Colin Paul Blumenthal v Bruce Anthony Stewart
| Jurisdiction | New Zealand |
| Judge | Ellis J |
| Judgment Date | 15 December 2015 |
| Neutral Citation | [2015] NZHC 3187 |
| Docket Number | CIV-2014-454-90 |
| Court | High Court |
| Date | 15 December 2015 |
Unde The Family Protection Act 1955 and the Law Reform (Testamentary Promises) Act 1949
In The Matter Of the Estate of JOHN HAWTHORN MATHIESON late of Palmerston N01ih (Deceased)
Under Paii 18, Rule 18.1 High Court Rules
In The Matter Of the J H MATHIESON TRUST
[2015] NZHC 3187
Ellis J
CIV-2014-454-90
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
Application for further provision under the Family Protection Act 1955 (FPA), s3 Law Reform (Testamentary Promises) Act 1949 (LRTPA) (estate of deceased liable to remunerate persons for work done under promise of testamentary provision) and in equity against a Trust which held assets of the deceased — the plaintiff's late mother had been in a de facto relationship with the testator for 22 years — the plaintiff had been an adult when the relationship began and was in his fifties now — the deceased left his estate to a charity (the second defendant) — the plaintiff said that the deceased had provided him with emotional and financial support — the plaintiff also claimed for the purposes of the LRTPA that he had provided the deceased with work and services, including helping him to maintain his property — whether the plaintiff was a stepchild for the purposes of s3 FPA (persons entitled to claim — stepchildren of the deceased who were being maintained wholly or partly or were legally entitled to be maintained wholly or partly by the deceased immediately before his or her death) — whether the words “his or her death” could be interpreted as referring to the death of the de facto partner — whether the plaintiff was being maintained by the deceased at the time of his death — whether the deceased had an obligation under the LRTPA — whether a constructive trust existed over the Trust's property or whether the Trust should compensate the plaintiff for unjust enrichment.
HA Cull QC and PA M01ien for Plaintiff
J M Morrison for First Defendant
S R Morris for Second Defendant
RESERVED JUDGMENT OF Ellis J
I direct that the delivery time of this judgment is 10 am on the 15th day of December 2015
For some 22 years John Hawthorn Mathieson (John) lived in a de facto relationship with Shirley Dawn Blumenthal (Dawn). John had never been married and had no children of his own. Dawn had four children from her previous marriage, including the plaintiff, Paul Blumenthal (Paul). Paul was a young adult when his mother's relationship with John began and he is now in his 50s. The relationship was ended by Dawn's death, in 2004.
John died on 1 February 2014. His will effectively left all his property, valued at around $468,000, to charity, the Neurological Foundation of New Zealand (the Foundation). The Foundation is also the only beneficiary of the J H Mathieson Trust (the Trust), which holds net assets valued at around $453,000.
In these proceedings Paul brings claims against John's estate under the Family Protection Act 1955 (the FPA) and the Law Reform (Testamentary Promises) Act 1949 (the TPA) and in equity against the Trust. I record that no similar claims have been brought by Paul's siblings. It is not, however, in dispute that Paul's relationship with John was closer and deeper than theirs.
It is useful to begin by setting out the facts and evidence in a little more detail.
Paul first became friends with John in 1978. John was a panel beater. Paul and Dawn were involved in running a family pest control business.
John executed his last will in 1981. His de facto relationship with Dawn began the following year. His solicitor at that time (and until his death) was Bruce Stewart, the first defendant. Mr Stewart drafted the will and is its sole executor and trustee. Under the will, the beneficiaries are John's father and his aunt, with a gift over to the Foundation. John's aunt and father both died before he did.
As I understand it, in the late 1980s John was no longer able to work as a panel beater and was unemployed for two years or so. In about 1990 he was given a job in the Blumenthal family's pest control business. Paul says that later, when that business was taken over by a company known as Ecolab, he ensured that John's employment with that company continued.
In early 2002 John sought advice from Mr Stewart, in relation to asset protection matters. In that context Mr Stewart wrote to John, recording that:
-
(a) the value of his major assets totalled approximately $351,000;
-
(b) the property he lived in with Dawn was owned by her; and
-
(c) because the principal beneficiaries under his will had died, his estate would go in full to the Foundation.
