Henry v Henry [2007] NZCA 42; [2007] NZFLR 640 (5 March 2007)

Last Updated: 2 January 2012

IN THE COURT OF APPEAL OF NEW ZEALAND

CA116/06 [2007] NZCA 42

BETWEEN PHILIP ROLAND HENRY
Appellant

AND GRAHAM JOSEPH CHARLES HENRY
Respondent

Hearing: 13 September 2006

Court: Glazebrook, O'Regan and Robertson JJ

Counsel: W M Patterson for Appellant
S J McCarthy for Respondent

Judgment: 5 March 2007     at 3 pm

JUDGMENT OF THE COURT

A The appeal is allowed and the order made in the High Court is set aside.

2. The matter is remitted to the Family Court for reconsideration in light of the new evidence relating to the appellant’s health and the consequential impact on his needs, and in accordance with the legal test as set out in this judgment.

100. We make no award of costs.
     

REASONS OF THE COURT

(Given by O’Regan J)

Introduction

[1] This appeal raises a number of issues surrounding the disposition of claims made under the Family Protection Act 1955 (the Act). The case concerns the competing claims of two brothers to the estate of their mother. The testatrix left three quarters of her estate to the respondent Graham Henry, and one quarter to the appellant Philip Henry. In the Family Court the claim made by Philip succeeded, as did a claim made by Philip’s daughter, Carolyn Henry: FC MAN FP092/993/02 FAM-2002-092-002816 3 June 2005. The outcome in the Family Court was that Carolyn was to receive $75,000 from the estate, and the remainder of the estate was to be shared equally by Philip and Graham. On appeal to the High Court, Asher J left undisturbed the award to Carolyn , but allowed Graham’s appeal, and ordered that Graham receive three quarters of the balance of the estate, and Philip receive one quarter: [2006] NZFLR 502. Philip now appeals to this Court, seeking a restoration of the Family Court decision. Carolyn took no part in the appeal and there is no challenge to the decision that Carolyn was to receive $75,000 from the estate, so the issue before us is confined to the brothers’ shares of the remainder of the estate.

Issues

Standard of review

[2] In the High Court, there were a number of challenges to factual findings made by the Family Court Judge, and the High Court Judge took a different view on a number of those issues. There was criticism of the approach taken by the High Court Judge, which raises an issue as to the standard of review which should be applied in challenges under the Act against decisions made by testators and testatrixes. That issue applies both to the High Court decision and to this Court’s decision in the present appeal.

Judicial review analogy

[3] In the High Court, Asher J found that the Family Court Judge, Judge Strettell had failed to adopt the conservative approach mandated by recent decisions of this Court. Asher J suggested that this Court’s exhortation to trial Judges to be conservative in decisions involving overruling the wishes of a testator or testatrix could be met by adopting an approach similar to that used in public law cases involving challenges to a decision of a public official on the basis of unreasonableness. The issue is whether that suggestion was correct.

Conservative approach

[4] Asher J’s comments on the conservative approach raise a further issue, namely what this Court meant by its reference to a conservative approach and how it should affect the way Judges deal with claims under the Act.

Approach to claims involving financial need

[5] In this case, the claimant is in financial need. That requires consideration of the approach to claims made under the Act where the claim is made in circumstances where the failure to make adequate provision from the estate is said to have left the claimant in financial need. That in turn requires consideration of whether the approach to such cases is different from that adopted in cases where the claimant is not in financial need.

Events after death of testator/testatrix

[6] In the present case, the needs of the claimant may have changed since the date of the High Court decision because of a deterioration in his health. There is an issue of whether this should be taken into account by this Court and, if so, how that should be done.

Factual issues

[7] There are also a number of disputed factual issues.

Setting the scene

[8] Before embarking on an evaluation of the above issues, it is necessary to provide some background as to the positions of Graham and Philip, and the dynamics of their family. The factual background is summarised in some detail in both the Family Court and High Court judgments, and there is no need for us to repeat that detail here. What follows is a brief summary of the facts which are salient to our decision. The reader is referred to the High Court judgment for further detail.

The estate and the will

[9] The testatrix, the mother of Graham and Philip, died in December 2001. Her last will was made in August 2000, and provided for Philip to receive one quarter of the residue of her estate, and Graham to receive three quarters. There are no other siblings. No provision was made for Carolyn. Neither brother is married and there are no other grandchildren of the testatrix. At the time of the High Court decision, the estate was worth about $800,000.

