Smith v Endean
[2022] NZHC 583
•28 March 2022
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2021-401-2214
[2022] NZHC 583
UNDER the Family Protection Act 1955 IN THE MATTER
of the Estate of George Clifford Smith
BETWEEN
JOCELYN LOIS SMITH
Applicant
AND
WILLIAM ARTHUR ENDEAN
Respondent
Hearing: 14 March 2022 Appearances:
R Amaranathan for the Applicant WE Andrews for the Respondent
SR Carey for Widvey grandchildren (as Interested Parties)
Judgment:
28 March 2022
JUDGMENT OF FITZGERALD J
[Application to file proceedings under Family Protection Act 1955 out of time]
This judgment was delivered by me on 28 March 2022 at 3.00pm, pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Date……………
Solicitors: Rice Craig, Auckland To: W Andrews, Auckland
S Carey, Auckland
SMITH v ENDEAN [2022] NZHC 583 [28 March 2022]
Introduction
[1] The applicant, Mrs Smith, is the widow of George Clifford Smith (who I will refer to in this judgment as Mr Smith). Mr Smith died on 9 August 2019, leaving a will dated 2 August 2019.
[2] The respondent, Mr Endean, is the executor and trustee of Mr Smith’s estate. He is also the sole trustee of a trust established by Mr Smith in 2016 (the Trust).
[3] Mr Smith’s will made no provision for Mrs Smith. Rather, the residue of Mr Smith’s estate was left entirely to the Trust.
[4] Mr and Mrs Smith had been together for 60 years. They had been in a de facto relationship from 1959 and married in April 1981. There are five children of the marriage and 11 grandchildren.
[5] For at least four years prior to Mr Smith’s death (and potentially longer), the relationship between the couple had been dysfunctional. In 2014 they had essentially separated. Indeed, from that time, the parties had been negotiating the division of their relationship property, though that had not been resolved by the time of Mr Smith’s death. Despite these circumstances, they both remained living in the family home, in which they had lived for the previous 45 years (the Property). The Property had originally been owned by Mr and Mrs Smith as joint tenants. In 2014, this was changed to ownership as tenants in common in equal shares.1 While the division of relationship property had not been finalised prior to Mr Smith’s death, it seemed to be common ground that the Property would be sold and the sale proceeds divided equally.
[6] Probate was granted in relation Mr Smith’s will on 30 June 2020. Mrs Smith was therefore required to bring any application under the Family Protection Act 1955 (the Act) within 12 months of that date, namely by 30 June 2021.2
1 See further below at [13].
2 Family Protection Act 1955, s 9(2)(b).
[7] Mrs Smith did not do so, filing her application on 5 November 2021. She was therefore some 18 weeks out of time. She accordingly seeks leave to apply out of time. If leave is granted, the primary relief Mrs Smith will seek is a life interest in Mr Smith’s estate’s half-share of the Property, so she can remain living in the Property for as long as she chooses.
[8] Mr Endean opposes the application for leave. Two of Mr and Mrs Smith’s nine adult grandchildren (who I will refer to as the Widvey grandchildren) support his opposition.3 The crux of the opposition is that there should not be any unnecessary delay in the estate’s assets being realised and distributed, largely comprising the Property being sold and the estate’s half-share of the sale proceeds transferred to the Trust. This will make the funds available for distribution to Mr and Mrs Smith’s grandchildren, who are the discretionary and final beneficiaries of the Trust.
[9] None of Mr and Mrs Smith’s children take any formal position on Mrs Smith’s application for leave. Nor do the remaining seven adult grandchildren. Six of those seven grandchildren have, however, sworn an affidavit or confirmed by email that they support their grandmother being permitted to stay in the Property for as long as she wishes.
[10] With that brief background in mind, the balance of this judgment is structured as follows:
(a)I first set out the factual background in more detail.
(b)I then summarise the principles applying to an application for leave to file proceedings under the Act out of time, which are not in dispute.
(c)Finally, I set out my decision on the application for leave, and provide my reasoning for reaching that decision.
