Mahon v Mahon
[2016] NZCA 642
•22 December 2016 at 12 pm
| IN THE COURT OF APPEAL OF NEW ZEALAND |
| CA574/2015 [2016] NZCA 642 |
| BETWEEN | DAVID WILLIAM MAHON AND RACHAEL JANE MAHON |
| AND | JOHN ROY MAHON AND DONALD COLIN GRANT MCKINNON AS THE EXECUTORS OF THE ESTATE OF MELVA EILEEN MAHON JOHN ROY MAHON AND ROGER NEWTON STANICH |
| Hearing: | 26 September 2016 |
Court: | Winkelmann, Brewer and Toogood JJ |
Counsel: | C T Gudsell QC and R S Walker for Appellants |
Judgment: | 22 December 2016 at 12 pm |
JUDGMENT OF THE COURT
AThe appeal is dismissed.
BThe appellants must pay the second respondents costs for a standard appeal on a band A basis and usual disbursements.
____________________________________________________________________
REASONS OF THE COURT
(Given by Winkelmann J)
Table of Contents
Para No
Background [4]
Melva’s wills [5]
The appellants’ challenge to the wills [8]
Grounds of appeal [11]
Approach on appeal [12]
First ground of appeal: Judge erred in failing to find undue
influence
Relevant principles [14]
Background facts [15]
High Court judgment [33]
Discussion [39]
Second ground of appeal: Family Protection Act 1955 [76]
High Court judgment [81]
Analysis [84]
Result [87]
Melva Mahon died in 2012, aged 88 years. Her husband Roy had predeceased her, as had her eldest son, Bill. Rachael and David Mahon, two of Bill’s three children, challenge their grandmother’s final three wills on the grounds that they were the result of undue influence exercised over Melva by her surviving son John. Alternatively, they allege that Melva had failed to make adequate provision for them in her final will, a claim brought under the provisions of the Family Protection Act 1955.
MacKenzie J’s rejection of both these claims is the subject of this appeal.[1]
[1]Mahon v Mahon [2015] NZHC 2143.
Bill’s estate had also brought a claim alleging that part of Melva’s estate was subject to a constructive trust in her sons’ (Bill and John’s) favour. That claim was dismissed by MacKenzie J and is not pursued on appeal.
Background
We gratefully adopt the Judge’s “thumbnail sketch of the family” set out in his judgment as follows:
[2] Melva and Roy were married in 1944. They had two sons: Bill was born in 1949 and John was born in 1953. Roy left work as a coal miner to found and run a business providing rides, sideshows and other entertainment at events such as Agricultural and Pastoral Society shows throughout the North Island. The family went on the road for several months each year, travelling to venues. Bill and John both helped out in the business during their childhood, but did not immediately go to work for the family company when they became adults. Bill trained as an accountant and worked in that field for a time. He joined the family company fulltime in about 1972. John trained as a teacher and taught for a time before he too joined the family company in about 1978. Bill and John over time assumed greater responsibilities in the business, while Roy eased back.
[3] Bill married Sue in 1972. John married Judy in 1978. Bill had three children: Rachel (1973), David (1976) and Paul (1981). John and Judy had four children: Anne (1980), Jane (1981), Kate (1983) and Christopher (1986). Sue and Judy both worked in the business and their children also helped out as appropriate. The families travelled on the circuits when circumstances allowed. It was very much a family business.
[4] Roy died in 1999. He had by then retired to the extent that he had little ongoing active involvement in the business. The business carried on, managed by Bill and John.
[5] Tragedy befell the family in April 2004. Bill was killed at the Easter Show while servicing a mechanical ride. The entire family rallied together and the business was able to carry on. John assumed the overall management role which had previously been divided between him and Bill. Two members of the next generation, Paul and Christopher, also worked full time in the company.
Melva’s wills
Melva made 12 wills between 1972 and 2008. The first will was made in 1972. In it, Melva left everything to Roy if he survived her. However, if he did not, everything was left equally to Bill and John, with a gift over of their share to their children should Bill or John predecease Melva. The wills made in 1986, 1990, 1992, 1993 (two wills), 1994 and 1998 dealt with the estate differently as between Roy, Bill and John, but had as a common theme that Bill and John were treated equally. The final three wills, all of which were made after both Roy and Bill had died (in 2004, 2006 and 2008) departed from this pattern of equality between Bill and John and their respective families, favouring John over Bill’s family.
The family business, the parent company of which is Mahons Amusements Ltd, does not form part of Melva’s estate. That is owned by John and Bill’s families. At all relevant times her estate was made up of her principal residence, her car, two properties in Ngāruawāhia and a farm at Whatawhata.
The effect of Melva’s last will (leaving aside specific monetary legacies) is that John will receive the Ngāruawāhia properties valued at $485,000, the proceeds of sale of Melva’s principal residence ($345,000), and her car. On top of that he will receive 60 per cent of the residue of the estate, or about $2.67 million. Bill’s children will receive about $1.78 million; the appellants, David and Rachael, about $444,000 each and their brother Paul, $888,000.
The appellants’ challenge to the wills
The appellants’ case in the High Court and before us was put as follows. Melva was, for the last few years of her life, physically frail, suffering from several chronic illnesses, and mentally and emotionally fragile. At the time of the first challenged will, 2004, she had recently lost her eldest son. Bill’s death had left the family, including Melva and John, in a bad way. After his death John spent time with Melva, telling her of his business worries in light of Bill’s death.
