Balchin v Hall [2016] NZHC 837 (29 April 2016)

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UNDER	the Administration Act 1969, the Wills Act 2007, the Trustee Act 1956 and Part 18 of the High Court Rules
BETWEEN	NATHAN LEE BALCHIN AND DAVID FINAU BALCHIN Plaintiffs
AND	ALISTAIRE ALEXANDER HALL AND MURRAY JOHN BALCHIN _Defendants

Hearing:	4 February 2016
Appearances:	A G Rowe for Plaintiffs P A Craighead for Defendants
_Judgment:	_{29 April 2016}

[1] When Ronald Balchin died in 2013 he left a valid will executed in 2007 under which his two adult sons Nathan and David Balchin (the plaintiffs) would share equally in his estate, which is worth approximately $100,000. He also left a document signed in 2008 that purported to be a will under which the plaintiffs would not receive their gifts unless and until they reached the age of 50. The 2008 document does not satisfy the requirements for a valid will.

[2] Alistaire Hall (Mr Balchin’s solicitor) and Murray Balchin (Mr Balchin’s brother), who were named as executors in the 2008 document, did not realise that it was not properly executed as a will. As a result, probate in common form was inadvertently obtained in respect of it.

[3] The plaintiffs wish to have the estate distributed to them immediately, as the

2007 will provides. In this proceeding they have sought, first, to have probate of the

(a) The defendants’ counterclaim seeking an order validating the 2008 will under s 14 of the Wills Act 2007;

(b) If the 2008 document is validated, the plaintiffs’ application to vary the trusts created by it through orders under either s 64A of the Trustee Act 1956 or the rule in Saunders v Vautier to permit immediate distribution of the estate;

[4] This decision deals only with the first of these questions, whether the 2008 document should be validated under s 14.²The plaintiffs oppose the making of an

order on the ground that to do so would be pointless because if the document is validated they will apply, and can expect to obtain, an order under either s 64A of the Trustee Act 1956 or under the rule in Saunders v Vautier. Validating the 2008 document would simply impose an unnecessary expense on them.

[5] Under the Wills Act a valid will is one that is made in writing and is signed and witnessed in the prescribed manner.³However, s 14 provides that this Court “may make an order” declaring a document that appears to be a will but does not comply with the formal requirements to be a valid will “if satisfied that the document expresses the deceased person’s testamentary intentions”.

[6] The nature of the inquiry under s 14(2) is uncontentious and was helpfully described by McKenzie J in Beaumont v Beaumont:⁴

A fundamental principle underpinning the law governing wills is that great care must be taken in determining whether what is claimed to be an expression of a will maker’s wishes is genuinely so. That care is necessary because a will operates only after its maker has died. ... In considering the s 14(2) question, great care must be taken in determining whether the draft will is genuinely an expression of the deceased’s intention.

Under s 14(2), the Court must be satisfied that the document expresses the deceased person’s testamentary intentions. The use of the phrase “is satisfied” is indicative of the state where the Court on the evidence comes to a judicial decision. There is no need or justification for adding an adverbial qualification.⁵In reaching a conclusion as to whether it is satisfied under s 14(2), the Court must have regard to evidence, as s 14(3) makes clear. The standard of proof to be applied in considering that evidence is the civil standard, balance of probabilities. That is not a fixed standard. ...

In the case of validation of a will, a finding that the Court is satisfied will result in a final distribution of the estate in accordance with the document under consideration. The rights and interests of those who will inherit if the document is not validated will be affected.⁶The potential consequences of the order and the importance of the fundamental principle to which I have

⁵_{Citing R v Wright (David) [1988] NZCA 55; [1988] 1 NZLR 264 (CA) at
[268].}

referred, indicate the seriousness of the matters to be proved and the consequences of proving them.

