Ipsofactoj.com: International Cases [2001] Part 5 Case 6 [NZCA]


COURT OF APPEAL, NEW ZEALAND

Coram

Williams

- vs -

Aucutt

RICHARDSON P

GAULT J

KEITH J

BLANCHARD J

TIPPING J

20 APRIL 2000


Judgment

Richardson P

(delivered the joint judgment Richardson, Gault, Keith & Tipping JJ)

  1. This appeal is against a judgment of Heron J delivered in the High Court at Nelson on 18 June 1999 ordering further provision out of the estate of Lilian Beatrice Henderson in favour of her daughter Mrs Susan Mary Aucutt under s 4 of the Family Protection Act 1955. The appellant, Mrs Christine Craig Williams is the only other child of the deceased and the primary beneficiary under the will. It is convenient to refer to the two sisters as Susan and Christine.

  2. Section 4 provides:

    (1)

    Notwithstanding anything to the contrary in the Administration Act 1969, if any person (in this Act referred to as the deceased) dies, whether testate or intestate, and in terms of his will or as a result of his intestacy adequate provision is not available from his estate for the proper maintenance and support thereafter of the persons by whom or on whose behalf application may be made under this Act as aforesaid, the Court may, at its discretion on application so made, order that such provision as the Court thinks fit shall be made out of the estate of the deceased for all or any of those persons.

  3. The special feature of the case is that Susan did not claim any present or possible future economic need for maintenance and support. Rather, her claim was and is that she deserved greater provision than was made for her under the will to recognise that she belongs in the family and to recognise her position in the overall life of her mother and the contribution she made in that respect.

    BACKGROUND

  4. Mrs Henderson died on 3 January 1996, aged 88 years. Her husband, whom she had married on 11 March 1936, had died on 23 June 1975, leaving her his estate. On their marriage they lived in Batavia but he was taken prisoner by the Japanese and the family was not reunited until after the war. He worked for an international telecommunications company in Hong Kong, Manila, Malta and, for many years, in Singapore. He and his wife retired to New Zealand in 1967 after 3 years in Malta and built their home at Upper Moutere, near Nelson, known as "Duncraig".

  5. Susan was born on 24 August 1937 and married on 4 July 1959 in Singapore, where she and her husband and family lived until they moved to Nelson in 1979. Her husband, a successful businessman, retired around 1995. They have three sons who were 36, 34 and 25 in 1996.

  6. Christine was born on 7 November 1946 and married her husband, a US citizen, on 20 March 1972. They have lived in Australia since then and have two sons, born on 15 February 1987 and 19 November 1989.

  7. It is well settled that whether there has been a breach of duty to make adequate provision under s 4 is customarily decided as at the date of death and in deciding how any established breach should be remedied regard is had to later events and thus including changes in asset values and financial and personal circumstances up to the date of hearing.

  8. The first inquiry, whether there has been a breach of duty, obviously requires details of the estate and of the financial positions of the claimants and beneficiaries under the will, all as at the date of death. Regrettably, the details provided by the executors are not adequately focussed on that date, which is a matter of some importance. In their affidavit of 6 December 1996, 11 months after the date of death, the executors, a Nelson solicitor and a Nelson barrister, referred to assets know to them at that time under four heads: the house property with a Government Valuation as at 1 September 1993 of $320,000; household contents with a valuation on 14 February 1996 of $231,000, on call and fixed deposits of $115,846; and shares as at 30 November 1996 — 15,622 BHP shares A$281,508, 1,744 CSR A$6,993, and two small shareholdings in overseas companies totalling some $2,000. There is no evidence as to the actual value of the house property as at the date of death, the Government Valuation as at 1 September 1996 was $372,000 and as at 1 September 1999 $405,000. Valuations by different registered valuers were $400,000 to $450,000 as at 6 July 1998 and $480,000 as at April 1999. A valuation by Dunbar Sloane Ltd of the contents dated 13 September 1997 gives market values totalling $116,290 and insurance values $226,945. The estate income for the 11 months up to 6 December 1996 is not identified, but is presumably included in the deposits and in any shares representing reinvestment of dividends.

  9. On a necessarily broad approach, given those data limitations, the total estate as at the date of death amounted to around $920,000. That represents some $380,000 for the house (reflecting the increase in the Government Valuations between September 1993 and September 1996 and with some allowance to recognise the higher than Government Valuations valuations in 1998 and 1999); $120,000 for the market value of the contents; and $420,000 for the deposits and shares (allowing as a deduction 5 percent in respect of the deposits and shares to reflect income, and simply converting the 30 November 1996 share values to New Zealand dollars at $NZ1 = A$0.9).

  10. Referring to Christine's position as at the date of hearing, Heron J observed that on any measure her assets were modest, and there is nothing to suggest a change of any significance in the 3½ years since the date of death, or for that matter up to the present. She owns a section of land valued at approximately $100,000 purchased in 1987 with a gift of $60,000 from her mother, but subject to a mortgage, and she has an old motor vehicle and a conventional amount of furniture and fittings. She put her net worth at $78,000. They have rented a small flat in Melbourne for over 20 years. She has an Honours degree from the University of London and occasionally works part-time. Her husband is a self-employed designer of furniture and children's books and has an after tax income of $A32,000. The children are home schooled and aspirations for their secondary and tertiary education would involve substantial fees and expenditures.

  11. Heron J accepted that the assets of Mr and Mrs Aucutt, as disclosed by Mrs Aucutt, were worth close to $1 m. There was substantial argument in the High Court and some discussion in this Court as to whether there had been full disclosure. The Judge considered there might be some basis for that criticism but did not think any increase in the value of her position was likely to be decisive. There is no suggestion of huge wealth and given the basis on which Susan's claim proceeded, and in particular her acceptance that she was not advancing economic need, present, in the foreseeable future or to cover contingencies, and that her claim for family recognition could be made without impinging on Christine's wider claims, it is unnecessary to discuss Susan's financial position any further.

