14 of the Senior Courts Act 2016. The former provision recognised that the High Court had the same jurisdiction in respect of mentally incompetent persons as is enjoyed by comparable courts in England and Wales. The latter provision is its more modern equivalent, in the following terms:
14Jurisdiction in relation to persons who lack competence to manage their affairs
(1)The High Court has jurisdiction and control in relation to—
(a)mentally impaired persons who, in the opinion of the court, lack wholly or partly the competence to manage their own affairs; and
(b)the property and managers of those persons.
(2)Subsection (1) is subject to other enactments making provision in relation to those persons or their property or managers.
[119] Mr Laurenson did not cite any decisions in which either provision has been invoked. I accept that a person certified as having stage three dementia will come within the definition of a person lacking the competence to manage their own affairs, and the donee of an enduring power of attorney to manage the property of such a donor appears to be within the contemplation of “managers of those persons”.
[120] However, subs (2) makes the power subservient to other enactments. A doubt arises as to whether retrospective validation of the conduct of the donee of an enduring power of attorney ought to avail her or himself of the power of additional scope by invocation of s 14 of the Senior Courts Act when the processes more specifically provided under the PPPRA would not avail. The scope of s 14 is preferably deferred for another occasion on which the Court has the benefit of thorough argument on the point. That did not occur in this case.
[121] In any event, on the basis of the factual findings I have made on the motives of the donees of the power, I would not consider this an appropriate circumstance in which to exercise this power.
[122] The last basis for seeking relief from the unlawfulness involved was under s 76 of the Contract and Commercial Law Act 2017 (CCLA). That empowers the Court to validate a contract in whole or in part, or for any particular purpose. I assume for the purposes of this analysis, but without deciding it, that the forgiveness of the debts comprise contracts that are illegal for the purposes of the CCLA. They were expressed as being in consideration of Doreen’s natural love and affection for each daughter as borrower, and were completed as deeds. The attorneys are parties to all the deeds in that capacity and therefore qualify to apply to the court for relief from the effect of the unlawfulness. Again, I received no detailed submissions on the considerations that should apply on this aspect of the application for relief from unlawfulness.
[123]Section 78 of the CCLA provides:
78 Matters court must have regard to
In considering whether to grant relief under section 76, and the nature and extent of any relief to be granted, the court must have regard to—
(a)the conduct of the parties; and
(b)in the case of a breach of an enactment, the object of the enactment and the gravity of the penalty expressly provided for any breach of the enactment; and
(c)any other matters that the court thinks proper.
[124] An important feature of the circumstances in which the attorneys procured the sale of the farm to their sister, the distribution of the proceeds and the subsequent forgiveness of debts was to protect that substantial asset of Doreen’s from claims if it had become an asset in her estate. Notwithstanding the three daughters’ claims that transactions on these terms reflected what Doreen wanted, and notwithstanding that apparently they were not advised of the inability to rely on the power of attorney to conclude transactions that did not advantage the donor of the power, my finding of motive is conduct that disqualifies them from the entitlement to any relief under s 76 of the CCLA.
[125] The consequence of my findings on the unlawfulness of the deeds of gift to the five daughters is that those advances to them in 2011 remain debts owing to Doreen’s estate.
[126] Doreen’s final will provided that she forgave and released her daughters from any monies that they owed her at the date of her death. The relevant provision was supplemented by a provision for additional gifts to Marie and Patricia if, during her lifetime, Doreen had not made gifts to them to equate amounts gifted up to the date of the last will to the remaining daughters.
[127] The duties of executors in administering an estate include collecting and realising all the deceased’s assets, including debts owed to the deceased at date of death, and paying the deceased’s creditors.20 Again, I received no submissions on the sequence in which the executors were required to get in the assets and then to distribute the surplus in accordance with the terms of the will. At least on the terms of this will, I am satisfied that it is only after discharging debts, including claims against the estate, that the surplus could be distributed in terms of Doreen’s wishes. I treat forgiveness of debt as a monetary bequest equivalent to the debt owing, and as such the forgiveness is only applied if and to the extent there is sufficient surplus to meet all claims against the estate prior to doing so.21
20 John McGhee (ed) Snell’s Equity (33rd ed, Sweet & Maxwell, London, 2015) at [31-001]; and Nicky Richardson and Lindsay Breach Nevill’s Law of Trusts, Wills and Administration (12th ed, LexisNexis, Wellington, 2016) at 607.
21 See, for example, the comments in Davis v Mancer [2015] NZHC 3005 where the Court describes without criticism a Family Court decision to set aside forgivenesses of debt in order to satisfy creditors of the estate.
[128] The further consequence is that Doreen’s estate for the purposes of the present claims is to be treated as comprising at least $3.3 million.
Doreen’s alleged mal-administration of DJ’s estate
[129] In and from 2001, there was a major falling out between Daniel and Arnold on the one hand, and Doreen on the other. In this dispute, Doreen was supported by her three daughters, Marie, Angela and Louise. Therese has supported Arnold.
