Parlane v Parlane HC Auckland CIV 2009-404-7607
[2011] NZHC 528
•30 May 2011
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV 2009-404-7607
UNDER s.66 Trustee Act 1956 and Part 18 High
Court Rules
IN THE MATTER OF the estate of Lindsay Harold Parlane
BETWEEN MILES WINSTON PARLANE AND DAVID LAWRENCE SCHNAUER Plaintiffs
ANDMILES WINSTON PARLANE AS ESTATE BENEFICIARY
First Defendant
ANDLINDA NOELINE PARLANE-POWELL AS ESTATE BENEFICIARY
Second Defendant
ANDLINDA NOELINE PARLANE-POWELL AS ESTATE BENEFICIARY EXECUTRIX
Third Defendant
Hearing: 23 and 24 May 2011
Counsel: NK Kearney for plaintiffs
RW Bell-Booth for second and third defendants
Judgment: 30 May 2011 at 3:30 PM
JUDGMENT OF FAIRE J
Solicitors: Schnauer & Co, PO Box 31 272, North Shore City 0741
Bell-Booth Sherry, PO Box 33 022, North Shore City 0741
PARLANE AND SCHNAUER V PARLANE AS ESTATE BENEFICIARY HC AK CIV 2009-404-7607 30 May
2011
[1] This proceeding concerns the estate of late Lindsay Harold Parlane who died on 24 December 2006. The plaintiffs and the third defendant were appointed the deceased’s executors by his will, which was signed on 10 November 2005. Administration of the deceased’s will was granted to the plaintiffs and the third defendant by this Court on 27 June 2007.
[2] The problem that has led to court proceedings relates to a disagreement between the executors as to precisely what the estate of the deceased consists of.
[3] The correspondence which has passed between the executors and, in some cases, the solicitors acting for them, raise no less than the nine following issues concerning the estate, namely:
(a) Did the testator loan to the second defendant $44,098.77?
(b)If so, does the second defendant owe the estate $26,760 as a result of the estate giving credit for a payment by the second defendant to the testator of $17,396?
(c) In whom should the Orange Finance Ltd investment of $25,000 vest? (d) Does the estate have an additional asset of $10,000?
(e) Were advances of $5,000 made to the first-named plaintiff and the second defendant by the deceased?
(f) What has happened to a withdrawal from a bank account with the
ANZ Bank of $4,645.50?
(g) What has happened to a pre-paid funeral account credit?
(h)When adjustment is made, having regard to the answers to the above questions, how should the estate of the deceased be distributed?
(i)Who is responsible for the costs occasioned by the various issues that require determination in respect of the estate?
[4] The plaintiffs, who are respectively the deceased’s son and the solicitor who drafted the deceased’s will, invite the Court to make orders pursuant to s 66 of the Trustee Act 1956. In particular, the orders sought are that the deceased’s estate be distributed equally between the first-named plaintiff and the second defendant, but after having regard to the following adjustments, namely that:
(a) The estate of the deceased includes a debt owed by the second defendant of $26,761.71, which therefore must be accounted for in the distribution;
(b)An estate asset, being an investment originally in the sum of $25,000 with Orange Finance Ltd, be vested solely in the second defendant as part of her entitlement to the deceased’s estate; and
(c) The costs of the second-named plaintiff, including the costs of bringing this proceeding, be a charge on the assets of the deceased’s estate.
Jurisdiction
[5] The plaintiffs have submitted that the Court’s jurisdiction under a s 66 application is restricted to ratifying or refusing to ratify the trustees’ proposed decisions as reasonable; which excludes making findings of fact. This argument is supported by the Privy Council decision of Marley & Ors v Mutual Security Merchant Bank & Trust Co Ltd,[1] where Lord Oliver stated that the Court is “engaged solely in determining what ought to be done in the best interest of the trust estate and not in determining the rights of adversarial parties.” The plaintiffs submit that whether or not the money given to the second beneficiary was a loan or a gift is a
finding of fact. This is unfortunate, as the intention behind this transfer is the crucial
matter on which this proceeding will turn.
