Silbery v Silbery-Dee HC Wellington CIV 2005-485-2499

[2007] NZHC 2023

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

CIV 2005-485-2499

UNDER  the Family Protection Act 1955

AND

UNDER  The Law Reform (Testamentary) Promises

Act 1949

BETWEEN  LIONEL JOHN SILBERY First Plaintiff

AND  CRAIG SILBERY, SCOTT SILBERY, DARREN SILBERY, MICHELLE SILBERY

Second Plaintiff

AND  ANGELA RUTH SILBERY-DEE GEOFFREY DAVID SILBERY MICHAEL BASIL-JONES (AS TRUSTEES)

Defendants

Hearing:         16 - 23 July 2007

Counsel:        B Gibson and C Parkin for First Plaintiff

P Jenkin QC Second Plaintiff

J Marshall QC for Angela Silbery-Dee

G Allan for Michael Basil-Jones

C Chapman for Geoffrey Silbery

Judgment:      22 August 2007

JUDGMENT OF SIMON FRANCE J

LIONEL JOHN SILBERY AND ANOR V ANGELA RUTH SILBERY-DEE AND ORS HC WN CIV 2005-

485-2499  22 August 2007

Introduction

[1]      Ruth Silbery died in December 2004, aged 86.   Her husband had died 19 years earlier.

[2]      Ruth was survived by three children:

•    Lionel      aged 58 at the time of Ruth’s death

•    Geoffrey    aged 53 at the time of Ruth’s death

•    Angela      aged 51 at the time of Ruth’s death

[3]      In 1966 a family steel business had been established.  At the time of Ruth’s death, the shareholding was:

•    Lionel                   47.5%

•    Ruth  27.5%

•    Geoffrey               15.0%

•    Angela                  10.0%

[4]      Events within the  family had  soured  in the  late 1990’s;    the  split  being between Lionel on the one hand and his mother and siblings on the other.

[5]      Ruth’s final Will was made some few months before her death.  The effect of its terms were:

•    Ruth’s shares in the company were to  be split  between Geoffrey and

Angela so that their shareholding in the company would be equalised;

•    Ruth’s home in Upper Hutt was left to Angela;

•    $3,000 was gifted to the cohort of children of each of Lionel, Geoffrey and Angela.  Thus Lionel’s four children received $750 each;

•    The residue was split between Geoffrey and Angela.

[6]      Thus, there was no provision at all for Lionel.  As it happens Lionel had first been excluded from his mother’s Will in April 2000.  This situation was maintained through new Wills made in 2002 and 2004.  At the time of her 2000 Will, Ruth made a testamentary statement explaining her reasons.

[7]      In these proceedings Lionel challenges  his exclusion  from the Will.    He claims that his mother had promised to leave him a third of her shares and so brings an action under the Testamentary Promises Act 1949.  Alternatively he contends that the last three Wills made by his mother were the product of undue influence exerted on her by his sister Angela.  It is contended they should be set aside in favour of his mother’s 1994 Will (which divided the shares amongst the three children equally). Finally, it is said that by excluding him from her Will, Ruth Silbery breached her moral duty to her son.  A claim is accordingly brought under the Family Protection Act 1955.

[8]      Lionel has four children; they have been joined as second plaintiffs and bring a claim in their own right under the Family Protection Act.   It is advanced on a contingency basis should their  father be unsuccessful.   It  is recognised that  any provision to Lionel will considerably weaken any claim his children might have.

General Factual Background

[9]      Lionel Silbery and Sons was established in 1966.   The source of the five hundred pound seeding money for the company is disputed, but it was set up as a family company.  Mr Silbery Snr and Lionel, each took 47.5% of the shares.  Five percent was allocated to Geoffrey Silbery, who joined the company as a full-time employee five years later in 1971.

[10]     The business carried on that way until 1979 when Mr Silbery Snr retired.  In

1981 there was an adjustment to the shareholding around the time of Geoffrey’s wedding.   Geoffrey and Angela were both given 10% of the shareholding, taken from Mr Silbery Snr’s share.   That allocation remained the same at the time of Mr Silbery Snr’s death in 1985, when all his estate passed to his wife Ruth.   The shareholding remained that way at the time of Ruth’s death.

[11]     Angela did not work for the company.  At some time unknown to me she had moved to Papua New Guinea where she remained until her permanent  return in

1991.

[12]     The  1990’s  were  to  prove  a  turbulent  time  for  the  family.     Without determining cause and responsibility, it is plain that from the mid-1990’s the relationship between Lionel and the others was becoming more strained.   The company and his management of it was the focal point.   Over that period Angela, following her return from Papua New Guinea, assumed more of the responsibility for looking after her mother who was generally independent but had failing eyesight.

[13]     Ruth Silbery lived in her own home in Upper Hutt.  For the latter part of the

1990’s she had caregivers, and in 2002 she moved out of the home to live with

Angela.  She remained there until her death.

[14]     In  the  mid-1990’s  Lionel  started  a  personal  venture  building  some  mini storage facilities.   These were a central aspect  of the defendants’ case,  it  being alleged that Lionel’s misuse of the company’s resources for this project was a major source of the strife.  Lionel denies this and says it is an after the event allegation.

[15]     It  is,  however,  clear  that  Ruth  Silbery  was  concerned  about  Lionel’s management of the company.  She arranged for a long-standing employee to come and see her to discuss things.  Angela and Geoffrey were undoubtedly unhappy with how things were with the company, and no doubt expressed that unhappiness to Ruth.   Lionel testified that during the latter half of the 1990’s his mother became increasingly unwilling to accept what he said about the company, and this frustrated him.

[16]     Matters came to a head in early 2000.  Ruth, Geoffrey and Angela signed a resolution removing Lionel as Managing Director.  A trespass notice was also served on him.  In the month preceding these events Ruth had signed a proxy on her shares in favour of Angela, and had signed the Will excluding Lionel altogether.

[17]     In 2000 Lionel  brought  an Employment  Court  case  against  the  company which was eventually settled.  Then in 2003 he commenced a minority shareholder action  which  also  eventually  settled  following  his  testimony.     The  settlement involved Lionel selling his shares in the company to the other three.

[18]     In 2005 Lionel brought these challenges to the Will.  Probate of the Will had been granted on 19 August 2005, and the proceedings were filed in November.

Pleadings

[19]     The pleading under the Family Protection Act 1955 alleges that Ruth failed to make adequate provision for Lionel for his proper maintenance and support.   It is alleged that the net value of the estate is $2m.

[20]     A second cause of action alleges that around the time of the husband’s death, Ruth Silbery promised to leave a third of the shares she had inherited from her husband to Lionel.  The statement of claim asserts that Lionel:

“wished to place the company into liquidation.   At that time, in 1985 a shareholders’ liquidation would have produced a surplus for the shareholders.”

[21]     It is said that Ruth did not want this, and wanted to continue receiving the wages formerly paid to her husband.   It is pleaded that Lionel agreed to continue with the company and pay the wages in return for a promise by Ruth to leave the shares and give him a majority holding.

[22]     The pleadings then detail a number of services the plaintiff rendered to his mother.  It is alleged that through the late 1980’s and 1990’s, Mrs Silbery repeated her promise.

[23]     The pleading seeks an order transferring a third of the shares to Lionel, plus any sums thought appropriate, or an order for a sum to be paid equivalent to the value of a third of the shares.    At  the hearing the plaintiff opted for this cash equivalent option.

[24]     The third claim is undue influence.  This was not part of the original claim but added at a later point.  It is alleged that from the time of a 1994 Will, which left the shares equally to the three children, Ruth Silbery was under strong influence and pressure from Angela.  The focus was to prevent Lionel obtaining sufficient shares to acquire  a  majority  interest.    It  is  alleged  that  Ruth  became  emotionally  and physically dependent on Angela, who used her influence to denegrade Lionel and isolate him.   It is said that Ruth was under her daughter’s strong influence when making all Wills from 1994, and that the pressure Angela placed on her amounted to undue influence such that the Wills did not represent the free exercise of her Will.

