O’NEILL v O’NEILL [2021] NZCA 585

O'NEILL v O'NEILL [2021] NZCA 585 [8 November 2021]IN THE COURT OF APPEAL OF NEW ZEALANDI TE KŌTI PĪRA O AOTEAROACA716/2020[2021] NZCA 585BETWEEN MARTIN TIMOTHY O'NEILLAppellantAND JUDITH ANNE O'NEILLRespondentHearing: 7 October 2021Court: Courtney, Woolford, Mander JJCounsel: P V Cornegé for AppellantP J Dale QC and L T Meys for RespondentJudgment: 8 November 2021 at 9.30 amJUDGMENT OF THE COURTA The appeal is dismissed.B Costs are awarded to the respondent for a standard appeal on a band A basisand reasonable disbursements.____________________________________________________________________REASONS OF THE COURT(Given by Mander J)[1] Martin O'Neill (Martin) is one of three children from the first marriage of hisfather, Larry O'Neill (Larry). After Larry separated from his first wife in 1979, hecommenced a relationship with Judith O'Neill (Judith) that lasted for some 37 yearsuntil Larry's death in August 2016, aged 84. The couple married in 1999.[2] The major asset of Larry's estate was his half share in the couple's Hamiltonhome which they owned as tenants in common. In his last will, dated June 2012, Larryleft his half share to Judith. All three adult children challenged the will, claiming thatLarry lacked testamentary capacity and that this will was the product of Judith's undueinfluence. Those claims were dismissed in the High Court by Downs J, as was a claimby the children under the Family Protection Act 1955 (the Act) that Larry breached hismoral duty to provide for them.1[3] Martin does not challenge the Judge's finding that the will was valid. However,unlike his siblings, he appeals the decision to decline his family protection claim.Martin maintains that Downs J erred by failing properly to distinguish his financialposition from that of his siblings and that he did not correctly apply the applicableprinciples under the Act.Background[4] Larry was a retired solicitor whose estate was modest. It included his half sharein the Hamilton home which he and Judith had built in 2000. Both had contributedfinancially to the purchase of the section and the cost of its construction. Judith stilllives in the home and Larry's half share is the only major asset of his estate.[5] In Larry's final 2012 will, he left what was described as theFairfield Investments Share Portfolio in equal shares to his children. As at the date ofthe 2012 will, this represented the value of Larry's holdings in a share club which wasbelieved to be worth some $7,200 at that time. Larry subsequently sold the shares and,by the time of his death, the portfolio was worth nothing. However, there remaineda separate share portfolio held with Forsyth Barr that in February 2017 was valued atsome $22,000. That formed part of Larry's residuary estate that passed to Judith afterpayment of debts and funeral and administration expenses.[6] Larry had been a partner in a firm of solicitors until they merged with anotherfirm in 2000 and he became an employee at the age of 68. Between 2004 and hisretirement in 2008, Larry continued to work on a part-time basis for a sole practice in1 O'Neill v O'Neill [2020] NZHC 2988 [High Court judgment].Hamilton. Before her retirement, Judith was a teacher who worked part-time until atleast 2012, when she was aged 76. Judith is now 85.[7] Larry suffered a minor stroke in 1999, when he was 67. This affected hisperipheral vision and he was no longer able to drive. As a result, he becameincreasingly reliant on Judith for transport. In 2004, Larry was diagnosed with prostatecancer. The medical prognosis was that he may only have a life expectancy of aroundfive years depending on medication. This development together with Larry's growingdependence on Judith appears to have influenced his decision to change his will inDecember 2007 so as to provide for Judith by leaving his half share in the house toher. Judith's evidence was that Larry had repeatedly said she would outlive him andhis "mantra" was that he would provide for her. Larry made a final will in 2012(the subject of this appeal) but the bequest of his half share did not change.[8] In the later years of their marriage Judith also suffered a number of healthsetbacks. In 2008, she broke her arm in a fall and later had shingles and recurringrespiratory infections. Larry's health deteriorated in 2008. He required a pacemakerand he stopped work completely. Larry had no private superannuation and moneyappears to have become tight. At the same time, Larry's dependence on Judith wasgrowing. He was reliant on her to attend medical appointments, which she would alsoattend, and Judith took on responsibility for maintaining their home and its extensivegardens on a steep site. She also organised the couple's social engagements which,notwithstanding their respective health difficulties, they sought to maintain, and tookresponsibility for the daily administration of the household.[9] There was evidence that Larry and Judith believed they had not receivedsupport from Larry's children. In February 2014, a handwritten document signed byLarry in December 2012 was provided to their solicitor. It reads:Statement of Larry O'Neill on present and future care arising out of medicalconditions.1. Since 1999 Judi has been my sole caregiver organising ongoingconsultations with doctors and specialists. See attached list fromDr Charleson.2. Judi has been responsible for organising all matters relating to our homeand extensive gardens.3. Social activities centred around the home are organised solely by Judi.4. Since my retirement Judi has maintained an essential teaching income asan on-call teacher.5. In the last six years Judi has had to deal with her own significant healthproblems. These include facial shingles, fractured arm and a debilitatingdigestive condition.6. I now require care on a daily basis. For this Judi will require support andpractical assistance from my children.