Paewai-Kohe v Paewai
[2014] NZHC 3137
•9 December 2014
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2014-404-2402 [2014] NZHC 3137
UNDER The Family Protection Act 1955 IN THE MATTER
of an Appeal from a Judgment of the
Family CourtBETWEEN
ALMA RUTH PAEWAI-KOHE Appellant
AND
API TERINA PAEWAI First Respondent
Hearing: 27 November 2014 Appearances:
B P Molloy and H Holmes for the Appellant
T Molloy for the RespondentsJudgment:
9 December 2014
JUDGMENT OF THOMAS J
This judgment was delivered by me on 9 December 2014 at 4.00pm pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Date:………………………….
Solicitors:
Haigh Lyon, Auckland. Spencer Legal, Auckland.
PAEWAI-KOHE v TERINA PAEWAI & ORS [2014] NZHC 3137 [9 December 2014]
ANDKAREEVE MOANA WITEHIRA, KAMILLA MARIANA WITEHIRA and KAYLA IVY EMMA WITEHIRA as successors to KARA IVY PAEWAI WITEHIRA (deceased)
Fourth Respondent
ANDMANAHI MONTROSE PAEWAI Fifth Respondent
ANDNOEL MEHA PAEWAI Sixth Respondent
ANDORA GOING-RICHARDSON and DUNCAN RICHARDSON
Seventh Respondents
Introduction
[1] The appellant, Alma Ruth Paewai-Kohe (Alma) appeals against the decision of the Family Court dated 15 August 2014 concerning the will of her mother, Hineapa Paewai (Mrs Paewai).1 Mrs Paewai is the mother of the first, second, third, fifth and sixth respondents, and the grandmother of the fourth respondents. The seventh respondents are the executors of the will.
[2] In her will Mrs Paewai bequeathed the bulk of her estate to Alma. The Family Court held that, in doing so, Mrs Paewai had not made adequate or proper provision for the first to sixth respondents under the will. Pursuant to s 4 of the Family Protection Act 1955 (the Act) the Court ordered that the estate be divided equally amongst all the children.
[3] Alma appeals on the basis that the Family Court Judge made errors of law and fact and that, even if there may be difficulties in the execution of the estate as provided in the will, its underlying scheme and essence should be respected.
Legal principles
The appellate approach
[4] Decisions under the Act are essentially discretionary. On an appeal against the exercise of discretion, the criteria for a successful appeal are stricter than on a general appeal. The lower court must have:2
(a) made an error of law or principle;
(b) taken into account irrelevant considerations;
(c) failed to take into account relevant considerations; or
1 Paewai v Going-Richardson [2014] NZFC 6250.
2 May v May (1982) 1 NZFLR 165 (CA) at 170; Blackstone v Blackstone [2008] NZCA 312, (2008) 19 PRNZ 40 at [8].
(d) made a plainly wrong decision.
[5] In Little v Angus, Cooke J summarised the principles to apply in Family Protection Act cases.3 At p 127 Cooke J noted that on appeal the Court will not substitute its discretion for that of a Judge at first instance unless there be made out some reasonably plain ground upon which the order should be varied. That approach has been confirmed recently by the Court of Appeal.4
The Act
[6] Section 4(1) of the Act is the governing provision. It provides:
4 Claims against estate of deceased person for maintenance
(1) 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.
…
[7] Pursuant to s 11 of the Act the Court may have regard to the deceased’s wishes, so far as they are ascertainable, for the purpose of making dispositions under the will and may accept such evidence of those reasons as it considers sufficient, whether or not the evidence would otherwise be admissible.
Factual background
The will
[8] Mrs Paewai died on 29 October 2009. She and her husband, the late Dr Manahi-Paewai, had eight children: Nitama, Ena, Kara, Noel, Alma, Huiarangi, Api and Manahi. The eldest child, Nitama, had Down’s Syndrome and required
continuous care throughout his life. He died on 19 November 2012, aged 61. Kara
3 Little v Angus [1981] 1 NZLR 126 (CA).
4 Fisher v Kirby [2012] NZCA 310 at [124].
died on 19 September 2013. She was intestate and her three children are the fourth respondents.
[9] Mrs Paewai’s last will was dated 4 July 2008, made when she was 82 years
old. The will provided as follows:
(a) The family home at 7 Hillside Crescent, Mount Eden, Auckland, was left to Alma together with one half of the land at the address on which the dwelling was erected.
(b) Following subdivision, the other half of the land was to be sold.
(c) The proceeds of sale – net of costs of subdivision and sale – were to be divided between Ena (Auckland), Kara (Manurewa), Noel (Auckland), Huiarangi (Gold Coast), Api (Auckland) and Manahi (New South Wales) in the following proportions:
(i) Ena and Manahi were to receive 10% each;
(ii) Noel, Huiarangi and Api were to receive 20% each;
and
(iii)Kara was to receive 20% on trust for her maintenance and welfare during her lifetime and then the balance to her three children: Kareeve, Kayla and Kamillia.
