Newland v Robertson
[2017] NZHC 2878
•22 November 2017
IN THE HIGH COURT OF NEW ZEALAND NEW PLYMOUTH REGISTRY
I TE KŌTI MATUA O AOTEAROA NGĀMOTU ROHE
CIV-2014-443-000017 [2017] NZHC 2878
BETWEEN JOHN SCOTT NEWLAND AND
JANICE MAREE FORSYTH AS EXECUTORS IN THE ESTATE OF GILLIAN ROBERTSON
Applicants
AND
DUNCAN STEWART ROBERTSON BY HIS ATTORNEYS JAMES ARTHUR COLEMAN AND AARON BLAIR ROBERTSON
First Respondents
AND
AARON BLAIR ROBERTSON Second Respondent
Hearing: 11-14 July 2016 Appearances:
S W Hughes QC for the Applicants
R J B Fowler QC for the First Respondent
H B Rennie QC for the Second RespondentA R Gilchrist for seven residual beneficiaries of the estates of the applicant and the first responden
Judgment:
22 November 2017
JUDGMENT OF PALMER J
This judgment is delivered by me on 22 November 2017 at 4 pm pursuant to r 11.5 of the High Court Rules.
..................................................... Registrar / Deputy Registrar
Counsel: Solicitors:
S W Hughes QC, New Plymouth Nicholsons, New Plymouth
R Fowler QC, Wellington Bullock & Associates, Whanganui
Newland v Robertson [2017] NZHC 2878 [22 November 2017]
H Rennie QC, Wellington Horsley Christie, Whanganui
A R Gilchrist, Barrister, Auckland Atmore & Co, Auckland
Summary
[1] By the latter half of 2012, Ms Gillian Robertson could communicate only with her eyes and her thumbs. She, her husband Mr Duncan Robertson and his cousin Mr Aaron Robertson signed a Deed purporting to waive her relationship property share in Glenview farm to allow the farm to be given to Aaron on Duncan’s death. Her litigation guardian, a residuary beneficiary, brought proceedings challenging the Deed. Gillian and Duncan have both since died. At the parties’ request I adjourned the hearing in July 2016 to allow them to explore settlement. A settlement proposal was jointly made by the parties, involving half of the value of the relationship property going to each estate, with the farm being gifted by Duncan to Aaron. Seven residuary beneficiaries raised concerns about the proposal. I have determined the settlement proposal honours the spirit of the wishes of both Gillian and Duncan. I make orders effecting it.
What happened?
The Parties
[2] Gillian and Duncan owned Glenview, a farm in Waverley, South Taranaki. From 2007, Duncan’s cousin, Aaron, managed Glenview for them. In 2008 Gillian and Duncan made wills leaving their estate to each other and then to their nieces and nephews. In 2010 they signed codicils giving Aaron first right of refusal over Glenview on sale after their deaths. Gillian developed supra nuclear palsy and, in December 2010, she entered Te Mahana Rest Home. Duncan acted as her attorney though, in December 2011, she appointed her nephew, Mr John Hunter, as successor attorney. Duncan appointed Aaron as his attorney.
The Deed
[3] By the latter half of 2012 Ms Gillian Robertson could communicate only with her eyes and her thumbs. Meanwhile, discussions between Aaron and Duncan had progressed about the farm. On 19 November 2012, the Robertsons’ solicitor, Mr James
Coleman, drafted a Deed of Arrangement between Aaron, Duncan and Gillian, purporting to gift Glenview to Aaron on Duncan’s death if Aaron was still farm manager. It purported to waive Gillian’s half share of Glenview under the Property (Relationships) Act 1976 (the Act). Another solicitor, Mr Roger Lawrence attended on Gillian on 19 November 2012 to discuss the Deed. Some amendments were made and Gillian marked it on 29 November 2012. On 10 December 2012 Mr Coleman attended on Duncan who signed the Deed. On 21 December 2012 Mr Coleman attended on Duncan who signed a new will, gifting the farm to Aaron. In January 2013
Duncan, too, was admitted to Te Mahana.
