Kirby v Sims
[2011] NZHC 935
•22 August 2011
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
CIV-2010-485-794
IN THE MATTER OF the Family Protection Act 1955
AND IN THE MATTER OF the estate of Donald Hammond Murray
BETWEEN MELISSA TANIA KIRBY Plaintiff
ANDEDWARD WILLIAM JOHN SIMS AND CARMEL MIRINGA FISHER Defendants
CIV-2010-485-1019
AND IN THE MATTER OF the Family Protection Act 1955
AND IN THE MATTER OF the estate of Irma Murray
BETWEEN MELISSA TANIA KIRBY First Plaintiff
ANDNATHAN HAMMOND MURRAY Second Plaintiff
ANDJOHN LESLIE BIRCH Third Plaintiff
ANDCARMEL MIRINGA FISHER AND HUGH GLADSTONE FISHER
Defendants
Hearing: 13 - 15 June 2011
Appearances: G Manktelow for Melissa Kirby and John Birch
J Reardon for Nathan Murray
G Jenkin and A Macdonald for Carmel Fisher, Peter Wakem, Gregory
Wakem and Melanie Wakem
P Logan and A Cavanagh for Olivia Murray-Kirby
Judgment: 22 August 2011
KIRBY V SIMS AND FISHER HC WN CIV-2010-485-794 22 August 2011
JUDGMENT OF CLIFFORD J
Outline
Introduction
The parties ........................................................................................... [1] Donald Murray’s estate and will ......................................................... [10] Irma Murray’s 1995 claims against Donald’s estate.......................... [19] Subsequent events................................................................................ [21] Irma Murray’s estate and will ............................................................. [27]
Overview of issues
Melissa’s claims ................................................................................... [32] Nathan’s claim ..................................................................................... [35] John’s claim ......................................................................................... [37] Olivia’s claim ....................................................................................... [38]
The law
General considerations........................................................................ [40] Recent cases – a more conservative approach?.................................. [53] Claims by adult children ..................................................................... [60]
General approach to these claims ................................................................. [64]
The affidavit evidence
Preliminary observations..................................................................... [65] Principal areas of factual dispute ....................................................... [69] My views............................................................................................... [77]
- Nathan’s estrangement from Irma ................................................. [78]
- Wanda’s generosity to Donald ....................................................... [86]
- Nathan the farmer ......................................................................... [99]
Melissa’s claim against Donald’s estate
Leave .................................................................................................... [105]
Breach of moral duty
- Melissa’s position in 1995 ............................................................. [123]
- Donald’s provision for Melissa ..................................................... [129]
Melissa’s claim against Irma’s estate
Melissa’s position at Irma’s death ...................................................... [133]
Irma’s provision for Melissa ............................................................... [139]
Nathan’s claim against Irma’s estate
Nathan’s relationship with Irma ......................................................... [148] Nathan’s financial position at Irma’s death ...................................... [154] Irma’s provision for Nathan................................................................ [161]
John’s claim against Irma’s estate
John’s position at Irma’s death ........................................................... [168] The grandchildren.......................................................................................... [173] Concluding remarks....................................................................................... [175] Costs .............................................................................................................. [180]
Introduction
The parties
[1] Irma Murray died on 12 May 2009, aged 79. She is survived by the two adopted children of her marriage with Donald Murray, Melissa Kirby and Nathan Murray. She is also survived by her natural child of a previous marriage, John Birch.
[2] Donald Murray pre-deceased Irma Murray, dying on 17 June 1994 aged 60.
[3] Melissa Kirby claims under the Family Protection Act 1955 against the estate of her father Donald Murray. Melissa was 26 when her father died. That claim is out of time and Melissa needs leave to bring it.
[4] Each of Melissa Kirby, Nathan Murray and John Birch claim under that Act against the estate of their mother, Irma Murray. They were aged 41, 44 and 60 respectively when their mother died.
[5] By agreement, the claims against both estates were heard together on the basis of common affidavit evidence.
[6] The named defendants, Edward Sims and Carmel Fisher, and Carmel and Hugh Fisher, are the trustees of Donald and Irma Murray‟s estates respectively. In their capacities as such, they abide the decision of this Court. Mr O‟Donnell, the trusts‟ lawyer, filed an affidavit but did not take an active part in the hearing of these claims.
[7] The plaintiffs‟ claims against the estates of Donald and Irma Murray are opposed by the children of Donald Murray‟s sister, Wanda Wakem – Carmel Fisher, Peter Wakem, Gregory Wakem and Melanie Wakem (together “the Wakem Children”). They are beneficiaries, indirectly through their mother and directly, of
those estates.1
1 All four Wakem Children are, by way of gift over through their mother, beneficiaries of Donald‟s estate. Carmel Fisher, and Peter and Melanie Wakem, but not Gregory Wakem, are beneficiaries in their own right of Irma‟s estate. Where appropriate, references in this judgment to the Wakem Children are to be understood accordingly.
[8] Melissa Kirby‟s daughter, Olivia Murray-Kirby, was also represented at the hearing. Olivia has a remainderman interest under her grandfather Donald Murray‟s will. She has no direct entitlement under her grandmother Irma Murray‟s will, but is a person entitled to claim from that estate under the Family Protection Act.
[9] Nathan Murray supports his sister Melissa Kirby‟s claim against their father Donald Murray‟s estate. They each support the other‟s claim against their mother‟s estate.
Donald Murray’s estate and will
[10] At the date of his death in 1994 Donald Murray‟s estate principally comprised the family farm at Papaitonga, near Levin (“the Papaitonga Farm”), shares in a company which owned a second property at Kuku Road which was farmed by Donald as one unit with the Papaitonga Farm, also near Levin, and associated property and investments. Donald Murray farmed the two properties as one. The Kuku Road property was owned by Papaitonga Cattle Company Limited, the shares in which were held by Donald and Irma Murray as to 26 per cent each, and Nathan and Melissa as to 24 per cent each. The dairy herd was owned by Donald and Irma as tenants in common in equal shares pursuant to an October 1984 matrimonial property agreement. Donald‟s estate had a value at the date of his death of approximately $2.47 million.
[11] By his will, Donald first provided specific bequests to Irma of: (a) $100,000.00;
(b)his interest in their residence and adjoining land on the Papaitonga Farm (“the Homestead”), and in their household furniture and effects; and
(c) his principal motor car.
[12] Donald‟s residuary estate was to be held by his trustees on trust:
(a) to pay his sister Wanda Wakem an annual income of $10,000 a year during her lifetime;
(b) to provide Wanda and her family, during Wanda‟s lifetime, with a
residential property up to $120,000.00 value;
(c) to pay the farm manager $100.00 a week from his retirement until his death;
(d)to permit Melissa during her life to occupy the cottage on the farm (“the Cottage”)2 rent free, maintenance to be paid from “the income from my farm”,3 with a gift over to her children in equal shares; and
(e) for Irma to enjoy the free use, occupation and income of the residuary estate until her death or the earlier of Nathan turning 50 (“the Annuity Date”).
[13] Donald‟s will further provided an entitlement for Nathan at any time on and after his father‟s death to “the farm” that is the combined Papaitonga/Kuku Road properties, as a 50/50 sharemilker. If Nathan so elected, he could purchase all the farm plant, machinery and chattels and his father‟s half of the dairy herd at valuation, paying over seven years interest free.
[14] On the Annuity Date, the Papaitonga Farm – including associated Māori land
– was to vest as follows:
(a) Nathan, a one half interest;
(b) Melissa, a one-eighth interest; and
2 As I understand matters, at the time of Donald‟s death the Cottage had not been subdivided from the Papaitonga Farm but, pursuant to a power created in his will, has now been subdivided and comprises CT WN44D/496.