(d) Alma was to retain the chattels during Nitama’s lifetime.
(e) After Nitama’s death the chattels were to be distributed between the children in accordance with a list Mrs Paewai left with the will.
(f) Any residue of the estate was to be divided between the children in equal shares.
[10] There is no issue as to Mrs Paewai’s competence and capacity at the time she made the will.
Estate assets
[11] The estate has no liabilities and as at September 2011 comprised the following assets:
(a) an ASB bank account with a balance of $1,953.57;
(b) all the land and dwelling at 7 Hillside Crescent South, Mount
Eden, Auckland (the property); and
(c) chattels as set out in a list of chattels dated 23 January 2004. [12] The executors produced an opinion of a real estate agent that, as at June
2010, the house and underlying land was worth $1,175,000 - $1,250,000 and the vacant section between $770,000 and $860,000. Subdivision costs could be around
$60,000. If the property was sold as one lot, it would be worth around $1,880,000.
[13] The real estate agent, Barfoot & Thompson, conducted discussions with Auckland Council before advising by letter dated 19 November 2012 that the subdivision would not be straight forward as it was not as of right and there were issues with stormwater, driveway and vehicle access. Barfoot & Thompson’s opinion was that the Council was “not enthusiastic that the property could in fact be subdivided”. They appraised the value of the property in one lot as between $2.5 and $2.8 million.
[14] There was no information before the Court about the value of the property at the time Mrs Paewai died. At the time of death Mrs Paewai had three bank accounts containing in total $15,532.09.
[15] There was also evidence before the Court from surveyors, Boundary Consultants Limited, considering the feasibility of subdividing the property. They noted a number of issues including the removal of retaining walls, creation of new
retaining walls, creation of a driveway and drainage issues. The report concluded that subdivision was feasible but did not identify costs.
[16] The Judge noted the provisions of the relevant District Plan including that access to any newly created section would be over a reserve and further that the property is on volcanic cane, a protected area under the District Plan. The Judge noted that there was, therefore, further indeterminate expense and an even more uncertain outcome and time frame involved in any subdivision of the property.
Evidence of Mrs Paewai’s intentions and reasons for them
[17] Mrs Paewai in her will declared that:
… in making this gift I am taking into account the assistance [Alma] has given to me and my son Nitama and that she will continue to provide a home for Nitama during his lifetime.
[18] Mrs Paewai had lived at the property with Nitama and Alma and her husband, Ora Kohe. It is not disputed that, although there was some external assistance from outside providers, Mrs Paewai and Nitama were primarily cared for on a day to day basis by Alma and her husband.
[19] Prior to Mrs Paewai’s executing her will Mr Simon Bratley, her lawyer, advised her there might be a problem with the local council in obtaining consent for the property to be subdivided. Mrs Paewai was aware that there would be insufficient funds in her estate to pay for resource consent and subdivision costs.
[20] Alma was present at the meeting between Mrs Paewai and Mr Bratley. She provided Mr Bratley with a typed unsigned document in the name of Mrs Paewai and titled “Chronology File of Events”. The document recorded a number of matters relating to the children including:
(a) that she had in the past assisted Manahi by providing the property as security for loans he had obtained from third party financiers;
(b)that when she and her husband were serving as missionaries overseas they left Ena in charge of their financial affairs. On their return there was a (tax) debt of $20,000;
(c) that she and her husband had lent Ena $6,000 in the 1980s to purchase a takeaway business;
(d)that Ena resided with her at the Property from 1983 to 1998. Mrs Paewai described her as “my confidant and support” during this time, following the death of her husband Dr Manahi-Paewai;
(e) that Ena was the owner of two properties with valuations exceeding
$500,000; and
(f) that Alma had lived with Mrs Paewai for the last 10 years, since September 1998, and had taken care of Mrs Paewai and Nitama and coordinated home care and doctor’s appointments.
[21] In her chronology of events, Mrs Paewai noted that, since her husband’s
death in 1990:
I have been hospitalised many time due to a heart condition, a health condition my husband looked after until he died. My Down’s Syndrome son now has severe health issues, between us we have many hospital specialists and doctors’ visits.
[22] Mr Bradley received a signed handwritten note from Mrs Paewai at the meeting, recording her wish to transfer title to the property to Alma because:
[s]ome of my children will contest my will and this could lead to my house being sold.
[23] The note also recorded that Alma had lived in the property and paid all
associated outgoings including Mrs Paewai’s personal expenses for the last 10 years.
[24] The solicitor’s file note of his discussion with Mrs Paewai on 14 May 2008 records:
Ora then handed to me a piece of paper which he intended to sign to give me a bit more background. It was at that stage that Alma left and I was left alone with Hineapa [Mrs Paewai] and Ora. I spoke directly with Hineapa about the will. She confirmed to me that in view of the children’s actions to her, she wanted to leave the property to Alma. I explained that there may be problems with leaving the property to Alma and the claim from the other children. I advised that the other children would have a claim as a right and it would be for the court to decide whether the claim would be successful. Hineapa confirmed that she understood this but she wanted to proceed in accordance with her wishes. Hineapa then confirmed to me that she had written the letter which she had signed.
