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What is a “testamentary promise”?

A testamentary promise is a promise made by one person (“Person A”) to another (“Person B”) that Person B will receive compensation for providing services to Person A.  For example, Person B might mow Person A’s lawns every week on Person A’s promise that Person B will be repaid out of Person A’s estate when they die.

If Person A were to neglect to provide for a promise in their will, Person B can bring a testamentary promises claim under the Law Reform (Testamentary Promises) Act 1949 (“the Act”).  If, after evaluating all of the facts, a Court is satisfied that Person A made a testamentary promise to Person B in return for services received, the Court can order the executor/administrator of Person A’s estate to pay the claimant a reasonable amount (having regard to a number of factors in that particular circumstance).

Testamentary promises can be made in writing or orally. When a promise is made orally, it can be more difficult to prove that a Promise was made.  Nevertheless, the Court will consider all of the facts of the case before making a decision.

There is a time limit to make a testamentary promises claim.  A potential claimant has only 12 months from the grant of probate to bring a claim (however, this time limit can be extended by the Court if the estate has not been distributed).

How do you prove a testamentary promise exists?

There are four requirements to prove a testamentary promise exists. There must be (incorporating Person A and B from the above explanation):

• Work or services done by Person B for Person A;
• An express or implicit promise from Person A to Person B;
• A causal link between the promise made and the work or services done; and
• Insufficient remuneration.

Tawhai v Govorko & Anor [2015] NZHC 2874 expands on these four requirements to aid understanding.

“Work or services” encompasses both the normal definition of the terms and wider constructions including companionship, affection, and emotional support.  In such cases, what is provided must go beyond what would normally be expected of a family member/friend.

“An express or implied promise” must amount to an intention to reward in the form of a testamentary provision for the claimant.  Such an intention could be an express statement or implied – this has been interpreted widely where a plain case is presented.

The ‘causal link’ required is that the promise must be intended as a reward for the work or services provided.  Where there is a promise to make some testamentary provision for the claimant, but there is no link to the work or services provided, the claim will fail.

The final requirement of insufficient remuneration means the claimant could not have been otherwise compensated for the work or services provided.  For example, in Tawhai there was a promise to “get the lot”, yet the claimant only received approximately half of the estate.  This was considered a failure to fulfil the promise made.

What will the Court consider?

In addition to the four requirements above, the Court will also consider a number of other factors specific to the particular circumstances.  Factors the Court will consider include:

• The situation in which the promise was made;
• The work that was carried out;
• The value of the work that was carried out;
• The value of the promise made;
• The value of the deceased’s estate; and
• Whether there are any other claims against the estate (and if so, the nature and value of those claims).

So how does all of this apply to you?

Due to the strict requirements that a Court must prove in order to satisfy a testamentary promises claim, it can be very difficult for someone to access the money that you have promised them.  In some instances, there is not enough evidence to prove the claim existed and the claimant received nothing.  The process of making a testamentary promises claim can also be quite an expensive and time consuming process.

If there is a specific person that you would like to leave money to when you pass away, whether it be for providing services or otherwise, the best option is to reflect this in a will and to discuss your options with a lawyer.

If you would like further information please contact Amanda Hockley on 07 958 7451.

Recent cases have outlined important considerations regarding the requirements necessary to prove a Will to be invalid.  There is some confusion around the grounds upon which a Will can be challenged, leading to unnecessary costs in questioning the validity of a Will.

There are several ways a Will can be challenged.  In brief:

• If the Will has not been made in accordance with the Wills Act 2007 (including disputes regarding the Will-maker’s capacity);
• If a family member was not provided for under the Family Protection Act 1955;
• If a promise was made to provide for someone under the Law Reform (Testamentary Promises) Act 1949; and
• Where a surviving spouse or partner is not satisfied with what they have been given under the Property (Relationships) Act 1976.

Wills Act 2007

Under this Act, the validity of a Will might be challenged on the following grounds:

• The Will was not properly signed and witnessed;
• The Will-maker did not have full mental capacity;
• The Will-maker did not know what was in the Will when they signed it; and/or
• The terms of the Will have been affected by fraud or undue influence.

Mumby v Mumby sets out the considerations that the Court will take into account when assessing the validity of a Will.  In this case it was argued that prior to her death Mrs Mumby was not pleased with the contents of her Will, however level of satisfaction is not a relevant consideration in determining validity.  It is important to note that the testator’s happiness with the provisions of the Will are not valid grounds upon which to challenge a Will – only the testator’s understanding of the provisions.  A lack of understanding of the provisions of the Will constitutes valid grounds to challenge the Will as it indicates that the Will-maker did not have full mental capacity – this is not the case with a lack of happiness relating to the provisions.

Family Protection Act 1955 (FPA)

Under the FPA a person is responsible for the proper maintenance of certain family members.  This includes:

• Spouse/partner;
• De-facto partner;
• Children;
• Grandchildren;
• Stepchildren maintained wholly or partly; and
• In some cases, parents.