The appellants say that John was involved in each of the three wills, in one way or another. These wills signalled a departure from the firmly established principle of equality within the family, a departure which favoured John over his brother’s family. The appellants say it can be inferred that these changes were the result of undue influence. Although probate has been granted on the final will, the final three are all challenged, as each gives a greater proportion of Melva’s estate to John than to Bill’s family.
The Family Protection Act claim was advanced on the basis that Melva’s moral obligation was to ensure that the children of her son Bill shared in her estate as to a one-half share. Bill would have received a one-half share had he survived Melva, and his children should do so notwithstanding his death.
Grounds of appeal
David and Rachael appeal on the grounds that in rejecting their claims MacKenzie J:
(a)wrongly required that the appellants establish “improper” influence;
(b)failed to have proper regard to all of the circumstances when assessing whether undue influence was established;
(c)made a number of factual findings not supported by the evidence; and
(d)was wrong to dismiss the Family Protection Act claim.
Approach on appeal
It is most convenient to address the first three grounds together as the essential point of each of these grounds is that the Judge was wrong to reject the undue influence claim. This appeal proceeds by way of re-hearing. As such we apply the principles in Austin, Nichols & Co Inc v Stichting Lodestar.[2] Those exercising general rights of appeal are entitled to judgment in accordance with the independent opinion of the appellate court.[3] That is so even where that opinion is an assessment of fact and degree and entails a value judgment. However, as this Court said in Green v Green, it is axiomatic that appellants bear the onus of persuading the appellate court to reach a different conclusion.[4] It is also axiomatic that, in undertaking its assessment, the appellate court will take into account any particular advantages enjoyed by the trial court, such as those possessed by a judge in determining questions of fact, particularly where assessments of credibility and reliability are concerned.[5]
[2]Austin, Nichols & Co Inc v Stichting Lodestar [2007] NZSC 103, [2008] 2 NZLR 141.
[3]At [16].
[4]Green v Green [2016] NZCA 486, (2016) 4 NZTR 26-021 at [30].
[5]At [31].
We have undertaken our own review of the evidence to form our own views. We have borne in mind that in this case there is very little dispute about the factual matters and that the Judge’s findings of fact did not turn upon assessments of credibility or reliability.
First ground of appeal: Judge erred in failing to find undue influence
Relevant principles
There is no dispute that the Judge correctly stated the relevant principles as to the law of undue influence (although the appellants say he later misapplied them):[6]
[6]Mahon v Mahon, above n 1 (footnotes in original).
[28] There is essentially no issue between the parties as to the legal principles to be applied to a claim of undue influence in the execution of a will. It is now routine, in cases in this Court, to refer to the summary of principles set out by Fisher J in Re Dudley (deceased).[7]
[7]Re Dudley (deceased) HC Auckland P 1042/92, 14 May 1993 at 11.
Counsel have helpfully referred me to many authorities concerning the legal tests for testamentary undue influence. Notable among these have been Banks v Goodfellow (supra); Hall v Hall (1868) LR 1 P & D 481; Re Annie Nissenbaum (Deceased) [1939] NZLR 94; Wingrove v Wingrove (1885) 11 PD 81 at 82; and Craig v Lamoureux [1920] AC 349. I was not referred to any recent New Zealand authorities but in my view the principles have not changed. They can be summarised in slightly unorthodox but gender-neutral terms as follows:
(a) The key question is whether, because of extraneous pressure from others, the willmaker has signed a will contrary to his or her own wishes.
(b) Persuasion which has left the final choice to the will-maker is not undue influence. Where there is evidence of strong influence or pressure, the Court will approach the question of the will-maker’s own wishes with suspicion. However, if satisfied that the will-maker’s wishes have not been overborne, and that in the end he or she wanted the will in that form, the Court must uphold the will. In those circumstances the ultimate source of the will is not the external pressures but the exercise of the will-maker's own free judgment.
(c) The onus of proof lies upon the proponent of undue influence. However direct evidence of undue influence is not to be expected. These cases usually turn upon the strength of the circumstantial evidence. The question is whether from all the surrounding circumstances, with particular emphasis upon the result of the will and the circumstances in which it was actually executed, undue influence is to be inferred.
(d) For this purpose all the circumstances bearing directly or indirectly upon the free will of the will-maker at the time of execution are relevant. These include illness, pain and suffering, physical weakness and mental deterioration falling short of testamentary incapacity. They also include dependency upon others in legal, business, social, medical and/or domestic matters. One should view with special care any powerful need, obligation, or vulnerability on the part of the deceased which others might be in a position to exploit.
(e) However, it is not enough to show that others had the means and opportunity to unduly influence the deceased and that there has been a recent testamentary disposition in their favour. The Court must be satisfied both that the power was exercised and that the will would not have resulted but for that exercise.
[29] Further guidance as to the application of the principles is also given by Elias J in Norton v Carey where she said:[8]
Influence will be “undue” if shown to have precluded “independent and informed judgment”: Lloyds Bank v Bundy at 342 per Sir Eric Sachs; Zamet v Hyman [1961] 1 WLR 1442, at 1446 per Lord Evershed MR; Bank of Credit and Commerce v Aboody at 968. Influence is “undue” if it operates to deprive the person influenced of independent and informed judgment irrespective of the motives of the person possessing the influence.