[10] The solicitor's evidence was that Larry and Judith had told her this support hadnot been forthcoming. She made a file note in which, under the heading "Larry", sherecorded the pacemaker was to cost $26,000; "none of the children would contribute";and Larry had "no sense of obligation" to his children.[11] In Larry's 2012 will, he explained his rationale for effectively not including hischildren. He stated:6. IN MAKING this Will, I am mindful of the fact that my children areall currently in their 50s, are financially well off, have established careers andsignificant assets of their own, and that in the circumstances they will have noneed to look to my estate for any maintenance and support upon my death.[12] Larry's other son, David, and his daughter, Philippa, did not dispute theaccuracy of Larry's assessment of their respective situations at the time he died in 2016as "financially well off" with "established careers and significant assets of their own".2However, Martin, despite being a qualified engineer, maintained his financial positionwas different to that of his siblings and that, as a result, he should have receiveda proportion of Larry's estate. His circumstances are dealt with in greater detail laterin this judgment.The appeal[13] Martin brings his appeal against the finding that Larry did not breach his dutyto provide him with proper maintenance and support on the following three grounds:2 At the time of the High Court hearing David was aged 62, Martin 60, and Philippa 59.(a) The Judge erred by not distinguishing between Martin's appreciablyworse financial position and that of his siblings having regard to theuncontested evidence to that effect.(b) If the Judge was correct not to distinguish Martin's position from thatof his siblings, a recognition award should have at least been made.(c) In either case, the Judge's assessment of the effect on Judith, inparticular that it would result in her having to sell her home, overstatedthe position.[14] Because of the related considerations to which each of these grounds give rise,their analysis tends to overlap. They essentially distil to whether the Judge was correctto conclude that, insofar as Martin is concerned, Larry did not breach his moral dutyto his son. We address each ground when examining this wider question and makeour own assessment of that question.Relevant principles[15] Persons entitled to claim under the Act, including children of the deceased,may apply to have provision made for them from the will-maker's estate for their"proper maintenance and support".3 Whether there has been any breach ofa will-maker's moral duty to provide for a particular individual is to be assessed onthe basis of the situation as it existed at the time of the will-maker's death.4[16] It is not suggested that Downs J did not correctly identify the principles to beapplied when assessing a family protection claim. For the purposes of this appeal it isnot therefore necessary to go beyond the list of considerations set out by Randerson Jin Vincent v Lewis, which were adopted by the Judge. Neither party demurred fromthis succinct summary:53 Family Protection Act 1955, s 4(1).4 Bill Patterson Law of Family Protection and Testamentary Promises (5th ed, LexisNexis,Wellington, 2021) at 49.5 High Court judgment, above n 1, at [67], citing Vincent v Lewis [2006] NZFLR 812 (HC) at [81].a) The test is whether, objectively considered, there has been a breach ofmoral duty by [the deceased] judged by the standards of a wise andjust [will-maker].b) Moral duty is a composite expression which is not restricted to merefinancial need but includes moral and ethical considerations.c) Whether there has been such a breach is to be assessed in all thecircumstances of the case including changing social attitudes.d) The size of the estate and any other moral claims on [it] are relevantconsiderations.e) It is not sufficient merely to show unfairness. It must be shown ina broad sense that the applicant has need of maintenance and support.f) Mere disparity in the treatment of beneficiaries is not sufficient toestablish a claim.g) If a breach of moral duty is established, it is not for the court to begenerous with the testator's property beyond ordering such provisionas is sufficient to repair the breach.h) The court's power does not extend to rewriting a will because ofa perception it is unfair.i) Although the relationship of parent and child is important and carrieswith it a moral obligation reflected in the Family Protection Act, it isnevertheless an obligation largely defined by the relationship whichactually exists between parent and child during their joint lives.