[25] The executors provided an affidavit attaching what they say is a handwritten letter written by Mrs Paewai explaining the rationale for her will. The note records Mrs Paewai’s desire to change her will because:
(a) Api and Ena demanded that upon Mrs Paewai’s death the property be
sold and Nitama placed in fulltime care;
(b)all her children have benefited from financial assistance with the provision of homes, businesses, education and moral support; and
(c) she would not have been able to continue to live in the house without the help of Alma and her family.
[26] One of the trustees, Ora Going-Richardson, provided affidavit evidence as to the reasons Mrs Paewai gave her about her will. She said that Mrs Paewai did “not want her house sold upon her death. Nitama will continue to live in her home… with Alma as a primary caregiver. Her wish is that her home is bequeathed to Alma and Ora.”
[27] Mrs Paewai expressed her gratitude towards Alma and her husband. She expressed love for all her children but noted that Alma had shown compassion towards her and Nitama and, when Mrs Paewai had been in hospital in 2007, she had been able to observe her family. She had strong feelings as to why she should change her will.
[28] Alma’s evidence is that Mrs Paewai would have left the family home to any one of her children who stayed and helped with Nitama, saying:
19. She then told Terina about her will. After a long heated conversation with Terina, she asked Mother, had it been anyone else in the family staying and helping her and Nitama would she have done the same for that family member? Without any hesitation Mother told her she would.
[29] Alma’s affidavit provided evidence that her parents had supported Api in respect of airfares to and from Hawaii where he was studying, Manahi was given support in purchasing his courier business, Ena was supported in her business, Kara received the benefit of some accommodation in the self contained flat at the property, and Huiarangi, Api and Noel received educational support.
Previous wills
[30] A will dated 1 February 1994 divided the estate equally between the children except Nitama for whom a lifetime trust was created.
[31] A draft will was prepared in 2000 under which the property was to be held in trust for Nitama and Alma to live in and upon Nitama’s death the property was to be sold and the proceeds distributed equally between the children.
Nitama
[32] Nitama died in November 2012, three years after Mrs Paewai.
[33] Nitama had always lived at home being cared for by the family and, for the last 11 years, by Alma and her husband. One of the issues raised before the Family Court was whether Mrs Paewai sufficiently considered that Nitama had a very short life expectancy, he being 57 at the time of the will. It appears that submission was based on a reference from Wikipedia and the website for the Down’s Syndrome Association.
Factual inaccuracies
[34] The respondents challenged the accuracies of a number of the matters apparently relied on by Mrs Paewai including noting that Manahi repaid his borrowings and the mortgage over the property was discharged at no expense to Mrs Paewai; that the loan to Ena for her business was less than $4,000; any difficulties
with the tax bill were as a result of the accountant’s actions and not the responsibility of Ena; and that the two properties owned by Ena were both heavily mortgaged and she has little, if any, equity in them.
Further affidavit evidence
[35] The appellant sought leave to file further affidavit evidence clarifying the financial support she gave Mrs Paewai and evidence of her relationship with her mother.
[36] The Court has jurisdiction pursuant to s 15(5) of the Act to hear further evidence if it considers the interests of justice so require. I was satisfied that the records sought to be produced to the Court were reliable and probative documentary evidence and it was in the interests of justice to admit them in evidence.
The diary
[37] Mrs Paewai kept a diary from January 2005 until about a year before her death. A constant theme of the diary is that Mrs Paewai considered herself “blessed” that Alma and her husband lived with her in the house because she was unable to live on her own. She records that Alma and her husband “helped me and my Down Syndrome 57 year old son, Nitama, in every way”. Specifically, there was an entry on 20 February 2008 saying:
I have made my will, and when I pass away, I will leave my home and contents to Alma and Ora. They have been very loving and so helpful to both my son Nitama, and me. She has been so helpful, showers both of us. Her husband showers Nitama too, in fact I couldn’t live on my own without them.
[38] Alma’s affidavit records that she and her husband paid the rates on the property, paid for groceries, telephone and other outgoings and that she was paid for caring for Nitama only from May 2008. The bank records attached to the affidavit show payments in respect of water rates, newspaper, Sky television, Telecom landline, Mercury Energy and garden bags.
[39] While the respondents note that Mrs Paewai did not watch Sky television, they are unable to dispute the other payments and their relevance to Mrs Paewai and Nitama. Furthermore, the note Mrs Paewai provided to her solicitor recorded that Alma paid all outgoings associated with the property including Mrs Paewai’s personal expenses.
Financial position of the children
Noel
[40] Noel is 60 years old with four independent adult sons. He worked as a manual labourer until August 2012 when, following a brutal assault, he has been unemployed. He lives in state housing rental accommodation. At the time of Mrs Paewai’s death he was receiving the unemployment benefit but now receives the sickness benefit. That is just sufficient to pay his rent and living expenses. As at Mrs Paewai’s death his only assets were household chattels. That situation continues.
