Lewis v Abernethy

[2014] NZHC 3081

IN THE HIGH COURT OF NEW ZEALAND TAURANGA REGISTRY

CIV-2013-470-528 [2014] NZHC 3081

BETWEEN

JASON JAMES LEWIS

First Plaintiff

AND

CHRISTINA ANNE MOLD Second Plaintiff

AND

COLIN ROSS ABERNETHY First Defendant

AND

DIANA FAY WISHLAW Second Defendant

Hearing:	20 May 2014
Appearances:	G C Jenkin for Plaintiffs G Brittain for Second Defendant
Judgment:	4 December 2014

JUDGMENT OF KEANE J

This judgment was delivered by me on 4 December 2014 at 1pm pursuant to r 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Solicitors:

Wife Family Lawyers, Perth, Australia, by their agent Bruce Dell Law, Panmure, Auckland for

Plaintiffs

Harris Tate, Tauranga for Second Defendant

LEWIS & ANOR v ABERNETHY & ANOR [2014] NZHC 3081 [4 December 2014]

[1]      Zelma Lewis died at Tauranga on 1 April 2013 aged 92 years, leaving a will, dated 8 April 1999.  Her executors and trustees are Colin Abernethy, her lawyer, and Diana Wishlaw, her daughter, who has renounced her right to probate.   In her will Mrs Lewis made a bequest to a niece, which is not in issue.  She left her residuary estate to her daughter with a gift over to her daughter’s three sons.

[2]      Mrs Lewis had one other child, a son, Geoffry Lewis, who died in Canada, in

1989, aged 43.  His children, Jason Lewis, now aged 43, and Christina Mold, now aged 45, have brought this claim under the Family Protection Act 1955, contending that Mrs Lewis failed in her moral duty to them to provide for their proper maintenance and support.  In this, they contend also, she compounded her husband’s earlier breach, under whose 1989 will they did not benefit either.

[3]      Until their father’s death in 1989, they say, Mr and Mrs Lewis treated their two children equally.   Under trusts Mr and Mrs Lewis settled in 1957 their two children became equally beneficially entitled to shares in their family company, Len Lewis Limited; and those equal rights continued under a modifying arrangement in

1984.  After their father’s death, however, they say, Mr and Mrs Lewis inexplicably preferred Mrs Wishlaw and her family, at a time when they themselves were in obvious need.

[4]      The first issue to which this claim gives rise is as to the nature and extent of Mrs Lewis’s duty to her grandchildren, and that is most immediately an issue of law. The second is whether, as Mrs Lewis is said to have assumed, any duty she might have been under at the date of her death had already been met because of the rights her grandchildren enjoyed, under their father’s will, to his entitlement under the 1984 arrangement.  The third is as to the extent to which Mrs Lewis’s duty was in any sense contingent on the extent to which her daughter, and by way of contrast her grandchildren, remained in contact with and supported her, especially as she grew older.  The fourth is as to their needs for support and maintenance, in themselves, and relative to those of Mrs Wishlaw and her family.

[5]      These last three issues turn largely on the  uncontested record, but Jason

Lewis and Christina Mold also put in issue Mrs Wishlaw’s credibility.  Mrs Lewis,

they contend, preferred Mrs Wishlaw to them, both under her will and in the way she managed  the  company  and  shared  with  Mrs  Wishlaw  directors’ fees,  and  other benefits, because she was subject to Mrs Wishlaw’s influence.  Mrs Lewis, they say also, acted to their prejudice on advice from Mr Abernethy.   He was not neutral either.  These issues of credibility can only be resolved on the papers to the extent that there is contemporary evidence.