[17] Whether or not there has been a breach of the moral duty to providemaintenance and support is a threshold issue, which turns on an assessment thatinvolves matters of law, fact and degree. It follows that on appeal that assessment fallsto be considered afresh in accordance with the principles discussed in Austin, Nichols& Co Inc v Stichting Lodestar.6 However, if a breach of moral duty is found theappropriate remedy will be a matter of discretion.7The alleged failure to distinguish between Martin's financial position and that ofhis siblings[18] Much of Martin's evidence regarding his financial position at the time of hisfather's death centred on a failed property development in Queenstown which hedescribed as having left him "destitute, insolvent and unemployed". The development6 Austin, Nichols & Co Inc v Stichting Lodestar [2007] NZSC 103, [2008] 2 NZLR 141 at [16].7 Talbot v Talbot [2017] NZCA 507, [2018] NZFLR 128 at [37].involved the construction of a number of townhouses but during the initial buildingphase it fell victim to the global financial crisis. The project collapsed in 2010 and thebank took over the project. Martin stated "[e]verything [he] owned had beenpoured into the development" and he was "left with nothing". He described being"wiped out financially" after the project failed and the bank took the land.[19] A number of friends and family had also invested funds in the development,including Larry who provided $50,000. The status of these funds was the subject ofongoing debate between father and son, with Larry taking the position that it wasa loan rather than capital. Martin denied that was the case and gave evidence herepeatedly informed his father of the true position. The actual status of the $50,000 isnot particularly material but Larry's belief may have informed his thinking at the timehe prepared his will.[20] Martin's evidence was that, although he obtained employment between 2011and 2018 after returning to Bali with his wife, he was not able to acquire significantassets or savings, unlike his siblings. Martin and his wife and family rent their homein Indonesia, where they have lived since 1987. In 2010 Martin secured a positiondescribed as Country Director of AECOM in Jakarta. Martin acknowledges this waswell-paid but cites pressures from educating his family in different countries aroundthe world and having to commute to Jakarta as placing demands on his finances whichprevented him from acquiring substantial savings or assets. Martin left AECOM towork for a New Zealand company that was subsequently sold and then for a renewableenergy company, both in Indonesia. Since 2018 he has relied on consultancy workwhich he describes as "patchy" but sufficient to pay his rent. Martin says he has beenunable to return to New Zealand because he has insufficient funds to place a depositon a house and that, since the advent of COVID-19, projects in Indonesia have stoppedand he has been without an income.[21] Martin's claim was to a certain extent hamstrung by a lack of detailedinformation about his finances since 2011, particularly regarding his income andexpenses and the financial difficulties he has incurred despite being a qualifiedengineer who has acquired a number of executive positions. Nor is it clear how theQueenstown property development failure over a decade ago has prevented him frombeing able to enjoy the rewards of an apparently good standard of living as anexpatriate in Bali. Despite purportedly being the sole guarantor for the project's debtsit is not clear that he was ever made bankrupt or whether he had to personally supportand manage debt arising from the property collapse on an ongoing basis oversubsequent years. No evidence was tendered about this beyond general statements tothe effect that in 2011 Martin was "insolvent" and "owed so much money".[22] It is not contested that Martin was afforded the opportunity to provide furtherdetailed information regarding his financial history and circumstances prior to thehearing of this matter but none was forthcoming. As noted by Downs J, the lack ofdetailed evidence about Martin's finances and the imprecision of his actual positionsignificantly detracts from his claim that Larry breached his moral duty to him by notproviding proper maintenance and support. His lack of assets and the fact he sufferedin the global financial crisis were acknowledged but we agree with the Judge'sobservation that the absence of financial information about the effects over the longerterm on his financial position means his claim remains opaque.[23] Mr Cornegé, on behalf of Martin, argued that the Judge placed undue weighton his reference to Martin not being "destitute" and his observation that the cost ofliving in Indonesia would be cheaper than New Zealand — there being no evidenceregarding that topic.8 However, we consider the Judge's reference to Martin not beingdestitute must be placed in context. It was an observation made about Martin'sfinancial position in comparison to that of his siblings when the Judge acknowledgedthat Martin's position is appreciably weaker. We do not consider Downs J waslabouring under any misapprehension that a threshold of destitution was required toestablish a successful claim. Similarly, the reference to the cost of living in Indonesiamay have been an unwarranted assumption on the part of the Judge but we do notconsider it detracts from his preceding observation that Martin is a qualifiedprofessional with an income, or that it was particularly material to the Judge'sreasoning.8 High Court judgment, above n 1, at [84].[24] In assessing the respective positions of the siblings, Downs J acknowledgedMartin's financial position was weaker than his siblings. The Judge also accepted thatLarry had not made this distinction between his children. David and Philippa haveboth been professionally successful and have achieved financial independence,whereas Larry appears to have misapprehended that Martin had significant assets ofhis own. To the extent that Martin's argument relied on demonstrating he was ina different financial position from his siblings, we do not consider the Judge erred inhis assessment of what was largely uncontested evidence. Downs J was also clearlycognisant of the fact that Larry may have been labouring under the apparentmisconception (both when he made his 2012 will and at the time of his death in 2016)that Martin was in a comparable position to his siblings.