Huiarangi
[41] Huiarangi is 54 years old and is married with three children, none of whom are dependent on her. They live on the Gold Coast, Australia, and have a combined annual income of A$50,000. At the date of Mrs Paewai’s death their only assets were a motor vehicle and household chattels. Their liabilities include an education loan and a tax bill. Their current assets total A$45,000 with liabilities totalling A$30,000.
Manahi
[42] Manahi is 51 years old and is married with three children, two of whom are still dependant. They live in Australia. Their household income is A$71,000. As at the date of Mrs Paewai’s death their only asset was a car and household chattels and liabilities of some $16,000. Their position today is essentially the same.
Ena
[43] Ena is 62 years old, is separated, and has five children, the youngest of whom is 27 years old. They are all dependant. Ena lives in her own home and owns another property, both of which are heavily mortgaged. Ena is employed earning approximately $66,000 per annum with expenses of approximately $60,000 per annum. Her current situation is essentially the same now as at the date of Mrs Paewai’s death.
Api
[44] Api is 53 years old, divorced with a 14 year old son. She has double degrees in business and travel and tourism management. At the time of Mrs Paewai’s death she was in receipt of the Domestic Purposes Benefit and is now on a job seeker benefit. She lives in state housing rental in Mount Albert. At the time of her mother’s death her only asset was a car and household chattels together worth approximately $9,000 with liabilities of around $2,000. At the present time her debt has increased to over $5,000 plus student loan debt of $16,000. Her son is no longer dependant on her.
Kamilla, Kareeve and Kayla
[45] These three are Kara’s children. At the time of Mrs Paewai’s death Kara was
not working and living with her husband at their home in Manurewa valued at
$300,000 with no mortgage.
[46] Kamilla is not married and has no children. She has a degree and earns approximately $42,000 per annum. Kareeve lives at home and is employed by her father. She has no assets or liabilities. Kayla lives at home and is studying. She has no assets or liabilities.
Alma
[47] At the time of the Family Court hearing Alma had not provided any information as to her financial position to the Court. The Judge noted that in Fisher
v Kirby,5 the Court emphasised that, although there was no obligation on a beneficiary under a will to provide the Court with details of their financial position, if they did not so, the Court was entitled to proceed on the basis that they were not in need of maintenance and support.
[48] Alma is not the one who had made an application pursuant to Act that she was in need of maintenance and support. That being the case, I do not take anything from the lack of that information.
[49] Bearing in mind, however, the implicit criticism in that observation, Alma, in her latest affidavit, states that her financial position cannot be described as prosperous and that she has just as much need as her siblings. Although she is employed, her income is $42,000 which she describes as modest. Her husband is still looking for work. She notes too that she was paid for Nitama’s care only from May 2008.
Family Court decision
[50] After a thorough discussion of the factual background and the legal principles to apply to claims under the Act, the Judge concluded that there was a good case that Mrs Paewai’s focus at the time of her last will was signed was a narrow one, in that she appeared to have fixed on securing use of a home for Nitima when regard should have been had to the needs of her other children. There was a justified concern that Mrs Paewai had based her decision on incorrect information and that had resulted in her making misguided decisions about her will. Nitama’s position could have been secured in a way that did not disenfranchise the other children. In this respect the will was overly protective of Nitama, and in doing so the will represented a breach of Mrs Paewai’s moral duty to her other children.
[51] The Judge concluded as follows:
[111] Mr Headifen cautions against a rewriting of the will and argues that the
Court should not, addressing the question of remedies, start from an equal basis.
5 Fisher v Kirby, above n 4, at [131].
[112] However we do have a situation here where all applicants have demonstrated in their evidence financial need. They are all entitled to support. I agree with the submission that has been made that based on the family relations and the financial circumstances there is no logical justification for distinguishing between the children. I agree that while it is not disputed that Alma lived and cared for the Deceased as well as Nitama for a significant period there were and have been benefits received despite the sacrifice. She has not paid rent which could be seen as a significant benefit. I agree with the observation of Hansen J in Re: Haase; Binne v Pomare that while there is no presumption that children should be treated equally, it is generally accepted as a starting point in normal circumstances that a just and wise testatrix will treat her children equally. To have not done so here in my view is unjustified and has led to the conclusion that there has been a breach of moral duty.
[52] Accordingly the Judge determined that the appropriate remedy for the breach was to resolve the matters on the basis of equality. He ordered that the property be sold without delay and the net proceeds of sale be divided equally between the siblings, and in the case of Kara, her three children would take her share equally.
Did the Judge make errors of fact?
The terms of the will and Mrs Paewai’s intentions
[53] The appellant contends that the Judge failed to take into account the expressed wishes of Mrs Paewai and her apparent gratitude for Alma’s assistance. It is submitted that the Judge substituted Mrs Paewai’s views for his own. That is, because Alma lived in the house rent free, Mrs Paewai should not have felt so compelled to reward her. It is submitted that the Judge did not adequately consider the moral and ethical considerations made by Mrs Paewai on the evidence before him.