[6]      Finally, it remains to mention, Jason Lewis and Christina Mold no longer pursue two causes of action against Mr Abernethy, as to the first in his personal capacity, concerning a $600,000 distribution he made on 22 April 2013 to Mrs Wishlaw as sole residuary beneficiary, after she returned to Canada.  On 29 August

2013 Mrs Wishlaw repaid to him $399,973, which is now held on trust until this case is resolved.

Salient events

[7]      Originally Mr and Mrs Lewis and their two children lived in Paeroa.  Their company, Len Lewis Limited, was incorporated in 1957.  It acquired and owns still a commercial building there.   There Mr Lewis, trading through the company, sold household furnishings, and was involved in cabinet making and carpet laying.  The company, which ceased to trade in the early 1980s, still derives rental from the building.

[8]      When the company was incorporated in 1957, the two primary shareholders became the L J Lewis Trust and the Z L Lewis Trust, each of which held 40 per cent of the shares for the benefit of the two children, Geoffry Lewis and Mrs Wishlaw. Mr and Mrs Lewis each held 10 per cent of the shares in their own right.   So the position remained until 1984 when a new arrangement was put in place, on the advice of their accountants and lawyers.

[9]      In the early 1980s Mr Lewis retired and Mr and Mrs Lewis built a new home in Mt Maunganui, using the sale proceeds of their home in Paeroa, $70,000.  Their Paeroa home, however, belonged not to them but to the company to which they incurred a $70,000 debt.  The two trusts, furthermore, ought to have been distributed to  Geoffry  Lewis  and  Mrs  Wishlaw  in  1976,  but  that  had  not  happened.

Coincidentally, the company had a $70,000 cash reserve to which the children were entitled equally.

[10]     The 1984 solution involved two simple interrelated transactions.   The trust shares were transferred to the children and the reserves notionally distributed to them as to $27,782 each.  They in turn lent those sums to their parents to enable Mr and Mrs Lewis to discharge their current account liability to the company.   In acknowledgements, dated 17 October 1984, Mr and Mrs Lewis recorded that they had received those sums interest free but repayable on demand.

[11]     Despite the fact that Mrs Wishlaw and Geoffry Lewis then acquired 80 per cent of the shares, Mr and Mrs Lewis continued to control the company and to take an income from it derived from the commercial property rent.   It was equally understood within the family that the children would not call up their loans until after their parents had died.

[12]     In 1988 Mrs Wishlaw and her Canadian husband settled in Canada and in

1989 Geoffry Lewis also went there.  He and his wife had separated some six years before but may have reconciled shortly before he left.  Whether he intended to return to New Zealand remains an issue, but that is academic.   Soon after he arrived in Canada, he suffered a fatal head injury, while working on a barge lifting and cleaning fish bin nets.  He was aged 43.

[13]     On their father’s death Jason Lewis, then aged 18, and Christina Mold, then aged  21,  each  received  $13,000  and  some  personal  items.   They also  inherited equally his 40 per cent shareholding and his right to be repaid the $27,781.69 loan. They say that they were not advised of either of those rights for some 23 years.  That is an issue in itself, which I am unable to resolve.  It turns in part on what the lawyer to the Geoffry Lewis estate then did or did not do, and he has since died.

[14]     On 6 October 1989, within four months of his son’s death, Mr Lewis made a will in which he left everything to Mrs Lewis if she survived him.   If she did not survive him he left a specific $5,000 bequest to a niece, whom he then appointed one of his executors, a $3,000 bequest to a nephew and $1,000 bequests to Jason Lewis

and Christina Mold.   He left the balance of his estate to Mrs Wishlaw.   The grandchildren say that Mrs Lewis may well have made a parallel will in 1989.  There is no evidence that she did.

[15]     After Mr Lewis died on 17 June 1993, aged 81, as Mr Abernethy recorded in a letter to Mrs Lewis, dated 14 July 1993, he briefly became a director of the company until Mrs Wishlaw and her husband could become directors.  (They remain directors still.)   At that stage Geoffry Lewis’s shareholding had still not been transferred to Jason Lewis and Christina Mold, and Mr Abernethy told Mrs Lewis that had to be rectified.