  12. It was common ground in the High Court that the estate was then worth approximately $1 m.

    THE WILL

  13. By her last will dated 17 February 1992 the deceased devised her residence to Christine and made a considerable number of bequests and legacies. To Susan she bequeathed her CSR shares, a painting by John Gully and a number of specific articles, including a 17-piece Worcester 1807 period teaset. Each of the five grandsons received a specified chattel or chattels of family significance and a legacy of $1,000 subject to abatement if the residue was not sufficient. Christine received a Hoyte painting, a large list of specified chattels and the contents of the residence other than those specifically disposed of, plus all shares owned at the death other than the CSR shares.

  14. The will contained the conventional direction to the trustees to pay duties and testamentary expenses, including estate duties payable in connection with her estate — although the abolition of estate duties had been signalled by the National Government, that legislation was not passed until 17 December 1992; and the residue went to Christine.

  15. Paragraph 9 of the will provided:

    I DECLARE that this my Will makes greater provision for my daughter Christine than for my daughter Susan not because of any lack of affection for my daughter Susan but because I consider that my daughter Christine's financial position is much worse than that of my daughter Susan who is well provided for from other sources and it was the wish and intention of my late husband that Christine's greater need be recognised.

  16. There was a similar provision in her previous will of 25 October 1988. That will also contained specific bequests to Susan of the CSR shares and of a lesser list of specified items, not including the Worcester teaset, and including the Hoyte rather than the Gully painting. And the then born grandsons received specified articles and legacies subject to abatement. The testatrix's handwritten instruction notes for the 1988 will that there should not be any estate duty, the estate being less than the $450,000 beyond which duty attached.

    FAMILY RELATIONS

  17. The affidavits filed in support and in opposition to Susan's claim rake over the family history and relationships and the respective involvements of Susan and Christine with their mother, with Susan and Christine criticising each other's performance in various respects.

  18. Referring to the earlier years, the Judge summed up the position in this way:

    Whilst the sisters between them disagree on some details, the overall picture is much the same. Both girls it seems to me were provided with educational opportunities by their parents. Whether they were taken up by them to the fullest extent is not important. It seems to me that in that part of their life their father and mother were dealing with them on an equitable basis and I can see nothing in the evidence to suggest anything different.

  19. Then, referring to the later years after 1979, when the Aucutts moved from Singapore to Nelson and Christine was keeping in touch with her mother and visiting from time to time from Australia, the Judge accepted that the closeness between Susan and her mother was not as great at the end of the deceased's life as in the earlier Nelson years, in particular, with the mother's decline in health and determination to live on in her own home. On his assessment of the evidence Heron J concluded that both of the sisters were dutiful daughters laying emphasis on different matters, Christine concerned about keeping her mother within her home which was obviously her wish and Susan considering the practicalities of it and also the management of her financial affairs. And:

    In the end, based on the medical evidence that I have seen, plainly she [the mother] was unable to manage her financial affairs and some formal steps had to be taken. For my part it seems that both daughters are to be congratulated on the extent of the attention they gave to this matter, although undoubtedly Christine gave more direct assistance in the last few years but that cannot overlook the degree of support and comfort and reassurance that Susan presented by virtue of her being in Nelson close by at times when Christine was in Australia .... whilst there was undoubted disagreement as to the manner and method as to the treatment of their mother, both daughters had acted with the best motivation .... This case is concerned with the respective positions of the two daughters in relation to their mother as will maker which it seems to me have not been seriously challenged by any form of disentitling conduct. To the contrary it seems both daughters have rendered services in different but creditable ways.

  20. There was no substantial challenge to those findings and having had an opportunity to read all the material in the case on appeal we do not depart from or wish to add to the Judge's conclusions in that respect.

  21. Finally, the Judge referred to submissions as to the testator's awareness of the net worth of her estate:

    Certainly from 1994 onwards there was clear evidence of a lack of full mental capacity, but even at the time of her 1992 will, a gift of $1,000 to each grandchild was only made subject to there being sufficient in the estate and to otherwise abate. Furthermore it seems that the deceased thought her house property was her most valuable asset and spoke of Australian shares of no great value but subsequently discovered to be worth close to a quarter of a million dollars. The chattels which had been insured for $20,000 at the time of her death were subsequently reinsured for $231,000 once the executors became aware of their true value.

  22. That last reference to true value should not be taken as a finding that the chattels had a market value of $231,000. The judgment later approved of a proposal to value the chattels in accordance with the Dunbar Sloane valuation. And the abatement provision in the will had been carried through from the 1988 will, and perhaps prior wills which the solicitor had prepared. It was the solicitor who said that when making the 1992 will he believed the house property was her most valuable asset. While she spoke to him then as if the Australian shares were of no great value, she specifically bequeathed the CSR shares to Susan as she had in 1988 when her handwritten instruction added with reference to what was to go to Susan "not BHP shares", and the solicitor knew she had some chattels by which she placed great store - as evidenced by the care she took in making the specific bequests to Susan and Christine and the grandsons.

  23. Against that background we turn to consider the Judge's reasons for finding a breach of duty and the remedial orders he then made.

    HERON J'S CONCLUSIONS

  24. Referring to the disparities in the financial position of the sisters the Judge said it was plain that the testatrix was entitled to distinguish between the two of them based on that ground alone. The question was whether the difference that she made was an appropriate one for a just and wise testatrix to make.

  25. After citing what he described as the conventional authorities of Little v Angus [1981] 1 NZLR 126 and Re Leonard [1985] 2 NZLR 88 he continued:

    I am clearly of the view that there is a breach of moral duty in this case. The history of this family cannot be overlooked. It seems to me that both daughters and their respective children would have brought great joy to their mother .... Susan was the undoubted support and mainstay for her mother for a continuous period of time in Nelson, in the years following her husband's death and before her death. Likewise Christine took over that role in 1995 and undoubtedly performed it excellently and in a manner that I find Susan could not and would not have necessarily done.