[7] Section 14 is framed in permissive terms, so there is a discretion as to whether to make an order, even if the Court is satisfied as to the will-maker’s intentions. The real issue in this case is the exercise of that discretion. It appears that the circumstances in which the discretion might be exercised have not previously arisen for consideration.

[8] The general principle as to the exercise of judicial discretion was explained by the Supreme Court in Shirley v Wairarapa District Health Board.⁷That case concerned the exercise of the discretion to award costs under the High Court Rules but the principle discussed in it applies generally. The Court observed that, although the costs jurisdiction was discretionary, it was not unprincipled, or else it would be unacceptably arbitrary. It cited Lord Halsbury’s statement in Sharp v Wakefield that:⁸

When it is said that something is to be done within the discretion of the authorities...that something is to be done according to the rules of reason and justice, not according to private opinion...according to law, and not humour. It is to be, not arbitrary, vague, and fanciful, but legal and regular.

[9] The principled exercise of a discretion should observe the purpose for which the power was conferred. The power to validate a non-complying document as a will was one of the recommendations contained in the Law Commission 1997 report Succession Law: A Succession (Wills ) Act.⁹Provisions of this kind already existed in most Australian states and the wording of s 14 was based on the Victorian draft, which contained a similar discretion.¹⁰In its report the Law Commission noted that one main purpose of the formalities required for valid execution was to authenticate a document as an expression of the deceased’s genuine intentions. It saw no reason, however, that the ways of proving a deceased’s genuine intentions should be confined to compliance with those requirements if the requisite intention could be

⁷_{Shirley v Wairarapa District Health Board [2006]
NZSC 63, [2006] 3 NZLR 523 at [16].}

⁸Sharp v Wakefield [1891] AC 173, cited also in Cates v Glass [1920] NZLR 37 at 57-58 per

⁹Law Commission Succession Law: A succession (Wills) Act (NZLC R41, 1997) at 18–19; see also the discussion by Nicola Peart in “Where There Is A Will, There Is A Way – A New Wills Act For New Zealand” (2007) 15 Wai L Rev 26 at 32-34.

[10] This approach is reflected in the Parliamentary debates. At the Bill’s first reading the then Associate Minister of Justice explained that the power to validate a non-compliant document would operate to ensure that will-makers’ intentions are upheld and not frustrated by technicalities.¹¹

[11] If the Court is satisfied that the document in issue does represent the deceased’s genuine intentions then one would expect that an order would be made validating the document as a will. Doing so would fulfil the purpose of the power. Not doing so would result in the established wishes of the deceased being disregarded. As a result, I consider that the discretion conferred in s 14 is only of a residual nature. Good reasons would need to exist to refuse an order. It is not sensible to attempt to identify what reasons would suffice, since they will inevitably be fact specific.

[12] Mr Hall had acted for Ronald Balchin since 2007. At that time Mr Balchin was residing in the Kenderdine Park Resthome. He acted for him, first, in relation to a relationship property dispute with his former wife Animatila Balchin (Ani). That proceeding was protracted and did not finally settle until mid-2009. Also in 2007 Mr Hall acted on the preparation of an enduring power of attorney for personal care and welfare and for property in favour of Mr Balchin’s brother, Murray Balchin. Also in

2007 Mr Hall prepared and arranged for the preparation and execution of the 2007 will.

[13] Mr Hall visited Mr Balchin regularly at the rest home. During these discussions Mr Balchin spoke of his concern about what would happen when his sons received his estate under the 2007 will. Mr Hall deposed that:

From time to time I recall he would raise with me his ongoing concern that his sons NATHAN and DAVID would receive his estate in the event of his death and in the immediate future. He asked me how he could try and make sure they did and that Ani would not take control of it. I believe this was because of how Ani was such a dominant person within their family and especially with their sons and possibly also his own experience as to how badly she had treated him. My advice was that he could look at setting up a

trust and put his money when he received it into that. The alternative was for him to make a new Will raising the age at which they succeeded to his estate so as to ensure they received it.

