Estate of Vasey [2015] NZHC 1491 (30 June 2015)

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IN THE MATTER	of the Trustee Act 1956
AND IN THE MATTER	of the Estate of KIM DOREEN VASEY
	WAYNE ROY COLLINGS AND JEAN DOREEN VASEY, AS EXECUTORS IN THE ESTATE OF KIM DOREEN VASEY Applicants

Hearing:	On the papers
Appearances:	M J Koppens for applicants A G Stuart for Camron Collings
_Judgment:	_{30 June 2015}

This judgment was delivered by me on 30 June 2015 at 4 pm, pursuant to Rule 11.5 of the High Court Rules.

[1] The applicants are the executors and trustees of the last will of Kim Doreen Vasey. The will is defective in two respects: it did not dispose of all of Ms Vasey’s property and there is some ambiguity as to the extent of the property disposed of under the will, creating an intestacy in relation to part of Kim Vasey’s estate. The beneficiaries on the intestacy are the applicant Wayne Collings, Ms Vasey’s former de facto partner, and three children of Ms Vasey. Two of the children are the adult children of an earlier relationship, and the applicants have entered into a settlement with them in respect of any claims of those two children and their entitlements. The third child, Camron Collings, who is also the son of Wayne Collings, is 16 years of age. Because of his age the applicants are unable to enter into any settlement with Camron, without the Court’s approval. On an application under s 66 of the Trustee Act 1956 the applicants now seek the Court’s approval.

[2] There is a joint affidavit in support of the application from the applicants, Wayne Collings and Jean Vasey. Jean Vasey is Kim Vasey’s mother. The affidavit records that Wayne Collings was “a long term de facto partner of” Kim Vasey. The period of the relationship is not recorded but it was at least from 1998 until Kim Vasey’s death on 2 March 2010.

24 November 1998. In 1998 Kim Vasey and Wayne Collings purchased a property as their home. I will refer to this as “the home”. Kim Vasey provided the couple’s equity for the purchase in a sum of $140,000.

[4] At around the time of the purchase, Wayne Collings and Kim Vasey entered into what is described as a “property sharing agreement”. This provided that the capital contribution of $140,000 from Kim Vasey was to be her separate property. The balance of the purchase price was borrowed on mortgage. The agreement provided that any sum paid by either party in reduction of the mortgage would be that party’s separate property. The mortgage debt of $75,000 was repaid by Wayne Collings.

[5] Kim Vasey’s last will is dated 2 March 2010. The assets of her estate are the sum of $140,000, just referred to, an assumed half share of the balance of the equity in the home calculated at $125,000, and the proceeds of an insurance policy of

[6] The will makes provision only in respect of the home. Wayne Collings is given the right of use of the home on various terms. As I understand it, his right of use is now at an end, but whether that is correct is not material to this application. The final clause of the will – clause 5.4 - provides that, on termination of Wayne Collings’ right of use of the home, the trustees “are to hold such sum as is due to me by virtue of the” property sharing agreement for the children in equal shares provided each of them attains the age of 20 years. The ambiguity referred to in the introduction is whether clause 5.4 means that all of Kim Vasey’s equity in the home is disposed of under this clause, or whether the clause relates only to the original capital of $140,000. The intestacy arises in respect of the proceeds of the insurance policy and the balance of the equity if the clause is limited to the separate property of

[7] The will makes no relevant provision for Wayne Collings other than the right of use of the home. On the alternative interpretations of clause 5.4, with the residue distributed in accordance with s 77 of the Administration Act 1969 for an intestate estate, the entitlements of Wayne Collings and the three children would be as follows:

(a) If clause 5.4 includes half of the balance of the equity - $125,000 - as well as the separate property - $140,000 - the value of the intestate estate would be just over $110,000. All of that sum would go to Wayne Collings as he has priority under s 77 to the first $155,000. Under clause 5.4 Carmron Collings as to one-third (with the two adults were it not for the settlement with them) would have received approximately $88,000.

