Gibson v Makgill
[2024] NZHC 781
•12 April 2024
IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY
I TE KŌTI MATUA O AOTEAROA KIRIKIRIROA ROHE
CIV 2022-419-256
[2024] NZHC 781
BETWEEN LYNETTE JOCELYN GIBSON
Applicant
AND
SIMON REDDING MAKGILL in his
capacity as Executor and Trustee of The Estate of Lewis Henry Wait Respondent
ROBERT ERNEST WAIT, WENDY
THERESE WAIT and GAYLENE ANNE CHRISTIE WAIT
Adult Interested Parties
Hearing (by VMR): 9 October 2023 Appearances:
P Dale KC for the applicant H Hui for the respondent
S Moore for the interested parties R E Wait and W T Wait
Judgment:
12 April 2024
JUDGMENT OF CAMPBELL J
This judgment was delivered by me on 12 April 2024 at 10.00 am pursuant to Rule 11.5 of the High Court Rules
Registrar/Deputy Registrar
GIBSON v MAKGILL [2024] NZHC 781 [12 April 2024]
[1] Claims under the Family Protection Act 1955 (the FPA) ordinarily have to be made within 12 months of the grant of administration, though the Court can extend the time for making a claim. The applicant wishes to make an FPA claim against the estate of her late father, Lewis Wait. Mr Wait died in March 1976 and probate of his will was granted in July 1976. The applicant should therefore have made her FPA claim by July 1977. She did not do so then, and still had not done so by August 2022. In that month, she applied for an order extending – by some 45 years – the time for her to make an FPA claim.
Background
[2] Lewis Wait was married to Nellie Wait. Mr and Mrs Wait had three children. It will be convenient if I refer to the children by their first names. They are Gaylene (who was 73 at the time of the hearing), the applicant Lynette (72) and Robert (68).
[3] Mr Wait died on 8 March 1976, aged 55, having lost a battle with cancer. The bulk of his estate consisted of a half-share in a farm in Cambridge. The other half- share in the farm was owned by Mrs Wait.
[4] Mr Wait had become ill with cancer while Robert was at university. Robert put his studies on hold to assist Mr Wait with running the farm. Robert then gave his studies up altogether to take over the running of the farm shortly before Mr Wait died.
[5] Mr Wait made a will dated 4 September 1975, under which he left Mrs Wait a life interest in his estate, with the estate to pass (on Mrs Wait’s death) to Robert, subject to Robert paying to Gaylene and Lynette, in equal shares, a sum equal to one- sixth of the value of the estate as at the date of Mrs Wait’s death. By a codicil dated 27 January 1976, Mr Wait changed the date for valuing the one-sixth share of the estate from the date of Mrs Wait’s death to the date of Mr Wait’s death.
[6] During his lifetime, Mr Wait settled the LH Wait Family Trust. The beneficiaries of the LH Wait Family Trust include Mr Wait’s children and grandchildren.
[7] On 5 May 1986, about ten years after Mr Wait died, a Deed of Family Arrangement was signed by Mrs Wait, Robert, Gaylene and Lynette. The Deed was entered into to give effect to an arrangement under which Robert would start sharemilking on the farm. The Deed recorded the essential terms of Mr Wait’s will. It provided that Mrs Wait would surrender her life interest in the farm’s livestock, and that Robert would pay $1,309 to each of Gaylene and Lynette for their one-twelfth shares in the livestock.
[8] In 2016, Mrs Wait sold her half-share in the farm to the Wait Farm Trust (a trust that was settled by Robert and his wife Wendy for their benefit and for that of their children). Mrs Wait retained her life interest in the half-share that had been bequeathed to her by Mr Wait. The purchase price of Mrs Wait’s half-share was
$4,543,958.50 plus GST. The Wait Farm Trust was to satisfy this by signing an acknowledgement of debt of $400,000 and taking over Mrs Wait’s half-share of all current and non-current liabilities (recorded as about $605,000, though Robert said the actual amount was higher). Mrs Wait gifted the balance of the purchase price to the Wait Farm Trust.
[9] In 2021, the LH Wait Family Trust made a capital distribution of $520,000 to each of Gaylene and Lynette.
