Samuels v Atkinson [2009] NZCA 556; [2010] NZFLR 980 (26 November 2009)

Last Updated: 6 January 2012

IN THE COURT OF APPEAL OF NEW ZEALAND

CA367/2008 [2009] NZCA 556

BETWEEN DAVID JACK SAMUELS
Appellant

AND DONALD TREVOR ATKINSON
First Respondent

AND ALEXANDER PAUL ATKINSON
Second Respondent

AND JENNIFER LOUISE DAINTY
Third Respondent

Hearing: 14 July 2009

Court: Hammond, Ellen France and Baragwanath JJ

Counsel: C R Pidgeon QC and C M Riddell for Appellant
G Brittain and J M McCleary for Respondents

Judgment: 26 November 2009 at 3 pm

JUDGMENT OF THE COURT

1. The appeal is allowed.
2. The quantum of relief awarded in the High Court is set aside. Instead, the respondents will have the following sums out of Sidney Samuels’ estate:

(i) Jennifer Louise Dainty: $100,000.

(ii) Donald Trevor Atkinson: $50,000.

(iii) Alexander Paul Atkinson: $50,000.

100. The costs of the parties are to be paid by the estate. Costs are to be fixed as provided at [101].
     

REASONS OF THE COURT
(Given by Hammond J)

Table of Contents

Para No
Introduction [1]
The background narrative [4]
The 1990 will [21]
The Law Reform (Testamentary Promises) Act 1949 [32]
The promises [35]
The services
The law [46]
This case [56]
Quantum
The legal principles [63]
The High Court’s reasoning [69]
“Netting off” [78]
Assessing quantum
1. Relevant factors [81]
2. Jennifer Dainty’s distinct services [91]
3. Valuing the “family relationship” [96]
Conclusion [99]

Introduction

[1] This is an appeal in a proceeding under the Law Reform (Testamentary Promises) Act 1949 against a judgment of Priestley J: HC AK CIV 2006-404-7878 30 May 2008.
[2] After determining that a testamentary promise had been made and that there was a nexus between the promise and services rendered, the Judge vested in the three respondents, as tenants in common in equal shares, certain shares in a farming company. In monetary terms that was an award of approximately $200,000 each, or $600,000 in total. Counsel said this was the highest award they have been able to locate under the Act.
[3] The appellant now appeals against those awards. Although the issue of whether there were relevant promises was put in issue before us, that issue largely fell away as the hearing progressed. The critical issue on the appeal is whether the quantum of the awards was too generous.

The background narrative

[4] The deceased, Mr Sidney Samuels (variously known as Sydney, Sammy and Uncle Sol), was born in Glasgow, Scotland, in 1910. We will refer to him as “Sammy” throughout the judgment. In 1930, at the age of 20, Sammy emigrated to New Zealand.
[5] At some point before the Second World War, Sammy met Mr Donald Atkinson Snr (“Donald”) in Auckland. The Atkinson family at that time lived in Onehunga. Sammy also met Donald’s brother, Trevor, and his sister, Alice. Donald, Trevor and Alice became good friends of Sammy.
[6] When the Second World War broke out Sammy, Donald and Trevor served in the 24th Infantry Battalion of 2 NZEF (the New Zealand Expeditionary Force). That unit saw a great deal of active service. These three men served in both the Western Desert and Italy. Trevor was killed in action at Cassino. In the same engagement Sammy and Donald were both wounded. Sammy carried unextractable shrapnel in his body until his death. His wounds continued to present periodic medical problems throughout his life. The Judge found that these experiences “would have affected both [Sammy and Donald] for the rest of their lives and created between them a special bond”: at [12].
[7] After Sammy and Donald returned to New Zealand and were demobilised in late 1945, Sammy married Freda. The Judge found that the couple had “good business skills”: at [13]. They set up a successful furniture retailing business in Auckland. They acquired a section in St Heliers Bay, Auckland, on which they built their home. Sammy lived there for some 50 years until he was admitted to an Auckland rest home with Alzheimers in 2004.
[8] Donald moved to the Bay of Plenty. There were a number of “rehabilitation farms” in the central North Island which were made available to returned servicemen after the Second World War. Donald acquired one in Waimana with a rehabilitation loan. He married Leila in June 1946. Sammy and Freda were guests at the wedding.
[9] The Judge found that a pattern developed of Sammy and Freda visiting the Atkinsons on their farm and spending their summer holidays there: at [15]. Freda and Leila became close friends. Sammy got to know other families in the district and would visit the Opotiki RSA with Donald.
[10] The three Atkinson children, who are the respondents in this appeal, were born between 1948 and 1952. Donald Trevor Atkinson will be referred to as “Don” and Alexander Paul Atkinson as “Paul” throughout this judgment. Sammy and Freda were not able to have children. The Judge found that Sammy and Freda wanted to play a special role in the lives of the Atkinson children: at [16]. The children called them “Uncle Sol” and “Aunt Freda”. When the three children visited Auckland to see other members of the Atkinson family, they would also visit the Samuels.
[11] In March 1954, Sammy executed a will leaving all his property to Freda. The 1954 will has various pencilled notes and names on it which are unexplained. None relate to the Atkinson family. The original of that will eventually found its way into the hands of Mr D B Thomas, an Auckland solicitor, who prepared a will in 1990. The 1990 will was admitted to probate with respect to Mr Samuels’ estate. We will deal with the 1990 will later in this judgment: at [21] – [31] below.
[12] In the late 1950s Freda was diagnosed with cancer. Thereafter her health deteriorated. Nevertheless she continued to visit the Atkinson farm. Leila would care for her during those visits. Freda died in January 1964. Sammy continued to visit the farm alone after her death.
[13] In 1963, Sammy visited his family in Scotland for the Bar Mitzvah of his nephew, the appellant, David Samuels (“David”).
[14] In 1966, a transaction took place which generated the shares at the centre of this litigation. Donald’s farm had become uneconomic and in need of expansion, a common phenomenon in New Zealand at that time. However, a neighbouring farm became available for purchase. The obvious thing was to join the two farms together. Donald borrowed what he could. But he was still some £4,000 short of what he needed to purchase the adjoining farm. He approached Sammy for a loan, who was businesslike about assistance. Sammy said he would make the necessary money available, but only on the basis that he became a shareholder in a farming company, with a financial stake in the farm.
[15] Thereafter, Glenholme Farms Limited (“Glenholme”) was incorporated. Glenholme acquired the original Atkinson farm and the neighbouring property. Sammy contributed £4,000 of the capital. He was allotted 12.91 per cent of the shares in Glenholme. He was appointed a director of the company and regularly attended shareholders’ meetings. Minutes were taken at these meetings, which were somewhat more formal than in many farming companies. For many years Sammy regularly visited the farm and stayed in the Atkinson home. Whilst there, he would participate in farm work and his friendship with the Atkinson family remained firmly on foot.
[16] During the 1970s and 1980s, the Atkinsons also extended hospitality to Sammy’s Scottish family and friends when they visited New Zealand. Correspondingly, when Donald and Leila travelled overseas in 1982 they stayed with members of the Samuels family in Scotland.
[17] The Atkinson children were now growing up. The Judge found that they enjoyed a “special relationship” with Sammy: at [24]. Sammy also financially assisted them. In 1972, he loaned Jennifer Dainty (née Atkinson) and her husband Geoff $12,000 for a term of five years at an interest rate of eight per cent. The loan was duly repaid.
[18] As adults, neither Paul nor Don chose to work on or take over their father’s farm. They did however remain involved in its operation. In 1973, an opportunity arose for Glenholme to purchase a further adjoining property. By then Don, aged 23, had graduated from Lincoln University. He was the under-bidder at the auction. Sammy would have been prepared to advance a second mortgage and had authorised Don to bid. The Judge found that Sammy “berated [Don] afterwards for not having gone beyond the agreed figure because he would have been prepared to cover it”: at [25].
[19] Paul farmed elsewhere. In the mid-1970s, Sammy lent Paul approximately $5,000 to assist in the purchase of agricultural machinery. In mid-1976, Sammy guaranteed an overdraft for Paul of $11,000. In the late 1990s there was also a second mortgage advance for $50,000. Those loans were all repaid before Sammy’s death.
[20] David first visited Sammy in January 1990 for the Commonwealth Games in Auckland. The Judge found (at [30]):