[130] A primary component of the dispute arose out of trenchant criticisms Daniel advanced of Doreen’s administration of DJ’s estate. Daniel convinced himself that in administering DJ’s estate, Doreen had misappropriated a valuable component of the life interest Arnold had been given under DJ’s will. That life interest was in the 90 acre block beneficially owned by DJ and comprising a part of the farm that had been managed by Arnold since DJ’s death. The farming operation also occupied an adjacent 110 acre block that was leased from the Mary Fitzgerald estate and the 53.5 acres owned by the Maryland Trust. From DJ’s death at the end of 1983, Doreen had treated the Maryland Trust as the lessee of the Mary Fitzgerald estate block. Allowing occupancy of that block as part of the land used by Arnold’s farming operation, as well as occupancy of the Maryland Trust’s 53.5 acre block, counted as consideration for the Maryland Trust (as putative lessee of the land) to earn a substantial share of the proceeds of Arnold’s dairying operation.
[131] The rental on the Mary Fitzgerald estate block had been calculated, over a lengthy period before DJ’s death in 1983 and up to the 1996 settlement between the Taranaki and South Island branches of the Fitzgerald family, at a rental that dropped substantially below the market rental for that property. The leasehold interest had substantial and increasing value because administration of the Mary Fitzgerald estate was neglected after the executors who acted in the mid 1960s died and were not replaced. On any view, the lessor would have been entitled to periodic rent reviews to a market rental. Instead, the level of the rent appears to have dropped further below the current market rental for the block with the passage of time. The return to the Maryland Trust from asserting its position as lessee was that the provision of that acreage to DJ’s dairy farming operation entitled it to a proportionate return on the
dairying operation for the provision of which it was paying an increasingly discounted rent.
[132] Arguably it would follow that if DJ’s estate, rather than the Maryland Trust, had been the lessee, then Arnold as holder of a life interest in DJ’s estate, rather than the Maryland Trust, would have benefited from the lower than market rental cost of that block. Perhaps more importantly, Arnold would have been able to retain a substantially greater portion of the proceeds of his overall farming operation, and to be more in control of his own planning and management of the dairy farming operation.
[133] Doreen denied that her administration of DJ’s estate involved any such error. She claimed that she merely continued the mode of administration of the family’s farming operations that had occurred under DJ’s management, with informal arrangements recognising that the Maryland Trust held the relevant lessee’s interest.
[134] Daniel’s criticism of Doreen depended on two contested propositions. First, that DJ personally held the lessee’s interest in the Mary Fitzgerald estate block in the period up to his death. Secondly, a particular interpretation of opaque provisions in DJ’s will to include that lessee’s interest in the assets over which Arnold was granted a life interest.
Who was the lessee of the Mary Fitzgerald estate land prior to DJ’s death?
[135] Determination of this factual issue is rendered more difficult by the lack of reliable records and the passage of time. The parties rely on different strands of evidence for their competing contentions. The three daughters contend that Doreen was correct to treat it as an informal lease held by the Maryland Trust, citing evidence of the accountant who was, at the time, the sole trustee of the Maryland Trust. Daniel and Arnold rely on lease documentation dating from 20 years before DJ’s death, and the records of the solicitors who acted for the Mary Fitzgerald estate and collected the rent, to assert that DJ was the lessee at the time of his death, so that that leasehold interest was an asset in his estate.
[136] The issue has arisen somewhat tangentially and it is debateable which side bears the evidentiary onus in making out its contention. Given the context, I would be reluctant to attribute an onus on this issue to either side. I consider it is to be decided on whether I find, on the balance of probabilities, it more likely that the Maryland Trust held the leasehold interest, or DJ did.
[137] The oldest surviving document is a memorandum of lease from James Garbett and Edward Long of the 110 acres to DJ, for a term of three years from 1 July 1953. It is common ground that Messrs Garbett and Long were, at the time, the trustees of the Mary Fitzgerald estate.
[138] A subsequent memorandum of lease was in evidence. It was for the 110 acres for a term of two years and three months commencing on 1 April 1964 and was from the trustees of the Mary Fitzgerald estate to DJ.
[139] Both the 1953 and 1964 leases include provisions prohibiting the lessee from subletting or parting with possession of the property, without the prior consent of the lessor. There is no documentation recording any request for consent to a sublease at any point from 1953 to DJ’s death in 1983.
[140] There is also a bailment agreement completed on 1 July 1964 for a term of two years and 11 months between DJ as the bailor and Patrick Joseph O’Dea as the bailee. That Mr O’Dea (a local solicitor) was acting in his capacity as trustee of the D Fitzgerald Trust. The bailment related to chattels and specified numbers of various types of livestock as well as plant and vehicles, mostly appearing to be of a type that would be used in pastoral and dairy farming.
