AB v FGH
[2022] WASC 244
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL
CITATION: AB v FGH [2022] WASC 244
CORAM: SOLOMON J
HEARD: 12 AUGUST, 12, 13 & 20 OCTOBER 2021 AND SUBMISSIONS 10 & 17 NOVEMBER 2021
DELIVERED : 29 JULY 2022
PUBLISHED : 29 JULY 2022
FILE NO/S: CIV 2174 of 2019
MATTER: Section 6(1) of the Family Provision Act 1972 (WA)
BETWEEN: FGH as executor and trustee of the estate of IJ
First Defendant
FGH beneficiary of the estate IJ
Second Defendant
NOP
Fourth Defendant
Catchwords:
Family provision and maintenance – Application made by daughter against estate of mother – Value of deceased's estate about $6 million – Whether entitlement on intestacy makes adequate provision for the proper maintenance and support of the fourth defendant – Where fourth defendant and deceased estranged – Impact of estrangement on application – Impact of potential or actual insolvency on application – Where brother has no special claim other than his relationship to the testator – Where the fourth defendant is in substantial debt – Failure on intestacy for sufficient provision for applicant – Provision made out of will of deceased – Creation of a discretionary trust where fourth defendant is the primary beneficiary and her issue are the class of general beneficiaries
Legislation:
Administration and Probate Act 1958 (Vic), s 96
Australian Constitution, s 109
Bankruptcy Act 1966 (Cth), s 139L(1)(iv)
Family Provision Act 1972 (WA), s 6, s 6(1), s 6(3), s 7, s 10, s 21A(5)
Family Provision Act 1982 (NSW), s 8, s 15
Inheritance (Provision for Family and Dependants) Act (UK)
Insolvency Act 1986 (UK)
Sucession Act 1981 (Qld)
Trustees Act 1962 (WA)
Uniform Civil Procedure Rules 2005 (NSW), r 36.11(2)
Result:
Application granted
Category: A
Representation:
Counsel:
| First Defendant | : | C McKie |
| Second Defendant | : | M Curwood SC |
| Fourth Defendant | : | P A Nevin |
Solicitors:
| First Defendant | : | Craig McKie Lawyer |
| Second Defendant | : | Solomon Hollett Lawyers |
| Fourth Defendant | : | Taylor Smart |
Cases referred to in decision:
Andrew v Andrew [2012] NSWCA 308; (2012) 81 NSWLR 656
Barns v Barns [2003] HCA 9; (2003) 214 CLR 169
Carroll v Cowburn [2003] NSWSC 248
Caska v Caska [1999] NSWSC 289
Charisteas v Charisteas [2021] HCA 29; (2021) 393 ALR 389
Chu v Ngar [2015] NSWSC 1505
Collicoat v McMillan [1999] 3 VR 803
CPT Custodian Pty Ltd v Commissioner of State Revenue of the State of Victoria [2005] HCA 53; [2005] 224 CLR 98
Curnow v Curnow [2014] NSWSC 896
Devereaux-Warnes v Hall [No 3] [2007] WASCA 235; (2007) 35 WAR 127
Diver v Neal [2009] NSWCA 115
Diver v Neal [2009] NSWCA 54; (2009) 2 ASTLR 89
Foley v Elis [2008] NSWCA 288
Ford v Simes [2009] NSWCA 351
Fordyce v Ryan [2017] 2 Qd R 240
Georgopoulos v Tsiokanis [2022] NSWSC 563
Grey v Harrison [1997] 2 VR 359
Gwenythe Muriel Lathwell as Executrix of the Estate of Gilbert Thorley Lathwell (dec) v Lathwell [2008] WASCA 256
Haskakis v Hatzopoulos [2015] NSWSC 1408
Herszlikowicz v Czarny [2005] VSC 354
Keep v Bourke [2012] NSWCA 64
Kilkenny v Kilkenny [2018] WASCA 197
Lemon v Mead [2017] WASCA 215; (2017) 53 WAR 76
Lygon Nominees Pty Ltd v Commissioner of State Revenue [2007] VSCA 140; (2007) 23 VR 474
Lysaght v John Francis Lysaght as Executor of the Estate of Paul Joseph Lysaght [2018] WASC 88
McLeod v Johns [1981] NSWLR 347
Metherell v The Public Trustee [2010] WASC 205
Official Receiver in Bankruptcy v Schultz [1990] HCA 45; (1990) 170 CLR 306
Palmer v Dolman [2005] NSWCA 361
Perpetual Trustees (WA) Ltd v Naso [1999] WASCA 80; (1999) 21 WAR 191
Pleash v Tucker [2018] FCAFC 144; 361 ALR 96
Popovski v Kenjar [2011] NSWSC 731
Re Abram [1996] 2 FLR 379
Stares v Public Trustee [2005] NSWSC 37
Stone v Braun [2015] WASCA 103; (2015) 13 ASTLR 444
Strano v Jovcevski [2008] NSWSC 380
Thomas v Jackson [2002] NSWSC 660
Varnel v Heyes [2008] NSWSC 978
Welsh v Mulcock and Anor [1924] NZLR 673
Wentworth v Wentworth (1995) 37 NSWLR 703
Wentworth v Wentworth (NSWSC, Bryson J, 14 June 1991)
Wentworth v Wentworth (NSWSC, Santow J, 23 May 1994)
Wentworth v Wentworth (NSWSC, Santow J, 27 June 1994)
Wentworth v Wentworth [1992] NSWCA 267
Wheatley v Wheatley [2006] NSWCA 262
SOLOMON J:
Overview
This proceeding is an application by the fourth defendant under s 6 of the Family Provision Act 1972 (WA) (the Act) for further provision from her mother's, that is, the testator's estate.