    The assets comprise a large number of valuable chattels and represent to some extent the history of this family and it would seem inappropriate that but a small number should be the final reward for Susan in this case. It seems to me that the testatrix was in breach of her moral duty to her albeit well off daughter to recognise the contribution that she had made over this period of time. The estate in my view even by modern standards is a large one .... There is ample in the estate to provide for Christine recognising her limited circumstances and future needs.

    Furthermore, I consider that the deceased was probably unaware of the extent of her estate and possibly laboured under a misapprehension as to how much she could provide.

    He concluded:

    The primary breach of moral duty in this case is the failure to recognise the position of Susan in the overall life of the deceased and the contribution that she made in that respect. That was a serious breach of moral duty in my view and it cannot be outweighed by the obvious claim to the estate as the testatrix saw it so far as Christine was concerned.

  26. Counsel for Susan had urged a one-third:two-third split as between Susan and Christine. Without expressing his reasons for rejecting that submission and for his final conclusion the Judge ordered that Susan was entitled to further provision from the estate by way of a share of the residue of the estate, which was to include the house property, the shares and the chattels, to the extent of 25 percent and that Christine was entitled to the balance of 75 percent.

    SUBMISSIONS FOR THE APPELLANT

  27. On the argument of the appeal Mr MacKenzie submitted that the Judge erred in principle in five respects. The first was in stating the question for the Court as being whether the difference the testatrix made between Susan and Christine, recognising the disparities in their financial position, was an appropriate one for a just and wise testator to make (para [24]). The inherent proposition that any differences in disposition and their extent must be justified was wrong. The second was that the Judge had failed to consider whether Susan had established a need for proper maintenance and support. While need was not limited to a narrow economic basis and moral and ethical considerations were to be taken into account, it must be shown that in a broad sense the applicant had need of maintenance and support. Here, Mr MacKenzie said, the findings of Heron J (para [25]) were inconsistent with a conclusion that she had demonstrated need. The third was that the Judge's conclusion that there was ample in a reduced share in the estate to meet Christine's needs, overlooked that Christine's entitlement was established by the will and it was for Susan to demonstrate a breach of duty to her, Susan. The fourth and associated submission was that the Judge erred in holding that this was a large estate in present day terms. It was not large in itself by today's standards and in relative terms was not more than sufficient to meet the "needs" of both. The fifth was that the Judge erred in holding that Susan was entitled to provision from the estate based on contributions she had made over a period of time. He submitted that the statutory focus was on the need for maintenance and support, not on rewarding for services.

  28. While not contending for a radical change in the approach to the exercise of the s4 jurisdiction to conform with the statutory proposals of the Law Commission in its recent report, Succession Law, a Succession (Adjustment) Act, Report 39E 31AB, August 1997, he drew attention the concerns expressed in the report over contemporary decisions under s4 imposing moral duties to provide for adult children irrespective of financial position (Report, paras 30-35 and 72-77).

  29. It was also submitted that, if the claim to further provision was made out, that provision ought to have been less than was awarded and in money not a share of the residue including the house property and contents.

    SUBMISSIONS FOR THE RESPONDENT

  30. Mr Downing emphasised the nature of the appeal and submitted that Heron J had not erred in principle in exercising the broad discretion reposed under s 4 and that it could not be said that he was plainly wrong in his conclusions. Mr Downing submitted that financial need cannot be elevated to a prerequisite before a breach of moral duty can be considered by the Court. The test is whether adequate provision has been made for the proper maintenance and support of the claimant. What is "adequate" and what is "proper" are relative inquiries not confined to financial considerations. Here, he submitted, Susan had a justifiable expectation or need for recognition from her mother that she was a dutiful daughter, for family heirlooms and family inheritance to be passed down from generation to generation and for "a fair distribution amongst the family members".

  31. The estate, he submitted, was a large estate, large enough to enable the testatrix to fulfil her moral duties to each of her two daughters. The statutory inquiry involved an assessment of all circumstances and contemporary expectations and the necessary value judgments were for the discretionary evaluation of the trial Judge. By dividing her large estate (excluding gifts to grandsons) 95 percent to one daughter and 5 percent to the other, the testatrix acted unwisely, unjustly, and contrary to community expectations.

  32. Finally, he submitted, the Judge was entitled, once he had decided there was a breach of moral duty, to award Susan 25 percent in lieu of the 5 percent under the will.

    FAMILY PROTECTION ACT CLAIMS: GENERAL PRINCIPLES

  33. The original 22 line Testators Family Maintenance Act 1900 was the first family provision legislation in the common law world providing restraint on testamentary freedom. Testamentary freedom remains except to the extent that there has been a failure to make proper provision for the maintenance and support of those who are seen at the date of death as entitled to such maintenance and support. The statutory scheme gives the Court a wide discretion in making that determination. Similar legislation followed in the Australian States and Territories and in Canadian Provinces and eventually in 1938 in the UK (see de Groot and Nickel, Family Provision in Australia and New Zealand (1993) paras 104-106).

  34. For many years the immediate reference point in family protection cases has been the judgment of this Court in Little v Angus [1981] 1 NZLR 126. It was an oral judgment. It was not a response to any argument as to the principles that ought to be applied under s 4. It did not involve reconsideration of earlier cases. Rather, it sought to summarise well settled principles applied by the Courts and so to avoid or reduce the need for Judges and practitioners to traverse a large number of cases decided over the years. And while there have been numerous cases in this Court and the High Court since 1981 in which particular points have been discussed, this Court has not had occasion to review those principles.

