Estate of Andrews [2021] NZHC 3179 (29 November 2021)

Last Updated: 16 December 2021

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2021-404-1023 [2021] NZHC 3179

UNDER	Section 140 of the Trusts Act 2019
IN THE MATTER	of the estate of ROBYN MARGARET ANDREWS
AND IN THE MATTER	of an application by EVAN WILLIAM ANDREWS, RICHARD JOHN ANDREWS and DAVID BRUCE BELL Applicants

Hearing:	10 November 2021
Appearances:	A Sorrell and A Borchardt for the Applicants D M O’Neill for Stephen Andrews B Carter for Evan and Richard Andrews in their personal capacity
Judgment:	29 November 2021

JUDGMENT OF GORDON J

This judgment was delivered by me

on 29 November 2021 at 2 pm, pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar Date:

Solicitors: Cambridge Law, Cambridge

Bell Associates, Auckland

Counsel: D M O’Neill, Hamilton A Sorrell, Auckland

B Carter, Auckland

re estate of ANDREWS [2021] NZHC 3179 [29 November 2021]

• [1] This proceeding concerns the interpretation of a will of Robyn Andrews, executed on 22 March 2017 (the Will). In the Will, Mrs Andrews left the residue of her estate to be divided equally between her three sons, Richard Andrews, Stephen Andrews and Evan Andrews,¹ albeit in Stephen’s case through a trust named the Andrews-Runnymede Trust (the Trust). The Will also provided that any loans Mrs Andrews had made to each of the three sons and which were still outstanding should be brought to account and charged against the share of each son in the residuary estate.

• [2] The administration of the estate is largely completed. What remains is an accounting as between the estate and beneficiaries. An accounting firm has been engaged by the executors and trustees to calculate the amount due to the estate by Richard and Stephen (Evan has repaid his loan).

• [3] Stephen was bankrupted shortly before his mother signed the Will. He was discharged from bankruptcy three months before his mother died. He contends that any debts provable in his bankruptcy cannot be brought into account in calculating the amount the Trust will receive as part of the residue because a bankrupt’s debts are extinguished on discharge, whether proven in the bankruptcy or not.² The executors and trustees of Mrs Andrews’ estate, Richard, Evan and David Bell, Mrs Andrews’ former solicitor, take a different view. They say that the loans to Stephen and entities associated with him are required to be brought into account.

• [4] The executors and trustees, as applicants, seek directions on the interpretation of the Will and, in particular, a direction framed as follows:

Directions as to the interpretation of the will dated 22 March 2017 and in particular whether bankruptcy of Stephen Robert Andrews (“Stephen”) on 15 March 2017 renders loans due by Stephen as at that date no longer correctly brought to account in calculating the net amount due to him from the Estate pursuant to the will of Robyn Margaret Andrews dated 22 March 2017.

• [5] Alternatively, the applicants seek a correction of the Will by inserting the words “irrespective of whether the capital or interest of any loans remain due in law

¹ I will refer to each of the sons by their first names to avoid confusion. I intend no disrespect by doing so.

² Insolvency Act 2006, s 304.

other than as a consequence of my gift or their repayment” in the relevant clause in the Will.

• [6] Richard and Evan, in their personal capacities as beneficiaries of their mother’s estate, filed an appearance reserving their rights. I excused the appearance of their counsel, Mr Carter.

Background

• [7] A brief background is all that is necessary at this point. I will set out further context if I get to the point where I am able to consider the relevant extrinsic evidence, which is at step two of the applicants’ case.

• [8] As noted, Mrs Andrews executed the Will on 22 March 2017. Stephen was bankrupted on 15 March 2017, seven days before Mrs Andrews executed the Will. The evidence for the applicants is that Mrs Andrews was not aware of the fact of the bankruptcy when she executed the Will. Mr Bell’s evidence is that Mrs Andrews came to see him on 26 April 2017. At that meeting she had with her a letter she had received from the Official Assignee dated 19 April 2017 and the Insolvency Detail Report enclosed with the letter. Mrs Andrews is listed as a “potential creditor” in Stephen’s estate. The report records she has a security interest in the sum of $352,000.00.

• [9] Stephen was discharged from bankruptcy on 15 March 2020. Mrs Andrews died on 15 June 2020. The Will was admitted to probate on 21 August 2020.