3 The grandchildren have an interest in Mrs Smith’s application given, as of October 2021, all 11 grandchildren have been discretionary beneficiaries of the Trust. They have always been the final beneficiaries of the Trust.
Factual background
[11] As noted, by the time of Mr Smith’s death, he and Mrs Smith had been together for 60 years and had been married since April 1981. As also noted, they had lived in the Property for approximately 45 years, and were still living there when Mr Smith died.4
[12]Mr and Mrs Smith raised their five children in the Property.
[13] While Mr and Mrs Smith’s marriage was a long one, it was not necessarily a happy or easy one, particularly in more recent years. Even on Mrs Smith’s case, there had been “difficult times” between her and Mr Smith from at least 2014. As noted, matters were sufficiently difficult that both parties had engaged lawyers and were negotiating the division of their relationship property. A tangible step in this regard was the severing in 2014 of the joint tenancy ownership of the Property, which was converted to a half-share each owned as tenants in common.5
[14] Mr Smith made a will in July 2014. His son-in-law, Asbjorn Widvey, and one of his daughters, Jennifer Strong (not Mr Widvey’s wife), were appointed executors. Save for some relatively minor bequests, the residue of Mr Smith’s estate was to pass to his then trust, the “Persia Trust”.6 Like his last will of August 2019, the 2014 will made no express provision for Mrs Smith.
[15] Correspondence between the parties’ solicitors from July 2015 onwards was put before the Court on the present application. The general theme of the correspondence was, as noted, that the Property would be sold and the net proceeds divided equally.
4 The Property has an indicative value at March 2022 of $2.125 million.
5 Mrs Smith consented to the change in form of ownership, though expressly without prejudice to any rights she might have in relation to the Property (“under any relation property or other legislation or at law”).
6 The Trust Deed for this trust was not produced in evidence. The discretionary and final beneficiaries of that trust are therefore unknown.
[16] Despite that agreement, there seems to have been a good deal of procrastination by both parties in finalising arrangements. As noted, they both continued to reside in the Property. Correspondence between their solicitors also continued over the ensuing years, ultimately focusing on a dispute over the division of chattels, as well as the precise mechanism by which the Property would be sold (quibbling over, for example, the number of sales agents and so on).
[17] It also appears that the rift between Mr and Mrs Smith had in turn caused a rift between their children. Some sided with Mrs Smith and some with Mr Smith.
[18] On 27 October 2016, Mr Smith settled the Trust. The trustees were Mr Smith, Mr Widvey and Mr Widvey’s wife Susan Smith (one of Mr and Mrs Smith’s daughters). At that time, the only discretionary beneficiaries of the Trust were Mr and Mrs Smith. The final beneficiaries were (and remain) Mr and Mrs Smith’s 11 grandchildren. Mr Flavell (the solicitor acting for Mr Smith on the settlement of the Trust) says in an affidavit filed in support of Mr Endean’s opposition that Mrs Smith was only named a discretionary beneficiary of the Trust given the scrutiny at that time of trusts where the settlor was the only named beneficiary. The Trust Deed provided that the trustee’s first responsibility was to consider on a regular basis Mr Smith’s circumstances while he was living. There is no suggestion Mrs Smith knew of this at the time, or of Mr Flavell’s advice to Mr Smith about who should be named as discretionary beneficiaries.
[19] At around the same time, Mr Smith made a further will. Mr Widvey and Susan Smith were the executors and trustees. Its terms were essentially the same as Mr Smith’s 2014 will, in that it left the residue of his estate to the Trust. Again, it made no direct provision for Mrs Smith.
[20] Over the following two years, drafts of a relationship property agreement7 were prepared and exchanged. This process again proceeded on the basis that the Property would be sold and the proceeds divided equally. Each party also acknowledged that the other party’s property would pass entirely to the beneficiaries of that party’s will and, unless the other party was specifically provided for under the will, she or he would
7 For the purposes of s 21 of the Property (Relationships) Act 1976.
have no claim against the estate. The draft agreement also recorded, somewhat unusually, Mrs Smith’s acknowledgment that she was not a beneficiary of the Trust (and that she made no claim in relation to trust funds having been settled by Mr Smith from his separate property). At that time Mrs Smith was, as noted, the sole discretionary beneficiary of the Trust (other than Mr Smith himself).
