Francis v Davey HC Christchurch M221/00

[2001] NZHC 749

IN THE HIGH COURT OF NEW ZEALAND
CHRISTCHURCH REGISTRY M221/00

In the Matter of the Family Protection Act 1955
And In the Matter of the Estate of WAYNE JAMES FRANCIS

BETWEEN DEBORAH ANNE FRANCIS
Plaintiff

AND GRAEME NORMAN DAVEY Chartered Accountant and SIMON GEORGE MORTLOCK, Solicitor Both of Christchurch, Executors and Trustees of the ESTATE OF WAYNE JAMES FRANCIS
Defendant

Hearing: 30 July 2001

Appearances: I G Hunt for Plaintiff
A R Herring for the Defendants
G M Brodie to Helena Francis
J M Kirkland for the Children Born and Unborn and Grandchildren of Helena Francis

Judgment: 16 August 2001

RESERVED JUDGMENT OF WILLIAM YOUNG J

Solicitors:
Young Hunter, Christchurch for Plaintiff
Simon Mortlock Lawyers, Christchurch for Defendants
Anthony Harper, Christchurch for Helena Francis
Malley & Co, Christchurch for Children Born and Unborn and Grandchildren of Helena Francis

Introduction

[1] This family protection claim relates to the estate of the late Wayne James Francis. Mr Francis died in Christchurch on 28 June 1999. His estate was worth approximately $27,000,000. The claim is by his widow, Deborah Anne Francis (“Deborah Francis”).

[2] The late Mr Francis married twice. Helena Francis (formerly Blaxall) is the only surviving child of the first marriage. She is now 32. She has four-year-old child, Jamie Francis Blaxall.

[3] Mr Francis and Deborah Francis (then Deborah Paine) began living together in or around February 1994. They were married in February 1998. They did not have children.

[4] The principal protagonists are Deborah Francis and Helena Francis.

Mr Wayne Francis

[5] Mr Francis was born in 1943. So he was 56 when he died.

[6] Mr Francis was well known both as a property developer and for his successful involvement in harness racing. As a property developer he was responsible for the very substantial development now known as Westmorland. At the time of his death he was engaged in a major property development venture in Auckland and a joint venture with Fulton Hogan Ltd. His share in this joint venture represents the bulk of the assets in his estate.

[7] Mr Francis owned, as at the date of his death and for a number of years beforehand, a property known as “Dannemora” which consists of some 11 hectares on Birches Road near Prebbleton. The house is substantial. It contains an art collection (worth a little over $500,000) and a reasonable collection of antiques (worth approximately $165,000). There were also many works of sculpture either in the house or on the property.

[8] As well as the Dannemora property, Mr Francis owned what appears to have been a reasonably substantial apartment in Australia and also a holiday house at Wanaka.

[9] Mr Francis’ interest in harness racing is reflected by his ownership, as at the date of his death, of interests in two businesses associated with harness racing, Nevele R Stud Ltd and Spreydon Lodge Ltd.

[10] Mr Francis was operated on for cancer of the oesophagus in early 1997. The affidavit evidence which I have seen suggests that following surgery, he and Deborah Francis (who was not then married to him) assumed that his prognosis was good. Indeed, after their marriage they endeavoured to have children and, when there were difficulties, persisted with this to the extent of invoking in vitro fertilisation techniques. These attempts, however, were unsuccessful.

[11] Mr Francis died, as I have indicated, on 28 June 1999. The evidence has left me with the view that he and Deborah Francis recognised that he was dying only in the three or four weeks which preceded his death.

Deborah Francis

[12] Deborah Francis was born in 1959 and is now 42.

[13] She had no assets of any real substance when she formed a relationship with Mr Francis. She had, in fact, been adjudicated bankrupt on two occasions. She did not work after she formed her relationship with Mr Francis and it is clear enough that she was not expected to do so by Mr Francis.