The law

Wills Act 2007

• [10] The High Court has jurisdiction under ss 31 and 32 of the Wills Act 2007 (the Act) when there are interpretation issues with a will or a will does not reflect a will- maker’s intentions.³ As the Court of Appeal noted in Wilson v Davidson, these two sections are based on common law jurisprudence regarding the interpretation and

³ Wilson v Davidson [2017] NZCA 468 at [10].

rectification of wills and earlier similar reforms in Australia and the United Kingdom.⁴ Prior to the Act, the position in New Zealand was summarised in Re Jensen:⁵

... The overriding objective is to give effect to the intentions of the testator. All canons of construction must be subservient to that end. The testator’s intentions are to be gleaned from an objective appraisal of the testamentary documents viewed as a whole but in cases of doubt the wording is to be interpreted in the context of those facts which must have been in the contemplation of the testator.

• [11] Where the wording of the will is not meaningless, ambiguous or uncertain, the court will give effect to the plain meaning, even if the will-maker may have had a different subjective intention.⁶ If a will-maker has formed a testamentary intention based on a mistake of fact, there is no power to rectify the will.⁷

• [12] This Court’s first task is, therefore, to construe the words of the Will and its internal context. If there is ambiguity or uncertainty in the words of the Will, or if the words are meaningless, the Court may move to s 32 of the Act.

• [13] Under the common law, while the words of the Will were central, evidence was admissible that could shed light on the view from the will-maker’s “armchair”.⁸ Section 32 of the Act is a statutory reflection of the armchair principle.⁹ Section 32 provides:

32 External evidence

(1) This section applies when words used in a will make the will, or part of it,—

(a) meaningless; or

(b) ambiguous on its face; or

(c) uncertain on its face; or

(d) ambiguous in the light of the surrounding circumstances; or

⁴ At [10].

⁵ Re Jensen [1992] 2 NZLR 506 (HC) at 510.

⁶ Sutton v Public Trust [2015] NZHC 1844 at [35]–[41].

⁷ Re McMillan HC Invercargill CP No 7/00, 5 April 2001 at [16].

⁸ Perrin v Morgan [1943] AC 399 (PC) at 420 per Lord Romer; and Re Beckbessinger [1993] 2 NZLR 362 (HC) at 367.

⁹ Wilson v Davidson, above n 3, at [12], citing Law Commission Succession Law Wills Reforms

(NZLC MP 2, 1996) at [235].

(e) uncertain in the light of the surrounding circumstances.

(2) The High Court may use external evidence to interpret the words in the will that make the will or part meaningless, ambiguous, or uncertain.

(3) External evidence includes evidence of the will-maker’s testamentary intentions.

(4) The court may not use the will-maker’s testamentary intentions as surrounding circumstances under subsection (1)(d) or (e).

• [14] In discussing s 32, the Court of Appeal in Wilson v Davidson said:¹⁰

... Under s 32 external evidence of background circumstances can be used to interpret words in the will that make the will or part of it meaningless, ambiguous or uncertain. But s 32 goes further than the rules applying to the interpretation of contracts. The ordinary principles of contractual construction prohibit the admission of evidence as to a contracting party’s actual intentions, and prior to the Act, this was also the approach to wills. Section 32(3) explicitly goes further in permitting evidence of the will-maker’s testamentary intentions to be considered. However, evidence of a will-maker’s wish to benefit a person is not evidence of surrounding circumstances for the purposes of identifying uncertainty or ambiguity under s 32(1)(d) and (e). It is admissible, rather, as evidence to assist in interpreting a will already found to be uncertain or ambiguous.

(citations omitted)

• [15] As is apparent from s 32 and the above quoted extract, before a Court may resort to extrinsic evidence of the will-maker’s testamentary intentions, a will must first be found to be meaningless, uncertain or ambiguous.

• [16] Section 31 of the Act now gives the High Court the power to correct errors in a will if the Court is satisfied that the will does not carry out the will-maker’s intentions. Section 31 provides:

31 Correction

(1) This section applies when the High Court is satisfied that a will does not carry out the will-maker’s intentions because it—

(a) contains a clerical error; or

(b) does not give effect to the will-maker’s instructions.

¹⁰ Wilson v Davidson, above n 3, at [18].

(2) The court may make an order correcting the will to carry out the will- maker’s intentions.

• [17] Generally s 31 applies when the words of a will, even applying s 32, cannot effect a remedy that reflects the will-maker’s intentions.¹¹ In discussing s 31, the Court of Appeal in Wilson v Davidson said:¹²

[33] There is an overlap in s 31(1)(a) and (b) of the Act. A clerical error that a party seeks to correct will generally, as well as being an error, not give effect to the will-maker’s intentions, and thus the correction of clerical errors will generally be available on the grounds set out in both s 31(1)(a) and (b). However not every failure to give effect to the will-maker’s instructions will be a clerical error in the sense of a mistake made in copying or writing out a document. ...

(citation omitted).

• [18] In this case, the applicants’ position is that the relevant provision is s 31(1)(b), if it is necessary for the Court to rectify the Will.

