Ipsofactoj.com: International Cases [2004] Part 8 Case 10 [NZCA]


COURT OF APPEAL, NEW ZEALAND

Coram

Flathaug

- vs -

Weaver

McGRATH J

FISHER J

RODNEY J

HANSEN J

29 MAY 2003


Judgment

Rodney Hansen J

(delivered the judgment of the court)

  1. This is an appeal against a judgment of Priestley J in which he ordered further provision of $90,000 under the Family Protection Act 1955 out of the estate of Ludvik Kristian Stein Flathaug in favour of his ex-nuptial daughter, Mrs. Jane Weaver.

    BACKGROUND

  2. Jane Weaver (who we will refer to as the claimant) is 47 years of age. She was born and brought up in England as the youngest of three children of Alfred and Doreen Hewlett. At the age of 24 she learnt that Alfred Hewlett was not her biological father. She was told by her mother and the testator, who was visiting England from New Zealand at the time, that the testator was her natural father. They went on to explain the background to her.

  3. The testator was a Norwegian. He fled to England during the Second World War to escape the German occupation of Norway. There he met and, in 1943, married Muriel Flathaug. After the war they lived in Norway for a short time. A son, John, was born there. After moving back to England in 1947, their second son, Nils, was born.

  4. In 1952 the Flathaugs became friendly with Mr. and Mrs. Hewlett. They were English. They had married in 1942. They also had two sons, born in 1946 and 1949. For a period there was a sexual relationship of an exclusive nature between Mr. Flathaug and Mrs. Hewlett. In 1954 Mrs. Hewlett became pregnant with the claimant who was born on 21 May 1955. Mr. Hewlett was named as the father on the birth certificate and treated her in all respects as his daughter until his death in 1977. However, Mrs. Hewlett deposed that her husband accepted from the outset that Mr. Flathaug was the father as, it seems, did Mr. Flathaug himself. The evidence satisfied the Judge that, on a consent basis, a declaration of paternity should be made under s 10(1) of the Status of Children Act 1969.

  5. In 1966 the Flathaugs emigrated to New Zealand with their two sons. The Hewletts remained in England. Mrs. Hewlett deposed that the two couples decided that, in the best interests of their children, they should go their separate ways. Apart from a visit by Mr. and Mrs. Flathaug to England in 1971, there was no further contact between the two families until 1979 when Mr. Flathaug visited England. While he was there, the claimant noticed and commented on her close physical resemblance to him. He and Mrs. Hewlett then revealed that he was indeed her biological father. They frankly disclosed to her the circumstances leading up to her conception and the joint decision that she should be raised as a child of the Hewlett family.

    SUBSEQUENT EVENTS

  6. The claimant deposed that from this time on she accepted the testator as her father and this obviously pleased him. She says when he left to return to New Zealand, it was an emotional time for all three. She and the testator agreed to keep in touch by phone and letter. From then until his death, both contributed to the growth of a close and affectionate relationship.

  7. The testator and his wife visited England in 1982 and saw the claimant twice. The testator made two further visits alone in 1987 and again in 1990. On each occasion he stayed for two weeks. He and his daughter saw a lot of each other in the course of both visits. By this time she was married with children of her own. In the course of one visit, the testator laid tiles in the bathroom of their house.

  8. During the 1990ís there was continued contact by letter and phone and, in 1997, the claimant visited New Zealand at her fatherís urging. He paid for the air fare. She stayed two weeks, spending most of the time with her father and his immediate family. She met and, from all accounts, was warmly accepted by John and his partner and Nils and his wife.

  9. In late 1999 the deceased became ill with cancer. His condition deteriorated rapidly. When she was told by John that death was imminent, the claimant immediately travelled to New Zealand and was able to spend time with her father before he died on 22 March 2000 at the age of 79.

    DECEASED'S WILL AND ESTATE

  10. The testatorís last will, made on 11 July 1997, left his entire estate to a family trust, the Flathaug Family Trust, and forgave the debts owed to him by the Trust. His estate totalled $781,072, comprising two house properties (one of which was the matrimonial home) on a section at Pakuranga together worth $520,000 and a debt due by the Trust amounting to $261,072.

