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Acknowledgement of Debt, Testamentary trusts, Will trusts, Wills

Fair is a relative concept

 

Families are funny old things.  Blood is thicker than water (fact).  But when it comes to who should get the most after Mum and Dad have died, perceptions can become quite  skewed.

In Ngui v Ngui the surviving parent left her estate to her four children in equal shares.  So far so fair.  However, one of the children Joseph, was living in the property with his wife and children when Mum died.   Joseph’s sisters tired of the status quo and as set out at [3] of the judgment:

“The sisters seek orders under s 339(1)(a) and (3) of the Property Law Act 2007 (the Act) directing the valuation and sale of the property. Joseph opposes these orders on the grounds they are not appropriate in the circumstances. He says the Court should make an order under s 339(1)(c) of the Act allowing him time to buy the property at an appropriate price. He also says the Court should take into account an asserted agreement giving him the right to subdivide the property and to occupy one of the resulting lots. He also says the Court should order performance of that agreement or should make an order under s 49(1)(a) of the Administration Act 1969 in respect of his interests under that agreement.”

The main issues related to whether the Court should order the sale of the property, whether  Joseph should pay occupation rent and whether there was an agreement that he could subdivide the property for his own benefit.

In deciding whether to order the sale of the property the Court must, in accord with the Property Law Act,  have regard to:

  • the extent of the share in the property of the sisters
  • the nature and location of the property
  • the extent of Joseph’s share
  • the hardship that would be caused to the sisters by refusing the order in comparison with the hardship that would be caused to Joseph by making the order
  • the value of any contribution made by any co-owner to the cost of improvements to, or the maintenance of, the property, and
  • any other matters the Court considers relevant.

The question as to whether there was agreement as to subdivision was discussed at [50] as follows:

“If the document is evidence of a gift, the question arises as to whether the mother intended to give the right to subdivide the land exclusively to Joseph, thereby negating the oral promises the parents had made to the sisters or whether she saw the document as sitting alongside those oral promises. There is no evidence on this point apart from Joseph’s assertion that this was his intention in getting his mother to sign the document and his claim that his father told him that he could have the back land as his own. However, Joseph’s assertion is not evidence of the mother’s intention. As for Joseph’s claim about what his father told him, it is relevant to recall the admonition of Salmond J in Harper v Whittaker that it is very easy to tell a story of a gift by a dying [or dead] man and very difficult to contradict it after he is dead. There is the further complication of not knowing whether, because of her dementia, the mother appreciated what she was signing”

Considering all matters the view of the Court was set out at [53] as:

“I am satisfied that Joseph’s right, and indeed the sisters’ rights, to build and own a house on the back land on the basis of the parents’ promises ended when the mother died and the property was disposed of in accordance with her will. Joseph effectively confirmed his understanding of this reality, when in response to Mr Gilchrist’s questions about whether he had challenged his parents’ wills, he said:

No, I accepted the share into four, the house into four shares, yeah.”

With respect to an order as to sale, the Court carefully considered the position of each of the siblings and determined that if Joseph could not purchase the property from his siblings in a specified time-frame then the property must be sold.

With respect to occupation rent, a grace period of just under 9 months was allowed.  No reason was given for the length of this period (other than a reference to adjusting to new realities following their mother’s death) although reference was made to a period when the house was untenantable due to a roof repair.  Outside that period Joseph was required to account to his siblings for a 1/4 share each of the market rent.

The siblings were required to account to their brother for properly incurred costs that could be evidence such as rates and maintenance, but not during the grace period.

The take home message is that when wills are drafted – care is required to practically consider how the will-maker’s wishes might be achieved when some family members live with the will-maker.

References:

  • Ngui v Ngui [2020] NZHC 160
  • Harper v Whittaker [1921] NZLR 783

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