Wilson v Saunders
[2016] NZHC 1211
•7 June 2016
IN THE HIGH COURT OF NEW ZEALAND INVERCARGILL REGISTRY
CIV-2016-425-000022 [2016] NZHC 1211
UNDER the Land Transfer Act 1952 IN THE MATTER
of an application under S 145A of that Act for an order that a caveat not lapse
BETWEEN
S A WILSON AND OTHERS Applicants
AND
R J SAUNDERS Respondent
Hearing: 30 May 2016 Appearances:
A C Ward for Applicants
G L Wilkin for RespondentJudgment:
7 June 2016
JUDGMENT OF ASSOCIATE JUDGE OSBORNE
as to lapsing of caveat
Introduction
[1] The applicants seek to sustain a caveat lodged against the title to an Invercargill property. They claim to be entitled as beneficiaries of a constructive trust arising from an arrangement between their father and stepmother to be effected through mutual wills.
Background
The family history
[2] The applicants’ father was Kenneth White (Ken). Through his first marriage, Ken had four children (the applicants in this proceeding). Ken separated from his
first wife in May 1979 and thereafter entered into a relationship with Patricia White
WILSON v SAUNDERS [2016] NZHC 1211 [7 June 2016]
(Pat). Pat had four children by a previous marriage, one of whom (Kelvin) predeceased her. One of her children, Raewyn Saunders (Raewyn), is executrix of Pat’s will and therefore respondent in this proceeding. Ken and Pat married in 1984. They owned their home in Nelson Street, Invercargill. Ken died on 29 July 2013. Pat died on 8 April 2015.
Ken and Pat’s mutual wills
[3] On 10 October 1984, Ken and Pat had made wills whose provisions corresponded or mirrored one another. Each left everything to the survivor but with the residue, if the other predeceased, to be divided amongst their surviving children in equal shares. Ken and Pat’s main asset at the time was the Nelson Street property, and it remained so.
[4] On 9 November 2011, Ken and Pat executed fresh wills. Their provisions again corresponded. Each left everything to the survivor but with the residue if the other predeceased them to be divided amongst their surviving children (at that point, seven) in equal shares (with a substitutory provision for the children of any deceased child). The 9 November 2011 wills were the wills in force when Ken died in July
2013.
Pat’s last will
[5] Pat’s last will was dated 15 August 2013, made some two weeks after Ken’s death (Pat’s will). By Pat’s will, she expressed the wish (not a direction) that Raewyn distribute personal effects in accordance with instructions Pat may have communicated to Raewyn. Pat then directed that the residue of her estate be distributed equally among her three surviving children. The two significant assets of Pat’s estate are the Nelson Street property (with an approximate value of $146,000) and bank accounts (with funds close to $22,000).
[6] Following Pat’s death in 2015, Raewyn contacted one of the applicants, Sandra Wilson (Sandra). Sandra uplifted some personal items relating to Ken. When Sandra was not further contacted as to the administration of Pat’s estate, she
obtained a copy of probate from the High Court. She then learned of the details of
Pat’s last will, including the exclusion of any provision for the applicants.
The recognition of mutual wills
[7] In New Zealand, there are two bases by which the commitment of two testators to make and maintain mutual wills may be given effect, namely:
(a) by recognition of an institutional constructive trust pursuant to the equitable doctrine of mutual wills; and
(b)in relation to wills signed on or after 1 November 2007, through a claim by the intended beneficiary on a promise in relation to mutual wills as provided for in s 30 of the Wills Act 2007.
The equitable doctrine of mutual wills
[8] In Lewis v Cotton, the Court of Appeal considered the equitable doctrine of mutual wills. The doctrine recognised that the executors and trustees of a will may be required to hold affected assets upon a constructive trust in terms of a revoked will.1 From Lewis v Cotton, and the authorities there referred to, the imposition of a constructive trust based on mutual wills has two fundamental requirements:
(a) There was an underlying consultation and coordination between two testators which resulted in an agreement or an arrangement as to how they would make their respective wills (which were then made).2 I will refer to this as the requirement for “corresponding wills”. Reference is sometimes made to “mirror wills” and, more ambiguously and confusingly, to “mutual wills”.