[10] In August 2022, Lynette applied for an extension of time to bring a claim under the FPA against Mr Wait’s estate. At that time, Mrs Wait was still alive. Mrs Wait was 99 years old at the time of the hearing. She passed away not long afterwards.
Lynette’s application for an extension of time
[11] Lynette proposes to make a claim under the FPA against her father’s estate for such provision as will see her receive an equal share (with Gaylene and Robert) of her father’s estate.
[12] Lynette says she did not make this FPA claim earlier because her father promised her that on the passing of Mrs Wait there would be a re-adjustment so that all of the children would receive a roughly equal share of the combined estates. She says that until recently she reasonably expected that she would be a beneficiary of her
mother’s estate and that that estate would still own the other half of the farm. In 2021, she learnt that her mother had (in 2016) transferred her half-share in the farm to Robert. Lynette says it was only upon learning of that transfer that she realised that any bequest from, or FPA claim against, her mother’s estate would not achieve the roughly equal sharing that she says she was promised.
[13] The respondent, Mr Makgill, is the sole executor of Mr Wait’s estate. He was appointed executor only in 2003 and had no first-hand knowledge of the events surrounding the drafting of Mr Wait’s will and codicil. Mr Makgill abided the decision of the Court. He made an affidavit to assist the Court.
[14] Robert and Wendy opposed Lynette’s application. They made affidavits. Gaylene made an affidavit in support of Robert and Wendy’s opposition, but she did not file a notice of opposition herself.
Legal principles governing applications for extensions of time under the FPA
[15] Section 4 of the FPA confers on the Court a discretion to order that provision be made out of a deceased’s estate for certain family members, where the deceased’s will does not make adequate provision for their “proper maintenance and support”.
[16] By s 9, a claim under the FPA must generally be made within 12 months from the date of the grant of administration in the deceased’s estate. But s 9 provides that the time for making a claim may be extended by the Court, so long as the application for an extension is made before the final distribution of the estate (which it was in this case).
[17] Bill Paterson, the author of Law of Family Protection and Testamentary Promises, says that a series of High Court decisions supports the view that the Court’s discretion to grant an extension of time may be exercised in two circumstances:1
(a)The first is where the applicant shows that: (i) their delay is excusable;
(ii) there has in the meantime been no material change in the
1 Bill Paterson Law of Family Protection and Testamentary Promises (5th ed, LexisNexis, 2021) at [16.10]–[16.12], and the cases there cited.
circumstances of the estate; and (iii) an extension of time will not prejudice beneficiaries. Under this first limb, the Court generally does not consider the merits of the applicant’s proposed claim, but rather focuses on the prejudice that the beneficiaries might suffer.
(b)The second is where, although the delay is inexcusable, the applicant shows that they would suffer manifest injustice if an extension were refused. Under this second limb, the applicant has to show that their proposed claim has merit (so that refusal of an extension could cause manifest injustice).
[18] Mr Paterson suggests, however, that this “two-limb” test should be discarded.2 I respectfully agree. While each of the factors identified in the two limbs are relevant to the exercise of the s 9 discretion, nothing in the text of s 9 supports the imposition (and constraint) of the two-limb test. The Court of Appeal has not endorsed the test.
To the contrary, and as Mr Paterson notes, in Re Magson the Court of Appeal said:3
[F]actors relevant to the exercise of the discretion to extend time have emerged from such Supreme Courts [sic] decisions as Hoffmann v Hoffmann (1909) 29 NZLR 425; Sheehan v Public Trustee [1930] NZLR 1; Re Brown [1949] NZLR 509; Re McGregor [1960] NZLR 220 (affirmed without separate discussion of this point [1961] NZLR 1077). Compare Re Hale [1981] 1 NZLR 704, 709. The factors include the length of the delay; the extent to which it is excusable because of ignorance of rights or otherwise; the strength of the claim that there was a breach of moral duty by the deceased; and the extent of any prejudicial effect on beneficiaries who have ordered their lives in reliance on the will or intestacy. The motives of the applicant are also relevant, but in the present as in most other cases one has to be cautious before giving major weight to them, for they can be difficult to assess fairly — especially on affidavit evidence.
[19] This passage is, I consider, inconsistent with the two-limb test. I will therefore exercise the discretion whether to grant an extension of time by considering the factors identified in Re Magson.
