Two sisters breached the Protection of Personal Property Act by using their mother’s enduring power of attorney to sell a 125 acre Taranaki farm, splitting the proceeds between themselves and three other sisters in what Justice Dobson said was a stratagem to remove assets from their mother’s estate prior to death. It is unlawful to use enduring powers of attorney for your own benefit.
Doreen Fitzgerald died in 2014. Her death crystallised family enmities going back last century. She had been widowed for over thirty years. The High Court was told of her disappointment at receiving nothing from the estate of her husband, known as DJ, following his 1983 death. One witness described her as poring over estate papers stating: ‘the bastard left me nothing’. DJ left proceeds of a life policy valued at some $21,000 to their elder son Daniel (living in Australia), a life interest in his farm to their second son Arnold (with Arnold’s children to then inherit) and little to their five daughters. Widow Doreen and the daughters were left with a right to occupy the farm homestead; the daughters until they married.
Doreen owned in her own right a 125 acre farm six kilometres away in Rowan Road, Kaponga. In 2011, while Doreen was still alive but suffering from dementia, daughters Marie and Angela used an enduring power of attorney to sell Rowan Road to a third sister, Louise and her husband. Louise had been sharemilking on the property at various times since 2003. The agreed price was $2.26 million which was then divvied up: $450,974 to each of Doreen’s five daughters, including Marie and Angela who had signed off on the sale.
Colouring family dynamics was evidence of Arnold assisting his mother at Rowan Road for over two decades with the construction of hay barns, replacing fencing and refurbishment of the milking shed, cow yard and effluent ponds. Justice Dobson was to rule that this work supported a claim by Arnold under the Law Reform (Testamentary Promises) Act. Family discussions at the time of the work pointed to Arnold being given first right to buy Rowan Road after Doreen’s death on easy terms; he would have to buy at market price but payment to his siblings of their share could be delayed up to five years. This was pre-empted when Maria and Angela sold up using their mother’s enduring power of attorney at a time when she was diagnosed with dementia. They did not tell Arnold of the $2.26 million being gifted, rather than being kept as an asset of their mother. He found out after his mother’s death.
Arnold’s testamentary promises claim was bitterly fought, with ten days of evidence in the High Court seeing fifty years of family washing hung out for inspection. Past disputes against distant relatives and between family members all got an airing.
Justice Dobson ruled Arnold was entitled to $50,000 from his mother’s estate: $40,000 for his testamentary promises claim based on his loss of the right to buy Rowan Road and a further $10,000 for a related family protection claim arising from the fact his mother’s estate was now notionally worth some $3.35 million with value of the unlawful gifting following sale of Rowan Road to Louise added back in. Louise keeps Rowan Road, but the $450,974 received by each of the daughters is liable for repayment. Daniel was awarded $20,000 in a similar family protection claim under the Family Protection Act. Justice Dobson ordered the five daughters as residuary beneficiaries of their late mother’s estate bear both the estate costs of all the litigation and the damages awarded to each of Arnold and Daniel. Estate payouts have been frozen since litigation was threatened. Separately, Doreen’s will leaves $50,000 each to both Daniel and Arnold; the balance equally to her daughters.
re Fitzgerald – High Court (21.09.18)
18.186