Johnson v Johnson
[2017] NZHC 1711
•24 July 2017
IN THE HIGH COURT OF NEW ZEALAND NELSON REGISTRY
CIV-2017-442-000008 [2017] NZHC 1711
IN THE ESTATE OF LAURENCE BRIAN JOHNSON IN THE MATTER OF
an Originating Application pursuant to s 14 of the Wills Act 2007
BETWEEN
MICHELLE LOUISE JOHNSON Applicant
AND
FINLAY TAYLOR JOHNSON Respondent
Hearing: 18 July 2017 Counsel:
A G Stallard for Applicant
D J Turley and D N Jackson for RespondentJudgment:
24 July 2017
JUDGMENT OF COLLINS J
Introduction
[1] On 30 March 2016, Laurence and Michelle Johnson (Mr and Mrs Johnson) visited their lawyer and gave him instructions to draft new wills. Two weeks later, the lawyer’s legal executive sent draft wills to Mr and Mrs Johnson. Unfortunately, Mr Johnson died approximately six weeks later without signing the document in accordance with s 11 of the Wills Act 2007.
[2] Mrs Johnson has applied under s 14 of the Wills Act for a declaration validating as Mr Johnson’s will the document prepared by the law firm for him. That
application is opposed by his son, Finlay Johnson.
JOHNSON v JOHNSON [2017] NZHC 1711 [24 July 2017]
[3] This judgment explains why I am satisfied the unsigned will expressed
Mr Johnson’s testamentary intentions and why I am validating the will.
Background
Mr and Mrs Johnson and their previous wills
[4] Mr and Mrs Johnson commenced living together in November 2002.1 Mrs Johnson had a daughter and two sons from her previous marriage and Mr Johnson had two sons, Daniel and Finlay Johnson, from his previous marriage.
[5] In July 2004, Mr Johnson executed a will in which he appointed Mrs Johnson as one of the executors and trustees and left his estate to his two sons on the proviso that Mrs Johnson could reside at Mr Johnson’s properties until Mr Johnson’s youngest son, Daniel Johnson, turned 25. Mr Johnson’s life insurance policy was left to Mrs Johnson, which she says was valued at $200,000.
[6] The 2004 will and all other wills referred to in this judgment were prepared by the Nelson law firm, Fletcher Vautier Moore. Mr Royds was the partner in the firm who oversaw the preparation of the wills and other legal services relevant to this case. Ms Jensen, Mr Royds’ legal executive, was responsible for preparing the draft wills that are the focus of this judgment.
[7] In December 2006, Mr Johnson made another will. At the same time Mrs Johnson also made a will. Those wills were substantially reciprocal. (I explain in [8] the slight discrepancies between the two wills.) In his will, Mr Johnson appointed Mrs Johnson as his sole executor and trustee and as the sole beneficiary of his estate should she survive him. In the event Mrs Johnson predeceased Mr Johnson, then his estate was to be divided into two parts, with one part being passed equally to Finlay and Daniel Johnson and the other part being passed to Mrs
Johnson’s three children.
1 They married in 2011, but for convenience I will refer to them as being Mr and Mrs Johnson at all relevant times.
[8] Mrs Johnson’s will mirrored the terms of Mr Johnson’s will, apart from two rings which were bequeathed to Mrs Johnson’s daughter. Mr Johnson was appointed the sole executor and trustee of Mrs Johnson’s will and as the sole beneficiary of her estate should he survive her.
[9] Unfortunately, Daniel Johnson was killed in a motor vehicle accident in 2010. Mr Johnson suffered severe emotional trauma after losing his son. During this time he was nursed and supported by Mrs Johnson. No changes were made to Mr and Mrs Johnson’s wills after Daniel Johnson passed away.
[10] Mr and Mrs Johnson married on 5 March 2011. Their 2006 wills were deemed to be revoked under s 18 of the Wills Act on the day Mr and Mrs Johnson married.
Key assets
[11] At the time Mr and Mrs Johnson commenced their relationship, Mr Johnson was the sole shareholder and manager of a business called Bead Gallery Ltd (Bead Gallery), which at one stage had shops in Nelson, Picton and Wellington. The Nelson part of the business was originally conducted from a property at Parere Street owned by a trust established by Mr Johnson and his first wife (the Trust). The beneficiaries of the Trust were Finlay and Daniel Johnson. In addition to owning the Parere Street property, the Trust also owned three residential properties in North Road, Nelson. The Trust properties were sold in 2010.