  35. The summary statement in Little v Angus at p 127 reads:

    The principles and practice which our Courts follow in Family Protection cases are well settled. The inquiry is as to whether there has been a breach of moral duty judged by the standards of a wise and just testator or testatrix; and, if so, what is appropriate to remedy that breach. Only to that extent is the will to be disturbed. The size of the estate and any other moral claims on the deceased's bounty are highly relevant. Changing social attitudes must have their influence on the existence and extent of moral duties. Whether there has been a breach of moral duty is customarily tested as at the date of the testator's death; but in deciding how a breach should be remedied regard is had to later events. Experience in administering this legislation has established the approach in this Court that on an appeal the Court will not substitute its discretion for that of the Judge at first instance unless there be made out some reasonably plain ground upon which the order should be varied. All this is so familiar that authorities need not be cited.

  36. The reference there to changing social attitudes is also reflected in the observation at p 128 that the claims of married daughters were to be approached somewhat more liberally than in the past. Similarly, and contrary to earlier cases, the Court in Re Wilson [1973] 2 NZLR 359 considered that adequate provision for widows was not to be restricted to income and could extend to capital sums. As McCarthy P said at 362, ".... the Family Protection Act is a living piece of legislation and our application of it must be governed by the climate of the time".

  37. Re Leonard [1985] 2 NZLR 88, 92 follows on from Little v Angus and emphasises that mere unfairness is not sufficient and that it must be shown in a broad sense that the applicant has need of maintenance and support:

    The question of whether the testator was in breach of his moral duty to his daughters as claimants on his bounty must be determined in the light of all the circumstances and against the social attitudes of the day. Mere unfairness is not sufficient and it must be shown that in a broad sense the applicant has need of maintenance and support. But an applicant need not be in necessitous circumstances: the size of the estate and the existence of any other moral claims on the testator's bounty are highly relevant and due regard must be had to ethical and moral considerations, and to contemporary social attitudes as to what should be expected of a wise and just testator in the particular circumstances.

  38. The expression "moral duty" does not appear in s 4 but it is implicit in the inquiry that the section requires; and its use by Salmond J in Re Allen, Allen v Manchester [1922] NZLR 218, 220 was endorsed by the Privy Council in Bosch v Perpetual Trustee Co Ltd [1938] AC 463 at 479. The judgment of the Privy Council also emphasised that "proper" connotes something different from "adequate" and that the amount to be provided is not to be measured solely by the need of maintenance which would be so if the Court were concerned merely with adequacy.

  39. Similarly, in Re Harrison [1962] NZLR 6 all three Judges emphasised the breadth of the statutory inquiry.

    Gresson P said at p 13:

    The ‘need’ of an applicant, or rather his or her needs — the plural form is I think preferable — cannot be considered in vacuo. What has to be assessed are the merits of the claim having regard to the applicant's circumstances as at the date of death of the testator; relations between the testator and the applicant in the past; and the extent of his estate and the strength of other claims.

    And he went on to observe that there could be a moral obligation to make a provision for a daughter or indeed a son, even if that child was comfortably situated financially. North J at p 15 noted that in earlier days the Courts may have been inclined to place undue emphasis on economic considerations, and therefore gave insufficient weight to moral or ethical considerations, and after referring to Bosch posed the question as being whether, having regard to all relevant matters, the testator has been shown to have been guilty of a breach of his moral duty to make adequate provision for the proper maintenance and support of the applicant. And Cleary J concluded at p 18 that the judgment appealed from attached rather too much importance to the needs of the appellant when considered in the light of economic factors only, and somewhat too little weight to the merits of her application when assessed in the light of the moral and ethical factors that enter into the determination of what is "adequate provision .... for the proper maintenance and support" of an applicant under the Family Protection Act.

  40. Finally, it is common following Re Allen to speak of two classes of estate. The first and by far the most numerous class consists of those cases in which, owing to the smallness of the estate and to the nature of the testamentary dispositions, the applicant is competing with other persons who also have a moral claim upon the testator (p 221). The second is where, owing to the largeness of the estate or the nature of the testamentary dispositions, the applicant for relief is complaining not of the unjust distribution of an inadequate fund among dependants, all of whom had a moral claim upon the testator, but of the failure of the testator to make out of the abundance of his or her resources a provision sufficient for the proper maintenance of the claimant (p 222). Applying the Consumer Price Index to the two estates referred to, Re Allardice (1910) 29 NZLR 959, considered by Salmond J to be in the first class, an estate of £20,000 is in present day terms equivalent to $2 m, and Re Allen, an estate of £80,000 and said by Salmond J to be clearly in the second class, is equivalent to $8 m today.

  41. It may be worthwhile to check external yardsticks before characterising estates as large. However, it is also important to keep in mind that the assessment is not simply of the absolute size of the estate but, as emphasised in Re Allen and numerous subsequent decisions, is also relative having regard to the various claims on it.

  42. There is a considerable volume of law reform material and other analyses in overseas jurisdictions concerning the exercise by Courts of their jurisdiction in favour of adult children who are not asserting economic need, with some suggestions for restricting awards to meet what are said to be prevailing social attitudes; and in some cases legislatures have enacted specific provisions precluding or curtailing awards to financially independent adult children (eg Law Commission No 61, Second Report on Family Property: Family Provision on Death (1974); Law Reform Commission, New South Wales, Report on the Testator's Family Maintenance and Guardianship of Infants Act 1916 (LRC 28, 1977); Queensland Law Reform Commission, Uniform Succession Laws for Australian States and Territories, Issues Paper No 2, Family Provision (WP47, 1995); Law Reform Commission of British Columbia, Report on Statutory Succession Rights (LRC 70, 1983); and Manitoba Law Reform Commission, Report on the Testators Family Maintenance Act (Report 63, 1985)).

  43. As well, there is some force in the point made by Williams, Mortimer and Sunnucks, Executors, Administrators and Probate, (1993) 761:

    The obligation to provide may derive from a sentiment that family and dependants ought to be left money to live on; or it may derive from a sentiment that they have the primary right to the deceased's property. These sentiments are different, though related, and within the restraints and guidelines provided by the Act and the decided cases, they will point the Court in divergent directions. The sentiment that family and dependants ought to be left money to live on will point towards a somewhat restrictive exercise of the jurisdiction, emphasising the concept of maintenance. The sentiment that family and dependants have the primary right to the deceased's property will point towards a generous exercise of the jurisdiction, and towards ideas of family property.

