Powell v Public Trustee
[2002] NZCA 276
•7 October 2002
| IN THE COURT OF APPEAL OF NEW ZEALAND | CA283/01 |
| BETWEEN | ALMA ELIZABETH POWELL |
| Appellant |
| AND | THE PUBLIC TRUSTEE |
| Respondent |
| Hearing: | 16 September 2002 |
| Coram: | Tipping J Hammond J Baragwanath J |
| Appearances: | S M Henderson for Appellant S J Moylan and M J Allan for Respondent |
| Judgment: | 7 October 2002 |
| JUDGMENT OF THE COURT DELIVERED BY TIPPING J |
Introduction
The appellant, Mrs Alma Elizabeth Powell, was the plaintiff in proceedings brought in the High Court under the Law Reform (Testamentary Promises) Act 1949 (the Act). O’Regan J awarded her $30,000 from the estate of the late Frank Gillam Birdling as remuneration for the work and services she performed for him during the last nine or so years of his life. She had claimed the whole estate. Mrs Powell’s appeal is brought on the basis that the Judge’s award was too low. The Public Trustee, as respondent, in his capacity as executor and trustee of Mr Birdling’s estate, cross-appeals on the basis that the award was too high.
The only significant asset in the estate at the date of death was Mr Birdling’s farm near Kaitaia. For trial purposes its value was taken as being close to $500,000, but, as we will mention below, its present value is much less. The appeal and cross-appeal put in issue only the amount of the award. There is also a relatively small question in relation to costs raised as part of the cross-appeal. There is no longer any challenge to the fact that Mr Birdling did promise to make testamentary provision for Mrs Powell but failed to do so. The whole of the estate was left to a nephew, Mr Menzies under Mr Birdling’s last will which he made on 28 October 1964. Mr Birdling died on 6 May 1999 at the age of 79 without having changed his will which was admitted to probate on 21 July 1999.
A significant feature of the case is that on 20 May 1996 Mr Birdling appears to have tried to leave his whole estate to Mrs Powell by signing a copy of the 1964 will, amended so as to change the sole beneficiary from Mr Menzies to Mrs Powell. He signed the amended copy, probably with testamentary intent, but the document was not valid as a will because it was not witnessed. The document did, however, as the Judge found, clearly support Mrs Powell’s evidence that Mr Birdling had promised to leave her his whole estate.
Further support came from the evidence of Mr Dunmore, a taxi driver, who frequently drove Mr Birdling from his farm into Kaitaia. He testified that he could clearly remember Mr Birdling telling him that the farm had been left to his nephew in his will but he was changing that. Mr Birdling told Mr Dunmore he was going to leave everything to Mrs Powell because “she had done so much for him”. Mr Dunmore deposed that this statement was repeated by Mr Birdling at least half a dozen times over what he described as the last ten years of Mr Birdling’s life.
The work and services which Mrs Powell claimed to have performed fell into three categories. The first comprised work in Mr Birdling’s home. The second involved work on his farm. The third comprised companionship and support over a period of about ten years prior to his death. Mrs Powell was a middle-aged woman who lived alone and supported herself by domestic and cleaning work with an emphasis on the elderly. She had children and other family, and formed a friendship with Mr Birdling in the late 1980’s. There is no suggestion of any sexual intimacy.
In deciding to make such a comparatively small award as against the value of the promise, the Judge appears to have been influenced in his discretionary assessment by two main factors. First he was not satisfied that Mrs Powell had performed work in Mr Birdling’s house and around the farm at the level she claimed. Second, albeit the Judge disavowed any conscious influence from this factor, Mrs Powell was proved to have fraudulently exaggerated the substance of what she had done by making false entries in her diaries. Although advancing them in an affidavit in support of her case, she did not ultimately pursue the claim in Court on the basis of the false entries but was clearly intending to do so had her deception not been found out. The first factor was a matter of importance in respect of the physical work and services which Mrs Powell claimed to have performed. It was, however, as we have noted, also a substantial part of her claim that she had rendered services of an intangible kind in the nature of companionship and support which had enabled Mr Birdling to live out his days on the farm. Her services of this kind had avoided, so she contended, his having to leave the farm in order to be cared for elsewhere, no doubt at significant expense.