[14] She was obviously heavily involved with the Dannemora property (on which she grazed a number of dressage horses). As well, she assisted Mr Francis with entertaining and generally shared his life.

Helena Francis

[15] Helena Francis has not put information as to her personal circumstances before the Court. I infer from this that she is comfortably off.

Background to the will of Mr Francis

[16] Prior to their marriage Mr Francis and Deborah Francis entered into a matrimonial property agreement and Mr Francis, as well, made a will in contemplation of his marriage. The terms of the matrimonial property agreement are of no moment in the present context. I should, however, say something about the 1998 will.

[17] Under this will, Mr Francis provided for Deborah Francis to have the free use of Dannemora and the chattels in the house for either five years from the date of his death or until her earlier departure from the house. The will provided that at that point (the expiry of five years or her earlier departure from the house) she was to be paid a legacy of $500,000 which was to be adjusted upwards to allow for movements in the Consumer Price Index from the date of death. As well, Deborah Francis was left a legacy of $1,000,000 payable at the rate of $100,000 per annum (while she should survive). She was also to receive a motor car and all items of household use in the Dannemora house excluding ornaments, pictures, paintings and sculptures which were to be divided between Deborah Francis, Helena Francis and Mr Francis’ sister.

[18] In April 1999, Mr Francis embarked upon a general restructuring of his affairs. He did this in conjunction with his solicitors, Mr Simon Mortlock. Having regard to the terms of a letter of 15 April 1999 from Mr Mortlock to Mr Francis, it appears that this exercise was, in part, prompted by what was described as being Mr Francis’ then “current lack of good health”.

[19] The letter observed:-

“Your present management and governance structure is simple in the extreme. You employ no personal staff and decisions are usually made by you alone. You have been fortunate in having excellent support personnel within Fulton Hogan itself and the horse/stud business has the usual complement of management personnel.”

Reading between the lines of this letter, it appears that Mr Mortlock and Mr Francis recognised that this “simple” management and governance structure would not suffice indefinitely, particularly if the health of Mr Francis should deteriorate. This was particularly so in the context of the Auckland property joint venture with Fulton Hogan Ltd which was, on any view, of major proportions.

[20] The proposals, as at April 1999, appear to have been principally focused on providing the sort of management and governance structure which would permit Mr Francis’ business interests to be managed in a way which might be regarded as being orthodox given their scale.

[21] With Mr Francis’ health taking a dramatic turn for the worse in or around the beginning of June 1999, his focus and that of his advisers rapidly shifted towards estate planning. I have read and considered carefully a comprehensive letter from Mr Mortlock to Mr Francis of 15 June 1999. The letter reviews the assets of Mr Francis and then addresses, comprehensively, the estate planning issues which Mr Francis had to face given the imminence of his death.

[22] The upshot of this exercise was three-fold:-

1. The formation of a new trust, the Wayne Francis Property and Bloodstock Trust which took title to the principal assets owned by Mr Francis (or in which he was involved) other than the Dannemora property. Deborah Francis is a beneficiary under this trust with entitlements to which I will refer shortly.

2. The last will of Mr Francis (also executed on 22 June 1999). I will refer shortly to the provisions of this document.

3. A memorandum of wishes to the trustees of the Wayne Francis Property and Bloodstock Trust and as appointed under his last will.

[23] In this context it is clear that Mr Francis’ will of 22 June 1999 must be viewed, fairly, as part of an overall business and estate plan which includes the Wayne Francis Property and Bloodstock Trust. To be considered sensibly, his will must be considered in conjunction with the Trust. I note that Mr Mortlock and a chartered accountant who was closely associated with Mr Francis, Mr Graeme Davey, are the personal representatives appointed under the will and are the Trustees of the Wayne Francis Property and Bloodstock Trust.

