Tolhopf v Rauner

[2025] NZHC 311

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2024-404-2283

[2025] NZHC 311

BETWEEN

CORALIE GAIL TOLHOPF

Appellant

AND

LANCE ANTON RAUNER, IAN FREDERICK RAUNER and SHEREE ANNETTE RAUNER

First Respondent

LANCE ANTON RAUNER and CORALIE GAIL TOLHOPF

Second Respondent

Hearing:	25 February 2025
Appearances:	P J Kennelly for Appellant M Crawford for Respondent
Judgment:	26 February 2025

JUDGMENT OF VENNING J

This judgment was delivered by me on 26 February 2025 at 3.30 pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date……………

Solicitors:           Kennelly Law, Orewa

Insight Legal, Warkworth

TOLHOPF v RAUNER [2025] NZHC 311 [26 February 2025]

Introduction

[1]    Fredrick Rauner (Fred) died on 28 March 2022. At the time he was 92. He left an estate of approximately $1,810,000, which included his home at Lakeside Drive, Orewa.

[2]    Fred and his wife Glenis (who had died in October 1999) had four children: Coralie, Lance, Ian and Sheree. Fred left his home and chattels worth approximately

$1,250,000 in total to Coralie. He divided the residuary estate of approximately

$560,000 between his three other children, Lance, Ian and Sheree, although in unequal shares. Lance, Ian and Sheree challenged Fred’s will and sought further provision under the Family Protection Act 1955 (the Act). They argued Fred’s estate should be divided equally between the four children.

[3]    In a judgment delivered on the 9th of August 2024, Judge S M Morrison allowed the claims of Ian and Sheree.1 She increased the provision for Ian to $336,000 to match Lance’s share of the residue, and increased Sheree’s share to $536,000.

[4]Coralie appeals to this Court from that decision.

The Family Court judgment

[5]    In her decision Judge Morrison briefly referred to the law, then summarised the parties’ financial positions and their cases.

[6]    While acknowledging Coralie may have received benefits in the arrangement which saw her looking after Fred, the Judge accepted Fred placed value on being able to grow old at home and to continue living there rather than being placed into residential care. That also maintained the estate for all children. However, the Judge also observed that Fred’s wish to provide Coralie with a home did not trump any moral duty owed to the other children.

[7]    Judge Morrison ultimately concluded that the $336,000 Fred had provided for Lance was sufficient to meet his needs and properly acknowledged his belonging to

1      Rauner v Rauner [2024] NZFC 10273.

the family. She did not consider there was any breach of Fred’s moral duty to provide for Lance.

[8]    However, she considered that in relation to Ian and Sheree, Fred’s will appeared to have been based on misinformation about the children’s respective circumstances and his legal obligation to ensure there was no breach of any moral duty owed to them upon his death.

[9]    In relation to Ian, the Judge considered there appeared to be no reason for Ian to be treated unequally to Lance other than the fact he lived overseas. She also noted that Fred had apparently failed to recognise that, while Ian had accumulated capital assets with his wife, the COVID-19 pandemic would have significantly impacted his business and income which relied on tourists visiting Thailand.

[10]   As to Sheree, the Judge did not consider there was any reason why she should be treated unequally to Lance. She considered Fred had failed to recognise that Sheree suffered from a health condition which had affected her ability to earn an income. The Judge also considered Fred had failed to recognise that Sheree had no capital assets to have recourse to. Fred’s earlier provision of $10,000 to her for the purchase of a car did not adequately discharge the moral duty he owed to her on his death.

[11]   Having made those findings the Judge then considered that the distribution to Ian should be adjusted by increasing his share to $336,000 to match Lance’s share and the provision for Sheree should be increased to $536,000 to recognise her dire financial circumstances compared to those of her siblings.

Appeal points

[12]   In support of the appeal Mr Kennelly submitted that the Judge’s decision was plainly wrong, that she had taken account of irrelevant considerations and had failed to take into account relevant considerations.

[13]   Mr Kennelly noted that as a result of the Judge’s decision Sheree ultimately received 30 per cent of the estate and Lance and Ian each received 18.5 per cent. Under the will Coralie had received 69 per cent of the estate whereas under the Family Court

decision Lance, Ian and Sheree shared 67 per cent while Coralie’s share was reduced to 33 per cent.

[14]   Mr Kennelly submitted that the Judge’s decision effectively rewrote the will without proper consideration of the reasons given by Fred for his original dispositions as is required by s 11 of the Act. He argued that Fred’s reasons for his dispositions had not been challenged and should have been given appropriate weight.

