Paterson v Archer
IN THE FAMILY COURT AT WAITAKERE
UNDER Family Protection Act 1955
IN THE MATTER OF The Estate of Ernest James Paterson
B MacLean for Appellant
P Revell for Estate (given leave to not appear)
A Gilchrist for the surviving children
J Browne for the adult grandchildren beneficiaries
Claim under s3(1)(c) Family Protection Act 1955 (persons entitled to claim) by grandchildren — father predeceased the testator — majority of father's share of testator's estate fell into residue to be divided amongst his other siblings — modest estate — moral duty to grandchildren — adult grandchildren in modest financial circumstances — infant grandchildren — principles relating to Family Protection Act claims.
The issue was whether E owed a moral duty to provide for his grandchildren.
Held: Where the parent of a grandchild predeceased a testator, there was a greater readiness to recognise the validity of the claim of the grandchild, but only where they could establish a breach of moral duty. E had dealt with his property in a way that allowed R to remain in the unit. It was doubtful E had understood the relative inequity he had provided between his grandchildren in the event of their respective parents dying. If one of his younger children had died their children would have succeeded to everything that the parent would have had. Upon R's predecease, his children were reduced to what amounted to a little over 10% of the entire estate. The estate was large enough for recognition of all the moral claims.
The two young grandchildren were exposed to potential poverty with needs for accommodation, food clothing, health and education. Upon R's death, their mother was left with net debts which she continued to service. Had E realised their plight he would have responded to make a just and wise provision. They were entitled to more than the $11,000 they would have received under the will.
The adult claimants were of full age; none were strongly situated and there was no indication they were likely to succeed substantially on their respective mother's side. A grandfather with an estate less than $700,000 and the families of four children to consider had a limited moral duty requiring him to provide for the maintenance and support of such children. Their case was less compelling but a just and wise testator would treat each of their cases equally. E had not paid sufficient attention to the needs of the grandchildren whom R had left exposed without hope of substantial inheritance.
Younger grandchildren awarded $50,000 each; Adult children awarded $15,000 each. That equated to approximately a quarter of E's estate which was an appropriate proportion. Balance of estate to be divided equally between E's other three children.
JUDGMENT OF JUDGE J G Adams
[Family Protection: Grandchildren]
When Ernest James Paterson died on 20 October 2008 he was an old man, 94 years old, and he had experienced declining health for several years. He had a degree of deafness, dementia, and had suffered from acute confusion for a couple of years before his death.
His wife, 15 years his senior, had died a number of years earlier.
Mr Paterson had close relationships with his four children. Each one of them had been involved in varying significant ways, providing company and comfort for him in his declining years.
He had been a builder and his final building task had been the erection of two units, a large unit and a small unit, on a site adjoining the old family home. He sold the old family home to his son, Gordon. Mr Paterson moved into the larger unit and his other son, Ron, moved into the smaller unit.
Like many families, some children fared better and some fared worse, as the years went by. Among Mr Paterson's four children, the oldest, Ron, never quite found the knack of having a penny stick to him. Ron was supposed to pay rent to his father for the smaller unit but much of the time his father let it go. Ron obtained a sum of money, perhaps $40,000 or more, from a matrimonial settlement and set about creating a recording studio at the smaller unit.
Ron made a number of alterations to the smaller unit. After he married for the third time alterations were made so that his third wife could provide a Thai massage service.
Ron's three younger siblings seemed to have thrived, better than Ron, financially and in the careers of their children.
Dorothy, now aged 69, still works as a doctor's assistant but her health has been deteriorating. Her husband is over 80 and they have an old house worth $175,000 and savings of $22,000. They have a blended family of eight children and nine grandchildren. Dorothy's own five children are in their 40s and appear to have good jobs.
Gordon, now aged 66, lives with his wife in what was the old family home, now worth $370,000 but in need of repairs in excess of $50,000. They have investments of $140,000. Gordon has prostate cancer which was in remission at the time he swore his affidavit. He is in employment. His three children, in their late 20s and early 30s, have good jobs.
Joan, now aged 63, is married with two children in their late 30s (the oldest may be 40 by now). She and her husband are comfortably settled with a house worth
$635,000; her husband has a beach apartment with a net value of $370,000 and they have other property in trust. Their children are well settled.
This case would never had happened except for a twist of fate. Whilst his father was infirm, and everyone expected him to die at any day, Ron was admitted to hospital for an operation, he contracted septicaemia and he died quite suddenly and unexpectedly on 22 March 2008, seven months before his father died. Ron was only
Initially the family decided not to tell his father that Ron had died because his own death was expected imminently but, in time, attempts were made to tell him, but his dementia was such that he could not take it in.
Ron had four children of his first marriage, one to his second and two his third. His widow was in her mid 30s, left with the care of their two boys, then aged 5 1/2 and almost 4, together with her two daughters from her previous marriage in Thailand which ended when her first husband died. She was left no real assets and had to shoulder approximately $40,000 of debt.
The estate comprises the larger unit which is valued at $375,000 (well below its official capital value of $440,000); the smaller unit which is valued at $260,000 (well below its current value of $390,000) and cash of $62,000. In all the estate is worth approximately $697,000. There may be some adjustments required because of rental.
Ron's widow has rented both units from the estate. She resides in the larger unit and has reconfigured the smaller unit for business purposes.
Although the last Will was made on 18 June 2002, it is helpful first to set out the terms of the previous Will made on December 1991.
On 19 December 1991, Mr Paterson's wife was still alive, but if she predeceased him, the relevant terms of the will are these.
(a) The smaller unit was to pass to Ron but if Ron did not survive then one third of that property was to pass to Ron's daughter Diane and two thirds was to pass to his youngest son Haydon. That meant that nothing was provided for the other three children that Ron then had.
(b) The larger unit passed to the other three children (Ron's siblings) with substitution of issue.
It is interesting to note what was to occur to the residue. If the residue did not exceed $20,000 it went equally to all of the children who survived him. If the residue exceeded $20,000 then Ron got only $5,000 (and if he predeceased that$5,000 went to Diane and Haydon in the proportions noted earlier) and the remainder of the residue went to the other three children with substitution of issue.
The last Will is dated 18 June 2002.
As with the previous Will, the larger unit was shared equally between Dorothy, Joan and Gordon with substitution of their issue.
The smaller unit passed to Ron but if he did not survive then it fell into the residue to be divided under para 4.3 of that Will.
Under para 4.3 the residue (now comprising the smaller unit and the cash) is to be divided into four equal parts. One part goes to each of Dorothy, Joan and Gordon with substitution of their issue. The remaining one quarter is to be divided equally among those of Ron's children who survived the testator.
Again, it is instructive to note what would have happened to the residue in the event that Ron survived. In that event the residue would have simply been the cash. If the residue was less than $20,000, then it was divided equally among the younger three children (that is, Ron would not have received a portion). If the residue was...
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