[24] The overall structure was, at least in broad terms, carefully and meticulously thought through. It is clear, however, that with Mr Francis’ health failing rapidly in June 1999, decisions associated with the will (along with a wide range of other decisions) had to be made extremely quickly and in circumstances where the pressure of events must have been very considerable.

The scheme of the will and the Wayne Francis Property and Bloodstock Trust

[25] The testamentary provision made by Mr Francis in favour of Deborah Francis was, as follows:

1. A legacy of $250,000.

2. The Dannemora property.

3. A Land Rover Discovery vehicle and a Toyota truck together with all articles of household use or ornament not otherwise dealt with under the will.

4. An entitlement to the possession of an art collection, garden sculpture and antiques during her lifetime or until she sells the “our home at Birches Road”.

5. An entitlement to use, during her lifetime, the holiday residence at Wanaka (to be shared with Helena Francis and her children and grandchildren).

6. An annuity paid either by the estate or by the Wayne Francis Property and Bloodstock Trust of $100,000 a year to be increased by reference to the Consumer Price Index, but with the adjustment arrangements themselves to be subject to the following provision:-

In the event of my wife remarrying she shall thereafter be entitled to receive an annuity of ONE HUNDRED THOUSAND DOLLARS ($100,000) per annum without provision for any increase based on the movement in the All Groups Index of the Consumer Price Index.

7. A continuing position in the trusts created by the will as a discretionary beneficiary (along with Helena Francis and her children and grandchildren).

[26] Under the Wayne Francis Property and Bloodstock Trust, Deborah Francis is entitled to further payments expressed in this way:-

“During the trust period so long as the Settlor’s widow, Debbie, remains unmarried or not in a de facto relationship the Trustees shall pay money and/or assign investments from either income or capital to a value of no less than TWO HUNDRED AND FIFTY THOUSAND DOLLARS ($250,000) on or about every fifth anniversary of the date of the Settlor’s death to the Settlor’s wife, Debbie, to meet her additional capital and income needs over and above that met by the payment of an annuity.”

[27] The trust period is defined as meaning the period from the date of the deed (22 June 1999) until the vesting day. The vesting day is defined as meaning:-

“The day SIXTY (60) years from the date of death of the Settlor or such earlier date as the Trustees may in their discretion by Deed appoint in respect either of the whole or any specified part of the Trust Fund.”

[28] Ignoring the value of Deborah Francis’ rights to retain possession of the art collection, antiques and garden sculpture as provided under the will, the value of her entitlements conferred by the will is, broadly (and in some respects at least very conservatively assessed) as follows:-

1. Residence at Birches Road (approximately) $1,200,000.00

2. Furniture and effects (very conservatively) 30,000.00

3. Two motor vehicles 30,000.00

4. Value of $100,000 annuity $2,578,000.00

5. Legacy 250,000.00

$4,088,000.00

[29] The value of Deborah Francis’ entitlement under the Wayne Francis Property and Bloodstock Trust is difficult to assess because of the contingencies as to re-marriage and entering into a stable de facto partnership. As well, the vesting date can be accelerated by the trustees and, if so, this would terminate the entitlement to the $250,000 payments every five years. In saying this, it is proper to recognise that it is unlikely, on my appreciation, that the trustees would accelerate the vesting date in a way which was prejudicial to the interests of Deborah Francis.

[30] Deborah Francis is, in addition to her entitlements under the will and Wayne Francis Property and Bloodstock Trust, also a discretionary beneficiary in terms of the trusts created by those instruments. Relevant to this status as a discretionary beneficiary is the memorandum of wishes executed by Mr Francis shortly before his death.

[31] In paragraph 2 of this memorandum, Mr Francis said:-

“In making the comments that follow I have assumed that my Trustees will at all times regard the interests of my wife, Deborah Anne Francis, and my daughter, Helena Blaxall, as paramount. This no doubt goes without saying. It is essential that they have no financial or other worries and I would not like their own independent resources of capital and income to be whittled away. My Trustees should disregard my wife’s and my daughter’s own assets in considering what assistance should be given.”

