CLARKE v GOULDING, [2017] NZHC 1326

CLARKE v GOULDING, [2017] NZHC 1326 [15 June 2017]IN THE HIGH COURT OF NEW ZEALANDCHRISTCHURCH REGISTRYCIV-2016-409-000515[2017] NZHC 1326IN THE MATTER OF THE ESTATE OF MARTIN LEOCOFFEY (DECEASED)BETWEEN DANIEL JOHN CLARKEPlaintiffAND COLLEEN MARGARET GOULDING,JAMES STEEL ANDGREGORY JOHN STEEL ASEXECUTORS AND TRUSTEES OF THEESTATE OF MARTIN LEO COFFEYDefendantsHearing: 12 June 2017Appearances: LMC Robinson for PlaintiffG M Brodie for DefendantsJudgment: 15 June 2017Reissued: 22 June 2017JUDGMENT OF GENDALL JIntroduction[1] In this proceeding the plaintiff brought a claim against the estate of his late father Martin Leo Coffey (the deceased) pursuant to the Family Protection Act 1955.[2] In related proceeding CIV-2016-409-517 the plaintiff's half sister Sharon Arlow also brought proceedings against the deceased's estate pursuant to the Law Reform (Testamentary Promises) Act 1949.[3] On 31 May 2017 this Court was advised by the parties to both these proceedings first, that a settlement had been reached relating to all disputes betweenthem and secondly, that Deeds of Settlement to incorporate this were being completed.[4] Before me an application was made by the defendants as the executors and trustees of the deceased's estate, effectively to approve the compromise of the Family Protection claim brought by the plaintiff Mr Clarke in the present proceeding CIV-2016-409-515.[5] In addition, orders were sought in terms of a Deed of Settlement which has been provided to the Court.[6] The trustees wished to have this settlement confirmed by the Court. This was seen as a proper step required to be taken here, given the suggestion that it was not possible for parties to contract out of the Family Protection Act 1955 – Re Matthews Matthews v Lamb,1 Re Moore (Deceased) Moore v Public Trust2 and Re Clifford (Deceased) Clifford v Clifford.3Background[7] It is useful at this point to set out some background to the settlement of this Family Protection claim and the circumstances leading to it. I acknowledge the assistance of Mr Brodie, counsel for both the trustees and the residuary beneficiaries in setting this out and now provide this background as outlined in his memorandum to this Court dated 12 June 2017.(a) The deceased died at Christchurch in January 2016. He was a very wealthy man. His estate comprised largely investment residential properties in Christchurch plus shares in two companies each of which owns substantial commercial properties in Christchurch.There is a summary of the assets and liabilities at exhibit "G" to theaffidavit as to assets and liabilities sworn by Mr L J Steel on 24 March 2017, a copy of which is attached. However the property values are based on assessments by Quotable Value NZ and are probably understated. Mr Steel considers the current total value of the estate is in the order of $17million but possibly more.1 Re Matthews Matthews v Lamb (HC) Auckland, 11 February 1987, Wylie J.2 Re Moore (Deceased) Moore v Public Trust Unreported Wellington (HC), 28 July 1999, Gendall J.3 Re Clifford (Deceased) Clifford v Clifford Unreported Christchurch (HC) 12 July 1993, Williamson J.(b) The deceased had separated from his wife the late Georgina Coffey and she died approximately six years ago. She had a daughter Sharon Arlow from a previous marriage, and she and the deceased are the parents of the plaintiff Daniel Clarke. The deceased did not make any provision for his son and step-daughter by his will. Instead he left his entire estate to three siblings and 17 nieces and nephews. They will each inherit something in the order [of] $1 million.(c) During their marriage, the deceased and Georgina had vested their property in their respective names as tenants in common apart from the family home at 19 St Albans Street Christchurch which was owned jointly and which passed to Martin Coffey by survivorship onGeorgina's death.(d) By her will Georgina left her entire estate, apart from a small legacy, for the benefit of Sharon Arlow and Daniel Clarke. Sharon Arlow and Daniel Clarke are now as a result wealthy in their own right.Exhibits "B" to the affidavits of assets and liabilities sworn bySharon Arlow and Daniel Clarke respectively both on the 24 February 2017 discloses that Sharon Arlow has net assets of $5,456,898, Daniel Clarke has net assets of $6,198,000 and the Estate of Georgina Coffey has assets of $9,017,893.(e) This last figure includes a debt owed by the estate of Martin Coffey at its full value of $2,489,258.(f) Formal valuations of the extensive properties which are involved, have not been obtained and these figures are based largely on Quotable Value figures issued for rating purposes.