[141] Handwritten ledger records maintained by Eltham solicitors, Roche Miller & Holdsworth, for the Mary Fitzgerald estate in the period between 1962 and 1995 show a consistent pattern of rent payments being made by DJ. An invoice from that firm dated 16 December 1994 was in evidence. It was issued on behalf of the Mary Fitzgerald estate, addressed to “the Estate D J Fitzgerald Dec’d”. It purports to be for
rent in advance for the half year from 1 January 1995.22 There is no reference in the documents in evidence from that firm to any rental payments received from the Maryland Trust.
[142] Mr Wilson took the point that no sublease from DJ to the Maryland Trust would be enforceable without it being evidenced in writing. There is no suggestion anywhere that such a formality was complied with. Further, Mr Wilson submitted that evidence of payment of the rent by the Maryland Trust, if accepted, is not of itself evidence that the Maryland Trust enjoyed the leasehold interest.
[143] Mr Wilson submitted that the documentation I have reviewed thus far consistently supports the claim that the leasehold interest was an asset of DJ’s that passed into his estate. Mr Wilson was dismissive of various writings by Doreen during the period she was responsible for administering DJ’s estate that recorded or referred to the leasehold interest being held by the Maryland Trust. On Mr Wilson’s analysis, inconsistently with her accurate recall of other details, she deliberately recorded falsely that the lease was an asset of the Maryland Trust. The last of those was a typewritten note in June 2002 acknowledging that “in the early fifties we leased Dan’s father’s farm … We continued to lease the Mary FitzGerald Estate trading as the Maryland Trust”.
[170] In Powell v Public Trustee, the Court of Appeal summarised the approach to quantification of an award where a claim is made out under the TPA.28 The following passages are relevant:
[10] As there is now no issue that Mr Birdling promised to leave his farm to Mrs Powell as remuneration for her work and services, the focus turns to the following matters which bear on the ultimate statutory consideration which is to determine what constitutes “such amount as may be reasonable” as remuneration for the work and services. The section requires the Court in making that assessment to take into account all relevant circumstances and in particular:
27 There was a mortgage over DJ’s 90 acres at the time of his death. The parties disputed who paid that mortgage but my analysis accepts Arnold’s evidence that he did.
28 Powell v Public Trustee [2003] 1 NZLR 381 (CA).
(1)The circumstances in which the promise was made and the services were rendered or the work was performed.
(2)The value of the services or work.
(3)The value of the testamentary provision promised.
(4)The amount of the estate.
(5)The nature and amounts of other claims on the estate.
[11] We will examine the case under each of these headings and under a residual heading of other relevant circumstances to reflect the need to take account of all relevant circumstances. Before doing so we note material aspects of the leading case of Re Welch [1990] 3 NZLR 1, a decision of the Judicial Committee of the Privy Council, the judgment of Their Lordships having been delivered by Sir Robin Cooke. At p 6, Sir Robin indicated that whenever a claim for relief is made out, s 3(1) as a whole demonstrates that the criterion as to the relief to be granted is reasonableness. That is always, he said, the result at which the Court is to aim, no matter whether the award is of money or of specific property. If the deceased promised a certain sum or a certain property, that is a relevant consideration but not necessarily decisive. In a passage directly relevant to the present case Sir Robin said at p 7:
In support of the present appeal Mr Withnall contended that the deceased had made his own assessment of the value of the appellant’s services by promising to leave him the chief assets in his estate, and that the deceased’s own assessment should not be disturbed. As to that contention, manifestly it will often be impossible or inappropriate to weigh in any nice scales services or work on the one hand and testamentary reward on the other. An assessment, even a generous one, by a promisor able to exercise a sound judgment would not lightly be departed from. In this case, however, the difficulty is that there is no evidence that the promises were ever seen by either the deceased or the appellant as an assessment of a reward for services.
[171] The imprecise nature of the promises and the circumstances of the family dynamics throughout the promisor’s life mean that Doreen could not be criticised for expanding or contracting the extent of concessions she gave to Arnold in facilitating a purchase of the Rowan Road property from her estate. The essence of the advantage was that Arnold would not have to compete for the property on the open market. In such family transactions, it is one thing for the acquiring sibling to devalue the advantage by stating that the purchase occurred at a valuation procured for the purposes, and quite another for a purchaser in those circumstances to not have to compete with the vagaries of an open market transaction.
[172] I am not satisfied that the terms of the 2004 settlement estop Arnold from pursuing a testamentary promise of an option to acquire the Rowan Road property. None of the parties to that mediation would have appreciated what was to be in Doreen’s final will, and the future of the Rowan Road property after her death was not addressed in the 2004 settlement.
[173] I did not receive legal submissions from counsel on whether disentitling conduct by a promisee could apply to relieve the promisor’s estate of the obligation to honour the promise that had been made out. Nor did I receive submissions on the alternative of whether disentitling conduct is a circumstance that can be taken into account in quantifying the appropriate award. Without addressing the legal basis for it, Mr Laurenson submitted that Arnold’s alignment with Daniel’s trenchant criticisms of the way in which Doreen had administered DJ’s estate constituted disentitling conduct on both Arnold’s TPA and FPA claims.