2 At [16.13].
3 Re Magson [1983] NZLR 592 (CA) at 598.
Should I extend time for the applicant to make a claim?
How long is the delay?
[20] Lynette applied for an extension of time more than 45 years after she should have made her FPA claim. That is an extraordinary delay. Counsel were unable to point me to any case where time had been extended under s 9 following a delay of that length, or anything close to it.
To what extent is the delay excusable?
[21] Lynette deposed that at a family meeting shortly before her father’s death, he said that he would leave her mother a life interest in his half-share of the farm, with that share being transferred to Robert on her death and Lynette and Gaylene receiving one-sixth of the value of the estate at the date of distribution to Robert. Lynette deposed that her father explained that he and her mother had agreed that on her mother’s death she would divide her share so that the three children would receive equal shares (by which Lynette thought he meant equal shares of the combined two estates). Mr Dale KC, counsel for Lynette, described this as a “promise” of a “levelling up”. I will adopt that terminology for convenience.
[22] Lynette deposed that, as a result of the alleged promise of a levelling up, she had for many years been content to not challenge her father’s will.
[23] In their affidavits, Robert and Gaylene adamantly denied that there was any such family meeting or that their father said that he and their mother had agreed there would be a levelling up between the children on their mother’s death. Gaylene acknowledged that after her father’s death her mother mentioned that her father had asked her to “balance the situation out later or with her Will”. But Gaylene deposed that this was new information, not something that had been raised (or promised) by her father at a family meeting.
[24] Lynette also deposed that only in 2014 did she discover the January 1976 codicil, which changed the date for valuing the share to be received by her and Gaylene from the date of distribution to Robert to the date of her father’s death. While she
believed that the codicil would create a very unfair outcome, she deposed that she still did not make an FPA claim, as she believed that her mother’s half-share in the farm would still be within her estate and so there would be sufficient funds for Gaylene and her to receive a fair allocation of their parents’ assets. She acknowledged that she received legal advice at the time from senior counsel.
[25] Lynette deposed that in mid-2021she learned for the first time that her mother had, in 2016, transferred her half-share in the farm to Robert’s family trust.
[26] It is not possible to resolve, on affidavit evidence alone and without cross- examination, the factual dispute as to whether a promise of a levelling up was made before Mr Wait’s death. But on this application it is not necessary to do so. Even on Lynette’s version of events, I find that her delay in bringing an FPA application is inexcusable.
[27] On Lynette’s evidence, she knew from the time of her father’s death in March 1976 the general terms of his will: that Robert would eventually receive Mr Wait’s half-share in the farm, subject to Lynette and Gaylene being paid one-sixth of the value of Mr Wait’s estate. She knew this was unequal treatment, and believed the inequality would be corrected by a levelling up when her mother died.
[28] The inequality of treatment of the three children in Mr Wait’s will is the focus of Lynette’s proposed FPA claim. Lynette has therefore known of the basis of her claim since March 1976. That she did not (on her evidence) know of the codicil (and therefore the extent of the inequality) until 2014 is, in those circumstances, of little moment.
[29] Further, it is not Lynette’s case that she was unaware at any stage of her right to bring an FPA claim. The only reason she put forward for her delay was that she was content not to challenge her father’s will because of the alleged promise that there would be a levelling up when her mother died.
[30] Lynette was therefore content to wait and see whether Mrs Wait would level matters up on her death. Whether that happened depended on at least two things. The
first was the size of Mrs Wait’s estate. Lynette realised that she was at risk in this respect, as her case is that it was reasonable for her to expect that Mrs Wait would still own a half-interest in the farm at her death. The second was whether Mrs Wait’s will gave effect to the alleged promise of a levelling up. This remains unknown.4 But, in any event, Lynette knew she was also at risk in that respect.
[31] Lynette has been content to take these two risks for 45 years. That was her choice. It does not excuse her delay in making an FPA claim. To the contrary, it means that she has been content, for 45 years, to proceed on the basis that, instead of challenging her father’s will, she will rely on an alleged promise of levelling up, and take whatever action may be available to her if her mother, for whatever reason, did not meet that promise.
How strong is the applicant’s proposed claim?