(g) Daniel cannot justify a Family Protection Claim on the basis of financial need.(h) It is however the case that he and his father had become completely estranged to the point that Daniel had changed his surname to Clarke, reflecting his estrangement. The executors have not sought to enquire into the reasons for the estrangement, the rights and wrongs of the respective positions of father and son, and nor have they attempted to determine who is at fault. What has happened is that a settlement has been negotiated whereby the executors have agreed to transfer to Daniel the former family home at 19 St Albans Street, Christchurch which the deceased was living in at the date ofhis death and which had, in earlier times, been Daniel's own familyhome. This property has a current market value of $850,000.00 as assessed by Quotable Value NZ. The transfer of this property to Daniel amounts to a settlement in the order of 5% of the estate.(i) A significant aspect of the settlement relates to the debt of $2,489.258.00 owed by Martin Coffey to his late wife Georgina Coffey. The estate has taken the view that even if that debtis payable by the deceased to his wife's estate, she wouldnevertheless hold that debt as relationship property to which he would be entitled to one-half. The trustees in the estate of their latemother have agreed to accept one-half of this debt, that is $1,244.629.00 in full satisfaction of this claim.(j) The nett cost to the estate is significantly less than 5% if this concession is taken into account.(k) A separate deed of settlement which does not require the consent of the court but which is conditional upon the settlement with Daniel being approved, has been entered into between the two estates.(l) There is a third settlement which relates to the Testamentary Promises claim brought by Sharon Arlow has brought a claim under the Law Reform (Testamentary Promises) Act. That claim has been settled in an amount of $750,000. That settlement does not require the approval of the court but is also conditional on the settlement with Daniel being approved.(m) The executors have provided each of the beneficiaries with details of the claim and the proposal for settlement. The beneficiaries have all been advised to take independent advice and to indicate whether they approve the settlement. The executors have received instructions in writing from each of the 20 beneficiaries that they now each formally approve of the settlement and they have authorised the trustees to enter into the settlement on their behalf.(n) Accordingly, the settlement is entered into with the consent of all persons who might be affected by the proceedings. It is noted that there are two specific legacies provided in the will. These legacies are not to be disturbed. They have been paid out in full.Legal position under the Family Protection Act 1955[8] With respect to the defendant's present application to approve the terms of the Family Protection settlement, two matters are accepted by all parties here. The first is that the plaintiff, in bringing this claim, is not able to demonstrate a need for financial maintenance, and the second is that the award he seeks is required to be made in circumstances where the need for his proper recognition as a son andmember of the deceased's family is made out.[9] In this regard, in the oft-quoted Family Protection decision Williams v Aucutt,4 Richardson P in the Court of Appeal at para [52] noted:The test is whether adequate provision has been made for the propermaintenance 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 that4 Williams v Aucutt [2007] NZLR 479.moral and ethical considerations are to be taken into account in determiningthe scope of the duty. "Support" is used in its wider dictionary sense of"sustaining, providing comfort". A child's path through life is supported notsimply 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.[10] Prior to that decision in Williams v Aucutt, the Law Commission had completed a report on "Succession Law, A Succession (Adjustment) Act" (NZLCR39, 1997)5 which had criticised what was seen as the Court's liberal approach at thetime to Family Protection Act claims, particularly with regard to adult children who were often successful regardless of financial need.[11] In a 2007 article in the New Zealand Law Journal entitled "Charities and theFPA: A Turning Tide"6 by Professor Nicola Peart and Mr W M Patterson it was suggested:The Law Commission saw no justification for this approach, which extendeda parent's duty to provide for a child beyond the inter vivos obligations imposed by legislation. It recommended that the eligibility of children to claim provision be restricted to minors, disabled children, and adult children who were in financial need. That recommendation was not implemented,but the Commission's criticism of the judiciary's approach found its mark. Amore cautious approach to claims became apparent, initially in the lower courts and later in the Court of Appeal, in regard to both children and spouses.