    The emphasis on the restraints and guidelines provided by the Act and the decided cases is obviously crucial.

  44. Clearly, too, there are difficulties for the Courts in making their own unaided assessment of current community attitudes in a complex and changing social environment. Social surveys of sufficient reliability may provide some assistance in assessing the public pulse. Green, "The Englishwoman's Castle — Inheritance and Private Property Today" (1988) 51 MLR 187, 208, notes that the intestacy rules were reformed in 1925 as the result of a survey of a large number of wills in Somerset House to see how ordinary people actually behaved and the Law Commission's proposals on matrimonial property were related to the extensive survey carried out by Todd and Jones, Matrimonial Property (1972).

  45. While it is not evident that the limited response to the New Zealand Law Commission's preliminary paper is an adequate barometer of community attitudes in New Zealand and there are difficulties with the Law Commission's report adverted to by Blanchard J in his judgment at para [68], there are pointers to concerns that some orders in recent years may have been out of line with current social attitudes to testamentary freedom relative to claims by adult children.

  46. The first is the Report of the Working Group on Matrimonial Property and Family Protection (October 1988). The convenor was Janice Lowe, Chief Legal Adviser of the Department of Justice. The consultants were W R Atkin, Victoria University of Wellington Law Faculty, Sian Elias QC and Law Commissioner (now Chief Justice), W J Gendall (now Gendall J) and Margaret Wilson, Law Commissioner (now Attorney-General). At p 50, after reviewing Re Foote (CA163/87, judgment 21 July 1988) where a 37 year old son with little capital and modest employment income who was left one seventh (1/7 th) of the estate of around $350,000, the balance going to the testator's wife of 18 years, was awarded an extra $150,000, the Working Group concluded that the decision represented a considerable departure from earlier interpretations of moral duty; and that:

    There has been a tendency to make awards solely on the basis of a blood relationship regardless of the need for maintenance and support. Similarly, adult children are awarded a share of an estate because they are perceived as having a ‘right’ to inherit a portion of the deceased parent's property. These awards sometimes reduce bequests to surviving spouses, widows in particular, frustrate the administration of wills and deplete estates. As a result the Act, as currently interpreted, encourages speculative claims and is capable of producing windfalls for claimants who are not in need of maintenance and support even in the widest sense of these terms.

  47. The second is the survey of 235 cases brought by children between 1985 and 1994. The survey was carried out by Nicola S Peart, University of Otago ("Awards for children under the Family Protection Act", [1995] Butterworths FLJ 224). The estate sizes varied between $5,400 and $1,675,000. 122 claims (over 50 percent) were brought against estates under $150,000 and 33 (15 percent) above $400,000. The vast majority of claims were by adult children who were not financially dependent on the deceased. Over 90 percent of all claims succeeded. The author concludes that in some cases there was clear evidence of real financial need but in many cases the reason for interfering was the perceived importance of recognising the family relationship (p 225). In the larger estates where the testator is able to satisfy all moral claims owed, the Courts generally seem to award between 20 percent and 12.5 percent of an estate to a dutiful child who is not in financial need (p 226). The author concludes that the Act is now more often used to recognise the special bond between parent and child which requires parents to leave a portion of their estate to their children regardless of age or need (p 226). However, at p 227 she notes Tipping J's admonition that "we have not yet got to the stage under the Family Protection Act where there is any presumption as to what testators should do with their property between children or otherwise" (Re Wilson (Christchurch Registry, M19/90, judgment 5 November 1990)).

  48. The third is the important decision of this Court in Re Shirley (CA155/85, judgment 6 July 1987). The estate was some $97,000 as at the date of death and some $120,000 at the hearing in the High Court. Under the will one son received assets worth at death $45,000 and he and the other three sons were entitled to a 25 percent share each in the residue, distributable on the death of the widow. The High Court Judge held that the testator had breached his moral duty to the other three sons and awarded further provision equivalent in the case of one son to $15,400 and to $13,800 each to the other two. On appeal this Court held, first that the emphasis laid by the Judge on the disparity between the benefits conferred by the will on Graham as compared with those conferred on his brothers was not appropriate; and that what each had to establish was that the provision made for him by the will was not in the context of his own means and obligations and all other relevant circumstances adequate to provide for his proper maintenance and support.

  49. The Court went on to review the individual claims. It concluded that there had been a breach of duty to one son and made an award in his favour.

    As to the other two sons, it said:

    We are of opinion that neither Kenneth nor Ian established a breach of moral duty by the testator. Neither established any relevant "needs" which he cannot adequately meet from his own resources which by the date of the hearing were substantial. Their position as sons of the testator was recognised by the bequest of a share of residue. The award made, equivalent in each case to about $13,500, was rightly described by Mr Barton as ‘just a little more than a token’.

    The bequest to each son of a share in the residue on the widow's death was in present value terms of less than 10 percent of the estate. In short, the Court, while accepting that family recognition as distinct from economic need could be the basis of a duty to provide proper support for an adult child, saw a relatively modest provision as adequate provision in that regard.

    CONCLUSIONS

  50. We return to the judgment under appeal. Two material conclusions reached in Re Shirley are of immediate relevance here. First, and this relates to Mr MacKenzie's first submission, in stating the question as in effect being whether the difference that the testatrix drew between the two sisters was an appropriate one for a just and wise testatrix to make, the Judge must be seen to have erred for the reasons we gave in Re Shirley (para [48]).

  51. While it seems from his subsequent reference to Little v Angus and Re Leonard and the following passage in his judgment (see para [25] which sets out his essential reasoning) that the Judge did focus on whether there had been a breach by the testatrix of her duty to Susan, his eventual award based on a 25:75 entitlement as between the sisters would seem to reflect that "extent of the difference" approach.