He stayed with his uncle and attended a number of events. His visit seems to have marked the start of a significant family friendship between Mr Samuels and his nephew. [Sammy] travelled to Scotland for David’s wedding in December 1992. Whilst the couple were on their honeymoon he remained in the Glasgow family home. David Samuels and his wife, Jemima, visited Mr Samuels with their daughter in January 1997. David Samuels paid a further surprise visit for his uncle’s 90th birthday in November 2000. During the last two or three years of his uncle’s life, David Samuels assumed responsibility for major decisions over his uncle’s care, including admission to a rest home. He was able to keep an eye on things with the assistance of Mr Samuels’ neighbour, Mr Mitchell, and Mrs Stephanie Markson, an outreach worker of the Auckland Hebrew Congregation.

The 1990 will

[21] There was no evidence that Sammy made any testamentary provision between March 1954 (see [11] above) and the will dated 7 November 1990 which was admitted to probate. In consequence, although nothing turns on it, Sammy had been intestate for almost a quarter of a century after his wife’s death in 1964.
[22] Nevertheless, Sammy seems to have been very clear about his testamentary intentions. In October 1990, shortly before he signed his new will, Sammy wrote to David in the following terms:

David, I have been to my solicitor to change my will. I had left everything to Aunty Shlovie [Freda], now I have asked the solicitor to make a trust with everything going to you and Doreen and the girls. I have nominated you as trustee, so far it hasn’t been finalised but the will is covered, my shares in the farm are being valued. I know the family would like them cheaply but I am not interested as I have had no return in all the years I have had the shares. What happens afterwards will be your problem.

(Emphasis added.)

[23] As to the actual provisions of the 1990 will, David was appointed sole executor and trustee. The entire estate was left jointly to David and Sammy’s niece, Doreen Spevack. Both beneficiaries live in Scotland.
[24] Mr Thomas, who drew the will, retained no notes with respect to the will, or written instructions if there were any. He confirmed in evidence that Sammy wanted to benefit his nephew and niece because they were blood relatives, even though at that particular point he had had little contact with them. The Judge found that Mr Thomas had no recollection of Sammy ever mentioning that he had a financial interest in the Atkinson family farm, despite having acted for Sammy in respect of a number of documented loans to the Atkinson family: at [32].
[25] It is difficult to know precisely what Sammy’s estate would have been worth at the time the 1990 will was executed. At his death in January 2006 the estate was substantial. As the Judge noted, a precise valuation is “problematic”: at [3]. Unusually, we do not have an affidavit from David, as trustee, in that capacity. The deceased’s St Heliers home and a commercial property he owned in Glen Innes have not been valued. He had over $1 m in the bank. Based on a 2005 land valuation, counsel indicated that the estate was worth at least $3 m, but probably nearer to $4 m.
[26] Included in the estate are Sammy’s 8,055 shares in Glenholme, which comprised 12.91 per cent of the company’s total shareholding. These have been valued at $595,980.
[27] In January 1991, Sammy wrote to David requesting details of his bank account so that he could remit to him $27,000 each year “free of tax”. This was presumably the sum which could be gifted free of tax each year at that time. For whatever reason this never occurred.
[28] On 1 April 1991, Sammy wrote a bereavement letter to David’s mother and his sister-in-law, Rita, on the occasion of the death of David’s younger brother, Alexander. In that letter, Sammy said:

Recently I have made my Will Rita and your children are named as my next of kin, so you can be sure that their future will be secure monetary wise.

