NIGEL DAVID RIMMER AND NICOLA RIMMER s AND CAROLYN MARY WILTON AS ADMINISTRATOR OF THE ESTATE OF DAVID RIMMER
[2025] NZCA 374
•30 July 2025 at 3.30 pm
| IN THE COURT OF APPEAL OF NEW ZEALAND I TE KŌTI PĪRA O AOTEAROA |
| CA351/2023 |
| BETWEEN | NIGEL DAVID RIMMER AND NICOLA RIMMER |
| AND | CAROLYN MARY WILTON AS ADMINISTRATOR OF THE ESTATE OF DAVID RIMMER |
| Hearing: | 29 October 2024 |
Court: | Mallon, Thomas and Collins JJ |
Counsel: | V T M Bruton KC and L S B Acland for Appellants |
Judgment: | 30 July 2025 at 3.30 pm |
JUDGMENT OF THE COURT
AThe appellants’ application to amend the grounds of appeal is granted in part.
BThe appeal is dismissed.
CThe respondent is entitled to costs for a standard appeal on a band A basis together with usual disbursements.
____________________________________________________________________
REASONS OF THE COURT
(Given by Mallon J)
Table of contents
Introduction [1]
Facts [5]
High Court argument [15]
Pleading [15]
Submission [16]
High Court decision [17]
Discussion [22]
Conclusion [43]
New argument [44]
Submissions [44]
Administration Act [46]
Discussion [50]
Result [66]
Schedule: Key terms of the Agreement [68]
Introduction
David Rimmer died on 18 March 2016. He left no will. Carolyn Wilton (the respondent in this appeal) was his surviving de facto partner. Ms Wilton was appointed administrator of Mr Rimmer’s estate. She has made distributions of the estate to herself that are challenged by Mr Rimmer’s (now adult) children, Nigel and Nicola Rimmer (the appellants).
The issue between Ms Wilton and the appellants concerns the effect of an agreement dated 6 June 2002 between Mr Rimmer and Ms Wilton (the Agreement) contracting out of the Property (Relationships) Act 1976 (the PRA) on Ms Wilton’s entitlements under the intestacy provisions of the Administration Act 1969.
The appellants say the effect of the Agreement was that Ms Wilton could not make any claim on Mr Rimmer’s property (his share of the relationship property and his separate property) in the event of separation or death. They say this meant Ms Wilton could not claim any entitlements under the intestacy provisions on Mr Rimmer’s estate (the new argument). Alternatively, they say that Ms Wilton, having elected Option B under s 61 of the PRA, receives her entitlements under the intestacy provisions but cannot rely on her entitlements under the Agreement (the High Court argument).
The High Court argument was unsuccessful in the High Court.[1] The new argument is raised for the first time on the appeal. Ms Wilton initially opposed the grant of leave for this new argument to be considered on the appeal. Without conceding that leave be granted, at the appeal hearing Ms Wilton was content for the new argument to be determined subject to the Court being satisfied there was no unfair prejudice. We proceed on this basis because it is in the interests of justice to resolve the dispute and we are satisfied we can do so without unfairly prejudicing either party.[2]
Facts
[1]Rimmer v Wilton [2023] NZHC 1372 [judgment under appeal].
[2]Wylie v Wylie [2021] NZCA 521 at [39]–[42]. We have not, however, determined the new issue at [64] which was not the subject of full argument in this Court and was not considered in the High Court.
The parties proceeded in the High Court on the basis of an agreed statement of facts. They have provided this Court with a chronology together with relevant documents from the High Court hearing. From these sources, the facts that follow are not in dispute.
Mr Rimmer and Ms Wilton commenced living together in a de facto relationship in September 2000. They purchased a property at Hunua on 18 January 2002 as tenants in common in equal shares (the Hunua property). They entered into the Agreement on 6 June 2002.[3]
[3]We note that this Agreement was entered into approximately four months after the Property (Relationships) Amendment Act 2001 came into force. This amended the Property (Relationships) Act 1976 [the PRA] so that it applied to the division of property when a married couple died and extended the PRA division regime so that it applied to the division of relationship property between de facto partners when they separated or one of them died.
The key terms of that Agreement are set out in the Schedule to this judgment. The Agreement specified certain property to be, respectively, the separate property of Ms Wilton and the separate property of Mr Rimmer. It also specified the Hunua property to be relationship property. It contained provisions concerning the division of property if they “should separate or cease to live together as parties to a de facto relationship”. It also provided the surviving partner a life occupancy in the Hunua property in the event of the death of one of them.
Mr Rimmer died on 18 March 2016. At this time, Mr Rimmer and Ms Wilton were still living together in a de facto relationship. Mr Rimmer’s two children survived him. Mr Rimmer did not leave a will.
At the time of Mr Rimmer’s death his estate comprised: $107,786.08 cash in a BNZ account; $40,070.00 bonus bonds; $400.07 interest; personal chattels; and his interest in the Hunua property.