It is clear from Mr Henderson’s closing submissions in the High Court that substantial reliance was placed on these less tangible matters. Reference was made in those submissions to the decision of Cook J in Chambers v Weston (1982) NZFLR 377 in which services, largely of an intangible kind, formed a significant part of the claim.
The companionship factor should be seen in the light of the fact that Mr Birdling was a man who kept his own company. He was a loner who did not welcome the attention of others. He had little, if any, relationship with his neighbours and seemed to have few, if any, friends. He did enjoy the local RSA and playing bowls but subject to those activities he kept very much to himself. Mrs Powell was virtually the only person he allowed into his house and to help him on his farm. She somehow managed to build up a rapport with him, something which no-one else seems to have achieved.
The law
The basis upon which a claim may be made under the Act is set out in s3(1) which is in these terms:
3 Estate of deceased person liable to remunerate persons for work done under promise of testamentary provision
(1) Where in the administration of the estate of any deceased person a claim is made against the estate founded upon the rendering of services to or the performance of work for the deceased in his lifetime, and the claimant proves an express or implied promise by the deceased to reward him for the services or work by making some testamentary provision for the claimant, whether or not the provision was to be of a specified amount or was to relate to specified real or personal property, then, subject to the provisions of this Act, the claim shall, to the extent to which the deceased has failed to make that testamentary provision or otherwise remunerate the claimant (whether or not a claim for such remuneration could have been enforced in the lifetime of the deceased), be enforceable against the personal representatives of the deceased in the same manner and to the same extent as if the promise of the deceased were a promise for payment by the deceased in his lifetime of such amount as may be reasonable, having regard to all the circumstances of the case, including in particular the circumstances in which the promise was made and the services were rendered or the work was performed, the value of the services or work, the value of the testamentary provision promised, the amount of the estate, and the nature and amounts of the claims of other persons in respect of the estate, whether as creditors, beneficiaries, wife, husband, children, next-of-kin, or otherwise.
As there is now no issue that Mr Birdling promised to leave his farm to Mrs Powell as remuneration for her work and services, the focus turns to the following matters which bear on the ultimate statutory consideration which is to determine what constitutes “such amount as may be reasonable” as remuneration for the work and services. The section requires the Court in making that assessment to take into account all relevant circumstances and in particular:
[1]The circumstances in which the promise was made and the services were rendered or the work was performed.
[2]The value of the services or work.
[3]The value of the testamentary provision promised.
[4]The amount of the estate.
[5]The nature and amounts of other claims on the estate.
We will examine the case under each of these headings and under a residual heading of other relevant circumstances to reflect the need to take account of all relevant circumstances. Before doing so we note material aspects of the leading case of Re Welch [1990] 3 NZLR 1, a decision of the Judicial Committee of the Privy Council, the judgment of their Lordships having been delivered by Sir Robin Cooke. At page 6, Sir Robin indicated that whenever a claim for relief is made out, s3(1) as a whole demonstrates that the criterion as to the relief to be granted is reasonableness. That is always, he said, the result at which the Court is to aim, no matter whether the award is of money or of specific property. If the deceased promised a certain sum or a certain property, that is a relevant consideration but not necessarily decisive. In a passage directly relevant to the present case Sir Robin said at page 9:
In support of the present appeal Mr Withnall contended that the deceased had made his own assessment of the value of the appellant's services by promising to leave him the chief assets in his estate, and that the deceased's own assessment should not be disturbed. As to that contention, manifestly it will often be impossible or inappropriate to weigh in any nice scales services or work on the one hand and testamentary reward on the other. An assessment, even a general one, by a promisor able to exercise a sound judgment would not lightly be departed from. In this case, however, the difficulty is that there is no evidence that the promises were ever seen by either the deceased or the appellant as an assessment of a reward for services.
In the present case the evidence of Mr Dunmore makes it clear that Mr Birdling did see the promised benefit of the farm as a reward for services. Hence Mrs Powell can reasonably invoke their Lordships’ observation to the effect that Mr Birdling’s assessment of the worth of her services should not lightly be departed from. But the respondent is entitled to point to the need for ultimate reasonableness and the trial Judge’s advantages in seeing and hearing the witnesses.