(b)There must have been a contract or mutual understanding (intended to bind each testator to a future cause of action) that neither testator
1 Lewis v Cotton [2001] 2 NZLR 21 (CA) at [42] per Blanchard J (delivering the judgment of the
Court).
2 At [46].
would revoke the will provision or deal with the property in a manner inconsistent with the provisions of the corresponding wills.3
[9] In addition to the above two requirements, there are requirements of proof and of evidence. The mutual understanding of the two testators:
(a) must be sufficiently certain in its terms that the Court can enforce the terms;4
(b)may be oral or in writing and may be contained in the wills themselves or proved by extraneous evidence,5 and may be proved either by express agreement or by conduct, such that that the mutual understanding may be implied;6
(c) does not require consideration in the usual sense;7
(d)is not established by the mere fact that the testators made corresponding wills;8 and
(e) is to be established on the ordinary civil standard (balance of probabilities) but is to be scrutinised, as a claim over the property of a deceased person, with very great care.9
Section 30 of the Wills Act 2007
[10] Section 30, Wills Act 2007 provides:10
30 Mutual wills
(1) This section applies when—
3 At [43], [46].
4 At [52]; In re Oldham; Hadwen v Myles [1925] Ch 75 (Ch).
5 Lewis v Cotton, above n 1, at [45].
6 At [23] – [30]; Birmingham v Renfrew (1937) 57 CLR 666 (HCA) at 682 – 683 per Dixon J.
7 Lewis v Cotton, above n 1, at [45].
8 At [46]; Gray v Perpetual Trustee Co Ltd [1928] AC 391 (PC) at 400.
9 Lewis v Cotton, above n 1, at [50]; Re Cleaver, Cleaver v Insley [1981] 1 WLR 939 (Ch) at 947.
10 Section 30, Wills Act 2007 applies to wills signed on or after 1 November 2007 – see s 40(2)(r) Wills Act.
(a) 2 persons make wills in which each—
(i) disposes of property on which the 2 persons have agreed; and
(ii) makes the disposition in a way on which the 2 persons have agreed; and
(b) each promises the other that he or she will not—
(i) revoke the will without making another will that keeps the agreement in the same or a better way; or
(ii) change the will in a way that fails to keep the agreement in the same or a better way; or
(iii) dispose, during his or her life, of some or all of an item of property that the will specifically disposes of; and
(c) the first of them to die (person A) keeps the promise; and
(d) the second of them to die (person B) does not keep the promise.
(2) A person who would have received a benefit from person B’s will if person B had kept the promise may claim from person B’s estate any part of the benefit that person B’s estate does not provide.
(3) The agreements referred to in subsection (1)(a), and the promise referred to in subsection (1)(b), may be made orally, in writing, or electronically.
[11] The authors of Garrow and Kelly Law of Trusts & Trustees make a number of observations as to s 30 including:11
(a) Section 30 largely reflects the common law but s 30(2) provides for a claim against person B’s estate which indicates a personal claim whereas the equitable doctrine is to focus more on proprietary claims;
(b) It is well established that claimants under the equitable doctrine of mutual wills can lodge a caveat under the Land Transfer Act 1952. It is not certain that this applies in respect to s 30 because of its emphasis on a personal claim.
(Footnotes omitted)
[12] To the extent the initial Garrow and Kelly observation suggests that the s 30
claim from person B’s estate of any part of the benefit may not, even where the
11 C Kelly and G Kelly (ed) Garrow & Kelly Law of Trusts & Trustees (7th ed, LexisNexis, 2013) at p 395,15.75.
relevant part of the benefit involves land, represent a caveatable interest, I doubt the accuracy of the authors’ conclusion. Section 30(1)(b) recognises that a mutual will may relate an “item of property”. If the item of property is land, and that is, in terms of s 30(2), “the benefit” which the beneficiary is entitled to claim from person B’s estate, there appears to be no basis on which to find the interest in that case to be less capable of protection than the beneficial interest arising by entitlement under the equitable doctrine.