What is undue is necessarily a question of degree and will turn on all the circumstances. In the case of some relationships (particularly those fiduciary in character) the circumstance of personal benefit without independent advice may be strong evidence of undue influence: see the discussion drawing on the cases where fiduciary duties are owed in CIBC Mortgages plc v Pitt at 209 per Lord Browne-Wilkinson. So too, an otherwise unexpected outcome may be powerful evidence from which influence which is undue can be inferred in the absence of other explanation. In cases where a disposition is to a family member something more may be required. If undue influence is established, however, clear disadvantage or unfairness in result is not required to be shown: CIBC Mortgages plc v Pitt.
What has to be proved in cases of actual undue influence is the converse of that by which in cases of presumed undue influence a defendant can rebut the presumption. It is for the plaintiff to show that the transaction was not “the result of the free exercise of independent will”: (Inche Noriah v Sheik Allie Bin Omar) at 135 per Lord Hailsham LC.
All the circumstances in which the will was made are relevant in establishing the fact of such influence. They include those which in the case of inter vivos dispositions would give rise to a presumption. …
Background facts
[8]Norton v Carey HC Auckland M191/95, 1 July 1996 at 54 to 55.
As noted, there is little dispute between the parties as to the relevant facts.
2004 will
Melva gave her initial instructions for the 2004 will in the immediate aftermath of Bill’s death. At that time the family were in a stressed state. Bill was a beloved husband, father, son and brother. Sue and the children were traumatised by his loss. John’s evidence was that on Bill’s death “all hell broke loose”. Bill and John each owned half of Mahon Amusements, a business hugely demanding of time and attention. Bill’s death occurred at its busiest time of the year. There was no insurance policy to provide John with the funds to buy out Bill’s estate, something that worried John as he thought Sue might want to be bought out. Bill’s death also plunged the business into uncertainty on an operational level. The business had been split up into two circuits, with John in charge of one and Bill the other. At a more general level, Bill and John divided responsibility for the various tasks that had to be performed between them. Those tasks now all fell to John.
In the five years preceding the execution of the 2004 will, Melva had lost her husband and her eldest son. Before his death, Bill had helped his mother with everyday business matters. After Bill’s death, John had to assume that responsibility. It was common ground that Melva reposed trust and confidence in John, who would advise his mother, visit her daily if he was not on tour and do various tasks for her. There was also no dispute that John discussed his worries and concerns regarding the business openly with Melva. John agreed in evidence that following Bill’s death he felt very anxious about the business and that he conveyed this anxiety to his mother. Together they decided they needed to see their lawyer.
John contacted Mr Bob McDermott, who had been the family’s lawyer since the 1960s. John’s evidence was that foremost in both his own and Melva’s minds was a shared concern for the future of the business. Mr McDermott came to Melva’s home in May 2004, about a month after Bill’s death. The meeting began with a discussion about the traumatic events and their effect on the business. John’s evidence was that he received some advice from Mr McDermott about the business, which he referred to as “guidelines”, and then he left, leaving Mr McDermott and Melva together. John accepted that Mr McDermott did not know about the operational side of the business, but it is apparent from the correspondence there were issues to be attended to including share transfers and whether the company had to replace Bill as a director.
When, on that day, the discussion turned to Melva’s will, John left the meeting. Mr McDermott recorded the instructions in a file note. Specific bequests in existing wills were to remain broadly the same. But in the first departure from the principle of equality that had shaped previous wills, Melva instructed that the properties at Ngāruawāhia were to go to John with the residue of the estate to be shared equally — half to John and Bill’s children dividing the other half between them.
Although Mr McDermott did not give evidence, his daughter Ms Barbara McDermott, a partner in the same law firm, did. She said that her father took the instructions and prepared the will. He then took the draft will to Melva for signature in September 2004. Melva did not sign the will but asked that further changes be made, including specific bequests of $10,000 each to her daughters-in-law, $20,000 to each of the grandchildren and that the residue clause be amended to provide for John to have 60 per cent of the residue and Bill’s three children to have 40 per cent. Melva marked some of these changes, together with some corrections she had noted, on the draft. A will reflecting these instructions was executed on 7 October 2004.[9]
2006 will
[9]The wills made various provisions as to survivorship, which we do not address in detail, as they are not relevant to the issues we are to consider.
John’s evidence was that Melva wished to give each of the grandchildren $20,000 for Christmas. However, their accountant raised concerns regarding gift duty, and suggested that, to avoid gift duty, Melva give each of the children $20,000 as a loan, which would be forgiven on Melva’s death. The accountant advised John that they should have a lawyer check through this plan.
John made the initial contact with Ms McDermott. Her file note records that her advice was Melva’s will could be amended so that all loans to grandchildren were forgiven on her death. John reported that advice to Melva and left it to her to “do what she wanted”. That was the end of John’s involvement with the preparation of this will.
Melva then made contact with Ms McDermott. Ms McDermott’s evidence was that they spoke on the phone and she asked Melva, in preparation for their meeting, to review her assets and how she wished to dispose of them. Melva mentioned the gifts and also increasing her grandson Paul’s share of the residue of the estate.
The meeting took place at Ms McDermott’s office. Ms McDermott was therefore able to prepare a draft in accordance with Melva’s instructions during the course of the meeting and then review it with her. Melva decided to add to the specific bequests to John so that he was now to receive the Ngāruawāhia properties, Melva’s principal residence and her car. The other change of significance was that the residue was now to go two-tenths to Paul, with each of David and Rachael receiving one-tenth. Ms McDermott’s evidence was that she understood from her meeting with Melva that the reason for this was that Paul was working in the family business and Melva would wish him to continue. Ms McDermott said “Business succession was important to her”.
