Matthews v Phochai
[2020] NZHC 3455
•18 December 2020
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2020-404-1459
[2020] NZHC 3455
UNDER The Family Protection Act 1955 IN THE MATTER
of the Estate of Noel Stanley Matthews
BETWEEN
GREG DENNIS MATTHEWS
Appellant
AND
NARADA PHOCHAI
Respondent
Hearing: 17 November 2020 Appearances:
D K Wilson for the Appellant
R Rao and T Anderson for the Respondent
Judgment:
18 December 2020
JUDGMENT OF HINTON J
This judgment was delivered by me on 18 December 2020 at 4:30 pm pursuant to Rule 11.5 of the High Court Rules
…………………………………………………………………… Registrar/Deputy Registrar
Solicitors/Counsel:
Raymond S Walker, Solicitor, Auckland David Wilson, Barrister, Auckland
Inder Lynch, Manukau
MATTHEWS v PHOCHAI [2020] NZHC 3455 [18 December 2020]
[1] This is an appeal against a decision of Judge Goodwin in the Family Court at Manukau dated 7 August 2020.1 An earlier decision dated 10 October 2019 is also relevant.2 The Judge awarded Ms Phochai $1,000,000 under the Family Protection Act 1955 (the Act). She was the de facto wife of the testator Mr Matthews, and no provision had been made for her under his will. The major beneficiary of the estate was the testator’s youngest child, Greg Matthews.
[2] During the District Court hearing it was conceded there was a breach of moral duty by the testator, so the only matter in dispute was the amount required to remedy that breach. The respondent says the judge erred in a number of respects and the sum awarded should have been between $700,000 and $750,000, not $1,000,000.
[3] This being an appeal against a discretion, May v May principles apply. The appellant has to show that the judge has failed to take a relevant factor into account, taken something into account he should not have, or reached a plainly wrong decision.3
[4] Ms Phochai also applied to set aside a contracting out agreement entered into between herself and Mr Matthews in 2005, under the Property Relationships (Act) 1976 (PRA). She was unsuccessful on that application.4 A question arises as to the impact of that agreement on the extent of the moral duty.
Background
[5] Mr Matthews died on 19 August 2016 at the age of 71. Ms Phochai was 55 at that time.
[6] Mr Matthews had been married twice and had three children, before entering the de facto relationship with Ms Phochai which began in mid-2005.
[7] Mr Matthews’ first marriage was in 1966 and produced two children, Gina who was aged about 49 and Mark aged about 47 at the time Mr Matthews died. Gina is a
1 Phochai v Estate of Noel Stanley Matthews [2020] NZFC 8347.
2 Phochai v Estate of Noel Stanley Matthews [2019] NZFC 5155.
3 May v May (1982) 1 NZFLR 165 (CA) at 169.
4 Above n 2, at [35]-[39].
doctor and lives in Australia with her family and Mark, who is single, lives in Tauranga in supported accommodation. He has a diagnosis of paranoid schizophrenia.
[8] Mr Matthews’ first marriage ended in 1974 and he remarried in 1982. Greg Matthews was the only child from the second marriage. Greg was aged 32 when Mr Matthews died. Greg has a wife and two sons who were aged 10 years and about six months respectively when Mr Matthews died. Greg owns a very modest car and is employed part-time as a labourer/builder. Greg and his father were very close. Greg was still living with Mr Matthews when Mr Matthews first entered into the de facto relationship with Ms Phochai, but he moved out of home at that point.
[9] As noted, Ms Phochai and Mr Matthews’ de facto relationship commenced in mid-2005. At about the same time, on 14 June 2005, they executed a contracting out agreement. Mr Matthews was aged about 60 when they started their relationship and Ms Phochai about 44.
[10] Ms Phochai had also been married twice before entering the de facto relationship with Mr Matthews. She had a daughter from her first marriage, born in 1985 and a daughter from the second marriage, born in 1998. Her two daughters lived with Mr Matthews and Ms Phochai and according to Ms Phochai he had a good relationship with them.