Graham

[10] Graham undertook a pharmacy apprenticeship after leaving school. After travelling overseas for a few years he worked in various pharmacies and then bought his own pharmacy which he has operated for about 35 years. He has net assets of about $950,000. The High Court Judge described him as having been a dutiful son, attending to his parents’ emotional needs and assisting them in managing their affairs over the last 20 years of their lives. Although he has no financial need for provision from his mother’s estate he has the right to the testamentary disposition made for him unless that must be varied to respond to the inadequacy of the provision made for his brother.

Philip

[11] Philip has no assets of substance and, following a severe back injury some years ago, is unable to undertake any significant paid employment. He lives in rented accommodation and is a recipient of a sickness benefit, though he sometimes supplements this with casual painting work. Subsequent to the hearing in this Court we received further evidence indicating that Philip now suffers from motor neuron disease and has limited life expectancy. We will revert to this aspect of the case later.
[12] There was considerable dispute about the contribution made by Philip to assisting his parents, and the assistance he had received from them, during their lifetime. We will return to this aspect of the case later. For present purposes we record the following:

(a) After leaving school Philip worked on his parents’ farm until he was 18, then attended Massey College for some time but did not complete his diploma. He then worked on the farm, a sheep and cattle operation on 257 acres. When he was 20, about 150 acres were transferred to him and he and his father farmed the whole property in partnership. The farm was operated as a single entity from 1962 when the partnership was formed to 1979 when it was dissolved and the farm was sold. However Philip worked as an agricultural contractor as well as on the farm during this period. The farm was converted to a dairy farm in 1968 and Philip said he made a substantial contribution of labour and equipment at that time. From 1968 onwards there was a sharemilker on the farm.

(b) In his mid-twenties Philip commenced a relationship with a woman who later became his wife, Diane, but the marriage was short lived. Carolyn was the only child of Philip and Diane.

(c) In his early thirties Philip began training as a pilot and for some time worked for Mt Cook Airlines. In 1980 he travelled to the United States, and then lived out of New Zealand until 2001, just before his mother’s death. In later years he was living in Australia, where he suffered an industrial accident which has prevented him from holding sustained employment. Philip was still living in Australia at the time the testatrix made her will and records that he was under pressure to return to New Zealand. He reported an acrimonious conversation with his mother just prior to the making of her will in August 2000. However he returned to New Zealand a few months before his mother died.

Family Court award

[13] Judge Strettell’s analysis started with the testatrix’s reasons for the 25/75 split. These were recorded in a file note made by her lawyer at the time of the making of the will. At that time, the testatrix thought the estate was worth about $412,000. She had noted that Philip’s share of the farm had been gifted to him, and when the farm was sold he got more out of it than she and her husband, and that Philip had had other financial support from them. She said she thought Philip was not entitled to anything further but had reluctantly decided that some further provision should be made for him.
[14] Judge Strettell found that the testatrix was wrong in a number of respects. In particular she and her husband had not received less than Philip from the sale of the farm. Similarly, the Judge found that she was wrong in her assertion that Graham had received no financial assistance from his parents whereas Philip had received substantial financial provision from his parents. The Judge found that the operation of the farm and the distribution of the proceeds of its sale involved real contributions by Philip to the welfare of his parents and that the testatrix’s view was both wrong and unfair. The Judge described the testatrix as having “unfairly categorised Philip as a prodigal son who wasted his inheritance”.
[15] Having assessed the legal test to be applied, the Judge commented at [75]:

Had the testatrix been fully cognisant of the facts relating to Philip’s acquisition of the farm and the manner of disposition following dissolution, together with the appreciation of the real value of her estate, then she may well have acknowledged that the position of her two sons was similar. One being their principal support in the earlier years and one in the later years of their lives.

[16] The Judge noted that equality between the children was not a principle based on precedent or a prima facie requirement, but found that there was much to commend it in the present case. He therefore ordered that Philip share equally with Graham in the residue of the estate.
[17] The attraction of the equality principle may have been based, at least in part, by the observation the Judge made earlier in his judgment at [65], when discussing the decision of this Court in Auckland City Mission v Brown [2002] 2 NZLR 650, as follows:

Of particular interest in respect to that case is the way in which the Court considered an adult child’s claim and needs might be met, the right to a home and a “contingency fund” were thought to be the way in which such claims might be met.

[18] The provision of a half share in the residue of the estate provided enough to Philip to purchase a home and still have a contingency fund.

