Lister v Pegg Ayton Gordon Trustee Limited [2014] NZHC 2553 (20 October 2014)

Last Updated: 1 December 2014

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2014-488-000057 [2014] NZHC 2553

UNDER	the Family Protection Act 1955 (s 4), the Property Law Act 2007 (s 64), and the Trustee Act 1956 (s 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, LINDA LOUISE LISTER / EDDIE and THE WILSON HOME TRUST Respondents

Hearing:	8 October 2014
Counsel:	Applicant in person CP Hallowes for Respondents
Judgment:	20 October 2014

_{JUDGMENT OF ASHER J}

This judgment was delivered by me on Monday, 20 October 2014 at 11 am pursuant to r 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Solicitors:

Schnauer & Co, Auckland.

Copy to: Applicant.

LISTER v PEGG AYTON GORDON TRUSTEE LTD & ORS [2014] NZHC 2553 [20 October 2014]

Introduction

[1] The applicant Debra Ann Greta Lister is the daughter of Earl Arthur Raymond Lister and the niece of Mr Lister’s sister, Iris Lorna Lyons. Mrs Lyons died on 2 March 1995. Her will dated 10 December 1993 left a life interest in her only significant asset, her home at 1/84 Trafalgar Street, Royal Oak, Auckland (the property) to her brother Mr Lister. The will provided that upon Mr Lister’s death the property be sold and the sale proceeds be given to the Wilson Home for Crippled Children Trust (the Wilson Home Trust).

[2] On 13 October 2011 Mr Lister died. Ms Lister has raised a number of claims. One of them is the claim that the property is part of her father’s estate and that the Wilson Home Trust has no interest in that property.

[3] In a judgment of 19 August 2014 Associate Judge Christiansen struck out that aspect of the claim that was against the Wilson Home Trust. Ms Lister has now applied to review the Associate Judge’s decision by an application dated

11 September 2014, which I must determine.

The will

[4] Mrs Lyons’ will dated 10 December 1993 provided:

I GIVE DEVISE AND BEQUEATH my flat at 1/84 Trafalgar Street, Royal Oak, unto my Trustee UPON TRUST to permit my brother EARL ARTHUR LISTER to have the use occupation and enjoyment of the same during his life he paying the rates, insurance and other outgoings and keeping the same in a reasonable state of repair and on his death I DIRECT that the said house property be sold and the nett proceeds of sale paid to the WILSON HOME FOR CRIPPLED CHILDREN at Takapuna for the purpose of purchasing equipment for use in the Home AND I DECLARE that the receipt of the Secretary for the time being shall be a sufficient discharge to my Trustee.

[5] By paragraph 4 of her will she gave, devised and bequeathed the “rest residue and remainder” of her estate “both real and personal” to her trustee upon trust to convert the estate into money and to pay the net balance to her brother.

[6] The applicant argues that the effect of these provisions, in particular paragraph 4, was to effectively vest the property in her father so that it became part of his estate. She has raised a number of grounds in extensive submissions. These include an assertion that she is on a WINZ invalid benefit and the only sibling and that she is in constrained circumstances. She would like to live in the property, which she says is essential to her future security and wellbeing.

[7] She raises s 64 of the Property Law Act 2007 as a basis for her claim. Section 64 provides as follows:

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.

[8] She claims that the effect of this section is that the gift to the Wilson Home Trust ceased to have effect, and passed into her father’s estate. By virtue of s 13 of the Administration Act 1969 “the gift over has ceased to be capable of taking effect” and the Wilson Home Trust and their co-executives “would have the Court take the property off myself – the lawful unregistered owner”. She asserts that there has been no lapse in the continuum of the absolute gift of the property to her father and that the gift over of the net proceeds from the sale of the property to the Wilson Home Trust has failed.

[9] The applicant has also 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.

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.

[10] Associate Judge Christiansen expressed his view on the core issue as follows:¹

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.

Analysis

[11] Mr Lister was the sole executor and trustee of Mrs Lyons’ will. In that will the property was given to him as “trustee”. The will was specific and unambiguous. He could have the use and occupation of the property during his lifetime with the obligation of paying the outgoings and maintaining the property being on him. Thus for that period of time he had a beneficial life interest in the house. However, on his death that life interest ended. The interest he had as a trustee continued and the obligation was for the house to be sold and the proceeds paid to the Wilson Home Trust. The beneficial interest in the property on Mr Lister’s part had ended on the moment of his death.