[11] Drawing on the contracting out agreement, at the outset of their relationship, Mr Matthews owned five South Auckland properties. Three properties were unencumbered, (his home at 17 Hollinbrigg Place, 10 Holmes Road and 236B Great South Road) and two, (13 Pratt Street and 118 Weymouth Road) are recorded as being then subject to an ASB mortgage, the amount of which is unknown. Mr Matthews also had a business, trading under the name of Matthews Mini Earth Movers, a car, bank accounts and various miscellaneous assets. Ms Phochai owned a car, furniture, bank accounts (of unstated amounts) and three properties in Thailand described as land and a house in the village of Sompoy, a five-acre mango farm and a three-acre rice farm.
[12] All of these assets were recorded as the separate property of each party along with any other assets in their names.
[13] The agreement recorded in essence that separate property was to remain separate and that the agreement was to be binding on the parties in all circumstances including death of one or both of them. The agreement also recorded that salary or wages were to be separate and that regardless of the property in which the parties chose to reside, the other would contribute from time to time to the living expenses. The agreement was in settlement of all claims under any circumstances, including under the Family Protection Act 1955.
[14] During the relationship the parties’ financial arrangements were consistent with the agreement. They lived in Mr Matthews’ home at Hollinbrigg Place. They each maintained separate bank accounts and did not intermingle any income or assets. Ms Phochai said she did not know what earnings Mr Matthews had received from his earthmoving business, as he kept that information to himself.
[15] Mr Matthews wound his contracting work down and retired in about 2008. He rented out the four properties that he owned in addition to Hollinbrigg Place. Ms Phochai worked part-time.
[16] Again consistent with the agreement, during the relationship Ms Phochai says she contributed to household outgoings by paying for groceries and the internet, and it seems Mr Matthews paid the other outgoings.
[17] When Mr Matthews closed his business around 2008, he sold the trucks and in August 2009 he acquired a property in Pukenui, in the Far North. From the time that property was purchased, Mr Matthews spent about half his time up there. Ms Phochai says she and the girls went there “sometimes”. Greg spent a lot of time with Mr Matthews up north.
[18] During the marriage the parties put about $50,000 into building a house on one of Ms Phochai’s Thai properties. It seems they were contemplating spending time
there once Ms Phochai retired. It is likely the $50,000 sum was sourced mainly from Mr Matthews.
[19] Except that Mr Matthews had sold the trucks and acquired the Far North property, his principal assets when he died were close to identical to those that were listed in the contracting out agreement.
[20] At the time Mr Matthews died, Ms Phochai also still had the assets that were listed in the contracting out agreement, including the three properties in Thailand. In addition she had cash or cash equivalent assets amounting to about $117,000. There is no indication of cash assets to that value at the time of the agreement. As with Mr Matthews, “bank accounts” were recorded simpliciter.
[21] Since Mr Matthews’ death Ms Phochai, by agreement with the executors, has remained living in the Hollinbrigg Place house. She has been joined by her two daughters, son-in-law and two grandchildren. Ms Phochai is now aged 58. She works four days per week as a support worker for Presbyterian Support, earning $30,000 per annum which she said was likely to reduce. Her older daughter operates a hairdressing business from Hollinbrigg Place and that same daughter’s husband works at the airport. Ms Phochai’s younger daughter’s circumstances are not evidenced. She would now be about 22.
[22] The outgoings on Hollinbrigg Place are being paid by the estate (rates and insurance) whereas user costs such as water and power are paid by Ms Phochai. It seems her extended family do not pay rent but do contribute to the household costs.
[23] Greg and his family have been living at the Pukenui property since his father died. He is doing odd jobs up there.