On 28 April 2016 Ms Wilton elected Option B under s 61 of the PRA (that is, to elect not to make an application under the PRA and to instead receive her entitlement on the intestacy of Mr Rimmer).[4] She filed a notice of that choice in the High Court on 3 May 2016.[5] The notice recorded that:
Under section 61 of the Property (Relationships) Act 1976, I choose —
to elect not to make an application under that Act for a division of the relationship property; and
to receive any beneficial interest to which I am entitled on his intestacy or partial intestacy.
[4]See below at [26] for the full text of s 61 of the PRA.
[5]Pursuant to ss 62 and 68 of the PRA, if a choice has not been made within six months of the later of the death of the deceased or the grant of administration of the estate (depending on the size of the estate), the surviving spouse is treated as having chosen Option B. For reasons of which we are not aware, the agreed facts stated that Ms Wilton did not choose Option A under s 61 of the PRA and that by default Option B applied. In fact, the documents show that Option B applied by election rather than by default.
On 13 May 2016 Ms Wilton applied without notice for letters of administration on intestacy. The High Court form for an affidavit in support of an application for letters of administration asks an applicant who is a spouse or de facto partner of the deceased to select “Statement A” (the statement for a surviving spouse or civil union partner) or “Statement B” (the statement for a surviving de facto partner). In accordance with that form, Ms Wilton’s affidavit in support of application for letters of administration selected Statement B which was as follows:
I am the surviving de facto partner of the Deceased. I am entitled to succeed on the intestacy. My beneficial interest in the estate is not affected by the choice I have made between Option A and Option B, under section 61 of the Property (Relationships) Act 1976, because I have chosen Option B and I lodged a Notice of Choice of Option in accordance with section 65(2)(c) of that Act in this Court on 3rd day of May 2016. A copy is attached and marked “A”.
…
On 25 May 2016 Ms Wilton was granted letters of administration appointing her administrator of Mr Rimmer’s estate. Following that grant, Ms Wilton:
(a)distributed all of Mr Rimmer’s personal chattels to herself;
(b)transferred Mr Rimmer’s half share in the Hunua property to herself as administrator on 17 June 2006;
(c)lived at the property rent free and personally paid all outgoings and maintenance while she occupied the property, until the property was sold on 31 May 2021 for $1.2 million;
(d)on 5 December 2016 paid $4,936.20 for legal fees for administration of Mr Rimmer’s estate, $10,618.82 for funeral costs and $130,132.58 as part payment of the prescribed amount of $155,000 under s 77 of the Administration Act;[6] and
(e)on 25 January 2017 paid herself $8,099.48.
[6]Administration (Prescribed Amounts) Regulations 2009, reg 5.
Ms Wilton has not made any distribution of the estate to the appellants.
The steps Ms Wilton took as administrator reflect her position that the relationship property is to be divided in accordance with the Agreement. This meant that Mr Rimmer’s estate comprised his half share of the Hunua property, which is subject to the life occupancy under the Agreement, and his separate property. Ms Wilton considers she was entitled to elect Option B under the PRA as she was not seeking a division of the relationship property under the PRA (having contracted out of division under the PRA). This meant that, had Mr Rimmer left Ms Wilton any gifts under a will, she would have been entitled to receive those gifts. It also meant that, Mr Rimmer not having made a will, she was entitled to the intestacy entitlements for a spouse or partner under s 77 of the Administration Act.[7]
High Court argument
Pleading
[7]See below at [46]–[47] for those entitlements.
On 23 August 2022 the appellants brought a claim against Ms Wilton. They alleged a breach of fiduciary duty. It appears that the appellants were unaware of the Agreement at this time as the pleading relied on Ms Wilton’s and the appellants’ respective entitlements under the intestacy and they were seeking an inventory. They were also seeking an account of profits and equitable compensation, apparently understanding that Ms Wilton had distributed all of the estate to herself.
Submission
By the time of the hearing before van Bohemen J in the High Court, the appellants were aware of the terms of the Agreement. They argued that, because Option B under the PRA applied,[8] Ms Wilton was precluded from relying on the Agreement. They contended that, as the Agreement was made pursuant to s 21 of the PRA,[9] if Ms Wilton wished to rely on her entitlements under the Agreement, it was necessary to select Option A under the PRA (pursuant to which an application is made under the PRA for a division of the relationship property). They further contended that, if Ms Wilton selected Option B, she could not take her entitlements under the Agreement because that was prohibited by s 76 of the PRA and inconsistent with s 95 of the PRA.[10]
High Court decision
[8]Still understanding that it applied by default rather than because she had elected it (see above n 5).
[9]We have set out s 21 of the PRA at [24].
[10]We have set out s 76 at [29] and s 95 at [33].
The Judge rejected this submission. He noted that Option A was an election for the division of relationship property under the PRA, whereas the whole purpose of a s 21 agreement is to provide for a division of relationship property other than under the PRA. The Judge considered this was evident from the words of s 21 which provides for an agreement “for the purpose of contracting out of the provisions of this Act”. He considered this was also clear from the structure and content of ss 21A to 21O that agreements are separate from and not subject to the PRA.[11]
[11]Judgment under appeal, above n 1, at [53]–[57].