Commencement and hearing of the proceeding
[4] In January 2014 Mr John Hunter, Gillian’s attorney and nephew, who was a potential beneficiary under her will, interviewed Gillian. These proceedings challenging the Deed were brought by Mr Hunter as litigation guardian in her name in March 2014. Gillian died on 2 January 2015. The proceeding was continued by the executors of her estate.
[5] From Monday 11 July to Thursday 14 July 2016 I heard opening submissions and the evidence in New Plymouth:
(a) On behalf of Gillian’s estate, I heard opening submissions from Ms
Susan Hughes QC and evidence from:
(i) Mr John Hunter, the Robertsons’ nephew and Gillian’s attorney;
(ii) Mrs Judith Herbert, manager of Mrs Robertson’s rest home;
(iii)Mr Wayne Chapman, a commercial law and conveyancing expert; and
(iv) Mr Shaun Gifford, a family law and conveyancing expert.
(b) On behalf of Duncan’s attorneys I heard an opening statement from Mr
Roger Fowler QC and evidence from:
(i) Mr James Coleman, the Robertsons’ solicitor who prepared the
Deed;
(ii) Mr Roger Lawrence, the solicitor who advised Gillian on the
Deed; and
(iii) Mr John Strahl, an expert conveyancing lawyer.
(c) On behalf of Mr Aaron Robertson I heard an opening statement from
Mr Hugh Rennie QC and evidence from:
(i) Mr Aaron Robertson;
(ii)Ms Elizabeth Somerset, a niece of the Robertsons (a brief from whom was admitted by consent);
(iii) Ms Ylva Robertson, Aaron’s wife; and
(iv) Mr Murray Armstrong, a friend of the Robertsons.
[6] Ms Hughes’ case was the Deed is null and void on the ground of Gillian was mistaken about it (non est factum) as well as non-compliance with the Act. Mr Rennie, for Aaron, submitted the doctrine of non est factum does not apply here on the facts and there is a problem with the High Court’s jurisdiction under the Act. He appeared under protest to jurisdiction but agreed the issue of jurisdiction should be confronted in the course of judgment.
[7] Mr Duncan Robertson lacks capacity and was a party to the proceedings through his attorneys, Mr James Coleman and Aaron. Mr Coleman and Aaron were both witnesses in the proceeding. Mr Coleman took the initial steps to set up the transaction under challenge and Aaron is a beneficiary of it and a party. Given the potential conflicts of interest, they both asked solicitors and counsel, Mr Fowler QC, to act in the proceeding as they thought best in their discretion to properly protect Duncan’s interests. Mr Fowler took no formal position on the validity of the gift from Gillian to Aaron under the Deed. He acknowledged Glenview was relationship
property. He did take a position in relation to jurisdiction over the relationship property claim, submitting it must be heard and determined in the Family Court.
Settlement discussions and proposal
[8] On 14 July 2016, just before closing submissions were due, counsel for each of the three parties requested a two-week adjournment to allow settlement discussions to occur. I granted the adjournment.
[9] In response, in a joint memorandum, all counsel stated the objective of achieving an overall settlement of all matters affecting the parties was “to be achieved consistently with the rights of all persons who are not parties but entitled to benefits (vested, discretionary, or contingent) from the estates of the Applicant and/or the First Respondent”.1 The parties agreed to pursue a settlement that would involve:
(a) equal division of relationship property, involving Duncan ending up with Glenview;
(b)mirror wills by both Gillian and Duncan, with the same 14 residual beneficiaries; and
(c) conditional gifting of Glenview by Duncan to Aaron.
[10] Counsel stated, jointly:2
The effect of that gift is to reduce the size of [Duncan’s] residuary estate by the value of that [conditional] gift. Each of the fourteen nephews and nieces will receive less. Counsel are agreed that on the evidence, that is what Duncan intended to happen, albeit with a contribution from Gillian. But – again as a result of the circularity [between the two estates having the same beneficiaries] the aggregate outcome for the residuary beneficiaries is the same as if that contribution, and the gift, had been made.
