Lister v Pegg Ayton Gordon Trustee Limited [2014] NZHC 1956 (19 August 2014)

Last Updated: 30 September 2014

IN THE HIGH COURT OF NEW ZEALAND WHANGAREI REGISTRY

CIV 2014-488-000057 [2014] NZHC 1956

UNDER	The Family Protection Act 1955, Section 4, the Property Law Act 2007, Section 64 and the Trustee Act 1056 Section 83B
IN THE MATTER OF	the Estate of EARL ARTHUR RAYMOND LISTER
BETWEEN	DEBRA ANNE GRETA LISTER Applicant
AND	PEGG AYTON GORDON TRUSTEE LIMITED, ROBYN ETHEL FRONTIN MATHEWS, LANCE IAN LISTER and LINDA LOUISE LISTER/EDDIE Respondents

Hearing:	19 August 2014
Appearances:	DAG Lister in person, the Applicant C Hallowes and J Thomas for the Respondents
Judgment:	19 August 2014

_{JUDGMENT OF ASSOCIATE JUDGE CHRISTIANSEN}

This judgment was delivered by me on

19.08.14 at 4:30pm, pursuant to

Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

_{Date...............}

D A LISTER v PEGG AYTON GORDON TRUSTEE LIMITED, REF MATHEWS, L I LISTER and L L LISTER/EDDIE [2014] NZHC 1956 [19 August 2014]

[1] Ms Lister has filed a claim challenging a gift provided by the Will of her

Aunt, Iris Lorna Lyons (Ms Lyons) who died on or about 2 March 1995. [2] By her Will dated 10 December 1993 Ms Lyons:

(a) appointed her brother Earl Arthur Raymond Lister (Mr Lister) the sole executor and trustee of her estate;

(b) bequeathed to Mr Lister a life interest in her flat property located at

1/84 Trafalgar Street, Royal Oak, Auckland (the flat) with the remainderman to the Wilson Home for Crippled Children (the Wilson Home Trust) a registered charitable trust; and

(c) the residue of her estate was bequeathed to her brother Mr Lister with a gift over to Mr Lister’s children if he predeceased Ms Lyons.

[3] Mr Lister died on 31 October 2011. The applicant, Debra, is a daughter of the late Mr Lister.

[4] The applicant is also one of four executors of Mr Lister’s estate. The other

three are Mr Lister’s son Lance, daughter Linda, and Ms Mathews a solicitor.

[5] The executors and trustees of Mr Lister’s estate have also become the executors and trustees of Ms Lyon’s estate by virtue of Section 13 of the Administration Act 1969.

[6] In this proceeding the applicant has filed claims under s 4 of the Family Protection Act 1955, s 64 of the Property Law Act 2007, and s 83B of the Trustee Act 1956. Of those only the Property Law Act claim directly challenges the testamentary provision by Ms Lyons to the Wilson Home Trust.

[7] This judgment deals with the application for strike out brought by the Wilson

Home Trust.

8. I am seeking to claim the property at 1/84 Trafalgar Street, Royal Oak Onehunga Auckland (Land Registration identifier NA 14D/297) under s 64 of the Property Law Act 2007 on the grounds that both my father Earl Arthur Lister and myself Debra Lister have/had issue with the gift over to the Wilson Home Trust and therefore the gift over has failed and it is part of my father’s Estate. Earl Lister had persistent and continual issue with the gift over, with attempts to secure the property through his Lawyers (done deal/watertight he was told) and multiple approaches directly to the Wilson Home...

9. The property at 1/84 Trafalgar Street, Royal Oak Onehunga, is subject to paragraph 3(c) of my Aunt, Mrs Iris Lorna Lyons Will... which indicates that the property is to be left to her brother Earl Lister as a life interest and then sold and the nett proceeds gifted over to the Wilson Home Trust on his death.

...

11. As I am on a WINZ Invalid benefit and the only sibling to be living in rental accommodation (which is set for development in 18 months), I am anxious to live in my aunts flat as it is essential to my future security and well-being. My father had offered the Onehunga flat to me to live in during his lifetime, but with the uncertainty of the gift over and his long term ill health, I had been hesitant to accept it.

...

19. s64 of the Property Law Act states that (2) The gift over ceases to be capable of taking effect as soon as there is issue, or a member of the specified class of issue, who attains the age of 20 years. (3) Subsection (2) applies even if the issue may subsequently fail.

[9] In a memorandum to the Court the applicant explains that because she is an executor of Ms Lyon’s estate by virtue of s 13 Administration Act 1969 “the gift over has ceased to be capable of taking effect”... that the Wilson Home and her co- executors “would have the Court take the property off myself – the lawful unregistered owner.”

[10] In her notice of opposition to the strike out application the applicant contends, inter alia:

The Property Law Act 2007 s 64 confirms that as I am the daughter of (Mr Lister) and the issue (niece) substituted by [Ms Lyons] Will, that there has been no lapse in the continuum of the absolute gift of (the property) at 1/84

Trafalgar Street... Therefore the gift over of the net proceeds from the sale of the property to the Wilson Home Trust, has failed.

[11] Noting that s 64 provides for when a gift over ceases to be capable of taking effect the applicant has, in her notice of opposition to the strike out application, asserted:

The provision that my Aunt Mrs Lyons made in her Will was to give her brother Earl Lister ABSOLUTE DISCRETION to alienate his interest. When a testator makes a bequest to a particular beneficiary and goes on to say “and in the case of death” of the beneficiary then over to another, the first person will take absolutely if that first beneficiary survives the testator. Prima face, the gift over can take effect only if the first beneficiary dies in the lifetime of the testator.