The Judge further considered that, if a surviving spouse or partner wished to receive property that is subject to an agreement made under s 21, the proper election under s 61 of the PRA would usually be Option B. In this event s 76 of the Act, which (relevantly) provides that the “surviving spouse or partner has no entitlement under Part 3 of the Administration Act 1969”, did not apply because that section applies when Option A is selected.[12] The Judge added that this conclusion was supported by s 95 of the PRA, which (relevantly) provides that, if Option B is chosen, the PRA does not apply to the distribution of property under pt 3 of the Administration Act.[13]
[12]At [58]. Pursuant to s 75 of the PRA, s 76 applies only where Option A has been selected.
[13]At [59].
The Judge concluded:
[60] For these reasons, I am satisfied that the position advanced by the [appellants]; namely, that, because Ms Wilton had elected option B, she was precluded from taking relationship property under the Agreement, is wrong as a matter of law.
[61] Under option B, a surviving partner of a deceased intestate partner elects not to make an application under the PRA for a division of the relationship property but, if entitled to a beneficial interest in the intestacy, receives that intestacy.
[62] That intestacy is distributed under pt 3 of the Administration Act. How the intestacy is distributed depends on the nature of the property in the deceased partner’s estate.
[63] In the present case, Mr Rimmer’s estate, as that term is defined in s 2 of the Administration Act, includes Mr Rimmer’s rights in relation to the Hunua Property. Those rights comprise rights under the title to the property and rights under the Agreement. It follows, therefore, that any distribution of Mr Rimmer’s estate under pt 3 is subject to the terms of the Agreement.
The Judge concluded that Ms Wilton had not breached her fiduciary duty as alleged by the appellants.[14]
[14]At [64].
The Judge went on to note that “there may be unaddressed issues over how the Agreement has been implemented” but they were not the subject of argument before him.[15] The Judge had earlier noted that there appeared to be scope for argument over: whether the adjustment of shares in the Hunua property provided for in cl 4.2 of the Agreement applied where one of the parties died; and whether the lifetime right to occupy the Hunua property included a right to rent-free occupancy and a lifetime use of the proceeds of the sale of the property.[16] However, the appellants had not advanced submissions on these matters and counsel for Ms Wilton “assured” the Judge that “these questions [were] not at issue in this proceeding”.[17]
Discussion
[15]At [65].
[16]At [25].
[17]At [26].
We start our discussion of the appeal issues with an overview of the relevant legislative framework.
One of the purposes of the PRA is to provide for a “just division of the relationship property between the spouses or partners when their relationship ends by separation or death”.[18] Consistent with this purpose, the PRA provides for “the division of relationship property” when spouses or partners are alive and they separate,[19] and when they have not separated but one of them dies.[20] Under the PRA, and subject to other provisions of the Act, relationship property is divided equally.[21]
[18]PRA, s 1M(c).
[19]Sections 10A and 25(2)(a) or (b).
[20]Section 10D.
[21]Section 11.
Section 21 enables spouses or partners to contract out of the PRA. It provides:
21 Spouses or partners may contract out of this Act
(1)Spouses, civil union partners, or de facto partners, or any 2 persons in contemplation of entering into a marriage, civil union, or de facto relationship, may, for the purpose of contracting out of the provisions of this Act, make any agreement they think fit with respect to the status, ownership, and division of their property (including future property).
(2)An agreement made under this section may relate to the status, ownership, and division of property in either or both of the following circumstances:
(a) during the joint lives of the spouses or partners:
(b) when one of the spouses or partners dies.
…
We will return to the effect of a s 21 agreement on the PRA provisions in the event of death. But first we set out how the PRA operates in the event of death when there is no such agreement.
Part 8 of the PRA is concerned with the division of property when a spouse or partner dies.[22] Part 8 includes s 61 which provides:
61 Surviving spouse or partner may choose option
(1)If one of the spouses or partners has died (except in a situation described in section 10D(1)), the surviving spouse or partner may choose option A or option B.
(2)Option A is to elect to make an application under this Act for a division of the relationship property.
(3)Option B is as follows:
(a)to elect not to make an application under this Act for a division of the relationship property; and
(b)if the surviving spouse or partner is a beneficiary under the will of the deceased spouse or partner, to receive that property; and
(c)if the surviving spouse or partner is entitled to a beneficial interest on the intestacy or partial intestacy of the deceased spouse or partner, to receive that interest.
[22]Section 55.
A choice under s 61 must be made within six months after administration of the estate is granted.[23] There are requirements for how the choice is made, including that it be in the prescribed form and lodged with the administrator of the deceased spouse or partner.[24] If no choice has been made within this period, then the surviving spouse or partner is treated as having chosen Option B.[25] The administrator or trustee of the estate of the deceased spouse or partner must not distribute the estate before the expiry of six months after the grant of administration or the choice made under s 61, whichever happens first.[26]
[23]Section 62(1)(b). Pursuant to ss 67 and 69, the choice is irrevocable subject to the court’s power to set it aside in certain circumstances.
[24]Section 65.
[25]Section 68.
[26]Section 71(1).