[174] The rationale for the statutory cause of action under the TPA is quite different from that addressed in the FPA. Under s 5(1) of the FPA, disentitling conduct is explicitly recognised as a relevant consideration. However, where a promisee has received and relied on a promise of reward to be provided for in the terms of the promisor’s will, after the promisor’s death her or his personal representatives will be required to respond on the promisor’s behalf in discharging the promise. In doing so, s 3 of the TPA and the authorities on it recognise a broad discretion to have regard to a range of matters including competing claims against the promisor’s estate.
[175] I can find no authority that enables a promisor’s estate to raise disentitling conduct by the promisee after the service was rendered and the promise made as a ground for avoiding performance of that promise. To do so would arguably be inconsistent with the recognition of rights (albeit limited) for a killer to bring a claim under the TPA against the estate of his or her victim.29
[176] Whilst the breakdown in relationships and Doreen’s intention to prefer her daughters can be taken into account in projecting the range of provisions Doreen could
29 Succession (Homicide) Act 2007, s 10(3).
have made to discharge the promise, I do not consider it could justify Doreen’s estate resiling entirely from the promise made by her and relied on by Arnold.
[177] Mr Wilson made no attempt to quantify an award for Arnold on his TPA claim. I did not understand Arnold’s claim to assert any in rem right to the property and would not consider that form of award appropriate, given the passage of time and extent of variation in positions for others involved.
[178] In monetary terms, I am satisfied that the option value appropriately recognised to meet Arnold’s claim is relatively modest when compared with the current value of the Rowan Road property. By the time of Doreen’s death, Arnold and his family were very well-established in substantial dairy farming and contracting businesses. Had the promise of a first option to acquire Rowan Road been addressed by Doreen, assuming she was competent to conduct her own affairs until the end of her life, it seems unlikely to have been on terms as generous, or certainly no more generous than the example provided by the November 2000 draft will.
[179] I acknowledge that by 2014, all the daughters, with the possible exception of Patricia, were themselves relatively well-established, even though most of them were conducting dairy farming operations with varying but substantial levels of debt.30
[180] I am not satisfied that this is a case in which quantum should be assessed simply on the basis of a breach of a contractual promise to afford Arnold a right of first refusal. He could not make out a breach in sufficiently clear terms to warrant that approach, and it would have been open to Doreen to approach performance of the promises she made in a variety of ways. There is an aspect of a claim for loss of a chance about Arnold’s claim, given his acknowledgement that terms would have to be fair to his siblings. My own attempt at posing indicative values of the promise and services provided is made without Arnold advancing evidence to quantify the value of the alleged broken promise. Those projections are also not a basis for attributing appropriate quantum to this claim. Doing the best I can with the competing
30 I would rank Therese as less securely established at that time than the other three sisters who were party to these proceedings.
circumstances, I find that an award of $40,000 is the appropriate and sufficient sum to discharge Doreen’s promise.
Arnold’s FPA claims
[181] I have earlier summarised the terms of Doreen’s wills.31 With the exception of the two wills in December 2005 and March 2006, pursuant to which Arnold and Daniel would have shared the bequest of Doreen’s Fitzgerald Avenue residence, Doreen decided from October 2001 to leave a relatively token bequest to Arnold. Since May 2004, the amount left to him was consistently $50,000. Treating Doreen’s estate as valued at some $3.3 million, does a bequest of $50,000 (1.5 per cent) demonstrate appropriate support in the circumstances of this family relationship of a just testatrix? Put another way, if the testatrix started from a presumption of equal treatment of her seven children, and then took into account Arnold’s advantages from DJ’s will and other family transactions, would a bequest of $50,000 relative to a one seventh share of the estate comprising a little more than $470,000 (that is, slightly more than 10 per cent of an equal share) discharge this testatrix’s moral obligation?
[182] These amounts reflect the position at the time of Doreen’s death. She had not addressed her testamentary wishes for some seven years. For a substantial part of that time she would have been unable to do so competently. I am satisfied that she would have assessed her testamentary responsibilities on the assumption that the Rowan Road property would comprise an asset in her estate, but it may be that she would not have predicted the increase in value of the Rowan Road property when limiting the testamentary gift to Arnold to $50,000.
[183] The Court’s task is not to procure an outcome that it considers to be fair. As Blanchard J put it:32
[70] It is not for the Court to be generous with the testator’s property beyond ordering such provision as is sufficient to repair any breach of moral duty. Beyond that point the testator’s wishes should prevail even if the individual Judge might, sitting in the testator's armchair, have seen the matter differently. As I have said, the Court’s power does not extend to rewriting a will because of a perception that it is unfair. Testators remain at liberty to do
31 See [62]–[74] above.
32 Williams v Aucutt, above n 13.
what they like with their assets and to treat their children differently or to benefit others once they have made such provisions as are necessary to discharge their moral duty to those entitled to bring claims under the Family Protection Act.
