ESTATE OF MAN - LYNCH AND LYNCH HC NAP CIV-2006-441-000242

ESTATE OF MAN - LYNCH AND LYNCH HC NAP CIV-2006-441-000242 20 December 2006IN THE HIGH COURT OF NEW ZEALAND NAPIER REGISTRY CIV-2006-441-000242UNDER the Family Protection Act 1955 IN THE MATTER OF the Estate of RAE DENISE MAN late of Hastings BETWEEN DEANN JAYNE LYNCH AND RICHARD DEREK LYNCH Appellants AND RICHARD DEREK LYNCH AS ADMINISTRATOR OF THE ESTATE OF RAE DENISE MAN Defendant Hearing: 2 May 2006 Appearances: H R Grayson for the Appellants J A Wickes for the Respondent Judgment: 20 December 2006 at 2.15 pmJUDGMENT OF FRATER JThis judgment was delivered by Justice Frater on 20 December 2006 at 2.15 pm, pursuant to r 540(4) of the High Court Rules Registrar/Deputy Registrar Date:Solicitors: Gresson Grayson P O Box 1045 Hastings for the Appellants Bramwell Grossman and Partners P O Box 500 Hastings for the Respondent Estate Loo and Koo P O Box 99687 Newmarket Auckland 1001 for the Deceased's Husband, J Man[1] Deann and Richard Lynch appeal against the judgment of Judge McMeeken, allowing their claim under the Family Protection Act 1955 for further provision out of the estate of their mother, Rae Denise Man, who died intestate. They say that the award was insufficient to rectify their mother's breach of moral duty towards them and that it should be higher.Background[2] Mrs Man died at Hastings on 7 October 2003. She was survived by her husband, Jin Quan Man, and the appellants. They are the children of her first marriage, and her only children. [3] The deceased was over 60 when she died; Richard was aged 37 and Deann 33. Mrs Man's first marriage lasted some 38 years. She was living apart from Richard and Deann's father in 2000, when she and Mr Man met. [4] Mr Man was born in China. He was 25 years younger than Mrs Man. He arrived in New Zealand on 24 October 1996 on a visitor's visa, having recently separated from his first wife. She remained in China with their son. He came to New Zealand to visit his brother and a friend. He settled in Napier. In January 1997 he obtained a work permit and, in the ensuing six years, was employed in a variety of occupations, including at Chinese restaurants, at a wool yarn processing factory and at the mushroom farm where he and Mrs Man met. [5] He moved into her home in October 2001, initially as a boarder. By Christmas of that year, despite their age difference and the language barrier, they had developed strong feelings for each other and commenced a de facto relationship. Mrs Man told her family about their relationship on 1 April 2002. [6] On 11 January 2003 Mrs Man's marriage with her first husband was dissolved. This was followed, on 27 January 2003, by the signing of two documents of some significance in this proceeding: an agreement under the Property (Relationships) Act 1976 and a Will.[7] The property agreement recorded (incorrectly) that the parties had been living together in a de facto relationship since 1 April 2000. It also noted that at the date of the agreement there was no relationship property. Mrs Man's separate property was identified as her home in Hastings and its contents, together with any shares and bank accounts in her name. Mr Man's separate property was listed as a moped, a computer, bank accounts in his name and a 1990 Toyota van. [8] The agreement was said to be binding on the parties and their executors:In all the circumstances including marriage, bankruptcy, the taking of property in execution by creditors, separation, reconciliation and/or the death of one or both of them.[9] Each received independent legal advice before signing the agreement. [10] Under her will, Mrs Man gave Deann $10,000 to take into account a business loan that she and her first husband had made to Richard. To Mr Man she gave her Kiwi Bonds, Elders shares and any motor vehicle she had at the time of her death. The residue was then given to her trustees, with a life interest for her former husband and, after his death, to be paid to her children in equal shares. [11] On 28 January 2003, Mr Man's first marriage was dissolved. [12] Mr Man proposed to Mrs Man in March 2003 and they married on 5 April 2003. [13] Shortly thereafter they travelled to China to meet Mr Man's family. In June 2003 they moved to Shanghai. They remained there until early August 2003, when Mrs Man returned to New Zealand to spend time with Deann, who was expecting her first child. Whether Mrs Man's return was also precipitated by a recurrence of the cancer which had first been diagnosed 10 years earlier and from which she eventually died, is unclear. Deann's daughter was born on 15 October 2003, eight days after Mrs Man died. [14] Mr Man did not return to New Zealand with his wife and after her death he was denied a visa to do so. He remains in China. He has not provided any detailsabout his current employment or financial position. What we do know is that he was unable to find work during the three months he and Mrs Man spent there together.The estate[15] As a result of the application of s 18 of the Wills Act 1837, Mrs Man's subsequent marriage invalidated the will she made on 27 January 2003 and she died intestate. Section 18 provides that:18 Revocation of wills by marriageEvery will made by a man or woman shall be revoked by his or her marriage (except a will made in exercise of a power of appointment, when the real or personal estate thereby appointed would not in default of such appointment pass to his or her heir, customary heir, executor, or administrator, or the person entitled as his or her next of kin under the Statute of Distributions).