[12] Later, the applicant writes:

Both real and person property go on the death of the owner to her executors and administrators. Earl Arthur Raymond Lister is the sole executor and trustee of the Will of Iris Lorna Lyons dated 10 December 1993. If however Mr Lyons property has not been alienated; I am the “issue” and the person appointed executor by virtue of s 13 of the Administration Act 1969 and Mrs Lyons Will; the property has passed to me – absolutely.

Considerations

[13] Ms Lyons’ Will makes four bequests. In two of those she bequeaths furniture and crockery to friends. In the third she bequeathed her flat to her trustee to permit Mr Lister the use and occupation of it for his lifetime and upon his death for that property to be sold and for the proceeds to be given to the Wilson Home Trust.

[14] In a fourth bequest Ms Lyons directed that the residue remainder of her estate be sold and after payment of debts and expenses for the balance to go to Mr Lister.

[15] It is clear from the Will terms that the flat is entirely disposed of by Ms Lyons’ Will and does not become part of Mr Lister’s estate but that on Mr Lister’s death the flat reverted to Ms Lyons estate. Ms Lister contends that the flat forms part of Ms Lyons’ residuary estate and therefore became part of Mr Lister’s estate and because Ms Lister is a beneficiary of that estate then Ms Lyons’ property became hers on her father’s death.

[16] Ms Lister’s error is to consider that the flat was part of the residual estate which by her fourth bequest Ms Lyons required that that which was left over be sold

and for the proceeds, after payment of expenses and debt, were to be given to Mr

Lister.

[17] The fact is that Ms Lyons fully disposed of the flat whilst enabling Mr Lister the use and occupation of it for his lifetime. Ms Lyons clearly intended the value in the flat to become the property of the Wilson Home Trust.

[18] It follows that any claim Ms Lister believes she has to the flat through the residuary estate, must fail.

[19] Ms Lister also claims the flat in her capacity as a trustee of Ms Lyons estate (by virtue of s 13 of the Administration Act 1969). Ms Lister contends that as a trustee she becomes the legal owner of the property and therefore the flat has become hers.

[20] This proposition is wrong for it overlooks s 25 of the Administration Act

1969 which requires property to be held by the administrator (a trustee) “according

to the trusts and dispositions of the will...”.

[21] In this case as a trustee of Ms Lyons estate Ms Lister, together with her fellow trustees, holds Ms Lyons estate on trust according to the terms of the Will. It does not follow that in her capacity as a trustee Ms Lister obtains a beneficial interest in the flat. Therefore Ms Lister’s claim of ownership by virtue of trusteeship must fail.

[22] The third arm of Ms Lister’s claim concerns s 64 of the Property Law Act

2007. Section 64 provides:

64. When gifts over cease to be capable of taking effect

(1) This section applies if –

(a) a person (person A) is entitled to an estate or interest in land; and

(b) the estate or interest is subject to a gift over to another person (person B) if person A has no issue or no issue of a specified class (whether at any specified time or within any specified period).

(2) The gift over ceases to be capable of taking effect as soon as there is issue, or a member of the specified class of issue, who attains the age of 20 years.

(3) Subsection (2) applies even if the issue may subsequently fail.

(4) In this section, gift over includes a gift over expressed to take effect on the ending of an estate or interest preceding that of the person whose estate or interest is the subject of the gift over.

[23] It is Ms Lister’s position that the disposition to the Wilson Home Trust was a gift over and that as such it fails because Mr Lister left children who survived him and therefore the flat became part of his estate.

[24] However, s 64 only applies where a person is entitled to an estate or interest in land and that estate or interest is subject to a gift over if the person has no issue i.e. children or descendants. In this case Mr Lister was entitled to an interest in the flat, namely a life interest. But that interest was not subject to a gift over such as is provided if a beneficiary dies before the Will maker dies. Rather Mr Lister’s interest was limited to his lifetime and upon his death the flat reverted to Ms Lyons estate. The flat is a fee simple reversion i.e. it has reverted to Ms Lyons estate for disposition in accordance with her Will directions.

Principles

[25] There is no dispute about these. Relevantly they include: (a) That the Court assumes the facts pleaded are true.

(b) That if a cause of action is to be struck out it must be clearly untenable.

(c) The strike out jurisdiction is to be exercised sparingly and only in clear cases.

(d) The Court ought to be slow to rule on novel categories of duty of care at the strike out stage.

Conclusions

[26] There is no dispute regarding the facts. The issues involve questions of law and interpretation.

[27] Ms Lister’s belief that the reversion is a gift over that has failed is incorrect. Her belief that the flat falls into Ms Lyons residual estate and therefore that she will inherit through her father Mr Lister is also incorrect. Finally Ms Lister’s belief that she is entitled to absolute ownership of the flat as a trustee is incorrect because she does not by virtue of that position take absolute title to that property.

[28] Therefore Ms Lister’s claims of an absolute interest in the flat by virtue of her executorship of the two estates or by virtue of her being the daughter of Mr Lister must fail. It follows that the claim based on s 64 of the Property Law Act cannot succeed.

Judgment

[29] The application by the Wilson Home Trust for strike out of the claim brought by Ms Lister under s 64 of the Property Law Act 2007 is granted.

_{[30] Costs are reserved for determination upon application.}

Associate Judge Christiansen