3 Donald‟s will refers variously to “my farm” and to “the farm”. The parties agree, and I concur,
that the correct interpretation of these references is that references by Donald to “my farm” are to the Papaitonga Farm which had been registered in his name at the date of his death, and that references to “the farm” are to the Papaitonga Farm together with the Kuku Road property – owned by Papaitonga Cattle Company Ltd, which Donald farmed as one unit.
(c) Wanda, a three-eighths interest, with a gift over in equal shares to her children Carmel, Peter, Gregory and Melanie.
[15] On and from the Annuity Date Irma was to receive an annuity until her death
from Donald‟s estate of $20,000, payable quarterly.
[16] In addition to the Papaitonga Farm vesting in the one half, one eighth and three eighth shares, Nathan was given the right “at any time after the Annuity Date” to purchase the Papaitonga Farm, ie the four eighth shares he did not already own, at valuation. If Nathan exercised that right, the trustees of the estate – now Edward Sims and Carmel Fisher – were “authorised and empowered” to leave the purchase monies outstanding as an interest-free loan, repayable over a 15 year period.
[17] The balance of the residuary estate was to be divided as to two thirds to
Nathan and one third to Melissa.
[18] Wanda Wakem died within a month of her brother. Donald‟s bequests to
Wanda of income and a residential property to occupy failed accordingly.
Irma Murray’s 1995 claims against Donald’s estate
[19] Irma applied to the Levin Family Court in 1995 for further provision from Donald‟s estate under the Matrimonial Property Act 1963 and the Family Protection Act. She sought – by agreement with her family:
(a) the sum of $191,629.64, being the balance of the proceeds of life insurance policies which had been used to pay the specific bequests of
$100,000; and
(b) Donald‟s 26 per cent shareholding in Papaitonga Cattle Company
Limited, said – by Nathan – to be then worth about $136,500,
both of which items would otherwise have formed part of Donald‟s residuary estate. [20] The Family Court made the orders applied for by consent. Those
arrangements are the subject of some controversy, to which I will return.
Subsequent events
[21] As matters transpired, Nathan – some time in 1996 – took up the sharemilking option and purchased the plant, equipment and half the herd, on the terms provided for under Donald‟s will. Nathan also purchased Irma‟s half share of the herd. Nathan funded the larger part of that acquisition by selling his 24 per cent of Papaitonga Cattle Company Limited to Irma, the balance by debt. Nathan sharemilked the farm between 1996 and 1999. Around this time, Melissa sold her shares in the Papaitonga Cattle Company Limited to Irma for $109,000. Irma then owned 100 per cent of the shares in that company.
[22] By a 1997 deed of family arrangement, Nathan, Melissa and the Wakem Children, as beneficiaries of Donald‟s estate, gifted Irma an additional 1,465 square metres of land adjoining the homestead block.
[23] In 1999, by agreement with Donald‟s estate, Nathan surrendered the sharemilking arrangement in exchange for a lease of the Papaitonga Farm, excluding the Kuku Road property. Nathan continues to operate a dairy farm business on the Papaitonga Farm today through his and his wife Michelle‟s family trust, the Papaitonga Trust.
[24] In 2007 Melissa returned to Papaitonga and occupied the Cottage with her husband Peter Kirby. Their daughter Olivia was born in January 2008.
[25] Therefore, as at Irma‟s death on 12 May 2009 (that day constituting the
Annuity Date as Nathan had yet to turn 50):
(a) Irma owned the Homestead, Papaitonga Cattle Company Limited, was the life tenant of Donald‟s estate and had considerable liquid assets in her own name;
(b) Melissa occupied the Cottage, which was to be maintained by income
from “my farm”; and
(c) Nathan farmed the Papaitonga Farm through the Papaitonga Trust; but
(d)No part of Donald‟s residuary estate had vested, as Irma‟s life tenancy had survived to her death and, likewise, her annuity had never become payable.
[26] As at the Annuity Date Donald‟s residuary estate comprised the Papaitonga Farm with a value of approximately $2.76 million and Fonterra shares and peak notes worth approximately $410,000. In an affidavit of 8 June 2011 Mr O‟Donnell, the estate‟s solicitor, included in Donald‟s estate (at [25]) 128 Papaitonga road, which I understand is the Cottage, at a value of $430,000. Given Melissa‟s life interest, that is not the correct value. Moreover, the gift over to Olivia means that the Cottage does not fall into Donald‟s residuary estate. As Nathan has continued to lease the Papaitonga Farm following the Annuity Date, lease payments would also – as Mr Reardon observed – be accumulating in Donald‟s residuary estate.
Irma Murray’s estate and will
[27] At the date of her death Irma‟s estate principally comprised the Homestead and its contents, one hundred per cent of the shares in Papaitonga Cattle Company Limited, cashed up following the sale of the Kuku Road property, and various investments Irma had accumulated over time. Irma‟s estate had a value at the time of her death of approximately $3.8 million, as adjusted for certain of the Wakem Children‟s legal expenses in these proceedings which should not have been charged to that estate but had been.
[28] By her will Irma first made a number of specific bequests. She:
(a) gave the Homestead and the shares in the Papaitonga Cattle Company Limited to her nieces and nephew Carmel Fisher, Peter Wakem and Melanie Wakem in equal shares – Gregory Wakem not being included in his aunt‟s will – with gifts over to their children;
(b)gave the proceeds of any life insurance policies (some $21,000 as matters transpired) to her grandchildren, Nathan and Michelle‟s children, Courtenay and Alexander, on their obtaining the age of 20 years;
(c) gave the balance in any offshore bank accounts (some $10,000 as matters transpired) to Melissa;
(d) gave $50,000 to Melissa when she turned 50, but with no gift over;
(e) provided bequests of $20,000 to each of the National Heart
Foundation and the Cancer Society; and
(f) created a special fund of $50,000, the capital and income of which was subject to a discretionary power of advancement to John Birch which, if not advanced, goes to Carmel Fisher, Peter Wakem and Melanie Wakem, with a gift over to their children.
[29] Any balance in Irma‟s estate at the date of distribution (the date on which the youngest of Carmel, Peter Wakem and Melanie Wakem‟s children living at Irma‟s death attains the age of 20 years), goes – again – to Carmel Fisher, Peter Wakem and Melanie Wakem in equal shares.
[30] Nathan received nothing under his mother‟s will.
[31] Irma‟s estate of $3.8 million therefore falls to be divided equally between
Carmel, Peter and Melanie, subject only to specific bequests of approximately
$121,000 and any sums actually advanced to John Birch out of the special fund of
$50,000.
Overview of issues
Melissa’s claims
[32] Melissa seeks leave to bring her claim against Donald‟s estate out of time on the basis that her mother had led her to believe that the Cottage was hers, and that she was in a position to transfer the title to Melissa absolutely, secondly that when she obtained a copy of her father‟s will she did not understand it and, thirdly and I infer perhaps most significantly, that she did not want to upset her mother as she was elderly and not in a good state of health. I reach that inference because Melissa commenced proceedings against her father‟s estate very shortly after her mother‟s
death. Melissa says her financial position was and is weak. She says that her father did not discharge his moral duty to her to provide for her maintenance and support and that that failure was compounded when the Family Court made orders vesting property in Irma that would otherwise have formed part of Donald‟s residuary estate. She asks for further provision from Donald‟s will, including by way of vesting the freehold of the Cottage in her.
[33] Melissa says that Irma failed to discharge her moral duty to provide for Melissa‟s maintenance and support when leaving her only $10,000, with a $50,000 annuity at age 50. Melissa says that further provision should be made for her out of her mother‟s will, including by restoring to her her share of the value of the property that would, but for the Family Court orders in 1995, have formed part of Donald‟s residuary estate.