[12] The key flaw in Ms Lister’s reasoning is her lack of recognition of the distinction between the beneficial and legal interests, and her unwillingness to accept Mrs Lyons plain intention that the proceeds of sale after her brother’s death go to the

_{Wilson Home Trust. The property never became part of Mr Lister’s estate. He only}

¹ Lister v Pegg Ayton Gordon Trustee Ltd [2014] NZHC 1956 at [24].

had a right to live there during his life. The home was always part of Mrs Lyons estate and was separate from the residual estate referred to in paragraph 4.

[13] Ms Lister submitted that she could rely on paragraph 4 as indicating that the property became part of the residual estate because the words were that “... the rest residue and remainder of my estate both real and personal...” be part of that residue. The property, she argued, was real estate and therefore fell within the ambit of that clause.

[14] The difficulty with this argument is the reference in paragraph 4 was that real and personal property was described as “the rest residue and remainder...”. On its plain meaning, particularly when juxtaposed with paragraph 3, it was real estate other than the property at Trafalgar Street that fell into the residue.

[15] Ms Lister also appears to claim that by virtue of s 30 of the Administration Act 1969 she can claim the flat in her capacity as a trustee of her father’s estate. She appears to contend that as a trustee she became the legal owner of the property and therefore the property became hers. Section 13 of the Administration Act does provide that an executor represents the original testator and has the same rights in respect of the estate of that testator as the original executor would have had if

living.²

[16] However, s 25 of the Administration Act provides that the administrator shall hold the estate of any person who has died “... according to the trust and dispositions of the will, so far as the will effects the estate”.³ In this case Mr Lister was a trustee of a property under a will, and Ms Lister as a beneficiary of his estate could not obtain any beneficial interest in a property in which she had no beneficial interest, but only an interest as trustee. Ms Lister can have no claim of ownership by virtue of the fact that she is an executor of her father’s will and he was the executor of Mrs

_{Lyons’ will.}

² _{Administration Act 1969, s 13(4)(a).}

³ Section 25(b).

[17] Turning to Ms Lister’s argument based on s 64 of the Property Law Act 2007, this section ensures that a provision for a gift over in the event that a person holding an estate or interest in land has no child or surviving child, cannot operate once any such child has attained the status of an adult. It means that if there is a gift to A for life with the remainder to A’s children who survive A, and failing that to C, once any child of A attains the age of 20, even if no child of A survives A, the gift over to C

cannot operate.⁴

[18] I respectfully agree therefore entirely with the reasoning of the Associate Judge. Section 64 cannot apply as Mr Lister’s interest in the land was not subject to a gift over. Thus, if Mrs Lyons is regarded as person A, her estate or interest was not subject to a gift over to Mr Lister. Mr Lister only had a life interest in the property. The question of whether Ms Lister had any issue does not arise.

[19] Mrs Lyons’ will therefore simply did not create a gift to which s 64 could

apply.

[20] The legal position is indeed entirely straightforward. Mr Lister got a freehold estate in the property, but it was only a life estate which ceased upon his death. The Wilson Home Trust had a beneficial interest in the property as a remainder, and the land reverted to Mrs Lyons estate on the death of Mr Lister and then in accordance with the trust that was created, was to be transferred to the Wilson Home Trust.

[21] This cause of action against the Wilson Home Trust was therefore clearly untenable. The Wilson Home Trust has an interest as beneficiary of Ms Lyons’ will. In terms of r 15.1(1)(a) of the High Court Rules there was no reasonably arguable cause of action disclosed. The Associate Judge, therefore, was quite right to strike it out and, with respect, he did so for reasons that were entirely correct.

Result

_{[22] The application for review is dismissed.}

⁴ _{See the discussion in GW Hinde, DW McMorland and NR Campbell Principles of Real Property}

Law (2^nd ed, Lexis Nexis, Wellington, 2014) at [5.023].

Costs

[23] While Mr Hallowes appeared today in an observer role, the Wilson Home

Trust took no steps and seeks no costs. There will therefore be no order as to costs.

...................................

Asher J