  52. Second, for reasons which will be apparent from the earlier discussion, we reject the argument that the Court must expressly find a need for proper maintenance and support. The test is whether adequate provision has been made for the proper maintenance and support of the claimant. Support is an additional and wider term than maintenance. In using the composite expression, and requiring "proper" maintenance and support, the legislation recognises that a broader approach is required and the authorities referred to establish that moral and ethical considerations are to be taken into account in determining the scope of the duty. Support is used in its wider dictionary sense of "sustaining, providing comfort". A child's path through life is supported not simply by financial provision to meet economic needs and contingencies but also by recognition of belonging to the family and of having been an important part of the overall life of the deceased. Just what provision will constitute proper support in this latter respect is a matter of judgment in all the circumstances of the particular case. It may take the form of lifetime gifts or a bequest of family possessions precious to its members and often part of the family history. And where there is no economic need it may also be met by a legacy of a moderate amount. On the other hand where the estate comprises the accumulation of the family assets and is more than sufficient to meet other needs, provision so small as to leave a justifiable sense of exclusion from participation in the family estate might not amount to proper support for a family member.

  53. In the present case the real question is whether the testamentary bequest to Susan of specified family possessions and the CSR shares having together a market value of some $50,000, or around 5 percent of the estate as at the date of death, was adequate provision for her proper support in that regard. Heron J's conclusion is expressed in terms of a breach of duty in failing to recognise Susan's position in the overall life of the deceased and the contribution she made in that respect. But the testatrix did not fail to recognise Susan. The question is whether she made adequate provision to discharge the duty to provide her daughter with proper support in that respect. And with respect to the Judge, the earlier reasoning set out in para [25] is not directly focussed on that question.

  54. Clearly, the testatrix took considerable care in determining how the particular family possessions should be distributed and which of those possessions Susan should receive. We cannot see any basis for the Court, acting under s 4, to differ from that assessment of what is adequate provision for proper support for Susan in that regard. However, we have in the end concluded that that provision and the bequest of the CSR shares was not adequate provision overall in all the circumstances. We are of the view that Heron J was entitled to conclude that the deceased was probably unaware of the full extent of her estate. There is nothing to suggest that she appreciated at the time of her death that her estate was worth $920,000 or thereabouts, and in particular that her shares were worth so much. It would seem that in concluding in October 1988 that her estate would not reach the $450,000 level attracting estate duty, she must, having regard to the house and chattels, have assessed the shares and the bank deposits at significantly less than they were worth by January 1996 when she died. And it is unclear whether, and if so to what effect, she addressed her mind to the possible incidence of estate duties at the time she made her February 1992 will.

  55. We turn finally to the difficult question of the amount required to redress the failure to make adequate provision for the proper support of Susan in the particular circumstances. In our view it is, at least ordinarily, inappropriate to award a share in residue as such and to redraw the will in that way. We also consider that a legacy designed to serve the limited purpose of supplementing the recognition of Susan's family belonging already provided under the will would have to be of a relatively moderate amount and that an additional sum of some $200,000, as in effect has been provided here, must be regarded as excessive. The particular amount is necessarily an exercise of judgment and we assess the additional provision required at $50,000.

    RESULT

  56. The appeal is allowed. The orders made in the High Court (except the orders as to costs) are quashed and in lieu it is ordered that the plaintiff, Susan Mary Aucutt, is entitled to the sum of $50,000 as further provision out of the estate of Lilian Beatrice Henderson. The appellant is entitled to costs on the appeal against the plaintiff which are fixed at $5,000 together with all reasonable disbursements as fixed, if necessary, by the Registrar.

    Blanchard J

  57. I agree with the judgment delivered by Richardson P which I have read in draft.

    THE EXTENT OF A DECEASED'S MORAL DUTY

  58. Section 4(1) uses the language of "adequate provision .... for .... proper maintenance and support" of those entitled to make application under the Act. But it has become customary for Judges to refer to the deceased’s "moral duty" and in fact Parliament itself adopted that terminology in 1967 when adding s 3(2) to the statute and directing the Court "in considering the moral duty of the deceased" to have regard to certain matters upon an application by a grandchild.

  59. In Bosch v Perpetual Trustee Co. Ltd [1938] AC 463, 476 the Privy Council said that the use of the word "proper" in this context was of considerable importance, and that it connotes something different from "adequate":

    A small sum may be sufficient for the ‘adequate’ maintenance of a child, for instance, but, having regard to the child’s station in life and the fortune of his father, it may be wholly insufficient for his ‘proper’ maintenance.

  60. Their Lordships went on to state (at 478):

    The amount to be provided is not to be measured solely by the need of maintenance. It would be so if the Court were concerned merely with adequacy. But the Court has to consider what is proper maintenance, and therefore the property left by the testator has to be taken into consideration.

  61. This Court was influenced by the latter passage in Re Harrison (Deceased) Thomson v Harrison [1962] NZLR 6, where Gresson P said (p 13):

    It is rather unfortunate that there has crept into the cases over the years a disposition sometimes to consider first the ‘need’ of the applicant and then to turn to a consideration of the extent of the estate and other claims there might be upon the testator. These considerations do not admit of separate consideration; they are inter-related. The ‘need’ of an applicant, or rather his or her needs — the plural form is I think preferable — cannot be considered in vacuo. What has to be assessed are the merits of the claim having regard to the applicant's circumstances as at the date of the death of the testator; relations between the testator and the applicant in the past; and the extent of his estate and the strength of other claims. A child might be in most necessitous circumstances yet because of the smallness of the estate and the necessity for the testator to make proper provision for a widow there might be no moral obligation upon him to do anything to relieve the child's necessity. So too a child might be in a reasonably strong financial position yet because of the size of the estate a testator might be under a moral obligation to allow him or her to participate to some degree in the distribution of his estate.

    and (p 14):

    But it is not necessary in order to establish a claim under the Family Protection Act that the applicant should be in necessitous circumstances. There can be a moral obligation to make a provision for a daughter, or indeed a son, even if that child is comfortably situated financially either by reason of his or her own property or in the case of a daughter, as we are concerned with, because she is married to a man who has considerable assets or a good income or both. In considering whether there is a moral obligation, regard is had not only to the needs of the applicant but also to the extent of the estate which the testator had to dispose of and to the claims which other persons had upon him.