[11] All parties agreed I had jurisdiction to determine the question of jurisdiction which had been put in issue during the hearing. The implication, and the express terms
of the joint memorandum, is that I had jurisdiction to make orders in the management of the proceedings. I agreed that was so.
[12] In my Minute No 2 of 2 August 2016 I stated:3
[7] The settlement proposal in the joint memorandum proceeds on the basis that Ms Gillian Robertson and Mr Duncan Robertson have mirror wills that leave their estate to the same beneficiaries. This means that, as long as property is part of either estate, the beneficiaries have the same ultimate entitlement. It also means that it is only the conditional future gift of the Glenview Farm (Glenview) to the second respondent that reduces the total amount distributed to the beneficiaries, if the gift becomes unconditional.
[8] The settlement proposal is based on the following propositions:
(a) It was Mr Duncan Robertson’s intention to gift his interest in
Glenview to Mr Aaron Robertson.
(b) The issue in the proceeding is whether Ms Gillian Robertson intended to waive her claim to half of Glenview.
(c) Mr Duncan Robertson’s testamentary capacity is agreed not to be in issue, up to and in December 2012 when he signed his last will.
(d) Mr Duncan Robertson no longer has testamentary capacity and cannot make another will himself. The settlement would remove any basis for his attorneys to apply for a new will to be made.
(e) The parties will agree the Deed is not in effect and no application to challenge that under s 21H of the Act would be made.
(f) The assets and value of Ms Gillian Robertson’s estate would be as if the Deed had not been executed.
(g) The assets and value of Mr Duncan Robertson’s estate will be reduced by the conditional future gift of his interest in Glenview, under his December 2012 will, to Mr Aaron Robertson (and, thereby, also to his wife Ms Ylva Robertson).
(h) The other clauses of Mr Duncan Robertson’s will regarding Mr Aaron Robertson (and, thereby, Ms Ylva Robertson) having options to purchase livestock, plant and chattels remain unchanged.
(i) Mr Aaron Robertson’s position as farm manager is confirmed and the first respondent will undertake to complete an employment agreement effecting that, until Mr Duncan Robertson’s death.
(j) The respondents will take steps to arrange Mr Aaron and Ms Ylva Robertson acquiring from Mr John Hunter and his sister their contingent interest in Mr Duncan Robertson’s estate if the gift in Mr Duncan Robertson’s will were to fail.
(k) The applicants expect to make a partial distribution of Ms Gillian
Robertson’s estate.
(l) There are some other minor practical matters to be provided for.
[9] I have reviewed the settlement proposal as set out above. Prima facie, I consider that approach is one that the parties should be able to pursue if they wish. It can be said to honour the spirit of the wishes of both Ms Gillian Robertson and Mr Duncan Robertson.
[13] I directed the first respondents, if they wished to proceed with the settlement proposal, to commence Family Court proceedings as all counsel proposed.
Further developments
[14] The Family Court proceedings were commenced accordingly and transferred to the High Court on 9 November 2016 under s 38A of the Act. On 1 December 2016, I consolidated them with the extant High Court proceeding.4
[15] On 7 February 2017 counsel jointly explained there had been a delay in obtaining the valuation report required for settlement. The report was delivered on 15
February 2017.
[16] Mr Duncan Robertson died on 14 February 2017. Counsel advised that may have some impact on implementation of the settlement. Probate of his will was granted on 3 April 2017.