The caveatability of the alleged interest in this case
[13] Both the 1984 and 2011 wills would have provided to the applicants an interest in residue. Raewyn, as executrix of Pat’s estate, included as one ground of opposition:
The interest claimed by the applicants is at best a trust over the residue of the estate and not an interest in the land that is capable of sustaining the caveat.
[14] Mr Wilkin primarily referred to the judgment of Priestley J in Fundel v Wall.12 In Fundel v Wall, as in this case, the corresponding wills (apart from some specific gifts of jewellery and investments) provided, in the event of the other spouse not surviving, that the residue of the estate be split between the children of the spouses’ earlier marriages. In short, what was provided was a share in residue and not an interest in a particular item of property.
[15] Priestley J found on the evidence that the applicants had established the existence of mutual wills.13 His Honour then dealt with the issue of the caveatability of a claimant’s interest. His analysis identified the crucial distinction between a commitment to leave a specific asset and a commitment to provision which “floats”, crystallising on the death of the survivor. His Honour reasoned:
[31] I now turn to the central issue of whether the obligations imposed on the respondent by the June 2005 documents are sufficient to create an equitable interest for the applicant sufficient to support a caveat. My clear view is that no such interest is created. The “floating constructive trust” (supra [26]) which, on respectable arguments, came into existence at the deceased’s death, does not attach to specific assets or indeed to in specie components of the deceased’s estate. Rather the trust attaches to the
12 Fundel v Wall (2009) 10 NZCPR 153 (HC).
13 At [30].
respondent’s assets at the date of his death. There is no evidence, as was present in Fazari v Cosentino, to suggest that the respondent is currently taking steps to avoid his obligations or reduce the size of his estate. The respondent’s clear obligations relate to the residue of his estate and in particular to his entitlement to the residue of the deceased’s estate. As I have already stated, the June 2005 documents do not single out the properties which are currently subject to the applicant’s caveat.
[32] For these reasons I am unattracted to Mr Hooker’s submission that the constructive trust created by the June 2005 documents creates a specific beneficial interest in the two relevant properties for the applicant which provide a proper foundation for a caveat.
…
[34] In Fisher v Mansfield [1997] 2 NZLR 320 Heron J agreed with a Master whose judgment he was reviewing that a caveat could be sustained in a situation where mutual wills had created an equitable interest in a former joint family home. The wills specifically identified the family home. On the authority of Birmingham v Renfrew the Judge considered the acceptance by the surviving spouse of the benefits under the will gave rise to an ongoing trust in favour of the first dying spouse’s grandchildren and that they thus had a caveatable interest in the specifically mentioned joint family home. Significantly the property was a specific asset, not residue.
[35] Highlighting the difference is the judgment of Anderson J, Bayer v Wiltshier (HC AK CP131/97 21 July 1998), again a case involving mutual wills where the deceased’s children endeavoured to protect their interests by way of caveats against two properties. The wills in question (unlike the situation in Fisher v Mansfield) gave interests in residue to the caveators. The properties were not specifically mentioned.