[16]     In early 1993, before Mr Lewis died, their accountants had proposed that he and Mrs Lewis acquire their children’s shares, in order to reduce their then liability to income tax.  On 26 April 1993 the accountants put that proposal to the solicitors for the Geoffry Lewis estate.  They then said that the shares were worth $19.05 each, and that the grandchildren’s shares would therefore be worth $51,396.90.  They also proposed that the grandchildren advance that sum to their grandparents on terms consistent with the 1984 arrangement.

[17]     On 6 April 1994 Mr Abernethy put a more modest proposal to the solicitors for the Geoffry Lewis estate, consistent with the letter he had written to Mrs Lewis on 14 July 1993.  In that earlier letter he had said that the shares had little immediate value to Jason Lewis and Christina Mold.  They got no dividends and their capital was likely to be locked up indefinitely.  He proposed that a nominal value, $40,000, be placed on the company’s single asset, the building, and that they be offered for their shares 40 per cent of that value, $16,000, on condition that they not demand Mrs Lewis repay their loans until her death.

[18]     That in essence was the proposal that Mr Abernethy made to the solicitors for the estate in his 6 April 1994 letter.   It was never conveyed to Jason Lewis and Christina Mold.   Just as materially, Mr Abernethy also said in that letter that the company’s then reserves, $18,471, were to be retained to meet  the costs of the commercial building; and that too resulted from advice he had given to Mrs Lewis in his 14 July 1993 letter.

[19]     In  that   earlier  letter,   speaking  of  the  source  of  those  reserves,  the undistributed profits for the years 1991 – 1992, Mr Abernethy had said that they were to be distributed either as directors’ fees or as dividends.  He proposed that they be retained largely as fees ‘to reduce the value of the shares and to ensure that the profits go into your name rather than to the benefit of the shareholders’.

[20]     Jason Lewis and Christina Mold, who have never received any dividends, now contend that it has to be material to their claim that between 2001 – 2013 Mrs Wishlaw received from the company in excess of $53,000 by way of directors’ fees and travel expenses.

[21]     After her husband’s death, Mrs Lewis made two wills in essentially the same terms, the first on 2 September 1993 and the second on 8 April 1999.  In each she appointed as her trustees and executors Mrs Wishlaw and a nominated lawyer, in each instance, whether named or not, Mr Abernethy.  She left a specific bequest to her niece, $5,000.   She left the residue of her estate to Mrs Wishlaw or, if Mrs Wishlaw died before her, to Mrs Wishlaw’s three sons.  She did not leave anything to Jason Lewis or Christina Mold.

[22]     Mrs Lewis continued to live in her Mt Maunganui home until, it seems, 7

December 2012 when she went into the rest home where she died early the following year.  Mrs Wishlaw does not say so herself, but Mr Abernethy, in a letter to the New Zealand Law Society, dated 20 August 2013, says that during the last two years of Mrs Lewis’s life Mrs Wishlaw spent 15 months with her, to care for her, and Mrs Wishlaw returned to Canada in October 2012.  In the absence of any protest I will assume that to be so.

[23]     After Mrs Lewis went into the rest home Mrs Wishlaw, who had an enduring power of attorney, put the Mt Maunganui house on the market.  It sold at auction on

21 February 2013 and Mrs Lewis died soon afterwards on 1 April 2013.

[24]     The estate’s assets are worth $901,049.65.  The net house sale proceeds are

$627,441.59.  There is an ANZ bank deposit, $206,942.43.  There is a trust account deposit, $5,649.40.   There are Trust Power shares worth $14,772.23 and a small

amount in bonus bonds.  The company owes the estate $9,914 and Mrs Lewis’s 20 per cent of the shares are worth $36,000, assuming the commercial building to be worth $180,000.

[25]     The estate’s liabilities, apart from the funeral account, are the two debts owed to  the  estate of  Geoffry  Lewis  and  to  Mrs Wishlaw,  each  of  $27,782,  totalling

$55,564.  Thus the net estate, before the costs of administration are subtracted, is of the order of $843,502.65.