[184] The first of Doreen’s reasons for not making greater provision for her sons, namely that they “are very well off financially” is true and is sufficient to negate any claim that either son had a need for material assistance. In relative terms, however, Doreen was not justified in drawing a stark distinction between her sons and her daughters on the basis of their respective financial positions. There was no evidence as to Patricia’s financial position and Therese was not as well off as the others, but the remaining three daughters are all in very sound financial positions.
[185] The second reason, namely the extent of benefits Arnold had acquired under the will of his father and from financial concessions made by other members of the family, is also accurate and valid. Doreen may not have appreciated that the net assets in her estate were likely to be more significant than those of her husband at the time of his death. However, by virtue of the timing of Arnold receiving a life interest and his position as the incumbent in the core of the family farming business that enabled him to take advantage of family arrangements thereafter, he was able to extend his dairy farming business. Arnold’s evidence on the point was that he was not given any favours by his siblings, and that each of the transactions involved his being treated by the family on arm’s length terms. A precise analysis is not possible but I am satisfied that the cumulative effect and timing of the transactions would have resulted in Arnold having a measure of financial advantage when compared with genuinely arm’s length terms that someone in his position would otherwise have had to conclude with independent third parties.
[186] As to the third of her reasons, namely that Arnold had enjoyed rent-free occupancy of “my homestead … for some 10 years”, I will deal separately with the three daughters’ counterclaim for rent on the homestead. On all the evidence I find there was no request conveyed during Doreen’s lifetime for Arnold to pay rent for it. By the terms of DJ’s will, rent was to be paid for the balance of the 90 acres that was to be quantified to provide an adequate fund for the maintenance and improvement of the homestead. This was on the assumption that Doreen continued to occupy the
homestead. There is no doubt that Arnold has committed substantial resources to maintenance and improvement. The homestead was in substantially better condition by the time of Doreen’s death than it was at the point in 1991 when she moved to a new house nearby. In those circumstances, the absence of demand would arguably give rise to an estoppel preventing any retrospective demand.
[187] Mr Larmer was asked to project the value of rent forgone for the homestead for the period between 1991 and 2014. One of the methods he adopted was to provide a fund for repairs and maintenance between two and three per cent of the annual building cost on a per square metre basis over the period from 1992 to 2014. That gave a range of $86,500 to $112,400, leaving Mr Larmer comfortable on this approach that approximately $100,000 is the value of the right to occupy.
[188] His projection of a market rent over the period, providing an net present value of cash flows hypothetically forgone, was estimated at $95,110.
[189] It was not entirely clear to me on the evidence who met relevant outgoings for the homestead. I assume that it was not separately assessed for rates purposes so that the rates demands for the 90 acre block on which it was located would have been met by Arnold. I cannot make that assumption on insurance costs, which were presumably separately identified.
[190] I am not satisfied that either of Mr Larmer’s approaches should apply. Doreen’s section for her new home was subdivided off the 90 acre block, and although Mr Larmer valued the loss of use of that part of the 90 acre block at a modest sum, her ability to stay in the area would, in the context of family arrangements, have some value. In any event, it is not clear from the terms of the relevant provision in DJ’s will that Doreen’s right of occupancy extended to a right to charge a market rent if she elected not to remain in occupation.
[191] However, within the family dynamic, when assessing her testatrix’s responsibilities, Doreen might validly have regard to the advantage Arnold had achieved by occupying the homestead without having to pay rent. Whatever the
position on a close legal analysis, she may reasonably have contemplated that rent was payable by the term of DJ’s will that left her with a lifetime right to occupy it.
Disentitling conduct affecting Arnold’s FPA claim
[192] Daniel had instructed Mr Wilson to attend on his behalf at the meeting convened at Doreen’s home on 23 February 2001 to discuss various disputes that had arisen within the family. Although Daniel denied instructing Mr Wilson to make trenchant personal criticisms of Doreen, in effect accusing her of being a liar and a cheat in relation to administration of DJ’s estate, I am satisfied that comments of that type were made in his name. I am also satisfied that Arnold was prepared to be associated with them. The criticisms of this type that persisted for some years were unjustified.
[193] Arnold and Edith gave evidence of a reconciliation between them and Doreen from about 2008, in the last period she was in her own home at Fitzgerald Avenue, and thereafter when she moved to the Annie Brydon retirement village. They described a pattern of visits to her and taking her to mass with them. Therese confirmed the restoration of a positive relationship between Arnold and Doreen in Doreen’s last years when she was mentally competent. The three daughters challenged the extent to which there had been a reconciliation or provision of support by Arnold for Doreen. They claimed that they provided the predominant support and company for Doreen in her last years of living independently and then when at Annie Brydon.
[194] I accept that there was a resumption of cordial relations between Doreen and Arnold and that, as she became less independent, she would have welcomed the support that Arnold provided. I am less confident that there was a complete reconciliation between them, given the strength of the allegations against her that had been aired in and after 2001. I am mindful that in wills Doreen completed from December 2005 she ceased making reference to animosity from her sons as a reason for making lesser provisions for them. However, that is not sufficient to warrant a finding that entirely positive relations were restored to the extent that the criticisms were forgotten.