After consideration of both options including the costs Ron instructed me that he would like to make a new will whereby Nathan and David would receive their capital entitlement at an age greater than 20 years. He asked me to calculate the age to make sure that they would be as certain as possible to do so.

I suggested that the age of 50 years would be a high enough age for them to make sure of getting their entitlement on the one hand or making it unlikely that there would be any concern that their entitlements would not in fact go to them. Ron authorised me to prepare a will with that age in it ...

[14] Mr Hall prepared a will in accordance with Mr Balchin’s instructions and sent it to the resthome with instructions for execution. It was returned to him, apparently executed and filed away without Mr Hall realising that it had not been properly executed. Mr Hall deposed that:

I continued to visit Ron regularly until the relationship property matters were resolved in approximately 2010.

Thereafter I saw him less often. However as I had an uncle who also entered Kenderdine Park a couple of years after Ron and whom I visited regularly, from time to time when I was visiting my uncle I would also see Ron.

Ron never raised with me after he had signed the 2008 document that he ever wanted to make any changes to it, although I recall that he did from time to time mention visits by his two sons and Ani. Therefore it is a reasonable inference that he was content with it and that it represented his last wishes up to the time of his death.

[15] Mr Hall annexed to his affidavit the letter under cover of which he sent the draft will for execution. It describes the contents of the will and records the reasons for the change, which are consistent with the draft will and with Mr Hall’s recollection.

[16] I am satisfied that Mr Balchin intended to make changes to his earlier will because he feared that his former wife would prevail upon the plaintiffs to relinquish their inheritance to her. By postponing the gift till his sons were 50 he hoped to ensure that they would actually receive and keep their inheritance. The 2008 document reflected that intention. Ordinarily I would make an order under s 14 validating the 2008 document.

[17] However, the plaintiffs say that there are good reasons for exercising the discretion against validation. The first is that the terms of the 2008 document were unreasonable or in breach of a moral duty. I do not consider that this assertion (even if correct) is a sufficient reason to decline validation where the document expresses the deceased’s genuine intentions.¹²The proper means of addressing those concerns is a claim under the Family Protection Act 1955.

[18] The second reason is that validation would ultimately be futile because the plaintiffs intend to apply for orders to distribute the estate under the rule in Saunders v Vautier or s 64A Trustee Act and can reasonably expect to obtain such orders. Validation would do no more than put the parties to additional expense and create unnecessary litigation.

[19] Under the rule in Saunders v Vautier the beneficiaries of a trust, if they are all sui juris and in agreement, may require the trustees to transfer the legal estate to them despite any directions to the contrary in the trust document.¹³However, given the terms of the 2008 document the rule in Saunders v Vautier would not apply. It provides for a gift over to the plaintiffs’ children in the event that either plaintiff should die before reaching the age of 50 years. The plaintiffs’ children are therefore

contingent beneficiaries, meaning that the beneficiaries are not all sui juris and in agreement. The effect of such a gift over was acknowledged in Carter, Harding v Carter:¹⁴

If the gift over is a valid gift, the principle in Saunders v Vautier is inapplicable. It has never been applied where there is a gift over. In the judgment in the case of Saunder v Vautier itself reliance was placed on the fact that there was no gift over, and in numerous other cases of the same class the absence of a gift over is referred to. If there is a gift over there is no absolute gift to the original legatee and it is only when the gift is absolute but there is an attempt by the testator to fetter the enjoyment of it by the legatee that the principle in Saunders v Vautier applies.

[20] The second obstacle is that, on the proper construction of the 2008 document, the gift to the plaintiffs themselves is not absolute but only of a contingent nature.