[26]     The value of the company shares, which Jason Lewis and Christina Mold presently retain, will depend on what the commercial building sells for if and when that happens.  It is on the market, and unencumbered, but so far apparently has not attracted any offer.  As at 10 April 2014 it was valued at $226,000.  Its capital value was then said to be $268,000, but its capitalised interest value, $203,000, was considered more real.

[27]     The building is presently only part occupied on a monthly tenancy for $150 a week.  Paeroa is a small centre and commercial property sales are few.  Businesses face strong competition from nearby larger centres.  If, however, it were sold at its ascribed  value,  the  shares  would  be  worth  $33.50  each,  and  Jason  Lewis  and Christina Mold could each anticipate a further $45,191.

Jurisdiction and underlying principles

[28]     Section 4(1) of the Family Protection Act 1995 is the source of this Court’s

jurisdiction to intervene:

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.

[29]     In deciding whether to make any order, and on what terms, the Court may

take into account the ‘character or conduct’ of the claimant either of which may be

disentitling.1   The Court may also take into account the reasons why the testator has made his or her will in the terms the claimant challenges ‘so far as they are ascertainable’; and that ability is wide:2

… the Court may accept such evidence of those reasons as it considers sufficient, whether or not the same would be otherwise admissible in a Court of law.

[30]     The general principle on which this jurisdiction is to be exercised is as was succinctly stated in Little v Angus:3

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.

[31]     In the recent case, Fisher v Kirby, the Court of Appeal made clear that in the cases since that has never ceased to be the nature of the inquiry. The Court said:4

The more recent decisions ... have re-emphasised what has always been understood: that mere unfairness is not sufficient to warrant disturbing a testamentary  disposition  and  that,  where  a  breach  of  moral  duty  is established, the award should be no more than is necessary to repair the breach by making adequate provision for the applicant’s proper maintenance and support.

[32]     In one of those earlier cases, Williams v Aucutt, where the Court of Appeal especially emphasised the need only to redress any injustice, it also held that ‘proper maintenance and support’, the ‘composite expression’ supplying the only basis for a claim, requires the Court to take into account ‘moral and ethical considerations’,5 recognising that:6

‘Support’ is  used  in  its  wider  dictionary  sense  of  ‘sustaining,  providing comfort’.  A child’s path through life is supported not simply by financial

1      Family Protection Act 1955, s 5.

2      Section 11.

3      Little v Angus [1981] 1 NZLR 126 (CA) at 127.

4      Fisher v Kirby [2012] NZCA 130 at [118].

5      Williams v Aucutt [2000] 2 NZLR 479 (CA) at [52].

6 At [52].

provision ... but ... by recognition of belonging to the family and of having been an important part of the overall life of the deceased.

[33]     Thus  what  is  called  for  is  a  judgment  in  ‘all  the  circumstances  of  the particular case’.  Whether there has been a lack of proper maintenance and support can include ‘lifetime gifts or a bequest of family possessions precious to its members and often part of the family history’.   Ultimately the issue is whether, even if the claimant has received something, it is ‘so small as to leave a justifiable sense of exclusion from participation in the family estate’.

[34]     In Henry v Henry,7 where the Court of Appeal again emphasised the need to intervene conservatively, it said that where a claim is founded on financial need as opposed to some broader moral claim, the underlying principle remains constant, but such a claim is able to be assessed ‘with greater precision, and with less room for broad value judgments, than in cases where the need is more of a moral kind’.

[35]     Finally, to return to Fisher v Kirby, the Court of Appeal there emphasised that, while the consistent trend of authority is that awards should not be ‘unduly generous’, they should not be ‘unduly niggardly’ either.  Much depends on the size of the estate and the latitude that gives to take into account the claims competing.8

Grandchild cases

[36]     Section 3(1)(c) confirms that grandchildren of the deceased are entitled to claim and s 3(2) says this:

In considering any application by a grandchild of any deceased person for provision out of the estate of that person, the Court, in considering the moral duty of the deceased at the date of his death, shall have regard to all the circumstances of the case, and shall have regard to any provision made by the deceased, or by the Court in pursuance of this Act, in favour of either or both of the grandchild's parents.