The testator and her husband were born in northern Greece. They were post-war migrants having emigrated to Perth in the 1950s where they met and married in 1957. The husband died in February 2002. The testator died on 13 January 2019 aged 87, leaving a will dated 17 December 2009 (the Will).
The parties to this litigation are their children. The eldest, born in 1958, is the only son and is the first defendant in his capacity as executor of the estate and the second defendant in his personal capacity as a beneficiary under the Will. Three daughters followed: the fourth defendant in 1960, the second plaintiff in 1964 and the first plaintiff in 1970. In this litigation, the son as the principal beneficiary of the estate (together with his daughter), was pitted against the three daughters, who were the first plaintiff, the second plaintiff and the fourth defendant.
The Will and the estate
At the date of death, the net estate was valued for probate purposes at $6,465,175.[1] The Will appointed the brother as executor and the family accountant in the alternative. The Will bequeathed specific gifts to the testator's three daughters. The first plaintiff received $300,000, some jewellery and the testator's framed photograph of the first plaintiff. The second plaintiff received $600,000, some jewellery, a tea‑set and a framed photograph of the second plaintiff. The fourth defendant received $25,000, some jewellery, some kitchenware and framed photographs of the fourth defendant and her children. Gifts of $25,000 were given to each of the second plaintiff's and the fourth defendant's children (five gifts totalling $125,000 between those five grandchildren).[2]
[1] Exhibit 1, 5.
[2] Exhibit 5, 12 - 31.
The residuary of the estate was left to a testamentary trust established by the Will, with the son as the trustee. It is unnecessary to recite the terms of the trust in any detail. In very broad terms, the practical effect of the trust's terms for present purposes is that the son, and the son's daughter from his second marriage (the granddaughter), are the immediate beneficiaries. The trust is to be controlled by the son during his lifetime (with the granddaughter able to elect to become a trustee from age 25) and after the death of the son, the granddaughter is to be the sole trustee. The terms of the trust permit the trustee to distribute capital or income to a beneficiary, including to him or herself. The Will also empowers the son, at his election, to pay any part of the residuary estate directly to himself or the granddaughter rather than to the trust. In reality, the residuary estate was bequeathed to the son and the granddaughter through the mechanism of a discretionary testamentary trust, with a power to take that benefit directly. At least for his lifetime, and certainly until the granddaughter turns 25 years old (she is presently 19), the son has sole control of the residuary estate and is able to apply it for his own benefit and, if he so chooses, for the benefit of the granddaughter.
It was agreed that as of 30 September 2021, the net value of the residuary estate (after accounting for bequests and estate expenses) was $3,088,423.[3] That value takes into account not only the estate expenses, but also the bequests paid in accordance with the terms of the Will and the additional sums agreed to be paid to the first and second plaintiffs under a settlement of their claims as I will explain briefly in these reasons.
[3] Exhibit 4, [2]; Amended Outline of Fourth Defendant's Substituted Submissions (11 October 2021) [26].
Some three to four weeks after executing the Will, on 12 January 2010, the testator made a statutory declaration. The declaration was admitted into evidence without objection (and is in any event admissible under s 21A(5) of the Act). The declaration was in the following terms:
1.I make this declaration at the time of executing my Last Will and Testament.
2.I make this declaration intending that it be tendered by my executor as evidence in any proceeding which may be commenced by my daughter [the fourth defendant] or any person on her behalf, pursuant to the provisions of the Inheritance (Family and Dependants) Provision Act 1972 (WA) or similar legislation.