[1] Marley & Ors v Mutual Security Merchant Bank & Trust Co Ltd [1991] All ER 198 (PC).
[6] A similar issue arose in the context of allegations of a breach of trust in Melville v NRMA Insurance NZ Ltd,[2] where it was submitted that an application for directions under s 66 is not an appropriate procedure where there is likely to be a substantial dispute of fact.[3] Wild J drew the following points from those authorities:
[2] Melville v NRMA Insurance NZ Ltd HC Wellington CP70/01, 17 April 2002, Wild J.
[3] This was supported by the following authorities: Sinking Fund of the City of Dunedin (1885) 4 NZLR, SC 226; Gould (1889) 7 NZLR, SC 733; Griffiths (1910) 12 GLR 533; Oliver [1927] GLR 91; Sir Lindsay Parkinson & Co. Ltd's Trusts Deed [1965] 1 All ER 609; Harrison v Mills [1976] 1 NSWLR 42; Garrow and Kelly's Law of Trusts and Trustees (5th ed, 1982) pp 338-9; Underhill and Hayton's Law Relating to Trusts and Trustees (15th ed, 1995) pp 808-10; Ford and Lee's Principles of Law of Trusts (3rd ed, 1996) pp 4-7 and Dal Pont and Chalmers Equity and Trusts in Australia and New Zealand (1996) pp 496-8.
(a) Section 66 is intended as an inexpensive procedure to obtain the Court's assistance “on points of minor importance arising in the management of the trust”: Sinking Fund; Gould; Griffiths and Oliver.
(b)Questions of substance or importance, particularly allegations of breach of trust, do not lend themselves to application under s 66. In this case, the parties should be able to avail themselves of “the full machinery which exists in ... proceedings”: Sir Lindsay Parkinson.
(c) An application under s 66 must be made upon stated, i.e. agreed, facts.
These facts “cannot be inquired into, and if not agreed should b
established in the normal manner”: Griffiths, Oliver, Harrison v Mills.
[7] However, in contrast to the contention of the plaintiffs, Wild J considered that the Court was able to pose options to the parties and was thus not strictly limited to merely approving a course of conduct. He concluded as follows:
[65] In my view, an application under s 66 has always been, and remains, inappropriate where there are substantial factual disputes and/or possibility of a breach of trust. It is certainly inappropriate where there is, explicitly or implicitly, an allegation of breach of trust.
[8] This phrase was later cited in Te Kapua Park Trust v Stratford Racing Club Inc,[4] where Andrews J noted that a similar point was made in In Re Powell in the context of a charitable trust, and in Neagle v Rimmington.[5] However, she considered that these cases did not apply to the “unique” circumstances before her, which involved a registered transfer of a race course to the Trust for “one peppercorn”, in
breach of the objects of the Trust.
[4] Te Kapua Park Trust v Stratford Racing Club Inc HC New Plymouth CIV-2008-443-446, 13 November 2008, Andrews J
[5] In Re Powell [2000] NZFLR 269; Neagle v Rimmington [2002] 3 NZLR 826.
[9] I consider that the immediate facts involve a substantial factual dispute that I may not resolve. There is an argument available that inferring intention on behalf of Mr Parlane is merely ascertaining the legal character of the facts. There is a further argument that the underlying reasoning of Melville and the associated cases is to grant trustees accused of a breach of trust access to the “full machinery” of the court system to conduct their defence. If this is the case, Melville reasoning is ousted where there are no such accusations.
[10] However, in the course of argument it has become apparent that there are factual disputes that are relevant to ascertaining this intention. For example: the existence of a general understanding of the nature of the transfers of money; the intention behind partial repayment of these transfers; and the inferences to be drawn from the cheque butts, record keeping, and the location of the records. This is not an exhaustive list of the areas that need to be canvassed to ascertain intention.
[11] I consider that these and potentially other relevant facts and associated matters would have become apparent during discovery, oral argument, and oral examination. Because of this, even where there are no allegations of misconduct, the full machinery of the court system is required where there are disputed facts or a disputed characterisation of facts.