[21] On 15 February 2018, Mr Smith signed a memorandum of guidance to the trustees of the Trust. He directed that the trustees were to consider as paramount the reasonable needs and requirements of his grandchildren, and as having priority over the needs and requirements of all other beneficiaries. The memorandum also directed the trustees to “take into account the age and circumstances of each grandchild and encourage his or her self-reliance and independence”. The memorandum directed that the trustees “should consider winding up the trust after the youngest of my grandchildren has attained the age of 30 years”.
[22] Correspondence between Mr and Mrs Smith’s solicitors on separation and relationship property continued. It appears that over time matters were getting more acrimonious, with the dispute focused on somewhat trivial matters such as particular chattels, who should be able to visit the Property and so on.
[23] On 30 April 2019, Mr Smith was admitted to Middlemore Hospital. After being discharged on 8 May 2019, and rather than returning to live at the Property, he went to live with his daughter Susan and her husband Mr Widvey. Mrs Smith says that in about May 2019, she moved out of the Property briefly and into rented accommodation. She says she felt unsafe in the home, in particular because Mr Widvey had been coming and going from the Property at will.
[24] Also in May 2019, Mr Smith instructed Mr Endean to act on his behalf on the relationship property matters.
[25] In June 2019, Mrs Smith’s solicitor stated in correspondence to Mr Smith’s solicitor that Mrs Smith did not accept the validity of the Trust established by Mr Smith using relationship property, and if the relationship property matters could not resolve promptly, court proceedings may ensue.
[26] Despite Mr Endean having been instructed in May 2019, Mr Flavell continued correspondence on Mr Smith’s behalf with Mrs Smith’s lawyer at least for some time thereafter. It seems that after Mr Flavell had given some fairly frank advice to Mr Smith (warning him of the potential consequences of not promptly resolving the relationship property agreement), Mr Smith signed the latest draft of that agreement. A copy was forwarded to Mrs Smith’s lawyers on 19 June 2019. This version of the agreement again contained Mrs Smith’s acknowledgment that she was not a beneficiary of the Trust, recorded that the Property was to be sold and the proceeds divided equally, and contained the term referred to at [20] above as to each party acknowledging that they had no claim to the other’s estate.
[27] For whatever reason, Mrs Smith did not sign the relationship property agreement. It was suggested in submissions that her failure to do so was “concealed” from Mr Smith and his lawyers. There is certainly no evidence that Mrs Smith’s lawyer advised Mr Smith’s lawyer at the time that Mrs Smith did not intend to sign the agreement. Nor, however, is there any evidence of Mr Smith’s lawyer chasing up Mrs Smith’s execution of the Agreement.
[28] Mrs Smith says that she did not hear from Mr Smith after he had moved out of the Property on 8 May 2019, but that by 5 July 2019 she knew something was wrong and called Middlemore Hospital. She was advised he had been admitted again and had been there since 21 June 2019. It seems that his relationship with Susan and Mr Widvey had broken down: later hospital discharge notes record that Mr Smith “ran away from home after an argument with daughter and son-in-law about his driving”. Following his discharge from hospital on 19 July 2019, Mr Smith went to stay with Mrs Smith at the home she was then renting.
[29] Also on 19 July 2019, Mr Smith met with Mr Endean. He confirmed that he had fallen out with Susan and Mr Widvey and no longer wanted them to be trustees of the Trust. Mr Endean offered to step in as an independent, professional trustee, an offer which Mr Smith accepted.
[30] On 21 July 2019, Mr Smith was re-admitted to hospital due to severe chest pain.
[31]Mrs Smith moved back to the Property on 24 July 2019.
