Martin v Finlayson [2016] NZHC 81 (17 February 2016)

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BETWEEN	IAN HENRY ADDISON MARTIN Appellant
AND	MAVYN MAGDALENE FINLAYSON, ANDREA VERVAIN BARBOUR, DIANA CHERYL PRICE AND FRANK WINSTON ADDISON MARTIN First Respondents PUBLIC TRUST Second Respondent

Hearing:	3 February 2016
Counsel:	R E Webby for Appellant K J Catran for First Respondents L K Speed for Second Respondent
_Judgment:	_{17 February 2016}

This judgment was delivered by me on 17 February 2016 at 4.00 pm, pursuant to Rule 11.5 of the High Court Rules.

Solicitors: Webby & Associates, Tauranga Cooney Lees Morgan, Tauranga Holland Beckett, Tauranga

[1] The appellant appeals against the judgment of the Family Court at Tauranga (Judge Coyle), in which the Court amended the will of the appellant’s mother, Mrs Martin.¹She and her deceased husband had five children who, at the date the will was made, in June 2011, ranged in age from 55 to 60 years. The only significant asset of her estate was her family home which she occupied with one of her two sons, the appellant.

[2] By her will, Mrs Martin divided her estate equally between all her children but subject to the right of the appellant, Ian, to continue to live in her home rent-free for ten years beyond the date of her death.

4.3 My Trustee will let my son IAN HENRY ADDISON MARTIN live in my home rent free until the earliest of the following (“the expiry date”):-

	1)	He has died.
	2)	My Trustee has decided that my son IAN is not living permanently in my home. My Trustee may disregard temporary absence when making such a decision, which shall be binding on my beneficiaries.
	3)	10 (Ten) years has passed from the date of my death.
[4]	The Family	Court judgment amended cl 4.3 deleting sub-cl (3)	and

[5] The effect of the amendment is to remove a period of about seven years, left of the ten-year period, from any right of occupancy by her son. That amendment is to the benefit of the appellant’s three sisters and one brother.

[6] The Family Court was exercising the jurisdiction granted to it through s 4(1)

(1) If any person (referred to in this Act as the “deceased”) 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.

[11] The applicants’ claim of breach of moral duty is advanced on the basis of lack of provision for both proper maintenance and support. They make that claim on the basis that it was unreasonable of their mother to have given Mr Ian Martin a 10 year right of occupancy. They argue their mother’s unreasonableness arose when consideration is given to the inter vivos gifts given by the late Mrs Martin to Ian, and, and taking into account the monetary benefit to Ian of living rent free for up to 10 years in the home before they then take their 20% share of the residuary.

[8] The Judge traversed the financial situation of the appellant and his siblings. I turn to consider his findings on this point as they provide the context as to why the Judge reached his particular decision:

[24] Sometime in 2004 or 2005 Ian obtained employment as a driver delivering containers from the Auckland Port to the Tauranga Port and vice versa. Around this time Mr and Mrs Martin’s senior’s health began to deteriorate and the family thought it would be a good idea that Ian move in with his parents so there would be someone there for them during the night and Ian agreed to do so.

[25] Ian remained living with his parents, and then following the death of his father, lived with his mother until her death. During that time he did not pay any rent, power or rates on the property. Ian’s evidence is that he would contribute $100 per month towards the power occasionally buy food, occasionally assist with other expenses, and occasionally assist with maintenance. The unchallenged evidence of Mrs Price [Ian’s sister] is that monetary value for Ian residing with his mother rent free for the seven years prior to her death was at least $105,000. As Mr Catran states in his written submissions Ian was clearly a dutiful and diligent son. His residing with his mother was seen by her as providing her with security and comfort in her later years. But it is clear that the late Mrs Martin at some point thought that Ian should be making his own way and she arranged budgeting advice for Ian.

[27] ... Additionally, Mr Martin’s work as a truck driver meant that he was often home late. For a number of years until relatively recently, Ian was

in a relationship with a woman in Auckland known as Jan, and he would stay at her place some nights each week in Auckland so was not present with his mother for those nights. The uncontested evidence is that it was the late Mrs Martin herself, and at times her daughters Mrs Barbour and Mrs Price, who did the majority of the cooking and looking after the general household. Ian clearly gave his mother companionship and support, but on the evidence before me, not to the level implied by Mrs Martin in her statement contemporaneous with the making of her will.

