Russell aka Vuletich v Ensing

[2021] NZHC 1875

IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY

I TE KŌTI MATUA O AOTEAROA KIRIKIRIROA ROHE

CIV-2020-419-135

[2021] NZHC 1875

UNDER

the Law Reform (Testamentary Promises) Act 1949

IN THE MATTER OF

the Estate of VIOLET FILOMENA COX (deceased)

BETWEEN

BRIAR MAREE RUSSELL also known as VULETICH

Plaintiff

AND

THEODORUS DIRK ENSING AND DESIRAE LOUISE ENSING as

Administrators of the Estate of Violet Filomena Cox

Defendants

Hearing:

On the papers (final submissions 25 June 2021)

Counsel:

P Maciaszek for the Plaintiff

J Gurnick for the Ensings as Administrators

P V Cornegé for the Ensings in their personal capacity AJH Witten-Hannah for F Silvester (a person directed to be served)

V Whitfield for certain residuary beneficiaries

Judgment:

23 July 2021

JUDGMENT OF MUIR J

Counsel/Solicitors:

Maciaszek Brown Law, Christchurch J Gurnick, Barrister, Hamilton

P V Cornegé, Barrister, Hamilton Witten-Hannah Howard, Takapuna V Whitfield, Barrister, Cambridge

RUSSELL v ENSING [2021] NZHC 1875 [23 July 2021]

Introduction

[1]    Ms Violet Filomena Cox passed away on 5 June 2017. This proceeding involves a claim under the Law Reform  (Testamentary  Promises)  Act  1949  by  Ms Briar Maree Russell against Ms Cox’s estate (“the Estate”). The parties now seek this Court’s imprimatur to a settlement agreement reached between them on 2 June 2021. As already previously indicated, I am satisfied with the terms of that agreement.1

[2]My reasons may be briefly stated.

Background

[3]The Estate is moderately large with a combined value of approximately

$4.6 million. Ms Cox’s last will is dated 29 February 2016 (“the Will”). It made provision for a number of specific beneficiaries including Mr Theodorus Ensing and Ms Desirae Ensing, who are also administrators of the estate (“the Ensings”). Under the will the Ensings stand to inherit two properties at 95 and 97 Beach Road, Howick, valued at $1,350,000 and $1,300,000 respectively. After $392,000 of specific legacies, the balance falls into a residuary intestacy. Twenty-five persons stand to inherit in the intestacy, including Ms Cox’s various nieces and nephews and Ms Cox’s only living sibling.

[4]    By application dated 11 September 2018, Ms Russell sought provision under the Law Reform (Testamentary Promises) Act 1949 in respect of extensive services provided to Ms Cox during Ms Cox’s lifetime. She alleges that such services were provided in return for promised testamentary provision.

[5]    In January 2021 Ms Russell’s claims proceeded to a mediation which was scheduled three weeks before the claims were intended to be heard in this Court. Although a number of residuary beneficiaries sought to take part in the mediation, only one (who had taken formal steps) was permitted fully to do so.

1      See my minute dated 8 June 2021.

[6]    A provisional settlement agreement was reached between those parties participating (namely, Ms Russell, the administrators, the Ensings and the one residuary beneficiary). This provided for a property at 2/14 Fencible Place, Otahuhu to be transferred from the Estate to Ms Russell in settlement of her claims, together with accrued rental on the property of approximately $22,000. Ms Russell was also to be paid $100,000 by the Ensings in their personal capacity.

[7]    The net effect of the provisional settlement agreement was substantially to visit the incidence of the settlement on the residuary estate and substantially to relieve the Ensings from that incidence. In broad terms, the difference between the provisional settlement and the result that would have occurred had the incidence of the settlement been visited on the Ensings and residuary beneficiaries pro rata (but excluding the specific legatees as intended) was in the order of $400,000 from the Ensings’ perspective.

[8]    Court approval was required for the provisional settlement to take effect. Ultimately that application was withdrawn after indications by me that I was concerned about the exclusion of various of the residuary beneficiaries from full participation in the mediation, noting that the beneficiaries concerned had significant objections to the provisional settlement, particularly in respect of the proposed incidence of payment.

[9]    Further directions as to service were at that point made. Service has been effected and verified.

[10]   All of those who have taken steps (excluding the Ensings in their capacity as administrators) have since reached a new agreement in settlement of Ms Russell’s claim. In terms of that agreement, Ms Russell is to be paid $700,000, the incidence of such payment to be pro rata across the estate. Again the consent of the Court is sought.

[11]   Two issues call for assessment: whether the specified settlement sum is appropriate and likewise whether the incidence of that payment is appropriate. I consider the answer to both questions is demonstrably ‘yes’.

The settlement sum

[12]   There is no dispute that Ms Russell’s claim is made out in terms of the services provided by her to Ms Cox, the promise made by Ms Cox, and the nexus between the services and the promise. The parties consider the proposed figure of $700,000 to be within the available range that could be awarded by the Court. I agree. Given the total value of the Estate in this case, and the value of the promise given to Ms Russell (somewhere in the order of $2 million),2 the agreed sum is reasonable.

Incidence

[13]   Unlike the previous settlement agreement, the new agreement provides for the award to fall rateably across the entire Estate with the following results:

(a)the Ensings will pay $420,840 (being a 60.12% share of the award);

(b)the remaining specific legatees will pay $61,040 (being an 8.72% share, pro-rated among them); and

(c)the residuary estate will pay $218,120 (being a 31.16% share, pro-rated among the residuary beneficiaries).

[14]Section 3(5) of the Law Reform Testamentary Promises Act provides:

The incidence of any payment or payments so ordered shall, unless the Court otherwise determines, fall rateably upon the whole estate of the deceased, or, in cases where the authority of the Court does not extend or cannot directly or indirectly be made to extend to the whole estate, then to so much thereof as is situated in New Zealand.

[15]   In National Heart Foundation of New Zealand v Carroll,3 Wild J held on near identical wording under s 7(1) of the Family Protection Act 1955 that it did not create a statutory prescription in favour of rateable payment.

2      Said to relate both to the properties at 95 Beach road (valued at approximately $1.3 million) and the property at Fencible Place (valued at approximately $660,000).

3      National Heart Foundation of New Zealand v Carroll (2009) 28 FRNZ 268.

[16]   Nevertheless, rateable payment remains a prima facie reasonable mechanism by which to meet monetary claims under the Act. It is the mechanism agreed by all parties who have taken steps in the proceeding.

[17]   On this basis, I am satisfied both that the quantum and incidence of the proposed settlement with Ms Russell is appropriate.

Result

[18]I approve the proposed settlement agreement and make orders accordingly.

Muir J