[54] Capacity was not an issue. Indeed, there was significant evidence before the Court as to the capacity and competence of Mrs Paewai. I accept the appellant’s submission that the evidence suggests a highly rational and carefully considered approach by Mrs Paewai in determining the adequate provision for her children. Not only did she discuss this with her lawyer, she recorded in writing for her lawyer the reasons for her determination, she wrote a letter explaining her reasons, she spoke about them to one of the executors, and in her diary she specifically referred to her will.
[55] I accept the appellant’s submission that she was aware of the various approaches which could be taken regarding disposition of her property. For example, a life time interest, a trust to provide for Nitama’s interest, a trust to provide for Kara’s children.
[56] While there may be some substance in the criticism of Mrs Paewai regarding the subdivision of the property and her understanding of the extent of her children’s financial stability (for example, giving weight to the fact that Ena owned two properties but no apparent consideration to the liabilities on them), there is no doubt that Mrs Paewai had given careful consideration to her will and was able to justify the reasons for doing as she did. While the support Mrs Paewai and her husband gave to their children could be minimised (in terms of the provision of financial support) because it consisted of guaranteeing loans and providing accommodation, there is no doubt that Mrs Paewai clearly considered she and her husband had supported and provided for their children throughout their lives.
Nitama
[57] For the appellant it is contended that the Judge was disproportionately swayed by the argument that the will was designed solely to protect Nitama. It is submitted that, while his welfare was clearly of some concern, it was not the sole factor influencing Mrs Paewai to dispose of her estate as she chose to. This is particularly so, it is submitted, in light of the evidence suggesting that the disposition was equally in recognition of the closer relationship and 11 years of care and affection given to Mrs Paewai by Alma at the time she needed it most.
[58] At [98] of his decision the Judge said:
A good case has been made out to support the contention that the Deceased’s
focus at the time her last will was signed was a narrow one.
[59] The Judge then said:
[99] This seems to have motivated her in effect into pleading her case as to why what she wanted in her will was justified. This involved her mentioning her positioning to Ora, she wrote a letter which has been found by the executors and she mentioned her position to the solicitor.
[60] I agree with the appellant that, on the evidence, Mrs Paewai was clearly concerned to provide for the care of Nitama for the rest of his life and to ensure he was able to remain living at the property. Given Alma’s devotion over 11 years to the care of both Mrs Paewai and Nitama, obviously the best chance of that occurring was if Alma were to stay in the property. Mrs Paewai was clearly aware of the available options. She specified that Alma would have the use of the chattels until Nitama’s death whereupon the chattels would be divided equally amongst the beneficiaries. She could have made a similar position in relation to the property on Nitama’s death. That she did not do so suggests she was concerned to reward Alma for the dedicated care she had shown over the previous 11 years of her life and that she was not simply protecting Nitama’s situation.
[61] The reference to Mrs Paewai “pleading her case” requires some comment. It is perhaps an unhappy way of characterising the steps Mrs Paewai took to explain why she made her will as she did. Given the advice from her lawyer, it is an entirely understandable and indeed prudent course to record her reasons in writing and to ensure that both her lawyer and executors were aware of the reasons. Perhaps unintentionally, the comment has a somewhat critical tone implying that Mrs Paewai had done something unjustified and was trying to explain that away.
[62] Indeed, it is a significant consideration that Mrs Paewai was sufficiently concerned about these matters to record her reasons and to write to her trustees advising them of the reasons for making the will in the way she did.
[63] The information before the Family Court as to what Mrs Paewai told her lawyer and her executor shows that Mrs Paewai’s focus was not limited to see that Nitama’s needs would be met after her death. It was wider than that. It was in recognition of what Alma and her husband had done for her and to enable Mrs Paewai and Nitama to stay in the family home. That is supported by the new evidence of Mrs Paewai’s diary entries. She said repeatedly how blessed she was that she had such a loving and supportive child in Alma and that she would have not have been able to stay living in her home without that support. Importantly too, Alma enabled Mrs Paewai and Nitama to live together.
[64] The Judge remarked that the will demonstrated “an over protectiveness on the deceased’s part in respect of Nitama”.6 Protectiveness towards an adult child with Down’s Syndrome is entirely understandable. The characterisation of the will as “overprotective” is putting the position too highly in my assessment, given the other evidence to which I have referred.
The appellant’s contributions and duty owed to her
[65] The submission is made on behalf of the appellant that the Family Court ignored the very clear reasons for the greater provisions made for the appellant in the will. This issue is closely aligned with the previous one.
[66] It is not for a beneficiary to justify the share bequeathed to him or her. It is for a claimant to establish that he or she has not received adequate provision for proper maintenance and support.7 Nevertheless the Court obviously should consider the testator’s wishes and evidence of them.
[67] The Judge said at [112]:
I agree that while it is not disputed that Alma lived and cared for the deceased as well as Nitama for a significant period there were and have been benefits received despite the sacrifice. She has not paid rent which could be seen as a significant benefit.