[32] Mrs Smith says that she visited Mr Smith many times after he was re-admitted to hospital. On 1 August 2019, she visited Mr Smith with one of her daughters, Alison, who took a video of Mr Smith. In the video he spoke about what he wanted to happen when he passed away, and twice said that he wanted the Property to go to Mrs Smith.
[33] The video was not put into evidence by either party on the present application. It was, however, before the Court when Venning J determined Mrs Smith’s application in 2020 for orders that Mr Endean, as executor of Mr Smith’s last will, file an application for probate in solemn form, and that the Court’s earlier order nisi for the grant of probate not be made absolute.8 Venning J observed that “[t]here are some matters of concern about the video and the way in which the conversation was directed, but for the reasons that follow I leave those for another day”.9
[34] Mr Smith made a further (and final) will on 2 August 2019. As noted at the outset of this judgment, the will gave the residue of Mr Smith’s estate to the Trust and made no provision for Mrs Smith.
[35] On 6 August 2019, Mr Endean received a telephone call from one of Mr Smith’s children (Jennifer) who was with Mr Smith at the hospital. Mr Endean then spoke directly to Mr Smith. Mr Endean’s file note records that Mr Smith expressed his wish that his interest in the Property would go to Mrs Smith. The file note goes on to record that:
He did mention that she would have to pay a certain sum of money in return for him giving her his share of the house but he was a little bit unclear as to the amount of money but did confirm in the end that he wanted to have his wife have his half of the house.
8 Endean v Smith [2020] NZHC 2365.
9 At [14].
[36] Mr Endean accordingly prepared a codicil to the 2 August 2019 will and, with a colleague, went to visit Mr Smith at the hospital on 7 August 2019. Mr Endean’s file note of that meeting records that when he explained the purpose of his visit and the codicil to Mr Smith, Mr Smith was “unable to comprehend that and was clearly unwell and we then decided to leave”. Mr Smith passed away two days later on 7 August 2019.
[37] There matters appear to have rested for some time, the next item of relevant correspondence being an email from the estate’s barrister to Mrs Smith’s solicitor dated 2 September 2020, enclosing a copy of the Trust deed.10 The cover email simply stated that “the trustees have been changed”.11 A copy of the Trust deed dated 27 October 2016 was attached. The discretionary beneficiaries of the Trust remained Mr and Mrs Smith.
[38] On 2 August 2021, the estate’s barrister wrote again to Mrs Smith’s solicitor, noting that the time for challenging Mr Smith’s will and estate had expired and that administration and winding up of the estate would now proceed. The letter stated that Mrs Smith must either buy out the estate’s half-share of the Property at market value or consent to the Property being sold on the open market, in which case “Mrs Smith will need to arrange alternative accommodation”.
[39] Mrs Smith’s solicitor responded on 16 August 2021, stating that “Mr Endean previously offered our client a life interest in the Trust’s share of the property, with the Trust paying its share of outgoings on the home. Although our client does not wish to live in the property indefinitely, she is not presently able and/or ready to move”. The letter proposed that Mrs Smith be granted a life interest in the Property to allow her the continued use and enjoyment of the Property, and time for her health and wellbeing to improve before she moved to a new property, all the while preserving a half-share of the Property for the grandchildren.
10 The context to this correspondence is unknown.
11 Presumably a reference to Susan and Mr Widvey being removed as trustees, and Mr Endean being appointed in their place.
[40] Subsequent correspondence on behalf of the estate dated 13 September 2021 records that “the suggestion of a life interest and continued occupation by Mrs Smith in the property is not acceptable to the executor trustee”. The letter did not, at least expressly, comment on the suggestion that Mr Endean had previously offered Mrs Smith a life interest. The letter stated that if Mrs Smith refused to cooperate, Mr Endean would make an application to the High Court for the sale of the Property pursuant to s 339 of the Property Law Act 2007 (the PLA). The letter stated that there did not appear to be any valid grounds of opposition and “my instructions are to file an application by the end of the month”.