[29] Ian maintains that he was in straightened financial circumstances for the later part of his mother’s life. In a sense that is true as he lost money both through the 1987 sharemarket crash, and through a subsequent failed business venture. In relation to his financial difficulties, Ian explained his financial commitment to his children, all of whom are now well into adulthood and appear from Mr Catran’s cross-examination to be in good employment and self-supporting. But the reality is that Ian was able to support his children and be generous because he was living rent free in his mother’s home. Ian has portrayed himself in his affidavit evidence as helping his parents out and about having “put his life on hold”. I agree with the submissions of Mr Catran that here does not seem to have been too much of an imposition on Ian, given that he was not constrained in his continuation of his employment, he was able to freely commute between Auckland and Tauranga, and thus able to maintain his relationship with his girlfriend (including staying with her in Auckland up to three nights a week), and he was living rent free at his parents’ house.

[30] Notwithstanding that Ian was living in the home, Mrs Price and Mrs Barbour were still in constant contact with their mother. They would regularly take their mother shopping, to the doctor and have contact with her most days. At times each of them took time off work if necessary in order to look after their mother.

[31] Thus, during Ian’s lifetime he has received a gift of a section at Darraghs Road, and the provision of free accommodation for seven years prior to his mother’s death. On the evidence that would appear to equate to around $135,000 at a minimum.²

[32] Mrs Price’s unchallenged evidence from a property manager with First National Realty is that the Links View Drive property would now attract a weekly rental of $380 - $400 per week. Mr Martin did not take issue with the evidence that taking a mid value of $390, the value of his 10 year right to occupy equates of $202,800.

[33] Ian’s argument is that he is in an impossible situation as he cannot afford to buy a home now, and that it was part of his mother’s intention to recognise that he was the only one of the siblings to not own his own home. I do not accept that. The reality is he will be without a home, if the will is given effect to, in 10 years time. Objectively it is hard to understand how Ian is in a precarious situation that he currently finds himself in. In his affidavit sworn on 28 August 2013 he disclosed a gross income of $54,000 per annum. Before tax that amounts to $1038 per week. Given that his only

fixed expenses appeared to be, on the evidence available to me, $100 per month by way of power in [sic] a monthly Sky subscription, and occasionally helping out with food and minimal maintenance to the home, I struggle to understand why Ian was unable to save significant monies during that period.

$202,000 and is then to receive a one fifth share of the estate (which on current figures would amount to $100,000). He has clearly been treated differently to his other siblings. In saying that I remind myself that it is not proper to change the will to simply correct any perceived unfairness or injustice.

[35] Most of the four complainants [the sisters and the brother] are in comfortable circumstances. They are all reaching their mature years and all have adult children and some have grandchildren.

[36] Mrs Price is a teacher earning around $68,000 per annum. She and her husband have a modest home and no significant savings. Mrs Barbour has one dependent child and two adult children. She is a receptionist earning a modest income of $32,000. I agree with the tenor of Ian’s cross- examination of her that she is to a large extent able to support her lifestyle due to the income of her husband, and that income is substantial. He was a land agent and whilst their assets have been placed by them in a family trust, the trust has assets of around $1.5 million and debts of only $88,000. They are comfortably off in my view.

[37] Mr Frank Martin lives in Adelaide and is a bio-medical engineer. He earns around $73,000 annually. He and his wife own a new home and four rental properties. They have a net worth of about $1.5 million. They have four adult children and some grandchildren. Ms Finlayson is the most impecunious of the siblings. She lives at Waipu and has been a teacher earning $55,000. She owns a home with equity of $170,000. She has three adult children. For a number of years she has had long standing health issues and then two years ago suffered a stroke which now prevents her from working. Her income is low and her future is uncertain. Ian has shares and forestry investments, but as at 28 August 2013 he had a number of credit card debts. He owns no property and is currently employed as a truck driver. His current annual income has not been disclosed to the Court. He is clearly in a difficult financial situation. He has had in his life time periods of wealth, but is now in a poor financial position.

[9] At the time Mrs Martin made her will with the Public Trust, she made a statement recorded by the Judge as follows:

[4] Contemporaneously with signing the will Mrs Martin signed, as requested by the Public Trust, a document known as “The Family Protection Act explanation”, that statement set out the following:

The Family Protection Act has been explained to me. I have provided my son Ian with a right to live in my home for as long as he wishes as he has provided care for me and my late husband since

2004, which in my view has enabled me to remain in my own home rather than seek alternative care in a retirement village or rest home. I am aware that this could mean my other children will have to wait some time before receiving a majority of their inheritance. However, I ask that they understand that the reason I am able to leave them an inheritance such as they will receive is because Ian’s support and care has allowed me to stay in my own home rather than use my capital funds to meet the costs of retirement village or rest home care.