[25]     Concerning Lionel’s children, the second plaintiffs, it is claimed by them that if their father has acted so as to justify disentitling them, they themselves have done nothing wrong, and have been good grandchildren.   It is said that, absent leaving anything to their father, Ruth owed a moral duty to them.

Some preliminary observations

[26]     There has been a sustained period of disagreement with the family resulting in one branch of it being estranged from the rest.  That inevitably leads to allegations and counter-allegations, and no doubt actions and words that are regretted, or should be.  Cases such as the present provide vehicles for airing these events.  I have been appreciative of the efforts made in this case to minimise that;  inevitably some of the flavour comes through, and gratuitous observations or comments are made.   But, overall, focus has been maintained.

[27]     I do not consider I can decide credibility issues on a blanket assessment of any of the principal participants.   There were aspects of each person’s testimony where I doubt the correctness of that testimony.   I prefer accordingly to resolve issues on an issue by issue basis, not ignoring earlier or subsequent adverse findings

about the witness, but not seeing such adverse conclusions as determinative on all the issues.

[28]    I intend to analyse the issues under the framework of the three claims: testamentary promise, undue influence and family protection.   Issues and conflicts will be allocated to these categories, although some impact on more than one claim. Each conclusion on a conflict is reached having broad regard to the resolutions I have reached on all the conflicts, regardless of when they are dealt  with in the judgment.

Testamentary promise

[29]     I start with the pleadings.  An aspect of the defendants’ position is that the focus of this claim changed during the hearing and so I identify first what is pleaded:

•   that  following  his  father’s  death  in  1985  Lionel wished  to  place  the company into liquidation, which would have produced a surplus for the shareholders;

•   that Ruth did not wish this, but rather wanted the company to carry on, and for her to receive the wages her husband had been receiving;

•   that Lionel agreed that this would happen,  and  in return Mrs Silbery promised the plaintiff that on her death she would leave him one third of her shares which would enable him to acquire a majority shareholding.

[30]     The pleadings then detail other acts done by Lionel for Mrs Silbery during her lifetime as examples of services rendered.  They do not in my view relate to the crucial promise alleged.   Further, in evidence Lionel expressly rejected the proposition they were connected to the promise.  They are in my view actions that one would expect of a son who has means, and I do not consider them further other than to note they were framed as part of the testamentary promises claim.

[31]     Finally I note it is pleaded that the promise was repeated by Mrs Silbery at various times through the 1980’s and 1990’s.  The pleading, as set out, appeared in the original statement of claim of November 2005, and was largely unchanged in the operative statement of claim filed in October 2006.

[32]     The plaintiff’s primary affidavit was sworn in November 2005 (all evidence in chief was by way of affidavit, taken as read).  In that he says he was conscious, at the time of his father’s death, of his precarious position as a minority shareholder in the company (47.5%).  He thought it best that there be a shareholder’s liquidation.  It is noted the  company was prosperous, had  a  dozen employees and  would  have produced a considerable surplus.

[33]     Mr Silbery says his mother persuaded him “not to do this”.  She wanted the company to continue so as to provide employment for Lionel and Geoffrey, and provide an income to herself and Angela.  Lionel says his mother promised to leave him one-third of her shares under her Will,

“in return for my not pressing for a shareholders liquidation and agreeing that she should continue to be paid the wages/drawings my father had been taking from the company prior to his death, I do not know whether I could have persuaded the other shareholders to agree to a voluntary winding up at that point, my brother and sister at that time may have been keen to accept the money, but continuing the payment of wages/drawings to my mother could not have been achieved without my agreement.  I did so on the basis of her promise, and also for that reason abandoned the idea of a shareholders voluntary liquidation.”

[34]     In a reply affidavit Mr Silbery says it would not have made sense to have continued to work in the company and expand it if he was not certain that at some point he would get control.  He would have been better otherwise to launch out on his own.

(a)      Was the promise made?

[35]     No  one  else  says  they  heard  the  promise,  nor  does  anyone  testify  that Mrs Silbery repeated the promise to them.  Lionel Silbery’s wife, Jan, testified that at a point earlier in time Ruth Silbery had said she would leave shares.   The context was that Mr Silbery Snr had gifted part of his shares to Geoffrey and Angela, and

Lionel’s wife was commenting to her mother-in-law on the absence of a gift  to Lionel.  It is at that time Ruth is said to have indicated she would leave shares to him.

[36]     The defendants broadly submit that the authorities emphasise caution before finding that such a promise was made, but not honoured in the Will.   They then identify several reasons which point against such a claim.   First, Ruth Silbery’s solicitor testified he asked her, when first advising her, whether she had previously made any testamentary promises.  Ruth advised him that she had promised Angela some jewellery, but otherwise had made none.

[37]     Second, reference is made to Ruth Silbery’s 1985 Will which would have been made around the time of the alleged promise, or within a few months of it.  In that Will, Ruth’s estate is divided equally between the three children.  The primary instruction is to convert all assets to cash, although the trustees have power to defer doing that, or to divide up the assets.  It is true, as the defendants say, that the alleged testamentary promise is not given specific effect, but the overall scheme chosen is not inconsistent with it.  Either the company would be sold, or the shares divided.  If the latter, Lionel would get a third.

[38]     Third, the next Will, in 1994, is inconsistent with the alleged testamentary promise because it divided Ruth’s shares between Geoffrey and Angela.   Lionel received one third of the residue but there is no doubt that as from 1994, if the promise was made, it was not being honoured.

[39]     Fourth, a testamentary promise is said to have been a very clumsy way of meeting Lionel’s concerns about control.  His mother was only in her 60’s and could live for quite some time (as she did).   If control and certainty were the issue for Lionel, it is submitted by the defendants that a future promise is unlikely to have satisfied him.

[40]     Next the defendants allege that Lionel’s expression of the promise and the reason for it has varied, and so cannot be relied on.  The primary focus is that it is said it was initially alleged that he did not put the company into liquidation in return

for the promise.  When it was pointed out to him that he did not have the power to liquidate, he is said to have modified the reason to “not pressing for” liquidation.  I am less troubled by this aspect generally.  I do not see any particular inconsistency. It is true the concept is variously and perhaps inaccurately described, but the essence of the claim, reflected in the evidence earlier cited, is that Lionel raised with his mother the future of the company and whether he would continue in it.   How he would extract himself was a less central focus than the basic concept of seeking to bring about a change by pressing for liquidation, a buy out by one shareholder, or whatever other means seemed possible.

[41]     Another theme of the defendants’ evidence is that they would have known had their mother made such a promise.  Angela in particular was of the view that the nature of her relationship was such that her mother would have told her if such a promise was made.  I will return to this topic in more depth later, but I do not accept the proposition.  Angela accepts that they never discussed her mother’s Will, and this issue of a testamentary promise falls within that area of non-discussion.

[42]     Nor am I prepared to decide the issue on the basis that if Ruth Silbery had made such a promise she would have kept it.  Whilst many spoke well of her honesty and directness, events that occurred have left me less sure that she would honour the promise if she considered it no longer the right  way to act for the good of the company and her family as she perceived it.  The crucial date in that regard is 1994 when she changed solicitors and made a new Will which did not leave any shares, or their equivalent in value, to Lionel.   That would have been, in my view, the first clear breach of the promise if it were made.  The Will Ruth made in 1994 reflects that already by then Ruth was concerned about the governance of the company and how her children were interacting in relation to the company.  I am not satisfied that she would not set the promise aside if she reached the point of determining that the greater good was effected by the type of Will she then made.