The High Court appeal

[19] Asher J reviewed the authorities both on the standard of appellate review and on the basis on which a trial court should approach a claim made under the Act. On the latter issue, he concluded that the approach of a trial court to a claim under the Act has many similarities to that of a court conducting judicial review of an administrative action of a public official. On appeal both counsel took issue with that finding, and we will deal with it in more detail later in this judgment.
[20] The Judge evaluated the evidence relating to the contributions made by both Philip and Graham during their parents’ lifetime. He made a number of important factual findings which led him to the conclusion that the Family Court Judge had over-emphasised the contribution Philip made to his parents. These included:

(a) Philip’s work on the farm after the age of 20 was only part time and he received remuneration for it;

(b) While Philip was involved in the change of the farm to dairying, he got a benefit out of that because his half share in the farm increased in value;

(c) Philip received half the farm at the age of 20, and did not pay for it, or at least for most of it;

(d) Philip received some money at the time the farm was sold, probably less than half the proceeds but nonetheless a substantial amount;

(e) From the age of 27, Philip led his own life and became progressively less connected to the farm.

[21] The Judge then turned to the reasons of the testatrix for making lower provision for Philip than for Graham. He accepted that she had been wrong to say he got more out of the farm than she and her husband did, but said there was still room for her to have a perception that Philip had done very well out of the farm and to consider that there was an inheritance element to this. He had squandered this, and had had little to do with her for some 20 years. This led him to conclude that the Family Court Judge had mistakenly assumed too harsh an attitude by her to Philip.
[22] The Judge then turned to Philip’s need and said this was treated as a given, which he accepted was correct.
[23] Evaluating the claim overall, Asher J determined that the Family Court Judge had made a significant error in equating Philip’s contributions to those of Graham, and had also been in error to rejecting the conclusion of the testatrix that Philip had already received his inheritance. Asher J said that the judgment made by the testatrix when determining to leave 25% of the residuary estate to Philip was a judgment she was entitled to make in the circumstances. He concluded at [100] that her conclusion was not “manifestly unreasonable”. Accordingly, she had not been in breach of her moral duty and, if the Judge had taken a conservative approach as he was required to do, he would have dismissed the claim. The appeal was therefore allowed and the 25/75 split provided for in the testatrix’s will was restored, subject only to the prior payment to Carolyn of the $75,000 provided for her by the Family Court judgment.

Standard of review

[24] This Court made it clear in Little v Angus [1981] 1 NZLR 126 at 127 what standard of review should be taken on appeal. It said that the approach was 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”. In reaching that conclusion the Court was reiterating what Cleary J had said in delivering the judgment of this Court in Re Blyth (Deceased), Blyth v Blyth [1959] NZLR 1313. There was no dispute that this restrained approach applies to appeals from the Family Court to the High Court. A similar restrained approach applies on second appeals to this Court.

The judicial review analogy

[25] The approach to be taken to family protection claims at first instance has been the subject of extended consideration in two decisions of this Court, Williams v Aucutt [2000] 2 NZLR 479 and Auckland City Mission v Brown.
[26] The starting point is s 4 of the Act which provides:

4 Claims against estate of deceased person for maintenance

(1) If any person... dies, whether testate or intestate, and in terms of his or her will or as a result of his or her intestacy adequate provision is not available from his or her estate for the proper maintenance and support of the persons by whom or on whose behalf application may be made under this Act, the Court may, at its discretion on application so made, order that any provision the Court thinks fit be made out of the deceased's estate for all or any of those persons.
...

[27] Courts often use the shorthand expression “moral duty” to describe the obligation to make “adequate provision... for the proper maintenance and support” of legatees. Although this expression is not mentioned in s 4, it is “too deeply embedded to be open to judicial reconsideration now”: Re Z (deceased) [1979] 2 NZLR 495 at 506 (CA). It also received apparent recognition from Parliament, which used the phrase in amending the Act in 1967 (see s 3(2)).
[28] In the judgment under appeal, Asher J drew an analogy between claims under the Act and judicial review claims. The Judge said (at [35]):

A Court at first instance considering the deceased’s conduct of the testamentary discretion, can draw some analogy between a discretion of a Court considering a Family Protection Act claim, and judicial review. This type of approach can be discerned in the preliminary paper of the Law Commission NZLC (24) [241 – 262]. It was endorsed by Sutton & Peart, pages 408 – 409. As the learned authors comment, the Court is exercising a discretion that has already been exercised by the deceased, not dissimilar to that carried out by a public official exercising a statutory or regulatory discretion. The comparison is apt, because of the Courts’ refusal to interfere with the decision in the absence of patent unreasonableness, or demonstrated error.