[5] At the same time the Public Trust electronic diary system known as “Vantive” was completed which in effect operates a file note recording a discussion that took place between the late Mrs Martin and Mr Barnes the Public Trust employee who attended on Mrs Martin. The Vantive note records:

Visited Mrs Martin and discussed Will, lengthy discussion around lifetime ROPR for son Ian and effect this could have on children receiving an inheritance, I suggested to Mrs Martin that this could cause some discontent and that a time limit could be a better option for Ian’s right, perhaps 5 years. Mrs Martin saw this as too short and thought 10 or 15 years would be better, explained that given Ian’s age of 59 at present, his options at age 69 or more would be limited but while still under 65 he may be better able to set himself up again. Ian has his own business as a truck driver and appears to work long hours, so appears to have some resources of his own. Mrs Martin would like him to consider purchasing her home from the estate, so with his share of residue and possible sale proceeds from his business this could be an option. None of this has been discussed with Ian so I’ve suggested she do this and I’ll call her in 10 days time to see what Ian thinks. A right to purchase could be added to the Will although Mrs Martin has indicated that any purchase by Ian would have to be at market value.

Given the hours Ian appears to work it raises the question of how much care and support Ian is able to provide, but I didn’t discuss this with Mrs Martin.

[26] Mrs Martin had completed several wills. Following the death of her husband she made a will on 20 October 2008 in which Ian was given a six month right of occupancy and then the property was to be divided equally between all five children. In a contemporaneous statement she recorded that her reasons for doing so were Ian had lost his house in his marriage breakup to Stephanie, and that he had looked after her allowing her to stay in her house. But she was clear that she felt six months was long enough for Ian to establish himself again.

[11] There was also a third, and first in time, will in 2006. This left a life interest in the house to Ian, plus all the chattels. Effectively, this will completely disentitled Ian’s sisters and brother. A note made at the time referred to the fact that Ian had lost his house in his marriage breakup and his shifting in with his mother allowed her to stay in her home.

[12] The Judge cited relevant dicta from a number of Court of Appeal decisions guiding the application of s 4:

The principles and practices which our Courts follow in family protection cases are well settled. The enquiry is as to whether there has been a breach of moral duty is judged by the standards of a wise and just testator or testatrix and, if so, what is appropriate to remedy the breach. Only to that extent is the will to be distributed.

[33] Testamentary freedom remains except to the extent that there has been a failure to make proper provision for the maintenance and support of those who are seen at the date of death as entitled to such maintenance and support. The statutory scheme gives the court a wide discretion to making that determination.

[52] ... we reject the argument that the court must expressly find a need for proper maintenance and support. 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.

The Judge also cited the judgments of Randerson J in both Vincent v Lewis⁵and

[13] Ms Webby, for the appellants, cited Court of Appeal authority emphasising that any Court intervention disturbing a will is only as is “sufficient to repair any breach of moral duty”. She cited Blanchard J, writing a separate judgment, in Williams v Aucutt:⁷

[68] In the last few decades an expansive view appears to have been taken of the power of the court to re-fashion the will of a deceased in order to fulfil what has been regarded as his or her moral duty. This trend has not met with universal approval, as reference to the Working Group’s report of

1997 will confirm. I would not wish to be thought to endorse all that the Commission has said on the subject of the claims of adult children. I venture to suggest that it has taken a rather extreme position. 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 re- write 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.

[69] We are not concerned in this appeal with a claimant’s need for proper maintenance. It is conceded that there is none. The claim is for proper support in the form of recognition both of membership of the family of the deceased and of contributions by way of assistance to and support of the deceased. Such a claim is one capable of being brought under the Act. In part it seeks support from the estate in return for support which has been rendered, albeit without any promise of return such as would fall within the Law Reform (Testamentary Promises) Act 1949. The question remains,

however, whether a need for proper support is made out in the particular circumstances. It is not to be assumed that merely because a claimant, no matter what his or her personal substance, has been a dutiful child of the deceased, it will necessarily be appropriate to order some provision or further provision. In some cases a mere acknowledgement of the relationship may be the most that can be expected. And in others the competing claims on the testator of a surviving spouse or of less fortunately placed siblings may negate any moral duty towards a wealthy claimant.

[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. As I have said, the court’s power does not extend to re- writing a will because of a perception that it is unfair. Testators remain at liberty to do what they like with their assets and to treat their children differently or to benefit others once they have made such provisions as are necessary to discharge their moral duty to those entitled to bring claims under the Family Protection Act.