[12] My jurisdiction is thus restricted to ratifying, or refusing to ratify, the
trustees’ proposed course of action.
[13] I remind the parties that trustees must act unanimously. A majority of a group of trustees cannot bind a dissenting minority: Luke v South Kensington Hotel Co; Rodney Aero Club Inc v Moore.[6]
[6] Luke v South Kensington Hotel Co (1879) 11 Ch 121 (CA); Rodney Aero Club Inc v Moore
[1998] 2 NZLR 192 at 195.
[14] It is with considerable regret that I reach this position. This is not a large estate. Legal costs incurred are substantial. There is a serious risk the testator’s wish to benefit both his children will be frustrated by the dispute, which essentially exists
between the first-named plaintiff and his sister, the second/third defendant. What
follows in this judgment, I hope, are helpful comments that might assist the parties in reaching an agreement. If they are unable to reach agreement then, clearly, a further application to the Court is required.
Background
[15] Unfortunately, from the commencement of the administration of Mr Parlane’s estate the plaintiffs’ and the second defendant’s positions were in conflict. The first documentary evidence of this conflict is in a letter, which is headed “without prejudice”, dated 21 February 2007 from the second-named plaintiff’s firm of solicitors to the second defendant. It raised matters that were already evidence of disagreement between the parties, namely:
(a) The status of a payment made by the second defendant to her deceased father in May 2005 in the sum of $17,336.06;
(b)The status of payments allegedly made by the deceased to the second defendant in the period 1996 to 2004, which were said to amount to
$44,098.77; and
(c) A disagreement over a burial plot.
The letter contained a proposal for settlement of the two financial transactions, that is, the alleged outstanding repayment of moneys advanced by the deceased and the allegation made by the second defendant that she was entitled to be repaid by her father the $17,336.06, which she had paid to him in May 2005.
[16] Matters were not able to be settled by the parties. There is an unfortunate and acrimonious round of correspondence that has been produced to the Court. The second defendant’s position has not been assisted by the fact that she has instructed a number of different solicitors to represent her.
[17] Fortunately, with the preparation of this case for trial, the issues were substantially reduced and are now agreed to be the following:
(a) Is the second defendant indebted to the estate of the deceased in the sum of $26,762.21, so that her share of the estate must be adjusted to take account of that indebtedness?
(b)Should the estate’s investment with Orange Finance Ltd, which was originally for $25,000, but is now $16,207.48, be vested in the second defendant as part of her entitlement to the deceased’s estate?
(c) How should the costs of administration of the estate and this proceeding be dealt with?
[18] The deceased’s will appointed the three trustees already mentioned as executors and trustees. It made provision for the estate to be left absolutely to the deceased’s wife, should she survive him for 21 days. In the event that she did not survive the deceased, which in fact is the position, the will left the estate on trust to the trustees and provided that, after payment of all just debts, funeral and testamentary expenses, it was to be divided equally between the deceased’s children, the first-named plaintiff and the second defendant. The will provided a gift-over in the event of one of the primary beneficiaries pre-deceasing the deceased. The will then contained a short empowering section, giving the trustees power to sell, retain and invest. It also gives the trustees powers to appropriate or partition any real or personal property to the share of a beneficiary. The will contains a charging clause in respect of a professional trustee. Finally, there was a direction that the deceased be cremated and that both his and his wife’s ashes be laid together in the Waimamaku Cemetery in South Hokianga. The will records that the deceased has pre-paid his funeral through H Morris Undertakers.
[19] The deceased’s wife died in April 2006, some eight months prior to the deceased’s death. The exact ages of the deceased and his wife are not recorded with any precision in the evidence. Suffice to say, Mr Parlane, in his evidence, gives an account which indicates that they would have been in their 90s at the time of their deaths.
[20] Mr Parlane gives an account of the family background. He says his parents brought him and his three sisters up on a farm in Hokianga, Northland. Tragically, two of his sisters died: one with a brain tumour when she was in her 20s and the other in an accident on the farm when she was approximately 11 years of age. Mr Parlane says that the death of his two sisters had a devastating impact on his parents; and affected the way his father treated the third defendant, who became his only surviving daughter.