Insolvency Act 2006

• [19] The case for Stephen rests on s 304(1) of the Insolvency Act 2006. It provides:

304 Debts from which bankrupt is released on discharge

(1) On discharge, the bankrupt is released from all debts provable in the bankruptcy except those listed in subsection (2).

• [20] Subsection (2) is not relevant for present purposes.

• [21] Section 231 defines “provable debt” as follows:

231 Meaning of provable debt

(1) A provable debt is a debt or liability that a creditor of the bankrupt may prove in the bankruptcy.

(2) A creditor’s claim form is the document that a creditor submits to the Assignee for the purpose of proving the debt.

(3) A debt is proved when it is admitted by the Assignee.

¹¹ Wilson v Davidson, above n 3, at [32].

¹² At [33].

• [22] Section 232 in turn provides:

232 What debts are provable debts

(1) A provable debt is a debt or liability that the bankrupt owes—

(a) at the time of adjudication; or

(b) after adjudication but before discharge, by reason of an obligation incurred by the bankrupt before adjudication.

(2) A fine, penalty, sentence of reparation, or other order for the payment of money that has been made following any conviction or order made under section 106 of the Sentencing Act 2002—

(a) is not a provable debt; and

(b) is not discharged when the bankrupt is discharged from bankruptcy.

Applicants’ position

• [23] The applicants advance their case on three alternative bases:

(1) The plain meaning of the Will can be ascertained from the relevant words in the Will and its internal context. The proper construction of the words of the Will does not require the executors and trustees to take Stephen’s bankruptcy into account. In other words, the loans Mrs Andrews made to Stephen and to entities associated with him are required to be accounted for;

(2) If there is any ambiguity or uncertainty, the Court may consider the relevant factual matrix to ascertain the intention of the testatrix under s 32 of the Act. They say the extrinsic evidence supports their interpretation that Stephen’s bankruptcy is not required to be taken into account; and

(3) If Mrs Andrews’ intention, evidenced from the extrinsic evidence, is not expressed in the words of the Will, the Will should be corrected under s 31 of the Act by the addition of the words referred to in [5] above.

Stephen’s position

• [24] Stephen says:

(1) First, Mrs Andrews knew Stephen was bankrupt and took no steps to update her Will;

(2) She had established a trust to protect Stephen’s inheritance from creditors, yet the estate is attempting to secure repayment of the loans as a creditor; and

(3) The loans referred to in the Will no longer exist by virtue of Stephen’s discharge from bankruptcy.

What is the plain meaning of the Will?

• [25] I first set out the relevant provisions of the Will.

Clause 3

• [26] Richard, Evan and David Bell, are appointed the executors and trustees of the Will.

Clauses 4 and 5

• [27] Specific items and sums of money are given to identified individuals (not including her three sons) and organisations.

Clause 6

• [28] This clause contains directions regarding Mrs Andrews’ pet dog and cat.

Clause 7

• [29] Remaining personal and household items are given to the trustees to divide among Richard, Evan and Stephen as the trustees see fit.

Clause 8

• [30] I set out this clause in full:

8. At the date of this will, I am owed these loans by my sons or entities associated with them:

(a) Richard: a loan to R & J Andrews Livestock Limited on the security of a registered second mortgage of the Onewhero property, the principal balance of this loan as at 28 February 2017 being $115,000.00;

(b) Stephen:

(i) a loan to NZNet Internet Services Limited (“NZNet”) (part of which was originally lent to Boltar Developments Limited), originally on the security of a debenture or general security in respect of the assets of that company, the principal balance of this loan as at 21 July 2012 being $340,534.09;

(ii) a loan to the Stephen Andrews Family Trust, originally on the security of a registered second mortgage of Unit C 1, 5 Douglas Alexander Parade, Albany, the principal balance of this loan as at 16 July 2012 being $66,132.13;

(iii) a loan to Stephen of $25,000.00 in or about 2009;

(iv) a loan to Stephen of $8,000.00 on or about 12 October 2011.

(c) Evan: a loan to The Takatu Trust on the security of an unregistered second mortgage of the Rakino Avenue, Manly, Whangaparaoa property, the principal balance of this loan as at 28 February 2017 being $8,940.00.

Clause 9

• [31] I also set this clause out in full:

I direct my trustees to conduct an examination with suitable professional assistance of loan documents and other records to establish as far as reasonably possible the amount outstanding (including unpaid interest, if payable) under each loan to Richard, Stephen or Evan or entities associated with each of them. However in the case of Stephen, the amount outstanding must include (and is deemed to include for the purpose of this will) all professional costs I have incurred over the years in respect of loan defaults and management, including but not limited to those of McDonald Vague, Victoria Toon and my own solicitors which I estimate to total about

$100,000.00.