[43]     Mr  Marshall  QC,  counsel  for  Angela,  also  relies  on  a  disputed  family meeting shortly before Mr Silbery Snr’s death, and therefore a few months before the alleged promise.  The defendants’ evidence is that at a meeting it was agreed that the company would continue as it was, with Ruth receiving an income.  I do not need to

resolve at this point the conflict on whether the meeting happened.  Even if it did, it would not preclude Lionel having second thoughts and advancing the proposition to her mother he says he did.

[44]     Another theme in the defendants’ case is that, far from wanting out, Lionel was excited about taking over the company.  That proposition ignores the fact that his father had retired in 1979 and Lionel has managed it from then.   I accept his evidence that his father’s gift in 1981 of a parcel of shares to Geoffrey and Angela but not to him had started him thinking about his position in the company.

[45]     I have not found the resolution of this issue easy.   I think there is a real chance, as Mr Silbery says, that his mother made this promise.  But there are aspects to it that equally leave me doubting.  In particular it does not seem likely to me that Lionel would  have been content  with a  future promise  of the  type  alleged.    A disputed event later on in the narrative involved Lionel approaching his mother to sell him, or give him, sufficient shares to take him up to either 50% of the shares or to have a controlling interest.   That proposal seems much more like the one that Lionel would have wanted in 1985;  it gives greater certainty.  The promise said to have been made does not seem to me to be of the type that would ease the concerns that are said to have led to it.

[46]     There is otherwise a lack of confirming material.  That is not uncommon, and a hurdle claimants must often face.   But nothing reinforces the existence of the promise.  Jan Silbery’s evidence of an earlier statement to like effect gives weight to the proposition, but  is not enough, especially given the very different context in which the statement was made.

[47]     On balance I conclude that the plaintiff has not satisfied me that it was more likely than not the promise was made.

(b)      Were services rendered?

[48]     It  is  unnecessary  to  analyse  this  question  given  my  earlier  conclusion. However, I record that I would have held that Lionel remaining in the business as

Managing Director met the requirements of s3 of the Law Reform (Testamentary

Promises) Act 1949.

[49]     This conclusion reflects a view I have of matters that is very different from that advanced by the defendants.  Their approach seems to be that as long as Lionel was paid a salary as Managing Director, his contribution was being recognised and rewarded.  It ignores that he plainly was the reason for the success of the company. He is a very capable businessman and his departure in 1985 would have been a significant blow.

[50]     I do not accept the suggested categorisation of his actions at the time as a “threat”.   It was a statement that he would prefer to direct his endeavours to an enterprise where his control of the enterprise was not at risk, and no doubt to an enterprise where he would be the prime beneficiary of his efforts.   The fact that Lionel was already Managing Director does not derogate from the reality that he could move elsewhere.  I have no doubt from the evidence he had the funds, even apart from his shareholding, to start again.

[51]     Had I found in favour of the promise, I consider that Lionel continuing on the company  from  1985  until  2000  when  removed  by  the  other  shareholders  was services rendered in return for the promise.   That he was paid a salary does not negate that because what he brought was much more.   On behalf of all the shareholders he developed the company to a point where it has made all the family well off.

[52]     Mr Marshall referred to an answer by Lionel when he said that he thought his mother made the promise because she loved him and wanted to leave her shares to him.  I agree that taken in isolation the answer would suggest any promise to leave shares was not made in response to an offer of services, but the overall context of the evidence linked it much more to continuing on with the business.

[53]     The testamentary promises claim fails.

Undue Influence

[54]     The plaintiff says that the only available inference is that all the Wills from

1994 were the product of Angela’s undue influence, and not exercises of Ruth’s free will.  There is objective material that could support that inference, and it comes from the pattern of the Wills.

[55]     During her husband’s lifetime, Ruth Silbery and Mr Silbery Snr made mutual Wills.  The way they dealt with the company was to leave the shares unevenly to all three  children  so  as  to  produce  a  final  pattern  which  is  not  untypical  of  the generation.  The effect of the Wills would have been to establish a shareholding:

Lionel 55% Geoffrey 40% Angela             5%

[56]     Lionel had started Lionel Silbery and Sons Limited with his father in 1966. He was the eldest son and was obviously involved from the outset.   Geoffrey, the second  son,  started  in  1971  and  also  worked  full-time.    He  was  not  nearly  as involved in the managerial part of it.   Angela did not work for the company and testified that she did not believe her mother envisaged her ever working for the company.  The proposed shareholding reflects this narrative.

[57]     The first “solo” Will made after Mr Silbery Snr’s death was in 1985.  It has been earlier described.  It essentially divided Ruth’s estate evenly amongst the three children.    Through  the  balance  of  the  1980’s  things  were  unchanged.    Lionel managed the business, Geoffrey worked in it, Angela was overseas.  Ruth continued to receive an income from the family.

[58]     In 1991 Angela returned from Papua New Guinea.  She lived for about a year with her mother before moving into her own house.  It is clear that from this time she

enjoyed a close relationship with her mother, and assumed most of the immediate responsibilities that fall on the children of the family in relation to their widowed mother.  It is common ground that the opportunity for influencing her mother was present.

[59]     Against that background the following events are noted:

1)In 1994 Ruth Silbery changed lawyers from the longstanding family lawyer to Angela’s lawyer.  At the time of that change she made a new Will which for the first time excluded Lionel from gaining a greater stake in the company.  The beneficiaries in this change were Angela and Geoffrey who were to take equally in Ruth’s shares.  The residual estate was divided amongst all three.  For the first time the executors were not solely professionals, but Angela was made an executor.

2)In 2000 Ruth signed a proxy of her shares in Angela’s favour.   She knew, at the time of doing that, that it was intended to remove Lionel as Director, and to issue a Trespass Notice preventing him from returning.

3)       A few days later Ruth changed her Will excluding Lionel altogether.

The shares were divided between Geoffrey and Angela so that their shareholding was equalised.   Thus Angela was bequeathed a much greater portion of her mother’s shares.  Further, Angela was solely left her mother’s home.   The residue was split between Angela and Geoffrey.

4)       Two later Wills repeated the basic division as established in 2000.

[60]     The plaintiff’s case is essentially that when one considers the closeness of Angela’s relationship to her mother, what is alleged to be a complementary isolating of her mother at least from Lionel and his family, the change in solicitors, then the changes in the pattern of Wills with increasing benefits to Angela, totally excluding Lionel and significantly diminishing Geoffrey’s share, the only conclusion is that the

Wills were the product of Angela’s plan and not her mother’s free will.  The claim is supported by the allegation that Ruth’s view of the company and of Lionel’s management  of it,  were also  the  product  of  misinformation  by  Angela  and  her brother.

[61]     I  am satisfied  that  this  claim  must  fail  both  because  I  do  not  consider Ruth Silbery capable of being influenced to the degree alleged or required, and also because there are alternative explanations for several of the events.

[62]     Concerning the events in 1994, which is the first significant change, it would appear Ruth considered that her former lawyer acted improperly (in a professional sense) towards her.   I return to this incident later, but it explains the change of lawyers.   I do not consider the defendants have made up the story of Ruth being upset.  It is confirmed by Heather Silbery, former wife of Geoffrey who I considered was neutral on the issue.

[63]     The change in direction in the 1994 Will is dramatic, and there is little in the evidence to explain it happening at that time.  However, the Will itself says that Ruth is concerned about the relationship between the three children.

[64]     The   change   in   2000   reflects   Ruth’s   dissatisfaction   with   her   son’s management of the company.   The issue here is not whether she was right to be dissatisfied, but whether she was exercising her own free will.  I have no real doubt at all that she was.