3.I spent many months deliberating over the contents of my Will and the nature and value of the gifts that I make in the Will.
4.I have considered in detail all of the issues which I consider may arise upon my death.
5.The gifts that I make in my Will are made following consultation with my legal and financial advisors.
6.Apart from the professional advice that I have received, I have only discussed the gifts that I make with one of the intended beneficiaries, my son [the second defendant] and no person (including [the second defendant] has sought to persuade me or otherwise influence me regarding the nature and value of the gifts that I make.
7.My decision to give [the fourth defendant] only the gifts made at clauses 7.1 to 7.6 inclusive and clause 12 (if any) of my Last Will and Testament was not made lightly. It was a distressing decision, but one which I have considered in great detail and for a significant period of time.
8.I make no other provision for my daughter [the fourth defendant], save for that made at clauses 7.1 to 7.6 inclusive and clause 12 (if any) of my Last Will and Testament executed by me on this day, because:
(a)Shortly after my late husband's death on 10 February 2002, [the fourth defendant] and my other daughter visited me to demand a division of the family assets amongst my children and I was very upset in my time of grief;
(b)Since shortly after my late husband's death I have not seen [the fourth defendant];
(c)She has not provided me with any assistance in recent years when my health has declined, I have had surgical procedures and I have been infirm and immobile;
(d)She is already adequately provided for by her husband, during and after their marriage; and
(e)She has not encouraged my grandchildren, X,Y and Z to visit me for the last 8 years.
The proceedings
This litigation commenced as a claim by the two plaintiffs who are the younger two daughters of the testator. The claims were made against the estate (represented by the son as first defendant and executor) for further provision under the Act. The son of the testator (and brother of the plaintiffs and the fourth defendant) was joined in his own right as the second defendant. The eldest daughter was joined as the fourth defendant. The fourth defendant then brought her own claim for provision within the proceeding.
The trial was listed to commence and did commence on 12 August 2021. In the weeks prior to the commencement of the trial, the first and second plaintiffs settled their claims. The litigation continued as between the fourth defendant as the claimant and her brother as the first and second defendant. On the second day of the trial, it became apparent that the matter could not proceed without further evidence. I made orders providing for the filing of further evidence and substituted submissions. The trial was then listed to recommence on 12 October 2021. In the meantime, on 6 October 2021, the High Court handed down its decision in Charisteas v Charisteas.[4] For reasons I will come to, that decision is centrally relevant to these proceedings. The trial recommenced on 12 October 2021. At the close of oral submissions and evidence, I gave leave to the parties to file supplementary submissions and responsive submissions in November 2021.
[4] Charisteas v Charisteas [2021] HCA 29; (2021) 393 ALR 389.
The litigation, as I have noted and for reasons I explain below, has some entanglement with litigation before the Family Court of Australia that ultimately found its way to the High Court of Australia. The names of the parties to those proceedings were anonymised. To protect that anonymity, I made orders for anonymisation of the parties' names in this proceeding. I shall refer to the parties and the family members in the following way:
(a)the deceased, being the mother of the plaintiffs and the second and fourth defendants: the testator;
(b)the testator's husband and father of the plaintiffs and the second and fourth defendants: the husband, and in other contexts the father;
(c)the second defendant, the testator's son and the fourth defendant's brother: the brother, and in other contexts the son;
(d)the fourth defendant, the testator's eldest daughter and the second defendant's eldest sister: the fourth defendant;
(e)the first and the second plaintiffs, being the testator's second and third daughters and the second and fourth defendants' younger sisters: the daughters; and
(f)the brother's daughter from his second marriage: the granddaughter.
I should note that at one stage the granddaughter was joined as a party to the proceedings. That was appropriate because she has a substantial interest in the proceedings by reason of her status as the primary beneficiary of the trust of the residuary estate created by the Will. When the proceedings were commenced the granddaughter was a minor. By the time of the hearing, the granddaughter was no longer a minor and had been removed as a party. The granddaughter turned 18 on 15 June 2021. Shortly before the hearing, the granddaughter filed an affidavit sworn on 3 August 2021. In that affidavit the granddaughter confirmed that she was aware of the proceedings, that she was aware she had been a party to the proceedings,[5] and that she had the option of seeking legal advice and participating in the proceedings.[6] The granddaughter confirmed in that affidavit that she did not wish to be involved in the proceedings and did not wish to obtain her own legal advice.[7]
[5] Affidavit of the third defendant (sworn 3 August 2021) [5].
[6] Affidavit of the third defendant (sworn 3 August 2021) [7].
[7] Affidavit of the third defendant (sworn 3 August 2021) [8].
