Morris successfully defends claim against mother’s estate

Morris successfully defended a mother’s estate on behalf of her son from claims by her de facto partner. The High Court recently delivered its judgment in Zhang v Guo, dismissing Shoujun Zhang’s claims for further provision from his de facto partner’s estate.

The New Zealand Herald has reported on this case at the following links:  
Wealthy homeowner fights stepson for slice of dead mother’s estate.
Wealthy homeowner loses legal bid for cut of late partner's estate.

Factual background

Hui Chai (Helen) passed away aged 48 in May 2018, leaving her estate to her only child, Chuanzelong Guo (Longee), who was 21 years old at the time. Helen’s de facto partner of six years, Shoujun, was not left anything under Helen’s will. However, he inherited Helen’s share of the assets they owned jointly by survivorship. These assets were their savings in their joint bank account of around $40,000 and a house in Greenhithe with a 2017 council valuation of $1.45million (Greenhithe property).

The claims against Helen’s estate

Shoujun brought a claim against Helen’s estate under the Family Protection Act 1955 (FPA) and a claim that the estate should contribute to half of the repayments on a mortgage secured jointly over the Greenhithe property and a house in Glenfield. Helen had purchased the Glenfield property with Longee’s father years earlier and had all but paid off the mortgage on the Glenfield property before meeting Shoujun. She drew down on the mortgage in order to fund the purchase of the Greenhithe property. As the Glenfield property was in Helen’s sole name, it formed part of her estate.

Relevant law

Under the FPA, a person has a moral duty on death to provide for the “proper maintenance and support” of certain close family members. This includes a de facto partner who was living in a de facto relationship with the person at the date of death. The court will consider a wide range of factors in determining whether the deceased breached his or her moral duty including:

• the character and conduct of the claimant, including the relationship between the claimant and the deceased; and
• what moral duty the deceased has to provide for others;
• whether the claimant was left anything;
• what the deceased’s opinions and wishes were;
• the claimant’s age, state of health, ability to earn a living and present financial position; and
• the size of the estate.

Shoujun’s claims in relation to the mortgage were based on the “doctrine of contribution” and “unjust enrichment”, under the law of equity.  

Defence to the claims

Longee was the primary beneficiary of Helen’s will and defended the claim against her estate. His position was that Helen made proper provision for Shoujun through survivorship and did not breach a moral duty to provide for him, particularly in light of the relevant factors under the FPA. These included that Shoujun received significant assets through survivorship and was in a strong financial position, particularly compared with Longee, and Helen considered that she needed to provide for Longee and his elderly grandmother, Helen’s mother, who lived with the parties.  

Alternatively, if there was a breach of moral duty, Longee’s position was that the Court should exercise its discretion against making an award under the FPA, or that any award should be nominal. Case law makes clear that the courts are to take a conservative approach and award no more than the minimum amount necessary to adequately provide for the claimant.  

In relation to the joint mortgage, it was submitted that:

• the estate should not have to contribute to the joint mortgage liability as the loans were incurred to fund the purchase of the Greenhithe property, which Shoujun received by survivorship; and  
• there was no unjust enrichment of the estate.
  

Outcome

The Court found that it was not a breach of Helen’s moral duty under the Act not to provide for Shoujun in her will. She was aware that Shoujun would receive full ownership of the Greenhithe property. Palmer J held that, "with a six-figure salary and an additional unmortgaged property providing rental income, in addition to the Greenhithe property, Shoujun Zhang is not badly off. I consider it was reasonable for Helen to believe that passage of that property, subject to the mortgage, would sufficiently provide for him."

In relation to the claim under the doctrine of contribution, Palmer J “did not consider the estate or any other party owes Shoujun Zhang an equitable contribution towards the mortgage”. Shoujun did not pursue his claim for unjust enrichment at the hearing, but Palmer J held that if he had, it would have failed as the estate was not enriched.

The Court ordered that the mortgage was to be secured only over properties Shoujun owned and not the Glenfield property that formed part of Helen’s estate. Palmer J also awarded costs and reasonable disbursements to Longee.

For more information about bringing or defending claims against estates, contact Morris.