  62. North J considered that perhaps in earlier days the Courts may have been inclined to place undue emphasis on economic considerations, and therefore gave insufficient weight to "moral or ethical considerations" (p 15). And Cleary J expressed the following view (p 18):

    In my respectful opinion the judgment appealed from attaches rather too much importance to the needs of the appellant when considered in the light of economic factors only, and somewhat too little weight to the merits of her application when assessed in the light of the moral and ethical factors that enter into the determination of what is ‘adequate provision .... for the proper maintenance and support’ of an applicant under the Family Protection Act. As late as Welsh v Mulcock [1924] NZLR 673; [1924] G.L.R. 169, there remained some difference of opinion between those who, like Herdman J. in that case, were inclined to confine the inquiry to actual needs, and those who, like Salmond J., preferred to emphasise in addition the deserts of the claimant and the relative urgency of the various moral claims upon the testator's bounty. Ever since that case, however, it has been accepted that the view of Salmond J. lays down the proper criterion to be applied, and it is unnecessary to do more than refer to the approval of that view given by the Privy Council in Bosch v Perpetual Trustees Co. [1938] A.C. 463, 478; [1938] 2 All ER 14, 20. ‘The amount to be provided is not to be measured solely by the need of maintenance’, and I think it is inherent in this statement that the obligation to make provision is not to be conditioned solely by the need of maintenance considered only from an economic point of view. Now, in the present case it seems to me that stress on the economic aspect of the appellant's needs is apt to minimise two factors which lend weight to her moral claim to have some provision made in her favour.

  63. The two factors mentioned by Cleary J were that the claimant was the testator’s only child for whom he had during his lifetime done virtually nothing, and that he had left the whole of his sizeable estate to her stepmother though the greater part of it had been inherited within a few years of his death from his uncle and his father, the claimant’s blood relatives.

  64. The claimant in Harrison had property of her own but was married to a man whose assets were slightly greater than the value of the deceased’s estate. (Gresson P described her as being in a comfortable and secure position. Her situation would be even more secure today by virtue of the Matrimonial Property Act 1976.) The widow / stepmother was also comfortably placed with assets of her own and an inheritance from her father, as well as what she had been left under the disputed will. In these circumstances this Court ordered that the claimant should receive a legacy equivalent to 11.71 percent of her father’s estate.

  65. In Little v Angus [1981] 1 NZLR 126, 128 this Court made the comment that the claims of married daughters are to be approached "at the present day" somewhat more liberally than in the past, having noted earlier (p 127) that changing social attitudes must have their influence on the existence and extent of moral duties.

  66. In Re Leonard [1985] 2 NZLR 88, the Court dismissed an appeal from an order of the High Court increasing to $40,000 each legacies of $4,000 given, along with some chattels, to two "dutiful" daughters under the will of a farmer whose estate in 1978 was $746,000. The deceased had left his farming properties to three sons. Both daughters were married and each marriage partnership owned assets of $175,000 to $185,000. The Court rejected an argument that each of them was in so strong a financial position that no duty rested upon the testator to make provision for them at all or going beyond what was provided under the will.

  67. Richardson J commented (p 92):

    The question of whether the testator was in breach of his moral duty to his daughters as claimants on his bounty must be determined in the light of all the circumstances and against the social attitudes of the day. Mere unfairness is not sufficient and it must be shown that in a broad sense the applicant has need of maintenance and support. But an applicant need not be in necessitous circumstances: the size of the estate and the existence of any other moral claims on the testator's bounty are highly relevant and due regard must be had to ethical and moral considerations, and to contemporary social attitudes as to what should be expected of a wise and just testator in the particular circumstances.

  68. In the last few decades an expansive view appears to have been taken of the power of the Court to re-fashion the will of a deceased in order to fulfil what has been regarded as his or her moral duty. This trend has not met with universal approval, as reference to the Working Group’s report of 1988, mentioned by the President, and to the Law Commission’s report in 1997 will confirm. I would not wish to be thought to endorse all that the Commission has said on the subject of the claims of adult children. I venture to suggest that it has taken a rather extreme position. Nonetheless, there is substance in the criticisms of the way in which Courts sometimes apply the present law. It is to be remembered that the Court is not authorised to re-write a will merely because it may be perceived as being unfair to a family member, and it is not for a beneficiary to have to justify the share which has been given. Rather, it is for a claimant to establish that he or she has not received adequate provision for proper maintenance and support.

  69. We are not concerned in this appeal with a claimant’s need for proper maintenance. It is conceded that there is none. The claim is for proper support in the form of recognition both of membership of the family of the deceased and of contributions by way of assistance to and support of the deceased. Such a claim is one capable of being brought under the Act. In part it seeks support from the estate in return for support which has been rendered, albeit without any promise of return such as would fall within the Law Reform (Testamentary Promises) Act 1949. The question remains, however, whether a need for proper support is made out in the particular circumstances. It is not to be assumed that merely because a claimant, no matter what his or her personal substance, has been a dutiful child of the deceased, it will necessarily be appropriate to order some provision or further provision. In some cases a mere acknowledgement of the relationship may be the most that can be expected. And in others the competing claims on the testator of a surviving spouse or of less fortunately placed siblings may negate any moral duty towards a wealthy claimant.

  70. It is not for the Court to be generous with the testator’s property beyond ordering such provision as is sufficient to repair any breach of moral duty. Beyond that point the testator’s wishes should prevail even if the individual Judge might, sitting in the testator’s armchair, have seen the matter differently. As I have said, the Court’s power does not extend to re-writing a will because of a perception that it is unfair. Testators remain at liberty to do what they like with their assets and to treat their children differently or to benefit others once they have made such provisions as are necessary to discharge their moral duty to those entitled to bring claims under the Family Protection Act.

