Thomas v Mathias
[2021] NZHC 461
•11 March 2021
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE
CIV-2020-409-000174
[2021] NZHC 461
UNDER the Law Reform (Testamentary Promises) Act 1949 IN THE MATTER
of the estate of Hilda Elizabeth Reid
BETWEEN
ANNA ELIZABETH THOMAS
Plaintiff
AND
MAXWELL CHARLES MATHIAS and ANDREW GEORGE WILLIAM LOGAN
Defendants
Hearing: 1 March 2021 Appearances:
A J Forbes QC and P M Smyth for Plaintiff B G Walker for Defendants
Judgment:
11 March 2021
JUDGMENT OF ASSOCIATE JUDGE PAULSEN
This judgment was delivered by me on 11 March 2021 at 11.00 am pursuant to Rule 11.5 of the High Court Rules
Registrar/Deputy Registrar Date:
THOMAS v MATHIAS [2021] NZHC 461 [11 March 2021]
Introduction
[1] The defendants are the executors of the estate of Hilda Reid (Ms Reid). Ms Reid died leaving a sizeable estate. The plaintiff is seeking payment from the estate of Ms Reid in recognition of services rendered to Ms Reid during her lifetime. The defendants apply to strike out the plaintiff’s amended statement of claim on the basis that it discloses no reasonable cause of action. The application is opposed.
Background
[2]Ms Reid died on 6 March 2019. She left a last will dated 14 February 2019.
[3] Probate of Ms Reid’s last will was granted to the plaintiff and the defendants on 26 April 2019. The plaintiff has since resigned as an executor of the will.
[4] Ms Reid never married and in later life her only close relative was an older sister, Ms Vacy Reid. Vacy died in 2012.
[5] The plaintiff was Ms Reid’s goddaughter. From the 1970s until Ms Reid’s death, the plaintiff provided services to Ms Reid. The details of those services are set out in a schedule to the amended statement of claim. The plaintiff considers the services went well beyond what might be normally expected of a godchild or a close friend.
[6] The plaintiff did not discuss with Ms Reid her financial circumstances or the terms of her will. The plaintiff understood Ms Reid’s financial circumstances were “average” and that she could not afford to remunerate the plaintiff for her services.
[7] As it transpires, Ms Reid was very wealthy. The plaintiff received a modest bequest under Ms Reid’s will. The residue was divided amongst charities and a school. The plaintiff was surprised and unhappy at the terms of the will in light of the extent of the services she had rendered to Ms Reid and the size of the estate.
[8] The plaintiff filed this proceeding on 24 April 2020. Her statement of claim pleaded four causes of action. She made claims under the Law Reform (Testamentary
Promises) Act 1949 and for unjust enrichment and also challenged the validity of Ms Reid’s will alleging lack of testamentary capacity and undue influence.
[9] Following a change of the plaintiff’s counsel, an amended statement of claim was filed on 14 December 2020. It pleads a single cause of action. The defendants applied to strike out the amended statement of claim. They assumed the plaintiff’s cause of action was promissory estoppel and that, as a matter of law, it could not possibly succeed given the acknowledged absence of a clear and express promise or assurance from Ms Reid that she would reward the plaintiff for her services.
[10] The defendants’ assumption was incorrect and it has now been explained that the plaintiff’s claim is advanced on the basis of the modern doctrine of equitable estoppel. Notwithstanding that, the defendants decided to proceed with their application for strike out.
Principles relevant to striking out applications
[11] The application is made in reliance on r 15.1(1)(a) of the High Court Rules 2016 which reads:
15.1Dismissing or staying all or part of proceeding
(1)The court may strike out all or part of a pleading if it
---
(a)discloses no reasonably arguable cause of action, defence, or case appropriate to the nature of the pleading;
…
[12] The principles used for striking out are not in dispute and were summarised by the Court of Appeal in Attorney-General v Prince,1 and endorsed by the Supreme Court in Couch v Attorney-General. In summary, the principles most relevant to this application are:2
(a)Pleaded facts, whether or not admitted, are assumed to be true.