2008 will
The final will was made in 2008. There is some evidence that the making of this will was related to thought John had been giving as to whether his inheritance should be left to his family trust, which had been established some time earlier.
John was present with Melva when Ms McDermott arrived at Melva’s apartment. This was in June 2008. Ms McDermott’s evidence was that there was initial discussion as to how best to deal with John’s inheritance and whether there was any advantage in having his bequest in the name of his family trust. But when the topic turned to discussing Melva’s will, John left.
Ms McDermott’s note of the meeting recorded that Melva was worried that she was not doing what Roy had said to do: “leave her estate equally to Bill and John which would mean that Bill’s share would go to Bill’s three children”. However, when Ms McDermott pointed out that Bill’s children might not be happy with the terms of the will as their inheritance had reduced because their father had died, Melva said she did not think this would be an issue. The note also records Ms McDermott’s advice to her was that a claim by her grandchildren was unlikely.
Ms McDermott and Melva discussed the Whatawhata farm and Melva wanted the ability to see it preserved after her death if that was desired. Ms McDermott said that Melva was very proud of the farm. Melva was attracted to the idea of using an inheritance trust to achieve this outcome and Ms McDermott received instructions to set one up.
Melva was also concerned that Mahon Amusements should continue. Ms McDermott’s evidence was that Melva wanted to make that possible by favouring those who were working in it, John and Paul, in light of changed circumstances since Bill’s death. Ms McDermott says that they discussed that Sue might want to sell her shares and in that event Melva wanted to make it possible for the shares to be retained in the family without having to sell the business. There was also the possibility of John’s son Christopher coming into the family business and eventually wishing to buy shares.
Ms McDermott and Melva met again in August, discussing in some detail the issue of keeping the farm following Melva’s death and also various ways that John’s children could take something from her estate on her death without waiting for their parents to die.
Melva and Ms McDermott met again in October to go through draft documents. Ms McDermott queried with Melva whether Rachael and David would accept their different treatment under the will but Melva said she thought they would understand. Melva sought advice as to whether any of the grandchildren could claim against her will because she had not discharged her moral duty to them, a concept which Ms McDermott had explained to her. Ms McDermott advised her that she did not think the differential so great they would have a valid claim.
Ms McDermott visited Melva in November 2008 for execution of the will. The will dated 27 November 2008 is the will in respect of which probate is granted. The monetary legacies were left unchanged. Bequests that had formerly been made to John were now made to John’s family trust, the J R Mahon Family Trust. The residue of the estate was left to the Melva Mahon Inheritance Trust. The beneficiaries of that trust are broadly 60 per cent to John (or to his children if he dies before final distribution of the Trust’s assets), 20 per cent to Paul and 10 per cent to each of David and Rachael.
High Court judgment
The Judge assessed the evidence in relation to Melva’s physical health and mental faculties. He was satisfied she undoubtedly had testamentary capacity and noted it was not suggested otherwise. He did not accept the evidence as to Melva’s condition during the critical four-year period supported an inference that she had become physically dependent upon John or Judy to an extent that she was susceptible to John’s influence, or that she would have a desire to act toward him in a way that would ensure continued physical support by him and his family.
The Judge said that the evidence established that Melva was a strong-willed person. Her insistence on continuing to live independently despite what was, on Sue’s evidence, strong advice to the contrary, bore that out. He referred to the evidence of other witnesses who described a woman who was not easily susceptible to influence. In relation to the 2004 will, he said:[10]
I cannot exclude the reasonable possibility that the changes were motivated by Melva’s concerns about the continuation of the family business, and the burden which she perceived as falling on John. That possibility, coupled with my finding that Melva was not easily susceptible to influence, particularly when any undue influence would have to be sustained over a period of months, means that I cannot infer that it is more likely than not that the 2004 will was the result of undue influence by John. Such a finding would be speculation.
[10]Mahon v Mahon, above n 1, at [55].
He noted the absence of evidence that John had suggested the changes to the wills and the fact he was not present on any of the occasions on which instructions were given. Although the Judge accepted the evidence that Melva reposed trust and confidence in John, and that John involved her in his concerns regarding the running of the family business, he considered there was no evidence that John, in discussing the business with his mother, may have deliberately given her a false impression about the business.
In relation to the 2006 will, he said:[11]
The evidence does not give rise to the inference that John exercised undue influence over the terms of the 2006 will. It goes no further than establishing that he assisted her in the initial arrangements for instructing Ms McDermott. The changes went beyond those contemplated at that initial stage.
[11]At [62].
The Judge then considered the 2008 will, which is the subject of the grant of probate. He noted there was nothing in the contemporary documentary evidence that suggested John had persuaded Melva as to the extent of the disposition to him under the will. John’s evidence was that his discussions with Melva related to how his share, whatever that might be, would be dealt with in the will. The 2008 will introduced a new trust structure for managing the inheritance. Although the Judge accepted that John had to some extent participated and discussed those proposed arrangements, he did not accept that they resulted from his involvement. He concluded:[12]
In any event that involvement fell short of undue influence. But, more importantly, any influence which he may have exercised in relation to the 2008 will did not lead to any change in the unequal division which had been established in 2004 and confirmed in 2006.
[12]Mahon v Mahon, above n 1, at [76].
The Judge was satisfied that Melva had acted for reasons which appeared to her to be good and which centred on the future of the business which had been her and Roy’s life’s work. He said:[13]
That is evident not only from the greater provision for John, but also from the greater provision for Paul. The only distinction which Melva could possibly have drawn between Paul and his siblings is his involvement in the family business.