[21] The family left the farm to live in Wellington, where the deceased obtained a position as a stewards’ director working for the Methodist Church. Mr Parlane describes his father as being very religious for a number of years after his sister’s death on the farm. He says his father left the church in about 1974.
[22] His mother and his father moved to Auckland, and spent the next 13 years living in Sunnynook until 1987. They then returned to the Hokianga, where they lived for about nine years. In 1996, when both parents were in their 80s, they came to live with Mr Parlane and his family in Milford. Mr Parlane’s mother had developed Parkinsons and skin melanomas. She was admitted into a nursing home in 2005, where she remained until she died in April 2006.
[23] Her entry into the nursing home seemed to co-incide with a consideration of the deceased’s asset position. The third defendant’s account with an Auckland barrister for $5,000 was paid by the deceased. The deceased gave the first-named plaintiff $5,000 for the first-named plaintiff’s own use. The reason given for these transactions was to reduce the deceased’s estate to below $150,000 and thus allow for a successful rest home subsidy to be made. By way of clarification, it should be mentioned that if that was the desired effect, no account was taken of any indebtedness to the third defendant in arriving at the value of the deceased’s estate for rest home subsidy purposes.
[24] Mr Parlane says his father invested the money he got from the sale of the Hokianga farm, and which largely represents the balance of his estate. On coming to live with him in 1996, his parents paid him $120 per week board initially, and $140 per week towards the end of his father’s stay with him. He says there were costs in
keeping his mother in the rest home. He then says that his father lent his sister over
$40,000.
[25] He then sets out a description of his sister, which he describes as ”not a complimentary picture”. It is self-evident that Mr Parlane shows considerable animosity towards his sister. He described his sister’s relationship with his parents as follows:
Lyn was the sole daughter of my parents to survive. Naturally my parents lavished affection which should have gone for their daughters on their one surviving daughter.
Again, in a later paragraph:
Dad was not a wealthy man and I know from comments he made to me from time to time that it troubled him that Lyn had not made more of her life and that she was always asking him to loan her money. Dad had a soft nature and Lyn had the ability to put pressure on him to make loans of money to her whenever she asked. I always felt that because Dad had already lost two daughters he wanted to do whatever he could to assist his only surviving daughter, Lyn.
I recall quite clearly that when Lyn sold her bach at Omapere and repaid Dad the sum of $17,396, he was tickled pink. That was in 2005. He told me that he was very happy to get something back from Lyn for a change because he had forked out for her so many times. There was certainly no mention by Dad to me to that Lyn had loaned him the $17,396 to invest for her. Indeed the contrary was the position, he told me that he was happy and proud of her and that she’d actually repaid him a sum of money.
[26] Mr Parlane then continues with a recount of his sister’s position, describing her two marriages and a relationship; difficulties in the bringing up of his sister’s son, Lindsay; the fact that his sister is a welfare beneficiary and now lives on her own. He also mentioned that she had been run over in a traffic accident and had a foot injury which requires her now to walk with a walking stick. He added, also, that his sister attended a function in February 2005 in Hokianga. In her return trip from that function she was involved in a motor accident when a young female passenger was killed. As a result she was prosecuted and he says she received a sentence of imprisonment of one year at Arohata Prison, Tauranga. She was serving that sentence at the time of her father’s death. It was her legal representation that her father paid $5,000 for and which I have referred to in [23].
[27] He maintains that the moneys which his father gave to his sister, Lyn Parlane- Powell, were given as loans. He said that his father kept a record of moneys which were loaned to Ms Parlane-Powell and that record was written down in his handwriting. He produced a document which he says is in his father’s handwriting. It is headed “Total 1-8-02 x Linda”. That is followed by six figure entries and with a total which has been crossed out. There is then a further set of figures on seven lines and with a total $41,548.77 written. There is yet a third group of figures which has at the head “203” and which contains a series of calendar dates and records sums between $50 and $300. There are seven entries in all.