[29] In January 2001, Sammy wrote to David, following a visit to the Atkinson holiday home on Lake Rotoiti. Sammy said:

... I had three nights on the farm and listened to Donald’s tails [sic] of woe, what a hard time he is having they are milking 400 cows and they have never so well off in their lifes [sic]. I have heard this for years and I don’t even listen now. [Don] got his start from the farm and he has made the best of his life and Paul also had the chance but his marriage was a disaster ... but I did enjoy my short stay on the farm. After all, I helped to buy the second farm and that has been my pleasure, as over the years Freda just loved the place and she and Leila got on very well and I would liked [sic] to have been more involved but to keep our friendship I kept out of things I did not like.

[30] The Judge found that the Atkinson family was “totally unaware” of the terms of Sammy’s 1990 will: at [37]. A Glenholme shareholders’ meeting was held on 19 February 1992, 15 months after the will was signed. Sammy was present. There was a wide-ranging discussion on the future of the farm. Various matters were discussed, including Donald’s upcoming retirement, the possible purchase of Donald’s and Leila’s shares by their three children and the need to “address” the shareholding of Glenholme more generally. Nothing of relevance to this appeal was resolved at that meeting.
[31] Although Sammy had executed his 1990 will a short time before, he said nothing about the will at this meeting. Plainly he expected that there might be some trouble later, because, as we have noted (at [22] above), he had made the following anticipatory statement in a letter to David: “What happens afterwards will be your problem”. Problems were likely because, as the Judge found, the Atkinson family “had a clear expectation that [Sammy] would leave his shares in Glenholme to the two Atkinson sons”: at [38]. It is the unresolved clash between two sets of expectancies which has led to this litigation.

The Law Reform (Testamentary Promises) Act 1949

[32] It is convenient to set out the provision on which the respondents’ testamentary promises claims were grounded. Section 3 of the Law Reform (Testamentary Promises) Act provides:

3 Estate of deceased person liable to remunerate persons for work done under promise of testamentary provision

(1) Where in the administration of the estate of any deceased person a claim is made against the estate founded upon the rendering of services to or the performance of work for the deceased in his lifetime, and the claimant proves an express or implied promise by the deceased to reward him for the services or work by making some testamentary provision for the claimant, whether or not the provision was to be of a specified amount or was to relate to specified real or personal property, then, subject to the provisions of this Act, the claim shall, to the extent to which the deceased has failed to make that testamentary provision or otherwise remunerate the claimant (whether or not a claim for such remuneration could have been enforced in the lifetime of the deceased), be enforceable against the personal representatives of the deceased in the same manner and to the same extent as if the promise of the deceased were a promise for payment by the deceased in his lifetime of such amount as may be reasonable, having regard to all the circumstances of the case, including in particular the circumstances in which the promise was made and the services were rendered or the work was performed, the value of the services or work, the value of the testamentary provision promised, the amount of the estate, and the nature and amounts of the claims of other persons in respect of the estate, whether as creditors, beneficiaries, wife, husband, civil union partner, children, next-of-kin, or otherwise.

(2) This section shall apply—

(a) Whether the services were rendered or the work was performed before or after the making of the promise:

...

[33] Under s 2 of the Act a promise is defined to include “any statement or representation of fact or intention”.
[34] The central principles of the testamentary promises jurisdiction are that: a claimant must have rendered services to or performed work for the deceased in his or her lifetime; the claimant must prove either that the deceased made an express promise to reward him or her for such services or work by making some provision for that claimant by will, or that such a promise may be implied; the promises must be linked to the services; and reasonable provision has not been made.

The promises

[35] The statement of claim on which the proceeding went to trial alleged:

7. In or about 1966, the deceased promised to reward the [respondents] for the services and work performed by Mr and Mrs Atkinson, and to be performed in the future by Mr and Mrs Atkinson and the [respondents]. In particular, the deceased promised Mr and Mrs Atkinson that:

(a) The deceased would hold the shares in Glenholme until his death, and then bequeath the shares to [Don and Paul];

(b) The deceased would make other provision in his will for [Jennifer].