[24] During his lifetime Mr Matthews executed five wills. In the first four, which were signed in 1977, 1983, 1984 and 1986, the bulk of the estate was left to his children equally. His last and operative will was dated 10 October 2001 (prior to his relationship with Ms Phochai) and it provided for gifts of $10,000 to Gina and Mark and the residue to Greg upon reaching 25.
The Family Court proceedings and decisions of Judge Goodwin dated 10 October 2019 and 7 August 2020
[25] As noted above, Ms Phochai brought proceedings in the Family Court seeking to set aside the contracting out agreement and for further provision under the Act.
[26]Claims for further provision were also made by Gina and Mark under the Act.
[27]All applications were heard together on 19 and 20 June 2019.
[28] At the time of the hearing, Mr Matthews’ estate was estimated to be worth about $3,400,000. The main assets were valued as follows:
17 Hollinbrigg Place $790,000 Pukenui (midpoint)
$321,000 - $343,000
13 Pratt Street (midpoint)
$650,000 - $700,000
118 Weymouth Road
$600,000
10 Holmes Road
$520,000
236B Great South Road
$390,000
[29] The total value of the properties, adopting a mid-point, was $3,275,000. The Judge said that the $3,400,000 million figure took into account anticipated further administrative costs and tax obligations.5 I return to the question of the net estate value for present purposes.
[30] Judge Goodwin issued two decisions, dated 10 October 2019 and 7 August 2020, the combined effect of which was:
(a)the contracting out agreement between Mr Matthews and Ms Phochai was upheld;
(b)Mark and Gina were awarded the sums of $570,000 and $200,000 from the estate respectively, under the Act;
5 Above n 2, at [9].
(c)Ms Phochai was awarded the sum of $1,000,000 from the estate, also under the Act; and
(d)costs were reserved and are yet to be determined.
[31] There is no appeal in respect of the awards to Mark and Gina and no appeal in respect of the decision under the PRA. The appeal is solely in respect of the quantum of the award made to Ms Phochai under the Act.
[32] All matters were determined in the October 2019 decision except that, because there was a question mark over the value of Ms Phochai’s Thai properties, Judge Goodwin only partially addressed her claim under the Act, and ultimately reserved his decision in that regard. Ms Phochai had valued the Thai properties at a total of NZD 43,000 whereas Greg had understood them to be worth a total of about NZD 1,800,000, perhaps having become confused between Thai baht and New Zealand dollars. Subsequently Greg obtained valuations through a law firm in Bangkok which the Judge accepted as being correct. These added up to approximately NZD 105,000, much closer to Ms Phochai’s original estimates.
[33] The Judge correctly set out the key legal principles in his October 2019 decision.
[34] Having addressed much of the claim under the Act in the first judgment, the Judge’s 7 August 2020 decision was brief. He said that in assessing the “proper maintenance and support” for Ms Phochai and reaching a conclusion as to the level of remedy to do what is necessary to make adequate provision but no more than that, he took account of the following factors:6
(a)At the time of [Mr Matthews’] death on 19 August 2015, [Ms Phochai] and he shared a committed relationship.
(b)The effect of the relationship property agreement is that [Ms Phochai] retains as her separate property, approximately $105,000 New Zealand dollars’ worth of property.
(c)The property retained is in Thailand. Other than this property, [Ms Phochai] has no other savings or assets in New Zealand.
6 Above n 1, at [18].
(d)[Ms Phochai] is 58, she is nearing the end of her working life. Her future work opportunities are therefore restricted, and her work experience has not been in high paying employment.
(e)[Ms Phochai] has family [to] support in both a financial and emotional sense. No provision at all was made for her in [Mr Matthews’] will.
(f)During [Mr Matthews’] lifetime, [Ms Phochai] and he shared a stable life with a relatively high living standard that allowed for travel and discretionary spending.
(g)[Ms Phochai] had an expectation of sharing retirement with [Mr Matthews] and having the benefit of sharing his assets and income and with the ability to continue with their lifestyle.