[41] Mrs Smith’s solicitor replied on 5 October 2021, noting that under the Trust deed, Mrs Smith was the sole discretionary beneficiary and raising the concern that distributions had already been made from the Trust to the grandchildren, who were not discretionary beneficiaries. The letter reiterated that Mrs Smith did not consent to the Property being sold and did not wish for it to be sold, stating that “[w]e understand the majority of the final beneficiaries [that is, the grandchildren] do not want their grandmother forced out of her home against her will”. Among other matters, the letter also gave notice of Mrs Smith’s proposed claim against Mr Smith’s estate.
[42] By letter dated 18 October 2021, the estate’s barrister notified Mrs Smith’s solicitor that using his power of appointment under the Trust deed, Mr Endean had removed Mrs Smith as a discretionary beneficiary of the Trust and appointed the 11 grandchildren as discretionary beneficiaries. This was said to be consistent with Mr Smith’s wishes and instructions to Mr Endean and Mr Flavell before he died. The letter concluded:
The [Property] must be sold, the estate wound up, and proceeds of sale vested. Mr Endean will nominate a vesting date and directions will be sought under the Trust Act to vary/wind up the trust to establish trusts for minors, and the distribution to adult final beneficiaries. The application will also deal with the interim distributions already made to grandchildren.
[43] The final point to note by way of factual background is that a number of Mr Smith’s grandchildren are opposed to Mrs Smith being required to move out of the Property. Nine of the 11 grandchildren are over 18 years of age. Affidavits or emails from six of those nine grandchildren were produced in evidence, and record their
support of their grandmother remaining in the Property. Susan and Mr Widvey’s two older children (who are 19 and 20 years old respectively) have sworn affidavits supporting Mr Endean’s opposition to leave being granted. The position of the remaining grandchild over the age of 18 is unknown, and the remaining two are minors. I interpolate to note that it is highly unfortunate that the grandchildren, all of whom are relatively young adults themselves, have become embroiled in this litigation. The position of Mr and Mrs Smith’s five children is unknown. None have, however, filed an application for maintenance and/or support from Mr Smith’s estate.
Legal principles
[44] The approach to be taken on an application for leave to apply under the Act out of time is not in dispute.
[45] The Court of Appeal in Re Magson confirmed that factors relevant to the exercise of the Court’s discretion to extend time under the Act are as follows:12
(a)first, the length of the delay;
(b)second, the extent to which the delay is excusable because of ignorance of rights or otherwise;
(c)third, the strength of the claim that there was a breach of moral duty by the deceased; and
(d)fourth, the extent of any prejudicial effect on beneficiaries who have ordered their lives in reliance on the will or intestacy.
[46] As Mr Carey, counsel for the Widvey grandchildren, observed, the first two factors are often interlinked in that the more compelling the excuse for delay, the longer delay will tend to be forgiven, and vice versa.
[47]Finally, the Court in Re Magson also observed that:13
12 Re Magson [1983] NZLR 592 at 598.
13 At 598.
[t]he motives of the applicant are also relevant, but in the present as in most other cases one has to be cautious before giving major weight to them, for they can be difficult to assess fairly – especially on affidavit evidence.
Application of the factors to this case
The length of delay
[48] The length of the delay is 18 weeks, or four-and-a-half months. While not negligible, nor is it particularly long, certainly by comparison to the delay often seen in cases of this kind.
Explanation for the delay
[49] Mrs Smith does not suggest she was unaware of her right to apply for maintenance and/or support from Mr Smith’s estate. Rather, her counsel, Ms Amaranathan, categorised the position as being that while Mrs Smith was aware of her rights, she did not perceive any need to exercise them. In this context, Mrs Smith says that given her position as discretionary beneficiary of the Trust, she thought she would be permitted to stay in the Property, or at least be consulted before any steps were taken to sell it. Indeed, in her affidavit sworn in support of her application, Mrs Smith says that because she was the sole discretionary beneficiary of the Trust, “I had a beneficial interest in George’s half-share of the property” (emphasis added).
[50] Ms Andrews (for Mr Endean) and Mr Carey submit that the fact Mrs Smith agreed that the Property ought to be sold right up until June 2019 cuts directly across her explanation for the delay. Ms Andrews submits that this also brings into play Mrs Smith’s motive for the present application, namely to prevent Mr Endean from making an application pursuant to s 339 of the PLA for an order that the Property be sold.