[28] The first-named plaintiff said that, for the purpose of preparing his affidavit evidence, he went back over his father’s cheque butts for several years before and after the year 2000. He said it was impossible to reconcile the schedule accurately with the cheque butts. He then proceeds:
28. … I say that for the following reasons:
(a) I only hold a few cheque butts from 1997, 1998 and 1999;
and then a complete set from 2000 onwards.
(b) Dad’s schedule runs from 1996- April 2004.
(c) I have some bills of Lyn’s which Dad paid – for example a bill from Daimler Finance for $11,084.02, which Dad had written on “Copy – paid 18-5-200)”. I do not have all the bills.
(d) Dad prepared his schedule not based on individual amounts he paid on Lyn’s behalf (amount by amount), but as a summary of amounts he paid each year for Lyn. The amounts on Dad’s schedule do not correspond with individual entries in Dad’s cheque butts.
(e) Dad’s schedule shows him calculating that Lyn owed him
$41,548.77 as at 1st August 2002. He then wrote down some further individual amounts which (when added to the
$41,548.77) appear to leave Lyn owing him $44,098.77.
(f) Dad’s schedule stops on 2nd March 2004. There are further sums appearing from the cheque butts, that Dad advanced to Lyn after that date.
(g) Dad’s schedule stops in March 2004 – i.e. before Lyn repaid the sum of $17,396 from the sale of her Hokianga property on 27 May 2005. The payment of $17,396 which Dad received from Lyn does not appear on the schedule.
29.Taking all the cheque butts and bills actually available to me from Dad’s records, I have prepared the schedule forming part of exhibit A. It shows the amount owing by Lyn to Dad’s estate (before her repayment of $17,326) is $44,565.64. Both the precise period and the debt breakdown is different than Dad’s schedule – but the end result is a figure remarkably similar to Dad’s handwritten schedule.
[29] The third defendant was cross-examined. She denied that there was any promise of repayment made to her father, or that he required that of her. She referred to the repayment of $17,336.06 on the sale of her property and said that she felt a moral obligation to pay that to her father. She denied, however, that she was repaying any loan. The payment was effected by the solicitor acting for the third defendant on the sale of her property, arranging for the payment to be deposited in the deceased’s bank account. The third defendant presented her father with the receipt from the solicitor concerned as evidencing that that payment had been made to him. She says, at that time, her father said to her that he would invest the funds on her behalf. It is now common ground that he did not do that. The funds remained within his bank account and with other investments.
[30] For completeness’ sake, I record the summary of entries extracted by the first-named plaintiff from his father’s cheque butts. The handwritten document completed by the deceased did not use the words “loan”. I was provided with four cheque butts. They did not include the 1996 and 1997 references in the summary listed below. I hesitate to draw any particular conclusion from use the word “loan” in the four entries. Indeed, it is one of the reasons why it is inappropriate to make any final determination of this issue in this proceeding.