8. The promise was repeated by the deceased to the [respondents] in or about 1990.

[36] Unfortunately, the judicial findings of fact in the High Court were not made specifically in terms of the pleadings.
[37] However, the Judge did “find as a fact that well before the 1990 will, probably as early as the 1970s, [Sammy] had specifically promised he would leave his Glenholme shares to his old friend’s two sons, [Don and Paul]. There is uncontradicted and corroborated evidence to that effect”: at [39].
[38] The Judge acknowledged that Jennifer’s position was “different and more problematic”: at [45]. He found that neither Donald nor Sammy were of a generation which would have contemplated a daughter being involved in the running of the farm. But there was uncontradicted evidence from Leila that, from time to time, when Sammy was speaking of leaving the shares to the Atkinson boys, he stated he would “do something else” for Jennifer. There was evidence that, in the 1980s, Sammy told Donald and Leila that he would leave certain shares (worth approximately $1,000) in Radio Bay of Plenty Limited to Jennifer.
[39] Before us, Mr Pidgeon QC submitted that there was not sufficiently compelling evidence produced in the High Court to enable the Judge to make a finding that there had been testamentary promises, particularly having regard to the fact that there was no written evidence of such promises. He suggested that Sammy’s letter of October 1990 (at [22] above) should weigh against a finding that testamentary promises had been made.
[40] Before commenting on that submission we need to mention one other factor. David had filed affidavits and was available to give evidence, by video link from Scotland, of relevant discussions with the deceased and Donald. But counsel for the respondents chose not to cross-examine him. The Judge was inclined to be dismissive of David’s evidence; he thought it to be “totally inconsistent with the understandings of the entire Atkinson family” and Donald’s “grief and distress shortly before his own death” in July 2006 when he became aware of the terms of the 1990 will: at [49].
[41] Mr Pidgeon complained about the way the Judge dealt with David’s evidence. It may well have been an unwise course for the Judge to dismiss David’s evidence as “highly improbable” (at [49]) without the advantage of cross-examination. But, in the event, the relevant evidence (whatever it may have amounted to) is not before us.
[42] Leaving the failure to cross-examine to one side, Mr Pidgeon’s submission in relation to testamentary promises was that the Judge had failed to exercise caution in upholding a testamentary promise that conflicted with the documentary evidence.
[43] Mr Pidgeon did not abandon this appeal point, and that may well have been consistent with his instructions. It can however be shortly dealt with. There was evidence on which the Judge could come to the view that he did on the issue of the promises. It was for the appellant to demonstrate that the Judge was wrong in that respect. He has not been able to do so before us.
[44] We add that the probabilities highly favour the unfortunate conclusion that this is a case in which Sammy said one thing to David and other things to the Atkinson family. The 1990 will evinces a testamentary intention in favour of David, at odds with the earlier promises in relation to the Atkinsons. Sammy’s enigmatic comments in his October 1990 letter reveal an anticipation of difficulties after his death. That is not to cast aspersions on the late Sammy. Plainly he had a close attachment to the Atkinson family; however, in his declining years he had become very closely attached to his next-of-kin, and David in particular. Doubtless it would have been a painful thing for him to have to confront the angst on the part of the Atkinsons if they came to know what he had done. But leaving two sets of expectancies alive has caused real difficulties, which the deceased was plainly aware might arise.
[45] In any event, we reject the submission that promises of the character identified by the Judge either were not made at all, or were not sufficiently demonstrated.

The services

The law

[46] Neither “work” nor “services” are defined by the Act. The term “work” does not appear to have given rise to difficulties in practice: the word has its ordinary, everyday meaning.
[47] The term “services” however has created some real difficulties. The appropriate starting point is Tucker v Guardian Trust and Executors Co of New Zealand Ltd [1961] NZLR 773 (SC). That was a case in which both the plaintiff and the deceased were beneficially entitled to a house property in the estate of their deceased mother. The deceased wanted to continue to live in the house. The plaintiff agreed to disclaim his interest in the house in return for which the deceased undertook to leave it to the plaintiff in his will. McCarthy J, having regard to the spirit in which the Act must be approached, considered that the plaintiff’s act fell within the meaning of the term “services”.
[48] McCarthy J said (at 776):

It is plain that the word "services", notwithstanding its descent from its Latin origin, can and often does embrace in ordinary speech something more than those acts which are performed under a master's contract of service with his servant or of services with a professional man. One finds that the Courts, too, have been prepared to give to the word an interpretation embracing more matters than physical acts where the context of the legislation under consideration justifies it. One finds this, for example, in the construction of railway legislation where the provision of sidings and the like are said to be services: see Hall and Co v The London, Brighton and South Coast Railway Co (1885) 15 QBD 505. Another example may be found in the case of Dwyer v Hunter [1951] NZLR 177 ... where the provision of a room in a hotel was held to be a service. In tenancy legislation there is such a case as R. v Paddington North and St. Marylebone Rent Tribunal, ex parte Perry [1955] 1 Q.B. 229 ... These are perhaps obvious extensions of the use of the word. Other extensions could be quoted. The word "service" then, if the context calls for it, may receive a wide meaning. How should it be construed in the particular legislation under consideration? It is important, I think, in answering that question, to remember the remedial purposes of the Act and the necessity to give it a large and liberal construction in order to attain its objectives: Nealon v Public Trustee [1949] NZLR 148. In Hawkins v Public Trustee [1960] NZLR 305, Shorland J applied that approach and took the view that the mere fact that what was rendered to the deceased was intangible and of a value incapable of precise monetary assessment, did not prevent it being a service. There, the facts were that the deceased, a self-made man, desiring a successor having the qualities which he himself possessed and which had seemed to be lacking in his own son, induced a grandson (the son of a daughter) to leave his parents' home and come and live with him, the deceased, and take his name. This the grandson did in return for a promise that certain testamentary provision would be made for him. He took the grandfather's name, lived with him and gave the filial affection and attendance of a son. He also worked on the deceased's farm but for this he was paid a salary. Shorland J included amongst those matters which could be considered "services" within the meaning of the section, the assuming by the grandson of the name of the grandfather and the performing of the role of a son, notwithstanding that those particular services were intangible and incapable of a precise monetary assessment. No doubt that case and the instant one are dissimilar but it might be thought that the position is stronger in this case in favour of the claimant than it was in Hawkins's case (supra). However, whether that be so or not, the proper view to take in this case, I believe, particularly having regard to the spirit in which the Act must be approached, is that what the plaintiff did for the deceased can fairly be included in the term "services" as used in s 3. I arrive at that view because of my opinion of the true nature of the action of the plaintiff. I would not have it thought, nonetheless, that in all cases where there is a contract under which one party, be he relative or not, exchanges rights in consideration of the promise of testamentary provision, a claim necessarily lies under this Act. As I see it, this instant case is a special one. It is not for me to say where the line will be drawn in other cases. That it may be difficult to draw is no answer to this claim if I am satisfied, as I am, that it comes within the words and spirit of the Act.