[32] To assess the strength of Lynette’s proposed claim, it is necessary to outline the law governing claims under the FPA. The test is whether adequate provision has been made for the “proper maintenance and support” of the claimant.5 The Court of Appeal explained those words in Williams v Aucutt:6
“Support” is an additional and wider term than “maintenance”. In using the composite expression, and requiring “proper” maintenance and support, the legislation recognises that a broader approach is required and the authorities referred to establish that moral and ethical considerations are to be taken into account in determining the scope of the duty. “Support” is used in its wider dictionary sense of “sustaining, providing comfort”. A child’s path through life is supported not simply by financial provision to meet economic needs and contingencies but also by recognition of belonging to the family and of having been an important part of the overall life of the deceased. Just what provision will constitute proper support in this latter respect is a matter of judgment in all the circumstances of the particular case. It may take the form of lifetime gifts or a bequest of family possessions precious to its members and often part of the family history. And where there is no economic need it may also be met by a legacy of a moderate amount. On the other hand, where the estate comprises the accumulation of the family assets and is more than sufficient to meet other needs, provision so small as to leave a justifiable sense of exclusion from participation in the family estate might not amount to proper support for a family member.
4 Although Mrs Wait died after the hearing, I was not informed of the contents of her will.
5 Williams v Aucutt [2000] 2 NZLR 479 (CA) at [52].
6 At [52].
[33] If adequate provision has not been made, it is customary to say there has been a breach of moral duty. In Little v Angus, the Court of Appeal said a claim under the FPA should be approached as follows:7
The inquiry is to be whether there has been a breach of moral duty judged by the standards of a wise and just testator or testatrix; and if so, what is appropriate to remedy that breach. Only to that extent is the will to be disturbed. The size of the estate and any other moral claims on the deceased’s bounty are highly relevant. Changing social attitudes must have their influence on the existence and extent of moral duties. Whether there has been a breach of moral duty is customarily tested as at the date of the testator’s death; but in deciding how a breach should be remedied regard is had to later events.
[34] Mr Dale submitted that Mr Wait failed to treat his three children equally in his will (as amended by the 27 January 1976 codicil) and that this was a clear breach of moral duty.
[35] It is self-evident that Mr Wait did not treat his children equally in his will. Robert was bequeathed, subject to Mrs Wait’s life interest, a half-share in Mr Wait’s estate. To receive that half-share on Mrs Wait’s death, Robert had to pay Gaylene and Lynette, in equal shares, one-sixth of the value of Mr Wait’s estate as at the date of Mr Wait’s death. Had Mrs Wait died soon after Mr Wait, effectively Robert would have received five-sixths of the estate and Gaylene and Lynette would have received one-twelfth each. That would have been unequal. But the inequality was more pronounced than that, as it would have been clear to Mr Wait when he made his will that it was probable that Mrs Wait, then in her early 50s, would outlive him by many years. Even assuming modest inflation, that meant that each of Robert’s payments to Gaylene and Lynette were likely to be much less, in real terms, than one-twelfth of the value of Mr Wait’s estate.
[36] But it is far from clear that this inequality of treatment constituted a breach of moral duty by Mr Wait towards Lynette. First, the test under the FPA is whether adequate provision was made (at the time of Mr Wait’s death) for Lynette’s proper maintenance and support. Disparity of treatment is by itself insufficient to establish a breach of moral duty.8
7 Little v Angus [1981] 1 NZLR 126 (CA) at 127.
8 Williams v Aucutt [2000] 2 NZLR 479 (CA) at [48], [50] and [70].
[37] Lynette made little attempt, beyond pointing to the unequal treatment, to explain how her father had breached his moral duty to her. She provided some details of her financial position at the time of Mr Wait’s death (mostly in a second affidavit in reply). She was 23 or 24 when her father died. She had recently married. She and her husband, who had by then been a builder for about 17 years, had modest incomes. However, they owned a bare block of land in Tamahere on which they were building a “high-end” home. Her husband had purchased the land for $27,000 in 1975, a not insubstantial amount at that time.