In view of the issues raised on the appeal we propose to adopt a structure for this judgment somewhat different from the structure adopted by O’Regan J for his. We will, however, carefully consider the matters which weighed with him under the various headings we propose to adopt.
The circumstances in which the promises were made and the work and services performed
It is desirable first to identify the nature of the work and services which Mrs Powell established. As noted earlier, O’Regan J found that her services inside the home by way of cleaning and allied activities were not as great as she had portrayed. The Judge was, in this respect, entitled to take into account the state of the house after Mr Birdling’s death. He concluded:
I therefore cannot give this claim any significant weight, except to find that Mrs Powell was present in Mr Birdling’s home from time to time and sometimes undertook some work for him. It was, however, not of a sufficient scale to justify a claim of the kind she makes in this case.
We do not consider there is any justification for this Court to take a different view. It is appropriate, however, to note that the whole of Mrs Powell’s claim did not rest on the work under discussion.
The Judge examined the evidence concerning Mrs Powell’s work on the farm with considerable care. His conclusions were expressed in these terms:
The observations of the defence witnesses are, of course, no more than observations. If they did not happen to be in the vicinity of Mr Birdling’s farm at the time Mrs Powell was working there, they could not see her. Nevertheless, the combined weight of the evidence of the defence witnesses who lived adjacent to Mr Birdling’s farm or passed it regularly, substantially undermine Mrs Powell’s claim to have undertaken work of the type or volume she claimed. By modifying her story after the exaggerations of her first affidavit she undermined her own credibility and the comparatively small number of genuine entries in her diary also create doubt about the scope of the services she provided in the way of farm work.
I conclude from the evidence that she undertook some farm work on relatively rare occasions, perhaps more frequently closer to the end of Mr Birdling’s life, but for the most part her presence on the farm was of very limited value and motivated as much by her own desire for company as a genuine provision of services in consideration for a testamentary promise.
We consider there is a problem with the Judge’s implicit treatment of the evidence of Mr and Mrs Stayte who owned a nearby farm and whose evidence on behalf of Mrs Powell was not challenged, albeit Mr Moylan did criticise it for its lack of specificity. Mr Stayte’s evidence was along the following lines. He knew Mr Birdling in the last ten years of his life as an “old timer” who lived entirely on his own (except for his friendship with Mrs Powell) and farmed his land in a pretty relaxed way. Mr Birdling was a good neighbour who kept almost entirely to himself. Throughout the 1990s Mr Stayte said he would drive past and frequently saw Mrs Powell’s car at Mr Birdling’s property. Often she could be seen on the property doing some work or accompanying him in whatever he was doing.
Mr Stayte first met Mrs Powell in 1990. She was the only person he saw visiting Mr Birdling or helping him on the farm. He saw her feeding out hay from the tractor, moving stock from paddock to paddock and drenching. He once saw her driving the tractor. Throughout the year a beef farmer, as Mr Birdling was, had to get the herd in to deal with inoculations, drenching or drafting, probably on eight occasions. Mr Stayte said that this was hard work, in respect of which Mr Birdling would have needed help. He indicated that he would have needed Mrs Powell’s help and Mrs Powell was the only one who gave him any help. That help was not just on the farm but also driving him for shopping and to the RSA. This seemed, to Mr Stayte, to be every Thursday.
Mrs Stayte gave evidence to the effect that she would frequently see Mrs Powell’s car at Mr Birdling’s house in the very early morning when she took her son to work. It was still often there or there again in the evening when she picked him up. Through the years Mrs Powell’s presence on the farm became more often than not and eventually, almost invariably. The district assumed that there was an affair going on. She never saw anyone visit Mr Birdling except Mrs Powell.
Although the Judge mentioned the evidence of Mr and Mrs Stayte in his general survey of the evidence on this topic, we note that he did not mention it again, or that it was unchallenged, when expressing his conclusions. We consider those conclusions do not adequately reflect the Staytes’ evidence and to that extent it is appropriate to modify them to the necessary extent. Mrs Powell did do work of the kind referred to by the Staytes thereby helping Mr Birdling with the management and operation of his farming activities. That said, we do not see this departure from the Judge’s approach to this topic as in itself making a substantial difference to his overall appraisal of what Mrs Powell’s claim was worth.