The other provision contained in this memorandum to which I should refer is the statement:-

“I would expect that my Trustees would exercise their discretion so as to provide my beneficiaries with adequate income for their needs extending both income and capital contributions up to TWENTY FIVE PER CENT (25%) more than I have presently provided for under both my Will and the Wayne Francis Property and Bloodstock Trust.”

[32] Consistently with the memorandum of wishes, the trustees have topped up Deborah Francis’ annuity by an additional $25,000 for the two years which have elapsed since Mr Francis died.

[33] All of this must be viewed in the context of an estate worth approximately $27,000,000.

[34] I have not set out the provisions made in the will for other people nor reviewed the inter-connection between the will and the Wayne Francis Property and Bloodstock Trust. It is sufficient to say that broadly the scheme of the will and the Wayne Francis Property and Bloodstock Trust is that funds not received by Deborah Francis will, in the main, be held for the benefit of Helena Francis, her children and her grandchildren or applied for charitable purposes.

The appropriate approach under the Family Protection Act in a case of this sort

[35] As I have indicated, Helena Francis has not placed her personal circumstances before the Court. It is, therefore, to be inferred that she is comfortably off and that if I make an award in favour of Deborah Francis, this will not interfere with her reasonable requirements and those of her descendants.

[36] In those circumstances, Mr Hunt, who appeared for Deborah Francis, suggested that the moral duty of Mr Francis should be assessed in terms of what was required to ensure that Deborah Francis was able to maintain, broadly, the standard of living which she enjoyed prior to the death of Mr Francis. This proposition was based primarily on the decision of the Court of Appeal in Re Z [1979] 2 NZLR 495. In that case, at page 499, Richmond P said:-

“Having regard to the size of the estate and the lack of evidence as to any needs of the testator’s children Mrs Z had a paramount claim to be provided for in a way which would enable her to continue living in much the same manner as she had done when the testator was alive.”

[37] Mr Brodie, who appeared as counsel for Helena Francis, did not really dissent from the proposition that this was the appropriate approach in the present case.

Overview of the claims by Deborah Francis

[38] On behalf of Deborah Francis, Mr Hunt challenged the will under three heads of argument:-

1. The size of the annuity and the re-marriage tag to which CPI adjustments were made subject

2. The size of the legacy

3. The provisions as to antiques

[39] I will deal with the case by reference to these heads of argument.

The size of the annuity and the re-marriage tag to which CPI adjustments were made subject

[40] It is reasonably clear, from the will itself and from the circumstances of the case as a whole, that Mr Francis expected that Deborah Francis would remain in the Dannemora property, albeit that he clearly contemplated that some of the land which presently forms part of that property should be subdivided off and perhaps sold by Deborah Francis. I should say, in passing, that providing Deborah Francis retains the land upon which the home is situated, and in this sense what was referred to in the will as “our home at Birches Road”, the sale of other portions of the property would not bring to an end her entitlement to possession of the art collection, antiques and garden sculpture (see paragraph [25.4] above).

[41] The primary issue in relation to this aspect of the case is whether the provision made by Mr Francis for his widow is sufficient for her to maintain a lifestyle broadly equivalent to that which she enjoyed while Mr Francis was alive. The starting point for the consideration of this issue must be whether the annuity of $100,000 is sufficient for these purposes.

[42] Mr Francis and Deborah Francis enjoyed a comfortable lifestyle. Dannemora is obviously a fine property with a comfortable and substantial house. The land is suitable for grazing horses and Mr Francis provided Deborah Francis with a dressage arena on it for her 40th birthday. Mr Francis owned a holiday house in Wanaka (and an associated speedboat) and an apartment in Australia. He was heavily involved in harness racing and had significant harness racing interests held through two commercial entities, Nevele R Stud and Spreydon Lodge Ltd. There was a good deal of travel. Mr Francis’ personal and leisure activities were closely interwoven with his commercial activities.