Clauses 10 and 11

• [32] Richard, in cl 10 and Evan in cl 11 are gifted the loans referred to in cl 8 and any other loans not repaid. The loans are then to be taken into account in determining their share of the residue. I set out cl 10, for Richard, in full:

I give to Richard, if he is living at my death, the loans described against his name in clause 8 and any other loans which I have made to him or entities associated with him in my lifetime and which have not been repaid at my death. If Richard dies before me, his executors or administrators will have the benefit of this gift. I direct my trustees to bring into account, and to charge against the share of Richard in my residuary estate, the amount outstanding including unpaid interest, if payable, under each such loan. If Richard dies before me, the share of his children in my residuary estate must be similarly charged.

• [33] Clause 11 for Evan is in identical terms.

Clause 12

• [34] The advances and interest payable ascribed to Stephen or associated entities are similarly given to the Trust of which Stephen and his children are the primary discretionary beneficiaries. Clause 12 then continues in a similar way to cls 10 and 11 for Richard and Evan. I set out cl 12 in full:

I give to the trustees for the time being of the Andrews-Runnymede Trust, a family trust under which the primary beneficiaries are Stephen and his children in the discretion of its trustees, and which I refer to in this will as the “Andrews-Runnymede Trust”, the loans described against Stephen’s name in clause 8 and any other loans which I have made to Stephen or entities associated with him in my lifetime and which have not been repaid at my death. I direct my trustees to bring into account, and to charge against the share of the Andrews-Runnymede Trust in my residuary estate, the amount outstanding including unpaid interest, if payable, under each such loan and the professional costs described in clause 9.

Clause 13

• [35] Clause 13 explains why Mrs Andrews established the Trust. It states:

I declare that I established the Andrews-Runnymede Trust for the better protection of what otherwise would have been the “inheritance” of Stephen personally, or of his children if he is not living at my death. In the case of any business failure or marriage or relationship breakdown or other adverse circumstances. I further declare that my concern about business failure has proven correct as NZNet was put into liquidation in 2011 and I believe that its

liquidators or creditors may attempt to recover money from Stephen on my death in the belief that he has a personal inheritance from my estate.

Clause 14

• [36] There is a reference to the Andrews-Douglas Trust established by Mrs Andrews for her grandchildren’s education. The trust no longer existed at the date of Mrs Andrews’ death.

Clause 15

• [37] This clause contains a declaration that the Will was prepared free from influence from Richard and Evan. It reads:

I declare that the provisions of this will are intended by me (and myself alone without influence from Richard or Evan) to reflect my wish to benefit Richard, Stephen and Evan equally and fairly as among them having regard to their different personal circumstances.

Clause 18

• [38] Clause 18 is the operative clause. It reads as follows:

I give all the rest of my real and personal property of whatever kind or wherever situated, including any property in respect of which I may have a power of appointment, to my trustees upon trust to pay my debts, funeral, testamentary and memorial expenses and all estate and other duties, wherever payable, in respect both my actual and my notional estate and to divide the balance (“my residuary estate”) equally among RIchard [sic] of the first part, Evan of the second part, and the trustees for the time being of the Andrews- Runnymede Trust of the third part for those trustees to hold upon the trusts contained in the trust deed pertaining that trust as in addition to the property, if any, already subject to those trusts.

Submissions

• [39] Mr Sorrell, for the applicants, submits that the Will, read as a whole, provides for the residue to be distributed after deduction of relevant inter vivos advances. For Stephen, account is also to be taken of the professional costs Mrs Andrews incurred, in ascertaining the share for the Trust, as the receiving trust. Mr Sorrell submits that only by this means would Mrs Andrews’ objective of adjusting for inequality in inter vivos advances be achieved. The applicants make a distinction between “debt” involving legal enforceability and advances or loans made. They say the Will reflects

an accounting exercise focused on advances plus specified items (i.e. costs incurred by Mrs Andrews in relation to Stephen).

• [40] The argument Mr O’Neill makes for Stephen is a simple one. He says, by virtue of s 304 of the Insolvency Act, as at 15 March 2020, the date of Stephen’s discharge from bankruptcy, he was released from all debts provable in the bankruptcy. In other words, Mr O’Neill submits the loans to Stephen and the entities associated with him referred to in the Will no longer existed as at 15 March 2020. Mr O’Neill emphasises the principle that if the testamentary language is unambiguous and discloses no obvious error, the Court must give effect to the words of the Will as it stands.¹³ Mr O’Neill submits the words in the Will regarding the loans said to be due by Stephen or his entities are not unambiguous or uncertain, nor are they meaningless. On discharge from bankruptcy Stephen did not owe any provable debt, which included loans said to be payable to his mother and consequently his mother’s estate.