Part 8 also includes provisions that follow from the choice that is made (or is treated as having been made). Section 63 provides that a surviving spouse or partner cannot “apply … for a division of the relationship property” unless they have first chosen Option A. Section 75 provides that, if a surviving spouse or partner chooses Option A, “sections 76 to 78 apply to the proceedings” and “sections 2 to 53A apply to the proceedings, but some of the sections are modified or affected by sections 79 to 94”.
Section 76 provides for the effect of selecting Option A on the surviving spouse or partner’s entitlements under the will or intestacy as follows:
76 Effect on will or intestacy of choice of division under this Act
(1)Unless the will (if any) of the deceased spouse or partner expresses a contrary intention,—
(a)every gift to the surviving spouse or partner in the will of the deceased spouse or partner (if any) is to be treated (for all purposes) as having been revoked; and
(b)the will of the deceased spouse or partner (if any) is to be interpreted as if the surviving spouse or partner had died before the deceased spouse or partner; and
(c)the estate of the deceased spouse or partner must be distributed accordingly.
(2)The reference in subsection (1)(a) to gifts to the surviving spouse or partner in the will of the deceased spouse or partner includes the whole of the interest of the surviving spouse or partner as a beneficiary in any real or personal property to which the surviving spouse or partner would otherwise be entitled under the will of the deceased spouse or partner.
(3)The surviving spouse or partner has no entitlement under Part 3 of the Administration Act 1969.
(4)This section is subject to section 77.
In other words, if Option A is elected, the surviving spouse does not receive anything under the deceased’s will if there is one, nor receive what would otherwise be their entitlements on an intestacy under the Administration Act if there is no will. This is subject to the court’s power under s 77 to make an order that the surviving spouse or partner may receive some or all of the gifts made to them under the deceased’s will or part or all of their entitlements on an intestacy.
We note that if Option A is elected, s 21 is amongst the provisions that continue to apply, of which some are modified or affected by ss 79 to 94. These sections set out such matters as how property that passes to a spouse or partner on survivorship is treated, the presumption that property acquired by the estate is relationship property, that separate property acquired by the surviving spouse or partner after the death of the deceased is separate property subject to the court determining otherwise, and who can apply for an order under s 25 (for the division of relationship property).
These provisions also include s 87 which modifies s 21 by permitting a surviving partner to challenge an agreement made under s 21 as follows:
87Surviving spouse or partner may challenge agreement
(1)This section applies if—
(a)the spouses or partners make an agreement under section 21 defining the share of the relationship property or any part of it that each is entitled to on the death of one of them; and
(b)one of them dies.
(2)If this section applies,—
(a)the surviving spouse or partner may apply to the court—
(i)to have the agreement declared void for non‑compliance with a requirement of section 21F:
(ii)to have the agreement set aside under section 21J; and
(b)the surviving spouse or partner may make the application either before or after exercising the option in section 61.
(3)In deciding, under section 21J, whether giving effect to an agreement to which this section applies would cause serious injustice, the court must have regard, in addition to all other relevant circumstances, to whether the estate of the deceased spouse or partner has been wholly or partly distributed.
(4)This section is subject to section 47.
In relation to Option B, s 95 provides:
95Effect on application of Act of choice of will or intestacy
(1)If the surviving spouse or partner chooses option B, nothing in this Act (other than sections 20 to 20F or sections 58 and 59) applies to the distribution of property under the will of the deceased spouse or partner or under Part 3 of the Administration Act 1969.
(2)To avoid any doubt, the fact that a surviving spouse or partner chooses, or is treated as having chosen, option B does not prevent that person from disclaiming any interest as a beneficiary in any real or personal property to which he or she is entitled under the will of the deceased spouse or partner or under Part 3 of the Administration Act 1969.
Sections 20 to 20F are concerned with the rights of creditors, a spouse or partner’s protected interest in the family home, payment of the protected interest in a bankruptcy, and other matters relating to debts. And ss 58 and 59 are concerned with the preservation of the rights of creditors and the payment of the protected interest in the family home when an estate is insolvent.
For Option B, there is no equivalent provision to s 75 pursuant to which s 21 continues to apply.
We return now to the effect of these provisions if the parties have entered into a s 21 agreement. We first note that a s 21 agreement may cover all relationship property, or some of it, and it may be intended to apply on separation or death or in both situations.
We start with the position where the s 21 agreement covers the division of all of the couple’s relationship property in the event of separation or death, and it is a valid and enforceable one.[27] In this situation the parties to the s 21 agreement have contracted out of the PRA and it does not apply. This follows from the words of s 21, which enables an agreement to be made “for the purpose of contracting out of the provisions of this Act”. This is reinforced by s 21O, which provides that relationship property is subject to the PRA if there is not an agreement under s 21.
[27]If a s 21 agreement does not comply with the requirements that are set out in s 21F, it is void but subject to the court’s power under s 21H to give effect to it if no party is materially prejudiced. Additionally, pursuant to s 21J, a court may set aside a s 21 agreement if it is satisfied that giving effect to the agreement would cause serious injustice.