[16] In the event, Richard obtained letters of administration enabling him to administer the estate. This had a net value at the date of Mrs Man's death of $215,655.15. The principal asset was Mrs Man's home in Hastings. There were also various bonds worth $70,000. By the time the matter was heard in the Family Court the house had been sold, which increased the value of the estate to $313,000 or thereabouts. [17] Under the intestacy provisions of the Administration Act 1969, Mr Man would have received $185,000 of this, and the appellants $64,000 each. [18] The effect of the Family Court judgment was that the estate was divided three ways with the appellants and Mr Man each receiving approximately $100,000, and the furniture and chattels being divided between Richard and Deann.The appellants' circumstances[19] Deann was formerly married but is now divorced. She lives in a de facto relationship. She and her partner have one child, a daughter who was born on 15 October 2003.[20] At the date of the Family Court hearing Deann was not in paid employment. She cared for their daughter while her partner worked as an engineer. They live in his home, in Hawke's Bay. In late 2004 it was worth approximately $300,000 to $350,000. There was a mortgage of $115,000 or thereabouts. They also owned furniture, chattels and two motor vehicles. [21] Richard is a self-employed painter and decorator. He lives in Wairoa where he owns his own home and a rental property which has a workshop from which he carries on his business. In 2004 his net equity in these properties was $37,000 and $30,000 respectively. He also has furniture and chattels, a motor vehicle and limited savings. His taxable income for the year ended 31 March 2004 was $8,263.15. He said that he struggled financially for several years but had managed to get by. He has a daughter who, at the date of her grandmother's death, was 16 years old. She lives in Auckland with her mother, from whom Richard is separated.The judgment under appeal[22] At the outset Judge McMeeken noted that:[7] It is well accepted that the Court can interfere with a distribution only to the extent necessary to remedy a breach of moral duty. The Court of Appeal in Williams v Aucutt [2000] 2 NZLR 479 reminded the Courts that a finding of need does not permit the Court to re- write the will (or in this case, amend the distribution) but merely to make such adjustments as will be necessary to meet the moral claim, having regard to the competing claims. [8] It is also clear that it is not for Mr Man to have to justify the share that he is to receive.[23] After stating these general principles, the judge recorded that:• The relationship between Mr and Mrs Man lasted 22 months, 20 months of which they spent together.• Given that Mr and Mrs Man were living in a de facto relationship, the clear purpose of the property agreement was to contract out of the Property (Relationships) Act 1976, and to ensure that Mrs Man retainedas her separate property her home and its contents, her shares and bank accounts. Common sense indicated that at the time they signed the agreement, both considered their relationship to be a continuing one. Similarly, when Mrs Man signed her will she considered she was in a serious and long term relationship with Mr Man.• Mrs Man very much loved Mr Man and wanted to be with him. Judge McMeeken was not clear whether Mr Man felt the same way.• Both Deann and Richard supported their mother during her illness. [24] The judgment concludes as follows:[22] I am satisfied that both Deann and Richard had an on-going and very close relationship with their mother. I am satisfied that they each have a moral claim to share in their mother's estate, which has not been satisfied by the provision made to them under the Administration Act. Although they are financially independent adult children, neither of them is "well-off". [23] Just over two months before she married Mr Man, Mrs Man made a new will which provided that Deann and Richard would ultimately inherit the majority of her estate. She made that provision at a time when she was living with Mr Man, and made a small provision for him. [24] Mrs Man's marriage to Mr Man lasted six months. They were together for only four months of that time as Mr Man chose not to return to New Zealand with Mrs Man, nor to return when she was very ill. During their marriage (and de facto relationship) they lived