Robyn Andrews wrote into her will that loans made to each of her sons were to be taken into account before dividing her estate equally between the three of them. On her death, son Stephen argued that his borrowings of $439,700 could be ignored; he had been bankrupted and these debts were no longer owing.
The High Court was told of their mother’s detailed estate planning, given her then serious concerns about Stephen’s financial circumstances. His company NZNet Internet Services Ltd had gone into liquidation insolvent some six years before she signed her final will. She had lent his company about $340,500 as a secured creditor. She got back about $9000 following liquidation.
Robyn Andrews signed her final will in 2017. The document stated loans made to each son were to be taken into account before making any distribution. Her will listed how much each son owed at that date: Richard ($115,000); Evan ($8900) and Stephen ($439,700). The will specified Stephen’s share of the estate was not to be paid to him personally, but paid to a trust named the Andrews-Runnymede Trust which listed as beneficiaries Stephen and his children, but not his wife.
Unbeknown to his mother, Stephen was bankrupted seven days before she signed this will. He was discharged from bankruptcy in March 2020, three months before her death. The effect of bankruptcy discharge is to write off all unsecured pre-bankruptcy debts; no legal action can be taken to enforce them.
Stephen challenged plans to include the $439,700 as a debt he owed his late mother’s estate before dividing the estate residue three ways. Justice Gordon ruled use of words in the will such as ‘loans’ and ‘amount outstanding’ were to be read as a proxy for money provided to her sons during her life and not as debts legally due. Further, lawyers’ file notes recorded that when giving instructions for her will, she made it clear that she wanted to treat her three sons equally, having regard to money they had already received.
The $439,700 lent to Stephen was to be taken into account, Justice Gordon ruled. The size of Robyn Andrews’ estate was not disclosed.
re Estate Robyn Andrews – High Court (29.11.21)
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