However, it does not necessarily follow that the pt 8 provisions of the PRA will have no application. Section 87 is premised on the basis that there is a s 21 agreement and an election has been, or can be, made. Further, s 71 provides that the administrator or trustee of an estate of a deceased spouse cannot distribute the estate before the earlier of the expiry of six months after administration is granted or the choice made under s 61. And, when a spouse or partner seeks a grant of letters of administration, the High Court form requires a choice to have been made.
The pt 8 provisions are, however, structured to ensure that a s 21 agreement will be given effect (unless challenged) on the death of spouse or partner. It does that because:
(a)Option A should not be selected if there is a s 21 agreement because the surviving partner is not able to apply for a division of the relationship property under the PRA (unless they are or will be challenging the agreement).[28] This is because they have contracted out of the PRA provisions for division and the division instead proceeds in accordance with the s 21 agreement. If Option A is nevertheless elected, s 21 is one of the provisions that continues to apply. In this event the surviving spouse or partner will be bound by their agreement and, pursuant to s 76, they cannot receive any gift under the will or receive any entitlement under the Administration Act.
(b)If Option B is elected, the surviving partner cannot make an application for division of the relationship property under the Act. Nor does the surviving partner need to do so, because they can rely on the agreement they have made under s 21 for the division of the relationship property. The surviving partner is also able to receive their entitlements under a will or on an intestacy.
[28]We acknowledge that this is different from the position expressed in Law Commission Dividing relationship property — time for change? | Te mātatoha rawa tokorau — Kua eke te wā? (NZLC IP 41, 2017) at [34.45]. However, the Law Commission cites no authority for the view that Option A should be selected if a party wishes to rely on a s 21 agreement. As the respondent submits, there are several High Court cases in which a surviving partner has selected Option B to receive their entitlements under a s 21 agreement and also under a will: for example, Chambers v Chambers [2016] NZHC 583 at [59]; Dymond v Upritchard [2020] NZHC 3274 at [7], [16] and [78]; and Thurston v Thurston [2014] NZHC 2267 at [73]–[74].
The practical effect of these provisions is that either way the s 21 agreement applies to the division of the relationship property. Option B will be elected if the deceased spouse or partner has made provision for the surviving spouse or partner in their estate or if there is no will. The s 21 agreement governs what part of the relationship property forms part of the deceased spouse or partner’s estate. If the couple do not wish to make provision for each other in their estate, they need to make a will gifting their property to beneficiaries other than their spouse or partner.
The same position applies if the s 21 agreement does not provide for the division of all relationship property in the event of death, or does so incompletely:
(a)If the division of the relationship property that is not covered by the s 21 agreement is greater than what they would receive under a will or intestacy, the surviving spouse or partner would likely elect Option A. They will be bound by the s 21 agreement (unless they challenge it under s 86) but they can also apply for division of the relationship property under the PRA for the property not covered by the s 21 agreement. If Option A is elected, they will not receive any gift under a will, nor be entitled to claim on an intestacy.
(b)If, however, the division of the relationship property that is covered by the s 21 agreement is less than what they would receive under a will or intestacy, the surviving spouse or partner would likely elect Option B. In this event, the surviving spouse or partner would take their share of the relationship property that is covered by the s 21 agreement pursuant to its terms, they would not apply for a division of the balance of the relationship property, and they would receive their gifts under the will if there is one, or under the intestacy if there is not.
The practical effect of the way the PRA operates in the event of death reflects that its purpose is the just division of relationship property and it provides for that division when the parties separate or die. The PRA is not about what the parties may choose to do with their respective share of relationship property and their separate property that together form part of their respective estates, except in so far as it enables a choice to be made by the surviving partner whether to apply for a division of the property under the PRA (if there is no s 21 agreement or it is successfully challenged), or to receive under the will or the statutory intestacy provisions if there is no will.
Conclusion
We therefore agree with the conclusion reached by van Bohemen J on the High Court argument. That is, we disagree with the submission for the appellants that Option A must be selected if there is a s 21 agreement. Option A is to elect to “make an application … for a division of the relationship property”. Such an application is only relevant (and of practical value to the surviving spouse or partner) if the surviving spouse wishes to apply for a division of the relationship property in accordance with the PRA provisions because they have not, or to the extent they have not, contracted out of the PRA provisions.
New argument
Submissions
The appellants submit that, properly interpreted, the Agreement applied to the status of property both during the parties’ lives and in the event of death. They say that this meant the choice of Option A or B under s 61 of the PRA did not apply. They further say that, by the Agreement, Mr Rimmer and Ms Wilton had contracted out of a claim for intestacy entitlements under s 77 of the Administration Act. They say this meant that Ms Wilton had no entitlement to Mr Rimmer’s estate except to the extent provided in the Agreement, namely the lifetime interest in the Hunua property. This in turn meant that, when that right of occupancy ended with the sale of that property, Ms Wilton was entitled to her 50 per cent share under the Agreement and was not entitled to share in Mr Rimmer’s 50 per cent share that formed part of Mr Rimmer’s estate.