[14] Ms Webby argued that that approach had been adopted by the Court of Appeal in two cases. The first is Auckland City Mission v Brown.⁸The second is Henry v Henry,⁹in which O’Regan J noted (delivering the judgment of the Court):

[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”.

[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.

[38] The late Mrs Martin clearly wished to treat her children equally in terms of the ultimate disposition What is an issue in this case is whether she has breached a moral duty to all of her children in providing for Ian to have a

[39] The ages of the siblings and their respective financial circumstances are important factors as are the overt intentions of the late Mrs Martin. I remind myself that it is not the function of the Court to rewrite Mrs Martin’s will and the Court cannot be guided by concepts of fairness or equity as between siblings. What the Court is required to do is put itself in the position of a wise and just testator.

[40] In my view a wise and just testator would not have given Ian a 10 year life interest taking into account the ages of the siblings, and particularly given the inter vivos benefits that Ian has received. In my view Ian’s assistance towards and support of his mother did not greatly exceed that given by his siblings, in particular given he was away each week with his work and the nights which he came home he often returned home late. It is my decision that the late Mrs Martin has breached her moral duty to the children and that she has not provided adequately for their proper maintenance through the imposition of a 10 year lease. (Emphasis added.)

[41] By way of remedy, I am attracted to the suggestion of Mr Catran in his submissions that the relevant portion of the will be amended to record that Ian is to have a right to occupy until 31 December 2015. This means that Ian would have had a right to occupy for around a three year period following his mother’s death, but also allows Ian some months to plan ahead and to seek alternative accommodation. It also gives clarity in that after that date the property will need to be sold with the net sale proceeds together with the balance of the estate to be divided equally between the siblings. I have given consideration to whether the will should be further amended to give Ian an unequal share of the residuary to recognise the wishes of Mrs Martin. I have reached the view however that given he has already received in effect an additional $135,000, coupled with a three year occupancy,¹⁰any further adjustment to the will is not appropriate.

[16] The appellant’s counsel concentrated on [40] and [41] of the judgment, contending that it was here that the Judge erred.

[17] Ms Webby submitted that [40] was essentially conclusory: that the Judge had not given “clear reasons” to justify that the respondents did not receive sufficient from the estate for their proper maintenance and support. She said that it is not possible to establish how the Judge has applied the maintenance in support test.

[18] She also argued that in [41] the Judge relied upon his view of a fairer and more desirable distribution of the estate and that there was no basis for him to override the testamentary freedom of the deceased, especially given the lengths to which Mrs Martin went to get the will correct.

[19] For the respondents, Mr Catran argued that [40] was the correct application of the legal principles. Firstly, he explained the repeated reference to “siblings” in [40]. As to the first sentence, he explained that ten years on from the date of death would put the siblings into their seventies. Secondly, he interpreted the second sentence of [40] as referring to the daily support provided to Mrs Martin by two of her daughters who lived nearby which, he argued, was at least equivalent to the support their brother Ian, given that he was away part of each week.

[20] He argued that the first line of [40] was the correct application of the test: that it was not a finding by the Court of what a wise and just testator should have done but, rather, was a very clear finding of breach; finding that such a wise and just testator, conscious of discharging his moral duty, would not have given Ian such a ten year life interest.

On balance it is submitted that the “benefits” given by Ian to his parents were no more than the normal attention and support from one’s children, and not particularly sacrificial. Ian’s actual involvement seems to have been at a lesser level than that provided by Diana and Andrea, who never received any

gifts or benefits in return. In those circumstances, it is submitted that the gifting of the Darraghs Road section and the provision of free accommodation to Ian during his mother’s life should be considered either as “prior provision” to him for the purposes of this claim, or at least as neutral “paid for” services, rather than especial and sacrificial support.

... that on an objective assessment, the very significant imbalance between the provision for Ian and that for his 4 siblings did involve a breach of moral duty by Mrs Martin to the claimants. That is particularly so given the age of the 4 claimants and the fact that any benefit or recognition they may obtain from their mother’s estate is deferred until they are well into their 70’s. Effectively, Mrs Martin ignored the 4 complainants and their involvement in her life and addressed her whole attention to her son Ian.

The Judge correctly assessed this and recorded his thinking clearly in his judgment.

The consideration is not just of the economic circumstances of the various parties but involves weighing the moral claims on a larger scale. The claimants are to be looked at on their merits and desserts. “Proper” maintenance is not limited just to economic or other need. It also requires there be a proper family recognition, allowing claimants to feel that they have been an important part of the overall life of the deceased. (William v Aucutt [2002] 2 NZLR 479 at 492.)