[43] Although Mr Francis was, by New Zealand standards, a very wealthy man, he nonetheless had a keen sense of the value of money and was not wildly extravagant or reckless in expenditure. To put it another way, his was a lifestyle which would be recognisable by a significant number of affluent New Zealanders.

[44] I might have found it of assistance in assessing the claim by Deborah Francis if I had been provided with financial information indicating the level of personal expenditure incurred by Mr Francis during the last years of his life. This information was not provided and I infer that this was because it has not proved altogether easy to segregate out what might be regarded as personal expenditure from a mass of predominantly business expenditure.

[45] My assessment of what is required to ensure that Deborah Francis can generally maintain a lifestyle broadly equivalent to what she enjoyed with Mr Francis must start with the expenditure which Deborah Francis has incurred in the period which has elapsed since Mr Francis died. Unfortunately, however, the level and patterns of her expenditure during this period are of comparatively little assistance in this context.

[46] Between 1 July 1999 and 18 June this year (which is the point to which figures have been taken out), Deborah Francis has incurred expenditure as follows:-

1. Personal expenditure $318,538.00

2. Household costs $132,191.00

3. Farm expenditure $127,142.00

4. Incidental expenditure/interest 92,094.00

$669,965.00

Not included in these figures are the costs of the purchase of an investment property in Warrington Street which is now to be sold and which I understand cost in the order of $150,000.

[47] The funds available to Deborah Francis to support this expenditure and the purchase of the Warrington Street property were analysed in the submissions of Mr Brodie for Helena Francis as follows:-

1. Legacy $250,000.00

2. Annuity $200,000.00

3. Discretionary allocation from trustees 50,000.00

4. Bank borrowing and credit cards $321,823.00

$821,823.00

I infer that the difference between the $669,965 in expenditure to which I have referred in paragraph [46] above and the figure of $821,823 which I have just set out is largely accounted for by the purchase price of the Warrington Street property.

[48] Since Deborah Francis’ expenditure has considerably exceeded the funds available to her, she has incurred debts which are now secured against the Dannemora property. With the pending sale of the Warrington Street property, the total debt secured against the Dannemora property will be in the order of $160,000 which can be treated, broadly, as representing the excess of her expenditure over her income which, for these purposes, included not only the topped up annuity but also the legacy of $250,000.

[49] It is difficult to analyse this expenditure so as to get a real feel for what money is required to enable Deborah Francis to live comfortably at Dannemora. In part, this is because, as she herself recognises, her actual levels of expenditure are well beyond what could be regarded as being reasonable in terms of the present exercise. Further, a good deal of the expenditure is simply in the form of cash transactions which are not now able to be broken down except in very general terms.

[50] One of the trustees, Mr Graeme Davey, who, as I have indicated, is a chartered accountant, carried out what must have been a very difficult exercise in March 2000 to calculate cash projections in relation to the expenditure of Deborah Francis. He started with her expenditure as it was up to the date of the projection (which I think must have been 20 March 2000). He came up with the following figures for expenditure for what he regarded as being a “normal year” as follows:-

1. Personal expenses 69,200.00

2. Household costs 25,820.00

3. Farm expenditure 24,000.00

4. Incidental expenditure 12,292.00

5. Hire purchase 33,800.00

$165,112.00

Each of these headings of expenditure is broken down into many components.

[51] The components of this exercise are necessarily open to argument. Such argument could be both ways. To take a minor example, Deborah Francis acquired a boat (which I was told was a “Bayliner”) from the estate of the late Mr Francis. Mr Davey (who I suspect does not own a boat) allowed expenditure, on an annual basis in respect of this boat of $1,000. This assessment strikes me as well under-done. On the other hand, his figures allow significant sums for interest ($11,792) and hire purchase payments on a Range Rover ($30,000) which are obviously debatable the other way. On the basis of what was left to Deborah Francis, the necessity to borrow money is far from clear to me. As for the Range Rover, Deborah Francis says that Mr Francis, when he was dying, agreed to her buying a Range Rover. But the acquisition of this Range Rover on hire purchase in the situation which obtained following Mr Francis’ death should not be regarded as setting the standard for what was reasonably required in terms of the moral duty of Mr Francis.