1 Attorney-General v Prince [1998] 1 NZLR 262 (CA) at 267.
2 Couch v Attorney-General [2008] NZSC 45, [2008] 3 NZLR 725 at [31] and [33].
(b)To be struck out a cause of action must be clearly untenable. It is inappropriate to strike out a claim summarily unless the Court can be certain that it cannot succeed.
(c)The jurisdiction is to be exercised sparingly and only in clear cases reflecting the Court’s reluctance to terminate a claim short of trial.
(d)The jurisdiction is not excluded by the need to decide difficult questions of law, requiring extensive argument.
(e)The Court should be particularly slow to strike out a claim in any developing area of the law.
The defendants’ submissions
[13] Mr Walker asserts the plaintiff’s cause of action of equitable estoppel is not viable in the context of a “will challenge claim”. He submits most of the cases concerning equitable estoppel relied upon by Mr Forbes concerned commercial dealings involving actual conduct by the promisor creating a belief or expectation which, he says, is not the case here.
[14] Mr Walker referred to Carroll v Bates, a recent decision of Dunningham J where a plaintiff successfully alleged that she should retain property because words and actions of a deceased, while alive, had created a belief and expectation that she would inherit the property.3 Mr Walker said he was not able to find any other similar cases relevant to a will challenge.
[15] It should be noted, consistent with the case the plaintiff advances, in Carroll v Bates Dunningham J remarked that traditional criteria for the existence of a proprietary estoppel had given way to a more general approach based on unconscionability.4
[16] Mr Walker summarised the plaintiff’s case as being that because of the services she provided, it was unconscionable for Ms Reid not to leave her a large bequest and
3 Carroll v Bates [2018] NZHC 2463.
4 At [72].
that Ms Reid had a duty to inform her of the actual level of her wealth because, had she done so, the plaintiff may not have continued to provide the services.
[17] Mr Walker argues it cannot be the case that Ms Reid had an obligation to speak out and inform the plaintiff of her financial circumstances. Such a view cannot be correct, he says, as to accept the plaintiff’s position requires also an acceptance that:
(a)if a testator demands help from a volunteer, at a significant level, it is expected that a substantial bequest will be made in the testator’s will, or
(b)if a testator is wealthy, he or she has a duty to inform a volunteer as to their financial position so that the volunteer can raise the possibility of receiving provision.
[18] Mr Walker also submits this claim is an attempt to circumvent the requirements of a testamentary promises claim. To allow the plaintiff’s claim to continue, he argues, would establish a dangerous precedent.
Discussion
[19] The law relating to the doctrine of equitable estoppel is discussed in detail in Equity and Trusts in New Zealand.5 The authors note that in New Zealand there has been a synthesis of equitable doctrines based on estoppel with the recognition of a general cause of action known as equitable estoppel. Equitable estoppel is based on the concept of unconscionability.6
[20] The law in this area is developing but the authorities are nevertheless relatively clear that a party alleging equitable estoppel must show the following matters:7
5 Andrew Butler (ed) Equity and Trusts in New Zealand (2nd ed, Thomson Reuters, Wellington, 2009) at [19.1]-[19.6].
6 At [19.1] citing Gold Star Insurance Co Ltd v Gaunt [1998] 3 NZLR 80 (CA) at 86 and National Westminster Finance NZ Ltd v National Bank of NZ Ltd [1996] 1 NZLR 548 (CA) at 549.
7 Butler, Equity and Trusts in New Zealand, above n 5, at [19.2].
(a)a belief or expectation has been created or encouraged through some action, representation, or omission to act by the party against whom the estoppel is alleged;
(b)the belief or expectation has been reasonably relied on by the party alleging the estoppel;
(c)detriment will be suffered if the belief or expectation is departed from; and
(d)it would be unconscionable for the party against whom the estoppel is alleged to depart from the belief or expectation.