[25] It was submitted that, because of this established difference between Martinand his siblings, Martin's evidence was sufficient to establish that he was in need ofmaintenance and support. However, Martin does not meet that test simply bycomparing his financial circumstances with those of his siblings. Any obligation Larryhad towards Martin had to be gauged against the competing interests of Judith, thesize of the available estate, and the clear moral duty to provide for her which Larrywished to discharge as his pre-eminent obligation.The assessment of Judith's position and Martin's recognition claim[26] Martin accepts that his father's pre-eminent moral duty was to Judith but heargues the provision Larry should have made for him in his will would not havebreached the moral duty he owed to Judith. Martin submitted that Downs J overstatedthe impact on Judith that would result from properly recognising his father's moralduty to him. This contest centred on the half share in the Hamilton house. It was notthe subject of any formal valuation. However, all parties appear to have been contentto proceed on the basis that its approximate value was likely to be $1 million and thatLarry's share of the asset was some $500,000.9 Mr Cornegé submitted that Martin'sclaim on his father's estate was relatively modest and would not have significantlyreduced Judith's share.9 The home has a rateable value of $780,000, however this figure is likely out of date.[27] Martin's claim was not limited to one based upon his pleaded impecuniosity.He, like his siblings, sought an award on the more fundamental basis that he wasLarry's child. It is not disputed that Larry owed a moral duty to his children andDowns J recognised that each of the siblings had a long, loving relationship with theirfather and were hurt by Larry's testamentary decisions. This Court has recognised thatthe statutory concept of support, as that term is used in the Act, can extend to theprovision of "comfort" to a would-be recipient and that a recognition award can bemade to acknowledge the wider considerations that are to be taken into account indetermining the scope of a will-maker's duty.10 These considerations include the needto recognise belonging to the family, and the part played by an individual in the overalllife of the deceased despite there being no apparent economic need.11[28] Martin argued that the Judge was wrongly influenced by two factors indeclining to make an award in recognition of his status as Larry's son: first, the costsof a retirement home and, second, Judith's alleged inability to meet an award unlessthe home was sold.[29] Martin is correct to identify there was no evidence as to the cost of a retirementhome. However, we consider the Judge's comment that retirement homes can becostly, which was made in the context of acknowledging Judith's financial interests,was an entirely sensible and understandable observation to make when assessing thefuture financial pressures that Judith is likely to face as an 85-year-old widow who isentirely dependent on government superannuation for her income.12 We consider thestatement is beyond contest.[30] We also consider the Judge was entitled to have regard to how an awardrelating to Larry's share of the house may necessarily impinge on Judith's ownershipof her home in order for her to meet any such obligation. It was argued that the Judgeerred because an award in favour of the siblings would not necessarily have requiredJudith to immediately sell the house and that a life interest in Larry's share of the homecould have been granted to Judith until such time as the asset was sold.10 Williams v Aucutt [2000] 2 NZLR 479 (CA) at [52].11 At [52], [69] and [75].12 High Court judgment, above n 1, at [81].[31] We are of the view that Downs J was aware such a course was possible, givenhis earlier observation that a recognition award could be made, albeit one that wascontingent upon the home being sold.13 However, we, like the Judge, consider thereare good reasons why such an order would not be satisfactory. These include, as weunderstand is the position, that the parties are estranged and relations between themare fractious. A clean break is preferable in that situation. Moreover, we accept thatnot only would such an arrangement undermine Judith's sense of security, which Larrywas clearly anxious to preserve for his wife at her late stage of life, but that herfinancial circumstances are such that she will likely need to borrow against theproperty in order to meet its ongoing maintenance, insurance, rates and other costs.This and any other reliance on the asset to meet financial needs will inevitably erodea resource that would otherwise be available to Judith to pay retirement home and carecosts when she finally comes to sell the house.