[36] His Honour stated, and with respect I agree with him;
The nature of equity’s supervision and intervention will depend on the nature of the obligations created and assumed by the makers of the mutual wills. Almost invariably these will be defined by the terms of the wills themselves. Where the parties intend that specific property will be left to the survivor who will dispose of that property in accordance with a mutual will, the trust will be impressed on such property, including in the hands of the survivor, to effectuate the mutual intent. Such a situation obtained in Fisher v Mansfield. Where, however, a survivor receives property in terms of mutual wills and the survivor’s mutual will provides that on the survivor’s death the survivor’s estate will devolve in a certain way, equity will impress a trust on that estate immediately upon the death of the survivor to enforce the mutual obligation. Birmingham v Renfrew was such a case. In this type of case equity will enforce the implied obligation of good faith between the mutual will makers so as to restrain, for example, in an attempt to avoid the prospective testamentary obligation by deliberate dissipation of the estate, including by way of inexplicable gifts to others. Also if a survivor revokes a mutual will, equity might make a declaration that the survivor’s property when determined at the point of death will be fixed with the trust in favour of an intended beneficiary. It will almost invariably be necessary for the terms of the mutual wills
themselves to be examined in order to define the obligations which equity will enforce. (citations omitted)
[37] His Honour was prepared to make a declaration confirming monetary legacies to the claimants which were specified in the mutual wills. He directed, however, that the caveats lodged against two properties had to be removed, for reasons which are obvious, from the above passage in his judgment.
[38] These authorities have been neatly and correctly summarised in Hinde, McMorland, and Sim Land Law in New Zealand (2008 LexisNexis) at 10.009(c).
Where the parties to mutual wills agree that on the death of one party specific property will be left to the survivor, who will in turn leave that property by will to the beneficiary, a constructive trust will, on the first party’s death, be imposed on the property in favour of the beneficiary. At that point the beneficiary therefore obtains an equitable interest in the devised property [Fisher v Mansfield [1997]
2 NZLR 230]. Where the devised property is Land Transfer land, or where the devised property can be traced into Land Transfer land, the beneficiary’s equitable interest will support a caveat [Fisher v Mansfield]. By contrast, where the mutual wills merely oblige the survivor to leave the residue of his or her estate to the beneficiary, the beneficiary has no interest in any specific property of the survivor, and therefore no caveatable interest in any Land Transfer land owned by the survivor [Bayer v Wiltshier HC AK CP131/97 21
July 1998, Anderson J, and McNamara v Mulqueeney HC AK M1355/02 14 March 2003, Master Sargisson].
[39] Relevant too in the area of caveatable interests flowing from wills is the Court of Appeal judgment in Guardian, Trust, and Executors Company of New Zealand Limited v Hall [1938] NZLR 1020, 1026:
The interest conferred upon the caveator by the will of his father was a right to a share in residue, and the residue was to be arrived at by sale, realization, and a discharge of liabilities. This process is not yet complete…. [T]he legatee of a share in residue has no interest in any of the property of the testator until the residue has been ascertained… his right is to have the estate properly administered and applied for his benefit when the administration is complete.
There were similar observations by McMullin J and Somers J respectively in
Holt v Anchorage Management Limited [1987] 1 NZLR 108, 114 and 117.
…
[42] … for the reasons I have stated, the interests of the applicant which arise out of the trust created by the execution of those mutual wills, do not create an equitable interest in either of the two properties against the titles of which the applicant’s caveat has been lodged.
[16] Fundel v Wall is a slightly unusual case in that the applicants brought their claim at a time when the surviving spouse was still living. The applicants were aware of the mutual wills arrangement and sought to protect their interests, pending
the surviving spouse’s death, by caveating the titles of two properties owned by the surviving spouse. In that situation, as Priestley J found, the constructive trust was still “floating” and had yet to crystallise.14 That would occur when the surviving spouse died if he disposed of his estate otherwise than in accordance with the mutual will.
The applicants’ case
[17] The interest claimed by the applicants is stated in their caveat in this way:
A Constructive Trust was created on the basis of a mutual agreement between the late Kenneth John White and the late Patricia Joy White to hold the assets on Trust for the named beneficiaries as per their mutual wills dated
9 November 2011. The final beneficiaries are Christine White, Barbara
White, Irene White and Sandra Wilson as children of the late Kenneth John White and Raewyn Joy Saunders, Sharon Van Baarlen and Gary Thomas Finlayson as children of the late Patricia Joy White in equal shares.