[34] The Wakem Children oppose leave being given to Melissa to bring her claim against Donald‟s estate on the basis that it is both estopped and out of time. They say that Donald did discharge his moral duty to Melissa, but do not oppose the freehold of the Cottage being vested in her, provided that does not otherwise affect their entitlements. They say that Irma deliberately made the will she did because she considered that Donald had made adequate provision for Melissa under his will. They also say that they have moral claims against the estates of Donald and Irma – recognised by Donald and Irma in the terms of their wills – because of Wanda‟s generosity to Donald, and his family. That generosity had allowed Donald‟s acquisition on favourable terms of the Papaitonga Farm. Moreover, their relationship with their aunt and uncle over time, but particularly and more recently, with Irma also gave rise to a moral claim.
Nathan’s claim
[35] Nathan says that by failing to provide for him at all, Irma breached her moral duty to him, and in effect also disinherited her grandchildren. Whilst Nathan acknowledges he was estranged from his mother, he says that state of affairs stemmed from her behaviour, not his. He says that he is needy, and seeks further provision for both his maintenance and support including, like Melissa, by reversing the effect of the 1995 Family Court orders.
[36] The Wakem Children oppose Nathan‟s claim on three principal bases. They say Irma‟s will reflected her view that adequate provision had been made for Nathan by both inter vivos gifts from his father and by the terms of his father‟s will. Nathan is not needy, or if he is, that is his own responsibility. Nathan‟s estrangement from his mother was caused in large part by his and his wife Michelle‟s behaviour, and thus is disentitling conduct. Further, and as already noted, they have moral claims on the estate of both Donald and Irma.
John’s claim
[37] John Birch claims against Irma‟s estate. Part way through the hearing the Wakem Children accepted that Irma had breached her moral duty to John. They suggest that this breach be remedied by the Court ordering that the special fund be increased. The issue for me is, therefore, limited to determining an appropriate award.
Olivia’s claim
[38] Olivia says that if the Court is to order that the fee simple of the Cottage be vested in Melissa, an appropriate arrangement should be made to compensate her for the loss of her remainderman interest. Since the trial counsel for Melissa and Olivia have reached an agreement between them for the Cottage to be settled on a family trust the beneficiaries would be Melissa, Olivia and any future children of Melissa or Olivia. Melissa would have the right to occupy the Cottage or any replacement home until her death. If Melissa and her husband Peter are not living apart, separated or divorced at the time of Melissa‟s death, Peter would have the right to occupy the Cottage or any replacement home until his death. Olivia would be compensated for any detriment to her interest in the Cottage caused by Peter‟s right of occupation by being paid by Melissa an actuarially assessed $16,000. The Wakem Children neither oppose nor consent to orders to that effect.
[39] Mr Logan also advanced a claim on Olivia‟s behalf against her grandmother‟s estate. If the Court were to consider such a claim, Nathan wants consideration to be given to similar provisions being made for his children, Courtney and Alex. The Wakem Children say that the Court ordered separate representation for Olivia to
defend her mother‟s claim against her grandfather‟s estate as it affected her remainderman interest. No proper notice of any claim by Olivia, Courtney or Alex against their grandmother‟s estate has been given and that the Court should not consider such claims.
The law
General considerations
[40] Section 4(1) of the Family Protection Act provides:
Claims against estate of deceased person for maintenance
(1) If any person (referred to in this Act as the “deceased”) dies, whether testate or intestate, and in terms of his or her will or as a result of his or her intestacy adequate provision is not available from his or her estate for the proper maintenance and support of the persons by whom or on whose behalf application may be made under this Act, the Court may, at its discretion on application so made, order that any provision the Court thinks fit be made out of the deceased‟s estate for all or any of those persons.
[41] Section 3 sets out who may apply, including children of the deceased and grandchildren of the deceased living at the date of death. Under the Adoption Act
1955, once an adoption order is made the person named in the order is deemed to be the natural child of the adoptive parents, and therefore can claim under the Family Protection Act.4 Melissa and Nathan clearly have standing to bring their claims, and there was no assertion to the contrary.
[42] The basic principles of the law of Family Protection in New Zealand, first enacted by the Testator‟s Family Maintenance Act 1900 and at that time unique in its conception,5 are well established. The essence of the jurisdiction6 was captured by
Edwards J in Allardice v Allardice:7
It is the duty of the Court, so far as is possible, to place itself in all respects in the position of the testator, and to consider whether or not, having regard to all existing facts and surrounding circumstances, the testator has been
4 Hemmes v Young [2006] 2 NZLR 1 (SC).
5 WM Patterson Law of Family Protection and Testamentary Promises (3rd ed, Lexis Nexis, Wellington, 2004).
6 At 2.1.
7 Allardice v Allardice (1910) 29 NZLR 959 (CA), at 969.
guilty of a manifest breach of that moral duty which a just, but not a loving, husband or father owes towards his wife or towards his children, as the case may be. If the Court finds that the testator has been plainly guilty of a breach of such moral duty, then it is the duty of the Court to make such an order as appears to be sufficient, but no more than sufficient, to repair it.8
[43] In Re McGregor Turner J said, referring to those words of Edwards J:9
It is no exaggeration to say that every year since 1910 has seen these words repeated in every Court in this country, and never with any qualification or question. The principle which they expound has again and again been approved by our greatest Judges.
[44] In Allardice v Allardice Stout CJ also recognised that the Act did not empower the Court to make a new will for a testator. Rather, where “adequate provision” had not been made, the Court would alter the testator‟s disposition only as far as was necessary to provide “proper maintenance and support for a claimant”.10
[45] In Allen v Manchester Salmond J, in what is now seen as a classic formulation, divided cases into two classes.11
[46] The first involved cases where: “owing to the smallness of the estate and to the nature of the testamentary dispositions, the applicant is competing with other persons who also have a moral claim upon the testator”.12 In such cases any provision the Court made in favour of the applicant had to be made at the expense of some other person or persons to whom the testator owed a moral duty of support. All the Court could do in such a case was to see that the available means of the
testator were justly divided between the persons having moral claims on him in due proportion to the relative urgency of those claims.
[47] The second class of case was that, in which owing to the largeness of the estate or the nature of the testamentary disposition, the applicant for relief is complaining not of the unjust distribution of an inadequate fund among dependants
all of whom had a moral claim upon the testator, but of the failure of the testator to
8 At 972 – 973.
9 Re McGregor [1961] NZLR 1077, at 1098.
10 At 969.
11 Allen v Manchester [1922] NZLR 218 (SC).
12 At 221.
make out of the abundance of his resources a provision sufficient for the proper maintenance of the claimant.13
[48] Such cases involved:14
The more difficult function of determining the absolute scope and limit of the moral duty of a wealthy husband or father to make testamentary provision for the maintenance of his widow and children [involving the need for the Court to judge between] the claim of a dependant to be maintained by the testator and the claim of the testator himself to do as he pleases with his own.
[49] Taken separately as at the Annuity Date, both estates probably fall in the category of large estates; taken together they certainly do. Therefore, and a little unusually perhaps for Family Protection claims today, I consider Salmond J‟s identification of the second class of case, and the different considerations that may apply to awards in such cases, relevant here.
[50] In Bosch v Perpetual Trustee Co Ltd the Privy Council emphasised that “proper” connotes something different from “adequate” and that the amount to be provided is not to be measured solely by the need of maintenance which would be so if the Court were concerned merely with adequately.15 Similarly, in Re Harrison (deceased) all three Judges emphasised the breadth of the statutory inquiry. Gresson P said:16
The “need” of an applicant, or rather his or her needs – the plural form is I think preferable – cannot be considered in vacuo. What has to be assessed are the merits of the claim having regard to the applicant‟s circumstances as at the date of the death of the testator; relations between the testator and the application in the past; and the extent of his estate and the strength of other claims.