Ms Wilton submits that to contract out of s 77 of the Administration Act other than by way of a will, it would have been necessary for she and Mr Rimmer to have entered into a settlement agreement under ss 21A or 21B of the PRA, and any such agreement would need to have included clear words that were intended to exclude any entitlements on intestacy. She says the correct interpretation of the Agreement is that: it defined what was relationship property and what was separate property at a point in time; and it did not purport to settle what each party could do with their property as defined in the event of death except in so far as it provided the surviving partner with a right to occupy the relationship property. She says this meant that each party was free to dispose of their estate under a will as they wished, including by gifting some or all of their property to the surviving partner. In the absence of a will, the intestacy provisions applied.
Administration Act
As to the intestacy provisions, s 77 of the Administration Act provides:
77Succession to real and personal estate on intestacy
If a person (the intestate) dies intestate as to any real or personal estate and leaves the other person or people referred to in column 1 of the following table, that estate must be distributed in the manner or held on the trusts set out in column 2 of that table opposite the reference to the other person or people:
…
The language is mandatory. It says that the estate “must” be distributed in the manner of the table. Under this table the surviving partner receives the deceased’s personal chattels as defined in the Administration Act, the prescribed amount (which is $155,000)[29] plus interest, and a one-third share of the residue of the deceased’s estate. The surviving children of the deceased receive two thirds of the residue.
[29]Administration (Prescribed Amounts) Regulations, reg 5.
The entitlements can, however, be disclaimed under and in accordance with the requirements of s 81:
81 Right of successor on intestacy to disclaim
(1)Subject to the provisions of this section, where a successor has become entitled under this Act to an interest as a beneficiary in the whole or any part of the real and personal property which passes on the intestacy of any person,—
(a)the successor may, by deed delivered to the intestate person’s administrator, disclaim that interest if at the date of the disclaimer he or she has attained full age and is of sound mind:
(b)the court may, by order, disclaim the interest on behalf of the successor or authorise the disclaimer of the interest by or on behalf of the successor if at the date of the disclaimer the successor has not attained full age or is not of sound mind.
(2) No disclaimer under this section shall be valid unless—
(a)the disclaimer is made by the successor in his or her lifetime; and
(b)the disclaimer relates to the whole of the successor’s interest as a beneficiary under this Act in the real and personal property which passes on the intestacy of the person, including property which any other person has disclaimed under this section; and
(c)the disclaimer is made within 1 year after the date of the first grant in New Zealand of administration in respect of the estate or will of the intestate person (whether that grant was made before or after the commencement of this Act) or within such extended period as may be allowed by the court.
(3) No disclaimer under this section shall be valid if—
(a)the successor has entered into enjoyment of the whole or any part of the interest to which he or she has become entitled as aforesaid; or
(b)the successor has transferred, assigned, mortgaged, settled, or otherwise disposed of that interest or of any part thereof or of any property which would include that interest or any part thereof if it were not disclaimed, or has covenanted or agreed to do any such thing; or
(c)there is any valuable consideration for the disclaimer; or
(d)the disclaimer provides for any assignment of the disclaimed interest or in any manner provides who is to be entitled to that interest; or
(e) the successor is bankrupt when the disclaimer is made.
…
(6)Nothing in this section shall affect any right which any successor may have to disclaim any property apart from this section.
(7)Every disclaimer under this section shall be deemed to be made at the first point of time when everything has been done in respect of the disclaimer which is necessary to comply with the requirements of this section and of any order of the court which relates to the disclaimer and is made under this section.
There is no deed of disclaimer in the present case.
Discussion
We now turn to consider what Mr Rimmer and Ms Wilton agreed to under the Agreement.
The Background section of the Agreement sets out its purpose. That purpose aligns with the words of s 21. It is described as being a contracting out agreement under s 21 “with respect to the status, ownership, and division of their property (including future property)”. It is to:
(a)define what is separate property and what is relationship property;
(b)provide the share of their relationship property that they are each entitled to when the “relationship ends”;
(c)define the respective share of the relationship property as between the surviving partner and the estate of the deceased partner “on the death” of either of them;
(d)provide for the calculation of “those shares”; and
(e)prescribe the method by which the relationship property is to be divided.
We note that none of those stated purposes relate to what each party may do with their respective separate property or their share of the relationship property in the event of their death. Nor did Mr Rimmer enter into a will when he entered into the Agreement stating how he intended to dispose of his separate property and his share of the relationship property in the event of his death.
Clause 2 of the Agreement meets the purpose of defining what is separate property. It does so by setting out in schs A and B what is the respective separate property of Ms Wilton and Mr Rimmer. In Mr Rimmer’s case, the property that is specified as his separate property is “[a]ll personal possessions of whatsoever nature and kind” as are in his “possession” or are “owned” by him “in his own name absolutely”. Clause 2 further provides that the Agreement is not exhaustive because each has further property they own at the date of the Agreement that is not included in the schedule. It also lists other types of property that will qualify as separate property.
Clause 4.1 of the Agreement meets the purpose of defining what is relationship property. It does this by setting out in sch C what is relationship property (namely the Hunua property, “together with all plant and equipment used in relationship to the property and all stock depastured thereon”), and by including in cl 4.2 “all other property which may hereafter be acquired by the parties jointly or as tenants in common” (and similarly in cl 4.3(i) providing that relationship property is “deemed to include all other property acquired by the parties jointly as tenants in common”).