[37]     In Re Ward (dec’d),9  the grandchildren had already received an inheritance from their father, and while they could not expect anything more, that had to be

7      Henry v Henry [2007] NZCA 42, [2007] NZFLR 640.

8      Fisher v Kirby, above n 6, at [120].

9      Re Ward (dec’d) (1970) 7 FLNZ 586 (HC) at 591.

taken into account in assessing their grandparent’s moral duty to them.  Williamson J

then said this, speaking of considerations that arise here also:

In exercising the Court’s powers under this Act, it is necessary to weigh up all of the factors affecting the grandchildren in relation to the deceased.  In this case the important factors in support of their claim are: firstly, the need for  family  recognition  from  the  deceased  on  the  basis  that  they  were members of his extended family; and secondly, the apparent absence of any direct assistance of an ongoing nature from the deceased to the plaintiffs, particularly at the important and difficult time following the tragic death of their father.

[38]     In Re Brown (dec’d),10  another case where both parents had died and the grandchildren had no further expectation, Holland J, speaking of s 3(2), said that there was, ‘a growing recognition of the duty of parents to treat children equally in the absence of circumstances justifying a different practice’.   And also this: ‘it is difficult to see the logical justification for not carrying that recognition through to children of deceased children.’

[39]     More recently, in Fraser v O’Grady, Fisher J recognised that where parents are still  living,  and  are  beneficiaries,  grandchildren  are presumed  likely  also  to benefit ultimately from any bequest made.  But, he said, this was ‘no more than a starting point and it is easily departed from whenever there is a reason for doing so.’

He added this:11

For example, in the present case the child of the deceased who was the immediate parent of the claimant grandchildren has died.   In those circumstances there can be a readiness to make an award in favour of the grandchildren on a basis which in its total value may not differ greatly from the claim which the immediate child would have had.

[40]     More recently still, in Chalk v Hoare,12 Simon France J, after accepting that a grandchild’s claim must be in his or her own right and not simply be the claim that their parent could have made, struck a more cautious note:13

… my reading of the not particularly numerous cases suggests that a sum rather  less  than  what  the  deceased  parent  might  have  got  is  the  more common outcome, if an award is made at all.

10     Re Brown (dec’d) (1988) 4 FRNZ 634 (HC) at 637.

11     Fraser v Grady HC Auckland M262/96, 20 May 1997, p 4.

12     Chalk v Hoare [2009] NZFLR 736 (HC) at [25].

13     Chalk v Hoare at [26].

[41]     There are also two other considerations, relevant to this case, and the first is what significance is to be given to a testator’s decision to prefer one family, or one aspect of a family, over another.   In Kale v Cowley, where the testator manifestly preferred the children of his second marriage to those of his first, Gendall J said:14

The question is not whether the difference that the deceased drew between the two families was appropriate …   Rather the test is whether adequate provision  has  been  made  for  the  proper  maintenance  and  support  of  a claimant taking into account the claimant’s means and obligations, and all other relevant circumstances, which include the size of the estate.

[42]     The second issue is as to the significance to be given to the level of contact between the testator and the preferred family, or aspect of it, and by contrast any lack of contact between those claiming and the testator.  Here too everything depends on the case.

[43]     In Fraser v O’Grady the claimants were two grandsons, one of whom at the date of his grandmother’s death was in his first year at university, the other still completing his secondary schooling.  Their grandmother had left everything to their uncle, who had closely supported her.  But she had assisted the boys, when they were young, and they had benefited from other family sources and were to continue to. They had not visited their grandmother, as they could have, especially during the last six months of her life.

[44]     Fisher J held that their moral claim was ‘relatively weak’. Apart from the fact that they were well looked after as a result of wider family resources, they had not attempted to make any contact with their grandmother:

They have not gone out of their way to support someone who lived in less fortunate circumstances than themselves, particularly someone who had helped them at a time when they needed her.  That is not disentitling conduct but it is relevant.