[12] Professor Peart and Mr Patterson in their article at page 53 referred to a review of 72 cases they had considered since Williams v Aucutt relating to Family Protection Act claims. Of these they noted 16 cases or 22 per cent were dismissed. The learned authors went on at page 54 of their article to note:in only four (7.1 per cent) of the 56 cases were awards made solely torecognise the family bond. This is a substantial reduction from the 27.6 per cent in the 1994 survey. In two cases the claimant received 10 per cent of the estate, in one 5, and in another 15. The claimant in the latter case,Re Good (FC, Christchurch PF009/1005/00, 20 July 2001), was an onlychild and the beneficiary had been the testator's de facto partner for only fiveyears. The other awards were in keeping with the Court of Appeal'sdirections for modest provision in Williams v Aucutt. The lack of recognition claims may indicate that parties are settling on the basis of 105 "Succession Law, A Succession (Adjustment) Act" (NZLCR 39, 1997).6 "Charities and the FPA: A Turning Tide" (2007) NZLJ 53.per cent of the estate rather than trying for 15 or 20 per cent, as was common in the past.[13] What is clear from the recent authorities is that a Family Protection Act claimbased solely on the need for recognition as part of the deceased's family willgenerally be a modest one – see Bill Patterson, Law of Family Protection and Testamentary Promises.7[14] In Williams v Aucutt the award for family recognition, originally at a figure of 25 per cent of the estate in the High Court decision, was reduced to about 10 per cent of the estate in the Court of Appeal.[15] In the case before me as I have noted above, the proposed settlement in favour of the plaintiff amounts to a maximum of something in the order of 5 per cent of the estate, or possibly something significantly less than 5 per cent if the concession noted at paras [7](i) and (j) above is taken into account.Result[16] Given the matters I have outlined above, and on the basis of recent Family Protection Act authorities, I am satisfied that the proposed settlement of the plaintiff's claim against his late father's estate is appropriate and justified. I note toothat this settlement has received the unanimous consent of all parties who might be affected by it. Furthermore the relatively modest settlement amount the plaintiff is to receive, given the size of the deceased's estate which I understand to be something in excess of $17 million, avoids what Mr Brodie has properly described as:The unsatisfactory prospect of litigation which would focus on thebreakdown of the relationship between the deceased and his son incircumstances whichwould serve no useful purpose.[17] For all these reasons the application before me succeeds. The plaintiff's claim against the deceased's estate succeeds.[18] The following order, in terms requested by the parties, is now made:7 Bill Patterson, Law of Family Protection and Testamentary Promises (4th Ed) Lexis Nexus at 2.10.After reading the statement of claim and affidavits in support filed by Daniel John Clarke and the affidavits of Leo James Steel in reply and after hearing Mr LMC Robinson, counsel on behalf of the plaintiff, and Mr G M Brodie, counsel on behalf of the defendant executors and on behalf of the residuary beneficiaries in the estate of the deceased, this Court orders that the Deed of Settlement dated 31 May 2017 which is Exhibit A to the affidavit of Leo James Steel sworn on 9 June 2017 be and the same is approved.[19] Before me counsel confirmed that no issue arose here as to costs. There will be no order made as to costs....................................................Gendall JSolicitors:Saunders Robinson Brown, ChristchurchSteel & Co, ChristchurchCopy to G M Brodie, ChristchurchAddendum[20] In para [2] of this judgment reference is made to Sharon Arlow who wasdescribed as "the plaintiff's step-sister". Counsel have now advised that there is an error in this description in that Sharon Arlow is in fact the plaintiff's half sister. Iregret the error which resulted from my misunderstanding of the situation.Accordingly, I direct now that the reference in para [2] of this judgment to "the plaintiff's step-sister" is deleted and replaced with the words "the plaintiff's half sister".Dated 22 June 2017This judgment was re-issued today, 22 June 2017....................................................Gendall J