[195] Doreen’s discovery of the unequal terms on which DJ left his estate is also relevant. Arnold gave evidence that shortly after DJ’s death he arrived at the homestead to find Doreen with an array of papers spread out over the floor including a copy of DJ’s will. Her comment to Arnold was to the effect that “the bastard has left me nothing”. I have analysed the import of that discovery on Doreen’s testamentary intentions in dealing with Arnold’s TPA claim.33
[196] The other important consideration is the existence of Arnold’s claim under the TPA. I have quantified that at $40,000. The TPA and FPA claims have quite different rationales which might lead to their being determined separately according to the principles applying to each. However, in the present litigation, I consider it would be unjust to reach a conclusion on the two claims independently and, more positively, the appropriate outcome in each is influenced by the outcome in the other.
[197] The factors identified by Doreen in her various wills legitimately reduce the scope of her moral duty to Arnold. Even though the animosity and lack of support was not cited by Doreen in her last will, nor in a number of wills before that, the trenchant nature of the criticisms and the harm they must have caused within the family relationships remained a factor that lessened the moral duty Doreen ought to have acknowledged to Arnold. Assuming a starting position of $40,000 on account of his TPA claim, I consider that a top-up of another $10,000, making a total payment of a further $50,000 out of Doreen’s estate, is an adequate imposition on Doreen’s estate to discharge the moral duty she inadequately addressed in respect of Arnold.
Daniel’s FPA claim
[198] Daniel received a modest bequest from his father’s estate, comprising an insurance policy valued at approximately $21,000 in 1983. Despite indications in earlier wills that Doreen would leave him a materially greater amount than Arnold, the final will treated the two sons in the same way so that he has had a total of some
$70,000 from both his parents’ estates.
33 See [167]–[168] above.
[199] Daniel has been physically distanced from the rest of the family and made only rare visits home to Taranaki during his mother’s lifetime. It is apparent that the bond between them was substantially less than the bond between Doreen and each of the other protagonists.
[200] In addition, Daniel committed what I consider to be the most serious disentitling conduct, in devising and mounting a campaign of bitter criticisms of Doreen. Daniel had convinced himself, apparently without taking legal advice, that Doreen was guilty of egregious mal-administration of DJ’s estate. In cross- examination, he refused to accept that alternative interpretations of the opaque provisions in DJ’s will could reasonably have arisen. He has transferred his animosity that originally focused on Doreen to the three daughters who have supported her in rebutting his criticisms. He scathingly referred to them in his evidence as “the Troika”.
[201] Doreen’s justification for reducing her testamentary provision for Daniel lacks the fact of substantial entitlements from DJ’s estate. On the other hand, I rank the seriousness of Daniel’s disentitling conduct more highly than that of Arnold, who tended to follow Daniel’s lead in this regard. There was no evidence of reconciliation between Daniel and Doreen prior to her death. Daniel has spent virtually all his adult life in Australia, and could not claim a close on-going connection with Doreen. The extent of the physical separation is a further factor reducing the scope of her moral duty to him.
[202] However, in the end I am satisfied that the award of $50,000 was inadequate to discharge Doreen’s moral duty to Daniel. Many countervailing considerations can be taken into account. I consider that an additional $20,000 is the minimum required to discharge that obligation.
Claim for Arnold to pay rent for the homestead
[203] In their capacity as executrices of Doreen’s estate, the three daughters have pleaded a conditional counterclaim in the event that Arnold is successful in obtaining an award from Doreen’s estate. They claim that Arnold was in a fiduciary relationship to Doreen in respect of his use, enjoyment, occupation and control of the homestead throughout the period when he and his family occupied it after Doreen had moved to
her new home in Fitzgerald Avenue. Although the pleading was that this was from 1990 to Doreen’s death in August 2014, the evidence suggests that the relevant domestic moves occurred towards the end of 1991. This contingent counterclaim was not addressed in any detail in either opening or closing submissions.
[204] There was a contested issue in the evidence as to whether Doreen was keen to move out of the homestead into her own new home, or whether she was pressured by Arnold to do so. The evidence for the defendants was to the effect that she was pressured, whereas Arnold and Therese gave evidence that she initiated the move, was not pressured, and was happy about it. Part of Arnold’s evidence included showing a home video he recorded including his contemporaneous audio commentary of loading personal items for Doreen into a trailer for her move from the homestead to Fitzgerald Avenue. I was invited by Mr Laurenson to adopt a cynical approach to the events as recorded in the video. He submitted that Arnold’s commentary about the move was a defensive strategy on his part to provide a misleading record to meet any subsequent criticisms that he had forced Doreen from the homestead.
[205] I find there is sufficient evidence that Doreen initiated or was in control of the process of subdivision and construction of her new house to negate the three daughters’ claims that Arnold had forced her from the homestead. Equally, I am not persuaded by Arnold’s evidence that he and Edith and their growing family were happy in a smaller home they were occupying at the other end of the farm and moved at Doreen’s request. However, I consider it a situation in which all those directly involved were comfortable with Doreen’s move from the homestead to her new house, and Arnold, Edith and their family’s move into the homestead.