[51] In more recent years, the immediate reference point in Family Protection cases has been the following summary of principles found in the Court of Appeal in
Little v Angus:17
13 At 222.
14 At 222.
15 Bosch v Perpetual Trustee Co Ltd [1938] AC 463, at 478.
16 Re Harrison (deceased) [1962] NZLR 6 (CA), at 13.
17 Little v Angus [1981] 1 NZLR 126 (CA), at 127.
The principles and practice which our Courts follow in Family Protection cases are well settled. The inquiry is as to whether there has been a breach of moral duty judged by the standards of a wise and just testator or testatrix; and, if so, what is appropriate to remedy that breach. Only to that extent is the will to be disturbed. The size of the estate and any other moral claims on the deceased‟s bounty are highly relevant. Changing social attitudes must have their influence on the existence and extent of moral duties. Whether there has been a breach of moral duty is customarily tested as at the date of the testator‟s death; but in deciding how a breach should be remedied regard is had to later events. Experience in administering this legislation has established the approach in this Court that on an appeal the Court will not substitute its discretion for that of the Judge at first instance unless there be made out some reasonably plain ground upon which the order should be varied. All this is so familiar that authorities need not be cited.
[52] Re Leonard followed on from Little v Angus, and emphasised that mere unfairness was not sufficient and that it had to be shown in a broad sense that the applicant had need of maintenance and support.18 At the same time, an applicant need not be in necessitous circumstances:19
... the size of the estate and the existence of any other moral claims on the testator‟s bounty are highly relevant and due regard must be had to ethical and moral considerations, and to contemporary social attitudes as to what should be expected of a wise and just testator in the particular circumstances.
Recent cases – a more conservative approach?
[53] In this century the general approach to claims under the Family Protection Act has been discussed by the Court of Appeal in three important cases, Williams v Aucutt, Auckland City Mission v Brown and Henry v Henry.20
[54] Williams v Aucutt is important for two reasons. First, the Court explicitly
rejected a “needs” based approach:21
... we reject the argument that the Court must expressly find a need for proper maintenance and support. 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 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”.
18 Re Leonard [1985] 2 NZLR 88 (CA).
19 At 92.
20 Williams v Aucutt [2000] 2 NZLR 479 (CA), at 52; Auckland City Mission v Brown [2002] 2
NZLR 650 (CA); Henry v Henry [2007] NZCA 42.
21 At [52].
[55] Secondly, the Court acknowledged that there were “pointers to concerns that some orders in recent years may have been out of line with current social attitudes to testamentary freedom relative to claims by adult children”.22 There, and again in Auckland City Mission v Brown, the Court emphasised that awards in Family Protection cases should be limited to the amount required to repair the breach of moral duty, and no more. Moreover, in Auckland City Mission v Brown the Court, in effect, confirmed that to that extent it was emphasising the need for a “conservative” approach to such awards. It did so in the following way:
(a) At [17] it first observed that, in the High Court:
the Judge accepted the submission of Mr Patterson ... that the recent decision of this Court in Williams v Aucutt should not be read as authority for the proposition that claims by adult children should be viewed more conservatively than in the past.
(b) Then, at [33] the Court stated plainly that:
Williams v Aucutt is not to be read and applied in the limited way explained by the Judge accepting Mr Patterson‟s submission (paragraph [17] above).
[56] In Henry v Henry the Court of Appeal confirmed that that was the proper approach.23
[57] For Nathan, Mr Reardon drew my attention to the following observation of Woodhouse J in Moon v Carlin,24 commenting on those recent Court of Appeal decisions:
Use of the expression “a conservative approach” can be misleading. Its meaning must be assessed by reference to what the Courts actually said. These cases do not mean that claims by adult children should be viewed more conservatively than in the past. That proposition, in respect of Williams v Aucutt, was expressly rejected in Auckland City Mission v Brown at [33], as noted by the Court of Appeal in Henry v Henry at [51].
[58] With respect, I am unable to agree with Woodhouse J that the proposition –
that those cases meant claims by adult children should be viewed more
22 At [45].
23 See, in particular, [54] to [55].
24 Moon v Carlin HC Auckland CIV-2010-404-5486, 23 February 2011, at [36].
conservatively than in the past – had been “expressly rejected in Auckland City Mission v Brown at [33], as noted in Henry v Henry at [51]”. Rather, as I have explained at [55] above, I think the contrary proposition is correct. Put very plainly, following the orthodox approach – which dates back to Stout CJ in Allardice v Allardice - may result in an award “lower than some awards made in cases which
were subject to the criticism made by Blanchard J in Williams v Aucutt”.25
[59] Having said that, I agree with Woodhouse J that the following remark by
O‟Regan J for the Court of Appeal in Henry v Henry is important:26
We do not think the comment of this Court in Williams v Aucutt at [54] heralded a fundamental change to the approach to be taken in cases under the Act from an orthodox assessment of whether adequate provision has been made for the proper maintenance and support of the claimant.
Claims by adult children
[60] In chapter 9 Law of Family Protection and Testamentary Promises, Patterson traces more generally the history of how the Courts have responded to claims by children, and adult children in particular.27 He cites the following extract from Flathaug v Weaver which explains the origin of the moral obligation which underpins the Family Protection Act‟s recognition of the moral duty owed by a parent to a child:28
The relationship of parent and child has primacy in our society. The moral obligation which attaches to it is embedded in our value system and underpinned by the law. The Family Protection Act recognises that a parent‟s obligation to provide for both the emotional and material needs of his or her children is an ongoing one. Though founded on natural or assumed parenthood, it is, however, an obligation which is largely defined by the relationship which exists between parent and child during their joint lives.
[61] Patterson then notes the increasing liberality with which the Courts have responded to claims by adult children, particularly in the group of cases he identifies
as comprising Re Swanson, Little v Angus, Re Hale, Re Whitton and Re Leonard. He
25 Henry v Henry [2007] NZCA 42, at [58].
26 At [36].
27 WM Patterson Law of Family Protection and Testamentary Promises (3rd ed, Lexis Nexis, Wellington, 2004).
28 Flathaug v Weaver [2003] NZFLR 730 at 737.
acknowledges that in Williams v Aucutt the Court of Appeal “firmly established a more conservative position”, before commenting on the apparent recognition in Williams v Aucutt and subsequently of “support” claims as a separate category perhaps meriting – by themselves – only modest awards. He suggests, however, that the actual award by the Court of Appeal in Auckland City Mission v Brown merited close attention, referring to the following comments of the Court which explained
the approach it adopted:29
We consider a wise and just testator would have ensured that they had the means to acquire a more substantial house for the family debt-free and to clear the loan [a debt owed to the deceased] together with a sum to supplement their business income and to provide a reasonably substantial contingency fund.
[62] As to that last suggestion, it is to be noted that in Henry v Henry the Court of Appeal agreed with the High Court that it would be wrong to see Auckland City Mission v Brown as authority for the proposition that the provision of sufficient money to purchase a home and provide a contingency fund was some kind of benchmark or default standard.
[63] In all of this, in my view the following observations of Gendall J in Thomass v Sadler provide a helpful summary of relevant considerations:30
What constitutes proper support will be a matter of judgment depending on the particular circumstances of the case, which include the nature and degree of any breach of moral duty; the age, health and financial position of the claimants; advantages received during a deceased‟s life time; the claimants reasonably foreseeable need; their relationship with the deceased; the size of the estate; competing moral claims; the manner in which an estate is acquired; and all relevant surrounding circumstances.