in Mrs Man's home and there is no evidence upon which to argue that Mrs Man has any moral obligation to Mr Man other than that which follows from the fact that he was her husband of six months. He made no financial contribution to her assets and did not practically support her during her illness.Proper approach by the Court on appeal[25] It is well settled that a Court considering an appeal in Family Protection proceedings should not substitute its discretion for that of the judge at first instance unless some reasonably plain ground for varying the order is made out: Little v Angus [1981] 1 NZLR 126, 127. One of those grounds is where there has been a failure to apply principle or misapplication of principle: Re Young [1965] NZLR294 at 298 and Patterson Law of Family Protection and Testamentary Promises (3 ed 2004) at 309-310.Grounds of appeal[26] The appellants contend that the Family Court erred in the following respects: a) Having found a breach in the application of the intestacy provisions, in failing to make greater provision for them; b) In applying the principle of minimum interference with wills, enunciated in Williams v Aucutt to a distribution on intestacy; c) In omitting, when considering the competing claims against Mrs Man's estate, to have regard to the nature and quality of the relationship between Mr and Mrs Man; and d) In placing undue reliance upon the judgment of this Court in Re Bush(1983) 1 FRNZ 100 in determining the extent of the further provision to be made for the appellants.Submissions[27] The submissions made in relation to the first three grounds overlapped. [28] Mr Grayson's first criticism of the Family Court judgment was that the judge did not expressly state the principles upon which she relied, other than to say that she took into account her findings and the size of the estate. He said that the Court did not appear to have approached the determination of whether there had been a breach, and if so the extent of it, in the manner described in Re Leonard [1985] 2 NZLR 88 (CA), where Richardson J said at 92, that, in addition to the size of the estate: any other moral claims on the testator's bounty are highly relevant and due regard must be had to ethical and moral considerations, and tocontemporary social attitudes as to what should be expected of a wise and just testator in the particular circumstances.[29] He submitted that, in weighing the competing claims of Mr Man and the appellants, the Court should have taken into account evidence suggesting an ongoing relationship between Mr Man and his former wife in China, and a note written by the deceased to Mr Man in October 2002 or thereabouts in which she expressed unhappiness about his treatment of her. It should also have given more weight to her expressed intentions, as evidenced in both her will and the relationship property agreement, that the appellants should receive the bulk of her estate and that provision for Mr Man be limited. [30] Marriage, only two months after the will was signed, did not affect those intentions, Mr Grayson said. [31] He emphasised that Mrs Man wanted to preserve her home for her children. He submitted that, given the size of the estate and the strength of the appellants' claims, that meant that Mr Man should have received only what he was given under the will, namely, property worth $30,500. It may be that an even smaller award was appropriate taking into account the greater financial contributions Mrs Man made towards the wedding, the trip to China and their living expenses there. [32] In response, Ms Wickes disputed that Mr Man made only a limited contribution to the relationship. She submitted that he made many practical contributions citing, in particular, the fact that they pooled their earnings, that he supported Mrs Man while she was in remission from cancer, taught her about the computer and contributed $10,000 to the China trip. [33] While acknowledging that Mr and Mrs Man did have disagreements, for example in relation to his parents' opposition to their relationship, Ms Wickes submitted that they grappled with such issues and learned to deal with them. There was ample evidence of mutual warmth between them, and of Mrs Man's gratitude towards and reliance upon Mr Man, she said. Indeed, counsel argued, this attitude was apparent even after Mrs Man's return to New Zealand. There was no evidencethat this was not a genuine marriage on both sides or that the parties to it were other than happy with each other at the time Mrs Man died. [34] In her submission the relationship property agreement defined the parties' property and precluded any claim under that Act by either of them on the other's separate property in the event of separation or death. It was irrelevant to the determination of the deceased's moral obligation to her children. She said that the primary obligation of a testator/testatrix was to his or her spouse, even if it was a second marriage: Flathaug v Weaver [2003] NZFLR 730 (CA) at 733, Re Rough[1976] 