It is clear from the comprehensive manner in which the parties sought to define their separate and relationship property that they intended the Agreement to be comprehensive in defining what was to be separate and what was to be relationship property.
Clauses 4.2 and 4.3 meet the purpose of determining how the relationship property is to be shared in the event of separation. Each party had the option of purchasing the relationship property, but otherwise such property was to be sold and paid to each other in the agreed proportions, being the value that each of their capital contributions bore to the total value of that property. Together with the intention to comprehensively define separate property, this method of division indicates an intention between the parties that each would receive what they contributed to the property (before or during the relationship) if they separated.
Clause 4.4 is the only clause specifically directed at meeting the purpose of determining their respective share of the relationship property in the event of the death of one of them. It provided that in the event of the death of one of them, the other had the right to “lifetime occupancy and use of all relationship property”. It did not purport to place any other limit on what each of the parties could do with their estate.
The appellants’ contention that the Agreement did limit what a surviving spouse could receive from the other’s estate relies on a combination of cls 2.1, 5.1 and 6.1. They rely on the agreement in cl 2.1 that “the other party shall make no demand on that separate property”. They also rely on the agreement in cl 5.1 that each of the parties agrees that the Agreement is “in full and final settlement of all claims” against the other “under any statute whatsoever or at common law or at equity”. Clause 6.1 provides that the Agreement will bind the executors, administrators and personal representatives.
We are not persuaded that cl 2.1 assists. In the first place it relates only to making a “demand” on the parties’ separate property. If cl 2.1 was intended to prevent a surviving partner from receiving a gift under the will or their statutory entitlements on an intestacy, it would apply only to Mr Rimmer’s separate property and not to his share of the relationship property. Moreover, we consider that “demand” is an inapt description of gifts made under a will or the intestacy entitlements, both of which an administrator or trustee would be required to give effect to unless cl 6.1 was intended to override any will or the statutory intestacy provisions.
We are also not persuaded that cl 5.1 has the meaning the appellants contend. Once again we consider that “claim” is an inapt description of gifts made under a will or the intestacy entitlements, both of which an administrator or trustee would be required to give effect to unless cl 6.1 was intended to override any will or the statutory intestacy provisions. The Agreement does not expressly provide for what each party may receive under a will of the other, beyond the life occupancy and interest in the relationship property, nor does it otherwise seek to limit this. Nor does it contain any agreement that each is required to disclaim entitlements on an intestacy. Rather, we consider that cl 5.1 was intended to address the potential for the common law and equity to apply, for example if the de facto relationship lasted less than three years.[30]
[30]PRA, ss 2E, 4(5) and 14A.
Lastly, we consider cl 6.1, pursuant to which the parties agreed that the Agreement binds the executors, administrators and personal representatives of each of them, was necessary both for determining the property that comprised the estate, and because the parties intended that the surviving party would have the lifetime occupancy and use of the Hunua property. But clear words would have been necessary if it were intended to override the power each of them would have to gift their estate as they wished, or to override the otherwise mandatory terms of s 77 of the Administration Act and the detailed requirements in s 81 of that Act for disclaiming the s 77 entitlements.
The Agreement therefore left open the possibility that their respective wills could provide what share (if any) of the relationship property they were gifting to their surviving spouse, as well as what share (if any) of their separate property they wished to give. Each party was free to leave the other none, some or all of their share of the relationship property or their separate property, but subject to the provision they had each made in the Agreement to grant the other a lifetime occupancy and use of the Hunua property. The Agreement also did not exclude entitlements on an intestacy.
It follows, in our view, that the Agreement did not preclude Ms Wilton electing Option B. The effect of doing so was that she received her separate property and her share of the relationship property in accordance with the Agreement. She was also entitled to her entitlements under the intestacy provisions in relation to Mr Rimmer’s separate property and his share of the relationship property. Under the Agreement she was also entitled to the lifetime occupancy and use of the Hunua property.
The appellants sought to include on this appeal the issue between the parties as to the effect of this once the Hunua property was sold. We did not receive full submissions about this from the appellants nor any submissions on the point from Ms Wilton. We decline to determine the issue because of this. However, like van Bohemen J, we agree there may be issues about the position Ms Wilton has taken.[31]
Result
[31]We were asked to order that the costs be paid out of the appellants’ share of the estate. We assume that is also what is sought in relation to the High Court. This seems sensible and should be capable of agreement and we do not think it is necessary to make an order to this effect.
The appellants’ application to amend the grounds of appeal is granted in part.
The appeal is dismissed.
The respondent is entitled to costs for a standard appeal on a band A basis together with usual disbursements, to be paid from the estate.
Solicitors:
Rout Milner Fitchett, Nelson for Appellants
Insight Legal Ltd, Warkworth for Respondent
Schedule: Key terms of the Agreement
The Agreement set out the background to the Agreement:
BACKGROUND
A.Caroline and David have been living in a de facto relationship as defined by section 2D of the Property (Relationships) Act 1976 (“the Act”) since September 2000 (“the relationship”).