[35] The Judge then noted Greg’s arguments that account should be taken of the fact the award should benefit only the claimant, which was compromised by the presence in the family home of her two daughters, son-in-law and grandchildren, and also that there was a likelihood that Ms Phochai would return to Thailand. The Judge found that there was no evidence of Ms Phochai returning to Thailand. Her life was in New Zealand. Further it seems clear that the Judge did consider it appropriate to take into account that Ms Phochai had family to support in a financial sense.
[36]In his 7 August 2020 judgment, the Judge concluded as follows:
[21]The conclusion I reach is that the award for Narada has to take account of the factors which I have articulated, balanced with the provision of doing no more than what is necessary to make adequate provision. Narada and Noel enjoyed a lengthy relationship, living together for 11 years and provision for Narada has to take account of her age, earning capacity and provision.
[22]I therefore award Narada the sum of $1 million. This accounts for just under 30 percent of the estate. It will allow Narada to retain a home, debt free, with some discretionary spending. This is adequate provision but taking account of the factors articulated still represents no more than is necessary.
Relevant law
[37] The key legal principles are not in dispute. As I have noted, these were expressly articulated by Judge Goodwin in his decision of 10 October 2019.
[38] It is important to record that, to the extent the contracting out agreement purported to settle any future claims arising under the Act, there is longstanding
authority to the effect that such a provision is void or voidable, as contrary to the public policy embodied in the Act and its predecessors.7 While making no reference to this principle, the Judge correctly paid that aspect of the contracting out agreement no heed in making an award to Ms Phochai. However, as I return to below, the existence and terms of a contracting out agreement can nonetheless be relevant to assessing the extent of moral duty and the necessary measure of repair.
[39]Section 4(1) of the Act provides:
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.
[40] The persons entitled to claim include, relevantly, a de facto partner of the deceased living in a de facto relationship with the deceased at the date of his or her death,8 and the deceased’s children.9
[41] The meaning of “proper maintenance and support” for the purposes of s 4(1) was addressed by the Court of Appeal in Williams v Aucutt, Auckland City Mission v Brown, and Henry v Henry.10 As the Court confirmed in each case, the overriding principle at all stages of the Court’s inquiry is conservatism and respect for testamentary freedom. It is not enough that “the individual Judge might, sitting in the testator’s armchair, have seen the matter differently.”11 Nor is it for the Court to be generous with the testator’s property.12 Rather, before disturbing the will, the Court must be satisfied that there has been a manifest breach of moral duty by the testator.13 Similarly, where a breach of moral duty is established – and it is not in dispute that
7 Gardiner v Boag [1923] NZLR 739 (SC); Parish v Parish [1924] NZLR 307 (SC); Re Julso [1975] 2 NZLR 536 (SC); Public Trustee v Dillon [1940] NZLR 874 (SC).
8 Family Protection Act 1995, s 3(1)(aa).
9 Section 3(1)(b).
10 Williams v Aucutt [2000] 2 NZLR 249 (CA); Auckland City Mission v Brown [2002] 2 NZLR 650 (CA); Henry v Henry [2007] NZCA 42, [2007] NZFLR 640.
11 Williams v Aucutt at [70] per Blanchard J (concurring).
12 At [68].
13 At [52] per Richardson P.
there was a breach of duty in this case - any adjustment must be no more than the minimum necessary to remedy the testator’s failings.14
[42] The three Court of Appeal decisions cited above were concerned with claims by adult children, but in Wylie v Wylie the Court of Appeal held the same approach applies to claims by widows.15 Logically therefore, they apply also to a surviving de facto partner such as Ms Phochai.