1 NZLR 604, 607.Discussion[35] No issue is taken in this case with the judge's finding that Mrs Man breached her moral duty towards her children. The issue is the quantum of the award necessary to repair that breach. [36] The factors which Judge McMeeken took into account in reaching her decision as to quantum are listed in paras [22] to [24] of the judgment under appeal: see [23] above – namely, the ongoing close relationship between Mrs Man and her children, the children's financial circumstances, the previous will, the length of the marriage, the time Mr and Mrs Man spent together during the marriage and Mrs Man's limited moral obligation to Mr Man. However, like the judge whose decision was under review by Priestley J in Woodcock v Beatson HC AK CIV-2005- 404-547 1 March 2006, Judge McMeeken did not spell out how she arrived at the figure she did. [37] The appellants contend that she did not give enough weight to Mrs Man's intentions as expressed in her will and the property agreement. [38] Obviously the fact that they are unfulfilled intentions and/or promises and the nature of them can, and usually does, have a bearing on the quantum of any award. As Patterson says at para 4.13, where:... a testator has formed an intention to make provision, or different provision, for an applicant but fails to carry out this intention the Court, on adequate proof of the intention, may grant relief.[39] Patterson also points out that in Re Hawke [1935] NZLR s157 the Court said that as a general principle, if it appears that the provision made by an existing will did not discharge the moral duty then the Court would be encouraged and not deterred by its knowledge of the testatrix's views. [40] However, at 17.12 the learned author qualified that statement, saying:The Court, however, must make its decision as to how to repair the breach of moral duty in the light of all the relevant circumstances and the testator's wishes, to the extent that they conflict with the Court's assessment, will not be given weight.[41] The critical issues in this case are: i) the weight to be given to Mrs Man's views, taking into account all relevant circumstances; ii) whether they should be afforded any greater weight in the determination of quantum because this is an intestacy, rather than a dispute in the context of a will. [42] The starting point is the following passage from the judgment of Blanchard J in Williams v Aucutt at 497: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 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.[43] The difference between the Williams v Aucutt situation and the present is that in the former the Court is seeking to uphold the integrity of the deceased's wishes as expressed in the will, whereas on an intestacy the reverse is the case because theAdministration Act provisions are deemed to represent the deceased's wishes in the absence of any indications to the contrary. Even where the Court has direct evidence of the deceased's intentions in the form of a will which is revoked because of the application of s 18 of the Wills Act 1837, they are not necessarily followed. [44] I have found only five relevant cases: Re Downing [1975] 1 NZLR 385;Re Williamson; Rossiter v New Zealand Insurance Co Ltd HC CHCH A251-78 16 September 1980, Cook J; Re Sepsy HC DUN CP 65/87 12 August 1988, Robertson J; Re Bush and Re Morris; Wilson v Morris HC DUN CP 144/90 15 October 1992, Fraser J. [45] Re Downing involved an intestacy where the deceased had written a will intending to give all of her property to her two sons equally should her husband predecease her. After the death of her first husband, she remarried, without realising that this revoked her will. Haslam J held that if the deceased's omission to perform her moral duty to her children had been due to some mistake or oversight, her wishes might legitimately be taken into consideration: Bosch v Perpetual Trustee Co Ltd[1938] AC 463. He commented (at 389) that, on the facts of the case before him:... it cannot be said that the deceased in desiring to benefit her sons exclusively, was contemplating a scheme of division which might be described as "fond and foolish" rather than "wise and just". Despite the embarrassment caused by her second marriage, the affection and mutual loyalty of parent and sons remained unimpaired to the end, and in her mind she fully recognised her abiding obligation to them. Had she made an effective will entirely in their favour, the most that could have been said was that she perhaps owed some duty to her second husband even after so brief a marriage, and to their credit, the plaintiffs fully recognise this possibility.