Discussion
[13]At [79].
The appellants’ case that there had been undue influence affecting these three wills was summarised by Mr Gudsell QC as follows:
(a)Equality had prevailed throughout the family and business relationships, reflected by the nine wills Melva executed prior to Bill’s death.
(b)Melva was physically frail due to her many ailments and she was in physical and mental decline following Roy’s and Bill’s death, thereby making her vulnerable to influence.
(c)Following Bill’s death, Melva relied upon John for help with her business affairs and reposed considerable confidence in him.
(d)John involved his mother in the business affairs, sharing with her his worries about the business and the impact of Bill’s death on him, and that it had increased the burdens he had to carry.
(e)The circumstances in which the changes to the will were initiated and the absence of independent legal advice in relation to her final three wills failed to provide an antidote to John’s influence.
(f)The last three wills departed from the equality principle, and benefited John, the person who possessed and exhibited influence over Melva.
(g)The circumstances in which assets were transferred into Melva’s estate were relevant to the undue influence claim.
We first consider the strength of each of these propositions before testing whether together, they take the appellants to the point of establishing undue influence.
Principle of equality
The evidence establishes that Roy and Melva were careful to ensure that the children and the grandchildren were treated equally. Many witnesses spoke of the care that Melva put into ensuring that no child or grandchild should be favoured or perceive that others had been favoured over them. David described the equality principle as the “very spirit of the Mahon family” and Rachael said that Melva had been a “stickler” for equality. This principle found full expression in all of Melva’s wills before 2004.
We accept that the last three wills were a significant departure from this principle. The 2004 will was the first will which departed from equality if it is accepted that Bill’s children stood in place of their father in Melva’s estate. The 2006 will increased that disparity. Although the 2008 will did not further alter the basic share between the families, it was significant for Bill’s children as they were to inherit from the residue of the estate, which was comprised principally of the farm. If the sale of that was delayed, then so too was their inheritance. However, we were told at the hearing that the farm has been sold and the residue is to be distributed.
Melva’s (alleged) physical and mental decline
Melva’s daughter-in-law, Sue, was, along with John’s wife Judy, very involved in Melva’s care. Sue is a retired nurse. Her evidence, corroborated by Melva’s medical records, is that Melva suffered from a range of ailments including arterial fibrillation, rheumatoid arthritis, congestive heart failure and depression. She had isolated incidents of forgetfulness. The overall picture Sue gives of Melva is that she was frail, elderly and unwell. While she was, as the Judge said, able to live independently, she needed the support of a large and loving family to achieve this.
The appellants argue that the medical evidence established mental and physical depletion on Melva’s part at the time that she executed her three wills, which had a direct or indirect effect upon her ability to exercise her free will. They say there was no evidential foundation for the Judge’s rejection of the proposition that Melva was so unwell as to be susceptible to John’s influence. We do not accept either proposition.
There was evidence from members of Melva’s family, including her sister, that Melva remained a sharp listener with strong determination and conclusions, and that did not change with time or age. In the eulogy he delivered at her funeral, David described his grandmother as being determined, a determination “which was tinged with a little stubbornness”. Although Melva did have many ailments, she was still able to live independently, even if that was with the help of her family. There was evidence that although restricted in her mobility, she continued to have an active social life through the period 2004–2008, driving herself considerable distances, travelling to see her grandchildren compete in sports and standing on the side line for lengthy periods of time. In 2006 she went on a cruise with her sister. We have viewed the videos which were placed into evidence and it is apparent that Melva had limitations on her mobility but remained a vital, interested personality.
One of the grounds of appeal advanced is that the Judge mischaracterised the appellants’ case in relation to Melva’s physical and mental frailty and that he also misdirected himself as to the law by narrowing the potential scope of relevance of the evidence of Melva’s physical and emotional frailty. This argument turns upon his finding:[14]
Melva’s physical health could be relevant only if it supported an inference that she had become physically dependent upon John or Judy to an extent that she was susceptible to John’s influence, or to a desire to act towards him in a way which would ensure continued physical support by him or his family. The evidence about Melva’s physical or mental health does not support such an inference.
[14]Mahon v Mahon, above n 1, at [41].
We do not understand the Judge to be stating this as a principle of law, but rather to be addressing the case as it was put to him. The pleadings and evidence produced in support of the claim emphasised Melva’s dependence upon John, and also the extent of Melva’s frailty. But in any case, it is apparent that the Judge did weigh the evidence of Melva’s physical and mental state in determining the broader question of whether she was susceptible to influence, as is apparent in the passage set out at [34] above and elsewhere in the judgment.
Our review of the evidence satisfies us that it strongly supported the Judge’s finding that Melva was not, by reason of her physical or mental condition, susceptible to influence. This was not a case where Melva was so physically or mentally depleted that she was particularly susceptible to influence (it is perhaps worth stating that she lived another four years after her last will).
Melva’s relationship with John
Following Bill’s death, John was Melva’s sole remaining child. She was elderly, bereaved by the death of her husband and son, and we accept that she looked to John for emotional support and advice. After Bill’s death John took over many of the tasks that Bill used to do for his mother, assisting her with organising her day-to-day affairs.