[49] That said, the area which has caused the courts some concern is whether things which are done voluntarily or which arise of their very nature from living in a close circle can properly be regarded as “services” for the purposes of the Act. For instance, in Re Welch [1989] 2 NZLR 1, a stepson received a large award for services in the High Court, which had included his assuming and performing the role of a son. On appeal, this Court held that the evidence pointed to nothing more than a normal family relationship between the stepfather and stepson, who got on well with each other. There had been “a reasonable balance of benefits and personal satisfaction on each side”: at 8. The Judicial Committee of the Privy Council dismissed a further appeal, agreeing with this Court that it strains the scope of the Act to “bring within the concept of services the natural incidents and consequences of life within a close family group, such as existed in this case”: [1990] 3 NZLR 1 at 7. For commentary, see Peart “Re Welch: The boundaries of the Testamentary Promises Act” (1991) NZLJ 77.
[50] Re Welch created two kinds of difficulties. First, some judges have expressed difficulty with the notion that services lovingly given should be worth less than services contractually given: see, for example, Re Lamb HC TIM M11/91 7 October 1992. That however is a logical downstream consequence of the Privy Council’s holding. Secondly, at a practical level, there is the difficulty of drawing a line between those services that might be expected in a normal family relationship, and those that go beyond that threshold.
[51] As to the latter, in Thwaites v Keruse [1993] 11 FRNZ 19 (CA) Hardie Boys J said (at 23):

Companionship, affection, cohabitation, may properly be regarded as “services” in some circumstances, where for example the promisor is elderly or lonely or in poor health. But that cannot be so in the case of young people simply sharing together the pleasures of each other’s company in a common household.

[52] More recently, in Re Fagan [1999] NZFLR 222 (HC) Baragwanath J considered that (at 236):

... the apparent difference may be resolved in conventional cases by first assessing the norm, as was done in Re Welch; and then deciding whether the benefits conferred significantly exceed that norm, in which case, as other authorities decide, an award – and in a strong case a substantial award – may be made taking into account competing claims, even though neither deceased nor plaintiff viewed the matter in commercial terms.

[53] To put this another way, it has been regarded as appropriate to endeavour to identify “something extra” which takes the facts of the particular case beyond the relatively narrow confines contemplated by the Privy Council in Re Welch. This approach to testamentary promises claims, if correctly followed, has the added benefit of making the quantification of claims more straightforward.
[54] Further, unrealistic claims should not be advanced in marginal cases. As William Young J said in Humphrey v New Zealand Guardian Trust [2004] NZFLR 179 at [65] (HC):

Testamentary promises claims should be decided in accordance with reasonably well established principles and the pattern of existing awards. The reasons for this are obvious. Like cases should be dealt with in a like way. Further, if reasonable consistency is maintained, cases such as this should generally be able to be settled on a basis which does not involve the parties in substantial legal fees. Viewed in the light of the relevant principles and the pattern of decisions generally, the claims by [the plaintiffs] are on the periphery of what can legitimately be the subject of an award under [the Act] and, furthermore, the quantum of the claims, as advanced, was unrealistic.

[55] For examples of services or work which have been addressed by the New Zealand courts, see Patterson Law of Family Protection and Testamentary Promises (3ed 2004) at 193 – 194.

This case

[56] Against this background of authority, we must now examine the services relied on in this case. The Judge did not find it necessary to discuss these services in detail. He said:

[51] The services extended to Mr Samuels by the Atkinson family as a group include companionship, family life, and affection which went well beyond the bonds of friendship. As a childless couple, Sammy and Freda became a special aunt and uncle. The consequence of this special relationship was that all three Atkinson children came to regard Uncle Sol as an extra parent. The Atkinson family became Sammy's New Zealand family, a particular benefit to him during those decades when he was far removed geographically and logistically from his blood relatives in Scotland. This family component of services was of particular value given that Sammy and Freda were childless. The value of family was augmented again as a result of Mr Samuels' widowhood. Support was given to Freda and subsequently to Mr Samuels during times of illness and convalescence.

[52] Although Mr Samuels lived in Auckland, the farm became part of his life. He was able to play a part in its operations, both in a hands-on and a financial sense. The symbolic significance of the farm to him, quite apart from his shareholding, is evidenced by a small loan of $1,250 being monies he advanced to Glenholme to build a barn. He insisted that sum remain as a debt in the company's balance sheet, being carried forward from year to year. The farm, and indeed the Atkinson holiday homes, were available to him for visits and holidays. Those visits included visits by his overseas family and friends.

[57] The Judge also referred to birthday parties and weddings and said that Don, a qualified valuer, helped Sammy renew insurances on his business each year at no cost.
[58] Again, those observations were not tied in to the pleadings in the statement of claim, where particulars of services had been provided. However, in broad terms those particulars suggest that the respondents fulfilled the roles of surrogate nephews and niece of Sammy and provided him at varying points of his life and in various ways with companionship, affection and emotional support, particularly after Freda died.
[59] Read as a whole, the particulars in the statement of claim rest on a common theme that the parties treated each other as “family”. This is the source of difficulty in the present case, having regard to Re Welch and the subsequent authorities in this jurisdiction.
[60] Mr Pidgeon, who did not appear at first instance, appreciated this problem. His argument for the appellant comes to this: what the respondents did was just what one would have expected them to do in an extended family context, and that there was nothing “extra” which would take the case beyond the norm.
[61] The essence of the Judge’s reasoning was that, given their childlessness, the intangible benefit of having surrogate children was “something extra” for Sammy and Freda. It is plain on the evidence that Jennifer in particular afforded Sammy services and assistance as a widower in his declining years. Although one would like to see that level of commitment in every family, it is not always so.
[62] The Judge found that there was, as there must be, a nexus between the services and the promises made by Sammy to the respondents: at [81]. See Byrne v Bishop [2001] 3 NZLR 780 at [9] – [10] (CA). As will be seen in our discussion at [78] to [80] below, we agree that services were provided and that there was sufficient nexus between those services and the promise made.