If proper provisions are not made in the Will for the proper maintenance of those mentioned above, they can make a claim in the Courts asking for provision to be made for them out of the estate.

Courteney v Courteney stresses the importance of recognising the moral duty you have to your children to provide for them following your death.  Where children are deliberately and wrongfully excluded from a Will due to clouded judgment on behalf of the Will-maker, constituting a lack of capacity, a breach of moral duty will be found.  For this reason, it is important to understand to whom you are obligated to provide for in your Will, and if you decide to exclude any such people, to seek legal advice to minimise the risk of a dispute in the future.

Moon v Public Trust shows that a de-facto partnership is not limited to couples who have lived together for three years or more.  Whether or not a relationship is de-facto will depend on the nature of the individual circumstances – for example, a couple who have been together for 27 years is likely to give rise to a moral duty to provide for one another, even when they have never lived together.  It is therefore relevant to consider significant relationships that may give rise to a moral duty even if the relationship does not strictly qualify as a de-facto partnership.

Law Reform (Testamentary Promises) Act 1949

Under the Testamentary Promises Act, where a promise was made by the deceased while they were alive but failed to be recognised in the Will, a person may seek provision for this promise from the estate.  It must be found that:

• Work or services were provided to the deceased;
• There was a promise of reward;
• There is a link between the work/services and the promise; and
• That no reward was ever given.

McBeth v Morrison (Wendt Estate) showed that where there is no link between the work and the promise of a reward, the application will fail.  As such, where the work/services provided were given with no expectation of reward, there cannot be sufficient nexus between the work/services and the promise.  A testamentary promise will only be upheld where, among the above factors, the work/services were provided with the knowledge that a reward would be received.

Kaylee is a Law Clerk in our Asset Planning Team.

The recent decision by the Independent Charities Registration Board (“the Board”) that Greenpeace does not qualify for charitable status provides further guidance for charities regarding political purposes, ancillary purposes, and illegal purposes.

Greenpeace background

The stated purposes of Greenpeace include to:

• Promote interconnectivity between humans and the planet;
• Promote the protection of the environment (including promotion of elimination of all weapons of mass destruction);
• Identify, research and monitor issues affecting these purposes;
• Develop public awareness;
• Promote education on environmental issues;
• Co-operate with organisations with similar objects to Greenpeace; and
• Promote the adoption of legislation which further the above.  This was amended to be clearly ancillary to the other stated purposes.

These purposes are capable of being charitable, however the question for the Board was how the end goals were furthered by Greenpeace.

Charitable purpose to protect the environment

It was considered that Greenpeace largely promoted personal views on environmental issues.  It is not possible to say whether the views promoted are of benefit to the public in the way the law recognises is charitable.  As public benefit cannot be found, Greenpeace’s purpose cannot be held to be charitable.

Greenpeace’s purpose could still be considered charitable if the non-charitable purpose, of advocating for the protection of the environment, is merely ancillary to an identified charitable purpose.  The Board considered that the primary focus of Greenpeace’s activities has been promoting its point of view on environmental issues, thus cannot be considered ancillary to an identified charitable purpose.

Charitable purpose to advance education

The test in Re Collier [1998] 1 NZLR 81 (HC) is that for research to qualify as educational it must:

• Convey a public benefit in that it somehow assists the training of mind or advances research;
• Not amount to propaganda or cause under the guise of education; and
• Reach some minimum standard.

The Board considered that to advance education, information must be presented in a balanced, objective and neutral manner so that the reader can form a view for themselves.  There can be no intention to persuade the public to a particular point of view.  Although some of Greenpeace’s reports are structured as research, the reports lack an independent and objective starting point in their analysis.  It was considered that Greenpeace’s reports seek to promote their particular point of view on environmental issues rather than to educate.

Charitable purpose to promote peace

The Board considered that Greenpeace’s activities in this area amounted to promoting its own particular points of view, thus it was not possible to confer public benefit and the purposes could not be considered charitable.  Further, the stated purpose to promote peace is expressed as a primary purpose that can be carried out independently from all other purposes, and thus is not merely ancillary to an identified charitable purpose.

Illegal purpose

The Board identified eight instances from 2011-2017 where there were activities that may have involved illegality carried out by Greenpeace’s members in New Zealand, including unlawfully being on property, trespass, resisting police, obstructing a public way, bill sticking, and disturbing meetings.  The Board noted that annual training included training for specialist climb and boat teams, which suggests that Greenpeace authorises and directly coordinates illegal activities such as trespass on ships and buildings.  For this reason, it was found that Greenpeace’s illegal activities form part of a pattern of behaviour and are not isolated breaches.  Taking into account the above, the Board found that Greenpeace has an illegal non-charitable purpose that disqualifies it from registration.