However, John was not in daily contact with his mother when he was out on the road, as he often was. Nor was the relationship one which was to the exclusion of others. Social isolation can amplify the influence of the sole caregiver or visitor. But it is apparent from the evidence of all of the family witnesses that Melva was fortunate to have both daughters-in-law, Sue and Judy, help her on a daily or almost daily basis as well as enjoy frequent visits from her grandchildren. She was very much kept close within the overall family and her relationship with John was not such as to exclude other influences from her.
We also accept Mr Gudsell’s point that the period of time immediately following Bill’s death was intense. It is apparent from John’s own evidence that he was overwrought and struggled to imagine how he would cope. He saw himself as doing the work of two men and, however wrongly, now having responsibility for two families, his own and Bill’s. It was in that context in which the 2004 will occurred. Indeed, it was a discussion between John and his mother which led to John making contact with the solicitors and organising the appointment which ultimately led to the 2004 will. It is also clear from the evidence that John continued to involve his mother in discussions regarding the business.
The circumstances in which the changes to the will were initiated and the lack of independent legal advice
Mr Gudsell submits that there was a pattern to events surrounding each of these wills — Melva instructed that changes be made after John had raised concerns regarding his business and legal affairs. He also contends it is significant that John was involved in setting up meetings in connection with each of the wills.
Such a pattern is, at a very general level, discernible. But we do not see that, on its own, much can be made of this. This was a close family. John’s thoughts about the business and asset planning naturally led Melva to reflect on her own plans. And it is not surprising that John was involved in some way in the mechanics of arranging meetings. Melva was elderly; John was her son and the person who helped her with personal business. The evidence does not establish that John drove any of the changes to the wills. It was not put to him that he suggested the changes in the 2004 and 2006 wills and he was not present during the taking of instructions for them.
We do see as significant that Melva’s instructions were invariably given in the absence of John. In the case of the 2004 and 2008 wills, this stretched out over several months. The evidence suggests that Melva regarded her wills as her private business. For example, in respect of the 2008 will Ms McDermott asked Melva whether she wished to discuss a proposed amendment to a will in front of John. Melva replied that she would prefer to discuss it on her own at which point John left the meeting.
Mr Gudsell also argues the Judge overlooked the absence of independent legal advice, noting that it is well-established that independent legal advice can act as an antidote to undue influence.
The first point made for the appellants is that any advice Melva received was not independent because the firm of solicitors that prepared Melva’s final three wills acted for the entire family. But there is no rule that a lawyer may not act for two clients where there is no conflict of interest.[15] There was no other party to this transaction and no other party claiming an interest. There was no suggestion that Mr McDermott, or later his daughter Ms McDermott, improperly advocated or urged John’s interests upon Melva in the course of carrying out her instructions to amend the will.
[15]Taylor v Schofield Peterson [1999] 3 NZLR 434 (HC); and Clark Boyce v Mouat [1993] 3 NZLR 641 (PC).
The suggestion that no independent legal advice was obtained is, as we understand it, also based upon the absence of written advice to Melva and the absence, at least in respect of the 2004 will, of any advice being given orally.
We accept that there is no evidence that Melva’s solicitors sought her reasons for making these changes, at least in respect of the 2004 will. There is evidence that in respect of the 2006 will, Ms McDermott discussed Melva’s reason for advancing the interests of Paul over the others. In respect of the 2008 will, the evidence suggests that on several occasions Ms McDermott discussed with Melva the unequal treatment of Rachael and David and, to a lesser extent, Paul under the will. Critically, Ms McDermott gave the following advice:
I pointed out that Bill’s children might not be happy with the terms of the Will as their inheritance had reduced because their father had died before Melva. Melva said that she did not think this would be an issue.
Ms McDermott met with Melva several times in connection with the 2008 will, each time in the absence of John. On more than one occasion, she returned to the issue of the unequal treatment of Bill’s children. If there were any pressure being brought to bear upon Melva this would have been an opportunity for the issue to be raised.
The most important point to be made, however, is that the absence of legal advice assumes significance if there is evidence that someone attempted to influence the testator to make a particular testamentary disposition. The Judge did not consider there was such evidence. The Judge’s failure to consider the significance of the absence of independent legal advice was therefore not surprising.
The wills were a departure from the principle of equality and advantaged John
The 2004 will was a departure from the principle which had informed earlier wills: that John and Bill should share equally in their mother’s estate. However, the issue Melva addressed for the first time in 2004 was how to distribute her estate following Bill’s death. We do accept, however, that discussions in 2008 suggest Melva had in mind the claims of Bill’s children to the share of her estate that would otherwise have been Bill’s.
Melva maintained the departure from equal sharing through this period of time and, in fact, the 2006 will increased that inequality. It was also an inequality that operated not just in favour of John but also, by 2006, in favour of Paul.
The circumstances in which assets were transferred to Melva
It was argued the Judge should have considered how the farm and the Ngāruawāhia properties came to be in Melva’s estate and, in particular, the fact that they were originally purchased by the family business and were used, to a greater or lesser extent, for business purposes. That was the basis for the constructive trust claim. We do not see that as relevant to the undue influence claim, other than perhaps as evidence that Melva had good reason for dealing with these assets equally. But the constructive trust claim was unsuccessful and is not pursued on appeal. We do not therefore think this adds much, if anything, to the appellants’ case.
Overall assessment
The appellants’ case as run in the High Court was that relevant contextual factors — Melva’s frailty, bereavement, dependence on John, and John’s decision to involve Melva in his worries — gave John the opportunity to exert undue influence over Melva. The inequality of disposition was sufficient to establish that undue influence had been exercised.