[12] The Bead Gallery business struggled financially and required ongoing injections of capital from the Trust and others. The financial statements for Bead Gallery for the year ending 31 March 2016 showed the business had been reduced to operating from one shop in Hardy Street, Nelson, and had substantial debts, including one for $152,665.55 borrowed from the Trust. That debt is a Trust asset that may be acquired by Mr Johnson’s surviving son, Finlay Johnson, as beneficiary.
[13] In her affidavit, Mrs Johnson explains that she also injected funds into the
Bead Gallery business, namely $120,000 that was paid to the business in January
2005 from money derived from the sale of a property Mrs Johnson had owned.
[14] After commencing their relationship, Mr and Mrs Johnson purchased and sold a number of properties in the Nelson area, including a home at Westerham Place in 2010.
[15] Mr and Mrs Johnson’s living arrangements changed when, in March 2015, Mr Johnson’s parents sold a property they owned in Stoke and moved with Mr and Mrs Johnson into a property at Waimea Road, Nelson, which was purchased to enable Mr Johnson’s elderly parents to be looked after by Mr and Mrs Johnson. There is evidence that Mr Johnson’s parents contributed $368,333 to the purchase of the Waimea Road property from the sale of their Stoke property. At the time the Waimea Road property was purchased, Ms Jensen made a file note in which she recorded that the Waimea Road property was to be registered solely in Mr Johnson’s name and that Mr and Mrs Johnson had put their Westerham Place property on the market although it was possible that it might be rented out rather than sold. It transpired that the Westerham Place property was not sold and the Waimea Road property was registered solely in Mr Johnson’s name.
[16] In her affidavit, Mrs Johnson has explained that she is in no doubt that Mr Johnson’s parents made a significant contribution to the purchase of the Waimea Road property and that their interests ultimately need to be protected regardless of the outcome of her application before me. Mrs Johnson has explained in one of her
affidavits that:2
I want to be entirely clear in that I have no wish to be in a position whereby [Mr Johnson’s parents] are not paid funds that are properly due to them. What I have been careful not to do, until all available information is to hand, is to commit to a particular figure that I would consider that [Mr Johnson’s] estate is obliged to pay.
I am not able to commit to that figure as the full detail has still to be determined, (and I am advised I am unable to bind the estate anyway at this stage) but if there are funds that are due and owing and they were advanced for the specific purposes as a loan advance, then I would not resile from any obligation that [Mr Johnson] had made …
2 Affidavit of M L Johnson, 30 May 2017 at [9] and [10].
Draft wills
[17] On 30 March 2016, Mr and Mrs Johnson met Mr Royds and Ms Jensen in relation to the purchase of investment properties. At the same time they discussed their wills. Ms Jensen’s file note records:
Will need to update 2006 wills given marriage.
The same file note raised a question as to whether or not Mrs Johnson should be referred to by her married name in the updated wills. There is a further file note under the heading of “Passover” that refers to all surviving children of Mr and Mrs Johnson sharing “equally”.
[18] On 13 April 2016, Ms Jensen sent the draft wills to Mr and Mrs Johnson. The covering letter stated:
Further to our meeting on 30 March 2016, please find enclosed updated draft Wills for you both. We have prepared these on the basis that your respective estates will be left to each other in the first instance and then pass down to each of the four children in equal shares.
Can you please confirm that this is your intention as the other alternative would be for the residue of your estate to be divided equally between the two families, i.e. one share to Finlay and one share to [Mrs Johnson’s children] jointly.
Please let us know how old each of the children are as we will need to include their ages in both of your Wills.
Once you have carefully read through your Wills, please advise if you require any amendments or have any questions. We can then finalise the Wills and arrange for you both to sign.
[19] The draft wills gave effect to the contents of Ms Jensen’s letter. Mr Johnson appointed Mrs Johnson as his sole executor and trustee and bequeathed his estate entirely to Mrs Johnson on the proviso that if she predeceased him, then his estate would pass in equal shares to Finlay Johnson and Mrs Johnson’s three children. Mrs Johnson’s draft will reciprocated her husband’s draft will, save for the specific bequest that her two rings pass to her daughter. The draft wills left blank spaces to insert the dates of birth of Mr and Mrs Johnson’s children.
[20] In her first affidavit, Mrs Johnson has explained that the draft wills reflected her and her husband’s intentions. Naively, she thought nothing further needed to be done. Regardless of the reasons for their lack of action, neither Mr Johnson nor Mrs Johnson arranged to sign their wills before Mr Johnson unexpectedly passed away on 28 May 2016.