[29] And later, at [50], he added:

As I have stated earlier in this judgment, the approach of the first instance Court has many similarities to that of a Court conducting a judicial review of an administrative decision of a public official. Only in the event of clear and material error or omission, or when the decision is one that no reasonable testatrix would have made, will the Court intervene.

[30] Neither party supported this exposition of the law before us. Mr McCarthy, however, argued that the Judge had not applied the judicial review analogy in his evaluation of the points raised on appeal, and that his comments were therefore obiter. We disagree. In our view it is clear from [100] and [110](d) of the judgment that he did take the judicial review approach to his task.
[31] The references at [35] of the High Court judgment to an article by Professors Sutton and Peart (“Testamentary Claims by Adult Children – The Agony of the “Wise and Just Testator”” [2003] OtaLawRw 6; (2003) 10 Otago LR 385), and to a preliminary paper of the Law Commission (Succession Law: Testamentary Claims (NZLC PP24 1996)), require further scrutiny.

Sutton and Peart’s views

[32] The cited passages from the Law Commission appear in the context of the Commission’s consideration of possible options for statutory reform of succession law. Professor Sutton was one of the Commissioners.
[33] In the course of discussing one of the options, the Commission referred to a “high threshold test of unreasonableness”. In relation to another, the Commission said a test based on the reasonableness of a testator’s bequest did not lend itself to a clear exposition of principles for curial review of a testator. However, the Commission drew no explicit analogy between a judicial review standard and a curial review of a testator under the Act.
[34] The first invocation of the judicial review standard is found in the article by Sutton and Peart. They referred to the following statement in Williams v Aucutt at [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...

[35] The Court then qualified this because of the testatrix’s error in underestimating the value of her estate. Sutton and Peart note that, from a traditional perspective, the emphasis on the testatrix’s mistake is out of place: the provision for Susan was either adequate or it was not. But they then note that the traditional view may be too simplistic and add at 408-409:

The Court’s lengthy experience with judicial review has spilled over into the family protection area. The testator is to be regarded as one would a public official, who has a legitimate territory of choice which is to be respected. Social values are complex and the court must always be aware of the danger of imposing the cultural preference of one family group on the honest decisions of another... The Law Commission foreshadowed this approach in its Preliminary Paper.

...

Courts are being encouraged not to respond too rapidly to their initial feelings of surprise and distaste at what is complained about in a family protection case. Suppose the testator or testatrix has given serious thought to the requirements of the claimant, had a correct appreciation of all the facts, and has then made a will which is reasonably applicable to the situation at his or her death. In such a case, courts should be slow to come to a different conclusion. Where, to the contrary, the testator or testatrix has been wrong-headed, revengeful or simply mistaken, the testamentary disposition calls for much closer scrutiny, and the court should more readily substitute its own provisions for those found in the will.

What is required to support the judicial review analogy?

[36] We do not think the comment of this Court in Williams v Aucutt at [54] heralded a fundamental change to the approach to be taken in cases under the Act from an orthodox assessment of whether adequate provision has been made for the proper maintenance and support of the claimant. The Court's outlining of the orthodox test at [52] confirms that. Nor do we think the judicial review analogy is appropriate. It would be appropriate in the present context only if:

(a) the testator’s role were analogous to that of a public official; and

(b) the first instance Judge’s role were analogous to that of the High Court in a judicial review proceeding based on unreasonableness.

[37] Neither is the case.

(a) Public official : testator analogy

[38] There are a number of differences between a public official and a testator. The testator is not charged with a function – he or she can die intestate and is not required to act. The testator decides on the disposition of his or her estate only with reference to his or her own intentions. A public official exercises a statutory power of decision in accordance with the statute or instrument giving him or her power to do so. The testator’s actions are subject to challenge only once he or she is dead and only on the specific basis set out in s 4 of the Act. All the court can do in remedial terms is to redistribute the estate by no more than is necessary to remedy the failure to make adequate provision for the maintenance and support of the beneficiary. The focus is on the result of what the testator did, not the process by which the result was achieved. In contrast, where a court reviews a decision by a public official, it focuses on the statutory power under which the decision was made and the process to be followed. If it decides judicial review is justified, it can, among other things, remit the matter to the public official with a direction as to how the official’s power of decision ought to be exercised.