¹²See for example Re Lauder [2012] NZHC 3155; Nicola Peart and Grey Kelly “The Scope of the

The estate is given “to such of them my children NATHAN BALCHIN and DAVID BALCHIN as are living at my death and attain or have attained the age of fifty (50) years and if more than one in equal shares ...”. On this wording the plaintiffs do not receive an interest in the estate unless and until they reach 50 years of age. It is not a case where the interest vests immediately with merely the enjoyment postponed.¹⁵

[21] The plaintiffs could, however, apply for an order under s 64A Trustee Act. Section 64A extends the rule in Saunders v Vautier by allowing the Court to consent to the variation of a trust on behalf of beneficiaries who are not legally able to do so, who have only a contingent interest, or who have not yet been born.¹⁶The policy behind s 64A was discussed by Tipping J in Re Greenwood:¹⁷

The purpose of s 64A is in my view to put the court into the shoes of a beneficiary who is, by reason of infancy or other incapacity, incapable of assenting to the variation, revocation or enlargement of powers proposed. Similarly the Court is put in the shoes of unborn and unknown persons. The Court, as one part of its consideration of the application, should ask itself whether, if the person on whose behalf it is acting had been alive and of full capacity and properly advised, that person would have been likely to have approved the arrangement on his or her own behalf and with or without conditions or amendment to the scheme.

[22] The principles from Re Greenwood and subsequent authorities were helpfully summarised by French J in McKnight v Craig:¹⁸

(ii) The court may consider any proposal which varies or revokes any, or all, of the trusts or a proposal which enlarges the powers of the trustees in managing or administering the property subject to the trust.

(iii) The discretion is exercised in the interests of the person on whose behalf the court is asked to approve the variation and from their point of view. The court should therefore ask itself whether the person would have given approval if that person were alive, of full capacity and properly advised.

¹⁵On the distinction between vested and contingent gifts see Johns v Johns [2004] 3 NZLR 2002 (CA) at [46] and Garrow and Alston Laws of Wills and Administration (5^thed, Butterworths, Wellington, 1984) at [35.1]–[35.30].

¹⁸McKnight v Craig [2010] NZHC 1086; [2010] 3 NZLR 860 (HC); see also Ewington v Schulz HC Auckland CIV-

(iv) The court can approve a scheme which conflicts with the intentions of the settlor but should not do so lightly.

(v) The court considers the trust provisions afresh if circumstances have arisen which were not foreseen or may not have been foreseeable at the time the trust was established.

(vi) The court cannot approve an arrangement to the detriment of any person on whose behalf the court is giving consent.

(vii) But the court is to take a wide approach to benefits and detriments in arrangements and must consider the arrangements as a whole in a practical and business-like way. Indirect and intangible benefits and detriments are relevant including the welfare and honour of the family.

(viii) Difficulties may be met by amendments to the proposal or covenants by persons benefiting to make good losses to the disadvantage of other beneficiaries.

[23] The plaintiffs both have young families and are in modest financial circumstances. In their affidavits they say that distribution of their father’s estate now would have a significant positive impact on their lives and those of their children. In these circumstances, it may well be that if the 2008 document were validated an application under s 64A to vary or revoke it would succeed. However, that possibility, or even probability, is not a sufficient reason to refuse validation.

[24] An order under s 64A involves the exercise of a discretion. On the Re Greenwood approach the Court puts itself in the shoes of the non-consenting beneficiaries and acts on their behalf. This requires detailed and careful consideration of the interests of both existing children and any future unborn children. Declining to validate the 2008 document would effectively usurp that process and the exercise of the discretion.

[25] Moreover, given that s 64A is a flexible remedial provision capable of striking a careful balance any order made under s 64A would not necessarily reflect the 2007 will under which the estate would be distributed without conditions. There have been cases where, for example, the contingent interests of children have been

provided for by their parents establishing a bare trust into which their share was paid.¹⁹

[26] I therefore conclude that this is not an appropriate case in which to exercise the discretion under s 14 to decline to validate the 2008 document and make an order validating the 2008 document.

High Court of New Zealand Decisions

Balchin v Hall [2016] NZHC 837 (29 April 2016)