Dispute
[21] On 20 April 2017, Finlay Johnson filed a notice of opposition to the application made by Mrs Johnson on the grounds that the draft will did not express his father’s intentions. That application relied on a letter from Mr Royds attached to Mrs Johnson’s affidavit which said:
We consider that this Will was at a draft stage (as our 13 April 2016 cover letter indicated). Further discussion was required and it was covering a variety of matters, including funds owing to [Mr Johnson’s parents] in respect of Waimea Road, and also how [Mr Johnson] wished to provide for his son, Finley.
[22] Validating Mr Johnson’s draft will would have been a straight forward exercise if it were not for the fact Mr Royds has raised issues about whether or not Mr Johnson’s draft will reflected his testamentary intentions.
[23] The stance taken by Mr Royds is troubling for the following reasons:
(1)First, Mr Royds was acting for Mr and Mrs Johnson, and, it would appear Mr Johnson’s parents and the Trust. He has sworn an affidavit in this proceeding on 12 May 2017 and has not sought to have his clients waive their privilege. Mrs Johnson in particular has
specifically not waived her privilege.3
(2)Second, there are many questions about whether or not Mr Royds was able to fully discharge his professional responsibilities to so many
parties.4
3 Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008, r 13.9.
4 Rule 6.1.
(3)Third, even putting aside for the present moment the important issue of privilege, Mr Royds’ affidavit contains hearsay statements and expressions of opinion. He has purported to speak on behalf of Ms Jensen, who has not sworn an affidavit. Mr Royds has not pointed to any contemporaneous file notes or documents that support most of the concerns that he raises.
[24] Mr Royds has advanced three issues about Mr Johnson’s draft will. He says that in his “view, [Mr Johnson’s] draft Will was purely a draft document requiring further discussion and edits”. Mr Royds bases his “view” on the following three points:
(a) [Mr Johnson] had instructed me to clarify the assets of the Trust and clarify why [the Trust’s accountant] was recommending the Trust be wound up. In my opinion [Mr Johnson] wanted to understand what assets sat outside his personal estate which would be available for his son, Finlay. Once he knew the answer he would be able to decide what, if any provision to make for Finlay in his Will;
(b) The debt and funds provided by [Mr Johnson’s parents] towards the purchase of … Waimea Road needed to be addressed. If this will was signed as drafted, that would mean his parents’ money would pass to [Mrs Johnson] without acknowledgement of the debt owing to [Mr Johnson’s parents]. In my opinion, this was highly unlikely to be [Mr Johnson’s] intention; and
(c) The residuary provisions needed to be discussed and clarified and the ages of the children inserted in [Mr Johnson’s] draft will.5
Legal principles
[25] Section 11 of the Wills Act states that a will must be in writing, signed by the person making the will and witnessed by two persons in his or her presence.
Purpose and effect of s 14 Wills Act
[26] Where, however, the provisions of s 11 of the Wills Act have not been met, a document can still be validated as a will if the criteria set out in s 14 of the Wills Act are satisfied. That section provides:
5 Affidavit of C J Royds, 12 May 2017 at [33].
14 High Court may declare will valid
(1) This section applies to a document that—
(a) appears to be a will; and
(b) does not comply with section 11; and
(c) came into existence in or out of New Zealand.
(2) The High Court may make an order declaring the document valid, if it is satisfied that the document expresses the deceased person’s testamentary intentions.
(3) The Court may consider—
(a) the document; and
(b) evidence on the signing and witnessing of the document; and
(c) evidence on the deceased person’s testamentary intentions;
and
(d) evidence of statements made by the deceased person.
[27] In Re Campbell (deceased), MacKenzie J explained the effect of s 14 of the
Wills Act in the following way:6
Section 14 of the Act made a quite fundamental change to the law concerning the validity of wills. Previously, a will that did not comply with the formalities required by law for the execution of a valid will was invalid. That meant that no matter how clearly the testamentary intentions of the deceased had been expressed those intentions could not be given effect if the mode of expression did not comply with the formalities that the law required. Section 14 has been very beneficial in avoiding that outcome. Its utility is demonstrated by the fact that it has been invoked in over 80 cases since 2007.
[28] In Re Estate of Wong, Asher J observed:7
The great benefit of the reform in s 14 is that it takes the eye of the Court away from form and makes it focus on substance and intention. A person who in good faith sets out to express testamentary intentions, should not have those thwarted by technicalities. The Court should give effect to the intention of the person who purported to make a will. However, it must be clear on the balance of probabilities that the document is intended to express the deceased person’s testamentary intentions.