Settlement Proposal II
[17] On 13 June 2017, on the basis of a joint memorandum of counsel of 2 June
2017, I recorded the parties’ agreement on resolution of all matters, in light of Duncan’s death, and the orders they sought to implement that agreement.5 That would involve:
(a) a relationship property order determining Glenview is Duncan’s sole property on payment of $1.25 million from his estate to Gillian’s estate;
4 Minute No 3 of 1 December 2016 at [3].
(b)directions to Duncan’s executors and trustees to account for and pay half of the funds they have or will receive for stock, plant, equipment and vehicles;
(c) the original High Court proceeding being recorded as discontinued pursuant to settlement or struck out or judgment entered for the respondents as appears to me correct;
(d) the evidence not to be searched without prior leave of a judge;
(e) the applicant’s and first respondent’s actual and reasonable costs being paid from the respective estates; and
(f) reserving leave to apply further in the event any further issue arises.
Concerns raised by seven other beneficiaries
[18] On 30 June 2017, at the request of seven of the 14 beneficiaries of Gillian’s and Duncan’s estates, I adjourned my consideration of the parties’ request for orders implementing their settlement until 3 August 2017.6 I noted that, if there was no resolution by the end of that period, the seven beneficiaries may seek to intervene or to launch separate proceedings. I indicated I would schedule a further teleconference after that on application of any of the parties.
[19] On 3 August 2017 Mr Gilchrist filed and served a memorandum of counsel for the seven beneficiaries advising:
3 Whilst there has been no resolution of issues, and the non-seeking (and obtaining) of a Vesting Order has resulted in the residual beneficiaries of both Estates being $1,250,000.00 worse off, the residual beneficiaries do not wish to pursue a challenge to the proposed settlement, do not seek to intervene, and do not wish to be further heard on the matter.
4 The seven beneficiaries leave the issue as to whether the proposed settlement is approved entirely to the Court, and the other parties, and do not wish to be heard further on this matter.
5 Counsel would attend a Telephone Conference if such was held and directed by the Court, but records that no current Telephone Conference has been set, and Counsel does not need to be involved in any further Telephone Conference addressing or advancing settlement issues.
Settlement Proposal II Again
[20] On 9 August 2017, the three Queen’s Counsel representing the parties filed a memorandum of counsel:
(a) explaining Ms Hughes and Mr Fowler had discussed with Mr Gilchrist the proceedings and how the settlement proposal came about;
(b)advising the position remains exactly the same as it was on 2 June 2017 when counsel jointly sought orders that would settle the proceeding;
(c) advising there is no additional information or updating of the 2 June
2017 memorandum required;
(d) confirming to me that:
(a) As set out in the 2 June 2017 memorandum, supporting documents, and the prior documents and court record, all relevant information is before Your Honour;
(b) Each counsel has separately considered the interests of their respective clients, and the position in law of each of the estates and Mr Aaron Robertson (including consideration of the impact of the orders on residuary beneficiaries) and confirms to Your Honour that the orders proposed are orders which may properly be made as proposed;
…
(d) Counsel do not seek either a teleconference with Your Honour or a further in court appearance before Your Honour but will attend either should Your Honour seek any further information, submissions, or other action by any party.
and
(e) seeking the orders set out in their memorandum of 2 June 2017.
Invitation for final submissions
[21] On 17 August 2017, I indicated to the parties I was satisfied the proposed settlement is appropriate in all respects other than, potentially, its effect on the residual beneficiaries of both estates. On that issue I had an open mind, I was conscious of the time that has elapsed already in this proceeding but I was concerned to ensure that the Court’s orders are consistent with the interests of justice. I expressed my understanding as follows:7
(a) Gillian’s will expresses her testamentary intention to convert her property into money on trust for Duncan and, on his death, for her residuary beneficiaries.
(b) The transfer of the farm to Aaron would have no effect on Gillian’s residual estate since transfer of her half of the farm is effectively compensated by the payment from Duncan’s estate.
(c) Duncan’s will expresses his testamentary intention to leave (his share of) the farm to Aaron.
(d) The arrangement to transfer the farm to Aaron diminishes Duncan’s residual estate, to the detriment of the residual beneficiaries, by the value of his estate’s $1.25 million payment to Gillian’s estate. In return, Duncan’s estate receives full ownership of the farm which is then transferred to Aaron.