[15]   Next, he argued that the Judge had also drawn inferences which had no proper basis in fact. In effect, in the absence of any proper consideration of the evidence the Family Court Judge had effectively rewritten the will on fairness grounds. Even if there had been a breach, it was not for the Court to be generous with the deceased’s estate beyond ordering such provision as was sufficient to repair any breach.

[16]   Mr Kennelly referred to the settled proposition that mere disparity in the treatment of the beneficiaries was insufficient to establish a claim, and noted that Fred had made provision for all his children. He had even gone so far as to speak to his sons Lance and Ian to tell them he had changed his will.

[17]   Mr Kennelly argued that the finding that a just and wise testator would have made the adjustments made by the Family Court required the Court to have found that the deceased did not know his children, or their circumstances and that his view of the relationship they had with him was wrong. He submitted there was no actual evidence to support such findings. Fred knew exactly what he was doing, and he was a just and wise testator. His will should not have been rewritten and his instructions should have been left intact.

The respondents’ case

[18]   Ms Crawford confirmed that Lance accepted the Judge’s decision which left the provision for him unaltered. He has not cross-appealed.

[19]   Ian and Sheree supported the Judge’s decision. Ms Crawford submitted the appellant had failed to demonstrate the decision was plainly wrong or involved an error of law or principle as was required to upset it. The redistribution of Fred’s estate

was necessary to address a clear breach of his moral duty under s 4 of the Act to Ian and Sheree. It was also proportionate, and respected the principle that the minimum adjustment required should be made.

[20]   Ms Crawford submitted the Family Court did not ignore Fred’s wishes, but the Judge had rightly prioritised the statutory test of moral duty over testamentary freedom.

[21]   Ms Crawford noted that the appellant made much of the expressed wishes of the deceased, but submitted that in reality little evidence of the deceased’s wishes was provided. The brief notes provided only a little insight into the deceased’s reasons for changing his will, very late in his life.

[22]   The Judge’s decision took account of Coralie’s care for the deceased. However, that care did not justify the extent of the disproportionate provision. Ms Crawford noted that Coralie had lived rent free with Fred, and in addition to assistance with a car, she had received payments of $10,000 and $9,000 during his life. Further, she had received a carer’s allowance.

[23]   Ms Crawford submitted the Judge had not rewritten the will but rather, had exercised her discretion to disturb the will only to the extent necessary to remedy the breaches of moral duty that she found. She submitted that the Judge’s decision to adjust the provisions for Ian and Sheree as she did was sound given the evidence before the Court. The Judge’s decision to take account of Sheree’s situation, given the evidence of her health was appropriate and it was also proper for the Judge to consider that Ian held few assets in his name and his tourist business would have suffered badly during the COVID-19 pandemic (which the Judge had taken judicial notice of).

[24]   Ms Crawford submitted that the Family Court decision was well reasoned, consistent with the evidence and applicable legal principles and should not be disturbed.

Approach to the appeal

[25]   In Talbot v Talbot the Court of Appeal set out the approach to be taken on an appeal involving a decision under the Act:2

[37] In our judgment the position is straightforward. Whether or not there has been a breach of the moral duty set out in s 4 of the Act is a threshold issue, turning on matters of law, fact and degree. Appeals involving this threshold issue fall to be determined by reference  to the approach  set  out  in Austin, Nichols. If there is a breach of moral duty found, then what remedy should be granted by the court below is an issue involving the exercise of a discretion, and an appellate court will only intervene if there has been an error of law or principle, if the Judge below took into account an irrelevant consideration or failed to take into account a relevant consideration, or if the decision below is plainly wrong.

[26]   In Brown v Brown the Court of Appeal noted that an appellate court will rarely intervene in an evaluative decision:3

[65]  … an appellate court will not intervene in an evaluative decision  unless persuaded that the court below was wrong, and that onus is frequently difficult to discharge in this jurisdiction.

Applicable principles to a claim under the Act

[27]   In Fisher v Kirby,4 the Court of Appeal summarised the principles relating to an application under the Act at [106]–[120] including the principles identified in the decision of the Full Court in Williams v Aucutt before concluding:5

[120] The decisions of this Court from and including Little v Angus are properly viewed as a timely reminder that awards should not be unduly generous. But, in our view, neither should they be unduly niggardly, particularly where the estate is large and it is not necessary to endeavour to satisfy a number of deserving recipients from an inadequate estate. A broad judicial discretion is to be exercised in the particular circumstances of each case having regard to the factors identified in the authorities.

Discussion

[28]   The first issue is whether, in relation to each of the individual claimants Fred breached his moral duty to them. If he did, as Judge Morrison concluded in the cases

2      Talbot v Talbot [2017] NZCA 507.

3      Brown v Brown [2022] NZCA 476.

4      Fisher v Kirby [2012] NZCA 310, citing Williams v Aucutt [2000] 2 NZLR 479 (CA) at [108].

5      Fisher v Kirby (footnote omitted).

of Sheree and Ian, then the issue on this appeal is whether the Judge made an error in law or in principle, took into account irrelevant considerations or failed to take into account relevant considerations or was plainly wrong in making the adjustments to the will provisions. As the authorities confirm, the onus on an appellant at that stage is a high one.