6 Re Campbell (deceased) [2014] NZHC 1632, [2014] 3 NZLR 706 at [4]. Research indicates that between years 2009 to 2016, seven out of 149 applications under s 14 of the Wills Act were declined: Nicola Peart and Greg Kelly “The Scope of the Validation Power in the Wills Act
2007” [2013] NZ L Rev 73 at 75.
7 Re Estate of Wong [2014] NZHC 2554 at [24].
[29] Similar comments were made by Andrews J in Re Tutaki:8
Under s 14, the inquiries are as to whether the document appears to be a will, and whether the document expresses the deceased person’s testamentary intentions. The focus is therefore on the substance of the document (whether it expresses the deceased’s intentions) rather than its form (whether it was intended to be the deceased’s will).
Section 14(1) Wills Act
[30] The requirements of s 14(1) of the Wills Act include that the document “appears to be a will”. This criterion is readily satisfied in the present case because, although the document is expressed as being a draft, it is intituled “Will of Laurence Brian Johnson” and contains provisions commonly found in a will. The document purports to have been made by Mr Johnson and to dispose of his property in a conventional manner in the event of his death.
[31] The other requirements of s 14(1) of the Wills Act are also satisfied in this case. The document was prepared in New Zealand and it was not signed by Mr Johnson in accordance with the requirements of s 11 of the Wills Act.
[32] The key issue is whether I am satisfied on the balance of probabilities under s
14(2) of the Wills Act that the document expresses Mr Johnson’s testamentary intentions. In analysing this issue I shall consider the total context in which the document came to be prepared,9 including the reasons for it not being signed, other evidence of Mr Johnson’s testamentary intentions and Mr Royds’ concerns.
Analysis
The document: s 14(3)(a) Wills Act
[33] It is significant the document was prepared by Ms Jensen, an experienced legal executive, working under the supervision of Mr Royds after Mr and Mrs Johnson gave instructions to Ms Jensen and Mr Royds to prepare new wills. The
brief notes made by Ms Jensen demonstrate that Mr and Mrs Johnson wanted new
8 Re Tutaki HC Hamilton CIV-2010-419-1208, 13 May 2011 at [25].
9 S Che Ekaratne “Validation under s 14 of the Wills Act: past, present and future” (2017) 9
NZFLJ 23.
wills to be made because their 2006 wills ceased to have any effect after they married. The document in issue is headed “Last Will and Testament” of “Laurence Brian Johnson” and contains standard clauses one would normally expect to find in a will. Aside from the failure to have the will signed and witnessed, the document was in all material respects a conventional will.
Evidence as to why the document was not signed and witnessed: s 14(3)(b) Wills Act
[34] Mrs Johnson has said she did not appreciate the draft wills needed to be signed and witnessed in accordance with s 11 of the Wills Act. She was not cross- examined and so her evidence as to why she did not take further steps in relation to her will is effectively unchallenged.
[35] In Re Estate of Hickford (deceased),10 MacKenzie J outlined three broad reasons why a deceased may have failed to sign his or her will. Those possibilities are that the deceased:
(1) changed his or her mind;
(2) overlooked or forgot to sign their will; or
(3) did not know that the will needed to be signed.11
[36] Not knowing that the will needed to be signed probably explains Mrs Johnson’s lack of action. It does not, however, fit comfortably with my understanding of Mr Johnson’s experiences as a business person and as a person who had frequent engagement with lawyers in relation to conveyancing and other matters. It is also not consistent with him having previously completed wills by signing and having his signature witnessed.
[37] Of the remaining options identified by MacKenzie J, I think it is likely
Mr Johnson simply did not get around to completing the requirements of s 11 of the
Wills Act prior to his death.
10 Re Estate of Hickford (deceased) HC Napier CIV-2009-441-369, 13 August 2009.
11 At [9].
Other evidence of Mr Johnson’s testamentary intentions: s 14(3)(c) Wills Act
[38] My conclusion Mr Johnson probably simply did not get around to arranging to sign his will and have his signature witnessed is reinforced by my assessment of other evidence concerning his testamentary intentions. That evidence can be explained by reference to the following six points.
[39] First, the draft will was entirely consistent with the way Mr Johnson’s testamentary intentions evolved. His first will in 2004, created soon after Mr and Mrs Johnson started their relationship, ensured Mr Johnson’s sons would be the primary beneficiaries of his estate. The second will, created in 2006 after Mr and Mrs Johnson had been together for about four years reflected the enduring nature of their relationship and made Mrs Johnson the primary recipient of Mr Johnson’s estate. It is significant that at the same time Mrs Johnson created what was effectively a reciprocal will in which Mr Johnson was the primary beneficiary of her estate. The 2006 wills reflected Mr and Mrs Johnson’s commitments and obligations towards each other. The 2016 draft wills replicated the most important feature of the
2006 wills namely, that Mrs Johnson would be the primary beneficiary of Mr Johnson’s estate and similarly, Mr Johnson would be the primary beneficiary of Mrs Johnson’s estate.