[68] This comment was made in the context of the Judge’s view that there was no logical justification for distinguishing between the children. At the time she made her will Mrs Paewai emphasised that Alma and her husband paid all outgoings connected with the property and all of Mrs Paewai’s personal expenses. The fact that they lived rent free was a benefit but needs to be weighed against the financial contribution made by them. Furthermore, the evidence now before the Court is that, while Alma was paid something for the care of Nitama, this occurred in the last couple of years only. Furthermore, the evidence that Mrs Paewai and Nitama could not have stayed in the house without Alma demonstrates the considerable role played by Alma and her husband. Not only the day-to-day care but also the attendance at
medical appointments, emergency hospital admissions and running of the household.
6 Paewai v Going-Richardson, above n 1, at [110].
7 Williams v Aucutt [2002] 2 NZLR 479, [2000] NZFLR 532 (CA) at [68].
There is no doubt that the ability to stay in her own house with Nitama was enormously important to Mrs Paewai and the same applies to the fact of Nitama being able to live in the family home rather than being put into care. I accept the submission on behalf of the appellant that the ongoing support clearly took enormous energy from Alma.
[69] Relevant too is the fact that living in the family home and caring for Mrs Paewai and Nitama prevented Alma and her husband establishing their own household and choosing where to live. I say this with particular reference to the children who have relocated to Australia. I make no criticism of them for having done so but they need to recognise the considerable limits on personal freedom and sacrifices made by Alma and her husband.
[70] For those reasons, I accept the submission that the Judge failed properly to weigh Alma’s heightened moral claim as against Mrs Paewai’s estate. In reaching that conclusion I do not ignore the evidence that the other children for times lived with their parents and provided a degree of support to Mrs Paewai and to Nitama. That said, Mrs Paewai was best placed to evaluate the relative contributions of the children and she was clearly in no doubt that Alma’s support entitled her to a significant reward.
The previous wills
[71] The Judge approved of the respondents’ submission to the effect that the previous will and the draft will would have adequately dealt with what he termed Mrs Paewai’s primary concern for Nitama but also addressed the needs of the other children and related to their proper maintenance and support. The crucial point is that Mrs Paewai chose to revoke her previous will and chose not to execute the draft will. She did so on a considered basis. That must reflect, in particular relating to the draft will, that it was more than Nitama’s ongoing security which was of concern to Mrs Paewai.
The increase of value in the property
[72] The appellant notes there is some evidence to suggest the value of the property is now in the mid to high $2,000,000 – 3,000,000 range. The judgment is criticised on the basis that the Judge failed to assess the extent to which the increase in value might go towards providing proper maintenance and support. That is, in deciding the alleged breach of moral duty to the other siblings, the Judge should have taken into account the almost doubling in value of the estate since Mrs Paewai’s death.
[73] Relevant to this issue is, however, is the concession on behalf of the appellant that a subdivision of the property is “most likely unrealistic”. Subdivision is feasible but complex and there is no money in the estate to pay the necessary costs. Alma reluctantly accepts that the property must be sold and she must move. Mrs Paewai’s intention that Alma should remain in the home cannot therefore be achieved.
The respondents’ disentitling behaviour
[74] The Judge made some reference to at least one of the daughters saying that Nitama should have been put in full time residential care on Mrs Paewai’s death. Unsurprisingly, Mrs Paewai was upset about that. However, I accept the submission on behalf of the respondents that it would undoubtedly been a difficult discussion to have held but one necessary in the circumstances. That is the question of whether Nitama would have been able to stay in the home is something which needed to be addressed. I am not satisfied that this would amount to disentitling behaviour.
[75] I am also not satisfied that Manahi’s loan secured over the property was of considerable stress to her. She might have been frustrated by it as was demonstrated by the evidence. She made it plain that he was the only one who had “benefited” from the house although of course a number of the children lived there from time to time.
[76] I am not satisfied that any of the behaviour was to the extent as to justify disentitling any of the respondents from their proper share of the estate.
Did the Judge err in law?
[77] The judgment is criticised on the basis that the Judge’s finding that Mrs Paewai had breached her duty to the respondents was premised on the concept that she should have treated her children equally. Furthermore, implicit in the decision was the presumption of equal sharing between children.8
[78] The starting point is not the presumption of equal sharing amongst the children, which was the approach adopted by the Judge. He concluded that the failure to share the estate equally was a breach of Mrs Paewai’s moral duty. While there is no principle that children should be treated equally it is well recognised that in normal circumstances a just parent would treat each child equally.9
[79] The correct approach is to determine first whether there was a breach of Mrs Paewai’s obligation to the respondents having regard to their need for proper maintenance and support in comparison to what they received. In making this assessment, reference must be made to Mrs Paewai’s reasoning and the appellant’s position. Then, if a breach is found, it is necessary to determine what is required to remedy the breach.