(b) If clause 5.4 applies only to the separate property of $140,000, the value of the intestate estate would be $235,000. Of that sum Wayne

Collings would be entitled under s 77 of the Administration Act 1969 to the prescribed sum of $155,000 plus approximately $26,000, a total of approximately $181,000. The three children would have been entitled to approximately $64,000 each.

[8] The applicants reached a compromise with the two adult children in respect their entitlement under the will and any claims they might have. They agreed to accept a sum of $75,000 each. These sums have been paid. I infer, from the information provided in the affidavit from the applicants, and a memorandum from Mr Koppens for the applicants, that the sum of $150,000 for payment to the adult children was borrowed on the security of the home. There will be expense in that regard, although particulars have not been provided. In addition, the deed of settlement with the two adult sons records estate debts for legal fees and funeral expenses totalling just under $16,000. The figures above would need to be adjusted down for these items.

[9] The applicants seek the Court’s approval of a settlement of Camron Collings interest in the estate, and any claims he may have, on the basis that a sum of $75,000 will be set aside for him on terms. They propose to sell the home and that the

$75,000 be set aside from the proceeds of sale. It is further proposed that, if the home is not sold within 12 months, interest will be payable from that date at a rate of five per cent per annum, with an obligation to ensure that the $75,000 and any accrued interest has been set aside within 24 months. The balance of the estate would vest in Wayne Collings.

[10] Mr Stuart was appointed counsel for Camron. He has provided a comprehensive and helpful report and submissions. This includes advice in relation to Camron’s circumstances following appropriate enquiries and discussions, including with Camron himself. It is unnecessary to record the detail, but it has all been taken into account. Mr Stuart also provided a careful appraisal of positive and negative aspects of the applicants’ proposal. I will outline these below in recording my assessment. Mr Stuart was of the opinion that, on balance, the settlement should be approved.

[11] The remaining factual background of relevance concerns Wayne Collings’ circumstances. This is relevant in respect of possible claims he may have. Wayne Collings has not sought to assert claims of his own in support of his joint proposal with Jean Vasey for settlement with Camron in the sum of $75,000. But his circumstances are a matter that the Court needs to take into account in assessing the best interests of Camron. Wayne Collings is aged 52. He suffers from two health problems. One of these is a chronic disease affecting the spine. The other is a recurring infection following medical misadventure from an operation. For the past three years he has been receiving accident compensation payments. His prognosis for recovery is not good and he is likely to remain on a benefit for the foreseeable future.

[12] As recorded in the introduction, one of the trustees and executors is Kim Vasey’s mother, Jean Vasey. It is relevant to record expressly what may be inferred from that fact. Jean Vasey, as Camron’s grandmother, obviously joins in the proposal that Camron’s interests are appropriately and properly met by setting aside the sum of $75,000 for him. The application was supported by a joint affidavit of the two applicants, with that affidavit containing the information I have referred.

Any trustee may apply to the Court for directions concerning any property subject to a trust, or respecting the management or administration of any such property, or respecting the exercise of any power of discretion vested in the trustee.

[14] Mr Stuart did not raise any issue as to jurisdiction to make the orders sought. I am satisfied that the orders may be made under s 66.¹Notwithstanding this conclusion, I also record, in the interests of the applicants as trustees and executors, as well as in the interests of Camron Collings as a minor, that I am satisfied that orders can be made, on the same terms, in exercise of the High Court’s inherent

_{parens patriae jurisdiction.}²_{This
jurisdiction is appropriately invoked not only for}

²As to the very broad scope of the jurisdiction see In Re X (A Minor) [1975] 1 All ER 697 at 699.

the purpose of positively advancing Camron’s interests, but also in a protective sense. It is protective because the alternative would be to proceed at least to a formal and contested hearing, and possibly other substantive proceedings. It is clear that any more extensive hearing on the present application, let alone new proceedings, would involve legal costs out of proportion to the value of the estate and the likely benefit to Camron.

[15] The Court’s inherent jurisdiction can be invoked to avoid consequences of that nature if there is no other express statutory power to do so. The application was has been brought on the expressly stated basis that it is designed to seek to avoid unnecessary cost. This approach has been endorsed by Mr Stuart. I commend counsel in the way in which they have approached the matter.