  11. The Trust is a standard family trust. There is a broad discretion to distribute income and capital to beneficiaries. The beneficiaries are John and Nils and their children. Mrs. Flathaug is not a beneficiary. Neither is the claimant. The assets of the Trust comprise cash and investments of approximately $750,000 and a house property with a book value of $142,800. Its liabilities are the debt due to the deceasedís estate and a debt to Mrs. Flathaug of $274,150. Its income for the financial year ended 31 March 2001 was $66,600 after tax.

  12. The testatorís eldest son, John, died several weeks after his father. He left three children, two adult daughters of his former marriage and a son, now aged nine, by his partner. She and her son occupy the house owned by the Trust. John had few assets when he died. The financial position of his partner and young son is poor.

  13. Nils is married with two adult daughters. He is in a comfortable financial position.

    CLAIM BY MRS. FLATHAUG

  14. The claim by Mrs. Weaver precipitated claims by Mrs. Flathaug under the Property (Relationships) Act 1976 and the Family Protection Act. It was not contested that she was entitled to an equal division of relationship property. That totalled $1.1M, comprising the testatorís estate, the debts owed by the family trust to the widow, a bank account, furniture and a motor vehicle. An award of half the relationship property reduced the testatorís estate to $550,000.

  15. The Judge had no difficulty concluding that the widow was entitled to further provision under the Family Protection Act. He rightly recognised her claim as paramount. He accepted a submission that her needs for comfort and financial security warranted further provision by vesting in her the deceasedís half interest in the matrimonial home and the adjacent house property and the household furniture and the car. There is no challenge to that finding.

    CLAIM BY JANE WEAVER

  16. The Judge began his consideration of the daughterís claim by noting her personal and financial circumstances. She is married with three children aged 21, 18 and 11. They are still studying and are in good health. She and her husband own their own home which has a market value of 280,000 pounds. They have an equity in the property of 150,000 pounds. The claimantís husband is a self-employed financial adviser earning 40,000 pounds per annum. She works as a part time secretary from home earning approximately 6,000 pounds per annum. (The figure of 600 pounds per annum which is referred to in para 39 of the judgment appears to be an error).

  17. The Judge noted that there was no evidence that the claimant had a disadvantaged childhood. It appears that Mr. and Mrs. Hewlett lived in modest circumstances. (Mrs. Hewlett, now aged 80, has assets totalling 160,000 pounds). The Judge found, however, there was no evidence of financial distress or other deprivation.

  18. The Judge reviewed the circumstances in which the claimant had discovered that the testator was her biological father and the relationship which subsequently developed between them. He referred to letters written in affectionate terms by the deceased to his daughter in 1994 in which he bemoaned his failure to be "more of a father to you" and that he had not "been of any help to you over the years". Soon afterwards he sent the first of four remittances he made to her, totalling some $16,000. One of $6,000 met the cost of her trip to New Zealand in 1997.

  19. The testator was clearly perplexed, as the Judge put it, about his obligation to his daughter. Over the last few weeks of his life he had numerous discussions on the subject with his solicitor, who said he was anguished about the need to "do the right thing" by everyone. In the end, the deceased concluded that he had done enough for his daughter during his lifetime and that further provision was unnecessary.

  20. The Judge noted the absence of any cases involving comparable facts to the present. He referred to Re Berryman (deceased) [1966] NZLR 743 in which an ex-nuptial child of the testator who was brought up by her mother and stepfather from the age of four, was awarded $3,500 out of an estate of $12,800. He referred to the subsequent passage of the Status of Children Act 1969 and its policy, as stated in the preamble ".... to remove the legal disabilities of children born out of wedlock". He expressed the view that the upbringing of an ex-nuptial child is one of the factors which must be weighed when considering a parentís moral obligation towards the child. He saw the nature and quality of a childís upbringing as informing rather than reducing the moral duty.