[45]     In Kale v Cowley, by contrast, Gendall J, speaking of a phenomenon not uncommonly encountered in these cases, estrangement between a parent and a child,

said this:15

14     Kale v Cowley HC Napier CP23/00, 22 February 2002 at [17].

15 At [35].

Absence of contact and support in an emotional and psychological sense may be taken into account.  Estrangement between parent and child is not a fact which disentitles a child to share in a parent’s estate if there has been a breach of moral duty on the part of the parent and no disentitling conduct on the part of the child.   Indeed where a child has no part to play in an estrangement … this will point to a greater moral duty …

[46]     All of that said, the awards that have been made to grandchildren have been relatively modest.  In the cases to which I have been referred most have been less than 10 per cent of the net estate, most indeed less than five per cent.  In Fraser v O’Grady the awards made were 7.4 per cent, in Kale v Cowley between 1.75 – 2.8 per cent, and in Chalk v Hoare between 4.3 – 6.7 per cent.

[47]     The notable exception is Re Ormsby (dec’d),16  where the testator, aged 87, left her entire estate to four charities, unjustifiably cutting out her son, whose moral claim was strong, and his three children, her grandchildren.  The son had received a significant bequest from her brother and she thought that enough.

[48]     Thomas J reduced the bequests to the charities to modest specific gifts.  He allocated one third of the residue to the son, in this reducing the son’s strong primary claim  on  account  of the significant  bequest  he  had  received.    He  consequently allocated  two-thirds  to  the  grandchildren,  each  of  whom  received  22  per  cent. Plainly, that was an exceptional case.

Mrs Wishlaw’s primary claim

[49]     At the date of Mrs Lewis’s death Mrs Wishlaw had a strong claim to be her mother’s primary beneficiary.  Despite the fact that Mrs Wishlaw has lived in Canada since 1988, she and her mother remained close in a very tangible way.  There is a

1995  letter  in  which  Mrs  Lewis  expressed  her  love  for  Mrs  Wishlaw  and  her children, reflecting their bond:

If the day comes that I don’t get a chance to say goodbye and give you all a

big hug I want you to know how very much I love you all.

Thank you Diana for being such a lovely daughter and friend.  Nick you’ve

been so kind to Diana and a great dad to your wonderful boys.  I know the

16     Re Omsby (dec’d) (1990) 7 FRNZ 573.

boys know they’ve got just a great mum and dad and will always be coming

home when they can.

Helping to guide them into their chosen futures will be exciting but not

always easy. You’ve all got some great times ahead.

Geoff, James and Michael always do your best and be proud of whatever you do.  Maybe there will be a little spot in your hearts for me.

[50]     Mrs Lewis visited Mrs Wishlaw and her family in Canada, and Mrs Wishlaw came to New Zealand to be with her mother, most especially for the 15 months towards the end of Mrs Lewis’s life to care for her; and the great affection Mrs Wishlaw felt for her mother is evident even in an email she sent to Jason Lewis soon after Mrs Lewis’s death.

[51]     Unsurprisingly, Mrs Lewis demonstrated during her life how completely she trusted Mrs Wishlaw, first by making her and her husband directors of the company in 1993, a role they have still, and then by conferring on Mrs Wishlaw an enduring power of attorney.  It is also evident that Mrs Lewis wished to benefit Mrs Wishlaw during her lifetime, as a director of the company.  The company accountant said in a letter to Mr Abernethy:

We were instructed to put the salaries through the company for services rendered to the company by both recipients.  Mrs Z Lewis always insisted on a payment to Diana on the basis that she was in regular contact with and always discussed decisions to be made on company affairs with her.   The writer recalls discussing company annual accounts and affairs with Diana during her regular visits to New Zealand.

[52]     At the date of Mrs Lewis’s death, moreover, Mrs Wishlaw was very clearly in need of her mother’s maintenance and support.  She and her husband own a home, which is free of liability, but of a modest value and their other assets are modest.  At the date of Mrs Lewis’s death neither was in work.