(b) Family Protection Act court: judicial review court analogy

[39] We will deal later with the approach to be taken by a court considering a claim under the Act. For present purposes, it suffices to say the court has a “wide discretion” to decide on a testator’s disposition as it “thinks fit”, subject to the requirement to do no more than necessary to remedy the failure to make adequate provision for the beneficiary. In contrast, a court hearing a judicial review claim must confine its consideration to established grounds of review. The focus is on process, rather than substance. Where the ground of review is unreasonableness in the sense described in Associated Provincial Picture Houses Ltd v Wednesbury Corp [1948] 1 KB 223, the degree of deference to the decision maker, and the corresponding willingness or unwillingness to intervene may depend on a number of factors relating to the nature of the office held by the public official and the nature of the decision.
[40] In our view, Asher J was, with respect, wrong to draw an analogy between judicial review claims and claims under the Act at [35] and [50] of his judgment. His consideration of the case was coloured by his adoption of the analogy, and his conclusion followed from his application of it.

A conservative approach

[41] We now turn to the approach which should be taken to assessing claims under the Act. We look at this at a general level, before focusing on claims based on financial need, as was the case here. This requires us to analyse the decisions of this Court in Williams v Aucutt and Auckland City Mission v Brown.
[42] In Williams v Aucutt, the testatrix’s estate was worth $920,000. She left assets to the value of $870,000 to one of her two daughters, Christine, and assets worth only $50,000 to her other daughter, Susan. The reason for this disparity was spelled out in the will itself: Christine’s financial position was far worse than that of Susan, whose net worth (combined with that of her husband) exceeded that of the estate. It was not in dispute that both Christine and Susan were dutiful children and the testatrix held affection for both of them. Susan applied to the High Court for greater provision from the estate. The High Court held there had been a breach of moral duty by the testatrix and ordered that Susan was entitled to 25% of the residue of the estate. Christine appealed to this Court. This Court thought the amount awarded by the High Court was excessive, and restricted Susan’s entitlement to an additional $50,000.
[43] Delivering the leading judgment, Richardson P (on behalf of himself, Gault, Keith and Tipping JJ) quoted with approval (at [35]) this Court’s judgment in Little v Angus at 127 per Cooke J:

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...

[44] Richardson P referred to reports and academic commentary to demonstrate concerns that courts had hitherto taken too liberal an approach when adjusting testamentary dispositions. He then articulated the test to be applied in the following terms at [52]:

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.

[45] This invocation of a “broader approach” affirms an older rule (see Allardice v Allardice (1910) 29 NZLR 959 at 969 and Re Harrison (Deceased), Thomson v Harrison [1962] NZLR 6 at 14) that to establish a claim under the Act, the claimant need not be in necessitous circumstances. It is not inconsistent with a conservative approach to the Court’s role under the Act.
[46] On the facts, the majority determined than an award of a “relatively moderate amount” of $50,000 to Susan, increasing her share of the estate to about 10%, was all that was required to meet the limited purpose of supplementing the recognition of Susan’s family belonging already provided under the will (at [55]).
[47] In a concurring judgment, Blanchard J explicitly favoured a conservative approach. Although His Honour considered the Law Commission’s approach was “extreme”, he said (at [68]):

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 rewrite 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. [Emphasis added.]

[48] Later he added (at [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.