Date
Note
Amount
$
Sub Total
$
1996
Loans to Linda
2,533.60
2,533.60
1997 Loans to Linda 1,726.81 1,726.81 15 September 1998
Linda’s Loan
1,513.98
6,644.38
15 September 1998 Linda’s Loan (Avco Finance Co) 2,575.00 15 September 1998 Westpac Bank (Linda’s account) 2,355.40 19 September 1998 Cash Linda 100.00 28 December 1998 Cash Linda 100.00 28 December 1999 Cash Linda 100.00 100.00 2 March 2000 Fiona (for Linda) 400.00 5,692.94 12 June 2000 Far North District Council (for Linda) 663.87 13 September 2000 B Jesney – carpenter 315.85 14 September 2000 I Tim (material for Linda’s
garage
100.00
14 September 2000 J Rand 400.00 20/09/2000 B Jesney – carpenter 200.00 11 October 2000 Kaihu Sawmill 200.00 9 November 2000 Kaihu Sawmill 200.00 9 November 2000 Great Northern Traders 135.00 10 November 2000 G Baker (plumber) 264.35 14 November 2000 Oue Concrete 2,178.00 23 December 2000 Westpac (for Linda) 635.87 27 January 2001 G Baker (plumber) 101.45 18,469.81 13 February 2001 NZ Herald 144.58 15 February 2001 Far North District Council (for
Linda)
500.00
27 February 2001 Warehouse 1273.10 21 April 2001 BBQ Factory (cash payment) 84.99 26 April 2001 Ken (Chimney move for Linda) 80.00 4 May 2001 Chemist 118.80 8 May 2001 Far North District Council Rates
(for Linda)
406.32
18 May 2001 Ambler 143.27 18 May 2001 ANZ credit card for Linda 3,983.20 18 May 2001 Daimler Finance Receipt 10,972.02 28 December 2001 Lumley Isaacs 662.08 9 April 2002 LN Parlane 500.00 1,350.00 4 June 2002 LN Parlane 150.00 10 September 2002 Cash for Linda 500.00 10 December 2002 Cash for Linda 200.00 17 June 2003 LN Parlane (Linda) 500.00 1,400.00 12 August 2003 LN Parlane 350.00 23 September 2003 Cash LN Parlane 250.00 14 October 2003 Cash LN Parlane 300.00 13 January 2004 Cash LN Parlane 3,000.00 4,450.00 2 March 2004 Cash LN Parlane 300.00 15 June 2004 LN Parlane (for her bank balance) 300.00 10 August 2004 Cash LN Parlane 150.00 19 October 2004 Cash transfer for LNP 200.00 16 November 2004 Cash LN Parlane 300.00 14 December 2004 Cash LN Parlane 200.00 Grand Total $42,367.54 18 January 2005 Cash LN Parlane 200.00 2,198.10 2 March 2005 Manukau City Council (Rates) 246.10 19 April 2005 Cash LN Parlane 200.00 17 October 2005 Cash LN Parlane 200.00 16 December 2005 Cash LN Parlane 1,000.00 28 December 2005 LNP purchase washing machine 352.00 Final Total $44,565.64
[31] The second-named plaintiff, Mr Schnauer, acted for the deceased for a number of years and was the draftsman and the person who took the deceased’s instructions at the time his will was executed. He says that he did not remember anything about a loan. In particular, he said:
I don’t remember specifically anything about a loan. I don’t believe I knew there was any loan that was in place, but I can’t be certain at this stage. But, I’d be surprised if I knew about it, and if I did, I think I would’ve put it in the will. … I knew nothing of any loan from the testator. I saw him about twice in the five years before he died, but I knew nothing of any loan until after he died.
[32] I now make the following observations on the first issue.
[33] The issue can be posed as a specific question as follows: were the payments made by the deceased to either the second defendant or on behalf of the second defendant made as loans and in circumstances which created an obligation on the part of the second defendant to repay the deceased or his estate?
[34] Counsel, at my request, address submissions dealing with the presumption of a resulting trust and whether, in this case, it could be displaced by the counter- presumption of advancement that may arise in a parent/child relationship.
[35] Both judges and commentators have expressed dissatisfaction with the presumption of advancement.[7] As it operates between spouses, this presumption has been abolished s 4 of the Property (Relationships) Act 1976. In other jurisdictions, the general presumption has been either abolished, or given very little weight.[8] Its status has been described by Baroness Hale of Richmond in Stack v Dowden as follows:[9]
[7] See Andrew Butler (ed) Equity and Trusts in New Zealand (2nd ed, Brookers, Wellington, 2009) at [12.5.4]-[12.5.7].
[8] Pecore v Pecore [2007] SCC 17; Brooks v Saylor and Madsen [2007] SCC 18; McGrath v Wallace [1995] 2 FLR 114; Calverley v Green (1984) 155 CLR 242 (HCA); Stack v Dowden [2007] 2 WLR 831; Dullow v Dullow [1985] 3 NSWLR 531 at 535-536.
[9] Stack v Dowden (2007) 2 WLR 831 at 850.