[38] Lynette says that she and her husband lived frugally so as to be able to build the high-end home. Even so, there is no evidence they had financial need at the time. I accept that financial need is not a pre-requisite to establishing a breach of moral duty. The FPA is concerned with more than financial provision to meet economic needs. And here, it appears that Mr Wait’s estate was more than sufficient to meet the needs of Mrs Wait and the three children. It seems to me that Lynette’s proposed claim therefore is likely to depend not on her financial need but on whether the provision that her father made for her was so small (either in absolute or comparative terms) as to leave “a justifiable sense of exclusion from participation in the family estate” (as the Court of Appeal put it in Williams v Aucutt).
[39] Secondly, in assessing whether Mr Wait discharged his moral duty to Lynette, it is relevant to consider Mr Wait’s expectations of Mrs Wait making further provision for Lynette. In many cases a parent may discharge their moral duty to their children by bequeathing their entire estate to the surviving parent, leaving it to the survivor to provide for the maintenance and support of the children.9 Here, Mr Wait did not leave his estate entirely to Mrs Wait. He bequeathed his estate to Robert (subject to a life interest for Mrs Wait), with a requirement that Robert make a payment to Gaylene and Lynette. This meant his estate was divided unequally in Robert’s favour. But it is likely Mr Wait expected that Mrs Wait would address (though not necessarily entirely remove) the unequal treatment. Lynette’s evidence was that there was a promise of levelling up. While Gaylene did not accept that such a promise was made,
9 But not where, as happened in Black v Black [2014] NZHC 1478, [2015] NZFLR 9 (FC), the testator knew and intended that the survivor would not provide for the children. At [61], the Court described the circumstances as “unique”.
her evidence supports the proposition that Mr Wait asked Mrs Wait to “balance the situation out”, either later in her lifetime or in her will. Mr Wait’s expectation would have been reasonable, as he was aware that Mrs Wait held her own half-interest in the farm, from which some levelling up could be achieved.
[40] Mr Wait’s expectation that Mrs Wait would address the unequal treatment in his will tends to show that he discharged, rather than failed in, his moral duty towards Lynette. The focus of Lynette’s proposed claim was on her mother having (allegedly) divested herself of most of her assets in favour of Robert, leaving her unable to achieve a levelling up. This appropriately recognised that, if there was any breach of moral duty, it was by Mrs Wait rather than Mr Wait. Indeed, Mr Dale indicated the possibility of claims against Mrs Wait or her estate (either in respect of the transaction under which the farm was sold to the Wait Farm Trust, or in respect of Mrs Wait’s will).
[41]For these reasons, I conclude that, although Lynette’s proposed claim is not
completely without merit, it appears weak.
Would an extension have a prejudicial effect on beneficiaries?
[42] I am satisfied that Robert would be significantly prejudiced were I to grant an extension of time to Lynette to make an FPA claim against Mr Wait’s estate.
[43] Robert has spent more than 45 years ordering his life on the basis of the bequest made to him in his father’s will. He was only 21 when his father died. By then, he had already sacrificed his university studies to help his father run the farm. After his father’s death, he ran the farm in partnership with Mrs Wait until she sold her half- interest to him in 2016. This meant he did not pursue an alternative occupation or profession. Throughout that time, and since, Robert has invested in the farm’s maintenance and improvement. It is plain that he chose to do these things in reliance on the bequest that was made to him in his father’s will.
[44] I accept that these choices have been to Robert’s benefit. But not entirely so. One of the purposes of Mr Wait’s will was to leave an income to Mrs Wait, and this could best be achieved by Robert running the farm with her. He has, therefore, been
to a large extent tied to the farm. It is a matter of speculation as to what choices Robert would have made had Lynette made a timely challenge to Mr Wait’s will. But it is certain that the choices made by Robert in the almost half century since his father died cannot be undone.
[45] Robert would also be significantly prejudiced, were an extension granted, because of the evidential difficulties he would face in opposing Lynette’s claim. More than 45 years have passed since Lynette should have made a claim. Memories have faded. Several potential witnesses (including some who would have been independent of the children) have died. Documentary evidence is no longer available.
Conclusion
[46] The factors I have traversed all point to declining an extension. None favours the grant of an extension.
Result
[47]I decline Lynette’s application.
[48]If any questions of costs cannot arise, the parties may file brief memoranda.
Campbell J
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