[16] The cost of alternative means of determining the issues is a major consideration in approving what is proposed, but other matters need to be brought into the balance. On the figures recorded above, related to alternative interpretations of clause 5.4, Camron’s entitlement would be, in round figures, either $88,000 or

Koppens is of the opinion that clause 5.4 applies only to the separate property of

$140,000. This is the interpretation which would produce the smaller sum for Camron. Mr Stuart submitted that clause 5.4 includes Kim Vasey’s half share of the equity as well as the $140,000, but he acknowledged that the alternative is arguable. It would not be appropriate to record any formal conclusion on this issue without a hearing, but I do record my provisional opinion that clause 5.4 covers both items of property. As a result, if the estate was distributed solely in terms of the will and s 77 of the Administration Act, based on the valuation of the home that has been provided, and on the gross figures already dealt with, Camron would be entitled to

[17] Another matter suggesting that Camron’s entitlement, based on the will and the intestacy, might be more than $75,000 is that the valuation of the home, from a registered valuer, was obtained in 2011. Mr Stuart submitted that “it seems more likely than not” that the value of the property will have increased since then, with a corresponding increase in Camron’s entitlement under the will and the intestacy.

Given the general observations by the valuer in the December 2011 valuation about the location of the property and the nature of demand, this is a factor against approval of the sum proposed. There is also need to take account of the fact that Camron does have other possible claims, and in particular under the Family Protection Act 1955.

[18] The principal factor in favour of approval of the settlement, in addition to the cost of alternative courses of action outweighing the likely benefit, is the fact that Wayne Collings would also be entitled to bring claims, and in particular under the Property (Relationships) Act 1976, as well as the Family Protection Act and, possibly, other legislation. Mr Stuart, quite properly and responsibly, acknowledged the significance of the fact that there is no provision for Wayne Collings under the will, apart from the restricted right of use. Mr Stuart accepted that, if Mr Collings commenced proceedings under the Family Protection Act, it would be likely that some provision would be made for him given the length of the relationship and his present circumstances. There are other factors pointing in favour of the settlement, including the diminished value of the estate from debts, not taken into account in the earlier calculations, and the cost of the settlement with the adult sons (meaning the cost over and above the capital sums of $75,000 each). There are also further legal costs for the estate, including those of Mr Stuart.

[19] Assessing matters overall, and weighing the competing arguments with the care required in the interests of a minor beneficiary, I am satisfied that what the applicants’ proposal, supported by Mr Stuart as counsel for Camron, is appropriate.

[20] Draft orders were filed with the original application. The essential provisions are approved, but the terms might be modified. What follows is a suggestion, with leave reserved to both counsel to file a memorandum if they consider that changes are appropriate (or separate memoranda if they cannot agree on the precise terms). The formal orders, after the usual recitals, including reference to Mr Stuart’s memorandum, might be as follows:

(a) Out of the estate of Kim Doreen Vasey, the sum of $75,000 is to be set aside for Camron Wallace Roy Collings, (Camron Collings) the son of Kim Doreen Vasey and Wayne Roy Collings and a beneficiary under the last will of Kim Doreen Vasey dated 9 November 1998.

(b) That sum of $75,000 is to be so set aside within a period of 24 months of the date of this order and shall be held in trust by the trustees until Camron Collings is 20 years of age.

(c) If that sum of $75,000 has not been set aside and invested within 12 months of the date of this order, interest to be paid out of the assets of the estate shall accrue at five per centum per annum until that amount is set aside and invested.

(d) The preceding orders are made in full settlement of all entitlement of Camron Collings as a beneficiary under the will of Kim Doreen Vasey and in full settlement of any claims Camron Collings might otherwise have pursuant to any enactment, or rule of law, or otherwise, in respect of the estate of Kim Doreen Vasey or in respect of any property of her estate.

[21] Any memoranda of counsel seeking amendment to the proposed terms of the orders should be filed and served within four weeks of the date of this judgment.

High Court of New Zealand Decisions

Estate of Vasey [2015] NZHC 1491 (30 June 2015)