[51] Mrs Smith’s statement that she had a beneficial interest in the Property is of course incorrect: as a discretionary beneficiary, she did not enjoy a vested interest in the Property, but a mere expectation or hope that the trustee’s discretion might be
exercised in her favour.14 Nevertheless, given it appears that — at least prior to the 12 month period for filing a claim under the Act passing — she was the sole discretionary beneficiary of the Trust, she may have drawn comfort from that fact, or indeed (wrongly) understood that she did have a beneficial interest. Further, even if Mrs Smith had understood that as a discretionary beneficiary she did not have a vested beneficial interest in the Property, I do not consider it would have been unreasonable for her to have thought that her interests would be taken into account when considering whether the Property ought to be sold.15
[52] Ms Amaranathan also points to the majority of the grandchildren’s support for Mrs Smith remaining in the Property, giving Mrs Smith further comfort that she did not need to apply under the Act. However, there is nothing in the evidence that suggests that that support, at least on a collective basis, was known to Mrs Smith prior to the 12 month period passing.
[53] There is some merit in Ms Andrews’ and Mr Carey’s submission that the correspondence concerning the relationship property agreement cuts across Mrs Smith’s suggestion that she was surprised at Mr Endean’s later intention to sell the Property. Mrs Smith says that while she may have agreed at that time to sell the Property (to get out of a “horrible” situation), she never wanted to sell it. Ultimately, I do not consider this point significantly undermines the potentially false comfort that Mrs Smith drew from the fact that the relationship property agreement was never signed by her, that Mr Smith then passed away, and she remained a discretionary beneficiary of the Trust.
[54] I also accept Ms Andrews’ and Mr Carey’s submissions that, despite knowledge of her rights, Mrs Smith did nothing to seek reassurance from Mr Endean in the period in which she was required to file any application under the Act. As noted at [39] above, there is a suggestion in the correspondence that Mr Endean had offered a life interest to Mrs Smith. But had this clearly been offered to Mrs Smith, or offered in a form in which it could be put before this Court, it would have no doubt been a
14 Hunt v Muollo [2003] 2 NZLR 322 (CA) at [11].
15 Noting that there is no evidence that she was aware of Mr Flavell’s advice on why she should be appointed a discretionary beneficiary (see [18] above).
focus of Mrs Smith’s explanation for her delay in making an application under the Act. As it was not, I cannot ascribe any real weight to it.
[55] Standing back, against what appears to be Mrs Smith’s tolerably clear understanding, at least up until Mr Smith’s death, that the Property would be sold; her knowledge of her rights; her acknowledgment in drafts of the relationship property agreement that she was not a named beneficiary under Mr Smith’s will; and that she was only a discretionary beneficiary under the Trust, I find Mrs Smith’s suggestion that she was “shocked” at Mr Endean’s intention to sell the Property a little unconvincing. Nevertheless, this is ameliorated by Mrs Smith taking comfort from her standing as sole discretionary beneficiary under the Trust.
[56] I do not place great weight on Mrs Smith’s motives. As the Court of Appeal cautioned in Re Magson, it is difficult to do so in the context of affidavit evidence only.16 Nevertheless, it seems reasonably clear — and Ms Amaranathan did not shy away from the fact — that Mrs Smith’s application was filed in response to Mr Endean’s communicated intention to seek orders pursuant to s 339 of the PLA. If Mrs Smith is granted leave to file her application out of time, and if the Court were to find that Mr Smith breached his moral duty to her, Mrs Smith plainly wants to preserve the Court’s ability to remedy that breach by granting her a life interest in the Property. I do not consider that a disqualifying motive in the present circumstances.
The merits of the claim
[57] As Mr Smith’s widow, Mrs Smith would normally have the dominant claim to his estate. That is particularly so where there are no competing claims by Mr and Mrs Smith’s children (or grandchildren); there are no children from prior marriages; and given the sheer length of Mr and Mrs Smith’s relationship.