[40] Second, the 2016 draft wills were only prepared because of a technicality that meant their 2006 wills ceased to have any validity once Mr and Mrs Johnson married. The draft wills clearly reflected Mr and Mrs Johnson’s ongoing commitments and obligations towards each other. While the 2016 draft wills provided for slightly different allocations of their residual estates than the 2006 wills, the 2016 draft wills replicated those provisions of the 2006 wills under which Mrs Johnson was to inherit Mr Johnson’s estate and vice versa.
[41] Third, Mrs Johnson’s unchallenged evidence is that the reciprocal provisions in the 2016 draft wills reflected her and Mr Johnson’s intentions. There is nothing to suggest Mr Johnson thought differently to Mrs Johnson on this key issue. On the contrary, Ms Jensen’s letter of 13 April 2016, sent after Mr and Mrs Johnson gave their instructions on 30 March, recorded that the draft wills provided for Mr and Mrs
Johnson’s estates being left to each other in the first instance. The only issue was whether the residual estates would be left equally between Mr and Mrs Johnson’s surviving children or on another basis.
[42] Fourth, not even Mr Royds has suggested that Mr Johnson intended his wife would not inherit his entire estate if she survived him. I examine Mr Royds’ concerns in [45] to [50].
[43] Fifth, declining Mrs Johnson’s application would mean Mr Johnson died intestate. Under the provisions of the Administration Act 1969 Mrs Johnson would, on current calculations, receive a little over half of Mr Johnson’s estate whereas Finlay Johnson would receive the balance. That outcome would be contrary to Mr Johnson’s clear testamentary intentions.
[44] Sixth, it is also appropriate to have regard to the fact that the reciprocal provisions in the 2016 draft wills were an orthodox way for couples to provide for each other in the event of one passing away.
Mr Royds’ concerns
[45] In his opposition, Finlay Johnson relies solely on Mr Royds’ concerns. In addition to the significant issues concerning the admissibility of Mr Royds’ affidavit, the substance of Mr Royds’ concerns do not withstand scrutiny.
[46] First, Mr Royds’ concern Mr Johnson wanted to know what assets the Trust had that would be available to Finlay Johnson is difficult to reconcile with the certified financial statements of Bead Gallery that clearly recorded that as at
31 March 2016, the Trust was owed $152,665.55. There is no contemporaneous documentation of this particular concern at the time the will was drafted.
[47] Second, there has never been an issue that Mr Johnson’s parents’ interests in the Waimea Road property needed to be quantified and secured. Mrs Johnson has made it abundantly clear in her evidence in this Court that she will ensure the interests of Mr Johnson’s parents are protected.
[48] Third, Mr Royds’ further question about the residual provisions in the draft will are only of any importance if both Mr and Mrs Johnson passed away and are not directly relevant to the issues that I must focus upon. The question concerning the insertion of the ages of the children into the draft wills was a minor matter.
[49] Fourth, I am also concerned Mr Royds is now raising issues about whether the draft wills prepared and sent by his firm actually reflected the testamentary intention of his firm’s client. It is difficult to understand why the draft wills were ever drafted and sent in the form they were sent if Mr Royds’ concerns are valid. Ms Jensen’s letter of 13 April 2016 did not refer to Mr Royds’ concerns regarding the Trusts’ assets or what was owed to Mr Johnson’s parents.
[50] Even if Mr Royds’ concerns could be properly put before me, it is clear, that there are many inconsistencies and flaws in the issues he has attempted to raise. Ultimately, I am not persuaded that there is validity in the issues Mr Royds has raised.
Conclusion
[51] I am satisfied that the draft 2016 will expresses Mr Johnson’s testamentary intentions and that I should exercise my discretion in favour of validating that document as Mr Johnson’s last will.
[52] Mrs Johnson is entitled to costs on a scale 2B basis. In my provisional assessment, those costs should be paid by Mr Johnson’s estate. If counsel disagree on my provisional conclusion as to how costs should be allocated, then they should
file memoranda to that effect within 10 days of the date of this judgment.
Solicitors:
Stallard Law Limited, Nelson for Applicant
Hamish Fletcher Lawyers, Nelson for Respondent
D B Collins J
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