[49] This Court confirmed the approach of Blanchard J in Auckland City Mission v Brown. This case involved a substantial estate, worth $4.6 million. The testator had one daughter who herself had three children. The testator settled a property worth $1 million in trust for his grandchildren. A specific bequest was made to his daughter, but it was significantly smaller than another bequest to a long-term female friend of the testator. The majority of the estate was left to charity.
[50] As in Williams v Aucutt, the testator’s reasons for the comparative parsimony of the bequest to the daughter were spelled out. The testator had provided venture capital to the daughter’s husband and he had not made a good fist of it. The testator considered the husband was lazy, and he did not want any more of his money to be squandered. The testator considered that the trust fund for the grandchildren amounted to adequate provision for his daughter because it saved her having to apply money for her children’s support. The daughter claimed under the Act and the first instance judge awarded her $1.6 million separate from the provision for her children. This Court allowed the charity’s appeal in part, and reduced the provision to just under 20% of the estate.
[51] Delivering the judgment of the Court, Richardson P took issue with a comment made by the first instance judge to the effect that Williams v Aucutt should not be read as authority for the proposition that claims by adult children should be viewed more conservatively than in the past (at [33]).
[52] Richardson P said that comment misrepresented the views of this Court in Williams v Aucutt. He approved of Blanchard J’s dictum in Williams v Aucutt to the effect that the courts have, in recent years, illegitimately assumed the power to refashion a will that is perceived as being unfair. He quoted the test set out at [52] of Williams v Aucutt (quoted at [44] above) as the required approach.
[53] On the facts, the Court determined that a wise and just testator would have ensured that the daughter’s family had the means to acquire a more substantial family home debt free, to clear a small loan from the estate and to provide a reasonably substantial contingency fund. Twenty percent of the estate, or $850,000, was sufficient for those purposes.
[54] In both Williams v Aucutt and Auckland City Mission v Brown the focus was on what was required to remedy the failure to make adequate provision in the will. In both cases there was no real dispute in this Court that such a failure had occurred. It is likely that the Court’s remarks about conservatism were also focused on the extent to which the will should be disturbed when a failure to make adequate provision is established. The law is clear on that: the award to the claimant should be no more than is necessary to remedy the failure. This Court’s concern appeared to be that that approach was not being strictly followed. So, in that context, conservative means simply “no more than the minimum necessary to make the adequate provision”.
[55] However, the call for conservatism is not limited to the question of what should be done to remedy a failure to make adequate provision. It applies also to the assessment of the issue as to whether adequate provision has been made. Again a mere perception of unfairness is not a good enough reason to disturb the will: the Court must conclude that the claimant has established that he or she has not received adequate provision for proper maintenance and support. That assessment must be made applying the test enunciated by Richardson P in Williams v Aucutt at [52] (quoted at [44] above). In making the assessment, however, the Judge must remind him or herself that there is no basis for the Court to override the testamentary freedom of the testator or testatrix if that test is not met, even if it appears to the Judge that a fairer distribution of the estate would have been desirable.

Is there a different approach for financial need cases?

[56] There was some argument before us that the conservative approach referred to by Blanchard J in Williams v Aucutt and by Richardson P in Auckland City Mission v Brown would not apply to the assessment of the amount required to remedy the failure to provide adequate provision for a claimant whose claim is based on financial need. We disagree. The principle is the same: the amount by which the will is disturbed should be no more than is necessary to make adequate provision for the maintenance and support of the claimant. That applies whether the claimant’s case is based on financial need or on a broader need for support or both.
[57] Mr Patterson referred us to the decision of this Court in Re Harrison at 16, where this Court commented that, once it was established that the claimant had practically no assets, the only justification for refusing relief would be if the testator’s estate was insufficient to meet the paramount claim by the claimant. He argued that this demonstrated that the conservative approach referred to in Auckland City Mission v Brown and Williams v Aucutt could not apply to a claimant in financial need. He said that if the conservative approach were applied, that would have the effect of reducing what would normally be an appropriate award. He said that approach should be rejected.
[58] We do not accept that the application of the conservative approach would reduce what would normally be an appropriate award. By definition, the result of applying the law as determined in earlier decisions of this Court would lead to the appropriate award. That award may be lower than some awards made in cases which were subject to the criticism made by Blanchard J in Williams v Aucutt. However, we do not think Mr Patterson’s concern is well founded. In cases of financial need, the amount necessary to remedy the failure to made adequate provision in the will will be able to be determined with greater precision, and with less room for broad value judgments, than in cases where the need is more of a moral kind. The conservative approach requires that the Judge makes the assessment of what is required on a basis which focuses on what is necessary to make adequate provision, but to do no more than that. Broader questions of desirability of greater awards or the Judge’s views of fairness should not come into play. We do not therefore share Mr Patterson’s concern that the application of the conservative approach will lead to improper awards.

Changes of circumstances after the death of the testator or testatrix

[59] In Little v Angus at 127, Cooke J said:

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.

[60] Although there was some debate about the issue before us, the above statement of principle is clear: events subsequent to the death of the testator can be taken into account in assessing the appropriate remedy if a breach of moral duty (assessed as at the date of death) is established.
[61] That is of considerable significance in the present case. At the hearing, we reserved leave for counsel to file further submissions on certain aspects of the case. Mr Patterson filed submissions, to which he attached a medical certificate for Philip Henry, which indicated that Philip’s health had deteriorated since the time of the Family Court and High Court hearings. According to the medical certificate, Philip now suffers from motor neuron disease, which is stated to be a “progressive untreatable condition”. According to the certificate, Philip will require significant assistance to support him at home, and as the disease progresses he may need to be cared for in a private hospital. None of this information was available to the High Court or the Family Court.
[62] After consideration of the further submissions filed, we issued a minute in which we pointed out that it was not possible for us to determine the impact of this new information about Philip’s health on the assessment of his needs without further evidence. We asked counsel for input on the manner in which we should dispose of the case. On 11 December 2006, the Court received a joint memorandum of counsel in which they indicated that they were agreed that this Court should issue a judgment as to the legal issues and test to be applied in dealing with the claim, and then remit the matter to the Family Court so that further evidence can be adduced as to the health of Philip and the impact of his health on the assessment of his needs. We agree that, in view of the need for further evidence, it is appropriate to remit the matter to the Family Court.