Following the settlement of the daughters' claims, the remnant of the litigation, that is the fourth defendant's claim, was fiercely contested. The brother in his different capacities filed a total of 14 affidavits. The fourth defendant filed a total of 14 affidavits totalling just short of 2,700 pages. The plaintiffs/daughters also filed substantial affidavits, however that material fell away with the settlement of the daughters' (i.e., the first and second plaintiffs) claims.
The remaining affidavit material was as follows:
(a)The fourth defendant relied on:
(i)Affidavit of the fourth defendant dated 12 September 2019 (Exhibit 5);
(ii)Affidavit of the fourth defendant dated 21 February 2020 (Exhibit 6);
(iii)Affidavit of the fourth defendant dated 6 April 2020 (Exhibit 7);
(iv)Affidavit of the fourth defendant dated 13 July 2021 (Exhibit 8);
(v)Affidavit of the fourth defendant dated 9 August 2021 (Exhibit 9);
(vi)Affidavit of the fourth defendant dated 27 August 2021 (as to judgments) (Exhibit 10);
(vii)Affidavit of the fourth defendant dated 27 August 2021 (as to costs) (Exhibit 11);
(viii)Affidavit of the fourth defendant dated 27 August 2021 (as to spousal maintenance) (Exhibit 12);
(ix)Affidavit of the fourth defendant dated 6 September 2021 (Exhibit 13);
(x)Affidavit of the fourth defendant dated 4 October 2021 (Exhibit 14); and
(xi)Affidavit of the fourth defendant dated 5 October 2021 (Exhibit 15).
(b)The brother as executor of the Will relied on:
(i)Affidavit of the brother dated 22 August 2019 (Exhibit 1);
(ii)Affidavit of the brother dated 19 July 2021 (Exhibit 2);
(iii)Affidavit of the brother dated 6 August 2021 (Exhibit 3); and
(iv)Affidavit of the brother dated 5 October 2021(Exhibit 4).
(c)The brother in his personal capacity relied on:
(i)Affidavit of the brother dated 26 March 2020 (Exhibit 16);
(ii)Affidavit of the brother dated 2 December 2020 (Exhibit 17);
(iii)Affidavit of the brother dated 10 August 2021 (Exhibit 18); and
(iv)Affidavit of the family accountant dated 2 December 2020 (Exhibit 19).
Objections were advanced by both sides to parts of the affidavits. These were resolved by agreement or by my rulings during the trial.
In addition, the fourth defendant, the brother and the long-time family accountant (the family accountant) all gave oral evidence and were cross examined.
Family history
Context
Notwithstanding the marked difference in some recollections of the relevant events, there was common ground in at least one important aspect of the family's history. Conflict, argument and estrangement appear to have been constant features of the family's interactions. It is that hostility and estrangement that has ultimately led to these proceedings.
The conflict is both tragic and relevant to the exercise of the court's discretion to resolve these proceedings. In my respectful view, it is appropriate to place that conflict in its social and historical context because it assists, to some degree, in understanding the familial discord and the attribution of its causes.
The decades following the upheaval of World War II witnessed significant migration from Europe to Australia. Many European countries sought to relieve the burden of their battle-worn economies by encouraging emigration at the same time as Australia perceived its fortunes as requiring an increase in population. Australian society was, and remains, greatly enriched by the influx of migrants from a variety of nationalities and backgrounds. Many families and individuals were also afforded the opportunity to resurrect lives and aspirations in ways that would not have been possible amid the gloom of hardship, devastation and atrocity that had plagued much of Europe's population.
While Australia's post-war immigration was overwhelmingly a happy and successful phenomenon, for some if not many individual families it brought upheaval and cultural alienation. In turn, those hardships often caused unique generational conflict and familial dysfunction. Sometimes those difficulties were irreparable. Sometimes they contributed to multi-generational familial conflict.
That dysfunction and familial hostility can appear odd to those of more distant European antecedence who have enjoyed relative stability in this country, largely immune from physical displacement and cultural upheaval. It is sometimes difficult to appreciate the pressures and strains on those families who have had to straddle different worlds in their quest for a better life. In the exercise of the broad discretion conferred by the Act, it can sometimes be unfair and unhelpful to bring clinical legal principles to govern the living rooms of those families who have endured those experiences.
The family farm
As I have observed, the testator and her husband migrated to Australia from Greece in the 1950s and met and married in 1957. In 1964, the testator and her husband moved to a home situated on 13 acres of land in Gwelup that was owned by the husband. They established a market garden on the land and sold the produce at what was known as the Perth Markets on the corner of William and Wellington Streets in West Perth. The whole family worked industriously. All the children to one extent or another contributed to the family enterprise, either in the market garden itself or through other household or child‑minding activities.