    THE CONTENT OF THE AFFIDAVITS

  71. The resolution of this unfortunate dispute between the two sisters has not been assisted by the voluminous affidavits made by them or on their behalf which, as is all too common in family protection proceedings, traverse, often irrelevantly, the minutiae of what each alleges was the conduct of herself and her sister towards each other and their mother. If at the end of the day they reflect on the size of the legal bills which have inevitably flowed from their contest, they should not overlook the impact of their respective decisions to mention at such length material which was never going to influence the outcome. It is a comparatively rare case where denigrating the character and motives of a family member will assist the cause of another in the eyes of a Judge trying a family protection proceeding.

    CONCLUSIONS

  72. It helps to focus on the essential facts. Mrs Henderson had an estate which at the date of her death comprised assets with a value of close to $1m. At that time one daughter, Susan, was, by her own admission, not in any financial need nor ever likely to be so. The assets of herself and her husband exceeded those of the estate. Her claim is entirely for recognition of her role in the life of her mother and as a family member. Upon the evidence it cannot be said that she made a greater contribution to her mother’s welfare than most daughters with an elderly mother.

  73. Mrs Henderson was obviously conscious of the very considerable disparity between the straightened financial position of Christine and the comfortable lifestyle of Susan. She would have been well aware also of the reasons for that disparity. She chose nevertheless to provide recognition for Susan in the form of a selection of family treasures including a painting and a tea-set, both of which she presumably felt would have some sentimental as well as economic value for Susan. She also gifted her the small parcel of CSR shares. She explained the limited extent of that bounty in cl 9 of the will.

  74. In my opinion, but for one factor, such provision, amounting in economic value to the not inconsiderable sum of $50,000 (more than many New Zealanders possess), would have been sufficient to discharge her moral duty to Susan in circumstances where her sister Christine was in obvious need of maintenance, not to say support. That one factor is Mrs Henderson’s apparent misunderstanding about the size of her estate. It is impossible to say exactly what she thought her assets amounted to but the remarks she made to Mr Williams in giving instructions for the 1988 will suggest that she seriously underestimated the value of the BHP shares. He says she spoke of her Australian shares as if they were of no great value. After the last will was made there also occurred the favourable impact of the removal of estate duties (40 percent on value over $450,000) which probably was not anticipated or understood by the testatrix. Unfortunately, neither the evidence nor the submissions addressed this point. She may have taken a different view of her moral obligation to Susan if she had appreciated how much the net value of her estate increased in the absence of duties.

  75. I have concluded that if Mrs Henderson had realised the extent of the net worth to be distributed in terms of her will, she would have re-appraised its provisions so far as Susan was concerned. A fair and just testatrix would have done so and would have taken the view that, so much more being available, a somewhat greater recognition of Susan’s role in the family and relationship with her mother was required as a matter of moral duty.

  76. This is obviously not an area in which an assessment can be made with any precision. Opinions may differ. But in my view a daughter in Susan’s position could not expect proper "support" to a greater extent than a provision of about $100,000 which happens to be around 10 percent of the estate. As, on her own estimation, she is already to receive about half that sum, I consider that she should not have been awarded further provision of more than about $50,000.

  77. In my view the award of a 25 percent share in the estate went far beyond the sum necessary to provide proper support. The Judge must, I think, have been unduly influenced by the extent of the difference in the way in which the will treated the two daughters, instead of concentrating on the extent of Susan’s moral claim. I conclude that as a result he has not exercised his discretion on an appropriate basis.


Cases

Little v Angus [1981] 1 NZLR 126; Re Leonard [1985] 2 NZLR 88; Re Wilson [1973] 2 NZLR 359; Re Allen, Allen v Manchester [1922] NZLR 218; Bosch v Perpetual Trustee Co Ltd [1938] AC 463; Re Harrison [1962] NZLR 6; Re Allardice (1910) 29 NZLR 959; Re Foote (CA163/87, judgment 21 July 1988); Re Wilson (Christchurch Registry, M19/90, judgment 5 November 1990; Re Shirley (CA155/85, judgment 6 July 1987); Bosch v Perpetual Trustee Co. Ltd [1938] AC 463; Re Harrison (Deceased) Thomson v Harrison [1962] NZLR 6

Legislations

Family Protection Act 1955, s.4

Authors and other references

Law Commission, Succession Law, a Succession (Adjustment) Act, Report 39E 31AB, August 1997

Law Commission No 61, Second Report on Family Property: Family Provision on Death (1974)

Law Reform Commission, New South Wales, Report on the Testator's Family Maintenance and Guardianship of Infants Act 1916 (LRC 28, 1977)

Queensland Law Reform Commission, Uniform Succession Laws for Australian States and Territories, Issues Paper No 2, Family Provision (WP47, 1995)

Law Reform Commission of British Columbia, Report on Statutory Succession Rights (LRC 70, 1983)

Manitoba Law Reform Commission, Report on the Testators Family Maintenance Act (Report 63, 1985)

Williams, Mortimer and Sunnucks, Executors, Administrators and Probate, (1993)

Green, "The Englishwoman's Castle — Inheritance and Private Property Today" (1988) 51 MLR 187

Todd and Jones, Matrimonial Property (1972).

Report of the Working Group on Matrimonial Property and Family Protection (October 1988).

Nicola S Peart (U. of Otago), "Awards for children under the Family Protection Act", [1995] Butterworths FLJ 224

Representations

A D MacKenzie and W M Patterson for Appellant (instructed by Rudd Watts & Stone, Wellington).
G M Downing for First Respondent (instructed by McFadden McMeeken Phillips, Nelson).
No appearance Second Respondents - abide decision of Court (instructed by Glasgow Harley, Nelson)


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