[80] The test stated by the Court of Appeal in Little v Angus is often quoted:10
The enquiry is as to whether there has been a breach of moral duty judged by the standards of a wise and just testator or testatrix; and, if so, what is appropriate to remedy that breach. Only to that extent is the will to be disturbed. The size of the estate and any other moral claims on the Deceased’s bounty are highly relevant. Changing social attitudes must have their influence on the existence and extent of moral duties. Whether there has been a breach of moral duty is customarily tested as at the date of the testator’s death; but in deciding how a breach should be remedied regard is had to later events.
[81] The High Court decision Vincent v Lewis helpfully considered various decisions and guidance and summarised the applicable principles as follows:11
8 At [51] above.
9 Re Lever HC Christchurch M278/87, 6 July 1988.
10 Little v Angus, above n 3, at 127.
11 Vincent v Lewis [2006] NZFLR 812, (2006) 25 FRNZ 714 (HC) at [81].
(a) The test is whether, objectively considered, there has been a breach of moral duty by [the deceased] judged by the standards of a wise and just testatrix.
(b) Moral duty is a composite expression which is not restricted to mere financial need but includes moral and ethical considerations.
(c) Whether there has been such a breach is to be assessed in all the circumstances of the case including changing social attitudes.
(d) The size of the estate and any other moral claims on the deceased’s
bounty are relevant considerations.
(e) It is not sufficient merely to show unfairness. It must be shown in a broad sense that the applicant has need of maintenance and support.
(f) Mere disparity in the treatment of beneficiaries is not sufficient to establish a claim.
(g) If a breach of moral duty is established, it is not for the Court to be generous with the testator’s property beyond ordering such provision as is sufficient to repair the breach.
(h) The Court’s power does not extend to rewriting the will because of
the perception that it is unfair.
(i) Although the relationship of parent and child is important and carries with it a moral obligation reflected in the Family Protection Act, it is nevertheless an obligation largely defined by the relationship which actually exists between the parent and children during their joint lives.
[82] Relevantly in that case, the Court held a testatrix had sufficiently discharged her obligation to her daughter by a legacy of $200,000 with the remainder of the estate, $2,000,000, to her son. While the Court observed that a legacy of 10 per cent of an estate that size would not ordinarily be regarded as sufficient for a child with no personal assets and whose only income is a benefit, the case was not an ordinary one given the dysfunctional and virtually non-existent relationship between the mother and daughter and lack of any contribution to her mother’s care and support
over the years.12
[83] I am satisfied that the Judge erred in law.
12 At [88].
Should the application have been granted?
[84] It is clear there were some misunderstanding by Mrs Paewai of the financial position of each of her children. This is most clearly demonstrated by Mrs Paewai’s belief as to Ena’s wealth in possessing two houses. While she might own two houses she has next to no equity in them.
[85] An added complication is that the proposed subdivision of the property is accepted to be an unrealistic proposition.
[86] Barfoot & Thompson’s appraisal indicates that the property could be sold for approximately $2.5 to $2.8 million with the house and dwelling being worth approximately $1.7 million. Taking a value of $2,650,000, on this analysis Alma was to receive 64 per cent of the estate, $1.7 million. If the proportions stipulated in the will were preserved the respondents would receive the following share of the balance:
(a) Ena - $95,000 (10 per cent of the balance but 3.6 per cent of the estate);
(b)Manahi - $95,000 (10 per cent of the balance but 3.6 per cent of the estate);
(c) Noel - $190,000 (20 per cent of the balance but 7.2 per cent of the estate);
(d)Api - $190,000 (20 per cent of the balance but 7.2 per cent of the estate);
(e) Huiarangi - $190,000 (20 per cent of the balance but 7.2 per cent of the estate); and
(f) The children of Kara - $190,000 (20 per cent of the balance but 7.2 per cent of the estate).
[87] The question then is on that basis has adequate provision been made for the proper maintenance and support of the respondents.
[88] I agree with the overall conclusion of the Judge that, objectively considered, there has been a breach of moral duty judged by the standards of a wise and just testatrix. All applicants have demonstrated financial need and they are all entitled to support to a greater extent than that provided for in the will. I also agree with the Judge that the distinction between Ena and Manahi receiving 10 per cent of the respondents’ share and the remaining respondents receiving 20 per cent is a breach of Mrs Paewai’s obligation. It obviously occurred as a result of her misunderstanding of their financial positions. As noted, Ena is not in the healthy financial position her mother assumed. Neither is Manahi. In those circumstances, there is no reason to distinguish their position from that of the other respondents.
[89] The respondents have confirmed their wish that all the respondents are treated equally, that is, the distinction made by Mrs Paewai should not continue. There could be grounds for Noel to receive a higher share than the other respondents given his physical condition resulting from an assault which occurred after Mrs Paewai’s death. However, there was no application in that regard, unsurprisingly perhaps given the common representation of all respondents. In the circumstances, I am unable to take that matter further. I will defer to the respondents’ wishes.
What further provision is necessary?