The presumption of resulting trust is not a rule of law. According to Lord Diplock in Pettitt v Pettitt [1970] AC 777, at 823H, the equitable presumptions of intention are “no more than a consensus of judicial opinion disclosed by reported cases as to the most likely inference of fact to be drawn in the absence of any evidence to the contrary”. Equity, being
concerned with commercial realities, presumed against gifts and other windfalls (such as survivorship). But even equity was prepared to presume a gift where the recipient was the provider's wife or child.
[36] The plaintiffs submit that this academic and judicial scrutiny has rendered the presumption of advancement irrelevant. I do not think this is yet the case. However, in any event, I do not think that this presumption need be given significant weight here. The modern presumption of advancement is very weak; and like all presumptions, it is designed to infer a generally applicable intention to fill a gap left by the absence of evidence. This interpretation is supported by its general treatment
in New Zealand.[10]
[10] See, eg, Kan v Kan HC Auckland CIV-2008-404-2583, 9 May 2008, Winkelmann J, at [12]; Reeves v Lord [2005] DCR 183, Judge Moore. But see Young v Young [2000] NZFLR 128; Collie v Collie HC Auckland CP 465/98, 18 June 1999, Randerson J.
[37] Thus, the starting point in any such inquiry will be a review of the facts to ascertain whether there is any clear intention which, in this case, gives guidance as to whether the payments made by the deceased to his daughter were a gift or were a
loan.
[38]
corres
The ponden
(a)
following matters that I have extracted from the evidence, ce and notes tend to support an inference of advancement:
The deceased felt an obligation to assist his daughter, who had not
made a success of her life. She is, and was at material times, a welfare beneficiary. By contrast, her brother is a retired deputy school principal; (b)
No formal documents were ever drawn up which either record an
obligation to pay moneys advanced back to the deceased or to his estate, or, for that matter, record that gifts were made; (c)
No formal demand for repayment was ever made by the deceased in his life time. The first actual demand was instigated by the first-
named plaintiff after his father’s death and as a result of discussions he had had with the second-named plaintiff;
(d)The first-named plaintiff described his father’s reaction when a payment was made by the second defendant of $17,396. That occurred on the sale of her bach at Omapere in 2005. The first-named plaintiff described his father’s advice:
[H]e told me that he was very happy to get something back from Lyn for a change because he had forked out for so many years. There was certainly no mention by Dad to me that Lyn had loaned him the $17,396 to invest for her. Indeed, the contrary was the position, he told me that he was happy and proud of her that she had actually repaid him a sum of money.
From that one could infer that there was no expectation on the
deceased’s part of every being repaid by his daughter;
(e) The deceased did not count any loan to his daughter as part of his estate at the time a rest home subsidy application was made. He did, however, reduce his estate by approximately $10,000 by paying his daughter’s legal bill of $5,000 and by paying a sum of $5,000 to his son so that his estate was reduced below the threshold which would allow for a successful rest home subsidy application to be completed;
(f) The deceased’s record of payments made to his daughter seems to have been first made approximately six years after the first payments which are recorded in it. The document gives no hint as to the purpose for the preparation of it;
(g)The second defendant maintains that she never undertook any obligation to repay her father for moneys that he had advanced;
(h)A consideration of the schedule shows that a number of smaller payments were made, which I infer would count against there being a promise to repay, unless, of course, some indication was given that that increased the total indebtedness;
(i)No advice was given to the solicitor preparing the will at the time of preparation of the will. That is, in my view, significant because apart from the deceased’s concern about provision for his wife, his only other primary concern was to make equal provision in his will for his children. No instruction was given to balance positions between children having regard to provision made during his life time. This estate is a relatively small one, probably less than $200,000. The size of the original loan contended was said to be in excess of $44,000. It is surprising that if an asset of that size was required by the deceased to be given special treatment of, that the appropriate instruction was not given to his solicitor; and
(j)The deceased left no instruction to his trustees or those handling his financial affairs indicating that his estate was owed a sum of money by his daughter.