  21. The Judge referred to the judgments of this Court in Williams v Aucutt [2000] 2 NZLR 479 and more recently in Auckland City Mission v Brown & Harrop [2002] 2 NZLR 650 which restated the principles on which claims by adult children should be determined. He quoted from the judgments of Richardson P and Blanchard J in Williams v Aucutt in which the concepts of maintenance and support are discussed and explained. He concluded that the failure of the deceased to make provision for his daughter in his will breached his moral duty to her. He summarised his findings in the following paragraphs of his judgment:

    [89]

    In my judgment the deceasedís moral obligation to support his daughter went beyond the modest inter vivos payments he made to her. He correctly assessed his primary obligation as being to his widow, for the reasons articulated to Mr. Neumegen. He also, as a just and wise testator, had to assess his obligation to each of his adult children. The economic and financial position of his son John was much weaker than the plaintiffís. The plaintiffís economic and financial position, compared to the deceasedís second son Nilsís was arguably slightly weaker having regard to the purchasing power of their assets in the United Kingdom and New Zealand respectively. Unlike Nils and his children, the plaintiff and her children could never have recourse to the family trust.

    [90]

    In addition to assessing his moral obligation towards the plaintiff and Nils based solely on economic need, the deceased needed to weigh the emotional impact of his revelations on the plaintiff and to achieve some congruency between his desire to treat her as a member of the family and some form of testamentary recognition. Those obligations in the plaintiffís side of the scale had to be balanced against Nils undoubted contributions to the deceasedís assets.

    [91]

    In my judgment, difficult and agonising though the balancing exercise was for the deceased, he fell short of his moral obligation to the plaintiff in deciding that he had no further obligation to provide for her support. The provision necessary to repair that breach of the deceasedís moral obligation is an order for further provision in the sum of $90,000.

    [92]

    In my judgment that sum represents adequate provision for the plaintiff having regard to the deceasedís moral obligation towards her and also having regard to the size of the estate and competing claims.

    COUNSELS' SUBMISSIONS

  22. For the appellants, Mr. Keene submitted that any moral duty owed to the claimant by the deceased had been extinguished by the financial assistance given to her in his lifetime. Alternatively, he argued that any undischarged moral obligation which remained at the death of the testator could be met by an award of a considerably reduced sum.

  23. At the forefront of Mr. Keeneís submission was that the Judge had fallen into what he termed the disparity trap. He referred to the judgment of this Court in Shirley v Shirley (unreported, CA155/85, 6 July 1987), a case involving claims by three brothers who had received significantly less under their fatherís will than a fourth brother. The Court deprecated the emphasis laid by the Judge on the disparity between the benefits conferred by the will on the fourth brother as compared with those conferred on the claimants. Somers J, giving the judgment of the Court, went on to say: "What each [claimant] 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."

  24. Mr. Keene pointed to the comparisons made in para [89] of the judgment between the respective financial positions of the claimant, John and Nils, and to the balancing exercise attempted by the Judge in para [90]. He argued that a comparison of the respective claims and needs of the children had diverted the Judge from the true object of the enquiry as articulated in Shirley.

  25. Mr. Keene also claimed that in assessing the claim, the Judge had largely ignored the moral claims of John and his three children. He was particularly critical of his apparently disposing of the pressing needs of Johnís infant child with the observation that they should be given close attention by the trustees of the family trust.

  26. Finally, in relation to the existence of a moral duty to the claimant, Mr. Keene criticised the Judgeís acceptance of her having been dealt an emotional blow when she discovered that the deceased was her biological father. The respondent did not directly refer in her affidavit to the effect of the disclosure on her. It was argued that without this evidential foundation, the Judge should not have assumed a negative emotional impact.

  27. Mr. Keene submitted that the claim for further provision must rest on an entitlement to support in the wider sense discussed in Williams v Aucutt of:

    .... recognition of belonging to the family and of having been an important part of the overall life of the deceased

    (per Richardson P at para 52) and

    .... recognition both of membership of the family of the deceased and of contributions by way of assistance to the support of the deceased

    (per Blanchard J at para 69).

    He assessed the part played by the claimant in the testatorís life as "minuscule" and argued that the award was out of proportion to any claim based on a right to support. He compared the award, amounting to some 16Ĺ% of the total estate, with the 10% award made to the claimant daughter in Williams v Aucutt where a much larger estate was involved and the claimant was a dutiful daughter who had had a lifelong relationship with her deceased mother.