Factual issues

[63] The High Court Judge took a different view from that of the Family Court Judge on a number of factual issues. His focus on these issues was, at least partly, due to his focus on the reasons given by the testatrix for the division of her estate between Philip and Graham, and whether those reasons supported the proposition that she had acted on a basis which was unreasonable in the Wednesbury sense. Given our conclusions on the inappropriateness of that test, our focus is different.
[64] The difference of view between the High Court and Family Court on factual issues is still important, however, because an assessment of the moral duty of the testatrix, and, if breached, the measures needed to remedy that breach, requires some consideration of the contributions made by Philip during the lifetime of his mother to the wellbeing of his parents, and the extent to which he received benefits from his parents during their lifetime. Asher J found (at [110]) that the Family Court Judge had made a significant error in over-weighting Philip’s contributions, and had failed to place adequate weight on what Philip had already received during his mother’s lifetime. We set out our views on these issues so that our they can be taken into account by the Family Court Judge when reconsidering matters in light of the new evidence about Philip’s health and its impact on his needs.

Contributions by Philip

[65] Philip claimed that he had worked for a number of years on the farm without remuneration, and had also undertaken the conversion of the farm from sheep farming to dairy farming. Because the farm was carried on in partnership with his father, this meant that his parents had benefited from the conversion. Asher J found that there was nothing to indicate other than full participation by Philip’s father in the dairy conversion (at [72]). But Mr McCarthy conceded in this Court that, in fact, Mr Henry senior was overseas at the time of the dairy conversion and could not have participated in the work which was required to bring it about.
[66] The High Court Judge rejected Philip’s evidence that he received no income from the farm which he operated in partnership with his father from 1963 to 1980. The Family Court Judge found that, up until the conversion of the farm to dairying, Philip’s income to meet his own living expenses was generated from his agricultural contracting business rather than from the farm. He also found that after the conversion, a share milker was employed and the income from the conversion supported Philip’s parents. It was at that stage that Philip pursued his interest in flying, selling his agricultural contracting business and obtaining his commercial pilot’s licence.
[67] The High Court Judge found that Philip was an active partner prior to his becoming a pilot, but that he had received remuneration for this. He said that the assertion made by Philip that he received no farm income did not seem to be right. He referred to a rather cryptic entry in Philip’s father’s diary in 1963 indicating a 50/50 split of profits, and to the accounts on the dissolution of the partnership which show an allocation of income to Philip as a partner in the farming operation. Unfortunately there is no evidence of any actual payment of profits in the 1963-64 year, and no evidence at all for the years between 1964 and 1978.
[68] It is not surprising that there is little documentary evidence about the operation of the farming partnership, given it was dissolved 28 years ago. While we agree with Asher J that the Family Court Judge did not deal with the documentary evidence that payments may have been made to Philip in the 1963-64 year and in the 1978-79 year, we doubt that this evidence was enough to conclude that Philip was remunerated throughout for the work he did on the farm, and that that work was therefore not a substantial contribution to the benefit of his parents. The fact that Philip ran his own agricultural contracting business while also working on the farm gives some support to his contention that his work on the farm was not rewarded in cash at least for some periods. The extent of the contribution cannot be accurately assessed given the paucity of documentary evidence and the lapse of time, but it would be unfair to treat Philip’s work on the farm during the years of the partnership as not making some contribution to the benefit of his parents.
[69] The next issue relates to the sale of the farm and the distribution of the sale proceeds to the partners (Philip and his father). The High Court Judge accepted that upon dissolution Philip provided capital to which he had a legal entitlement to enable his parents to buy their home at Bucklands Beach, which was the major asset of Mrs Henry’s estate. However the extent of the contribution made on the dissolution was also in issue. Philip received about $170,000 from the sale of the farm, but rather than receive this in cash he received it as a share in the vendor mortgage. He then sub-mortgaged his interest in the vendor mortgage as security for loans made to him by his father to fund his pilot training. Ultimately, he received about $95,000 when the mortgage was redeemed, after meeting the obligations subject to the sub-mortgage.
[70] We do not think there is a significant issue here: it is clear that Philip received an entitlement to the proceeds of the sale of the farm which he took substantially by way of an interest in the vendor mortgage, rather than in cash, to allow the cash to be used to buy his parents’ home. He was able to use his interest in the mortgage to finance his pilot training (but appears to have effectively paid back these amounts on the repayment of the mortgage, so that they cannot be considered to have any element of gift from his parents). This was a contribution, but Asher J recognised that at [78].