However, it is well established that the Court does not replace the testator and rewrite the will. It will amend the provisions in the will only to the extent that is necessary to meet any breach of the moral duty to make proper provision. (Little v Angus [1981] NZLR 126 at 127.)

[23] It is plain that Judge Coyle was attracted by the argument that, before his mother’s death, the appellant had benefited significantly and out of proportion to the benefit derived by his siblings, being a fact which would have been taken into account by a wise and just testatrix. Mr Catran supported this assessment. Further, Mr Catran argued that Ian’s needs were assessed by the Judge in [33].¹¹

[24] As is reflected in Mr Catran’s argument, I think that the reasoning of the Judge in his critical paragraph [40]¹²has embedded in it an assumption that there needs to be considerations in play which justify disturbing a prima facie assumption

_{of equal distribution of the estate among siblings. It may also be that
assumption is}

present in the Judge’s reasoning because the mother’s intent broadly was equal distribution; but that the vesting was to be postponed.

[25] It is important, however, to keep in mind that, to my knowledge, no Court has ever said that an unequal distribution of assets among siblings needs to be morally justified. That is not the law. The law does not contain any moral obligation in that regard at all.¹³

[26] A moral obligation of equality is something quite different from an examination of breach of any moral duty of proper maintenance and support.

[27] The very phrase “proper maintenance and support” reflects a moral duty to

[28] To be sure, on the facts of this case, it can be argued that in financial terms the appellant did very well during the life of his parents vis-à-vis his siblings but wasted his opportunity to save up for his own house, after the breakup of his marriage. It is a commonplace for there to be feelings within a family that one child is preferred over another. A sibling’s perspective, however, is often quite different from the parent’s perspective.

[29] There is usually no obvious just allocation of assets for the wise and just testatrix to adopt when making a will. The law does not presume there is. So when looking for a breach of moral duty, the Court does not come with any presumption of equality, nor with any assumption that there will be on analysis an obvious just and wise disposition of assets. Rather, the Court looks for a breach of moral duty of proper maintenance and support (giving “support” a generously wide meaning to include emotional support), and intervenes only when it is clear and to the extent that there has been such a breach.

[30] In this case, I think that the Family Court has been captured by the economic evidence designed to calculate, in dollar terms, the benefits the appellant received

_{during the life of his parents, disproportionate to those of his
siblings. The Court}

¹³See [12] above, especially the quoted passages from Williams v Aucutt, above n 4.

was captured by the proposition that such a calculation should have weighed morally against any unequal distribution in his favour in the will of his mother.

[31] The unassailable fact is that these economic benefits were not captured by the appellant in his lifetime. He is poor. His financial circumstances were when the will was made, and remain in stark contrast to those of his siblings.

[32] It was common ground that this Court can intervene on appeal only if the Court identifies an error of law or principle, or a failure to take into account relevant considerations, or that the Judge took into account irrelevant considerations, or overall that the judgment was plainly wrong.¹⁴

[33] In my respectful opinion, [40] of the judgment contains an error of law. The question that should have been asked was whether or not a wise and just testatrix, discharging a moral duty as explained by the decisions of the Court of Appeal, could have given the appellant a ten year life interest. Whether a wise and just testatrix would have given the appellant a ten year life interest is a different question and it is an error of law to ask that question. It is never relevant to ask what a wise and just testatrix would or would not have done for that is speculative.

[34] The second sentence of [40] confirms the error of law. It is not the function of the Judge, when deciding whether or not there has been a breach of a duty, to express a personal view of the merits of the child’s need for maintenance and support. Plainly, his mother recognised his poverty. Plainly, she did not consider she had to balance his assistance to her, and past benefits from living with her, against the contributions of her other children. “Proper maintenance and support” does not require balancing of contributions. At the heart of it I think that the Family Court judgment proceeded also on the basis that any discharge of a moral duty required a balancing of relative contributions. That is a second error of law.

[35] It is the judgment of this Court that, on the facts, a fair and wise testatrix could decide that the appellant should have a further ten years in the house before it

¹⁴Paewai-Kohe v Paewai [2014] NZHC 3137, subsequently upheld by the Court of Appeal in

would be sold and equally distributed to all the children. Therefore to do so was not a breach of her moral duty to the other children, none of whom have the equivalent financial needs.

[37] The appellant is entitled to costs in this Court and in the Family Court. Costs are reserved.

High Court of New Zealand Decisions

Martin v Finlayson [2016] NZHC 81 (17 February 2016)