[65]     I  heard  from  her  accountant,  from  her   most   constant   caregiver  and companion from 1997 on, and from a friend who did odd jobs around the house and was close to her.   Their descriptions of her lead me to conclude Ruth remained strong  willed,  and  determined.    Her  last  medical  practitioner  said  the  issue  of dementia never occurred to her.  Whilst that is of course not the same thing as being “weak and feeble” it  complements the evidence I heard from other independent witnesses.

[66]     I do not deny the pattern identified by the plaintiff;  it is objectively apparent that Angela has progressively benefited significantly throughout the period.  Nor can the opportunity to influence be denied.  Indeed, to be realistic, for whatever reason Ruth became more and more aligned with Angela and Geoffrey, against Lionel.  She was generally in the position of being a recipient rather than observer of events, and her views were undoubtedly influenced by the perception that Angela and Geoffrey had of Lionel.  But that is a long way from establishing the Wills were the product of undue influence.

[67]     There was a dispute as to where the onus lay.  The plaintiff’s case was that once it laid an evidential foundation in relation to the principal beneficiary under a Will, the ultimate onus moved to the beneficiary.   The case on which he relies is Tanner and Others v Public Trustee and Others [1973] 1 NZLR 68. That case concerned a beneficiary who had had discussions with the testatrix about the contents, drafted and typed the Will and arranged for her to sign it. The case concerned an application for probate and it was held that the beneficiary in such circumstances carried the onus. That case is very different from an undue influence case such as the present in relation to a Will prepared by a professional legal adviser

who is in no sense himself a beneficiary.   Theobald on Wills (16th  ed, Sweet and

Maxwell 2001) states at 3-29:

“The legal burden of proof of undue influence or fraud always lies on the person alleging it.  That person must prove that the Will … was made as a result of the undue influence or fraud of another person …  No presumption of undue influence arises from the existence of a confidential relation ship between a donee and the testator.”

[68]     I am satisfied that is a correct statement of the law, but where the onus lay in this case would not alter my decision.  The evidence points plainly to Ruth Silbery being a person who could and did know her own mind.  This must have been even more clearly the case in 1994 when the first removal of Lionel from sharing in her shareholding occurred.

[69]     This claim fails.

[70]     I commence by observing three underlying matters not in dispute.

•   Ruth deliberately excluded Lionel for reasons to do primarily with his management of the company, because she believed he had created discord in the family, and because she believed he had benefited enough from the company;

•   Lionel is a man of substantial means who is not in any real sense in financial need of a payment from the estate;

•   The estate is substantial, being probably worth between $3-4m, although the plaintiff would say more.   The final amount depends on the value of Ruth’s shares in the company.

[71]     These facts mean the case is a claim that Ruth owed Lionel a moral duty to provide proper support which recognised Lionel’s membership of the family and the assistance  and  support  he gave to  Ruth.   The  estate was  large  enough  to  have addressed imbalance in the needs of Angela and Geoffrey on the one hand, and Lionel on the other, and still have allocated  funds to  Lionel to  recognise those features.

[72]     The key issue is whether Ruth owed the moral duty she plainly felt no longer existed toward her eldest son.  This is really an enquiry into why she cut him from the Will and whether they expunged her moral duty.   In beginning my analysis I remind myself that it is generally for a testator to leave their assets in the manner they wish, as long as, of course, existing moral duties are not overlooked.

[73]     I propose to first consider a number of topics that arose during the case, the resolution of which has influenced my thinking.

[74]     Some time around 1995 Lionel began a project at Seaview to build storage units of the type that people rent on a temporary basis.   It was an enterprise of significant size, and eventually proved very lucrative.   Lionel used some company materials,  machinery and  labour.   The defendants say that  Lionel used  a  lot  of company resources and that it impacted on the company.  They also say that it was a secret Lionel withheld from his family in the sense of the true ownership of the units, and that it was a significant factor in his mother’s disenchantment with Lionel.

[75]     Angela, through counsel, describes the enterprise as a “rort” and a “rip-off”; it is alleged that Lionel was in breach of his fiduciary duties to the company, and is the prime example of Lionel using and running the company for his own benefit. Angela  and  Geoffrey  allege  that  it  was only  through  their  researches  that  they discovered the true ownership, and that  when they confronted  Lionel with their acquired knowledge he denied it.

[76]     I address the various issues under  two  topics – scale and  impact  on the business, and knowledge of who owned the storage units.

(a)      Scale and impact on business

[77]     The evidence about the amount of Lionel Silbery and Sons’ resources that were used  is,  from my viewpoint,  rather  unsatisfactory.    It  consists of Lionel’s evidence (including cross-examination) and that of a long time worker at the company, Mr Keith Willis.   Geoffrey also  touches on  it  but there  is  very little documentation provided, nor company accounts or profit and loss patterns which might disclose the impact or otherwise.  I will return to this but commence with the evidence that is available.

[78]     As noted, the allegation by the defendants is that the storage units enterprise was the key example of Lionel running the company for his own benefit, and a prime reason for his removal as Managing Director in March 2000.

[79]     In terms of evidence in this case, the topic is untouched in Lionel’s original affidavit.     Affidavits  filed  by  Angela,  Geoffrey  and  a  long  time  employee (Mr Keith Willis) put it firmly in issue, and then Lionel addressed it in reply.  There was extensive cross-examination of Lionel on the topic.

[80]     Lionel’s essential proposition is that the storage units were something that Angela was concerned about, and that she has built up what was a non-issue into a major problem.   He plainly considers his mother’s concerns about the company reflect  Angela’s  focus.    Lionel  takes  the  position  that  he  essentially  paid  the company for his use of it, and that he (through his storage company) was a good customer of the company.

[81]     A summary of Lionel’s evidence is that he started the storage unit enterprise around the middle of 1995.   Lionel Silbery and Sons was a significant supplier of materials and labour, but so were other companies that he used as suppliers.  In terms of company employees working on the site, he estimated Mr Willis spent 2-3 days but that was essentially the extent of it.

[82]     Concerning the rate at which the company supplied materials to him, I take Mr Silbery’s evidence to be that he paid for it in the normal way.  The agreed bundle included  two  pages  of  a  running  ledger  which  indicated  Mr  Silbery’s  storage company was paying Lionel Silbery and Sons for materials.   The ledger was seemingly kept by a Mr Keith Flanagan, who had worked for the company as Office Manager from 1990 until March 2000.

[83]     It is necessary to pause here to observe that in 2003 Lionel had commenced proceedings against the other shareholders.  An issue in those proceedings was the storage units.  Mr Flanagan was a witness for Lionel.  The proceedings were settled mid-way through.   The settlement saw Lionel selling his shares to the other three.

Mr Flanagan’s evidence from that occasion was put to Lionel as representing a statement that Mr Flanagan was saying Lionel had bought the materials at cost.

[84]     Late, however, Mr Silbery, when being taxed about various items relating to the storage units, observed:

“In the previous case we had an expert witness who examined all of the invoices carefully and worked out all the prices and came to the conclusion that all the prices were fair or along the lines of what I would pay other companies so how that can be at cost I don’t know.”

[85]     The expert was not called in this case, and so it is hearsay evidence.  I cite it, though, as capturing my assessment of Mr Silbery’s view of the relationship between the company and the storage units’ enterprise.

[86]     The defendants challenged Mr Silbery with a view to showing he had abused his position as Company Manager.  The evidence, however, was in my view totally deficient to support this attack.  Angela Silbery-Dee is presently Managing Director and  is  in  the  process  of  acquiring  all  her  brother  Geoffrey’s  shares.    Whilst Mrs Silbery-Dee asserts that the drain on the company was significant, no records at all  were  put  before  me,  nor  was  I  provided  with  any  company  accounts  to demonstrate that there was a financial impact on the company through the years in question.  It is to be recalled that Angela did not herself work there so her evidence, unsupported by any documentation, cannot on this topic be given much weight.