General approach to these claims
[64] All parties have approached this case on the basis that the two estates, and the testators‟ dispositions, are to be considered together. Given the terms of Donald‟s will, and particularly as the date of Irma‟s death became the Annuity Date, I consider that to be generally appropriate. Moreover, the Wakem Children defend Melissa‟s
and Nathan‟s claims on their mother‟s estate by reference to their inheritance under
29 Auckland City Mission v Brown [2002] 2 NZLR 651 at [45].
30 Thomass v Sadler HC Palmerston North CP38/00, 2 August 2002 at [19].
their father‟s will. Whilst Melissa‟s claim against her father‟s estate must, as a matter of law, be considered separately, I will therefore consider it alongside her claim against her mother‟s estate.
The affidavit evidence
Preliminary observations
[65] Some 39 affidavits in all were filed across both claims. Together with their annexures they run to 1,425 pages. The principal deponents were Melissa Kirby (6 affidavits), Nathan Murray (4), John Birch (3) and Carmel Fisher (4). Whilst some of the affidavit evidence related to the current valuations and contents of the two estates, and the financial positions of the applicants, much approached the category of evidence commented on by Richardson P in Williams v Aucutt in the
following terms:31
The resolution of this unfortunate dispute between the two sisters has not been assisted by the voluminous affidavits made by them or on their behalf which, as is all too common in family protection proceedings, traverse, often irrelevantly, the minutiae of what each alleges was the conduct of herself and her sister towards each other and their mother. If at the end of the day they reflect on the size of the legal bills which have inevitably flowed from their contest, they should not overlook the impact of their respective decisions to mention at such length material which was never going to influence the outcome. It is a comparatively rare case where denigrating the character and motives of a family member will assist the cause of another in the eyes of a Judge trying a family protection proceeding.
[66] It is common ground that Nathan and Irma were estranged, and had been for quite some time, at Irma‟s death. Given that fact, and given the potential significance at law of an estrangement between a child and a parent caused, to the discredit of the child, by the child, I accept Nathan inevitably had to explain, from his point of view, the reasons for that estrangement. That he chose to do so in such blunt terms, critical of his mother, may be understood on the basis of his obvious sense of real hurt over time. It was, nevertheless, to be regretted. I think Nathan could have explained his position more temperately. Similarly, it is to be regretted
that Carmel, for the Wakem Children, chose to respond in a similar manner and,
31 At [71].
indeed, to initiate certain aspects of the contest. In one of her affidavits Carmel, by stating that “we all doubt Nathan can corroborate his statements about the breakdown of his relationship with his mother” virtually invited Nathan to obtain the supporting affidavits that he did. I remind counsel of the frequent observations of the Courts in this area as to their obligations in such matters.
[67] Another theme of the affidavit evidence were allegations by Melissa and Nathan that their father‟s estate had been badly administered. In their submissions, counsel for Melissa and Nathan referred to the possibility of claims against the trustees and executors of Donald and Irma‟s estates. Melissa raised a very specific issue, namely that the Cottage had not been maintained as Donald‟s will had provided. These proceedings are not an appropriate vehicle for such complaints. The Court is not in a position to investigate them or in any meaningful way to comment on them. Therefore, I do not refer to those issues further, save for one matter.
[68] That is, the evidence seems clear that – for whatever reason – Melissa has had herself to pay for maintenance to the Cottage, and that she currently faces further expense to undertake further maintenance. Those matters can, in my view, properly be taken account of as relevant surrounding circumstances when I consider her claim against Irma‟s estate. Irma was, after all, a trustee of Donald‟s will.
Principal areas of factual dispute
[69] The principal evidential contest relates to the parties‟ perceptions of the nature and quality of the relationships between Melissa and Nathan and their parents but particularly between Nathan – and later Nathan and Michelle – and Irma. To the extent that there were clear tensions in those relationships, and in particular between Irma and Nathan and later Michelle, the parties – as is inevitable – differ as to where the responsibility for those tensions lay. There was also an evidential contest relating to the reasons for the two wills, Irma‟s in particular. Nathan‟s qualities as a farmer, and the implications of the current financial position of the Papaitonga Trust for his needs based claim, were also the subject of much adverse comment by Carmel for the Wakem Children.
[70] In his first affidavit, Nathan attributed his estrangement from his mother to difficulties he experienced with her from very early on in his life due to her dissatisfaction with the fact that he was adopted, compounded by a serious drinking problem. Irma was, he said, prejudiced against him and Melissa, and favoured their cousins Carmel Fisher and Peter Wakem as being “real blood”. She had not been a very loving mother. According to Nathan, both he and Melissa had left home as soon as they were able, in effect to escape the tense and difficult lives they had at home, principally because of their mother‟s behaviour towards them. The problems in their relationship were exacerbated when he returned home with his wife Michelle. Irma and Michelle did not get on. Further tension arose between Nathan and Irma when Nathan was a sharemilker, and then lessee, of the Papaitonga Farm.
[71] For her part, Melissa did not make much, if anything, of any difficulties in her childhood or of any estrangement from her mother. Later she did confirm the breakdown in the relationship between Nathan and her mother and – to some extent
– Nathan‟s identification of Irma‟s difficulties with alcohol as a contributing factor to
that breakdown.
[72] Carmel provided most of the affidavits on behalf of the Wakem Children. She was, in fact, the first to raise issues of estrangement. In her (first) affidavit of 10
November 2009 filed in the proceedings against Donald‟s estate, and after Melissa had commenced proceedings against Irma‟s estate but before Nathan had done so, she alleged that Melissa became estranged from her mother following Donald‟s death, and that the relationship between Donald and Irma and their children deteriorated as the children reached adulthood. More generally, Carmel rejected Nathan‟s assertion that his mother had a significant drinking problem. Nathan, and Melissa, had had privileged and wealthy upbringings. It was Nathan, not Irma, who had caused the estrangement. Irma had been particularly saddened when Nathan and Michelle had not, from approximately 2004 onwards, encouraged or supported contact between Irma and her grandchildren. Based on their view of the family history, the Wakem Children did not say that Irma wrote her will as she did because of that estrangement. Having said that, if, as Carmel in her affidavits asserted, Nathan was responsible – and as portrayed by her in a way which was to his discredit – for that estrangement, then that would be something which could count against him.
[73] In support of her contentions, Carmel exhibited what she described as extracts from diaries Irma had kept over time. These selected extracts did indeed support Carmel‟s position. In my view, however, it would not be appropriate for me to place much if any weight on these selected extracts. It would appear that the diaries themselves had not been made available to Nathan or Melissa. In my view, to give weight to those extracts would have required the diaries in their entirety to have been available, if not to the Court then at least to the claimants.
[74] The increasingly bitter exchanges in the affidavits reflected the other major theme of the dispute between Melissa and Nathan on the one hand, and the Wakem Children on the other. It is the Wakem Children‟s position that Donald and Irma wrote their wills as they did in order to repay a debt of honour to Donald‟s sister, Wanda, through whose generosity – they allege – Donald had acquired the Papaitonga Farm. They say that Melissa and Nathan had been well provided for by their father‟s will, and therefore had no claim to further provision from their mother‟s will. On their behalf, Mr Jenkin advanced the interests of the Wakem Children as a competing moral claim. Nathan and Melissa rejected that that was the basis upon which Donald had acquired the Papaitonga Farm. In their view, Irma had not made her will to satisfy family obligations but rather to disinherit her two adopted children for whom she had – at least according to Nathan – never been a loving mother at all.
[75] Carmel categorised Nathan‟s financial position, as reflected in the accounts of the Papaitonga Trust – and on which Nathan based an assertion that he was in need of maintenance and support, as having two causes. First, Nathan was not a good farmer. Second, he and Michelle had overly expensive lifestyles, reflected in their drawings over time from that trust and its indebtedness to its banks.