Quantum

The legal principles

[63] Mr Pidgeon had very real reservations as to whether any award was justified, given that the “services” in this case were of a character routinely found in extended family relationships.
[64] However his primary submission on quantum was that, even if the Judge was correct in recognising promises, services and a nexus between them, the quantum of $600,000 was excessive because the Judge failed to make an award of such amount as may be reasonable, having regard to all the circumstances of the case.
[65] The relevant principles in relation to quantum were rehearsed by this Court in Powell v Public Trustee [2003] 1 NZLR 381. For the Court (Tipping, Hammond and Baragwanath JJ), Tipping J noted that the issue is to determine what constitutes “such amount as may be reasonable” as remuneration for the services actually identified: at [10].
[66] Tipping J said that s 3 of the Act requires the court, in making that assessment, to take into account all relevant circumstances and in particular:

(1) The circumstances in which the promise was made and the services were rendered or the work was performed.

(2) The value of the services or work.

(3) The value of the testamentary provision promised.

(4) The amount of the estate.

(5) The nature and amounts of other claims on the estate.

(6) Other relevant circumstances.

[67] In relation to the value of services or work, Tipping J noted (at [24]):

It is always difficult to put a value retrospectively on physical work and services of the kind in issue. It is even more difficult to put a value on services of an intangible kind such as those in this case. In our view they represent the greater part of Mrs Powell's claim. One can look at the matter from the point of view of the cost to the provider of the work and services but also from the point of view of the value of the work and services to their recipient. The Act places the principal focus on the latter dimension.

[68] Tipping J further noted that “in the end the right answer must be a matter of judgment in respect of which there must be a substantial margin of appreciation for the result reached by the trial Judge ... It is not a matter of this Court substituting its own discretionary assessment”: at [42]. In that case, after considering the relevant factors, this Court took the view that the Judge’s assessment represented an amount which was “plainly too low”: at [42].

The High Court’s reasoning

[69] The Judge did not analyse this case under the sort of heads articulated by Tipping J (at [66] above), although he referred to Powell. This makes it difficult to “tease out” the Judge’s views of the relevant considerations.
[70] The value of Sammy’s estate clearly weighed heavily with the Judge. He rightly noted that the estate was worth approximately $4 m; on that basis the value of the shares in Glenholme was less than 20 per cent of the value of the estate.
[71] Perhaps the heart of the Judge’s reasoning as to quantum is as follows (at [88]):

I am satisfied that Mr Samuels regarded his Glenholme shareholding as being a tangible expression, not only of the various benefits which flowed to him (and previously to his wife) of being able to visit and retreat to the farm, but also of his special relationship with the Atkinson family and all that they had to offer him. Out of friendship, Mr Atkinson (senior’s) expansion plans in 1966 gave Mr Samuels an opportunity to invest in the farm and the family in a tangible way. That reflected the value to him of his involvement with and, indeed incorporation into, the family and their farm. The promise he made, in my judgment, reflects fairly and accurately what those many services were worth to him and how he wished to reward them.

[72] The Judge noted that the provision for Jennifer appeared to be linked to the promise to “do something” for her in addition to the promise he made to reward her brothers: at [90].
[73] The Judge then said (at [91]):

Although the value of the shares will, on a quantum assessment, exceed the value of the services performed individually by each or all of the plaintiffs, their valuation does not, in my judgment, exceed the value of the many services rendered collectively by the Atkinson family to Mr Samuels and his widow from the end of the Second World War to his death in 2006.

[74] There are several difficulties with this reasoning. First, it is difficult to avoid the conclusion that the Judge considered that Sammy should have kept his initial promise to the Atkinsons. Effectively, he ordered specific performance of the promise of the Glenholme shareholding. One difficulty is that a testamentary promises claim is quite distinct from a claim in contract. There, provided only there is some consideration, the remedy is to give effect to what is promised. The present type of claim looks not only to what was promised but to its reasonableness measured against other factors. Another difficulty is that the will speaks as at the date of death, which in this case was many years later. But as we have recited in the factual narrative, Sammy’s position did not remain static, which gave rise to further relevant considerations. Life moves on. It is quite plain on the evidence that Sammy came to harbour some real reservations as to the “value” of what was rendered to him by the Atkinson children. He was a businessman to the core. There is written evidence that he thought that he had not got what might be termed a “fair return”. More important, as we mention at [77], is the objective measure of his net benefit. The short answer, in commercial terms, is that in some respects he did get such a return (for instance, the interest received on loans) and in other respects he did not (for instance, no dividends on shares). The old adage that money and friendship do not routinely sit well together was never more evident than in this case.
[75] Secondly, the Judge considered that the value of the shares awarded did not come up to the value of the services performed “individually” by each or all of the respondents: at [91]. As will appear, we disagree.
[76] Thirdly, as we observed during the hearing, no attempt was made to estimate those individual services in the evidence put before the Court. Those matters were left “in the air”. We would have thought that, for example, Jennifer’s personal care and attendance in relation to Sammy was easily capable of being translated into some kind of concrete assessment.
[77] Fourthly, and critically, for there to be a claim at all, there has to be a “netting off” of the respective benefits and burdens. As was said by this Court in Powell (at [31]), “a claim can succeed only to the extent of the unremunerated balance”. The Judge did not undertake such an analysis. We therefore turn next to that exercise.