The third aspect of the relevant work and services relates to the less tangible matters of companionship and general support. It is a reasonable inference from the evidence as a whole that Mrs Powell’s companionship and support materially contributed to Mr Birdling’s ability to remain on the farm until his death. In the context of the kind of man Mr Birdling was and his farming background, we consider that this must be regarded as a significant service by Mrs Powell. It can reasonably be inferred that being able to remain on the farm must have meant a lot to Mr Birdling. It can similarly be inferred that he would have derived significant benefits from Mrs Powell’s companionship and general support. We will deal with the issue concerning the reciprocal benefits which she received under a later head.
Having considered the Judge’s appraisal of this aspect of Mrs Powell’s claim, we are, with respect, of the view that he did not place as much weight on the companionship and allied points as the case justified. The Judge correctly identified that matters of this kind can qualify as services: see Byrne v Bishop [2001] 3 NZLR 780 (CA), and Thwaites v Keruse (1993) 11 FRNZ 19 (CA). It is a point in respect of which Mr Birdling’s own appraisal of the worth of Mrs Powell’s services is entitled to receive significant weight.
This survey of the nature of the work and services provided by Mrs Powell implicitly covers the circumstances in which they were provided. Further assistance in appreciating those circumstances comes from the relatively small but significant fact that Mrs Powell nursed Mr Birdling through a fairly serious bout of influenza in 1995. She also cared for him during his last illness, not calling a doctor because he would not allow her to do so. That being his nature, it is perhaps not altogether surprising that he never attended the solicitors in Kaitaia who had prepared his 1964 will, in order to make a new will reflecting his changed intentions. He did not do so in spite of correspondence inviting him to consider updating his will.
The circumstances in which the promises were made have already been touched on in part. They were made largely as a result of Mr Birdling’s gratitude for what Mrs Powell had done and could be expected to continue to do for him. Mr Dunmore’s evidence is powerful testimony of Mr Birdling’s reasons for promising to leave Mrs Powell his farm. The fact that Mr Birdling mentioned the matter to Mr Dunmore on a number of occasions over quite a long period of time implies that Mr Birdling felt quite strongly about the value to him of what Mrs Powell was doing. There is not the slightest hint in the evidence that Mr Birdling’s promises were other than wholly voluntary and sincerely meant. Furthermore there is evidence that suggests that in spite of his somewhat reclusive nature, Mr Birdling was assiduous in attending to business matters and had a full grasp of his personal affairs. In short the promises were made in circumstances giving no reason to doubt their sincerity, voluntariness and understanding of what was involved.
The value of the services and work
It is always difficult to put a value retrospectively on physical work and services of the kind in issue. It is even more difficult to put a value on services of an intangible kind such as those in this case. In our view they represent the greater part of Mrs Powell’s claim. One can look at the matter from the point of view of the cost to the provider of the work and services but also from the point of view of the value of the work and services to their recipient. The Act places the principal focus on the latter dimension. Mrs Powell’s physical work and services were not, on the evidence, extensive, but neither do we consider they should be regarded as trivial. Mr Birdling’s own appraisal is clear evidence that they must have been appreciable. It is a reasonable inference that he could not have carried on certain of his farming activities without Mrs Powell’s help. That must be regarded as the high point of this aspect of the case because it is, as the Judge found, difficult to be confident exactly what Mrs Powell did do in physical terms, both in the house and on the farm. The intangible services of companionship and support were undoubtedly of considerable value to Mr Birdling. He would hardly have expressed himself to Mr Dunmore as he did if that were not so. Mr Birdling’s perception was that Mrs Powell had done “so much” for him.
The value of the testamentary provision promised
This topic is a simple and short one. Mr Birdling promised to leave Mrs Powell the only significant asset he possessed, namely his farm, which the Judge described as having a value of about $500,000. This was presumably an estimate of its value either at the date of death or the date of hearing. The farm’s 1 September 1998 government valuation is shown in the papers as being $402,000. We must however, on this aspect and the next, proceed on the basis of the material to which we now refer.