• [41] Mr O’Neill submits that it must follow if a loan or debt does not exist, then it cannot be collected or taken into account in the calculation or division of the residuary estate.

Discussion

• [42] The Will refers to “loans”. The opening words of cl 8 are “At the date of this will, I am owed these loans by my sons or entities associated with them.” Then in cl 12 there is a direction to the executors and trustees to bring into account and to “charge against the share of the Andrews-Runnymede Trust in my residuary estate “the amount outstanding including unpaid interest if payable under each such loan and the professional costs described in clause 9”.

• [43] The use of the word “loans” might suggest that the amounts said to be owing under cl 8 and any future amounts owing by Stephen were extinguished on his discharge from bankruptcy. Not only is there the use of the word “loans” but cl 12 also refers to “the amount outstanding”. Again those words are particular. On Mr O’Neill’s argument there was no amount outstanding under the loans to Stephen

¹³ Coleman v Chalklen [2016] NZHC 3178 at [18], citing Re Jensen, above n 5, at 507.

on his discharge from bankruptcy. On their face, and read on their own, apart from the rest of the Will, the words of cls 8 and 12 are not uncertain or ambiguous and could be said to support the case for Stephen.

• [44] However, the words of a will must be read in the context of the will as a whole. It is necessary to consider the words of cl 15 as part of the internal context of the Will. I have set out that clause already, but repeat it here for ease of reference:

I declare that the provisions of this will are intended by me (and myself alone without influence from Richard or Evan) to reflect my wish to benefit Richard, Stephen and Evan equally and fairly as among them having regard to their different personal circumstances.

• [45] Clause 15 makes it clear that the provisions of the Will are intended to reflect Mrs Andrews’ wish to benefit Richard, Evan and Stephen equally and fairly. Only by reading the words “loans” and “amount outstanding” as a proxy for inter vivos gifts (and not as debts legally due) will the three sons benefit equally and fairly. I consider it follows that in the accounting exercise the amounts of loans or advances to Stephen and/or his entities are to be taken into account in calculating the Trust’s share of the residue.

• [46] If the advances/loans made to Stephen and his entities are not taken into account, Stephen will benefit in an unequal way, contrary to what is expressly said in cl 15. Evan has paid back his loan which, as at the date of the Will, was $8,940.00. Richard will have his share of the residue adjusted by the balance of his loan which, at the date of the Will, was $115,000.00. If there is no accounting for the loans to Stephen and his interests and they are not taken into account, there will be no accounting for the sum of $439,666.00 provided by way of loans during his mother’s lifetime. Clause 15 makes it clear that the provisions of the Will were to even things up between the three sons by taking into account inter vivos distributions by way of loans. In other words, cls 8, 9 and 12, when read in the context of cl 15, contain a distribution formula by way of an accounting exercise. They do not refer to a “legally enforceable” debt.

• [47] Clause 9 also provides some support for the interpretation of “amount outstanding” as reflecting an accounting exercise rather than an amount outstanding

that is legally enforceable. That is because Mrs Andrews brings into account for Stephen, as part of the “amount outstanding”, costs that Mrs Andrews had incurred. Those costs, as expressed in cl 9, are clearly not legally enforceable debts owed by Stephen.

• [48] I accept that on a plain reading of the Will in the context of the Will as a whole, the loans made by Mrs Andrews to Stephen and his interests are to be taken into account in calculating the net amount due to the Trust from his mother’s estate. In other words, Stephen’s discharge from bankruptcy on 15 March 2020, which means Stephen no longer owes any debts that were provable in his bankruptcy, is irrelevant on a plain reading of the words of the Will in their internal context.

Interpretation involving extrinsic evidence (s 32)

• [49] In the event that I am wrong in my conclusion above and the wording of cl 15 makes the words in cls 8, 9 and 12 uncertain or ambiguous as to whether the loans to Stephen and entities associated with him are to be taken into account in calculating the Trust’s entitlement from the residuary estate, I turn to the relevant extrinsic evidence to consider whether that illuminates Mrs Andrews’ testamentary intention.

• [50] The evidence for the applicants is provided by way of three affidavits from Mr Bell who was involved in the drafting of the Will. Mr Bell is an experienced solicitor who, prior to setting up his sole practice in April 1993, was a partner in various law firms engaged primarily in commercial, corporate, banking and insolvency law. When he commenced sole practice, Mr Bell continued his commercial law practice with some property law work and began to develop a practice in trusts and estate planning. He has been an executor and trustee of many deceased estates over the years.