[87]     That leaves the other two witnesses, Geoffrey and Keith Willis.  Concerning Geoffrey, I admit to being largely unconvinced by his evidence.  It will be necessary to return to this, but Mr Silbery worked at the company from 1971.   He was a Director through at least part of the 1990’s, and along with his sister, and mother, has had control of the company in the 2000’s.  The lack of supporting documentation applies equally to him.   Further, I found his evidence on this topic, given he had worked there for so long, surprisingly vague and sparse.

[88]     Mr Geoffrey Silbery’s recollection is that the units were built over a period of three years, most of the staff were involved, and that effectively the company built them.  He observes:

“The factory seemed quite busy but by 1998 it didn’t seem to be earning the sort of money that it should have been and the overdraft seemed to be getting bigger

[89]     I repeat the observation as to the lack of any documentary support for these propositions.

[90]     The other witness is Keith Willis.  He worked for the company for 30 years. His evidence is that he would have worked the equivalent of 9-12 months full time on this job.   He says other staff worked at the site for long periods, including a Mr Alphie Rawiri, and other named persons.   He refers to Geoffrey Silbery being annoyed by the priority being given the storage units, and at times overriding that priority, something not referred to by Geoffrey Silbery.

[91]     The  contrast  between  Mr  Willis  (9-12  months)  and  Mr  Lionel  Silbery (2 to 3 days) as to the amount of time spent on site by Mr Willis is stark, to say the least.   It is not capable of resolution by the usual reference to people’s vagueness about time periods and dates.

[92]     I do not consider myself in a position to resolve it on an individual basis. However, I am well satisfied, overall, that the propositions advanced by the defendants about the storage units have not been established.

[93]     First, I essentially believed Mr Lionel Silbery on this aspect.  For example, he was taken through the construction of the storage units in some detail and taxed as to the source of materials and labour at each point.  His answers had a convincing ring to them, and did not convey the sense of abuse of the company.

[94]     Second, I have referred already to the lack of any supporting documentation. I have no evidence that the company suffered.  It is plain that there was a liquidity problem in 1999, but  Lionel’s explanation was that  this was due  to  his sister’s actions and communications with the bank causing it to have doubts.  No one really challenged this, nor as I say were documents produced to show a problem.  Further, a deponent for the plaintiff was the relevant bank’s business manager who oversaw the company files from 1996.  He noted that the bank had complete confidence in Lionel Silbery.  He reported that in late 1998 he was shown a letter from the defendants’

solicitor which alleged the company was flying “financially blind”.   This was sufficiently concerning to the bank to cause it to write a response saying it was not a correct description so far as the bank was concerned.

[95]     In  1999  the  bank  was  concerned  about   the   company’s   deteriorating performance, and  had  discussions with Lionel  in September  1999  as to  how to address this.  I note, however, that from the evidence given the initial storage unit project in Seaview would have been built by then, and nothing before me links the

1999 situation to the storage units.   The Bank Officer was not required for cross- examination.

[96]     Third, the evidence of Mr Willis does not take the defendants far.  What role he had in the company is not clear, and what position he was in to comment on source of materials and  on what  basis  they  were  paid  for,  if at  all,  was  never established.  Indeed, material on the company was generally sparse.  There is no real evidence on its size, number of employees, or financial performance.  I do not know what Geoffrey’s job was.  I am sure Mr Lionel Silbery was in a position to know and comment, but nothing establishes the probative value of contrary views.

[97]     Fourth, the evidence concerning personal use of company equipment left me far from concerned and bordered at times on the petty.  Nothing really was advanced to  challenge Mr  Lionel Silbery’s evidence that  staff at  all  levels  could  use  the equipment on the weekends, free of charge.   Suggestions by him as to Geoffrey’s extensive use, and the provision to Geoffrey of equivalent benefits such as company cars, were not challenged.  It is true Angela did not have like benefits but she did not work there, and was a lesser shareholder.

[98]     There were of course many other points of dispute which I do not need to delve into.  I am satisfied that the Seaview Mini Storage, whilst a significant project, did not represent a rort on Lionel Silbery and Sons Limited.  It is probably the case that it was a larger enterprise for a period than it would be preferable or wise for Lionel as Manager of the family company to be committed to, but the evidence does not establish that the family company suffered as a result, or that Lionel improperly

benefited having regard to the general practise as regards staff using company machinery.

[99]     On the evidence the material and labour were paid for, at least at cost and my suspicion is something more than that even if not at the full rate.  Ultimately on this topic I generally accept the evidence of Lionel Silbery.

(b)      Knowledge of the Mini Storage project

[100]   Lionel Silbery says he told his mother, and she approved.  He accepts he was reticent in telling his siblings because, he says, they would want to be involved and he did not want them.

[101]   The defendant’s evidence is markedly different.   Angela says her  mother began to suspect and asked Geoffrey to keep an eye out.   She says that  in her presence her mother twice confronted Lionel as to his involvement, and he denied it altogether.   He was then challenged with evidence Geoffrey had obtained from a company search that proved Lionel’s involvement.

[102]   Lionel denies these confrontations.   He accepts there was a confrontation over the development  at  his  mother’s home,  where he  believes  his  mother  was wound up by his siblings who had taken umbrage at their lack of involvement.

[103]   On this I have a firm view that Lionel’s evidence is to be preferred.  I believe he told his mother, although it is possible she may not have appreciated the scale.  I also consider that by the time of the confrontation she had an erroneous view as to the misuse of company’s resources in the building of the project.

[104]   First, I consider Geoffrey must have known.   He worked there and could hardly not have.  I can accept that Keith Willis may not have realised, but as Lionel Silbery says, why should he have been told?   Geoffrey, in his brief describes the company’s involvement and then says:

“From time to time I asked Lionel what was going on.   He told me not to worry because he was paying for it and it was okay.  I wasn’t sure about it.

The factory seemed quite busy but by 1998 it didn’t seem to be earning the sort of money that it should have been …”

[105]   When asked about this Geoffrey Silbery said he realised by late 1997 it was Lionel’s  project.    I  found  the  answer  unconvincing,  and  consider  that  both  his position at the company and the passage in his brief suggest earlier knowledge.  The timeframe for the units was mid-1995 till mid to late 1998, spilling into 1999.  It is difficult to imagine that for two and a half years Geoffrey was unaware.

[106]   Second, one of Lionel’s children, Michelle, said she drove her grandmother to see the units in 1996.  She says from her discussions her grandmother knew they were Lionel’s project.   I saw no  reason to doubt this testimony.   Michelle is a claimant, and is obviously supportive of her father’s claim, but it is true that all the family members are supportive of one side or the other.

[107]   Third,  it  seems common ground that  Keith Flanagan,  the office  manager knew.  The more who know, the less likely it can have been to be a secret.

[108]   Again, I believe Mr Lionel Silbery’s testimony that he had told his mother, and necessarily I do not accept the version that says Lionel was confronted and denied involvement.   He would have known it was an easy fact to establish.   Not only from company records, but, as the evidence shows, his cell phone number was emblazoned on the storage unit building as the contract number.   A simple phone call would establish the point.

Conclusion on Storage Unit

[109]   I thought an answer of Geoffrey Silbery’s in cross-examination was telling. He was asked:

“What issue was of most concern to your mother in the late 1990’s as far as the company is concerned … he was gaining an advantage through the mini storage, he was building it up with company equipment and gear at  the expense of our company because it was meant to be for the benefit of us all, not just him.”

[110]   In my view that answer captures the essence of it.   It is clear that Lionel’s personal endeavours had proved hugely successful.  All members of the family had, in  addition to the  company,  seemingly  done  their  own  thing.    Angela  had  had businesses in Papua New Guinea, and Geoffrey had a rural property in Mangaroa Valley of some 200 acres.  Lionel’s unchallenged evidence was that Geoffrey used company resources to assist with that project.