[29]   The Judge concluded that in the case of Lance there was no breach of moral duty. I agree. The evidence disclosed Lance had a close relationship to Fred but was not in any particular need of assistance. In the circumstances an award of $336,000 or approximately 18½ per cent of the estate was more than sufficient to recognise his belonging to the family and his close relationship with Fred.

[30]   Before addressing the particular circumstances of Ian and Sheree and whether Fred breached his moral duty to them in the provision he made for them in his last will, I deal with some general points that arise in the present case.

Cross-examination

[31]   Mr Kennelly made something of the fact that he had been denied the opportunity to cross-examine the applicant’s witnesses, and in particular Coralie’s ex- husband. I do not consider there is anything in that point. The Court usually deals with applications under the Act on the basis of the affidavits before it. It is for the Court to assess the weight to be given to that affidavit evidence in light of all of the evidence before it. Cross examination will be rare. It is not helpful for the Court to be presented with evidence by or on behalf of the respective parties that challenges the bona fides or the personalities of the other claimants. Unfortunately, despite that, the parties from time-to-time resort to presenting such evidence as occurred in this case.

Fred’s reasons

[32]   Next, although Ms Crawford suggested that there was little evidence of Fred’s wishes or reasons behind the change to his will, I consider in this case Fred set out his reasons in some detail. First, there was a note with the will in which he confirmed his decision and specifically that he wanted to acknowledge Coralie had looked after Glenis and him, that Lance had been helping a lot, that he never saw Sheree and he

gave her a car once and that Ian had been in Thailand for 20 years. That note was confirmed by a solicitor’s file note made shortly before the will was executed in May 2020. Further, in this case Lance and Ian at least were advised of Fred’s decision to change his will before his death.

Earlier wills

[33]   Finally, it is not strictly correct for the respondents to say that Fred had always previously provided equally for his children. In an earlier will he had left his home equally to Lance and Ian to the exclusion of Coralie and Sheree. Further, it is relevant that the earlier will which provided for equality had been made 20 years previously.

The Judge’s approach

[34]   Although the Judge referred to the established principles, I have come to the view that she did not apply them correctly. The error in her approach is reflected in some of her comments.

[35] It appears that the Judge was influenced by the evidence of the claimants that suggested there may have been issues of undue influence and/or incapacity even though she accepted that no such proceedings had been issued and there had been no challenge to probate. The Judge referred to those issues not only in [4] in the introductory part of her judgment, but also later during her discussion of the issues at [20].

[36]   More relevantly, despite the principles that the Court is not authorised to rewrite the will merely because it may be perceived as being unfair, and that, in this case, Coralie was not required to justify the interest given to her, the Judge seems to have been influenced by her perception the will was unfair. Her approach is reflected by her comments at an early point:6

Perhaps not surprisingly Lance, Ian and Sheree are not happy with Fred’s will

…

6      Rauner v Rauner, above n 1, at [5].

And the later comment:7

Unfortunately, absolute equality is not the test I need to apply when considering how to rectify any breach of moral duty by Fred. I must only disturb his will to the extent necessary to remedy any breach.

[37]   The use of the word “unfortunately” is itself unfortunate and suggests the Judge saw the matter through the wrong lens, when the well established principles confirms that mere disparity in the treatment of beneficiaries is not sufficient to establish a claim and that if a breach of moral duty is established it is not for the Court to be generous with the testator’s property beyond ordering such provision as is sufficient to repair the breach. Importantly the Court’s power does not extend to rewriting a will because of a perception it is unfair. I consider there is force in Mr Kennelly’s submission that the Judge effectively rewrote the will on fairness grounds which is what Katz J cautioned against in Ormsby v Van Selm.8

[38]   I return to the cases of Ian and Sheree. Ian is in his early sixties. His affidavit in support of his claim was brief. Ian has lived in Thailand for the last 20 or so years and has made his life there. Prior to the COVID-19 restrictions Ian returned to New Zealand regularly for two weeks or so a year. Ian referred to having bank accounts, a car and three motorcycles and said he receives NZD 2,300 a month in salary. Further detail was provided by Coralie and by Lance. Apparently Ian has approximately

$50,000 in the bank accounts he referred to. Relevantly, his wife owns the home they live in, but in his exchanges with Coralie he also referred to other property.