[22] I invited separate submissions on the questions of whether the effects of the orders sought on the residual beneficiaries are consistent with the testamentary wishes of both Gillian and Duncan, equally weighed, and whether the effects are consistent with the principles of the relationship property regime and, in particular, regarding:8
(a) the tests required to be satisfied for me to make the orders proposed;
(b) the effect of the proposed settlement on the interests of the residual beneficiaries;
(c) whether and to what extent, given that effect, the proposed settlement honours the spirit of the wishes of both Mrs Gillian Robertson and Mr Duncan Robertson and the principles of the relationship property regime;
(d) whether any alternative arrangement could be said to better honour the wishes of Mr and Mrs Robertson;
7 Minute No 6 of 17 August 2017 at [10].
8 At [12].
(e) identifying, if I approve the settlement, the procedural means by which the residual beneficiaries can pursue the matter if they wish; and
(f) whether any party wishes me to hear them on this issue, given that my decision will need to be reflected in a judgment.
[23] I invited, but did not require, Mr Gilchrist to file such submissions as well, by the same date, on behalf of the seven concerned beneficiaries.
Final submissions
Gillian’s estate’s submissions
[24] Ms Hughes submits the settlement involves Duncan and Gillian each receiving one-half of the relationship property to which they were entitled. The settlement reflects Duncan’s willingness to transfer cash to Gillian in return for her interest in the farm, so he could give it to Aaron. The residuary beneficiaries of Gillian’s estate will receive one-half of the relationship property. The residuary beneficiaries of Duncan’s estate will receive considerably less than that because he has gifted the farm to Aaron. But that reflects Duncan’s “stated and unwavering intention”. The gift was not challenged. There is no family protection claim available to the residuary beneficiaries and no testamentary promise claim. And the beneficiaries of each estate are the same so the division of property has no effect on the benefit received.
[25] Ms Hughes submits Mr Gilchrist’s suggestion of an order vesting half of the farm in Gillian’s estate would have gone beyond what Gillian was entitled to (which is half the relationship property not half of a particular asset). She also submits that, if Aaron had not been able to afford to purchase Gillian’s interest then Glenview would have had to have been partitioned, which was not consistent with Duncan’s stated ambition. She submits there is no better or, indeed, other possible resolution than that negotiated.
Aaron’s submissions
[26] Mr Rennie, on behalf of Aaron, submits the proposed settlement is fully consistent with the rights of all parties and beneficiaries and those orders should now be made. He submits, on Duncan’s death and probate of his will, Aaron’s legacy
vested, requiring transfer of Glenview to Aaron. Gillian’s relationship property claim to half the value of Glenview (as the couple’s home) is satisfied by the proposed settlement. Mr Rennie submits the Court would not, and would not be able to, vest half of the farm in Gillian’s estate. This is because Glenview was solely in Duncan’s name and he had disposed of it by legacy before any Court determination and no prudent executor would ever seek, and no court would vest, half an interest in an uneconomic farm unit. He submits the impact on the residuary beneficiaries is solely the effect of Duncan’s intended gift of the farm to Aaron. Mr Rennie submits the settlement in is full accordance with the spirit of the wishes of both Gillian and Duncan each of whom could give away or consume any or all of their assets before death.
[27] Mr Rennie also notes, apart from the seven beneficiaries who have raised concerns but stated they do not intend to apply or participate further, the other beneficiaries are Mr Hunter and his sister, Mrs Somerset, who gave evidence for Aaron, and four other Hunter beneficiaries who have informed Mrs Somerset they wish Duncan and Gillian’s intentions to be given effect by the Court. He submits there are no means by which residuary beneficiaries can pursue the matter because: Duncan’s will has been probated; none of the residuary beneficiaries can bring a claim under the Family Protection Act 1955; none have claimed a testamentary promise; and none could claim against the executors of either will.