• [51] Mr Bell became Mrs Andrews’ solicitor on 14 November 2007. At that time she had four prior Wills, one with a codicil. Mr Bell prepared a fifth Will for Mrs Andrews as well as the final Will.

• [52] The first Will was dated 3 November 1987. It was prepared by the Public Trust and the Public Trustee was the executor and trustee. At that time, at least some of the

sons were minors. The first Will provided for equal division of the estate among all three sons.

• [53] The second Will is dated 17 October 1995. It was prepared by Roger Donnell, solicitor. Richard, Stephen and Evan were the executors and the trustees and all three were equal beneficiaries (or their children in substitution). A codicil to this Will is dated 20 February 1998. The codicil was prepared by Roger Donnell and there was no material change to the Will.

• [54] The third Will is dated 2 November 2001. It was prepared by Michael McClatchy, solicitor. Richard, Stephen and Evan were the executors and trustees. There was an option to Stephen to purchase Mrs Andrews’ home at fair market value. Otherwise the three sons were equal beneficiaries (or their respective children in substitution).

• [55] Mrs Andrews’ fourth Will is dated 13 March 2003. It was also prepared by Mr McClatchy. Richard, Stephen and Evan continued as the executors and trustees and equal beneficiaries (or their respective children in substitution). The option to Stephen to purchase Mrs Andrews’ home also remained. For the first time, the principal amounts of two inter vivos advances made by Mrs Andrews to Richard and Evan and to Stephen’s two companies (NZNet Internet Services Ltd and/or Boltar Developments Ltd) and/or the Stephen Andrews Family Trust were recorded. Those amounts were to be given to the relevant son but were to be brought into account and deducted from the equal share of that son in the residue of the estate.

• [56] Mrs Andrews’ fifth Will is dated 28 July 2008. It was prepared by Mr Bell. Mr Bell’s notes of a meeting with Mrs Andrews on 1 April 2008 record “A lot of problems with money re Stephen”.

• [57] On 28 April 2008, Mrs Andrews and Mr Bell met and she briefed Mr Bell on the monies advanced previously by her to Stephen and his associated entities and her increasing concern about Stephen’s financial affairs.
• [58] Mrs Andrews met Mr Bell again on 22 May 2008. Mrs Andrews updated Mr Bell about changes to Stephen’s group of companies and instructed him to review her securities, to write to Stephen’s lawyer that all communications were to be between Stephen’s lawyer and Mr Bell and in writing. She also asked Mr Bell to review her 2003 Will to ensure that the indebtedness of Stephen and his associated entities would be deducted from his “inheritance”. Mrs Andrews told Mr Bell that she was still receiving interest payments regularly on that indebtedness but not the agreed monthly report and that Mr Bell should arrange for those reports to resume and to be sent to him.

• [59] Mr Bell wrote to Mrs Andrews by letter dated 27 May 2008 about the 2003 Will. The focus of the letter was on rearranging Mrs Andrews’ affairs in relation to Stephen. Mrs Andrews and Mr Bell then met on 23 June 2008. Mrs Andrews instructed him to make a number of significant changes to her 2003 Will in relation to Stephen. They included removing him as an executor, trustee and beneficiary and the establishment of an inheritance trust (the Andrews-Runnymede Trust) with Stephen and his children but not his wife as discretionary beneficiaries. The option to Stephen to purchase Mrs Andrews home upon her death was also to be removed from the new Will.

• [60] Mr Bell sent Mrs Andrews a draft Will, Trust Deed and Memorandum of Guidance to the trustees of the Trust under cover of a letter dated 11 July 2008. Mrs Andrews and Mr Bell met again on 21 July 2008 to discuss the draft Will. By that stage, the interest on money loaned to Stephen and his associated entities was not being paid and Mrs Andrews was not receiving the financial report she had required. Included amongst Mrs Andrews’ instructions that day were that “at the end of the day out of Stephen’s inheritance”. (The file note is clearly in shorthand form).

• [61] On 28 July 2008, Mrs Andrews signed the fifth Will. The executors and trustees were Richard, Evan and Mr Bell, but not Stephen. Stephen did not have the option to purchase Mrs Andrews’ home. The loans made to Richard, Stephen and Evan or entities associated with each of them were updated. The Trust, having been established on that same day, the loans made to Stephen and/or his associated entities were to be given to the Trust and brought into account and charged against its equal

share of the residuary estate. This was instead of Stephen who was no longer a residuary beneficiary of the estate. Evan and Richard remained as residuary beneficiaries with the same loan treatment as the Trust (i.e., as in the previous Will).

