07 August 2023

Estate: re Estate Denis Chambers

 

She started her working career operating a trench digger, progressing over two decades to become general manager and a director of family-owned earthwork contractor Chambers & Jackett Ltd based in Tasman.  Following the 2020 death of her father Denis Chambers, daughter Cindy found his forty per cent shareholding valued at $3.4 million had been left to her stepmother Lynette, contrary to a family understanding that Cindy would inherit.  The High Court ruled Cindy was entitled to take ownership of the shares, with stepmother Lynette to receive an annual allowance from the company during her lifetime.

The High Court was told the Chambers and Jackett families’ contracting business was founded nearly one hundred years ago.  Cindy is a third generation Chambers now working for the business.  She served her apprenticeship as a machine operator, before moving into management.  As with other family members, she was paid below market rates, being given shares in the company as time progressed.

At the time of her father’s death, Cindy and her family trust had a ten per cent shareholding in Chambers and Jackett.  Relatives expected that her father’s forty per cent shareholding would be passed to her on death.  The tradition had been for shares in the family-owned company to be left by will to blood relatives, preserving the family legacy.  Evidence was given that Denis had frequently stated his shares would go to Cindy.  She was ‘the son he never had.’  Evidence was given of comments confirming that Cindy would inherit made by Denis to both extended family and his accountant at the time of his terminal illness.

However, terms of Denis’ 2007 will left the residue of his estate, which included his Chambers and Jackett shareholding, to his second wife, Lynette.  Denis’ accountant told the court that Denis had a poor understanding of the value of his business and how his business affairs were structured, being more interested in hands-on work out in the field.  His accountant was surprised to learn that Denis died owning jointly with wife Lynette listed shares valued at over two million dollars.  As Denis’ accountant, he had never been told of income received on these shares when filing his tax returns.

Justice McQueen ruled Cindy was entitled to her father’s forty per cent shareholding in Chambers and Jackett under the Law Reform (Testamentary Promises) Act.  Denis had promised in his lifetime the shares would be hers.  Her work for the company went beyond payment received at the time.  Her sustained and dedicated commitment over a period of two decades had increased the company’s value and fulfilled her father’s aspirations for the business, Justice McQueen said.

One complication was Denis’ expressed wish to ensure that after his death Lynette personally would receive income from the company.  Justice McQueen ruled this wish should be honoured, asking both Cindy and executor NZ Guardian to indicate how this wish could best be implemented with an annual payment to Lynette of $40,000 - $50,000.  This was a figure mentioned by Denis to his accountant in earlier discussions.

The court was told Lynette holds business assets in her own right.  She inherited by survivorship listed company shares with a value of some two million dollars that she owned jointly with Denis.  Cindy inherited by will a half share in the family home at Cushendall Rise in Richmond owned by Denis at time of his death, with Lynette having a right of occupation until her death.

re Estate Denis Chambers – High Court (7.08.23)

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