[39]   Ian has lived and worked in Thailand for the last 20 years. While his monthly income is limited in NZ dollar terms, there is no evidence about the cost of living in Thailand to suggest that he has a particular need for more.

[40]   The Judge’s reasons for finding a breach of the moral duty in respect of Ian are not convincing. She simply said there appeared to be no reason for Fred [sic] Ian being treated unequally to Lance other than the fact he lives overseas and was only able to call rather than visit his father. She noted his ability to visit his father in the two years prior to his death was impacted by the COVID-19 pandemic. However, the point is

7 At [21].

8      Ormsby v Van Selm. [2015] NZHC 2822 at [39].

that, as an adult Ian has chosen to live overseas for the last 20 years and has made his life in Thailand, including marrying and establishing a business there. The fact he has had limited personal contact or a close relationship with Fred over that long period is relevant, and provides a reason to distinguish his situation from that of Lance.

[41]   Next the Judge also suggested that by failing to recognise that, while Ian has accumulated capital assets with his wife in Thailand and has limited savings in New Zealand, COVID-19 would have impacted his business and income, Fred breached his moral duty to Ian. The Judge purported to take judicial notice of the effect COVID-19 would have had on his business. With respect she was not entitled to do so in the absence of evidence. The Judge’s reasoning on the point is speculative. The onus was on Ian to make out his case.

[42]   In Ian’s circumstances, the bequest in the will equating to $112,000 or just over six per cent recognised his place as part of the family, but took into account he had chosen to make his life in Thailand. He is married and his wife owns property there. He has an income and some savings. The evidence does not support a finding that he has any relevant needs which cannot be met from his and his wife’s resources. I consider the Judge was wrong to find that Fred breached his moral duty to Ian.

[43]   Sheree’s position is different. She is in her mid-sixties. The evidence establishes that, for whatever reason, her health has affected her ability to earn an income and will continue to do so. Sheree has no capital assets to draw on to provide security for her future. She and her partner receive a benefit. In the circumstances, I accept that the bequest of $112,000 was insufficient to meet Fred’s moral obligation to provide for Sheree’s needs.

[44]The issue then is whether the Judge erred at law in providing the amount of

$536,000 to address that breach. Her reasoning for doing so is limited, apart from referring to Sheree’s dire financial circumstances.

[45]   First the Judge suggested there seemed no reason why Sheree was treated unequally to Lance. But despite making that observation the Judge then went on to award Sheree $536,000 while leaving Lance’s share at $336,000 untouched.

[46]   The Judge next noted that while Sheree did not appear to visit her father regularly, she had previously contributed to Glenis’ care, which Fred had placed value on. However, that was over 20 years previously. The evidence was that Sheree’s contact with Fred over the last 20 years been limited.

[47]   There is more force in the Judge’s reasoning that Fred failed to recognise Sheree suffers from a health condition which has affected her ability to earn an income for herself and will continue to impact her ability to earn an income to adequately support herself for the rest of her life. Also as noted, Sheree has no capital assets to have recourse to. The much earlier provision of $10,000 to assist to purchase a car was insufficient.

[48]   I accept that Sheree is in need of support. As noted both she and her partner rely on a supported couples’ benefit as she is unable to work. She has no capital assets.

[49]   However, accepting that Sheree has need for further provision, the Judge’s award of $536,000 seems, with respect, to be inconsistent with the applicable principles and in error. It represents just under 30 per cent of Fred’s estate and completely rewrites Fred’s will in its effect.

[50]   In my judgment, an award equating to that of Lance, namely $336,000 would be sufficient to provide capital to provide for the maintenance and support of Sheree while complying with the direction in the authorities, that any increased award should be no more than is necessary to repair the breach by making adequate provision for the applicants’, in this case Sheree’s, proper maintenance and support.9 The $536,000 awarded by the Judge is excessive.

[51]   For the above reasons, and applying the above principles, I consider an award of $336,000 (or 18½ per cent of the estate) equating with Lance’s bequest is sufficient to address the breach in respect of Sheree.

9      Fisher v Kirby, above n 4, at [119].

Result

[52]   The appeal is allowed in part. The award of $336,000 in favour of Ian is set aside. The award of $536,000 in favour of Sheree is set aside and replaced with an award of $336,000.

Costs

[53]   The Judge made no award of costs. Coralie has succeeded in part on this appeal, but not entirely. I reserve the issue of costs on this appeal, but indicate that I consider a just outcome would be for the costs of all parties to this appeal to be borne out of the estate (recognising that Ms Crawford has represented all three respondents), and on the basis that Lance, Ian and Sheree should receive the sums of $336,000 (in the case of Lance and Sheree) and $112,000 (in the case of Ian) without deduction. However, if counsel cannot agree, I will deal with costs on the basis of an exchange of memoranda.

Venning J