[53]     Mr Wishlaw had been made redundant in October 2012, and had been unable to get more work.  He had exhausted his employment insurance.  He then relied, as he does still, on his Canadian pension, CAD $519.56 monthly.   Mrs Wishlaw had resigned  her  job  to  be  with  her  mother  and  did  not  and  does  not  qualify  for assistance.  As at December 2013 they had savings of the order of CAD $140,000

from which they obtained $150 interest each month.  Their monthly expenditure is

$2,000. They were then and are still forced to live off their savings.

Grandchildren’s competing claim

[54]     By making Mrs Wishlaw her sole beneficiary, Mrs Lewis could not have recognised Mrs Wishlaw’s moral claim more completely than she did.  But in this she took no account, or no sufficient account, of the competing moral claims of Jason Lewis and Christina Mold, despite the fact that she and Mr Lewis had, until his death, recognised that Geoffry Lewis, their father, had a claim to their bounty equal to that enjoyed by Mrs Wishlaw.

[55]     Why Mrs Lewis, but also Mr Lewis, failed to appreciate their grandchildren’s moral claim was not something they ever documented.   That they plainly did not recognise any such duty is clear, however, from the terms of their wills; and, according to Mrs Wishlaw, Mrs Lewis told her that there were two reasons why she considered that they did not have any claim, which I accept to be plausible.  One was that they had been in minimal contact with her, particularly after 1999 when they both went to Australia.  The other was that, under their father’s will, they had already benefited sufficiently under the 1984 arrangement.

[56]     As to the first of those reasons, there is no evidence to explain why, after Geoffry Lewis died, whatever relationship there had been between Mr and Mrs Lewis and his children, their grandchildren, ceased, as it plainly did.  There is no evidence indeed about their relationship at that time with Geoffry Lewis himself; and, in the six years before his death, the children lived not with him but with their mother,  or  independently,   at  some  distance  from   their   grandparents  in  Mt Maunganui.

[57]     What is clear is that Geoffry Lewis’s death was sudden and shocking and that they were young and vulnerable.  At that time, I consider, Mr and Mrs Lewis came under a clear moral duty to provide for their maintenance and support and a related duty to do whatever was necessary to bolster their relationship.  They did quite the opposite.

[58]     Nor are Jason Lewis and Christina Mold to be held to account for the fact that whatever relationship there was effectively ceased after they left to live in Australia in 1999.

[59]     They could not be expected to travel back to New Zealand.  Their incomes were modest.  The cost of travel was high.  But Jason Lewis did come back to New Zealand once and he did take his children to meet his grandmother.   From the photographs  taken,  she  appreciated  this.    Regrettably  that  is  the  only  tangible evidence of any continuing contact.   Christina Mold retains some cards from her grandmother, when she was younger. That is all.

[60]     There  is  no  evidence,  as  there  could  have  been,  of  regular  contact  by telephone. But here too Jason Lewis and Christina Mold are not to be held solely accountable.  Mrs Lewis also has to have been responsible for this to some extent as well.  In short the grandchildren’s failure to keep in contact with their grandmother, and to support her, is not so inexplicable or extreme as to disentitle them from a claim on her bounty.

[61]     Secondly, Jason Lewis and Christina Mold also have a significant moral claim as a result of the 1984 arrangement, which Mrs Lewis considered sufficiently answered any moral claim they had on her.

[62]      The purpose of that arrangement was to benefit Mrs Lewis and her husband. It was to subordinate the rights that their two children had as beneficiaries under the

1957 trusts they had settled in order to minimise their liability to income tax; rights

which Jason Lewis and Christina Mold inherited as to their father’s share.

[63]     The  effect,  if  not  the  purpose,  of  the  1984  arrangement  was  to  sever ownership of the family home from the company.  It was to pass ownership of the shares from the trusts to Mr and Mrs Lewis’s children, but to enable Mr and Mrs Lewis to retain control of the company and the benefit of the company income.  It was also to enable Mr and Mrs Lewis to retain control of the family assets as if they owned them personally.  The children were to have no actual benefit until both their parents died.