The amount of the estate
As just noted, the case proceeded in the High Court on the footing that the farm was worth about $500,000. We were not told whether that approach was based on up-to-date valuation evidence. The case initially proceeded in this Court on the same basis. But, for the purposes of the appeal, the respondent had filed an affidavit described as updating the assets and liabilities in the estate. That document took the farm into account at its September 1998 government valuation of $402,000. When the Court inquired how that information could be described as updating, and furthermore how it stood against a September 2002 valuation, counsel for the respondent initially took the stance that this was all the information with which he had been supplied by the Public Trustee. To that response the Court demurred. The respondent was directed to provide a current valuation of the farm so that the present true value of the estate could be known with some precision. The evidence now produced shows that the farm is currently worth only about $350,000.
The updating evidence also disclosed that the respondent has incurred very substantial costs in conducting this litigation. Without bringing to account the costs of the appeal, and working on the present value of the farm, the net value of the estate is currently about $260,000. We do not propose to say anything about the fact that a piece of land previously treated by the respondent as being part of the estate is now, on fuller inquiry, found to belong to someone else! Indeed, had the Court not taken the initiative the respondent and the residuary beneficiary would have received a decision based on a materially greater value for the estate than that which actually prevails. It is perhaps worth confirming that in litigation of this and similar kinds the executor is expected to provide the Court with accurate information concerning the values of assets and liabilities at date of death, at date of initial hearing, and at date of appellate hearing, if applicable. The express provisions of s11A of the Family Protection Act 1955 have always, as a matter of longstanding practice, been treated as applying to proceedings of the present kind.
The nature and amounts of other claims on the estate
Mr Birdling had no creditors of any moment. He had no wife or children. The only other relevant claim on the estate was that of Mr Menzies, his nephew. His claim was as the sole beneficiary of a will made in wholly different circumstances, 35 years before Mr Birdling’s death. We cannot improve on the Judge’s appraisal of this aspect of the case.
Mr Menzies gave evidence, and I also had before me an affidavit from his mother, Patricia Menzies. Her evidence was that when Mr Menzies was a child he had a very close relationship with Mr Birdling. Mrs Menzies’ husband died when her son was only eight years old and at that point Mr Birdling took over the role of caring for mother and child. Mr Birdling paid for Mr Menzies to go to Kings Preparatory School and Kings College and even after Mrs Menzies and her son moved to Auckland, Mr Menzies spent at least one school holiday a year, usually the long summer holiday, on Mr Birdling’s farm. Mr Menzies described Mr Birdling as a father figure, and referred to the values he had been taught by him. As a young man Mr Menzies had a very close relationship with Mr Birdling, and this was highly valued by both of them.
However, after Mr Menzies finished school, contact with Mr Birdling fell away and appears to have been almost non-existent in the last 10-15 years of Mr Birdling’s life. Mr Menzies referred to keeping in regular contact but his evidence did not substantiate that claim. His last visit to Mr Birdling was in 1997 and, because he had not let Mr Birdling know he was coming, the two did not meet. Their last meeting was in 1995, some four years before Mr Birdling’s death. Mr Menzies did not attend Mr Birdling’s funeral and although he talked of the disruption in his life which led to that occurring, it was not consistent with the close relationship he claimed to have.
Mr Menzies also referred to Mr Birdling’s farm as his “second home”. He is now living on the farm awaiting the outcome of this litigation, but is not farming the property – all of the stock and plant was sold soon after Mr Birdling’s death and the grazing has been leased to a neighbouring farmer.
I accept Mr Menzies’ evidence that there was a very strong bond between him and Mr Birdling in the early part of Mr Menzies’ life, and although there had been little contact in the last few years, the bond would have had some enduring quality. However, I do not believe that the moral right of Mr Menzies to inherit the property can be characterised as a strong one in the circumstances of this case.
There was in these circumstances plenty of room to meet whatever reasonable amount Mrs Powell is entitled to without in any way doing any moral injustice to Mr Menzies.
Other relevant circumstances
Two further matters require consideration. The first is the value to Mrs Powell of the companionship she herself derived from her friendship with Mr Birdling. The second relates to the Judge’s approach to Mrs Powell’s attempt to present a fraudulently exaggerated claim by means of the false diary entries.