[76] On the question of Nathan‟s ability as a farmer, and his spending habits, Nathan rejected Carmel‟s criticisms. He pointed to Irma‟s lack of personal and financial commitment to the farming business, and her decision to sell the Kuku property, as being the real cause of any difficulties he had encountered in maintaining the profitability of the Papaitonga Farm.
My views
[77] As always, it is not possible – nor necessary in terms of applicable law in this area – to reach clear findings of facts in all of the areas of dispute. Nor do I intend to trawl through the detail of the affidavits filed. In these types of situations, it can be difficult if not impossible to reconcile the contradictory expressions of fact and opinion which the affidavits reveal. The overall sense of these matters that I have, having read all of the affidavits, is that, as is so often the case, the truth probably lies somewhere in the middle. However, the three principal areas of dispute that I have identified influence the position of the parties across all the claims in dispute. I therefore think it helpful if, before I consider the detail of those claims, I record my findings on those three principal issues.
Nathan’s estrangement from Irma
[78] Section 5 of the Family Proceedings Act recognises that conduct by a person entitled to bring a claim can disentitle them to an award that might otherwise have been their due. The onus is on the person who alleges the disentitling behaviour. Patterson comments that despite the existence of s 5 the Courts have been reluctant
to refuse to make orders on this ground.32 Rather they prefer to regard the conduct
of the applicant, not as disentitling, but rather as a circumstance to be considered in determining the quantum of provision made.
[79] Carmel, as I have noted, alleged that Melissa and Nathan were estranged from both their parents. There is in my view simply no reliable evidence to find that Melissa or Nathan were estranged from their father, or that Melissa was estranged from her mother. Difficulties there may have been, but that is not unusual. The only real issue in my view is what is the significance here of Nathan‟s undeniable estrangement from Irma.
[80] From the affidavits it is clear that Irma was a strong-minded person, who spoke that mind in plain terms. Having said that, I do not propose to endeavour to
resolve the strong difference of views between Nathan and Melissa and the Wakem
32 Patterson, Law of Family Protection and Testamentary Promises ch. 5.8, at 88.
Children, relating to Irma‟s character more generally and in particular to the difficulties she had with alcohol. Various friends and neighbours, both of Donald and Irma, and of the children, filed affidavits on this point for both sides in this dispute. By my assessment, the preponderance of those affidavits supported Nathan‟s position. Nevertheless, there was opposing evidence from others, for example, Irma‟s oral surgeon in later years spoke highly of her and said he had never observed difficulties with alcohol.
[81] What came through very clearly from Nathan was a strongly felt sense of grievance at the way his mother had, for whatever reason, treated him over time. Whilst the Wakem Children, particularly Carmel and Melanie, in later years may have had a reasonably close relationship to Irma, I doubt whether they are in a position to fully appreciate the very private dynamics within the family that Nathan spoke of.
[82] Moreover, and in all of this, one affidavit warrants particular mention. In her will Irma acknowledged her friendship with Maureen Madsen. Irma forgave any debts owing by Maureen Madsen to her estate in consideration “of the natural love and affection” she bore Maureen. Mrs Madsen‟s affidavit, filed in support of Nathan‟s claim, states, much as Nathan had, that Irma was a cold and dispassionate mother, that she would berate and criticise both Nathan and Melissa for the slightest thing, that she always had an issue with the fact that Nathan and Melissa were adopted, and that her continual excessive drinking was a huge issue. Given Ms Madsen‟s status as a good and long friend of both Donald and Irma, her evidence provides considerable support for Nathan‟s narrative.
[83] Yet Nathan returned to farm the family farm, and Melissa, at her mother‟s request, returned to live on the farm and look after her mother when she fell ill in her latter years. It would appear that Nathan had greater difficulties with his mother than Melissa did and yet, at that point I do not think it could be said that Nathan was estranged from his mother.
[84] My sense is that Nathan‟s estrangement, as it undoubtedly became, really occurred after his marriage. That may not be surprising. A daughter-in-law may, quite understandably, not be able to accept behaviour from a mother-in-law that a
son will accept from his mother. Ron Halford, who was engaged by Donald‟s estate to advise Irma and who did so until Irma‟s death, deposed in support of Nathan‟s claims to having observed the difficult relationship between Nathan and Irma. More significantly he observed that on many occasions he saw Nathan avoid making any response to his mother‟s criticisms of him, and that he tried to play them down. He then observed that Michelle would not tolerate Irma‟s behaviour, unlike Nathan. I therefore infer that it was at that point that the tense relationship that had existed between Nathan and his mother broke down, and that they became truly estranged. That, in these circumstances, after 2004 Michelle and Nathan did not foster relationships between their children and Irma is unfortunate, and not something that is to their credit, but is, perhaps, understandable.
[85] I therefore conclude that however Nathan‟s estrangement from Irma arose, it does not constitute disentitling conduct on his part so as to preclude a Family Protection Act claim by him against his mother‟s estate. I consider later the more general relevance of that estrangement to the question of whether or not Irma in her will discharged her moral duty to Nathan.
Wanda’s generosity to Donald
[86] On the question of whether or not it was due to Wanda‟s generosity that
Donald acquired the Papaitonga Farm, the accepted factual position was that in 1963
Donald Murray‟s father, David, left the farm to Wanda completely. It would appear that Donald had been estranged from his father for some time prior to, even if not at, his father‟s death. Shortly after his father‟s death Donald commenced Family Protection Act proceedings against his sister. Those proceedings were settled so that half of the land Wanda inherited went to Donald, and half of a smaller block that Donald‟s father had given Donald during his lifetime went to Wanda. Sometime later, Donald acquired Wanda‟s one half share of the farm for cash.
[87] In her affidavits Carmel Fisher asserts, at numerous places and in various ways, that Wanda effectively “gave” her half of the farm to Donald when she agreed to settle Donald‟s 1963 proceedings by consent. At the same time she largely overlooks Donald‟s transfer of the half of the block he owned to his sister. She then
categorises Donald as having taken advantage of his vulnerable sister when, later, he acquired her share of the family farm for cash.
[88] Nathan and Melissa emphasise that Donald had to commence proceedings against Wanda. Nathan asserts that there was no “generosity” in Wanda‟s dealings with her brother, rather the other way round. In one of his affidavits Nathan went so far as to state: “There is nothing to suggest Donald was „determined‟ to give part of the farm to Wanda. It is only Irma‟s will that provides for this ...”. This appears to overlook Donald‟s bequest of three eighths of the farm to Wanda, with a gift over to her children, on the Annuity Date.
[89] It is simply not possible to draw any firm inference from the evidence before me as to the circumstances in which Donald brought his Family Protection Act claim, and in which that claim was settled. Mr Jenkin made the point that, in 1963, it would be difficult for an adult child, and one in Donald‟s position with a career (Donald was an accountant) and able to support himself, to bring a successful claim of that nature. I think that is a fair comment. The following observation, from Melissa‟s first affidavit, also provides some support that Wanda co-operated with her brother‟s claim, although Melissa did later emphasise the significance of Donald having to take proceedings against Wanda to obtain half the farm:
When my grandfather died, the farm went to my aunt, Wanda Kelly, but by agreement between her and my father, my father took over half of the farm and subsequently my father bought the balance from Wanda.
[90] In his submissions, Mr Jenkin suggested that, taken overall, the evidence that was available as regards those 1963 proceedings “could” suggest that there was a significant amount of generosity towards Donald on Wanda‟s behalf. That they “could” suggest that conclusion does not, of course, establish it – even on the balance of probabilities.