[46] In the event, however, as the two sons were "capable able-bodied men in their thirties" neither of whom was in need of financial assistance (see 387), the Court held that despite the intentions of the deceased, there was no breach of moral duty – the intestacy laws had made ample provision for them. [47] The deceased in Re Williamson left a meagre estate worth approximately $9,000 net, a second wife, and five adult children from his first marriage. The second marriage lasted less than two years after which the parties signed a separation agreement pursuant to which the second wife received a payment in settlement of herclaim on the deceased's property. By the time the deceased died they had little to do with each other. However, as they had not divorced, and the deceased did not leave a will, the second wife was entitled under the Administration Act to the estate. The children, who were in modest circumstances, claimed that the deceased's final property was purchased as a family property. The Court held that in the circumstances the deceased owed a duty to his children, but not to his widow. [48] The deceased in Re Sepsy died in 1986 as a result of a work accident. He had married two and a half years earlier, the parties having lived together in a permanent relationship for two years before that. There was one child of the marriage born in late 1985. The two children of the widow's former relationship, aged 10 and six at the time of death, also lived with the family. In 1983 Mr Sepsy made a will in which he left his entire estate to his widow, or if she predeceased him, to be divided equally between his children and her children. However, he did not realise that his marriage ended the operation of his existing will and, as a result, he died intestate. [49] In terms of the Administration Act, from the $115,000 estate, the widow would receive approximately $70,000 and the youngest child, the balance. [50] The stepchildren applied under the Family Protection Act for provision out of the estate and Robertson J was asked to approve an arrangement whereby the residence would be divided equally between the three children. On doing so, he said at 4-5:Because of the provisions of the Administration Act the youngest child is the sole beneficiary under the Trust. I find that there was a moral duty in terms of the Act by Mr Sepsy to the other 2 children and the question is because of the breach of that duty what provision ought to be made to remedy it bearing in mind that the Court is required to maintain the integrity of testamentary disposition to the greatest extent possible. There is something almost hollow in even saying those words because the testamentary intention is at variance with the Administration Act on intestacy and it seems to me quite artificial and unreal that I should not take into account this man's clear intentions. There is nothing to suggest that he ever changed his view, that he modified the approach and one would anticipate after 3 more years of living as a re- constituted family his desire to make provision for these children would have increased.[51] The fourth case, Re Bush, concerned a claim under the Family Protection Act by the three infant children of the deceased's first marriage. At the time of his deathfrom cancer in early 1982, Mr Bush's second marriage had subsisted for only two months, although his relationship with his widow had begun in 1980 and he had lived with her, and her five year old daughter, in her house since mid 1981. [52] The deceased and his first wife separated in 1978. Their children remained living with their mother. By agreement the former matrimonial home was sold and half the proceeds paid to the first wife to buy a new home, but negotiations for the settlement of all property and maintenance issues had not been concluded when Mr Bush died. [53] He did not leave a will. On intestacy his widow stood to receive $78,000 of the estate valued at $160,000 with the applicants receiving $27,500 each. [54] Thorp J's primary concern was to resolve the competing claims of the deceased's widow, his stepdaughter and the applicants, two of whom had special needs. He did this by awarding property worth $51,000 (made up of personal effects, chattels and a lump sum of $44,5000 plus interest) to the widow, on the assumption that she would take care of her daughter, and $104,000 as a fund for the applicants. [55] Finally there is Re Morris. Mr Morris died intestate in 1990 leaving an estate worth $132,000, which had increased in value by the date of hearing to $169,500. The major asset was a house in Clyde. [56] The plaintiff was the deceased's only child. At the time of the hearing she was 41 and married with three infant children. Her husband was an engineer earning $57,000 per annum. They owned their own home with an equity of over $200,000 and also had household chattels, a car, some life insurance and savings. All the family enjoyed good health. [57] In contrast, the deceased's widow, who was his second wife, and from whom he was living apart at the time of his death, was aged 72 years and lived alone in rental accommodation. Her sole income was national superannuation and her onlyassets were her household furniture and a small sum in savings. Her health was poor. [58] The deceased and his second wife had lived together in a de facto relationship