[64]     Jason Lewis and Christina Mold inherited under their father’s will nothing of immediate value under the 1984 arrangement.  All that they obtained was a right to be repaid the loan on Mrs Lewis’s death, without any interest, and a right to the value of the company’s shares once the building had been sold and the company placed in liquidation.  Even now there is no certainty when the building will be sold. The value of those shares continues to remain uncertain.

[65]     While also there may have been some sensible proportion in 1984 between the values of the company’s building in Paeroa and the Mt Maunganui house, that soon ceased. The building, which remains of uncertain value, is unlikely to be worth any more than $226,000. The Mt Maunganui house, in a prime location, achieved on sale a net worth of $627,441.59.

[66]     One measure of the benefit Mr and Mrs Lewis obtained, as a result of the

1984 arrangement at the expense of their children, and now their grandchildren, is that, if the company had owned the Mt Maunganui home at the date of Mrs Lewis’s death, Geoffry’s estate would have been entitled to 40 per cent of the net proceeds of sale.  It would have received $250,000 not $27,782.

[67]     Finally, and no less relevantly, at the date of Mrs Lewis’s death both of her grandchildren were in real need of her bounty.

[68]     Jason Lewis and his wife have two young children, aged eight and seven.  He is an IT support administrator on contract receiving a gross income of A$50,700, A$975 weekly.  As at April 2014 his wife had set up her own law practice in their home and had a virtual office in Perth.  She had not drawn any income.  They rent their home and have modest other assets.  Their joint weekly expenses are A$1,547. In April 2014 his personal loan and credit card debt totalled A$24,850, and included a loan taken out to cover the cost of this claim.

[69]     Christina Mold and her husband have separated.  She supports herself and her children, aged 17 and 16.  She retains the home, but to pay her husband out she has had to borrow $208,000, which costs her $1,150 a month.  Her weekly expenditure is

$872.  She works one day a week as a relief teacher, earning $1,000 a month. That is

all she is able to obtain.  To get by she relies on child support of $530 a week, which will soon reduce, and on $200 a week from her mother who lives with her.  That just suffices.

[70]     As will be equally evident, neither grandchild can expect anything significant from their mother, whose own assets are modest.

Conclusions

[71]     In the result, I am satisfied that at the date of her death, 1 April 2013, Mrs Lewis discharged her moral duty to her daughter, Mrs Wishlaw, as her primary beneficiary, at the expense of her moral duty to the children of her son, Geoffry Lewis, her grandchildren, and that they are entitled to redress under the Family Protection Act 1955.

[72]     Mrs Lewis’s will, dated 8 April 1999, is to be varied only to the extent necessary to correct that injustice.  But the distinguishing feature of this case is that, by her will, Mrs Lewis bequeathed to Mrs Wishlaw in its entirety a net estate, which derived from a property acquisition made possible by subordinating and postponing the rights Mrs Wishlaw and Geoffry Lewis, and thus his children, had under the 1957 trusts, which Mr and Mrs Lewis had settled to minimise income tax.  Mrs Wishlaw has been recompensed for that under Mrs Lewis’s will. The grandchildren have not.

[73]     As the cases say, it is rare for grandchildren to be entitled to a bequest equivalent to that to which their parent may have been entitled, particularly where, as here, a testator is entitled to recognise the affection and support she has received from her principal beneficiary, but not received from the claimants.  To correct Mrs Lewis’s breach of moral duty to her grandchildren, however, I consider that a higher than usual award is called for.

[74]     I give judgment for Jason Lewis and Christina Mold.   Under s 3 of the Family Protection Act 1955 I hold that they are each to receive 15 per cent of Mrs Lewis’s net estate.  I direct also that their indemnity costs, and those of Mrs Wishlaw,

are to be met out of the estate before her share and their shares are fixed and

disbursed.

P.J. Keane J