[90] In Williams v Aucutt the Court discussed the issue of awards to children whose entitlement under s 4 of the Act is on a family recognition basis, as distinct from economic need. They discussed the Court of Appeal case Re Shirley,13 in which a bequest of less than 10% of the estate was a "relatively modest provision" but was "adequate provision" to recognise the child's moral claim.14
[91] In Auckland City Mission v Brown the Court of Appeal stated:15
13 Re Shirley CA 155/85, 6 July 1987.
14 Williams v Aucutt, above n 7, at [49].
15 Auckland City Mission v Brown [2002] 2 NZLR 650, (2002) 22 FRNZ 232 (CA).
[33] First, Williams v Aucutt is not to be read and applied in the limited way explained by the Judge accepting Mr Patterson's submission (para [17] above). The plurality judgment (in which Blanchard J concurred) referred to pointers to concerns that some orders in recent years may have been out of line with current social attitudes to testamentary freedom relative to claims by adult children (para [45]). One of those pointers was the survey by Nicola S Peart discussed at para [47], citing Ms Peart's conclusions that in larger estates where the testator is able to satisfy all moral claims owed, the courts generally seem to award between 12.5 per cent and 20 per cent of an estate to a dutiful child who is not in financial need and that the Act is now more often used to recognise the special bond between parent and child which requires parents to leave a portion of their estate to their children regardless of age or need. Blanchard J observed that in the last few decades an expansive view appears to have been taken of the power of the court to refashion the will of a deceased in order to fulfil what has been regarded as his or her moral duty and that there is substance in the criticisms of the way in which courts sometimes apply the present law. It is, he said, to be remembered that the court is not authorised to rewrite a will merely because it may be perceived as being unfair to a family member, and it is not for a beneficiary to have to justify the share which has been given (para [68]).
…
[36] Second, it is not clear from the judgment that when he came to settle on the amount of the award the Judge had in mind that the order had to be limited to the amount required to repair the breach of moral duty to Inge. As the court emphasised in Little v Angus …, cited in Williams v Aucutt at para [35], "Only to that extend is the will to be disturbed." To like effect, Blanchard J said at para [70], "It is not for the Court to be generous with the testator's property beyond ordering such provision as is sufficient to repair any breach of moral duty. Beyond that point the testator's wishes should prevail even if the individual Judge might, sitting in the testator's armchair, have seen the matter differently.
[92] This approach was confirmed by the Court of Appeal in Henry v Henry to apply to the assessment of the amount required to remedy the failure to provide adequate provision for a claimant whose claim is based on financial need.16 The Court went on to state:17
… In cases of financial need, the amount necessary to remedy the failure to made adequate provision in the will will be able to be determined with greater precision, and with less room for broad value judgments, than in cases where the need is more of a moral kind. The conservative approach requires that the Judge makes the assessment of what is required on a basis which focuses on what is necessary to make adequate provision, but to do no more than that. Broader questions of desirability of greater awards or the Judge's views of fairness should not come into play. We do not therefore share Mr Patterson's concern that the application of the conservative approach will lead to improper awards.
16 Henry v Henry [2007] NZCA 42, [2007] NZFLR 640 at [56].
17 At [58].
[93] Mere unfairness, therefore, is not sufficient.18 Mrs Paewai did not take her responsibilities as testatrix lightly. She gave proper and detailed consideration to her estate. Mrs Paewai clearly and for good reason considered Alma was entitled to a much greater share of the estate than her siblings. That situation should continue except to the extent of altering the shares sufficiently to repair the breach. Counsel for the respondents submitted that, even were the whole estate equally divided amongst all siblings, the provision at approximately $400,000 each would still not constitute proper maintenance and support. The issue is not however the maintenance and support a child might require for the rest of his or her life. Rather the issue is what is proper in the context of the claimants’ competing moral claims, given their respective financial need, as well as the size of the estate, the claimant’s relationships with Mrs Paewai, and her wishes.
[94] If the six respondents were to receive 15 per cent each, Alma would receive
10 per cent of the estate only. If the estate were equally shared between the siblings, they would each receive approximately 14.28 per cent. These examples demonstrate the difficulty in this case. While the estate is relatively substantial, and the respondents’ are all in financial need, the issue is complicated because of the number of children between whom it is to be divided coupled with the need to adjust Mrs Paewai’s legacy to the minimum required.
[95] Balancing those factors, in my assessment Alma should receive 40 per cent of the estate with the remaining 60 per cent divided equally between the first to sixth respondents so they receive 10 per cent each. If the property realises $2,800,000, the first to sixth respondents would receive $280,000 each (with Kara’s $280,000 share divided equally between Kara’s children), and Alma would receive $1,120,000. If the property realises $2,650,000, they would receive $265,000 and $1,060,000
respectively.
18 Re Leonard [1985] 2 NZLR 88 (CA) at 92.
Conclusion
[96] The appeal succeeds and the order of the Family Court is set aside. The property is to be sold without delay and the net proceeds of sale divided with 40 per cent to the appellant and with the remainder divided equally amongst the first to
sixth respondents. All reasonable costs of counsel are to be met from the estate.
Thomas J
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