Decision

The Board considered that Greenpeace had an independent purpose to advocate its own particular views on environmental issues and peace/weapons that could not be sufficiently determined to be for the public benefit in a way previously accepted as charitable by the Courts.  Greenpeace also had an illegal purpose that disqualified it from being a registered charity.

The Board decided that Greenpeace does not qualify for registration as a charitable entity because it is not established for exclusively charitable purposes.

Learnings

Advocacy will not be considered a charitable purpose where it is promoting a particular view and is not ancillary to a main charitable purpose, in other words if advocacy is a main purpose of an organisation.  Further, a purpose will not be considered charitable through the advancement of education where information is merely collated from other areas or does not provide a complete factual view.  Involvement in illegal activity, even where remote, is likely to cause the automatic failure of the application for charitable status.  These are all important factors to keep in mind when applying for registration as a charity or when considering the activities of a registered charity.

Kaylee is a Law Clerk in our Asset Planning Team.

Online wills or do it yourself will kits seem to be a popular new trend and could be due to a number of factors.  For example, people often put off making and signing their wills until they are going overseas and they feel a sense of urgency to ‘get their affairs in order’, and sometimes it is the simple fact that online wills or will kits are seen as more cost effective.

However, are online wills or DIY will kits, especially without a lawyer’s oversight, the most effective way to ‘get your affairs in order’?

In the recent case of Mills v Laboyrie [2018] NZHC 1368, the question before the High Court was whether or not a partially completed will from a will kit satisfied section 14 of the Wills Act 2007.

For a will to be declared valid under section 14, it has to satisfy the following requirements:

• the document has to appear to be a will;
• the document does not fall within section 11 of the Wills Act 2007 (for example, it is not signed and witnessed by two independent people);
• the document came into existence in or out of New Zealand; and
• the document expresses the deceased person’s testamentary intentions.

Background

The deceased was Stephen Mills who died of complications with multiple sclerosis on 14 April 2017.  At the time of his death, Stephen lived in the family home and required daily care.

Stephen was one of eight siblings.  Stephen’s brother Terence was involved with Stephen’s care and seemed to be the only sibling that understood Stephen’s fear of leaving the family home and being placed into a care facility.  Terence was involved in building work and was working on making Stephen’s home more accessible as Stephen’s disease progressed.  Some of Stephen’s other siblings had been exploring arrangements for him to be placed into a full-time care facility.

On 10 April 2017, a few days before his death, Stephen’s carer obtained a will kit at Stephen’s request.  The document was drafted by Stephen’s carer, but dictated by Stephen.  The provisions of the document were read back to Stephen and he verbally indicated to his carer that the document outlined his wishes.  The resulting partially completed document left everything to Terence.

A Justice of the Peace was organised by Terence to formalise the will on 12 April 2017 by witnessing Stephen sign the will.  However, prior to this occurring, Stephen was hospitalised and subsequently died without formalising the will.

An earlier draft will, prepared seven or so years prior to Stephen’s death, provided for equal distribution between all but one of the siblings.

High Court decision

The Court determined that section 14 of the Wills Act applied to the will kit document and could be declared a valid will if Jagose J was satisfied that it expressed Stephen’s testamentary intentions.

Jagose J cited Re Campbell (deceased) [2014] NZHC 1632, [2014] 3 NZLR 706 (HC) at [18] where it was observed that:

“… section 14 [is] a remedial provision, and that where there is evidence of the deceased person’s testamentary intentions, it is better that those intentions be given effect, in preference to the disposition of property which would take effect under any previous will, or on an intestacy.”

Jagose J found that as Terence appeared to be the only sibling that understood Stephen’s fears about moving into permanent care, it seemed consistent with Stephen’s desire that he wanted Terence to be the recipient of his estate.

Based on the factual circumstances and evidence, the Court held that the partially completed will kit document did express Stephen’s testamentary intentions and it was therefore declared a valid will.

Conclusion

Although the Court found that the will kit document was a valid will in accordance with the Wills Act 2007 in this case, having a will declared valid by the High Court is not the most cost effective way to deal with your asset planning matters, and can add further stress to grieving family members.

While online wills and will kits may be good initial first steps in getting your affairs in order, there are benefits to be gained by involving a lawyer in your asset planning matters.  A lawyer can advise you of the laws that may impact on the provisions of your will.  For example, there are relationship property and family protection laws that may trump some of the specific wishes in your will.  Asset planning matters you already have in place, such as a trust, also need to be taken into account.  Lawyers can advise you on the possible effects and implications of your wishes.  Lawyers will also use their best endeavours to see that a will is completed in accordance with the terms of the Wills Act so that you can be rest assured your affairs are in order and are less likely to be subject to Court scrutiny.

Natalie is a Solicitor in our Commercial and Asset Planning Teams and can be contacted on 07 958 7435.