[91] Perhaps the best evidence of Donald having a sense of gratitude to his sister, which might originate in the circumstances in which he obtained half the farm, is that he did in his will leave three eighths of the farm to her.
[92] The evidence however does not support Carmel‟s narrative that Donald exploited her mother‟s vulnerability when he later bought half the family farm from
her. It is in my view simply contradictory for Carmel to point, on the one hand, to the close and loving relationships between her uncle and her mother in support of the Wakem Children‟s case that this Court should not disturb Donald‟s and Irma‟s wills, and yet at the same time to allege such significant unfairness. Edward Sims, an executor and trustee of Donald‟s estate, filed an affidavit in support of Nathan‟s claim. Mr Sims was an old friend of Donald and Irma and, from the time of Donald‟s death, helped Irma and then Nathan manage the farm. Mr Sims was asked by Irma to be trustee after she had encountered difficulties with the original trustee, Mr Lisle.
[93] Mr Sim‟s evidence, in response to the suggestion that Donald had purchased Wanda‟s half share in the farm on very favourable terms, was that he believed that was mistaken. His evidence was that Donald had given financial assistance to Wanda over the years and that it would be entirely inconsistent with his character and behaviour to his sister if he had taken advantage of her in that way.
[94] I am also of the view that Irma‟s affidavit, filed in her 1995 Family Protection proceedings, confirms that she and her husband worked hard and saved the money that enabled them to later acquire from Wanda, on fair terms, Wanda‟s half share in the farm.
[95] The Courts have recognised that persons other than those with a statutory entitlement to bring a claim under the Family Protection Act for breach of moral duty may nevertheless establish they have a moral claim on the testator‟s estate. Conceptually and logically, one would expect that such persons would have a relationship with a testator, so as to give rise to obligations of and entitlements to maintenance and support, of a character equivalent to the relationship between a parent and their child, and between a testator and the other categories of entitled persons under the Family Protection Act, where Parliament has, because of the inherent nature of those relationships, recognised by statute such obligations and entitlements.
[96] The significance of such claims would appear to be that, where a plaintiff in Family Protection proceedings establishes a breach of moral duty and the beneficiaries of the estate have no competing moral claim, the Court will not hesitate
to reduce awards to such beneficiaries to the extent necessary to remedy the breach of moral duty. Where, however, beneficiaries have competing moral claims, questions of distributative justice will arise. Here, my view of the facts counts against Wanda‟s alleged generosity being such as to mean that she had a moral claim on Donald‟s estate at the time of his death. Of considerably more difficulty, from a legal point of view, is whether such a “moral claim” could, in effect, be inherited by her children so that they, in turn, have a moral claim now against Irma‟s estate. Even if the facts were more in Wanda‟s favour, I do not think a moral claim could be “inherited”. Rather, and just as disentitling behaviour must actually be that of the
claimant,33 so in my view must a moral claim actually be that of a contesting
beneficiary.
[97] Mr Jenkin, in his written submissions, based the Wakem Children‟s competing moral claim firmly on Wanda‟s generosity. In response to questions from me, he also submitted that such a claim could also be based on the nature of the Wakem Children‟s relationship with Irma. I accept that, especially in latter years, Carmel would appear to have been in regular contact with Irma, and to have had a close relationship with her. The closeness of that relationship is evidenced by Irma lending $300,000 to Carmel‟s family trust, the Fisher Trust, in November 2005 to assist with the purchase of a new holiday home at Leigh, north of Auckland. The loan would appear to have been unsecured, and to have attracted interest at ten per cent per annum. Moreover, and more significantly, Melanie was a caregiver to Irma for some time, including on a paid basis for part of that time. While these considerations are relevant to my assessment of all circumstances at play here, they are not in my view of such significance as to constitute a competing moral claim. Rather, they reflect the reasons why Irma made the will she did, and focus attention on the question of whether in doing so she breached her moral duty to her own children.
[157] First, those accounts included one of the Papaitonga‟s Trust‟s assets – an orchard originally given to Nathan by his father some time ago – at a cost of
$180,972.00 rather than at current valuation. An adjustment to current valuation is appropriate as land in the estates was so valued. Nathan did not provide a current valuation, a matter Mr Jenkin said was greatly to his discredit. Mr Reardon acknowledged the oversight was his. I accept that. Hugh Fisher researched the matter and provided an affidavit to the Court. That affidavit shows the orchard currently comprises three blocks with a combined rating land valuation of
$1,180,000. On that basis, the adjustment required is $1,000,000.
[158] Secondly, the Papaitonga Trust‟s account included a liability to Nathan and Michelle of $371,106, representing advances from Nathan and Michelle – I assume as settlors or donors – interest free and repayable on demand. In this context, that liability is cancelled by the equivalent asset – i.e. the right to be paid that money – belonging to Nathan and Michelle. Accordingly, for the financial position of the Papaitonga Trust to reflect Nathan‟s final position that liability should be disregarded.
[159] On that basis the Papaitonga Trust‟s negative assets of ($670,813) become a positive $700,293. Adding Nathan‟s entitlement of $1,668,530 from Donald‟s estate produces a net worth for Nathan, effective as at Irma‟s death and now, of approximately $2.4 million.
[160] Nathan also has the option, which is itself of value, to acquire the half of the Papaitonga Farm he does not own. Depending on how the trustees exercise the somewhat uncertain discretion given to them under Donald‟s will, Nathan may do so
on the very favourable term of equal payments over 15 years interest free.
38 I note that the financial statements of the Papaitonga Trust for the FYE 31 March 2010 show the
Trust‟s liabilities exceeding its assets by $670,813.
Irma’s provision for Nathan
[161] In these circumstances, would a wise and just testator in Irma‟s position make further provision for Nathan? On the one hand, as the Wakem Children say and as the foregoing analysis demonstrates, Nathan is by New Zealand standards a wealthy man. He owns assets, after all, of just on $2.4 million. At the same time, he has not, thus far, received any significant distribution of cash from either his father‟s or his mother‟s estate. Moreover, and as I understood the evidence, it would appear that at least some of the Fonterra shares that are accepted as forming the bulk of Donald‟s residuary estate may have been funded by Nathan as lessee farmer of the Papaitonga Farm.
[162] In terms of Donald‟s will, Nathan is – as even Carmel recognised39 – the person who is to farm the Papaitonga Farm, and thus keep that farm in the family. Nathan acquired the herd and farming equipment, in terms of their valuation, on arm‟s length terms albeit with, in effect, financing assistance from the estate. Similarly, in order that he exercise his option to own the Papaitonga Farm, he may – but this is unclear – receive financing assistance from the estate. At the same time, were he to wish to sell the farm, his cousins and sister have the option to acquire, again possibly on similar terms.
[163] In these circumstances, I think a wise and just testator in Irma‟s position – whilst acknowledging the relevance of the circumstances of Nathan‟s estrangement – would, as regards Nathan, consider:
(a) that, as with Melissa, some bequest was called for to take account of significant cash assets having been removed from Donald‟s residuary estate by the consent orders made in the Family Court in 1995; and
(b)that some provision for him, as for the time being in some ways a custodian for the family of the Papaitonga Farm, by way of a cash
bequest to support him and his family in so doing.
39 Affidavit of 26 January 2010, para 16.
[164] In my view, a wise and just testator could well look to the debt that Nathan has accumulated in the Papaitonga Trust as a measure of cash assistance that would be appropriate. That external debt currently amounts to some $1.6 million. I think a wise and just testator, in Irma‟s position, would therefore have provided a cash bequest to Nathan to enable him to pay off a material part of that debt. On that basis, I consider that an award to Nathan from his mother‟s estate of $600,000 would be sufficient to discharge Irma‟s moral duty to her son Nathan, noting that the amount of that award – relative to the award to Melissa – does reflect the circumstances as I have assessed them of Nathan‟s estrangement from his mother.