[21] I am satisfied the plaintiff’s amended statement of claim addresses all of these elements. The plaintiff’s case as pleaded is:
(a)Ms Reid knew or ought to have known that the plaintiff was unaware of her financial position;
(b)by her conduct Ms Reid created an expectation or belief in the plaintiff that she was unable to reward or compensate her for services the plaintiff rendered and the costs she incurred on Ms Reid’s behalf;
(c)the conduct involved Ms Reid’s frugal lifestyle, her reliance upon the plaintiff for meals and other necessities, the fact Ms Reid shopped at charity shops and that she demanded the plaintiff provide services and incur costs without reward that went well beyond what could reasonably be expected of her;
(d)the plaintiff’s belief as to Ms Reid’s circumstances was reasonable and she was not aware of matters that would have led her to know of Ms Reid’s actual circumstances;
(e)the plaintiff acted in reliance upon her belief to her detriment;
(f)the detriment she suffered was that she continued to provide services without reward when had she known the true position concerning Ms Reid’s circumstances she would have sought appropriate recognition in Ms Reid’s will for both past and future services; and
(g)it is unconscionable that Ms Reid allowed the plaintiff to provide services to her, when she knew or ought to have known the plaintiff was acting on the assumption Ms Reid could not reward her for those services.
[22] For the purposes of this application, I must accept the plaintiff’s allegations are true and can be proven at trial. On that basis, I must also accept that the plaintiff has an arguable cause of action and it cannot be struck out.
[23] As far as Mr Walker’s submissions are concerned, it is plainly the case that the law as it relates to equitable estoppel is not settled and is developing. This is, for that reason alone, a case that the Court should be reluctant to strike out.
[24] I do not entirely accept Mr Walker’s view that this is a will challenge case. I cannot see why the plaintiff could not have pursued a claim based on equitable estoppel during Ms Reid’s lifetime had she become aware of Ms Reid’s circumstances and had Ms Reid refused to recognise her past services. The fact the claim is brought against Ms Reid’s estate is because Ms Reid’s actual circumstances have, the plaintiff says, only come to light after her death.
[25] Nor do I accept this claim is an attempt to avoid the requirements of a traditional testamentary promises claim. The fact the plaintiff cannot base her claim on the Law Reform (Testamentary Promises) Act must be irrelevant when that Act preserves remedies existing independently of it, which include equitable claims.8
[26] Mr Walker’s primary attack on the plaintiff’s case concerned the assertion that Ms Reid was under a duty to speak out and disclose her financial circumstances. The
8 See for instance Wischnewsky v Public Trustee [1995] NZFLR 166.
circumstances where such a duty to speak out may arise are discussed in Equity and Trusts in New Zealand,9 and by the Court of Appeal in Infinity Enterprises NZ Ltd v Kinara Trustee Ltd.10 In Infinity Enterprises the Court considered a duty to speak out would arise where a reasonable and honest third party in the position of the silent party would speak out to correct an error known to have arisen.11 That is what the plaintiff alleges here. It is a contextual enquiry not suitable for determination on an application of this kind.
[27] Finally, as to Mr Walker’s concern about creating a precedent, all I need to decide on this application is whether the plaintiff’s claim is arguable. Therefore, my finding sets no precedent.
Result
[28]The defendants’ application is dismissed.
[29] The plaintiff is entitled to costs (for one counsel) on a 2B basis plus reasonable disbursements to be fixed by the Registrar if not agreed.
O G Paulsen Associate Judge
Solicitors:
Smyth & Co, Christchurch
Mortlock McCormack, Christchurch
9 Butler, Equity and Trusts in New Zealand, above n 5, at [19.5].
10 Infinity Enterprises NZ Ltd v Kinara Trustee Ltd [2020] NZCA 309 at [98]-[104].
11 At [102].
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