Then, Mr Stewart noted:
Your arrangement with your partner [Dawn] is apparently that she will not leave anything to you and likewise you will not leave anything to her.
Mr Stewart went on to recommend that John transfer his assets to a Trust in order to address the twin risks posed by:
-
(a) the possibility that Dawn might change her mind and make a claim under the Property (Relationships) Act 1976 (the PRA) in the event of John's death; and
-
(b) the dissipation of those assets in the event that he might later be required to pay rest home fees.
As a result, the Trust was established in 2002 and John's assets transferred to it (as a loan), accordingly. The trustees were John and Mr Stewart. The named beneficiaries were and are John, the Foundation, “any other person in New Zealand” and “any charity in New Zealand” that John later nominated by deed. A gifting programme was put in place whereby the $351,000 debt owed by the Trust to John would be forgiven over time.
As foreshadowed by Mr Stewart, when Dawn died in 2004, her will made no provision for John. Rather, she:
-
(a) left her shares, and any current account credit she might have, in Kiwi Pest Control (1988) Ltd (Kiwi Pest) to Paul; and
-
(b) divided the residue of her estate equally between her two daughters.
The principal asset in Dawn's estate was the property in which she and John had been living. In 2004 it was valued at between $375,000 and $400,000. There was a dispute between Dawn's children over the will, which was eventually settled. 1 In the context of that dispute John swore an affidavit in which he:
-
(a) confirmed that he made no claim on Dawn's estate; and
-
(b) expressed his sadness and dismay at the dispute between Dawn's children, but took no sides on the merits.
Because the house in which John and Dawn had been living formed part of Dawn's estate, John wished to purchase a new home. It seems that at one point there was a proposal that he might receive a $50,000 contribution from Dawn's estate for that purpose, but this was not pursued by him.
Instead, in mid-2005, the Trust purchased a property on the corner of Bunnythorpe Road and Setters Line in Manawatu (the Setters Line property) for $545,000. The purchase price was funded from the Trust's existing investments and a Westpac mortgage of $100,000. From that time onwards John lived in a self-contained flat which was part of the “shed” on the property and rented out the main house.
Paul's evidence was that, in return for John doing panel beating on Paul's vehicles, Paul removed a considerable amount of rubbish including a lot of scrap
metal from around the Setters Line property and tidied up the section. At John's funeral Paul said that he had “a new best friend and a panel beater on tap”Paul was given keys and had open access to the Setters Line property. At one point he also stored his furniture in the shed and his children stayed with John who supported them during Paul's divorces.
It seems that Paul's second divorce was particularly difficult. He said that it caused him such financial hardship that he had to sell his own house to service the resulting relationship property debt. He said “John provided support of all kinds to me during that period”, including offers of money and the use of his own ute (neither of which Paul accepted). Paul did, however, relocate his pest control business to the Setters Line property and operated his business from there rent-free. He freely admitted that he stored his ute, work equipment and the chemicals he used in his business in the shed on the property for at least two years. The shed had 3-phase power and a high enough stud for Paul to install a hoist in it. Paul said that throughout this time John provided him with both moral and practical support in the running of the business.
At some point Paul also moved some weaner steers into a paddock at the Setters Line property. He said the steers helped to keep the grass down and were a source of meat for both him and John.
Paul said, and I accept, that the friendship between John and Paul grew stronger after Dawn's death in 2004. He said that his mother had specifically asked him to look after John after she died. It is not seriously in dispute that they shared a close relationship. They were variously described by Paul's witnesses as being “like friends”, “good mates”, “like brothers”, or as having a stepson-stepfather relationship. Paul himself described John as his “best friend” in the eulogy he delivered at his funeral and as a “good friend and mentor” in John's death notice.
On 18 November 2013 John snapped the tendons in both his ankles and was hospitalised and immobile. Paul's evidence was that he visited him daily in hospital and brought him anything he needed. Although John was recovering his mobility and had been released from hospital in January 2014 he died, quite unexpectedly, on 1 February.
Before turning to consider Paul's claims, there are two ancillary matters which need to be recorded.
Following John's death,...
To continue reading
Request your trial