(a) Reciprocal benefits
There can be no doubt that reciprocal benefits must be brought to account. Section 3(1) of the Act itself requires a plaintiff to account for any remuneration already received. A claim can be made only to the extent to which the deceased has failed to make the promised testamentary provision “or otherwise remunerate the claimant”. A claim for services or work, which have already been partially remunerated in money, can succeed only to the extent of the shortfall. If intangible services have been partially “remunerated” by reciprocal benefits, the same approach must logically be taken. As intangible services like companionship qualify as services, reciprocal benefits of a like kind must equally qualify as partial remuneration. A claim can succeed only to the extent of the unremunerated balance. If intangible services were to be wholly matched by reciprocal benefits, there would be no balance to claim. This line of reasoning is inherent in the judgment of their Lordships in Re Welch at page 10: see also Byrne v Bishop (supra) at 785.
The Judge was fully alive to this issue and expressed himself upon it in this way:
In assessing a claim under the Act it is relevant to consider the extent to which any services provided by the party making the claim under the Act were rewarded during the lifetime of the deceased. It is notable that almost all witnesses who knew Mr Birdling well described him as someone who always paid his debts and found a way of returning a favour. This led some defence witnesses to argue that it would have been likely that Mr Birdling would have returned any favour provided to him by Mrs Powell during his lifetime. On the other hand, it could also be argued that the testamentary promise alleged to have been made by Mr Birdling was his method of effecting payment.
Mrs Powell obviously derived considerable pleasure from the time she spent with Mr Birdling. In that sense the companionship she provided to him appears to have been reasonably evenly balanced by the benefit she gained from the companionship she received from him. Often she ate meals at Mr Birdling’s house, and there was also evidence she grazed a steer on his property. In my view the “companionship” element of the services provided by Mrs Powell were balanced by the benefits she derived from Mr Birdling’s company and at least some of the services she provided to him in the house or on the farm, were recompensed by benefits she received. Having said that, I do not believe the benefits she received were a complete reward for the services she provided to Mr Birdling.
In argument Mr Henderson contended that the Judge had regarded the balance in Mrs Powell’s favour as too small, whereas Mr Moylan was inclined to suggest that it was too great, even to the point that no balance should be recognised at all. It follows from our view that the Judge under-estimated the worth to Mr Birdling of Mrs Powell’s companionship and support that we regard the balance as being greater than that assessed by the Judge and we will approach our ultimate assessment on that basis. Even without that dimension we would have been of the view that the balance was greater than that inherent in the Judge’s statement that he did not believe the benefits Mrs Powell received were a “complete” reward for the services she provided to Mr Birdling.
(b) The false diary entries
The first point we should address under this heading is Mr Moylan’s submission that the Judge should have found that Mrs Powell’s conduct in respect of the false diary entries was conduct which wholly dis-entitled her to any form of relief. Mrs Powell was penalised in costs for her conduct (a topic to which we will revert). We do not consider it correct in principle for her to be penalised again in relation to her claim itself. The Judge was, and was fully entitled to be, very cautious as to Mrs Powell’s credibility in the light of her fraudulent conduct, but whatever the claim is truly worth should not be diminished by way of punishment for her fraud. Promises were made; work and services were performed. Their value has to be fixed by reference to “all the circumstances of the case”. It is not in our view a circumstance relevant to the amount of the appropriate award that Mrs Powell fraudulently exaggerated her claim in its pre-trial stages. This dimension was highly relevant to the veracity of Mrs Powell’s evidence but, recognising this, Mr Henderson invited the Court to assess the worth of her claim by reference to the evidence of others, and without relying on Mrs Powell’s evidence to any significant extent. If after adopting that approach a valid claim is established at a certain level it would, as we have noted, be wrong in principle to reduce or eliminate it by reference to Mrs Powell’s fraudulent conduct in the original presentation of her claim.