Although all the children of the family contributed, there is little doubt that the brother was expected to make, and did make, the most significant contribution.
In around 1979, part of the land was compulsorily resumed by the State for the development of the Mitchell Freeway. The son assisted with the negotiations and although the detail was not in evidence, the son described the result as a 'very good financial outcome' for his parents.[8] This led to other profitable commercial developments including factory units on the remaining land and the Morley Gateway complex. It is not disputed that the son assisted with these ventures and the daughters did not.
Fourth defendant
[8] Exhibit 16, [11].
From a young age, the fourth defendant contributed to the family enterprise, not so much by work on the farm itself but by domestic assistance she gave with home duties, including the child‑care of her younger sisters.
The fourth defendant trained as an apprentice hairdresser when she turned 15 and began to work away from the family farm. Even then, the fourth defendant continued to contribute to the family enterprise, for example by making or buying things for dinner. The fourth defendant left the family farm and home when she married in May 1979.
The fourth defendant and her then husband had three children, the first born, a son in 1981 then twin daughters born in 1983. The fourth defendant would continue to visit the family and the farm regularly with her children. From time to time, she would still contribute to the family enterprise, such as by peeling onions for pickling by her mother as part of the business producing and selling pickled foods.
The fourth defendant and her husband separated in 2005 and divorced in 2007. The litigation surrounding their divorce has been more than protracted; it has been extraordinary. It has spawned numerous applications and decisions and as noted, by 2021 had travelled all the way to the High Court. It is still not resolved. It has had a destructive impact on the fourth defendant's financial position and thereby has a significant impact on the application the subject of these proceedings as I will explain later in these reasons.
The fourth defendant continues to enjoy a good relationship with her children; she lives with her son and receives substantial support from her daughters.
As I have noted, the fourth defendant swore numerous affidavits and gave oral evidence at the trial. In my assessment, her evidence was given in a straightforward and truthful manner. Where her evidence conflicted with the evidence of the brother, I preferred and accepted the evidence of the fourth defendant.
The brother/son
The brother was involved in the farm from a young age and has remained centrally involved in his parents' financial affairs his whole life. Even when pursuing his own separate career as a draftsman, and then his own business, he maintained that role in the family.
The brother was first married in 1981 and has two daughters from that marriage, born in 1982 and 1988 respectively. The available evidence suggested that the brother is estranged from his children of that marriage. In contrast to some other grandchildren, particularly the son's daughter of his second marriage (i.e., the granddaughter), the son's daughters of his first marriage received nothing under the Will.
In 1997, the brother moved in with his parents after the breakdown of his first marriage. He remained living with his parents for some six years, including from late 2001 to February 2002, the period during which the husband became ill and died. He remained in the house with the testator for a further 15 months until May 2003 when he left the testator's home to live with his new partner whom he subsequently married. The brother and his second wife have one child, the granddaughter, who was born on 15 June 2003.
After the death of her husband, the brother continued to assist the testator with the management of her property investments and with investment in 'several more' properties.[9] The brother managed the properties on his mother's behalf. There was scant evidence about these ventures, the entities in which they were held, and what became of these investments.
[9] Exhibit 16 [13].
The brother emphasised in his evidence that it was he, and only he, who contributed to his parents' economic fortunes by those efforts. It is indeed plain that only the son, not the daughters, lent this assistance to the parents. It is equally plain that none of the daughters appears to have benefited from these activities and that the extent of the benefit that flowed through to the son in one form or another remained somewhat opaque. The brother's own financial circumstances were not the subject of any evidence.
It was not disputed that particularly since her husband died in 2002, the brother and to some extent his second wife, were the primary source of care and support for the testator. That care and support increased incrementally as the testator aged. In May 2016 as the testator's health continued to decline, the brother organised for the testator to move to an aged care facility. The brother continued to visit and was attentive to the testator's needs after she moved into the facility. The testator's daughters during that period, as will be explained, provided no assistance to the testator.
The brother gave detailed evidence of the things he did for his mother, including the assistance he gave in respect of her various medical ailments. He was at some pains to explain that only he (and his own family) and not his sisters provided that care and support. It is not necessary to record all of the brother's efforts in that regard. There is no doubt that the brother was loving and attentive and that his devotion, care, and attention for his mother was extensive. It was not disputed that it far exceeded that provided by his sisters, which at least for the last 15 or 16 years of the testator's life, amounted, in essence, to no assistance and no contact at all.