[18] The applicants invoke the equitable doctrine of mutual wills and assert also an entitlement to claim upon mutual wills pursuant to s 30 Wills Act. For the applicants, Mr Ward submits that it is reasonably arguable that the applicants have an interest as beneficiaries under a constructive trust as claimed in their caveat.
The applicants’ evidence
[19] The applicants’ evidence was provided by Sandra Wilson (Sandra).
[20] In this judgment, I will ultimately conclude that even were the applicants to establish that the wills of Ken and Pat qualify as mutual wills, such interest of the applicants as came into existence was not a caveatable interest in the Nelson Street property.15 That is sufficient to dispose of the application.
[21] On that basis, it is unnecessary that I embark upon a detailed analysis which would otherwise be required in this caveat-lapsing jurisdiction as to whether the applicants have a reasonably arguable case that they are beneficiaries of a
constructive trust in relation to the residual assets of Pat’s estate. Given that such
14 From [31].
15 See below at [35] – [41].
personal claims may be for consideration in another proceeding, I do no more than record the salient aspects of Sandra’s evidence which suggest that the applicants may have such a claim.
[22] Significant matters identified by Sandra’s evidence include:
(a) The Nelson Street property was and remained the main asset of Ken and Pat.
(b)Both their significant assets (the Nelson Street property and their savings) were held jointly so that full ownership would be taken by survivorship.
(c) Ken and Pat, during their marriage, made nothing other than corresponding wills.
(d) The 1984 wills were made shortly after Ken and Pat’s marriage.
(e) There was a significant bonding of Ken and Pat with their respective step-children and step-grandchildren, illustrated by Pat’s identification as “Mum” and “Nan”.
(f) Sandra had a discussion with Ken between August and October 2011 (before the execution of the November 2011 wills). Ken explained the intended replacement of the executor. He said that he and Pat would leave everything to the survivor who would in turn leave everything (other than personal items) to the children equally.
(g)Sandra continued to see Pat regularly after Ken’s death. Pat discussed her will with Sandra a number of times. Sandra deposes that Pat made it clear to her that the arrangement between Pat and Ken was to provide for all seven children equally. Sandra deposes that in early
2015, when the two were discussing a dispute which had arisen within another family, Pat said to her that they did not have anything to
worry about as her property would be divided seven ways when she died.
[23] The principal evidence in opposition was that of Raewyn. It contains a challenge to some of Sandra’s evidence. The differences are not capable of resolution in this jurisdiction.
[24] Sandra’s evidence deals with matters of the kind which have weighed with Courts in their assessment of mutual wills claims. Assessment of similar evidence occurred in Howard v Poulgrain16 and Henson v Gandar17 with interlocutory or substantive success for the claimants.
The applicants’ submissions
[25] For the applicants, Mr Ward submitted that in this case the rights of the beneficiaries under the constructive trust crystallised upon Pat’s death. Mr Ward necessarily accepted that the applicants’ claim was not of the Fisher v Mansfield type of case in which the subject-matter of the promise under the mutual wills was specified land. But Mr Ward submitted that, although the subject-matter of the corresponding wills in this case was the residue, the principled approach in cases such as Fundel v Wall is equally inapplicable because there has now been a crystallisation of interest.
[26] Mr Ward observed that Pat still owned the Nelson Street property at her death; the statement of assets and liabilities prepared by the estate’s solicitors shows sufficient cash reserves to meet all estate liabilities without resort to the Nelson Street property; and the “executor’s year”, which represented a reasonable period in which Raewyn could get in the assets and deal with liabilities, has expired.
[27] In these circumstances, Mr Ward submitted, the applicants’ interest crystallised as an interest (as to a share) in the Nelson Street property. Matters such as partition or sale of the property are able to be dealt with between the co-owners
under the Property Law Act 2007 or otherwise.