• [62] Clause 10 contains a statement as to the reason for the substitution of the Trust for Stephen (similar to cl 13 of the Will under consideration in this proceeding).

• [63] I turn next to the context, starting on 2 October 2012, for the preparation of the final Will. Mrs Andrews and her son Evan met Mr Bell on that day. Prior to the meeting Mrs Andrews had appointed a receiver and manager to Stephen’s company, NZNet Internet Services Ltd (NZNet). The receiver was Victoria Toon, an insolvency practitioner. NZNet had been placed into voluntary liquidation. Mrs Andrews had received around only $9,000 back from funds she had paid in, advanced to the receiver for her fees and expenses to carry out the receivership and none of the principal money advanced by her to Stephen, his companies or his family trust, nor interest accrued on those monies over the previous four or more years.

• [64] The purpose of the meeting was to “review and fine-tune” the 2008 Will and to “shore up against a family protection claim by Stephen”. Mrs Andrews did not want to establish another trust for herself and her assets but agreed to prepare a summary of her financial losses relating to Stephen and his associated entities. The file note of the meeting also records “Victoria surprised Stephen not being bankrupted. IRD chasing him”.

• [65] There are various other communications in 2013 and 2014. One of those, a letter dated 4 September 2013 from Mr Bell to Mrs Andrews states:

“ ... your current will (providing, among other things, for equal distribution of your residuary estate among your sons or, in the case of Stephen, the Andrews-Runnymede Trust, but bringing into account monies already advance [sic]. ...

• [66] There are then further communications in early 2017. Mrs Andrews met with Mr Bell on 27 February 2017. The file note records: “Stephen a “de facto bankrupt””. The file note also records that Stephen was “gold-digging”. Mr Bell advised Mrs Andrews that a forensic accountant should be engaged to calculate the exact

amount owed by Stephen to her as he would challenge her will. Mr Bell’s letter of 28 February 2017 on the following day contains the following:

You explained to me the most recent developments in your medical condition and your primary concerns to provide from your deceased estate for all three sons to be treated equally with flexibility for education and other appropriate welfare assistance for your grandchildren. You wish this to be done in a way which recognises the financial assistance each son has received from you over the years, Stephen having received significantly more financial assistance than Evan and Richard. The affairs of your estate should be administered independently of your family as far as possible. You are most concerned that Stephen and his wife may seek to claim a greater than equal share in totality without full recognition of the assistance you have provided to him.

• [67] Mrs Andrews met Mr Bell again on 1 March 2017. Of particular relevance, Mr Bell’s file note of that date contains the following:

Robyn very concerned to do whatever can be done so Stephen, Evan and Richard are treated equally taking into account $ received already. And no more or less than that. She especially does not want Stephen to receive more (given signs that he will attempt to do so).

(underlining in original)

• [68] A file note of an attendance by Mr Bell on Mrs Andrews on 15 March 2017 containing notes for a Will, contains the following:

Stephen: not bankrupted. Limitation period for liquidators? A reason no inheritance to Stephen. Other creditors too. They all waiting for Stephen to receive inheritance?

• [69] A further file note of 20 March 2017, when Mrs Andrews met Mr Bell to discuss the draft Will, concludes with the following:

Long discussion again about her legal responsibilities to all her sons. She feels Stephen has had more benefit ($) than her other sons over the years.

• [70] Mr Bell’s final file note regarding the Will, on the same day that it was signed, namely 22 March 2017, contains the following:

As she explained (again), she is very concerned to treat all 3 sons (& their children) equally.

• [71] There is reference to a forthcoming trip to visit Evan’s family in Australia. The file note of 22 March 2017 states that:

On her return she will ... Make arrangements for the “forensic consulting” to establish the actual $ owing for Stephen’s loans and associated professional costs she has incurred over the years. ... Robyn does not want Richard and Evan to have to deal with this “forensic accounting” ...

• [72] On 26 April 2017, a month after the execution of the Will, Mrs Andrews met Mr Bell and showed him a letter that she had received from the Official Assignee dated 19 April 2017 advising that Stephen had been bankrupted. Mr Bell’s file note includes the following:

I said it does not affect her will negatively and the wills [sic] should not be changed. We will file the OA letter on file in Deeds.

I explained the effect of bankruptcy.

I said she could do nothing about this. Just leave it.

• [73] Mr O’Neill submits the Court cannot correct the Will without clear evidence of the Will-maker’s intention. He submits it must be her subjective intention, based on information she had at the time she gave instructions for the Will.