In summary, it is plain that the brother enjoyed a significant familial and financial bond with his parents that was much stronger than his sisters, particularly the fourth defendant. The brother was involved in the family business enterprises from a young age in a manner that extended far beyond the role of his sisters. From around 1997 with the breakdown of his first marriage he returned to live with his parents, including during the period of his father's demise. He continued to live with his mother until May 2003 by which time, as will be explained, the testator's relationship with her daughters was irretrievably broken. The son became, in effect, the sole source of the testator's familial support and affection, together with his second wife and their daughter.
The family accountant is a cousin of the family (through the father) and was the family accountant for the husband and the testator for many years. He has also been at various times, the brother's accountant. The family accountant gave evidence that the brother was involved in the business from a young age and was engaged in a wide variety of farming and administrative tasks. Later, after part of the farming land was resumed, the family accountant observed that the brother was involved extensively with the father in property development. The brother was the only one of the children involved in those enterprises.
As the eldest and only son of a traditional migrant family, it is clear that the brother carried both responsibility and privilege. It is equally plain that he took both seriously. The brother assumed and bore the primary responsibility for his parents' financial and physical welfare and understood that this burden carried with it a level of entitlement. Again, in my assessment, he took both the burden and the entitlement very seriously. The brother expressed the position in his affidavit evidence as follows:
I have always managed my parents' financial affairs, both personal and business. This was the expectation of a European family, and especially of the eldest son, and the expectation was that I would do this work for no payment. However, it was also my Parents' cultural expectation that I would ultimately be rewarded for the work from their estates when they passed away, given the amount of work I was doing to provide them with a better lifestyle and build their assets.[10]
The fourth defendant's relationship with her parents
[10] Exhibit 17, [4].
The relationship between the fourth defendant and the testator appears to have been reasonable until the 1990s. The fourth defendant described it as 'good'. That is notwithstanding what the fourth defendant described as frequent arguments within the family and the fourth defendant's candid acceptance in cross-examination that her relationship with her parents was always 'unstable'.[11]
[11] Transcript, AB v FGH, Supreme Court of Western Australia, 13 October 2021, 237.
Tensions between the fourth defendant and testator began to escalate it seems from about 1990 and became more acute in 1992. The tensions erupted over things such as overseas holidays and the timing of and participation in family weddings. The issues appeared on the surface to relate to a dispute between the fourth defendant and one of her sisters about an overseas holiday and whether the fourth defendant planned holidays at the time of family weddings, or whether weddings were planned knowing that the fourth defendant and her family were to be away on holidays. Disputes arose also about inclusion or exclusion from the bridal party. One suspects that these tensions reflected deeper issues, but these were not the subject of any evidence. Be that as it may, the events led to an estrangement between the fourth defendant and the testator and, it appears, to some degree between the fourth defendant and other members of the family from 1992 until 1997. There was no contact between the fourth defendant and the testator in that period.
The fourth defendant's evidence was that in 1997 her brother was undergoing a bitter and protracted divorce. Following the period of estrangement from 1992 referred to above, the testator contacted the fourth defendant and asked her to provide support to her brother. At that point relations were resumed between the fourth defendant and the rest of the family, including the brother and the parents. The brother's evidence of why contact was resumed at that point was quite the opposite. The brother's evidence was, in effect, that he initiated and resumed contact with the fourth defendant to assist the fourth defendant with her own marital strife at the request of the fourth defendant's then husband. That evidence was consistent with the brother's general perspective of the family dynamic – that it was he who was the provider and the fixer of problems created by others, mainly the fourth defendant.
The extent of contact between the testator and the fourth defendant at that point in 1997 did not emerge clearly on the evidence. In any event, to the extent there was a reconciliation, it was short‑lived. According to the fourth defendant's evidence, her parents were aggrieved at the fourth defendant's disinclination to become involved in her brother's divorce proceedings. The brother maintained that the fourth defendant was the cause of the estrangement, because she took his ex‑wife's 'side' in the marital breakdown. On either version, the deterioration of the fourth defendant's relationship with the brother and the testator resulted from the fourth defendant not lending her fulsome and active support to her brother in his matrimonial battle with his former spouse. That is one of a number of indicators that the fourth defendant's troubled relationship with the testator was a problem not unrelated to the brother's undoubted closeness to and influence upon the testator.
This led to a further breakdown in the relationship and the fourth defendant did not see the brother or the testator from later in 1997 until 2001 when her father was critically ill.
In circumstances explained below, in August 2002 there was a breakdown in the relationship between the testator and the fourth defendant (and indeed all of the testator's daughters) which was sadly never repaired. The fourth defendant did not see the testator again after August 2002. However, in the testator's final years, the fourth defendant said that she kept herself advised of her mother's condition through staff at the aged care facility where the testator resided.