[43] Where there is a competition between children of present or earlier relationships who have been provided for under a will and a claim by a surviving partner under the Act, claims by the partner have tended to be described as “paramount”.16 That however, has in each instance been an evaluation in the circumstances of the particular case.17
[44] The approach has differed in cases where the testator married once only, compared to cases where the widow’s claim has been in competition with that of children of an earlier marriage. In the former category (so not that found here), the testator’s moral duty has been found in cases of a larger estate to take the form of an obligation to secure the widow in an anxiety-free standard of living by providing ownership of the fee simple in the matrimonial home, an annuity out of the estate, a capital award to cover expenditure, and a capital reserve.18
[45] Where the beneficiaries are children of an earlier relationship however, the Courts have been slower to depart from older authority that the widow should not receive a capital award, preferring to make an award of an annuity and a life estate in suitable accommodation together, where necessary, with a smaller capital sum in the
14 Henry v Henry [2007] NZCA 42, [2007] NZFLR 640 at [54].
15 Wylie v Wylie [2003] 23 FRNZ 156 (CA).
16 See, for example, Re Rush (1901) 20 NZLR 249 (SC) and Re Cockery (1991) 8 FRNZ 584 (HC) at 589.
17 As recognised in respect of the equivalent New South Wales legislation by the High Court of Australia in Re The Will of FB Gilbert (1946) 46 SR (NSW) 318 (HCA) at 323; See also, for an example of this approach in the New Zealand context, Re Sutton [1980] 2 NZLR 50 (CA).
18 See, for example, King v White [1992] 2 VR 417 (VSC); Re Z [1979] 2 NZLR 495 (CA); Re McNaughten [1976] 2 NZLR 538 (SC) at 543.
nature of a “nest egg”.19 This is so that, as Beattie J put it in this Court in 1976, “the capital ultimately is preserved for the child and is not unfairly passed on to strangers in blood.”20 Similar comments can be found in more recent decisions of the Family Court.21
[46] Ultimately, the balance to be struck depends on the circumstances of each case. With both first and subsequent marriages and relationships, the extent of the testator’s moral duty to the widow or surviving de facto partner will depend on factual circumstances such as, for example, the duration of the marriage; its nature in terms of the widow’s role in bringing up the testator’s family, managing the household, and acting as his partner in life; and their expectations as to how they would share their resources during their lifetime together.22 Those points, obviously, will need to be considered alongside the circumstances underpinning the children’s “claim” to maintenance and support.
[47] Applying the above principles, where the parties agree at the outset they will maintain financial independence and each have their own families from prior relationships to support, this will be relevant in determining the quantum of an award and also relevant in deciding whether to take account of a claimant’s support of other members of their own family. I address these points below.
Discussion
[48] Ms Phochai is clearly an eligible claimant under the Act, and there is no dispute that there was a breach of moral duty. The approach that should apply, as the Judge stated, is to do only what is necessary to make adequate provision for Ms Phochai while recognising her position as Mr Matthews’ surviving partner.
19 See, for example, EM v SL [2005] NZFLR 281 (FC); Re Cunningham [1936] NZLR 69 (SC) at 61; Worms v Campbell [1953] NZLR 924 (SC and CA); Re Calder [1950] GLR 465 at 467; Marquet v Marquest [1992] 3 NZLR 742 (HC); Re PHR [2004] NZFLR 26 (FC).
20 Re McNaughten [1976] 2 NZLR 538 (SC) at 543.
21 See, for example, Holland v Kemp [2004] NZFLR 1135 (FC); EM v SL [2005] NZFLR 281 (FC) at [28]-[30] and [47].
22 EM v SL [2005] NZFLR 281 (FC) at [28]-[30] and [47]; Holland v Knapp [2004] NZFLR 1135 (FC); Re Cunningham [1936] NZLR 69 at 71; Worms v Campbell [1953] NZLR 924 (SC and CA) at 936-937 and 942; Re The Will of FB Gilbert (1946) SR (NSW) 318 (HCA); E v E (1915) 34 NZLR 785 (SC and CA); Re Whitfield [1937] VLR 17 (SCV); Re Calder [1950] FLR 465 at 467; Re Boag [1962] NZLJ 289; Re Jennings [1940] GLR 546; Clements v Clements [1995] NZFLR 544 (CA); Wightman v Steenstra [1997] NZFLR 701 (CA).