• [74] In my view Mr Bell’s file notes, taken overall and particularly the notes of 1 March 2017 and 22 March 2017, make Mrs Andrews’ intention clear. She wished to treat her sons equally, having regard to sums they had already received from her by way of loans. This is conceptually different from debts legally due. I consider taking into account monies already received by Stephen and associated entities through loans in calculating his entitlement (or the Trust’s entitlement) under the Will is in accordance with Mrs Andrews’ intention that her three sons be treated equally.

• [75] Mr O’Neill submits Mrs Andrews and Mr Bell were operating under a mistake of fact and law (i.e. that discharge from bankruptcy did not extinguish debts) and that the evidence does not go so far as to show that Mrs Andrews considered the possibility of bankruptcy and intended to disregard the legal effect of a bankruptcy (if it were to occur) when it came time to calculate and divide the residuary estate. Mr O’Neill submits there is no evidence to show Mrs Andrews intended the debts to remain owing to her or to the estate following Stephen’s discharge from bankruptcy. He says Mrs Andrews did not contemplate the legal effect of the discharge from bankruptcy when she gave instructions for her Will. He submits it is too great an inference to draw

and that Mrs Andrews intended the advances to remain chargeable against Stephen’s (i.e. the Trust’s) share of the estate despite his bankruptcy.

• [76] I do not accept Mr O’Neill’s submissions. I have accepted that the words “loans” and “amount outstanding” in the Will were used as a distribution formula, rather than in the sense of debts “legally due”. Interpreted in that way, the bankruptcy does not affect the Will as Mr Bell explained to Mrs Andrews, and as set out in his file note of 26 April 2017.

• [77] In conclusion, the external evidence of Mrs Andrews’ testamentary intentions make it clear that the inter vivos loans to Stephen (and entities associated with him) were to be taken into account. Stephen’s discharge from bankruptcy has no effect. The amounts referred to in cls 8 and 9 of the Will are to be taken into account by the executors in calculating the Trust’s share in the residue.

Correction of Will (s 31)

• [78] Given my decision that the application for directions as to the interpretation both without and with the application of external evidence succeeds, then it is not strictly necessary to consider the application for correction. However, I do so, briefly.

• [79] As the Court of Appeal in Wilson v Davidson noted, there is an overlap in s 31(1)(a) and (b) of the Act.¹⁴ The Court of Appeal stated that a clerical error that a party seeks to correct will generally, as well as being an error, not give effect to the will-maker’s intentions. Accordingly, the correction of clerical errors will generally be available on the grounds set out in both s 31(1)(a) and (b).¹⁵ But not every failure to give effect to the will-maker’s instructions will be a clerical error in the sense of a mistake made in copying or writing out a document.¹⁶

• [80] In that case the Court considered that if s 31 were to apply, the relevant subsection was s 31(b). The Court then asked itself whether the clause under consideration gave effect to the Will-maker’s instruction. The Court continued:

¹⁴ Wilson v Davidson, above n 3, at [33].

¹⁵ At [33].

¹⁶ At [33].

[34] For the reasons that we have already set out, it does not, but the words that were used are sufficiently broad to accommodate the interpretation advanced by Ms Davidson. Had the words been incapable of bearing that meaning, we would have rectified the Will under s 31 in light of the clear evidence as to Ms Dillon’s intention.. ...

• [81] I follow the same approach in this case. The words used in the Will bear the interpretation advanced by the applicants. If I had found the words used were not capable of bearing that meaning, I would have rectified the Will, under s 31, given what I consider was Mrs Andrews’ intention. I would have ordered rectification by inserting the words: “irrespective of whether the capital or interest of any loans remain due in law other than as a consequence of my gift or their repayment” in clause 9 of the Will at the end of and as an extension of the first sentence of cl 9.

Direction

• [82] I make a direction in the following terms:

(1) Loans expressed in the Will of Robyn Andrews dated 22 March 2017 (the Will) to be due by Stephen and/or entities associated with him are correctly brought to account (together with costs incurred by Mrs Andrews in respect of loan defaults and management) in calculating the net amount due to him (i.e. to the Andrews-Runnymede Trust) from the estate notwithstanding Stephen’s discharge from bankruptcy on 15 March 2020. Stephen’s bankruptcy and later discharge from bankruptcy have no effect on the terms of the Will.

Costs

• [83] Costs are reserved. In the event that the parties can agree costs, a joint memorandum is to be filed within 20 working days of the date of this judgment. In the event that costs cannot be agreed, the applicants are to file and serve their memorandum within five working days of the date for the joint memorandum. Stephen is to file and serve his memorandum within five working days of the date of service of the applicants’ memorandum.
• [84] Costs memoranda should not exceed five pages, excluding any attachments. The applicants included submissions on costs in their submissions for the hearing. If the applicants wish to expand on those submissions, they may do so in accordance with the timetable above.

Gordon J