“Netting off”

[78] Although it is awkward, and in a sense distasteful in respect of close personal relationships, to have to “net off” the balance of benefits and burdens in a case like this, the court has to do the best it can if the principles of the Act are to be properly observed.
[79] We approach this exercise in the following manner:

• (a) As between Donald and Leila and Sammy, there was friendship and companionship on both sides. As Mr Brittain said, this was probably reasonably balanced over the period 1945-1960.
• (b) On the “plus” side for the Atkinsons, there was the considerable care for Freda in her illness and succour for Sammy as he grieved over her loss.
• (c) Further, the Atkinson’s farm was a “home away from home” for Sammy for many years.
• (d) As between the Atkinson children and Sammy, there was very real friendship on both sides.
• (e) On the “minus” side for the Atkinson children, there was the assistance Sammy gave them in getting them set up in life, albeit on commercial terms. That kind of initial assistance is of particular value. Not to be overlooked, even though non-economic, is the fact that he provided friendship to them.
• (f) Don provided free valuation services annually.
• (g) Jennifer provided specific services of a caregiver variety.

[80] We consider that the benefits received by Sammy exceeded the benefits received by the respondents; the unremunerated balance requires awards. We think the Judge was right to see this case as going beyond “ordinary” love and affection within an extended family, in some respects. Without being pejorative, this is clearly a case in which Sammy acquired a “surrogate” family. The benefits of that to him increased steadily with the passage of the years as his wife became ill and then died, and during his own declining years as a widower. The Atkinsons had their own family. But without his own family, Sammy lacked that kind of solidarity in his life. In our view, the justification for an award principally rests on this element. In fairness to the Judge, that is also a very distinct part of his reasoning.

Assessing quantum

1. Relevant factors

[81] We now revert to the heads of analysis utilised by this Court in Powell and required by s 3(1) of the Act. The ultimate question, as emphasised in Powell (see [65] above), is what constitutes a reasonable amount as remuneration for the identified services.
[82] In terms of the circumstances in which the promise was made, it was made many years ago. The 1954 will had left everything to Freda, who died in 1964. Sammy was intestate thereafter. The respondents’ statement of claim indicated that the promise was made “in or about 1966”, when Glenholme was incorporated. The Judge’s findings are not precise, holding that Sammy’s promise to leave the Glenholme shares to Don and Paul was made “well before the 1990 will, probably as early as the 1970s”: at [39]. Whichever date is correct, it is clear that Sammy had a testamentary problem: his wife had died and it was going to be necessary for him to make further testamentary provision or die intestate. In those circumstances, it is hardly surprising that he thought of giving the Glenholme shares to members of a “surrogate” family that had given him and his wife such support. But that does not create a liability; all other relevant factors must still be considered.
[83] By 1990, life had changed for Sammy considerably. He still had the Atkinson connection but he had now become close to his Scottish kin and, in particular, David. To that extent, this is a “change of heart” case which arose out of a change of circumstances. It could not extinguish the promise. But the later events are germane to what award is reasonable.
[84] As to the value of the testamentary provision promised, this case is unusual in that there is not an identifiable fixed sum, save perhaps in the case of Jennifer. With respect to Don and Paul, specific property in the form of shares was promised. And if Glenholme prospered (as it did), it could have been expected that the value of the shares would rise.
[85] As to the amount of the estate and the nature and amount of other claims on it, Sammy’s estate can fairly be regarded as “substantial”. There are no competing claims on it. However, testamentary promises claims are not only different from claims in contract; they are to be distinguished from claims under the Family Protection Act 1955. Testamentary promises claims are not predicated on competing moral or dependency factors. A respectable margin of appreciation should be allowed for a trial Judge’s estimate of factors such as the size of the estate: see Powell at [42]. There is plainly room to very distinctly recognise this in the case of a large estate.
[86] As to the value of the services, we have already alluded to the real difficulties of concrete assessment in this case. We have accepted, as was articulated by McCarthy J in Tucker, that providing a “surrogate” family can amount to services of an intangible variety. It would be wrong to downgrade the enormous value to persons of “solidarity” and humanity of that kind. Real and lasting friendship is rightly accorded real worth in the pantheon of human virtues. Undoubtedly, those things were very important to Sammy. But it seems that Sammy considered that the Atkinson family had had far more from him economically than he had had from them. With the benefit of hindsight based on his correspondence, Sammy’s viewpoint seems to have been that he had helped the Atkinsons get set up in life. His financial contribution to Glenholme resulted in a successful farming business worth over $4 m. This could never have come about but for him. To put this another way, Sammy did not rate the economic value of his association with the Atkinsons highly at all. If anything, he seems to have thought that he got a “poor return” on it. But the law requires that the “value” of what Sammy received be assessed objectively.
[87] As to other relevant circumstances, we turn now to the particular difficulties of Sammy’s estate and the Glenholme shareholding. The claim which the Judge upheld was to 12.91 per cent of the shares in Glenholme. The valuation which was undertaken by Quay Accountants as at 31 March 2008 valued the Glenholme shareholding at $4,620,000, or $73.92 per share. 12.91 per cent of that shareholding results in a quantum of $595,980. This produces the rounded figure of $600,000 which has been used throughout the litigation. That assumes that an overdrawn shareholder’s current account is part of the equity of the company (as it normally would be). As the accountants noted, this probably undervalues the book values of the livestock, which are based on 2007, not 2008 figures. Rounding things off, it would not be unreasonable on the figures we have been given to assume, on a net assets backing basis, a value of $75 per share in Glenholme. In passing, this may be thought to reinforce Sammy’s own point that his initial investment of £4,000 had been critical in creating what is now a $4 m asset, over the course of more than a quarter of a century.
[88] The fact that the estate owns these shares in Glenholme creates its own very real difficulties for both the Atkinsons and Sammy’s descendants. There can be no doubt that this litigation should have been settled. It is completely to the disadvantage, both financially and emotionally, of all parties that it has advanced through our courts. That said, the real life position now is that David is the trustee of Sammy’s estate and, if the shares remain in it, he will have to continue to deal with Glenholme. Sooner or later, by some means, the Atkinsons are going to have to acquire the estate’s shareholding. They can hardly complain about that; Sammy put his stake in the ground many years ago when he insisted on being an initial shareholder. The respondents’ problem is that they had an expectation (upheld by the Judge) that Sammy was effectively going to forgo that interest on his death.
[89] It is easy to empathise with the position taken by the Judge because what he did is craft a practical solution to the dilemma. But realistically the only way one can get to the Judge’s outcome, in terms of fundamental principle, is by valuing the intangible benefit of human solidarity at a very high figure. While solidarity has to be taken seriously, the problem for the law is that this measure is immeasurable in monetary terms.
[90] Against all of this we return to the essential question: what is a reasonable amount as remuneration for the net benefit of the services actually rendered in this case?