The extent of benefits received

[71] The major focus of this aspect of the case was the transfer to Philip of 150 acres in 1963. It was clear from the transfer produced in evidence that this was a transfer for consideration, though Philip’s share was subject to a mortgage over the whole farm. However the consideration was not required to be paid, and it appears no payments were made until the dissolution of the partnership and the sale of the farm in 1979. Asher J referred to this transaction as being “a substantial gift”. In fact, the element of gift was the deferral of payment. That was the extent of the benefit received by Philip from that transaction. That can be contrasted with the testatrix’s statement to her lawyer at the time of the making of her will that Philip’s portion of the farm had been gifted to him.
[72] The testatrix also thought that, on the sale of the farm, Philip had got more out of the sale than his parents had. The Family Court Judge found that she was wrong in that perception, but Asher J thought that there was room for the testatrix to have a perception that Philip had done very well out of the farm. As noted earlier, the cash proceeds of the sale of the farm were substantially distributed to Philip’s father to allow for the purchase of the Bucklands Beach property, with Philip’s interest being represented by an interest in the vendor mortgage, which was not redeemed until seven years later, at which point he had substantially sub-mortgaged his interest.
[73] There was also evidence accepted in the Family Court, but not referred to in the High Court, to the effect that Philip had not received interest on the vendor mortgage, but had rather assigned the rights to receive interest to his parents. To an extent this may have been because of the sub-mortgage arrangement, but the deed of assignment of the interest entitlement from Philip to his parents does not refer to the sub-mortgage as the reason for the assignment. Thus at least some benefit was derived by Philip’s parents from this arrangement as well.

Observation: Auckland City Mission v Brown

[74] The award made by the Family Court Judge was to the effect that Philip and Graham would share equally in the residue of the estate, after the payment to Carolyn. Judge Strettell noted at [80] that this outcome “would enable Philip either to acquire a home of modest proportion or a deposit towards such a home and a sum for investment, which in turn might contribute towards any mortgage payable”.
[75] Earlier, when analysing Auckland City Mission v Brown, the Judge noted that the award made in that case was an amount necessary to ensure that the daughter’s family had the means to acquire a more substantial family home, to clear a small loan from the estate and to provide a reasonably substantial contingency fund. The actual award was $850,000 in that case, which constituted about 20% of the estate.
[76] The Family Court Judge observed at [65]:

Of particular interest in respect to that case is the way in which the Court considered an adult child’s claim and needs might be met, the right to a home and a “contingency fund” were thought to be the way in which such claims might be met”.

[77] Asher J referred to this observation and said at [57]:

So far as he seemed to be concluding in this paragraph that Auckland City Mission v Brown is setting some sort of standard by which adult children’s claims can be fulfilled, by giving them a home and a “contingency fund”, this is taking the statement out of context. The comment in Auckland City Mission v Brown referred to was made where there was a very large estate and ample money to meet all maintenance needs.

[78] We record that we agree with Asher J on this aspect of the case. The outcome of Auckland City Mission v Brown was the result of the application of the relevant legal tests (see [44] and [55] above) to the particular facts of that case, which bear no resemblance to the facts of the present case. We agree with Asher J that it would be wrong to see Auckland City Mission v Brown as authority for the proposition that the provision of sufficient money to purchase a home and provide a contingency fund is some kind of benchmark or default standard. If the Family Court Judge did, in fact, see Auckland City Mission v Brown as providing some sort of benchmark he was wrong to do so, and should not take that factor into account in his reconsideration of the merits of the case.

Result

[79] We allow the appeal and set aside the order made in the High Court at [119].
[80] We remit the matter to the Family Court for reconsideration in light of the new evidence relating to the appellant’s health and the consequential impact on his needs, and in accordance with the legal test as set out in this judgment.

Costs

[81] As each party has had a measure of success in this Court, we make no award of costs.

Solicitors:
Patterson Hopkins, Auckland for Appellant
Murdoch Price, Auckland for Respondent