16 Howard v Poulgrain HC Hamilton CP 10/00, 9 March 2001.
17 Henson v Gandar [2016] NZHC 841.
Application that caveat not lapse – the general principles
[28] In order to properly consider Mr Ward’s submission, I adopt the following
general principles on caveat-lapsing proceedings:
(a) the burden of establishing that the applicant has a reasonably arguable case for the interest claimed is upon the caveator;
(b)the caveator must show an entitlement to, or beneficial interest in, the estate referred to in the caveat by virtue of an unregistered agreement or an instrument or transmission, or of any trust expressed or implied;18
(c) the summary procedure involved in an application of this nature is wholly unsuitable for the determination of disputed questions of fact. An order for removal of the caveat will not be made unless it is clear that the caveat cannot be maintained either because there was no valid ground for lodging it or that such valid ground as then existed no longer does so;
(d)when an applicant has discharged its burden there remains a discretion as to whether to remove the caveat, which will be exercised cautiously; and
(e) the Court has jurisdiction to impose conditions when making orders.
Discussion
[29] Mr Ward’s submissions, based upon the concept of the “floating constructive trust” referred to in Fundel v Wall and the “crystallisation” concept which is a part of Priestley J’s analysis, effectively confuse two different concepts of crystallisation.
[30] The first of those concepts is that which Priestley J considered in Fundel v
Wall. It is the crystallisation of an interest which has previously “floated”. The
18 Land Transfer Act 1952, s 137.
interest floated because, even under the arrangement of mutual wills, the surviving spouse was to have, for their personal benefit, rights of use and sale of the property. Those rights were recognised by the Court of Appeal in Lewis v Cotton where the Court of Appeal had stated:19
[51] Where the survivor is given the use of property under the mutual will of what in some early cases is quaintly called the first dier, it may be implicit that the survivor, though bound to bequeath the property in terms of the mutual will, may be taken to have agreed only to pass on what he or she has not sold, expended or consumed, provided that he or she does not act so as deliberately to defeat the purposes of the arrangement. This has been described in Birmingham v Renfrew by Dixon J (at p 689) as a “floating obligation” which crystallises on the death of the survivor.
[31] The authorities referred to recognise that the relevant crystallisation (that is, the attaching of the trust to the subject-matter of the mutual wills) occurs upon the death of the survivor when his or her personal need in relation to the assets ceases.20
[32] Mr Ward accepted that the attaching of the constructive trust to the assets comprising the survivor’s residuary estate, as recognised in Fundel v Wall and the other cited authorities, is insufficient to support a caveat against specific property. But Mr Ward places emphasis on the fact that Pat retained to her death the Nelson Street property and that Raewyn, as executrix, appears to be able to discharge estate liabilities without the sale of the Nelson Street property. Mr Ward submits that the applicants’ interest may now be said to have crystallised as an interest in the Nelson Street property.
[33] Mr Ward recognised that such attachment would occur not at the point of crystallisation identified in Birmingham v Renfrew and Fundel v Wall (the date of the survivor’s death). Rather he submits that the posited event of attachment to specific property arose in this case when Raewyn, as administratix of Pat’s estate, completed her role as administrator and became trustee.
[34] Mr Ward referred to judgments of the Court of Appeal which recognise the legal significance and consequences of the transition from executorship to
19 Lewis v Cotton, above n 1.
20 The English Courts have similarly adopted the “floating trust” concept: see Re Goodchild (dec’d) [1996] All ER 670 (Ch) at 676; affirmed in Re Goodchild (dec’d) [1997] 3 All ER 63 (CA).
trusteeship.21 The point recognised in those authorities was made by Callan J, delivering the judgment of the Court of Appeal in Guardian, Trust, and Executors Company of New Zealand, Ltd v Hall:22
The interest conferred upon the caveator by the will of his father was a right to a share in the residue, and the residue was to be arrived at by sale, realization, and a discharge of liabilities. This process is not yet complete … [T]he legatee of a share in residue has no interest in any of the property of the testator until the residue has been ascertained, and … his right is to have the estate properly administered and applied for his benefit when the administration is complete.