for about seven years, married in 1982, and finally separated three years later, after a Court order was made dividing their matrimonial property. [59] In a will made before his second marriage, he left his estate in three equal shares, one each for his first wife, his daughter and his second wife. However, under the Administration Act provisions the widow received his personal chattels, $90,000 and interest and one-third of the residue. [60] In awarding two-thirds of the estate to the deceased's daughter and one-third to his second wife, Fraser J said (at 4-5):... there is no evidence of any considered decision or wish on the part of the deceased to benefit the defendant in the manner in which she prima facie benefits under the relevant provisions of the Administration Act 1969. I do not consider that the Family Court Matrimonial Property Act order, made about the time defendant and the deceased began living apart precludes consideration of her competing interest on the present claim. I accept, however, that the circumstance that there had been a matrimonial property order and that she and the deceased had been living apart for a period of some five years prior to the testator's death during which they had lived separate and independent lives weighs against her moral claim notwithstanding her health and lack of means. Plaintiff is settled in life and in relatively good circumstances. On the other hand she is deceased's only child and has the responsibility, with her husband of bringing up her three children, the deceased's grandchildren. I think that, having regard to the size of the estate, a wise and just testator would have recognised a responsibility to make a limited provision for his separated wife, despite the property division on separation, because of her need, but a greater responsibility and moral duty towards his daughter.[61] What is apparent from all these cases is that, even on intestacies, the Court will only interfere with the division of the estate to the extent necessary to remedy the perceived breach of moral duty. So, to answer Mr Grayson's question – in my view the principle of minimum interference enunciated in Williams v Aucutt applies equally to claims under the Family Protection Act arising on an intestacy as those challenging a will.[62] The difference between the two situations, it seems to me, lies in the readiness with which the Court will have regard to a property agreement or expression of the deceased's wishes in determining whether there has been a breach, and if so, the extent to which they are prepared to redistribute the estate to reflect those wishes. [63] But it is interesting to note that only in Re Williamson, where, effectively the deceased had already satisfied his moral duty to his widow, was the Court prepared to make a radical redistribution of the estate. In the others the maximum award to the claimant/s was two-thirds of the estate. [64] It is not for Mr Man either to justify the original distribution in his favour, or the award under appeal. The onus was on the appellants to satisfy me that the judge erred in her assessment of the quantum necessary to repair the breach by Mrs Man of moral duty to them. I am not persuaded that she did so. [65] In balancing the competing moral duties owed by the deceased, the judge was required to consider the nature and quality of the relationships Mrs Man had, not only with the appellants but also with her husband, and clearly she did that. She commented on the way Mrs Man felt for Mr Man, the length of their relationship and their marriage. The judge was satisfied that, whatever issues there may have been between them, their relationship was serious and long term – or at least Mrs Man perceived it in that way. That is reflected not only in the relationship property agreement which provided that after acquired property would be divided in accordance with the provisions of the Property (Relationships) Act 1976, but also in the affectionate emails sent by Mrs Man to her husband as late as nine days before her death. [66] The judge may well have had regard to the division ordered by the Court inRe Bush in fixing her award. She would not have erred if she did so, at least in providing a starting point, as there are some similarities between the cases insofar as the length of relationship is concerned. However, ultimately each case has to be determined on its own facts, and I am satisfied that is what she did.[67] To make the award sought by the appellants would amount to re-writing the statutory division under the Administration Act to provide a result which the appellants think is fair. But, as has been emphasised many times, that is not the function of the Court in proceedings under the Family Protection Act. If anything, I regard Judge McMeeken's award as generous.Result[68] For the foregoing reasons, the appeal is dismissed. [69] Given the outcome, Mr Man is entitled to costs on the appeal. These are fixed at $3,000 plus disbursements. M A Frater J