B.Caroline’s property is set out in Schedule A.
C.David’s property is set out in Schedule B.
D.Relationship property is set out in Schedule C.
E.Caroline and David wish to enter into a contracting out agreement pursuant to Section 21 of the Act, with respect to the status, ownership, and division of their property (including future property), which is to provide for the following:
(a) Provide that any property, or any class of property, is to be relationship property or is to be separate property.
(b)Define the share of their relationship property, or any part of the relationship property, that Caroline and David are to be entitled to if the relationship ends;
(c)Define the share of the relationship property, or any part of the relationship property, that the survivor of Caroline or David and the estate of the deceased partner is to be entitled to on the death of either of the parties;
(d)Provide for the calculation of those shares;
(e)Prescribe the method by which the relationship property, or any part of the relationship property, is to be divided.
Clause 2 of the Agreement provided:
2. SEPARATE PROPERTY
2.1Subject to clause 3 of this agreement, the parties do hereby agree and declare that the following property shall at all times in the future be the absolute and separate property of the party recorded as the owner, registered proprietor or person entitled to ownership at law or in equity (as the case may be), together with all increases in value thereof and the other party shall make no demand on that separate property including any increase in value thereof:
2.1.1All that property owned by Caroline as set out in Schedule A to this agreement, and all that property owned by David as set out in Schedule B to this agreement, it nevertheless being expressly agreed by and between the parties that neither Schedule A nor Schedule B to this agreement is intended to be exhaustive, each of the parties having further property owned by them at the date of this agreement and which has not been included in the Schedules; and
2.1.2Property acquired (whether before or after the date of this agreement) from a third party by way of gift, succession or survivorship or as a beneficiary under or pursuant to any trusts; and
2.1.3Property acquired for an inadequate consideration from third party relatives to the extent of the inadequacy of consideration; and
2.1.4Property acquired by incurring a liability subsequently forgiven by way of gift to the extent of that gift; and
2.1.5Any form of property into which the foregoing property referred to above or the proceeds derived from the sale of the property may subsequently pass and any increase in value thereof
AND SUBJECT TO Clause 3 of this agreement the status of the foregoing property referred to above as separate property shall not be affected by the use to which the property is put or by which party receives the benefit or by any amalgamation with other property in co-ownership or by any statutory classification of the property which for the time being represents the property.
Clause 4 of the Agreement provided:
4. RELATIONSHIP PROPERTY
4.1The parties do HEREBY AGREE AND DECLARE that the property owned by them jointly or as tenants in common as set out in Schedule C of the agreement shall be relationship property.
4.2That in case the parties should separate or cease to live together as parties to a de facto relationship, all relationship property as set out in Schedule C and all other property which may hereafter be acquired by the parties jointly or as tenants in common shall, after the removal of those items of separate property referred to in Schedules A and B hereto including any increase in value thereof at the time of division, together with any other items deemed to be separate property pursuant to Clause 2 of this agreement, be divided between the parties in the same proportions as the value of each of their capital contributions to such property bears to the total value of such property.
4.3(i) That in case the parties should separate or cease to live together as parties to a de facto relationship, either party may give written notice to the other of the desire of that party to terminate their sharing in any relationship property (which shall be deemed to include all other property acquired by the parties jointly as tenants in common) …
…
(v)If neither party exercises his or her option to purchase or both parties waive their respective options to purchase then the relationship property shall immediately be placed on the market for sale at a price agreed upon by the parties and sold and the net proceeds of sale … shall be paid to the parties in the proportions set forth in paragraph 4.2. …
4.4In the event of the death of one party, the remaining party shall have the right to lifetime occupancy and use of all relationship property. The right of occupancy shall be extinguished in the event of the death of the survivor.
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4.6If either party shall with the consent of the other borrow additional money (“additional money”) on the security of the charge over any relationship property which additional money is not expended on such property but is used for the purposes of that party alone, the party borrowing such money shall protect the other’s share in the relationship property and shall keep indemnified the other party, his/her estate administrators, executors and assigns from and against all actions, costs, claims, damages and expenses arising out of such borrowings and the party borrowing the money shall be solely responsible for meeting all payments of interest and principal in connection with the additional money.
Clause 5 of the Agreement provided:
5. LEGAL EFFECT
5.1That subject to the provisions of this agreement the parties agree that this agreement shall be in full and final settlement of all claims which each of them may have against the other under any statute whatsoever or at common law or at equity.
…
5.3In this agreement the terms “separation” shall include any occasion upon which the parties cease to live together in a de facto relationship as defined by the Act and whether or not by virtue of any oral or written agreement between them or pursuant to a separation order made by any Court or competent jurisdiction.
Clause 6 of the Agreement provided:
6. ACKNOWLEDGEMENT
6.1This agreement shall bind the executors, administrators and personal representatives of both Caroline and David given the parties acknowledge that they have had independent legal advice before signing this agreement and the effects and implications of this agreement have been explained to them by their respective solicitors. They further acknowledge that they have received a draft of this agreement for consideration and approval prior to executing it.
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