  28. Mr. Wilson, for the claimant, defended the judgment. He submitted that the award was justified having regard to the nature and duration of the relationship between the claimant and his daughter. He emphasised that the claim was not based simply on a right to support but also on a need for maintenance. He denied that the Judge had been side-tracked by a focus on the disparity of benefits. He submitted that the Judgeís reference to the needs and claims of other family members was a proper and necessary part of assessing the moral claim of the respondent.

    DISCUSSION

  29. We are satisfied that the Judge was right to conclude that the testator breached his moral duty to his daughter in failing to make testamentary provision for her. However, for reasons which we will later explain, we consider the further provision he ordered was well in excess of what was necessary to repair the breach.

  30. A claim for further provision by an ex-nuptial child falls to be considered on the same principles as those which govern any other claim. Since 1936 children born out of wedlock have been permitted to claim under the Family Protection Act: see the discussion of the legislative history of claims by children under the Act in the judgment of Keith J in Keelan v Peach [2003] 1 NZLR 589. Section 7 of the Status of Children Act 1969 now gives ex-nuptial children the same right to claim as any other child.

  31. The approach to any such claim is governed by s 4 of the Family Protection Act. The test is whether adequate provision has been made for the proper maintenance and support of the claimant: Williams v Aucutt at p 492. In considering whether that test has been met, it has been customary to consider whether there has been a breach of the moral duty owed the claimant by the testator: see the judgment of Blanchard J in Williams v Aucutt at p 494. This reflects both the moral obligation which the Act is designed to enforce and the manifold factors which will determine what a wise and just testator should do.

  32. The relationship of parent and child has primacy in our society. The moral obligation which attaches to it is embedded in our value system and underpinned by the law. The Family Protection Act recognises that a parentís obligation to provide for both the emotional and material needs of his or her children is an ongoing one. Though founded on natural or assumed parenthood, it is, however, an obligation which is largely defined by the relationship which exists between parent and child during their joint lives.

  33. In the circumstances of this case, there could be no question of a moral duty arising before the claimant learned the testator was her father. The decision that she should be brought up as a member of the Hewlett family was taken with her (and her half-brothersí) interests in mind. She enjoyed all the advantages of being reared in a unified and stable home. There was no event or circumstance which might have called for the testatorís intervention. His decision to play no part in her upbringing was an act of enlightened forbearance, not of neglect.

  34. The moral duty which the Judge found to exist arose from the relationship built up between father and daughter following disclosure. We agree with the Judge that disclosure would have been an emotional blow to the claimant and was itself a legitimate consideration in evaluating the existence and extent of the moral duty. In our view, direct evidence was not required. The news must have come as a shock to the claimant. As the Judge said, it would have required a reassessment of all her childhood verities. It was to her credit that she was able to accept the change in a positive way and foster a relationship with her father and his family.

  35. By the time of the testatorís death, the continuing communications and intermittent contact with his daughter, had provided the foundation for a moral duty to provide for her. Their joint efforts had built up a bond of loyalty and affection which warranted recognition by the testator subject to the constraints of competing demands and available resources. The competing demands were the claims of the testatorís widow and his two sons and their children. Nils and his family were in comfortable circumstances but the situation of John and his family was dire. He was terminally ill, had few assets and a dependent partner and 8-year-old son. His death soon afterwards gave his son an enhanced claim to provision.

  36. In assessing the strength of these competing claims, the entitlement of John and Nils and their children to benefit under the Trust is relevant. Mr. Keene sought to argue that, as the Trust is fully discretionary, it should be ignored for the purpose of assessing the competing moral claims of Nils and John and their children. He referred us to Re Wilson [1973] 2 NZLR 359 where this Court held that a testator could not discharge his moral obligation to provide for his widow by the establishment of a discretionary trust in her favour. We are satisfied that Re Wilson is not authority for any wider proposition. We see no reason why, in a proper case, an entitlement to benefit under a trust, even of a fully discretionary nature, should not be taken into account in assessing a testatorís duty to make provision. In this case, the only beneficiaries of the Trust are John and Nils and their children. It would be wholly unrealistic not to have regard to their exclusive rights to benefit from the Trust. By leaving his entire estate to the Trust, the testator plainly saw it as the means by which he would provide for his children and grandchildren. In our view, for the purpose of assessing their competing claims, that may be regarded as equivalent to direct testamentary provision.