The second aspect of the present point concerns Mr Henderson’s contention that the Judge allowed his appropriate condemnation of Mrs Powell’s conduct to influence his appreciation of the amount and value of Mrs Powell’s work and services. We have fully considered everything advanced on both sides of this issue and are left with the view that there is force in Mr Henderson’s submission. The Judge’s several references to the topic and the obvious and understandable impact it had on him leads us to the conclusion that his appraisal of Mrs Powell’s conduct in respect of the diary entries must have unconsciously caused him to depreciate the worth of Mrs Powell’s claim as established by evidence and reasonable inferences from material not associated with Mrs Powell or her misconduct.
The submissions in this Court
Mr Henderson’s argument in summary was that the Judge had failed properly to take into account the circumstances of the promises, and the relevance of the fact that the promises were of the entire estate. Counsel further argued that the Judge had taken into account an irrelevant matter, namely Mrs Powell’s fraudulent exaggeration of her work and services by means of the falsified diaries. Thirdly, counsel submitted that the Judge had ignored or not fully weighed the value of the promise, particularly in the light of the approach of the Privy Council to this topic in Re Welch.
Mr Moylan’s submissions were largely the converse of those presented by Mr Henderson. He argued that the Judge had not fallen into the errors ascribed to him. Mr Moylan also reminded the Court that the Judge’s assessment was essentially a discretionary one which should not be disturbed, save in limited circumstances. We have borne that point in mind: see Re Welch at pages 6-7. Mr Moylan further argued that the evidence of Mr and Mrs Stayte should not carry much weight because of its lack of specificity. We consider this submission overstates the position. While there is no great specificity in what they said, that is not unusual in cases of this kind. The general tenor of their evidence paints a reasonably clear picture.
Although Mr Moylan endeavoured to persuade us that the Judge’s approach to the intangible factors of companionship and support was justified and appropriate, we consider that the Judge did not give sufficient weight to this aspect of the case. Even after allowing for appropriate set-off of reciprocal benefits, we consider there is a clear balance in Mrs Powell’s favour. When one brings all the services together, both tangible and intangible, they must be regarded as representing a substantial contribution to the happiness and effectiveness of Mr Birdling’s last few years on his farm. Our approach to the remaining aspects of Mr Moylan’s submissions is inherent in what we have already said.
Discussion
It is time to bring all the relevant threads together. Mr Birdling promised to leave Mrs Powell his whole estate, comprising his farm now worth about $350,000. Over nearly the last ten years of his life, and increasingly as time went on, Mrs Powell assisted Mr Birdling around the house and on his farm. These tangible services were not extensive but they were, particularly as regards the farm, far from trivial. Furthermore she gave him companionship and support at a level which was of obvious and recognised benefit to him and which helped him to continue to live on the farm until his death. His estimation of the value of her services, both tangible and intangible, speaks for itself. There was no-one else in his life to whom he owed any moral duty. While he had been close to his nephew in earlier years, that relationship had all but ceased to the point that Mr Menzies did not attend his uncle’s funeral. Furthermore Mr Birdling had supported his nephew handsomely in his earlier years. Mr Birdling was therefore entitled to be generous to Mrs Powell. There is no suggestion that his intended provision for her was other than fully voluntary and with full appreciation of his financial and personal affairs.
In objective terms the value of the promise is clearly greater than the value of the services. Real weight must, however, be given to Mr Birdling’s own appreciation of their value. His appraisal in these circumstances should not, as the Privy Council said in Re Welch, lightly be departed from. The Judge departed from it in a major way. Mr Henderson recognised, during argument, that it was difficult for his client to sustain her claim to the whole estate. That was an appropriate position for counsel to take when the ultimate criterion is reasonableness. To award the whole estate would be going beyond what is reasonable, even after allowing for Mr Birdling’s own appraisal. Departure from what he intended is necessary to achieve objective reasonableness.
The more difficult question is what the extent of that departure should be. There are sometimes arguments in this kind of case whether the plaintiff starts from zero and must demonstrate what is reasonable or whether the plaintiff starts from the amount promised, which should be reduced, if at all, only to the extent necessary to bring the award within the range of objective reasonableness. No substantive argument was directed to this question in this case but it was touched on indirectly. In the end each method of analysis should reach the same result. What is reasonable must be informed by all the circumstances including the amount of the promise. So whichever way one looks at it, logically the same result should be achieved.