[39] In support of inferring an intention to merely loan the various sums of money, the plaintiffs submit that the will requires equal treatment to be given to the daughter and son. However, I consider that this intention was relevant only after Mr Parlane’s death, rather than when he was alive and able to help his children as necessary. The following suggestions have also been made: it is unlikely that Mr Parlane’s intention was to gift such a large sum of money, because he was not a wealthy man; Mr Parlane accepted partial repayment of the sum; and the money was used by his daughter to fund a bach. In the absence of strong and objective supporting evidence, I consider these arguments to be conjectural, as multiple meanings could be given to those actions.
[40] These are the matters that have been raised to date in this proceeding and will obviously have to be taken into account by the parties before the issue is finally resolved.
[41] I make the following observations on the second issue. The plaintiffs’
position is that due to the procrastination of the third defendant, an opportunity has
$16,207.48 of that investment is now subject to a moratorium.
[42] There are a number of letters passing between the solicitors acting for the trustees and the second defendant regarding the Orange Finance Ltd investment of
$25,000. On 10 July 2008 the trustees’ solicitors wrote:
With respect to the Orange Finance/Money Managers investments, we see no reason to wait until maturity to close those accounts, given there is no penalty to do so. In any event one investment for $25,000 matured on 3 June
2008 and because we had not received the signed forms from your client, these have now been “rolled over” pending final closure. We consider there is a risk in continuing having money invested with Money Managers given the status of financial institutions in today’s climate and we would urge you to advise your client to sign the forms and return them to us. If there is a dispute as to the distribution of those funds we will hold them in our trust account, interest bearing, pending final settlement between the parties. The important point however is that these investments should be cashed in at the earliest possible moment. We have to say that unless your client agrees to do this and Orange Finance/Money Managers company subsequently fails, the other to trustees will hold her personally liable and take that into account in any final distribution.
On 24 July 2008 the trustees again wrote:
Finally, given the collapse of Hanover Finance, we urge your client to sign the release forms to case in the Money Managers investments. In our view, your client’s refusal to sign the forms up until this time has already put the repayment of those funds at risk and we urge her to reconsider her position and sign the forms immediately.
[43] On 8 September 2008 the solicitors again wrote:
In the meantime may we urge your client to sign the early release form in respect of the remaining investment with Orange Finance for $25,000.00.
[44] On 22 December 2008 Orange Finance Ltd wrote to the trustees’ solicitor advising that with effect from 22 December 2008 it has ceased the repayment of maturing debentures and interest. On 11 August 2009 Orange Finance Ltd wrote advising that at a meeting of debenture holders held on Friday, 7 August 2009 debenture holders voted 95% in favour of a moratorium proposal. It also indicated that payments would be made.
this investment and had sent the appropriate forms to the legal advisers for the second defendant, but she had elected not to return them. What the overall outcome of that will be was not revealed to me. No information has been placed before me on behalf of the second defendant to indicate any reason for not returning the early payment form. As with the first issue, there are disputed matters of fact involved in the resolution of this issue and, in particular, whether some of the disclosures should or should not have been made as they were made under the protection of privilege. Further, there will need to be a careful analysis as to whether the invitation to surrender the Orange Finance Ltd investment was given without any tags.
Costs
[46] The final matter that needs comment from me is the costs on this proceeding. In view of the fact that I am unable, in this proceeding, to ratify proposed decisions of the plaintiff trustees, it is not proper that I ratify payment of the costs which have been incurred, particularly in relation to this proceeding. $9,613.12 and $6,519.38 have been rendered to the estate. Those accounts include GST. I was also provided with a summary of costs incurred by the professional trustee for steps taken relative to this proceeding which amount to $32,500 plus GST. In view of the position I have reached, I cannot ratify payment of the costs. However, for the avoidance of doubt I make it clear that this position is reached because the particular proceeding which has been advanced by two of the trustees I have found to be inappropriate to resolve the problems with this estate.
[47] Counsel invited me to reserve costs. I do so on the basis that if counsel are unable to agree memoranda may be filed in support, opposition and reply at seven- day intervals.
Orders
The plaintiffs’ application is refused. Costs are reserved and if orders are sought memorandum in support, opposition and reply shall be filed and served at
JA Faire J
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