The husband's demise
The brother's unchallenged evidence was that from the early 1980s, his father suffered from alcoholism and underwent periods of institutionalised rehabilitation. Notwithstanding attempts at rehabilitation, from 1997 the husband was drinking heavily. In 2001, the husband was diagnosed with cirrhosis of the liver and was not expected to live for long. The brother contacted the fourth defendant to tell her that their father was gravely ill. This led to a resumption of contact between the fourth defendant and her parents. Relations between the fourth defendant and her mother resumed, it appears satisfactorily, up to the time that the husband died in February 2002 and in the months thereafter.
In summary, the relationship between the fourth defendant and the testator was deeply fractured from at least 1992 until 2001 when the husband became very ill. I have referred briefly to matters that arose in the evidence which caused or contributed to that breakdown. That familial discord is the background against which further matters occurred that ultimately led to a rupture that was sadly never repaired. In the scheme of things, it may be thought curious that matters such as those I have referred to, could lead to such enduring rifts and estrangement between a parent and child or between siblings. However, that mystery serves to illustrate that these matters may have been symptoms of more profound difficulties. The resulting estrangement between the fourth defendant and her mother, and indeed between the testator and all her daughters that I refer to below, suggests deeper issues lurked that bore upon the familial relationships. The court is in no position to make an assessment of those issues; less still to attribute cause or to apportion responsibility in a definitive way. For that reason, the precise details of each family fracas are not material. Generally speaking, it is neither possible nor helpful to make findings as to what transpired at each episode.
Perhaps unsurprisingly, different members of the family have different recollections and perspectives of these events. Even less surprisingly, each family member's recollection casts that family member as the noble actor and others as quarrelsome, aggressive, or unreasonable. The differences in recollection and perception were not pursued or explored in the oral evidence. That said, two significant events after the father's death were the subject of evidence and do warrant attention.
The family meeting
The first event was a family meeting on 27 April 2002 attended by the testator, the fourth defendant and her then husband, and the other two daughters, one with her husband. The brother did not attend. The meeting was also with the family accountant.
Direct evidence of the meeting was given by the fourth defendant and the family accountant.
The family accountant gave evidence that he attended the meeting as the testator's accountant. The evidence from both the family accountant and the fourth defendant was that the fourth defendant's then husband effectively ran the meeting and did most of the talking. The fourth defendant's husband presented a document at the meeting which was produced in evidence.[12] It is dated 27 April 2002. It provides, in effect, for three alternative ways to deal with the assets of the testator, which in substance were the assets that had passed to her from the husband's estate.
[12] Exhibit 19, 8.
In broad terms, the alternatives were directed to different ways of providing for the transfer of the assets to the testator's son and three daughters. The document records that the first alternative was generally agreed by the testator and the three daughters. It is not clear whether and how this conclusionary comment was included in the document presented at the meeting (or whether it was added in a subsequent version). That anomaly was not explored in the evidence. The document refers to risks arising from the brother's potential bankruptcy and proceedings in the Family Court.
The family accountant's evidence was that at the meeting the testator did not agree to anything. In his affidavit, the family accountant gave evidence that the testator said words to the effect, 'my husband's eyes haven't even popped yet and here you are trying to divide my stock'.[13] In his oral evidence the family accountant clarified that the testator probably made those comments after or at the end of the meeting and that during the meeting the testator said very little. That was consistent with the evidence of the fourth defendant.
[13] Exhibit 19, [53].
The family accountant's evidence was to the effect that the testator was upset by the meeting. The family accountant's recollection was clear; he understood the discussion was directed to how the testator's assets would be divided after her own death, and that the discussion was not about the division of her assets while she was still alive. The family accountant was asked why the testator would have been upset if the discussion was limited to the division of her assets after her passing. He explained that the testator was 'very upset that the conversation was even taking place'.[14]
[14] ts 13 October 2021, 298.
The document presented at the meeting is somewhat unclear. Although aspects of its content suggest that at least two of the options reflected an intention to divide the assets while the testator was still alive, the evidence of the family accountant was clear: 'the discussion was centred around the division of [the testator's] assets on her demise'.[15] The family accountant reiterated that in further evidence. Moreover, the family accountant gave clear and unambiguous evidence that he explained the document to the testator and that he explained to her that it was to operate after her death. He was similarly clear and unambiguous in his evidence that the testator understood at the time that her income was safeguarded, and that the testator knew that the assets would remain in her name. That evidence was also consistent with a note the family accountant wrote of the April meeting some months later in August 2002, when the issue arose again.[16]
[15] ts 13 October 2021, 295.