John was consistent in his evidence that he did not know of the detail of his mother’s wills beyond, in the case of the last will, the detail of the trust mechanism contained within it. There is no evidence that John exerted pressure upon his mother to depart from the principle of equality that had guided earlier wills, that he attempted to persuade her to that point of view, or even that he hinted at that as being a solution to the difficulties caused by Bill’s death. It was not put to him that he suggested to Melva that she should leave her property in the manner that she did or that the idea came from him. Mr Gudsell accepted that the appellants’ case was not that John had pressured, persuaded or hinted at that result.
That being the case, the appellants undue influence claim could not succeed. As the authorities make clear, it is not enough to show that John had the means and opportunity to unduly influence the deceased and that there has been a recent testamentary disposition in his favour. The appellants had to show both that the power was exercised and that the will would not have resulted but for that exercise. Mr Gudsell submits that the timing of the changes to the wills suggests they were a response to John’s worry and distress regarding the business. But in the absence of evidence that John suggested or even hinted at the changes as the appropriate response, we are left with the inevitable conclusion that Melva came up with these changes by the exercise of her free will, even if they were in response to the worries John had communicated to her.
We agree with the Judge that there was a gap in the proof. MacKenzie J said that the claim required that he speculate as to the reason for the unequal distribution. But he was satisfied that there could be reasons other than undue influence and, in particular, concluded that he could not exclude:[16]
… the reasonable possibility that the changes were motivated by Melva’s concerns about the continuation of the family business, and the burden which she perceived as falling on John.
[16]Mahon v Mahon, above n 1, at [55].
We agree with the Judge that this is an alternative and indeed more likely explanation for the unequal disposition. The evidence was that the business was viewed by all as a family business. When the evidence of the family is read, the extent of their emotional involvement in the business is immediately apparent. If this was a family business, then those who committed their lives to it needed the family support. It could well have been Melva’s intention to support the family by supporting John and Paul in the business and by favouring them in the will. Indeed she discussed that with Ms McDermott. Mr Gudsell submits that this analysis was flawed, as John’s son Christopher was also involved in the business but he received no preferential treatment. We do not see this as undermining the Judge’s conclusion if John and Paul are treated as the representative of each branch of the family, carrying the burden of the business for the benefit of each family.
John undoubtedly did have influence over Melva, due to the strength of their bond, an influence which may well have grown following Bill’s death. But even if there was evidence he suggested she change her will in his favour (there was not), other evidence fatally contradicted the notion that Melva’s will was overborne when she made the various changes.
We have already set out the reasons for our view that Melva was not particularly susceptible to John’s influence. It is also telling that Melva’s broad resolve as to how the estate should be distributed was sustained over a lengthy period, from 2004 to 2008. By 2006 the emotional intensity of the situation in 2004 would inevitably have faded. Still more so by 2008. Melva met with her lawyer many times and on more than one occasion her lawyer highlighted the unequal disposition. But Melva was consistent in her instruction.
Mr Gudsell pointed to Ms McDermott’s evidence that when Melva mentioned the departure from the principle of equal treatment Melva was:
… also sad. It might have been a combination of worried, sad. It wasn’t the way things were meant to be.
However, Ms McDermott’s evidence was that she understood Melva to be sad because Roy would not have anticipated how things would turn out, with Bill’s tragic death. We do not construe this evidence as assisting the appellants’ case.
Mr Gudsell also argues that in rejecting the undue influence claim, the Judge applied the wrong principle, in that he referred on more than one occasion to “improper influence”.[17] Mr Gudsell submits that the appellants were not required to establish “improper” influence or conduct on the part of John — this was an error and it was a significant one. It meant that the Court’s focus shifted from the critical question of whether Melva’s final three wills reflected her own free and independent wishes to whether there was anything “improper” about John’s influence and, in particular, about his mentioning concerns about the business.
[17]Mahon v Mahon, above n 1, at [74] and [80].
We are satisfied that the Judge did correctly direct himself to the law, noting as he did the observation of this Court in Carey v Norton that the alleged undue influence need not be accompanied by malign intent.[18] On our reading of the judgment, MacKenzie J has simply used the expression “improper influence” as a synonym for the expression “undue influence”.
[18]Carey v Norton [1998] 1 NZLR 661 (CA).
We also record that following the hearing of this appeal, the decision of this Court in Green v Green was released.[19] Mr Gudsell sought an opportunity to file additional written submissions in connection with the judgment. We decline counsel’s request as we do not consider we would be assisted by them. Green v Green simply applied well-established principles to the facts of that case.
[19]Green v Green, above n 4.
For these reasons we are satisfied that the Judge was correct to reject the appellants’ claim that Melva’s last three wills were the product of undue influence.
Second ground of appeal: Family Protection Act 1955
The appellants claim that Melva failed to make adequate provision for them from her estate for their proper maintenance and support. They seek an amount from Melva’s estate equal to two thirds of one half of the value of her estate — that is, they seek equality between Bill’s three children on the one hand and John’s family on the other.
They identify two factors as favouring their claim. The first is Melva’s moral obligation to ensure the children of her son receive a share reflecting the value Bill would have received were he still alive. They rely upon s 3(2) of the Family Protection Act, which provides:
3 Persons entitled to claim under Act
…
(2)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.