[49] I turn to address the five factors the appellant says the Judge should have taken into account but failed to do so.
The true net value of the estate
[50] The appellant makes the point that the Judge worked from a net value of the estate of $3,400,000 and was clearly aiming to award Ms Phochai approximately 30 per cent of that sum, making express reference to that percentage. However counsel for the appellant, Mr Wilson, contends that the relevant value of the estate should for this purpose take account of likely costs awards, costs incurred by Greg in the proceedings, and a tax liability of $150,000 which it seems was somehow not factored into the $3,400,000 value.
[51]I agree. I am advised that the costs sought by Mark, Gina and Ms Phochai are
$80,000-$100,000, $40,000 and $50,000 respectively. This point is complicated by the fact that costs have not actually been fixed but Mr Wilson says he anticipates the costs orders will total at least $100,000, or could do. That seems likely and counsel for Ms Phochai, Mr Rao, did not dispute that. In addition I am advised by Mr Wilson, and accept as reasonable, that his client has incurred costs of approximately $100,000 which of course have to come out of what he ultimately receives from the estate. Then inevitably there must be further costs in administering the estate.
[52] All told, it seems to be to be fair to work from a true net value of the estate of approximately $3,000,000 after costs awards and expenses, tax and other liabilities, 30 per cent of which would be $900,000, not $1,000,000. As Mr Wilson points out, after deducting the $720,000 awarded to Mark and Gina, Greg would receive little more than Ms Phochai under the Family Court judgment, an outcome obviously not contemplated by the Judge.
[53] I note in this regard that the values of the properties may have increased since the hearing but in broad terms that is offset by the fact that Ms Phochai and her family have had the use of the Hollinbrigg Place house since 2016 and the outgoings on the house have been met by the estate. Also, the two awards to Mark and Gina were paid some time ago which involved the estate borrowing money such that the administration costs will be considerable.
The extent of Ms Phochai’s assets
[54] The Judge proceeded on the basis that Ms Phochai had only $105,000 worth of assets, being the properties in Thailand. However, as her counsel concedes, Ms Phochai had approximately $217,000 worth of assets (including over $100,000 in cash or other liquid assets) when Mr Matthews died. She had spent some $50,000 on costs by the time of the hearing but I do not consider it appropriate to deduct that amount. Ms Phochai has sought costs in the proceedings of $50,000 and will receive an award of such amount as is considered appropriate.
[55] Further Ms Phochai’s assets should be treated as if available to her in full. My impression is the Judge did not really take the Thai properties into account. While I agree with the appellant that Ms Phochai has the “option” of returning to live in Thailand (which would obviously materially impact on any award to her if it were exercised), I agree with the Judge that is not a realistic approach to the case. Ms Phochai has apparently been living in New Zealand since about 1994. However, the reverse of finding she intends to stay here, is that there is no compelling reason why Ms Phochai could not sell the properties that she has in Thailand, which would mean she has a substantial cash sum of her own available for her use in New Zealand.
[56] I therefore consider that the Judge should have proceeded on the basis that Ms Phochai had available assets of just over $200,000, plus a car and presumably the household chattels at Hollinbrigg Place, which she seems to have retained.
Ability of Ms Phochai’s family to contribute
[57] Judge Goodwin seems to have considered that Ms Phochai should be able to retain the home she is living in and also have some money to spend, and in particular he clearly considered he should take into account that she had her own family to support.
[58] Mr Wilson submits that Mr Matthews had no moral obligation to support Ms Phochai’s family and, correspondingly, the house Ms Phochai is living in is greater than needed by her, as evidenced by the number of people she is housing. Hollinbrigg Place is a three-bedroom home on an 1,155 square metre section and the valuation
information records it as having development potential. As noted, it is valued at
$790,000.