The cases of greatest difficulty are apt to be those like the present when the deceased’s subjective appraisal of the worth of the services appears to be substantially greater than what objectively those services might be seen as worth. How much then should the deceased’s appraisal influence the outcome, it being a factor which the statute (as confirmed in Re Welch) clearly says should influence that outcome? What is a reasonable award must be assessed by giving as much weight to the promisor’s own assessment as it is reasonable to give in all the circumstances. Such weight will be influenced by such matters as his grasp of his financial and personal circumstances, the existence and circumstances of other claimants and beneficiaries, and whether there is any concern about the promisee’s own conduct as regards the making of the promise. We have already indicated that no such concern arises on the evidence in this case. In the end the right answer must be a matter of judgment in respect of which there must be a substantial margin of appreciation for the result reached by the trial Judge. We are, however, constrained to the view that in this case the trial Judge has made an award which materially underestimated what is a reasonable sum, bearing in mind all the relevant factors which we have traversed. It is not a matter of this Court substituting its own discretionary assessment. We consider, with respect, that the Judge’s assessment represents an amount which is plainly too low.
Conclusion
What then is the correct amount? There must be a range within which any figure can fairly represent a reasonable conclusion. The primary considerations on the one side are the value of the estate, the value of the promise and the lack of any competing claims. On the other side is the fact that the work and services, in purely objective terms, cannot reasonably be valued at anywhere near the level of the promise. Another factor in a case such as this is the need, as the Privy Council put it, not to depart from the promise lightly. We would add that if departure is necessary to bring the award within the bounds of reasonableness, the figure assessed should be at the upper end of what is perceived to be the reasonable range.
In making our assessment of quantum, we have compared the circumstances in Byrne v Bishop (supra) with those in the present case. Byrne’s case was a substantially stronger one for the plaintiffs but there are some similarities. After taking account of reciprocal benefits, the trial Judge in Byrne awarded the plaintiffs a farm and other assets worth in total about $1.4m. The whole estate was worth about $2.5m. The award thus represented a little more than half of the promise, which was to leave the whole estate. This Court expressed its agreement with the trial Judge’s assessment, observing that services such as companionship “are really beyond a monetary calculation”. Significantly, the Court then said that the award was appropriate, albeit the deceased thought the services and work had been worth a very great deal more than the amount the Judge eventually awarded. Reference was made to the observation in Re Welch that it is impossible to weigh in any nice scales services or work on the one hand and testamentary reward on the other. It should be noted that the Byrne Court regarded that case as having some quite extraordinary features justifying an award “going well beyond the normal range, even for a claim against a large estate”.
Doing the best we can in this case, we fix the appropriate amount at $120,000. This figure, which is about a quarter of the originally assessed value of the estate, still represents a lot less than the value of the promise but, in our view, anything more would be beyond the bounds of reasonableness in all the circumstances of the case, including those which properly weighed with the Judge. In fixing this amount we have had regard to the present value of the estate, albeit the costs incurred by the respondent in opposing Mrs Powell’s claim must fall essentially on the residuary beneficiary.
Obviously there is no merit in the respondent’s cross-appeal seeking to reduce the amount of the award. Nor is there any merit in the challenge to the amount which the Judge awarded Mrs Powell for her costs in the High Court. The costs award was par excellence a discretionary assessment and we are not persuaded we should interfere with it. The amount reflected the Judge’s assessment of the impact on costs of the false diaries issue. We are significantly increasing the amount of the primary award but nevertheless do not consider an adjustment is required to the order for costs in the High Court on that account. That decision is in itself a facet of recognising Mrs Powell’s misconduct in the original presentation of her claim.
Formal orders/costs
The appeal is allowed and the cross-appeal dismissed. The award in the High Court is set aside. We substitute an award of $120,000. There is to be no alteration to the costs award in the High Court. For costs in this Court Mrs Powell is to have the sum of $5000 plus disbursements including the reasonable travel and accommodation expenses of counsel, to be fixed if necessary by the Registrar.
Solicitors
Henderson Reeves Connell Rishworth, Whangarei for Appellant
Minter Ellison Rudd Watts, Auckland for Respondent
0
0
0