Discussion
[35] The argument that the applicants’ beneficial interest has attached to the
Nelson Street property must fail for two reasons, one factual and one legal.
[36] Factually, it is not arguable in this case that the administration of Pat’s estate is complete. Raewyn is responsible as executrix to get in the estate assets, identify and deal with debts and adverse claims (including any taxation liabilities), and to effect distribution of the net estate.
[37] There is a telling passage in Sandra’s evidence where she identifies precisely the explanation which her father gave her in 2011 as to the will arrangements he had put into place with Pat. Sandra deposes that Ken had explained that the wills were straight-forward. She quotes him as saying:
… they would leave everything to each other, and on the second person’s debt Pat’s personal items would go to Pat’s children, and everything else would be sold and divided between his and Pat’s seven children equally.
(emphasis added)
[38] The understanding of the arrangement conveyed by Ken to Sandra was as provided in the 1984 and 2011 wills. The children would take a share of the residue, arrived at after Pat had “sold and divided” everything else. Implicitly, Pat’s executor in that process would deal with the estate’s indebtedness before effecting a division
of the residue.
21 Guardian, Trust, and Executors Company of New Zealand Ltd v Hall [1938] NZLR 1020 (SC) at
1026; Holt v Anchorage Management Ltd [1987] 1 NZLR 108 (CA) at 114 and 117.
22 Guardian, Trust, and Executors Company of New Zealand, Ltd v Hall, above n 21, at 1026.
[39] The caveat and this litigation represent adverse claims which are yet to be resolved. The outcome of the caveat lapsing proceeding will not of itself resolve substantive issues. The executrix will incur costs for the estate which are likely to increase the estate’s liabilities. Mr Ward’s submission contains the assumption that, at the point of completion of an administration which allows the clearance of estate indebtedness without resort to the Nelson Street property, the applicants would have a beneficial interest specifically in the Nelson Street property. Even were that assumed as a matter of law to be correct (which it is not – see [40] below) such a point has not been reached. The administration of the estate is incomplete. The applicants at this point can have no interest in the caveated land. Their position is no
higher than that of the claimants in Fundel v Wall and Bayer v Wiltshier.23
[40] Secondly, and as a matter of law, any underlying trust which arose between Pat and Ken (or their successors) would be at most a trust in relation to the residuary estate. The executrix has her responsibility to get in the assets, settle debts and to distribute any residue. On the assumption that the applicants might in due course establish the applicability of the doctrine of mutual wills, the executrix will fully discharge the mutual commitment of the testators by distributing the residuary estate in the proportions established under the 1984 and 2011 wills. The commitment of Ken and Pat to one another, on a mutual wills approach, was in relation to residue. The estate is intact and its residue will become available for distribution. There is no basis upon which equity might seek to substitute a share in particular assets for any committed share in residue. As a matter of law, the testators vested in their administratix the responsibility and discretion of selling and converting property and paying debts in order to effect a division of residue.
[41] Mr Ward’s suggestion that partition or sale under the Property Law Act would provide a means by which seven co-owners of the Nelson Street property might resolve matters of future ownership reinforces the inappropriateness of any conclusion that the testators gave one another an enforceable commitment to have their children share in specific property rather than the residue. Under the provisions of the corresponding wills, the executrix was to have the ability promptly to realise
the Nelson Street property and other assets, to meet debts, and to distribute the
23 Bayer v Wiltshier HC Auckland CP 131-97, 21 July 1998.
residue. The spectre of beneficiaries bringing partition or similar proceedings (as an alternative to Pat’s executor converting the assets into cash and distributing the residue) was not within the contemplation of the testators, either in terms of their corresponding wills or in terms of any arrangement explained by Ken and Pat to Sandra.
Outcome
[42] The applicants do not have a reasonably arguable claim to a beneficial interest in the Nelson Street property. The application for an order that the caveat not be removed must fail.
Costs
To follow the event
[43] Counsel addressed me briefly as to costs at the conclusion of the hearing. Both accepted that costs should follow the event.