[206] In those circumstances, a question arises as to the precise nature of the life interest in the homestead that was given to Doreen by the terms of DJ’s will. She was to have “use and occupation and enjoyment of the homestead … during her lifetime”. Until Doreen’s death, Arnold was obliged to pay rent for the use of the remainder of the 90 acres owned by DJ. The terms requiring the trustees to set a fair and equitable rental with the intent that it should provide for the repair, maintenance and improvement of the homestead do not contemplate a rental in respect of use of the homestead, if Doreen moved out and Arnold moved in.
[207] There is no suggestion that Doreen raised any requirement for Arnold to pay rent for the homestead at the time he and his family moved into it. Nor does the prospect of rental appear to have been raised with Arnold at any time during Doreen’s lifetime. Doreen raised the lack of rental as a reason for reducing her bequest to Arnold in wills completed in and after December 2005, including her final will, but there is no evidence that view was ever put to Arnold. I am satisfied on the evidence that, certainly since they took up occupation of the homestead, Arnold and Edith have thoroughly repaired, maintained and improved it.
[208] In all these circumstances, I am not satisfied that the three daughters can eliminate the prospect that Arnold and Edith and their family have occupied the homestead as invitees of Doreen. That characterisation of their occupancy is consistent with Arnold’s entitlement to occupy it after Doreen’s death as the life tenant, with the homestead then passing, as part of the 90 acre block on which it is situated, to his children as the residuary beneficiaries under DJ’s estate.
[209] A variant on this prospect of their being invitees is that they assumed occupancy, without any prospect that they were required to pay a rent by Doreen. Her life interest entitled her to occupy it if she wished, but that does not necessarily carry with it a right to charge rent to the life tenant of the land on which it is situated when she vacated. On her death, Arnold was entitled to occupancy, and if she ceased occupancy in a circumstance other than when she died, the same underlying right might have been triggered.
[210] Further, an estoppel arguably arose preventing any claim for rent over the period up to Doreen’s death, when the terms for calculating such a rental and a claim that it was payable were not notified to the occupant from the outset. Arnold and Edith were afforded no opportunity to contest the quantum of any such rent, or to decide whether they were prepared to occupy the property, assuming maintenance and other obligations, and still be required to pay a rental.
[211]Accordingly, the counterclaim could not succeed.
The three daughters’ FPA claim against DJ’s estate
[212] The three daughters pleaded a contingent claim under the FPA against DJ’s estate, in the event that the dispositions provided for in Doreen’s will were disturbed by any awards in favour of Arnold and/or Daniel.
[213] The extent of preference for Arnold in DJ’s will, implicitly because of his commitment to carry on the family farming business, clearly resulted in inadequate provision by DJ for his five daughters. A number of factors are relevant in assessing the character and extent of that breach. First, DJ’s testamentary provisions are to be tested by reference to the standards reflecting social and other conditions at the time of death.34 In 1983, the importance of family traditions that facilitated farming land being kept in the family would have provided a more credible explanation for the terms of DJ’s will than would now be accepted. Nonetheless, as Re Leonard shows, that social standard was already recognised as outdated and could be the foundation of a successful FPA claim.35
[214] Secondly, this claim is advanced without any reliable quantification of the value of the assets comprising DJ’s estate. Other aspects of the three daughter’ case in these proceedings denied that the leasehold interest in the Mary Fitzgerald estate comprised an asset in DJ’s estate. The evidence was that Doreen or the Maryland Trust paid the liabilities of DJ’s estate on the basis that there was no cash available to his estate. The major asset was the 90 acre block which went to Arnold and then his children. The livestock interests were, by agreement of all the family, transferred in the 1986 deed of family arrangement. The value and circumstances of what were the assets in his estate have moved on to an unrecognisable extent in the 35 years since his death.
[215] Thirdly, an aspect of Arnold’s and Daniel’s proceedings has been an attempt to assess entitlements of the children of DJ and Doreen in light of Doreen’s evident intention to prefer their daughters to make up for DJ’s neglect of them. The assessment
34 Talbot v Talbot [2017] NZCA 507, [2018] NZFLR 128 at [39]; Henry v Henry [2007] NZCA 43, [2007] NZFLR 640 at [59]–[60]; Re Leonard, above n 12; and Little v Angus [1981] 1 NZLR 126 (CA) at 127.
35 Re Leonard, above n 12.
of the extent to which Doreen’s estate needs to be disturbed has been influenced by my recognition that their favourable treatment from their mother was in part justified because of their unfavourable treatment by their father.
[216] In all those circumstances, I see no scope for recognising the contingent FPA claim pursued by the three daughters.