[111]   However, Lionel’s acts were no doubt on a greater scale not only in terms of company property, but also in terms of the endeavour itself.  It was of a scale that breached the idea of a jointly held family company being the core of the family’s endeavours and fortunes.   It would not surprise me if this upset Ruth, who undoubtedly was also often privy to the discontent of Geoffrey and Angela about it.

[112]   In my assessment the units did represent an important factor in the break-up of the family dynamic.  I do not accept their existence, and Lionel’s involvement in them, was unknown to Ruth or Geoffrey until late 1997 or 1998.  I do not accept that what Lionel did in relation to them was improper within the concept of how the family company was run, and I consider generally he paid for anything that was a direct cost to the company.  I have little or no evidence to show the project impacted improperly on the company.  I do, however, think there was annoyance on the part of Geoffrey and Angela that it was not a family project, and probably annoyance on Ruth’s part that it was not a family project befitting all her children.

Topic Two – Lionel’s actions towards his mother

[113]   It is plain that through the late 1990’s, contact between Geoffrey, Lionel and his family, and Ruth diminished.  By 2000 on, following the events of March when Lionel was sacked, contact essentially ended.

[114]   In this regard I consider Lionel was probably more aggressive and loud to his mother  than he was willing to  acknowledge.    Geoffrey’s  former  wife,  Heather, testified that on one occasion she arrived and it was clear Lionel had been speaking to Ruth in a way that greatly upset her.  Eileen Black, a caregiver, from 1997 on, and

also a companion in later years, said that Ruth, at least in the later years, would decline any opportunity to have Lionel contacted.

[115]   I accepted Jan Silbery’s evidence that in the early years, and in the 1980’s, she was a good companion and helper to her mother-in-law.   From when Angela returned in 1991 the need for this role diminished, and then from the mid-1990’s tension was developing with the company.

[116]   I am sure that Lionel should have tried harder to keep contact going, and should have done more following March 2000 to overcome the personal rift.  That applies equally to Ruth.   It is in my view understandable that there would be a tremendous feeling of hurt on Lionel’s part.   He had worked for the company and developed it to what it was in 2000.   He was removed by the other shareholders, without notice, and at the same time given a trespass notice banning him from the site.  That his mother was party to those actions would have been a deeply felt hurt.

[117]   In  2000  Lionel  brought  Employment  Court  proceedings,  and  in  2003

Company Act proceedings.   These could have been taken personally by Ruth, and that  would  be  understandable.    I  have  no  information  that  allows  me  to  judge whether reasonable alternatives were available to Lionel – the essence of the two proceedings does not seem improper, but whether they were avoidable I do  not know.

[118]   I consider that Lionel was until the mid-1990’s a good son, who right up to her death loved his mother.   From the mid-1990’s his relationship with her deteriorated, and totally collapsed in the 2000’s.  The views I have reached on other issues means that on the evidence I heard I cannot absolve Angela of some role in that.  I consider she had a view of the company and what she wanted it to achieve for the whole family, and in particular herself, and I have no doubt she did and said things that reflected her ambitions.

[119]   It is difficult to divorce Lionel the son, from Lionel the head of the company. On paper separate responsibilities are easy to identify but it was the family company that was pivotal to them all and over which there was an increasingly bitter dispute.

Ruth Silbery aligned herself totally with two of her children against the third, and the third, Lionel, plainly as a consequence fell away in terms of his relationship with his mother.

Topic Three – Ruth Silbery’s actions towards Lionel

[120]   During the 1990’s Ruth was upset about two incidents that I consider did not happen.

[121]   First,   she   took   the   view   that   Lionel   put   the   then   family   lawyer, Mr Vernon Peters, up to convincing Ruth to alter her Will so as to leave shares to his wife Jan.  Mrs Silbery was allegedly very upset by it, and that is why she changed her lawyer.

[122]   Mr Peters said the meeting never happened.  He had done a Will for Ruth not long after her husband’s death some six years earlier.  At no stage did she thereafter discuss her Will.  Simply put I accept Mr Peters’ evidence and his rejection of what is an allegation of improper conduct. There is nothing in his relationship with Lionel or the company that would remotely support the idea that he would act that way or have any incentive to do so.  He denies it, and I accept that.

[123]   There are possible implications to this that must be acknowledged, but need not from my viewpoint be resolved.  Angela says she and Mr Peters were present in his office when Ruth made the allegation about what he had said.  Heather Silbery says Angela and Ruth both confirmed it had happened to her.  I have considered this evidence in reaching my conclusion that Mr Peters’ evidence is to be accepted, but it did not  dissuade me.    I  see no  profit  in speculating  on the  implications of my rejection of the contrary recollections.  I have mentioned the other evidence only so as to make it plain I have not ignored it.

[124]   The second incident is when Lionel visited his mother with a view to getting her  to  transfer  some  of  her  shareholding  to  him.    He  was  accompanied  by  a Mr James Sherwin who was a partner in the accounting firm that looked after the family company.  Mr Sherwin recalls the aim was to achieve a majority shareholding

for Lionel;   Lionel’s evidence is that he wanted to take his holding up to exactly

50%.

[125]   Angela reports that Mrs Ruth Silbery told her that Lionel had threatened at the meeting to disclose to the police thefts of company property by Geoffrey if shares were not transferred to him.  (It is common ground that Geoffrey had stolen some property, and been caught on video).

[126]   Mr Sherwin says that that threat was never made and he would not be party to it.  I accept his evidence.  Lionel Silbery’s answer also rang true to me:

“… it never entered my mind to complain to the police about my younger brother”.

[127]   It  appears then  that  Ruth  Silbery  has  significantly misread  the  situation. Nothing occurred on this occasion that reflects poorly on Lionel or which entitled Ruth to take against him.

[128]   As with Lionel, I do not consider it is possible to separate Ruth’s actions towards,  and  relationship  with,  Lionel  from  the  events  happening  within  the company.

[129]   That said I do consider it was harsh for her to agree to the treatment of Lionel in March 2000, and be a party to it.  She must have known what the company meant to him, and how much he had put into it for 35 years.  To be a party to ending his involvement in the way she did indicates that his wellbeing was very low in her concerns at that time.

[130]   The evidence of Eileen Black suggests that thereafter Ruth made no effort at all to resume contact with her son.

Topic Four – A vision for the family company?

[131]   This topic could be addressed under relief, but it is preferable to do it as part of the general discussion.  Mr Chapman in particular, on behalf of Geoffrey, stressed

the idea of a Mr and Mrs Silbery Snr having a vision for the company that explains much of Ruth’s testamentary activity, and which should influence any relief.

[132]   The company began in 1966.   There was a dispute as to the source of the initial  500  pounds  funding;    Lionel  says  he  provided  it.    The  then  company accountant says that he waited at the house where Mr Silbery Snr went and arranged a loan.  He recalled it took an hour.

[133]   That dispute aside, no one took real issue with Lionel’s description although Angela testified as to a discussion she recalled her parents having with her at the time they set it up, and how they explained what it would mean to her.  Angela was seven  at  the  time.    Lionel  testified  that  he  and  his  father  had  worked  at  an engineering company called Hyams.   Mr Silbery Snr worked there and obtained work for his son.  Lionel eventually decided to set up on his account and he found a factory in Stokes Valley to rent.   He and his father were made redundant in 1966 although his  father  was able to  stay on  for  a  few  months.    In  July  1966  they incorporated the family company that operated from the factory he had previously rented.

[134]   This version is broadly similar to that given by the then initial company accountant who assisted in the incorporation.  He does not speak of Mr Silbery Snr’s vision but confirms that the initial shareholding was 47.5% to each of Mr Silbery Snr and Lionel, and 5% to Geoffrey.