[58] As against this, there seems to be no doubt that the parties had effectively lived separate lives for a number of years prior to Mr Smith’s death. For present purposes, I accept that this was from at least 2014. Nevertheless, the parties were not formally separated, nor had the division of relationship property been finalised. Mrs Smith also
16 Re Magson, above n [12], at 598.
says that there had be a reconciliation of sorts between her and Mr Smith shortly before his death (referring to those events summarised at [28] to [35] above). Whether or not that was the case is not a matter capable of determination on the present application.
[59] All parties accept that the fact the parties were separated does not act as a barrier to Mrs Smith’s entitlement to make a claim under the Act. That is clear from a number of authorities, such as Re Churchill,17 Re Hilton,18 and Williams v Crotty.19 Anderson J’s discussion of the issue in Re Hilton is particularly illuminating. His Honour stated:20
The will makes no provision for the plaintiff. Plainly the deceased believed that the matrimonial property division fully discharged his obligations to his wife. Such a view may be inherently flawed since the question of a wise and just testator’s duties in respect of persons entitled to claim under the Family Protection Act 1955 is distinguishable from the question whether the pool of matrimonial property in existence at the time a married couple separate has been justly divided between them. A moral obligation as a testator cannot be automatically satisfied by having previously met an irresistible legal obligation as a spouse. Upon a property division spouses take not by dint of charity or bounty but by right, and moral obligations are not in issue. Some moral obligations or entitlements capable of being met by monetary compensation can remain unsatisfied even though the Matrimonial Property Act 1976 regime may have been punctiliously applied because the benefit or value of the obligation or entitlement, whether economic or moral, does not fall into or cannot be adequately satisfied by the pool of matrimonial property available for division.
[60] Anderson J went on to state that “[t]he scope of a testator’s moral duty takes account of a different property pool with a larger moral circumference.”21 In that case, the parties had been together for more than 16 years before their separation, had been separated for some 18 months prior to Dr Hilton’s death, and had completed a matrimonial property agreement. Anderson J considered that Dr Hilton had a moral duty to “provide his separated wife with the security of an unencumbered modest home, reliable transport, and a contingency fund to meet her future needs in life.”22 Provision from Dr Hilton’s estate to his former wife was ordered for that purpose.
17 Re Churchill (deceased) [1978] 1 NZLR 744 (SC).
18 Re Hilton [1997] 2 NZLR 734 (HC).
19 Williams v Crotty HC Hamilton CIV-2005-414-1292, 2 December 2005.
20 Re Hilton, above n [18], at 742–743.
21 At 743.
22 At 744.
[61] Accordingly, there is no dispute that Mrs Smith is entitled to make a claim on the estate, and noting that unlike in some of the authorities referred to, the relationship property division between her and Mr Smith had not in fact been resolved at the time of his death.
[62] Nor do I consider the fact that the parties were essentially separated for at least four years prior to Mr Smith’s death renders Mrs Smith’s claim weak. This is particularly so in the context of a 60 year relationship. It also seems that Mrs Smith provided significant comfort and support to her husband over the duration of the marriage, including working with him for many years in the family business; caring for Mr Smith during his treatment for and recovery from bowel cancer in the mid- 1990s; paying for property and family related expenses (including mortgage repayments); paying for utilities; paying a half share of rates and insurance; as well as raising the couple’s five children. The length of the parties’ relationship was perhaps the basis for what appears to have been at least a “flicker” of reconciliation between them in the final days before Mr Smith’s death, and which led to the codicil being drafted by Mr Endean on 6 August 2019.
[63] I accept Mr Carey’s submission that the fact both parties agreed in the years prior to Mr Smith’s death that the Property would be sold and the proceeds divided equally may undermine the suggestion that Mr Smith had a moral duty to Mrs Smith to provide her with a life interest in his half-share of the Property. But that is a somewhat different inquiry as to whether Mr Smith owed Mrs Smith a moral duty to provide for maintenance and/or support from his estate.23 Given those matters referred to at [62] above, I consider there to be some merit in the suggestion that Mr Smith breached his moral duty to Mrs Smith. The more contentious issue might be the extent of that breach, the minimum required to remedy it, and whether an appropriate response would be to grant Mrs Smith a life interest in the Property.