As to the significance of the death of Bill, they refer to the statement by Simon France J in Chalk v Hoare:[20]
Grandchildren stand in their own right. They do not take the place of a deceased parent in terms of a grandparent’s moral duty. That said, it has several times been recognised that there may exist a moral duty where a child had died, leaving children. Plainly those grandchildren have no expectation of downstream inheritance. Depending on the timing of the respective deaths, they may have particular needs, especially if young at the time the parent dies.
[20]Chalk v Hoare [2009] NZFLR 736 (HC) at [42].
The second factor they identify is the circumstances surrounding the creation of Melva’s estate. The appellants note in particular that the Ngāruawāhia properties and the farm, the family’s principal assets, were accumulated in large part through the joint efforts of John and Bill.
The appellants argue that the Judge failed to give adequate weight to these two factors.
High Court judgment
The appellants do not dispute the articulation of the relevant principles, set out in the following passage of the judgment:[21]
[96] The test for “proper maintenance and support” for an adult claimant not under any disability is enunciated in Williams v Aucutt by Richardson P in these terms:[22]
[52] Second, for reasons which will be apparent from the earlier discussion, 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 a broader approach is required and the authorities referred to establish that moral and ethical considerations are to be taken into account in determining the scope of the duty. “Support” is used in its wider dictionary sense of “sustaining, providing comfort”. A child's path through life is supported not simply by financial provision to meet economic needs and contingencies but also by recognition of belonging to the family and of having been an important part of the overall life of the deceased. Just what provision will constitute proper support in this latter respect is a matter of judgment in all the circumstances of the particular case. It may take the form of lifetime gifts or a bequest of family possessions precious to its members and often part of the family history. And where there is no economic need it may also be met by a legacy of a moderate amount. On the other hand, where the estate comprises the accumulation of the family assets and is more than sufficient to meet other needs, provision so small as to leave a justifiable sense of exclusion from participation in the family estate might not amount to proper support for a family member.
[97] As that case makes clear, the focus is not the reasons for treating family members differently. It is up to the claimant to satisfy the Court that the provision in the will was not adequate for the proper maintenance and support of the claimant. Blanchard J said:
[70] It is not for the Court to be generous with the testator’s property beyond ordering such provision as is sufficient to repair any breach of moral duty. Beyond that point the testator’s wishes should prevail even if the individual Judge might, sitting in the testator’s armchair, have seen the matter differently. As I have said, the Court’s power does not extend to rewriting a will because of a perception that it is unfair. Testators remain at liberty to do what they like with their assets and to treat their children differently or to benefit others once they have made such provisions as are necessary to discharge their moral duty to those entitled to bring claims under the Family Protection Act.
[21]Mahon v Mahon, above n 1 (footnote in original).
[22] Williams v Aucutt [2000] 2 NZLR 479 (CA).
The Judge noted Rachael and David had not provided evidence they were in financial need. But he observed that in this case, where the estate comprised the accumulation of the family assets, the question was whether the provision was so small as to leave a justifiable sense of exclusion from participation in the family estate. He was not satisfied that the amount of provision was so small. What was complained of was the lack of equality of participation and that was not a proper basis for the claim. Melva had turned her mind to the differential and he was therefore satisfied it did not arise from any inadvertence or misapprehension on her part. Melva had made significant provision for the appellants and awarding more would create an inroad into Melva’s testamentary freedom which would necessarily go beyond ensuring that adequate provision was available from her estate for the proper maintenance and support of David and Rachael.
Finally, the Judge observed that it was relevant that the expectation of all family members to the fruits of Melva’s and Roy’s lifetime labours was not limited to their inheritance from Melva’s estate. The business which Roy and Melva had founded, and built up with the help of their family, had passed in equal shares to each branch.
Analysis
We see no defect in the Judge’s reasoning. The provision made for each of Rachael and David was not, to use the expression used in Williams v Aucutt, so small as to leave a justifiable sense of exclusion from participation in the family estate.[23] While it is true that Bill predeceased Melva, so that Rachael and David have no downstream expectation of an additional flow through inheritance from Bill, that gap is adequately filled by the significant provision that is made in the will for each of them. Further, as the Judge said, there is no evidence that Melva had failed to turn her mind to this unequal distribution. She had what she considered to be good reasons for it.
[23]Williams v Aucutt, above n 22..
The appellants also point to the history of the assets within the family. Again, this claim is based upon the same essential grounds as the constructive trust claim, which was dismissed and is not now pursued on appeal. The Judge’s analysis and our analysis proceeds on the basis that Melva’s estate represented an accumulation of family assets.
Finally, we endorse the following comments made by the Judge:[24]
[79] The departure from equality is understandably distressing to the plaintiffs. That distress will be partly as to the financial consequences and partly as to their perceived standing in Melva’s affections. It will provide little comfort to them, but I repeat what I have said, that I find in the evidence no suggestion that Melva held any member of her family in less esteem than any other. I am satisfied that Melva acted for reasons which appeared to her to be good, and not with the intention of hurting any of her family. These reasons were centred on the future of the business which had been her and Roy’s life’s work. That is evident not only from the greater provision for John, but also from the greater provision for Paul. The only distinction which Melva could possibly have drawn between Paul and his siblings is his involvement in the family business.
Result
[24]Mahon v Mahon, above n Error! Bookmark not defined..
For these reasons, all the grounds of appeal must fail. The appeal is dismissed.
The appellants must pay the second respondents costs for a standard appeal on a band A basis and usual disbursements.
Solicitors:
Raymond S Walker, Auckland for Appellants
Harkness Henry, Hamilton for First Respondents
Bell-Booth Sherry, Takapuna for Second Respondents
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