[52] In the very difficult situation which confronted Mr Francis in June 1999, it would not have been easy to calculate with any precision the level of the annuity necessary to provide Deborah Francis with the standard of living to which she had, by then, become accustomed. I have already indicated that costs associated with his business interests and personal life were intermingled. Indeed, it is far from clear to me that Mr Francis necessarily thought that the $100,000 a year annuity was necessarily enough. It is clear from his memorandum of wishes that he expected the annuity to be topped up significantly by the trustees, acting in their discretion.

[53] The exercise carried out by Mr Davey indicates that the base figure of $100,000 per annum provided for by the will was not adequate for Deborah Francis to maintain broadly the sort of lifestyle which she and Mr Francis enjoyed before his final illness and death. In the context of the case as a whole, I see no requirement to assess this on a penny-pinching or mean-spirited basis. On the material I have seen, I assess the base figure appropriate to maintain that lifestyle as being in the order of $140,000.

[54] It must not be forgotten that the $100,000 per annum provided to Deborah Francis under the annuity (and subject to CPI adjustment) is likely to be supplemented. In the first place, it is likely to be supplemented, as it has been to date, by a further $25,000 per annum as a result of the trustees simply following the memorandum of wishes executed by Mr Francis just before he died. Further, there are the five yearly payments of $250,000 (plus CPI adjustment) to which will in all probability be paid to Deborah Francis should she not remarry or enter into a stable de facto relationship. She remains a discretionary beneficiary under the trusts created by the will and the Wayne Francis Property and Bloodstock Trust. Counsel referred, in the course of their submissions, to a number of cases as to the extent to which the moral duty of a testator can be regarded as being discharged by the creation of a discretionary trust. Reference can be made, for instance, to Mills v New Zealand Insurance Co Ltd [1958] NZLR 356. Obviously, Deborah Francis’ position as a discretionary beneficiary under the will and the Wayne Francis Property and Bloodstock Trust is not decisive and certainly does not control my decision as to whether the annuity provided for in the will should be interfered with.

[55] In the present circumstances there are three considerations which suggest to me that I should put on one side, for present purposes, Deborah Francis’ entitlement as a discretionary beneficiary under the trusts created by the will and the Wayne Francis Property and Bloodstock Trust. They are:-

1. It is very important for Deborah Francis and for the trustees, that Deborah Francis has a clear understanding as to the level of income and support which she can expect. In a situation in which her fixed entitlement is set too low, the probabilities (as I assess them) are that Deborah Francis will expect the trustees to make good the difference between her entitlement and what she considers to be appropriate. This is likely to result in a pattern of events broadly similar to what has obtained since the death of Mr Francis.

2. Such an approach will cause considerable ongoing difficulties for the trustees in terms of planning and managing cash flows in relation to the trusts created by the will and the Wayne Francis Property and Bloodstock Trust.

3. Given that additional provision for Deborah Francis is effectively at the expense of Helena Francis and her descendants, it is likely that Helena Francis will wish to have some input into the decisions which are made and this, itself, will further complicate the administration of the trusts and the underlying personal relationships.

[56] In those circumstances, I propose to increase the annuity to $140,000 per annum.