[135]   The only Will I have of Mr Silbery Snr was the one dated 21 December 1979, as amended by codicil dated 5 December 1980.   However, Wills of Ruth made in

1967, 1975, 1979 and 1980 are available and it seems generally accepted she and her husband made mutual Wills.

[136]   The pattern across these Wills was to leave shares in unequal amounts to all three  children,  but  always  having  the  effect  of  leaving  Lionel  as  a  majority shareholder (i.e. more than 50%);  Geoffrey having the bulk of the rest and Angela a small parcel.

[137]   Mr Silbery Snr’s Will reflected that he had gifted shares to Geoffrey and Angela around the time of Geoffrey’s marriage.  The effect of those Gifts, and his codicil would have been:

•    55%         Lionel

•    30%         Geoffrey

•    15%          Angela

[138]   Matters remained at the point until Mr Silbery Snr’s death.

[139]   If one can see through the Wills a vision for the family company, it was plain that it was always envisaged all three children would have a stake in it but that Lionel would have a controlling interest.  There was never a point where he received an equal share of his parents’ holding, but he always received enough to have the principal shareholder, and able to control the company.

Topic Five – History of Wills and reason for exclusion of Lionel

[140]   The first Will Ruth made after Mr Silbery’s death was made in the same year as his death, 1985.   It is the one and only occasion where the shares are evenly divided across the three children, although even then it is not that direct.  Rather the shares are not specifically mentioned, and the estate is simply divided equally (apart from chattels going to Angela).

[141]   The pattern of Wills is then:

15 April 1994

[142]   $3,000 to each group of grandchildren;  jewellery etc. to Angela;  shares split evenly between Angela and Geoffrey, residue split between all three children.

[143]   The effect of the share allocation would be to create a situation where Lionel had 47.5%, Geoffrey 28.75% and Angela 23.75%.  The Will stated in relation to the shares:

“In making this bequest under the will it has been my intention to attempt in some way to balance the position regarding the shareholding in the company so that there is a spread of control throughout the shareholders in the hope that  my  children  will  work  together  and  cooperate for  the  good  of  the company.”

16 April 2000

[144]   $3,000 to each group of grandchildren;   company shares split to equalise shareholding between Angela and Geoffrey;   residence to Angela;   residue split between Angela and Geoffrey.

[145]   At her solicitor’s request Mrs Silbery made a statement as to why Lionel was being cut out of her Will.  It reads:

“To my Executors

I, Ruth Silbery of Upper Hutt, Widow, state:

In  giving instructions  for  the preparation  of  my  will  I  have specifically excluded my son Lionel Silbery.  Over recent years I have noted with worry and concern how he has operated the family business of Lionel Silbery & Sons Limited.  He appears to have operated the business for his own benefit and does not listen to the other shareholders.

It had always been my late husband’s wish that the company would benefit all of our children.  However because Lionel has retained a stranglehold over the management and control of the company Geoffrey and  Angela  have received little or no benefit.

I am also concerned that Lionel appears to have acted in a self-centered [sic] manner and has  created  discord within the family by his  attitude to his brother and sister.  I believe that he has already sufficiently benefited from the family company.

Because the family company has not so far been of any benefit to anyone other than Lionel (contrary to my late husband’s vision) I believe that my moral obligation now is to Geoffrey and Angela to see that they receive some benefit from my husband’s bequest and I have accordingly left the bulk of my estate to them.

For these reasons and many other reasons relating to the way in which I have been treated by Lionel I have explicitly excluded him from benefiting under the provisions of my will.

Dated 27 day of March 2000

Ruth Silbery”

31 December 2002

[146]   $3,000 to each group of grandchildren.   Shares to Angela and Geoffrey to equalise holdings, but hold on trust to then go to their children;  residence to Angela; residue to Geoffrey and Angela.

9 August 2004

[147]   As with last Will but shares no longer held on trust.

[148]   Both the last two Wills contained a statement of testamentary disposition that was the same as that which had appeared in the 1985 Will.

[149]   It can be seen there are three changes of significance:

a)       in 1994 Lionel for the first time is denied any shares, and so will not come to own an absolute majority of the shares or gain control;

b)       in 2000 Angela gains substantially further my Ruth’s shares now being divided unequally to make her an equal shareholder with Geoffrey;  Lionel is excluded totally;

c)       in 2000 Angela also gains by being left absolutely the family residence.

Topic Six – Did Ruth Silbery breach a moral duty to Lionel?

[150]   Lionel does not base his claim in present or future economic need.  Rather, as in Williams v Aucutt [2000] 2 NZLR 479, the claim is that he deserved greater

recognition  of  his  membership  of  the  family  and  contributions  to  his  mother’s overall life.   There is no  dispute that the estate was sufficient  for the needs of Geoffrey and Angela to be properly met and for there to be provision to Lionel.

[151]   The situation of an adult child claimant in such circumstances was reviewed by the Court of Appeal in Williams v Aucutt.  With one addition, that reference to the principles identified there by Richardson P is sufficient for the purposes of this case:

[52] Second, for reasons which will be apparent from the earlier discussion, we reject the argument that the Court must expressly find a need for proper maintenance and support. The test is whether adequate provision has been made for the proper maintenance and support of the claimant. “Support” is an additional and wider term than “maintenance”. In using the composite expression, and requiring “proper” maintenance and support, the legislation recognises that a broader approach is required and the authorities referred to establish that moral and ethical considerations are to be taken into account in determining the scope of the duty. “Support” is used in its wider dictionary sense  of  “sustaining,  providing  comfort”.  A child’s  path  through  life  is supported not simply by financial provision to meet economic needs and contingencies but also by recognition of belonging to the family and  of having been an important part of the overall life of the deceased. Just what provision will constitute proper support in this latter respect is a matter of judgment in all the circumstances of the particular case. It may take the form of lifetime gifts or a bequest of family possessions precious to its members and often part of the family history. And where there is no economic need it may also be met by a legacy of a moderate amount. On the other hand, where the estate comprises the accumulation of the family assets and is more than  sufficient  to  meet  other  needs,  provision  so  small  as  to  leave  a justifiable sense of exclusion from participation in the family estate might not amount to proper support for a family member.

…

[69]     We are not concerned in this appeal with a claimant’s need for proper maintenance.  It  is  conceded that  there is  none.  The claim  is  for  proper support in the form of recognition both of membership of the family of the deceased and of contributions by way of assistance to and support of the deceased. Such a claim is one capable of being brought under the Act. In part it seeks support from the estate in return for support which has been rendered, albeit without any promise of return such as would fall within the Law Reform (Testamentary Promises) Act 1949. The question remains, however, whether a need for proper support is made out in the particular circumstances. It is not to be assumed that merely because a claimant, no matter what his or her personal substance, has been a dutiful child of the deceased,  it  will  necessarily  be  appropriate  to  order  some  provision  or further provision. In some cases a mere acknowledgment of the relationship may be the most that can be expected. And in others the competing claims on the testator of a surviving spouse or of less fortunately placed siblings may negate any moral duty towards a wealthy claimant.

[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. As I have said, the Court’s power does not  extend to rewriting a will because of a perception that it is unfair. Testators remain at liberty to do  what  they like with their  assets  and to treat  their  children differently or to benefit others once they have made such provisions as are necessary to discharge their  moral duty to those entitled to bring claims under the Family Protection Act.