[64] I accordingly consider Mrs Smith’s proposed claim has some merit, particularly on the question of whether there has been a breach of moral duty. The
23 Ms Amaranathan confirmed that given Mrs Smith’s financial position, the claim would be focused on support rather than maintenance. Mrs Smith has cash reserves from the earlier sale of relationship property in an amount of approximately $725,000.
appropriate remedy for any such breach will depend on a range of factual matters that it is not possible, or indeed necessary, to comment on for the purposes of this application.
Prejudice
[65] Finally, I do not consider there to be any material prejudice to the primary beneficiary of the estate, namely the Trust, nor to the grandchildren through the Trust, were leave to be granted.
[66] As noted, a significant number of the grandchildren support their grandmother’s position. All of the grandchildren are relatively young. They have each already received a distribution of $35,000. It also appears that the Trust is already paying for at least some of the grandchildren’s university accommodation and student fees. Moreover, and subject to trust assets being depleted by legal fees, the Trust has significant cash reserves.24 These would appear sufficient to meet any non- exceptional claims on the Trust in the period between now and any claim by Mrs Smith under the Act being resolved.25
[67] It is also important to recall that the question of prejudice is not simply prejudice per se, but prejudice to beneficiaries “who have ordered their lives in reliance on the will or intestacy”.26 There is no evidence that any of the discretionary beneficiaries of the Trust have ordered their lives in any material way in reliance on Mr Smith’s last will. Indeed, that would seem somewhat unusual given their young age. I reiterate that the Trust has reasonably significant cash reserves in any event.
[68] I accordingly do not consider there to be any prejudice occasioned to any beneficiary that weighs against leave being granted.
24 As at 22 February 2022, totalling approximately $655,000.
25 I also note the availability of student loans/allowances scheme in relation to any grandchildren who are studying.
26 Re Magson, above n [12], at 598.
Conclusion on the factors
[69] Taking all of the above factors into account, I am clear in my view that leave ought to be granted.
Result and costs
[70] Mrs Smith’s application is granted. I grant Mrs Smith leave to file her claim under the Act out of time.
[71] The proceeding ought to be scheduled for a case management conference before an Associate Judge as soon as possible. Given Mrs Smith’s age, it may be appropriate for this proceeding to be given a priority fixture. If that is to be pursued, an application will need to be put before the Executive Judge, Justice Moore.
[72] There are also the extant Trust Act proceedings, which were briefly touched on in counsel’s submissions. I do not have any visibility of those proceedings other than that they appear to be at an early stage. Whether they ought to be heard before, after or together with these proceedings is not a matter I can comment on. I simply reiterate my observations to counsel and the parties at the hearing that it would be most unfortunate if this relatively modest estate were overwhelmed by legal costs associated with the various sets of legal proceedings. It was also evident to me that there is already a reasonable degree of “heat” in this matter, which could have the unfortunate consequence of unnecessarily adding to the legal costs (for example by driving various interlocutory applications and the like). It would obviously be in all parties’ interests that, if the matter cannot be resolved by agreement, there is at least a good degree of cooperation and pragmatism to enable the matter to be brought to a prompt hearing, without becoming bedevilled by interlocutory disputes.
[73] As to costs, Mrs Smith has been successful on her application, but in seeking leave to file her application under the Act out of time, she was seeking an indulgence. In those circumstances, an appropriate outcome may be that costs on the application are to lie where they fall.
[74] If, despite this observation, the parties cannot reach agreement on costs, any party seeking costs may file a costs memorandum within 15 working days of the date of this judgment. Any party opposing that costs application may then file a memorandum in response within a further five working days. No memorandum is to be longer than three pages in length (excluding any schedules). Unless I need to hear further from counsel, I will then determine costs on the papers.
Fitzgerald J
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