[57] The tag as to remarriage is of, at best, doubtful appropriateness in the current social climate. In the present case, I am of the view that it was inappropriate. When Mr Francis died, Deborah Francis was 40. Mr Francis plainly intended that she should live at Dannemora. As Mr Hunt pointed out in his submissions, it is not really a house for one person. It is not necessarily the case that a person whom Deborah Francis would wish to marry would be in a position to support her financially. In the event that remarriage occurs in say 10-15 years time, the CPI adjustment factor is likely to be significant. For instance, assuming an inflation rate of 3%, the annuity will, 10 years after the death of Mr Francis, be adjusted to a sum a little in excess of $130,000. If Deborah Francis were then to remarry, the annuity would reduce to $100,000.

[58] Mr Brodie, for Helena Francis, realistically and appropriately recognised the tag was not appropriate. I therefore delete the remarriage tag.

The size of the legacy

[59] Under the will, Deborah Francis received a legacy of $250,000 which has been paid.

[60] As I have indicated, Deborah Francis has significantly overspent, since the death of her husband, in terms of the sources of income and capital available to her. The result will be that, once the Warrington Street property is sold, she will have a debt secured over the Dannemora property of around $160,000. Indeed, it is clear that she went on a spending spree after Mr Francis died which she now explains in terms which suggest it was, at least in part, a form of retail therapy in respect of her grief. She did this in circumstances where she was being warned by the trustees not to incur debts as she was not in a position to ensure that they would be paid. This happened in a context where the estate, although long on assets, was short in cash. The result will be that once the Warrington Street property is sold, she will have debt secured over the Dannemora property of around $160,000.00.

[61] There is a real sense in which Deborah Francis is now seeking a larger capital sum from the estate to mop up this indebtedness.

[62] If it is the case that the provision made for Deborah Francis by Mr Francis (as supplemented by me in relation to the annuity) is appropriate to satisfy his moral duty, I find it difficult to see how Deborah Francis’ behaviour since the death of Mr Francis can fairly give Deborah Francis an additional claim against the estate.

[63] Mr Francis had major reservations as to the money management skills of his wife. This is understandable given her bankruptcies. There cannot be many women of Deborah Francis’ age who have been bankrupted twice. The concerns of Mr Francis seem to me to have been validated by what has happened since his death. In those circumstances, it seems to me that he was entitled to conclude (as he obviously did) that the position in relation to his estate as a whole, and also the position of Deborah Francis herself, would probably be best preserved and advanced if the capital made available to her was comparatively limited - I say comparatively given the size of his estate as a whole - but she remained a discretionary beneficiary under the trusts created by the will and the Wayne Francis Property and Bloodstock Trust.

[64] The contention put to me on behalf of Deborah Francis was that any further capital provision should be on trusts drafted so as to provide protection against the exigencies of life as they may affect Deborah Francis. If I were to make further provision on that basis, the position that would then obtain is not very far removed from that which obtains now with Deborah Francis a discretionary beneficiary under the terms of both the will and the Wayne Francis Property and Bloodstock Trust.

[65] In those circumstances I see no relevant breach of moral duty and I am not prepared to make further provision for Deborah Francis by way of capital.

The antiques

[66] It will be recalled that, under the will, antiques to a value of approximately $165,000 are to be in the possession of Deborah Francis during her life or until she sells “our home at Birches Road”.

[67] These antiques were, largely, acquired by Mr Francis after he formed his relationship with Deborah Francis and Deborah Francis obviously has a personal connection to and attachment for them.

[68] The provisions in relation to the art collection, garden sculpture and antiques are likely to give rise to a good deal of difficulty between Deborah Francis, on the one hand, Helena Francis, on the other, with the trustees in the middle. Deborah Francis has a life expectancy of around 40 years and, absent a sale of the “home at Birches Road”, the likelihood is that these chattels will not come into the possession of Helena Francis, if they do at all, until she is in her 70s. I think that Deborah Francis and Helena Francis would be well advised to sit down and divide, in an equitable manner, all the chattels.