  37. The expectation that Johnís children and Nils and his children will ultimately benefit from the widowís estate is of lesser consequence but should not be disregarded altogether. The combined worth of the Trust and the relationship property is almost $1.5M. The total sum may exceed that figure if the house property owned by the Trust is accorded market value.

  38. Taking into account the resources available to other family members, we are satisfied that recognition of the moral duty owed the claimant is not precluded by competing claims. We are also satisfied that, in concluding that the testator was under a moral duty to make provision, the Judge did not fall into error by undue focus on the relative position of the claimant and her half-brothers. There are passages in paras 89 and 90 of his judgment (quoted in para 21 above) which might suggest that the Judge was attempting to achieve some sort of balance in the provision made for each sibling. However, reading these passages in the context of the judgment as a whole, it appears that the Judge was weighing the relative personal and financial circumstances of family members for the purpose of assessing the strength of their respective claims for provision. In the end, he appears to have given independent consideration to Mrs. Weaverís claim with special emphasis on her need for recognition as a family member. We are satisfied, in any event, that in all the circumstances his finding that a moral duty existed was correct.

  39. Although the Judgeís focus on the relative circumstances of family members did not lead to an erroneous finding that a moral duty existed, it may have been responsible for an award which, in our view, is considerably greater than the sum required to repair the breach of moral duty. Earlier in his judgment (at para 63) he referred to a submission on behalf of the claimant that she should be treated in a way which was "appropriately comparable" to the position of her two half-brothers. The award suggested was between 20% and 25% of the estate or between $100,000 and $125,000. In the end the award was of a sum which amounted to approximately 16% of the estate. This suggests that the Judge may have been overly influenced by the provision made for the claimantís half-brothers, leading to an award which could not be justified by an independent assessment of her claim.

  40. We accept that the claimant demonstrated a need for both maintenance and support. She and her husband have modest means and a family (the grandchildren of the deceased) who remain largely dependent on them. She clearly also qualified for support in the expanded sense of recognition of her place in the family and of the part she played in the life of the deceased. As a result, what Richardson P described in Auckland City Mission v Brown at p 658 as a "compendious inquiry into the combined elements of the composite expression" is required.

  41. That inquiry must, however, take full account of the limited nature of the relationship between the testator and the claimant. It lacked any element of shared family life and of the common endeavour and mutual sacrifice which are associated with it. It was fundamentally different from the lifelong relationships which underpin claims in more conventional circumstances such as existed in Williams v Aucutt and Auckland City Mission v Brown. This is not to diminish the value and importance of the emotional bond which had developed between father and daughter by the time of his death. Rather, it serves to emphasise that the duty owed to provide both maintenance and support in present circumstances is of a materially lesser order than would arise between a parent and child who had had shared a lifetime relationship.

  42. Having regard to these considerations, and taking into account the assistance provided by the testator to his daughter during her lifetime, we are of the view that the sum required to discharge his moral duty to her is $40,000.

    RESULT

  43. The appeal is allowed and the award made in the High Court is reduced to $40,000. All other orders made in the High Court, including costs orders, will stand. There is no order as to the costs of the appeal.


Cases

Re Berryman (deceased) [1966] NZLR 743; Williams v Aucutt [2000] 2 NZLR 479; Auckland City Mission v Brown & Harrop [2002] 2 NZLR 650; Shirley v Shirley (unreported, CA155/85, 6 July 1987); Keelan v Peach [2003] 1 NZLR 589; Re Wilson [1973] 2 NZLR 359

Legislations

Property (Relationships) Act 1976

Family Protection Act.

Status of Children Act 1969: s.7

Representations

G A Keene for the Appellants (instructed by Kemps Lawyers, P O Box 62-566, Central Park, Auckland)

D K Wilson for the First Respondent (instructed by Blair OíBrien, P O Box 36014, Northcote, Auckland)


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