[32] We consider that the Judge's approach to Martin's claim is likely to have beenunderstandably influenced by the fact that there realistically appears no other meansto meet an award against the estate other than by encumbering Judith's home. Thereis the share portfolio held with Forsyth Barr which is capable of being liquidated as apossible means of meeting an award without jeopardising the security provided toJudith from her acquisition of Larry's share of the house. However, the Judge mayhave discounted this part of the estate after referring to the review inChambers v Chambers of awards made on a purely "support" basis where it wasobserved that adult children who are not in financial need sometimes receive up to10 per cent of an estate.14 In the present case that would translate to an award of some$50,000 per child. Given the Judge was dealing with claims by all three siblings thatin combination would have well exceeded such a sum, he may have viewed the shareportfolio valued in 2017 at some $22,000 as immaterial.[33] Downs J found himself unpersuaded that Larry had breached his moral duty tothe children. In reaching that conclusion, he considered Larry's primary duty to Judith;her needs and the modesty of the estate were decisive. Having assessed the matter forourselves, we consider the Judge correctly identified these matters as the pivotal13 At [69]–[70].14 Chambers v Chambers [2016] NZHC 583 at [114].considerations. We initially had a residual concern that the Judge may have limitedhimself to a binary choice between the moral duty Larry owed to his wife and thatwhich he owed to his children, or at least to Martin, as a result of the apparent solefocus on Larry's half share in the house maintained in the belief this was the onlyavailable asset of the estate from which any award could be met and that the Judgehad ignored the share portfolio. However, the value of the shares has reduced to$17,000 and some $9,000 will need to be applied from that asset to meet probate andadministration fees that have been paid by Judith.Our assessment[34] For ourselves, we consider, as the Judge himself found, that Martin's overallfinancial position does place him apart from his siblings. However, the poor qualityand superficiality of much of Martin's evidence was insufficient to establish a properbasis upon which to sustain a claim based on the proposition that Larry had anobligation remotely comparable to his duty to Judith to provide proper maintenanceand support. Nonetheless, we have given careful consideration as to whether thecombination of Martin's broader financial situation and Larry's misapprehension ofhis son's position may have justified a limited award in recognition of Martin's statusas Larry's son on the basis of the availability of the Forsyth Barr shares.[35] Martin argued that when the Judge held that to make an award to the siblingswould be "to dramatically rewrite Larry's will", he misapplied the general principlethat a Court should not rewrite a will because of a perception of unfairness.15 Martinargued it was self-evident from the making of any award under the Act thata deceased's will is to some degree being rewritten and that this should not be a basisupon which to refuse to make any award at all. He submitted that such an approachmay have fettered the Judge's willingness to consider an award in favour of Martinand his siblings, subject to a life interest in favour of Judith. However, we considersuch a submission is speculative. Moreover, we believe the Judge's point was clear.Taken together, the siblings' claims would have effectively returned the testamentaryposition to Larry's original will of 2002, despite the will-maker having twicerepudiated the effect of that will during the 14-year period before his death. Accepting15 High Court judgment, above n 1, at [82].the siblings' claims would have severely abridged Larry's testamentary intentions and,we agree, effectively abrogated his testamentary freedom.[36] It is these considerations that we have in mind in declining to make any awardin favour of Martin. Larry's priority was his wife and we consider he was entitled tostructure his will in a way that would provide at least some measure of security forJudith as his elderly widow. The estate was simply too modest to both provide forJudith and recognise Martin by way of some albeit small legacy. We do not consider,in the circumstances, that Larry breached any moral duty to his son by not doing so.[37] As mentioned, we have closely considered the merit of making a small awardfrom the shares held by Forsyth Barr but, on balance, we do not consider that isappropriate or would realistically achieve much. An award to a claimant should be nomore than is necessary to make adequate provision from the estate and remedy thefailure to do so.16 In making such an assessment the Court must be mindful oftestamentary freedom and that what may represent a proper award is a matter ofjudgment in the individual circumstances of the particular case.17[38] In this case, those considerations would point to only a nominal award but onethat would also deprive Judith of a small but valuable source of cash that would allowher to maintain the property and meet other expenses, if only for a relatively shortperiod. Putting to one side any relationship property considerations relating to theshares, after taking into account administrative costs, it appears only some $8,000worth of shares would likely remain. In those circumstances we consider Downs Jwas correct to decline Martin's claim under the Act.Result[39] The appeal is dismissed.16 Henry v Henry [2007] NZCA 42, [2007] NZFLR 640 at [54].17 Williams v Aucutt, above n 10, at [52]; and Henry v Henry, above n 16, at [55].Costs[40] Costs are awarded to the respondent for a standard appeal on a band A basisand reasonable disbursements.Solicitors:Nielsen Law, Hamilton for AppellantNeilsons Lawyers Ltd, Auckland for Respondent