Increased costs
[44] For the respondent, Mr Wilkin submitted that the respondent, if successful, might reasonably be entitled to increased costs. Mr Wilkin noted that, at an early point, he had identified to Mr Ward the decision in Fundel v Wall.24 Implicitly, Mr Wilkin relied upon r 14.6(3)(b)(iii) High Court Rules. That sub-rule allows the Court to order the payment of increased costs where a party without reasonable justification fails to accept a legal argument.
[45] I am not satisfied, by reference to the early disclosure of relevant authorities, that it would be appropriate to categorise the applicants’ pursuit of their argument as not reasonably justified. For the reasons I have identified, Fundel v Wall is a
relevant authority but it is not an authority conclusively against the applicants’ case.
24 Fundel v Wall, above n 12.
Items of cost
[46] There is, however, one circumstance which has added unnecessarily to the attendances required in this proceeding, which I am satisfied should be justly brought into account in the Court’s costs order. It relates to the affidavit of Raewyn Saunders.
[47] In her affidavit, Raewyn stated that a lot of what was said in Sandra’s affidavit did not relate to the claim about the caveat. Raewyn is in fact incorrect. Sandra’s 19 paragraph affidavit was responsibly confined to points relevant to the applicants’ legal case.
[48] Regrettably, Raewyn having made her assessment of the relevance of
Sandra’s affidavit, continued:
While I have been told that most of my answers to Sandra’s affidavit are also off the point of the application I feel that I have to respond in some detail to the allegations made.
[49] In the remainder of her affidavit, Raewyn embarks on a mixture of some relevant material and substantial passages of irrelevant allegations. The irrelevant allegations include scandalous and tendentious observations which ought not to have been included. Some of the content of Raewyn’s affidavit rendered it such that the Court might properly have refused to read it, pursuant to r 9.76(2) High Court Rules. Alternatively, the Court might simply have struck out the affidavit, following the
Court’s approach on previous occasions.25
[50] Raewyn’s introductory comments to the evidence which followed should have made it clear both to her and counsel that the affidavit ought not to be have been completed and filed in that form. The affidavit was nevertheless filed. Sandra Wilson and her counsel were required to consider it for possible reply. Responsibly, Sandra’s reply affidavit was limited to replies to four particular paragraphs in
Raewyn’s affidavit. Sandra concluded her affidavit by recording that she had been
25 Re Mulcock (dec’d) HC Christchurch M362/88, 1 September 1989; Hero Sportswear Ltd v
Underground Fashions Ltd (1997) 10 PRNZ 655.
advised by her solicitor that it would not be appropriate to answer other allegations as they did not relate to the caveat issue.
[51] On filing her opposition and supporting affidavit in response to an originating application, the respondent would normally have been entitled (under item 38, sch 3, High Court Rules) to an allowance (under band B) of two days. It is appropriate and just in this case that the respondent be allowed, under Item 38, only one day.
Outcome on costs
[52] The applicants should otherwise appropriately pay costs on a scale basis.
Access to documents
[53] Having regard to the content of Raewyn’s affidavit, it is also appropriate that there be an order precluding access to Raewyn’s affidavit without a Court order.
Orders
[54] I order:
(a) The application dated 23 February 2016 is dismissed;
(b) The Court’s interim order dated 1 March 2016 is rescinded;
(c) No-one may inspect the affidavit of Raewyn Joy Saunders sworn 17
March 2016 without an order of the Court;
(d)The applicants are to pay to the respondent the costs of the proceeding which I fix on a 2B26 basis together with disbursements to be fixed by the Registrar, but with the allowance for item 38, sch 3 High Court
Rules, to be one day instead of two days.
Solicitors:
Ward Adams Bryan-Lamb, Invercargill
AWS Legal, Invercargill
Associate Judge Osborne
26 High Court Rule, Category 2 under r 14.3(1) and band B under r 14.5(2).
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