Outcome
[217]The final outcome is accordingly:
(a)a declaration that the gifting of the proceeds of sale of the Rowan Road property in 2011 was unlawful and there are no grounds for relief from the effect of that unlawfulness;
(b)Arnold’s TPA claim is made out and sufficiently met with an order for
$40,000 against Doreen’s estate;
(c)Arnold’s FPA claim is made out and, having regard to the extent of the award under the TPA claim, a top-up of a further $10,000 is ordered;
(d)Daniel’s FPA claim is made out to the extent of $20,000; and
(e)orders for executrices of Doreen’s will to recover debts owing by the five daughters from the unlawful forgiveness of the loans made to them in 2011 but only to the extent necessary to meet all remaining liabilities of the estate including making payment of the awards totalling $50,000 to Arnold and $20,000 to Daniel, together with costs liabilities.
Costs
[218] Mr Laurenson asked that I defer costs until the parties know the outcome. The proceedings will have incurred, for all parties, costs at a level disproportionate to the net amounts I consider were ever realistically at stake. Bitterly contested family litigation sadly has that feature not infrequently.
[219] Arnold and Daniel have enjoyed modest success in their respective claims. The scope of the litigation was substantially expanded by evidence and argument dealing with their criticisms of Doreen’s conduct as executrix of DJ’s estate. The three daughters’ counterclaims, although unsuccessful, were understandable components of their response to the claims advanced.
[220] My provisional view is that Arnold and Daniel should be entitled to one set of costs for all the proceedings, on a 2B basis, and reduced by 40 per cent to take account of their failure to justify the criticisms of Doreen’s conduct as executrix of DJ’s estate. On that provisional view, there would be no separate costs on counterclaims arising in the three daughters’ separate proceedings. If this indication is not sufficient to enable costs issues to be settled between counsel, then I will receive memoranda, limited in each case to eight pages.
Dobson J
Solicitors:
CIV-2015-443-054
Till Henderson, Stratford for plaintiff Parker and Marriner, Hawera for defendants
CIV-2017-443-022
Parker and Marriner, Hawera for plaintiffs Till Henderson, Stratford for defendants
Counsel:
S W Hughes QC, New Plymouth, counsel for grandchildren
Appendix
RUNG 5 OF DOBSOT J
[Sraros ob THr's fiIiIIs’ etTdeoc e]
[1] Part-nay though the cues-examination of Mrs ktd1s onTlnmdaY, 9.Mgust2018, I was asl:ed to allow her to leave the u.imess box on the uiguig of her daughter. who was in the back of the C‹xiti and obswzd behavfiur that stie considenxl to be consistmt with kms Mills sufferuig difficulnes with her heart. Mrs Mills left the witness box and I was subsequemfy advised that she had been taken to mo@tal @' ambulance and rimvimed there overnight.
[2] On Fridaj• 10 August 2018, the last dai of the hearine, km Laarenson advised that klrs Mills was not in a position to ieslum eng her evideme that days He ptesected a niedical Certificate ßomMrs Mills’ prartitioner. li could:rzued that she Butters from
infarction treatinmi for which minded the insertion of one or more stems. The doctor 's ophion is that exposure to excess stress should be avri‹1efL to avoid actual physical liarnL
[3] On 10 August 2018. km Larueason deferred closing his case until the status of kms Mills’ incomplete ev :1ence was iesolivd.
[4] Afier tkkmg insmictims on the leans of theme‹lim1cemficate, Mr U*ilson filed a nieamnuidum on 13 Aiieusl 2018 recorduig his cliems’ poufion tfiat Mrs M(t1s oiielii to be reqrured to be available to complete her she,and that if she did net tlim noought could be placed on the evidence that had been addure:£ Mr Wilson neated the medical cernficate as innfficimt to estabhsh thai Mrs Mills was zm&cally imfit In ewe since for the foreseeable fiihne. He iwlicabxl that lits clients scald at oppose an application
[5]I conveaed a teleplionr confeience to address the issue.
[6] In light of ktr U*ilson’s criticisms of the mediml certificate. I accept that it provides less than a coiupelhng foimdation for treating Mrs Mills as uiuwailable. Nonnlieless, I take the view tfiat there is little prospect, eiven the symqrtoms describefL that her mediml coalition is likely to improve to a material extent that would enable the
to her Health zre added to the limited inspects of my bemg able to ie':›mivme the lnmmg
a:uy tizm before the simmm vzcatinn the length of lil:ely delay adds to the exhort of t&
[8] I on méidfiil that the oppoeng factions oftbe Fitz fauélylizve liiedtfiinugli a forbugbt of eii3ence w their long-standing and bitterly held diBére res. To su;puul resolution of their dispirln awxituig the pmspect of completion of the eii3ence of one (albeit iiziporta°i) uitnem w‹ntd be inconsistent with the Coinl’s ovmall task of results disputes in a just speedy and inezpensivz manner.
[9] ( o Mr \Vdson’s objection, I accordingly declared that Mrs klills is imnoilable. k'(r Lamenson oonfirined that the defendants case wxs closetL
[10] Counsel will I:e Able to anale submissions on the appropriate we@d that I m@d give In parts of Mrs Mills' w.i3mice in ligld of what has occurred. The right to complete cues-examination is inarguably a nmst important no. The absuice of crest
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