Sutton v Public Trust - [2015] NZHC 1844

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

CIV 2014-485-11263 [2015] NZHC 1844

IN THE ESTATE of Ernest Wilfred Sutton

UNDER

section 31 of the Wills Act 2007

BETWEEN

MICHELLE ANNE SUTTON, KARLA MARIE SHAW AND RICHARD WARREN SUTTON Plaintiffs

AND

PUBLIC TRUST Defendant

Hearing: 15 July 2015

Counsel:

C J Kelly for Plaintiffs
T Tso for Defendant
G Caro for Official Assignee

Judgment:

6 August 2015

JUDGMENT OF SIMON FRANCE J

Introduction

[1] By a will dated 28 August 2003, the testator Mr Ernest Sutton, in the event that his wife predeceased him (as occurred), directed that his residuary estate be divided amongst his three children:

… living at my death. However if this gift to any such beneficiary does not take effect THEN any benefit to which that beneficiary would have been entitled is to be taken equally by those of his or her children who are living at my death.

SUTTON & ORS v PUBLIC TRUST [2015] NZHC 1844 [6 August 2015]

[2] At the time of his death, Mr Sutton’s three named children were all living. However one, Mr Warren Sutton, was at the time an undischarged bankrupt. Section 102(1)(a) of the Insolvency Act 2006 appears to govern the situation. It provides:

(1) Between the commencement of bankruptcy and discharge of the bankrupt,—

(a) all property (whether in or outside New Zealand) that the bankrupt acquires or that passes to the bankrupt vests in the Assignee without the Assignee having to intervene or take any other step in relation to the property, and any rights of the bankrupt in the property are extinguished; …

[3] The children of Mr Warren Sutton dispute the applicability of s 102. They contend:

(a) that, on the plain meaning of the words, the gift has not “taken effect” as provided in the will and therefore their father’s share should go to them;

(b)alternatively, that the meaning of the words is ambiguous and uncertain as those terms are used in s 32(1) of the Wills Act 2007. This being so, the Act allows recourse to extrinsic evidence of the will-maker’s intention. When this is done, it becomes clear the testator intended the gift to his son to fail if the son were bankrupt; and

(c) alternatively, pursuant to s 31 of the Wills Act 2007, the Court should correct the will because it does not give effect to the will-maker’s instructions.

The extrinsic evidence (if able to be considered)

(a) Concerning the testator’s general intentions

[4] The background to the issue is that Mr Warren Sutton, the testator’s son, is a businessman who has experienced highs and lows. The narrative presented through affidavits filed by him, and his wife, is that during the period 1998 to 2001, he was at

risk of being made bankrupt. An investment had failed, and Mr Sutton was the last person standing in relation to trade debts and secured borrowings concerning which he had given personal guarantees.

[5] Against that background there were discussions with…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Sutton v Public Trust

Details

AGLC: Sutton v Public Trust [2015] NZHC 1844
Case: [2015] NZHC 1844
Decision Date: 6 August 2015

CaseChat Overview and Summary

The case Sutton v Public Trust was heard in the High Court of New Zealand, Wellington Registry. The plaintiffs, Michelle Anne Sutton, Karla Marie Shaw, and Richard Warren Sutton, sought to contest the distribution of their father's estate under his will, particularly in relation to the distribution of the estate in the event that one of the beneficiaries was an undischarged bankrupt at the time of his death. The defendant was the Public Trust, the executor of the estate. The central legal issue was whether the will's residuary clause, which provided for the estate to be divided among the testator's children if they were living at his death, would still apply if one of the children was bankrupt, with the resulting distribution being to the Assignee under the Insolvency Act 2006. The plaintiffs argued that the gift had not "taken effect" due to the bankruptcy, or that the terms of the will were ambiguous and should be interpreted to mean that the estate would pass to the grandchildren instead.

The court considered the evidence presented, including affidavits from family members and the Public Trust employees who drafted the will. The court concluded that there was no ambiguity in the terms of the will, and the gift would take effect upon the son's receipt of his share, regardless of the statutory consequences of his bankruptcy. The court also found that the evidence did not support the plaintiffs' claim that the testator had specifically instructed the Public Trust to include provisions for the bankruptcy scenario, and thus, the application to correct the will under the Wills Act 2007 was also declined. The court ultimately ruled that the gift to the bankrupt son had taken effect, and there was no ambiguity in the terms of the will. The plaintiffs' applications were dismissed, and the court indicated that costs would follow the event, to be paid to the Official Assignee.

Orders