Submissions on behalf of Duncan
[28] Mr Fowler, on behalf of Duncan’s interests, observes that Duncan’s intention to give the farm to Aaron had a long and well-documented gestation. Given that, he submits the executors of his estate were never going to agree to Mr Gilchrist’s suggestion to transfer half of Glenview to Gillian’s estate. That would promote the interests of the residuary beneficiaries of Duncan’s estate over the interests of the specific legatee and would be in breach of their fiduciary obligations.
Seven beneficiaries’ submissions
[29] Mr Gilchrist, on behalf of the seven beneficiaries, restated their concern that if half the value of the farm was in each of Gillian’s and Duncan’s estates, they would be better off by $1,250,000. Mr Gilchrist submits the proposed settlement does not
honour the spirit of Gillian’s wishes and the vesting of half the farm in Gillian’s estate would do so better. He said the seven beneficiaries’ sense of unfairness has been exacerbated by a lack of information and they are concerned about the continuation of litigation from the time of Gillian’s death, at a cost they effectively bear. They leave it to the Court as to whether to approve the settlement. They submit their own legal costs should be met from the estate as part of any settlement and that the order that the evidence not be searched without prior leave of the Court should not apply to them. They make comments on their rights against the executors of Gillian’s estate which are not before me. Mr Gilchrist attached a memorandum written by the seven beneficiaries amplifying their concerns, which I have read carefully. Ms Hughes responded to Mr Gilchrist’s memorandum.
[30] No one sought to be heard.
Decision
[31] I have considered the submissions by each party and the seven concerned beneficiaries, in light of the evidence at trial and the law. I confirm my initial view that the proposed settlement honours the spirit of the wishes of both Gillian and Duncan:
(a) Gillian’s estate receives half of the relationship property.
(b) Duncan’s wish to give Glenview farm to Aaron is honoured.
[32] It is true the effect of the settlement impacts adversely on the residuary beneficiaries. But that derives from Duncan’s wish to give the Glenview farm to Aaron. A residuary beneficiary is only entitled to what is left in an estate on death and after specific bequests. Duncan intended the farm to go to Aaron rather than for its value to be left to be distributed amongst the residuary beneficiaries. Gillian intended for her residuary beneficiaries to share in her estate, which includes half of the relationship property. Both intentions are honoured by the proposed settlement.
[33] Accordingly, I am satisfied the orders required to effect the proposed settlement comply with the applicable law, are consistent with the facts as ascertained
at trial, are within the scope of determination of the consolidated proceedings and are consistent with the proper rights and interests of the beneficiaries who are not parties.
[34] I am sympathetic to the request of the seven concerned beneficiaries to be able to access the court file. But I do not know the positions of the parties, other than the applicants, on that question. So I make the order sought by the parties and leave it to the beneficiaries to request access to the court file, with reasons, if they wish, upon which I would seek the responses of the parties.
[35] I have allowed the seven concerned beneficiaries to express their concerns, have carefully considered them and have made a decision about their concerns when strictly, perhaps, I was not required to do so. They are not parties to the proceeding. Their request for legal costs must be directed to the relevant executors who must consider it in accordance with their fiduciary duties.
Result
[36] I make the following orders:
(a) I determine and declare the land and buildings of Glenview Farm at 694
Karahaki Road, RD 1, Waverley, comprised of TN151/39, TN262/30, WN495/115 and WNE3/1150, are the sole property of Duncan Robertson on payment of $1,250,000 from his estate to Gillian Robertson’s estate.
(b)I direct Duncan’s executors and trustees to account for and pay half of the funds they have or will receive for stock, plant, equipment and vehicles.
(c) I enter judgment in this proceeding for the respondents, as sought jointly by the parties.
(d) I order the evidence is not to be searched without prior leave of a judge.
(e) The applicants’ and first respondents’ actual and reasonable costs will be paid from the respective estates.
(f) I reserve leave for any of the parties to seek the assistance of the court in the event any further issue arises with this proceeding.
Palmer J
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