[165] I note that Nathan and Melissa do not share equally in their parents‟ estates. That is the result here of the freedom of testamentary disposition which allows testators to favour one child over another, especially perhaps where the importance of retaining a family farm within the family is a relevant consideration.
John’s claim against Irma’s estate
John’s position at Irma’s death
[166] The Wakem Children have, somewhat belatedly, accepted that Irma breached her moral duty to her son, John Birch.
[167] John‟s largely uncontested affidavit evidence was that, as a young child, he was looked after by his grandmother, Irma‟s mother. Aged about seven, he went with his mother and lived in Sydney, during which time his mother left him at boarding houses for children on a temporary basis. He then attended boarding school during which time he saw his mother only infrequently. He was 15 when Irma married Donald and he moved to New Zealand to finish his last year of secondary education at Horowhenua College. From the age of 16 onwards he had little to do with Irma, a situation that would appear to have been largely of Irma‟s doing. He trained as a linotype operator, and worked in the newspaper business from then on. John eventually moved to Australia and married. His wife died in 2002.
[168] John can only be described as poor. He lives alone some two hours north west of Toowoomba on a six acre block of scrub land worth A$16,000 in a kitset
house worth A$15,000. He is a beneficiary. It was, as I said during the hearing, a somewhat remarkable proposition that the Wakem Children advanced when they submitted that John was a person who wanted little. That a person is poor, and has little, does not equate to them wanting little. Having said that, John is now 60 years old. He has no children of his own.
[169] More than Nathan and Melissa, he articulated the type of award he thought would respond to Irma‟s moral duty to him. That was to provide him with a house, which he estimated would cost A$300,000, and a further sum to provide him with some comfort and security as he nears old age.
[170] Whilst Irma clearly breached her moral duty to John, in my view the extent of that moral duty has to be assessed in the context of, first, the fact that Irma‟s estate comes to her very much by reason of her marriage to Donald and, second, the nature of the relationship between Irma and John. Having said that, I note that in his will Donald did acknowledge his stepson, in terms of a share in a gift over as regards the
$100,000 bequest he made to Irma. Secondly, a wise and just testator would also be mindful of their responsibility for the lack of contact John had had with them, as I think John‟s largely uncontested affidavit evidence establishes as regards Irma‟s conduct.
[171] In my view, a wise and just testator in Irma‟s position would have recognised
their moral duty to John in the follow manner:
(a) She would have enabled John to acquire a house of the type he has identified, that is, one with a value of approximately A$300,000.
(b)Further, I think such a wise and just testator would have provided John with an additional cash sum to support him. I think the appropriate amount for such a cash sum, being as I emphasise again the minimum to discharge the moral duty, is A$50,000.
[172] On that basis, I consider that a wise and just testator would have provided a bequest to John of A$350,000, in place of the discretionary fund of $50,000.
The grandchildren
[173] I have reviewed the basis upon which it was agreed by the parties and accepted by the Court that it was appropriate for Olivia to be represented. Ms Stanley, who is a solicitor in Mr Logan‟s firm of ARL Lawyers, filed a memorandum of counsel dated 3 May 2011. That memorandum makes clear that she was appointed to represent Olivia because Olivia was a beneficiary under Donald‟s will, and therefore Olivia‟s interests should be separately represented in Melissa‟s claim against Donald‟s estate. In my view, and notwithstanding that the Court Minute recording that appointment was issued by reference to both sets of proceedings, I think the position is therefore clear. I am therefore not willing to expand that representation to provide for very late and unanticipated claims by Olivia, or indeed Courtney and Alexander, against Irma‟s estate. Moreover, and although claims of grandchildren can be made under the Family Protection Act, there is no suggestion here that Olivia, Courtney and Alexander will not be adequately provided for by their parents‟ wills.
[174] In these circumstances, I do not think it necessary for me to make orders as regards the position of the grandchildren. To the extent that Mr Logan may, in effect, have been asking me to recognise such a claim pursuant to s 4(2) of the Act, I decline to do so.
Concluding remarks
[175] I have, as the cases show is appropriate, assessed what I have found to be Irma‟s breach of moral duty as regards each of Melissa, Nathan and John by looking at their position, and by determining the award I consider to be sufficient, and no more, to respond to that breach of moral duty. Thus, I have not compared – as Mr Jenkin spent some time doing – Melissa, Nathan and John‟s position vis-à-vis their inheritance under Donald‟s and Irma‟s will, with the benefits that remain for the Wakem Children under that will. Nevertheless, I note that the valuation of the property that remains to be shared under Irma‟s will by the three Wakem Children is, by my calculation at prevailing exchange rates and allowing for the two charitable
bequests, approximately $1.8 million, or some $600,000 each. That remains a significant and generous bequest by an aunt to her nephews and nieces.
[176] In summary therefore, the effect of my decision is as follows:
(a) Melissa has not established that Donald breached his moral duty to her, and no further provision is made for Melissa out of Donald‟s estate.
(b)Each of Melissa and Nathan have established that Irma breached her moral duty to them. To address that breach of duty I order that:
(i)a specific bequest of $750,000 is to be provided to Melissa from her mother Irma‟s estate, in place of the $50,000 which was to vest when she attained the age of 50; and
(ii) a specific bequest of $600,000 is to be provided to Nathan
from his mother‟s estate.
(c) It having been accepted that Irma breached her moral duty to John, I order that a specific bequest be paid to John from his mother‟s estate of A$350,000, in place of the $50,000 fund that the will provided for.
[177] Because I found no breach by Donald of his moral duty to Melissa, I do not consider there to be a jurisdictional basis upon which I could, without the express consent of the Wakem Children – which as I understood by Mr Jenkin‟s memorandum of 15 July was not provided – order that the Cottage vest either in Melissa or in the trust which she proposed. Having said that, such an arrangement would appear to be a sensible one which I encourage the parties to enter into voluntarily. With reference to the joint memorandum of Messrs Manktelow and Logan dated 4 August 2011, I observe:
(a) I do not consider that s 5 of the Family Protection Act enables me, in Family Protection Act proceedings, to make an order in favour of a person who is not entitled to bring a claim under the Act; and
(b)Whilst my minute of 24 June 2011 contemplated orders being made by consent, I do not – as I have noted – consider that the consent of the Wakem Children to these arrangements has been provided.
[178] If I have misunderstood the position of the Wakem Children as regards consent, then a further memorandum may be filed.
[179] I note finally that I anticipate that the specific bequests my orders provide for may be satisfied by the trustees first from the cash and investments that were in Irma‟s name at the date of her death, together with part of the cash standing to the credit of the Papaitonga Cattle Company Limited. That is, however, a matter for the trustees in the first instance. I reserve leave to the trustees to apply for further directions should that be necessary.
Costs
[180] At counsels‟ request, the question of costs is reserved. If counsel are unable to agree, submissions, brief and to the point, should be provided to me by Messrs Manktelow, Reardon and Logan within one month of today‟s date, with Mr Jenkin to respond to those submissions within a further two weeks.
“Clifford J”
Solicitors:
T Manktelow, P O Box 31-265, Lower Hutt (Counsel: G Manktelow, [email protected]) Cooper Rapley, P O Box 1945, Palmerston North ([email protected])
Hornabrook Macdonald, P O Box 91845, Auckland (Counsel: G C Jenkin, [email protected]) ARL Lawyers, P O Box 30-430, Lower Hutt ([email protected])
Grant O‟Donnell, P O Box 900, Palmerston North (Counsel: G Mason, [email protected])
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