[69] My only task at the moment, however, is to decide whether the provision in relation to the antiques was in breach of the moral duty of Mr Francis. I am persuaded, by a narrow margin, that it was, but only to a limited extent. I am prepared to accept that the enjoyment of the antiques formed a relevant part of the lifestyle of Deborah Francis which Mr Francis was under a moral duty to sustain following his death. In that context, I see no reason why Deborah Francis’ right to possession of the antiques should terminate in the event that Dannemora is sold. So, in relation to the antiques (as opposed to the garden collection and garden sculpture in respect of which no issue has been raised) her right to possession shall enure during her lifetime even if the “home at Birches Road” is sold.

Disposition and ancillary issues

[70] I, therefore, make further provision for Deborah Francis by increasing the annuity to $140,000, the annuity to be otherwise subject to CPI adjustment but to be freed from the remarriage tag to which I have referred. I also direct that her entitlement to possession of the antiques is to enure during her lifetime and is not to terminate on the sale of the Birches Road home.

[71] That leaves two issues. The first is that the trustees have made discretionary payments to Deborah Francis of $50,000 and this raises the question whether those payments should be set off against her retrospective entitlement to the increased annuity. The other question relates to the practical impact, in the short term, of the orders which I propose to make.

[72] As to the first issue, I am of the view that the retrospective entitlement to the increased annuity should not be subject to set off in relation to the additional discretionary payments already made. Obviously, however, I do not have jurisdiction to amend the memorandum of wishes made by Mr Francis and likewise I do not have jurisdiction to control the way in which the trustees, in the future, exercise their discretions in relation to the status of Deborah Francis as a discretionary beneficiary. How the trustees exercise these discretions is for them to decide. It is not, however, a necessary corollary of my judgment that Deborah Francis can expect every year a top up of 25% of the increased annuity provided for by this judgment. On the other hand, the trustees will, no doubt, be mindful of the instruction that the interests of Deborah Francis and Helena Francis are paramount and I have no doubt that they will exercise their discretionary powers in relation to Deborah Francis in an appropriate way.

[73] As to the second issue, I imagine that the increase in the annuity will not cause any substantial embarrassment to the trustees. But if I am wrong as to that, it may be appropriate to defer the time for payment in relation to it and I reserve leave to the trustees to seek directions in this respect.

[74] All questions of costs are reserved.

[75] Accordingly, I invite memoranda from counsel as follows:-

1. If the trustees wish to make any submissions in relation to administrative matters associated with the implementation of this judgment and, in particular, as to the timing of additional payments in relation to the increased annuity, they may make submissions by memorandum within 21 days of the date of this judgment with counsel and Deborah Francis and Helena Francis (if she wishes to be heard on this point) to respond within a further 21 days.

2. In the event that issues as to costs cannot be resolved between the parties (and I would hope that they could be) submissions are to be filed on behalf of Deborah Francis within 28 days and by the trustees and Helena Francis within 21 days after receipt of Deborah Francis’s submissions.

[76] Before I conclude this judgment I should record that I was impressed by the content and tone of the affidavits which were filed. It seems reasonably clear that, while Mr Francis was alive, the relationship between Helena Francis and Deborah Francis was correct rather than cordial. There is now, obviously, antagonism. Yet the affidavits did not (as they so often do in cases of this sort) come down to petty point scoring exercises. They were, instead, focused on the issues and written in a restrained and dignified way. Moreover, the concession made by Helena Francis in relation to the remarriage tag in relation to CPI adjustments was sensible and generous. In that context, I see no reason why outstanding issues associated with this litigation and, indeed, the will and the Wayne Francis Property and Bloodstock Trust should not be able to be resolved in an amicable and sensible way. While the scheme of the will and the Wayne Francis Property and Bloodstock Trust strike me as sophisticated and well thought through, the detail had to be finalised in the very difficult situation which obtained in June 1999 and should not, as between Deborah Francis and Helena Francis, be necessarily regarded as sacrosanct. Once that is recognised, I would expect all outstanding issues to be able to be resolved by agreement.