[152]   The one addition is the recent review of the authorities in Henry v Henry

CA116/06 5 March 2007.  At paragraph [55] the  Court observed:

[55] However, the call for conservatism is not limited to the question of what should be done to remedy a failure to make adequate provision. It applies also to the assessment of the issue as to whether adequate provision has been made. Again a mere perception of unfairness is not a good enough reason to disturb the will: the Court must conclude that the claimant has established that he or she has not received adequate provision for proper maintenance and support. That assessment must be made applying the test enunciated by Richardson P in Williams v Aucutt at [52] (quoted at [44] above). In making the assessment, however, the Judge must remind him or herself that there is no basis for the Court to override the testamentary freedom of the testator or testatrix if that test is not met, even if it appears to the Judge that a fairer distribution of the estate would have been desirable.

[153]   In this case Ruth Silbery first totally excluded her son in 2000.  His share had been reduced in 1994, but it was the Will of 16 April 2000 in which Mrs Silbery first indicated her intention to make no provision at all for her eldest son.   The date is approximately one month after she was a party to his abrupt dismissal from the family firm after 34 years of contribution to it.

[154]   Mrs Silbery set out her reasons in a testamentary disposition which I have set out in full (paragraph [145] above).

[155]   In essence therefore the reasons given are:

1.Lionel’s management of the company for his own benefit.  It is considered Angela and Geoffrey have received little or no benefit.  Lionel does not listen to other shareholders.

2.Lionel has created discord within the family;    this is again linked to him benefiting sufficiently from the company.

3.        Unnamed reasons regarding how Lionel has treated her.

4.Her moral obligation to give effect to her husband’s wishes to ensure Geoffrey and Angela receive same benefit.

[156]   It is difficult to know exactly what Mrs Silbery understood by “benefit” from the company.  I put to one side the storage units where I have concluded that Lionel did not improperly benefit in the way alleged.

[157]   In terms of a daily or annual return from the company, Lionel and Geoffrey received their salaries, Angela received nothing for her share and Mrs Silbery continued to receive her late husband’s salary.  There were two occasions where the salaries were reduced or stopped.   It does not appear on the evidence that Lionel benefited from the company disproportionately to the others, or had a separate route of return on his shareholding.  There appears to be exaggerated beliefs on the part of the other shareholders.   In her affidavit  Angela says Lionel was taking a salary package near the end of his employment of $200,000.  As the person in control of the company and its records one would expect her to know.  Yet Lionel appended to his affidavit a letter from the company accountants which stated his salary to the year ending March 1999 and March 2000 was $126,694 and $114,573 respectively.

[158]   This   evidence   was   not   challenged,   nor   was   Angela’s   mis-statement explained.  It is one of a number of aspects that left me concerned as to the accuracy of the information from which Ruth was operating.  In evidence her caregiver said she read the mail to Ruth who had little eyesight in her latter years.  The mail did not include company documents or information.   Mr Basil-Jones, the trustee, said he believed that Angela and Geoffrey and himself were sources of information, but particularly Geoffrey.

[159]   The focus of Ruth on “benefit” from the company also raises another feature. There appeared no insight on the part of Ruth that the shares had a value outside the

‘control’ aspect they conveyed.  In 1994, her concern was control of the company. That would explain the share allocation to only Geoffrey and Angela, but there was no adjustment, for example to the residue, to reflect recognition that the value of what was being left to Lionel had been greatly reduced vis a vis his siblings.  The same could be said of the 2000 Will when the value of what Geoffrey received was significantly reduced in favour of Angela with no explanation in the evidence as to why she was so greatly favoured over Geoffrey.

[160]   My general sense is that the other shareholders displayed no recognition or acknowledgement of the fact that the value of the company was due in a significant way to Lionel’s efforts.  He had started the company with his father, and run it since

1979.  There seems no suggestion Geoffrey, Angela, or indeed Ruth contributed to its direction or development.   The value of the company, and the fact that it was worth fighting over, can be attributed in large measure to Lionel.

[161]   Ruth’s testamentary dispositions reflect a lack of appreciation of this and a failure to separate day to day management from overall value.   The company has proved to be of great benefit to all the shareholders.

[162]   The comment about how Lionel has treated her should not be overlooked. Despite his denials, I would not be surprised if Lionel had on occasions been overbearing or loud.  He no doubt was very frustrated over the company, and with his mother siding with Angela and Geoffrey, the nature of his position was increasingly tenuous.  There was a conflict whether at one such meeting following his dismissal, Lionel disowned his family.  He denies it.  I am not sure either way, but it would not surprise me given the context in what was no doubt a tremendously emotional and stressful time for all family members.

[163]   I have not found the central issue at all difficult.   I consider Ruth, in her testamentary dispositions,  treated  Lionel and  his  family  very unfairly.    Further, however, I consider she plainly breached her moral duty to him to provide proper support  in  the  sense  of  acknowledging  his  belonging  to  the  family  and  his contribution to her estate, and to her life overall.  The hard times at the end did not

justify disentitling him, and there was nothing in his specific conduct that removed a mother’s moral obligation to him.

Proper support

[164]   Three factors make it not possible for me to settle upon an appropriate award to Lionel.  First, I have determined that the estate should bear the reasonable solicitor client costs of all parties.  The cause of the proceedings has been the failure of the Testator to recognise her moral duty to the plaintiff.  I have not considered the claim of the grandchildren.   Their claim must be dismissed because their father has succeeded and will receive a share that extinguishes any separate claim.  However, it was reasonable for them to bring proceedings.  The treatment of their father was a hurt that would have been rightly felt  by them.   Because costs are likely to be substantial I want to know the impact on the estate before settling on an award.

[165]   Second, I decline to award a percentage.  The dynamics of the family make it necessary to achieve finality by way of a fixed sum.  Whether there is the continuing dispute over the 2003 settlement is a matter for the parties to that agreement.

[166]   Third, I would like some greater certainty as to the value of the estate.   I direct the trustee to have the valuation, Exhibit  B to  his 5 July  2007  valuation updated by obtaining up to date property valuations.  The trustee should then provide an updated Exhibit F.  I would like an indication of when this information is likely to be available.

Conclusion

[167]   The plaintiff fails in his undue influence and testamentary promise claim, but succeeds under the Family Protection Act claim.  I am conscious I have largely made favourable  assessments   of  Lionel  Silbery’s   evidence,   so   have   revisited   my conclusions  on  the  testamentary  promises  claim.     There  were  aspects  to  the plaintiff’s evidence I did not find wholly convincing – for example, the scale of the storage units, and his rapport with his mother.  I have therefore concluded that my

assessment on the testamentary promises claim should remain - essentially the plaintiff has not discharged his onus, although it is a claim I have given very serious consideration to upholding.

[168]   My overall conclusion is, I trust, clear.   I consider that Lionel was unfairly excluded from Ruth’s Will, and that the exclusion was in clear breach of Ruth’s moral duty to her son.  She was obligated to recognise his membership of the family, his significant contributions to her, and the family’s fortunes, over 36 years, and the times when he was undoubtedly a good caring and loving son.

Orders

1.        The testamentary promises claim is dismissed.

2.        The undue influence claim is dismissed.

3.The Family Protection claim of Lionel is upheld.   A fixed sum  award  will  be  made  when  further  information  is available.

4.        The claim of the grandchildren is dismissed.

5.The reasonable costs of all parties are to be borne by the estate.  Counsel are to provide me with a note of those costs.

6.The trustee is to take steps to update the valuation of the shares   by   updating   the   valuation   of   the   commercial properties.  Once that is to hand, a revised statement on the estate is to be provided.   The trustee through counsel will

please advise when that information is likely to be available.

Simon France J

In accordance  with r540(4)  I direct the Registrar  to endorse  this judgment  with the delivery  time of

3.30pm on Wednesday  the 22nd day of August 2007.

Solicitors:

B Gibson, Wellington for First Plaintiff

P Jenkin, Wellington for Second Plaintiff

J Marshall, Wellington for Angela Silbery-Dee G Allan, Lower Hutt for Michael Basil-Jones Gaskin Avison, Lower Hutt for Geoffrey Silbery