2. Jennifer Dainty’s distinct services

[91] We take first the position of Jennifer, whose position is in some respects discrete. The services she rendered have an orthodox element, difficult though it is to quantify given the inadequacy of the evidence put before the Court.
[92] Jennifer had no expectation of shares. She had an excellent and loving relationship with her “Uncle Sol”. More particularly for immediate purposes she undertook a number of tasks that might fairly be considered to be “services” which constituted “something extra”.
[93] After an intestinal prolapse in the 1980s, Jennifer took Sammy manageable light food, cleaned his home, and through that and other medical episodes took him for checkups. Caregiving of that kind is demanding and, on our estimation, would have required “home help” if Jennifer had not undertaken work of that kind. She increasingly assisted Sammy with his personal accounts and cash handling. She provided transport, and a “search and rescue” type role at the onset of Sammy’s Alzheimers, when he began wandering about the neighbourhood.
[94] On the evidence, it is not easy to pinpoint an exact temporal period for these activities. We know Sammy retired in 2002 at the age of 92; he moved into a rest home in 2004 at the age of 94; and he died in 2006 at the age of 96. He had further medical and related problems before retirement and it seems he did not retire until these really overtook him. As we have noted, caregiving is demanding and time consuming work. Jennifer was not Sammy’s natural daughter. He would likely have had to have paid for assistance if she had not stepped in. We think we can fairly say these kinds of services were discrete.
[95] It would be wrong to be parsimonious in a case under an Act which calls for a “large and liberal construction”: Tucker at 776. It may well be that if Jennifer had not done what she did, Sammy would have been moved to a rest home rather sooner than he was. Doing the best we can, we allow a figure of $12,000 per annum for four years, or $48,000, with regard to the forgoing specific matters. We round that off at $50,000.

3. Valuing the “family relationship”

[96] Moving to the position of Don and Paul, the evidence did not disclose on their part the sort of discrete or “extra” things that were undertaken by Jennifer. There is only minimal evidence of contributions by Don and Paul. Even on the respondents’ case, matters were not put above the strength of the relationship, in solidarity terms. For instance, in one telling passage in the notes of evidence the following exchange took place between the Judge and Don:

Q. Tell me in your own words Mr Atkinson why you think that the late Mr Samuels should have left these shares to you and your brother?

A. For the same reason that I would have expected my parents and mother and father to leave their shares to us. I saw it and that same terms (sic). Providing we were honourable members, family members and supported our mother and father thru ups and downs I saw it in exactly the same way with Sammy but I always understood from my perspective that only pertained to the farm, or the shares in the farm and not the rest of his estate.

...

Q. Do you think that his obligation to leave the shares to you and your brother was to reward the two of you for anything if so what?

A. I have never thought of inheritance in those terms. But I just think there was with that there is a duty of care in the sense that we were all there for each other and in turn we are there for our children and he was just part of that cycle. I don’t see it as being in terms of affectedly given (sic) rewards I just see it as terms of family and what we were about. We were brought up in a very traditional rural family.

[97] This passage is in many ways emblematic of the difficulties in this case: the Atkinsons and the Samuels did what they did because they treated each other as surrogate or extended family. Donald and Leila Atkinson did not think of themselves as performing services and indeed would likely be offended to have things thought of in that way. As we have already noted (at [86]), this is not a claim under the Family Protection Act and we are not concerned with Sammy’s moral duty.
[98] Any talk of “purchasing” or measuring the worth of a surrogate family has obvious difficulties. We incline to the view that economic analysis does not hold appeal or particular utility here. The derision which rightly attended Richard Posner’s attempt to put a value on babies is a salutary warning against such an exercise: see Landes & Posner “The Economics of the Baby Shortage” (1978) 7 J Legal Stud 323. We think there is no alternative but to consider the matter as one of judgment “in the round”, based on what is a reasonable remuneration for the services rendered taking into account all relevant circumstances. We award each of the respondents a sum of $50,000 under this head.

Conclusion

[99] The appeal is allowed.
[100] The quantum of the awards assessed in the High Court is set aside. In substitution therefore:

(a) Jennifer Dainty will have a sum of $100,000 out of the estate.

(b) Donald Atkinson will have a sum of $50,000.

(c) Paul Atkinson will have a sum of $50,000.

[101] Counsel were agreed that the costs of the parties should come from the estate in this instance. We agree. We do not think it appropriate to put the parties to the trouble and expense of a taxation. Counsel should, within 21 days of this judgment, submit a combined schedule as to their suggested fees and disbursements. The Court will consider the schedule, and issue a short costs judgment, if the sums are approved.

Solicitors:
Wynyard Wood, Auckland for Appellant
Buddle Bentley Tweed, Whakatane for Respondents