[59] I agree with Mr Wilson that there is no reason in these circumstances, particularly in light of the contracting out agreement, why Mr Matthews should have an obligation to support Ms Phochai’s family, nor do I consider it fair to even conclude on the evidence that they need her support, as opposed to being able to support themselves. Ms Phochai herself would only fairly need a two-bedroom home. It is a reasonable inference that a two-bedroom home in the same area would cost less than
$790,000 and that seems to be borne out by reference to the (albeit limited) valuation evidence provided in respect of another of Mr Matthews’ other properties, being 118 Weymouth Road. That property is also in Manurewa and is listed as having a value of $600,000. It appears to be a 1,000 square foot house, although oddly the valuation information refers to “zero bedrooms”.
[60] Alternatively, it would be fair to take account of, not just the income of Ms Phochai, but the income or potential income that she could derive from the others living with her by way of board and/or material contribution to costs. That would mean, coupled with her own capital, that she had more than sufficient to otherwise support herself, even if she were in fact or notionally to remain in the more valuable Hollinbrigg property. In other words provision of any extra funds would not be necessary.
The parties’ agreement to be financially independent
[61] As noted, the contracting out agreement insofar as it purported to exclude any claim under the Family Protection Act is either void or voidable and that was presumably not contested. Nonetheless, Mr Wilson submits the agreement must be relevant to an assessment of the amount required to remedy the moral breach. The parties had each agreed that they would be financially independent and would leave the relationship with only the assets they came in with, plus anything more they had acquired themselves.
[62] Judge Goodwin found the agreement became unfair with the passing of time, but not seriously unjust and therefore upheld it. It would seem wrong then to simply
ignore the clear intent of the agreement in the context of fixing an award under the Act. At the least, the award should be at the lowest end of any potential range.
[63] It also has to be noted that this was a third relationship for each of the parties and more relevantly, they each had children from their two previous relationships. As the Judge said, it is very common for older couples who have previous families to want their assets to go to their children and not (ultimately) to the children of a later partner. The case law I noted earlier is relevant in this regard. In cases such as this, provision of housing in trust for life or even by way of rental may be more appropriate than a house being provided as a capital sum. It seems the case was not argued that way by either party, but those options should be reflected in a discounted capital sum.
[64] It is important to note that the agreement records the parties’ joint intention. The intention of the testator alone (even if made clear at an early stage) would be of little relevance.
Relevance of Greg’s own position
[65] Mr Wilson argued that the Judge should have taken Greg’s circumstances into account. I agree Greg’s circumstances are relevant, but my impression is that the Judge did take them into account. I note that Greg has virtually no assets and a wife and two young children to support. Further, one of the children has a material physical impairment in that they were born missing the lower half of one arm, which will obviously impact on their level of dependency.
Overall assessment
[66] Each of the first four matters listed above I consider to have been relevant factors in respect of which the Judge either made an error or failed to take the point into account, resulting in the award being excessive.
[67] Taking all of the above factors into account, including the fifth, I consider that a fair award would be $750,000. That would enable Ms Phochai to purchase a cheaper property than Hollinbrigg Place and have sufficient cash, including her own assets, to support herself. Alternatively, she might be able to retain the Hollinbrigg Place
property (or similar) with her family paying market rent. Or she could readily rent a suitable property for the rest of her life and have sufficient to support herself.
[68] This award also bears greater proportionality to the much lesser awards made to Mark and Gina of $570,000 and $200,000.
Result
[69] The appeal is allowed. The award of $1,000,000 to the respondent is vacated and an award of $750,000 substituted.
[70] Hopefully the parties will now be able to agree costs in both courts and bring this matter to a head. If not, the appellant should file a costs memorandum within 15 working days from the date of this judgment, and the respondent within a further 10 working days. Memoranda are not to exceed five pages, excluding intituling pages and supporting materials such as invoices.
Hinton J