[16] Exhibit 19, 11.
The family accountant was relatively, although not entirely, independent, given his close association with the brother. He gave his evidence in straightforward and credible terms. I accept the family accountant's evidence in relation to the meeting and his discussions with the testator.
It follows that the discussion at the meeting was not directed to shifting assets from the testator to her children during her lifetime. Nor did the family accountant give the testator that impression in his discussions with her. As I will come to, other evidence however indicates that the testator believed the meeting reflected an intention by her daughters to have her assets transferred to them in the near future. To the extent that the testator believed that to be the case, I find that the brother materially contributed to that impression.
It was plain from the brother's affidavit evidence that the brother, who was not at the meeting, took a firm view that the meeting was directed to persuading his mother to part with her assets during her lifetime and in particular to include his sisters in that distribution of assets. The brother deposed that:
On 27 April 2022…[the second plaintiff] organised a meeting through…our family accountant. [The family accountant] made me aware of this intended meeting. As I was living at home at the time and knowing that my Mum was being subjected to verbal demands for money from my Dad's estate, I decided to forewarn her of the intended meetings…The meeting was organised I believe to present to and convince Mum that she should consider options regarding handing certain cash amounts to individuals.[17]
[17] Exhibit 16, [64].
That statement was put to the brother in cross-examination. The brother's apparent eagerness to obfuscate his role in tainting the testator's perception of the meeting emerged in that cross‑examination. It is necessary, therefore, to comment on the brother's evidence in some detail.
In cross-examination the brother maintained that all he was told about and anticipated in relation to the proposed meeting was that it was 'just financial issues'.[18] The brother denied that he told his mother that the meeting was anything other than 'to come and talk about her finances'.[19] When it was put to the brother that he 'forewarned' his mother about the meeting, he replied 'I'm not forewarning her; I'm just telling her what the plan is, because they were intending on using her dining room to discuss it'.[20] The brother insisted that he took a neutral position about the proposed meeting in his own mind and in discussion with his mother. It was pointed out to the brother that his own affidavit recorded that he had 'forewarned' his mother about the meeting, and that he believed that his sisters intended to convince the testator that she should make cash 'handouts'. The brother then explained that he was 'just assuming' because he suspected that there were ongoing demands from his sisters for money from his mother. The brother continued to maintain that he 'forewarned' his mother simply about 'finances' in neutral terms. When it was put to him that he told his mother to expect that his sisters would 'go after her for money', the brother said 'no, just that [there is] this meeting to discuss finances'.[21]
[18] ts 13 October 2021, 268.
[19] ts 13 October 2021, 268.
[20] ts 13 October 2021, 268.
[21] ts 13 October 2021, 269.
The brother was plainly seeking to resist any inference that he had influenced or contributed to his mother's negativity in relation to his sisters including the fourth defendant. The brother maintained in his evidence that he merely had a general discussion about finances with his mother and it was his mother who assumed that the meeting was to be about taking her money. It was put squarely to the brother that he had told his mother that the meeting was going to be about taking her money. He denied that suggestion.
In my assessment, the brother's evidence about this matter was not credible. He had a long-standing antipathy towards his sisters and in particular the fourth defendant and by that stage, her then husband. That antipathy was palpable throughout the brother's evidence. The family accountant's clear recollection was that he explained at the meeting that the proposal was confined to distributing the assets after the testator's death. It is tolerably clear from the brother's affidavit and oral evidence that he sought to, and likely did, influence his mother to believe that his sisters and in particular the fourth defendant and her husband were seeking to take her money during her lifetime. The unsatisfactory nature of the brother's evidence was illustrated by his argumentative and non‑responsive answers as to why he included in his affidavit that he 'forewarned' his mother. It is also noteworthy that the prospect of sharing the parents' wealth equally with his sisters was in any event contrary to the brother's expectation of his entitlement. The brother's attitude to any discussion of an equal division among the four children was always likely to engender hostility from the brother and efforts to undermine such an outcome.
The statutory declaration made by the testator shortly after she made the Will in January 2010 states:
Shortly after my late husband's death on 10 February 2002, [the fourth defendant] and my other daughters visited me to demand a division of the family assets amongst my children and I was very upset in my time of grief.
In my view that sentiment reflects the strongly held belief of the brother, rather than what was said at the meeting or the advice that was given to the testator by the family accountant. I find that the brother's conduct in relation to the meeting of 27 April 2002 contributed to, in a significant way, or at least compounded, the final and irretrievable breakdown between the testator and the fourth defendant that occurred in August 2002.
It appears nothing came of the meeting. Some months later, the family accountant received a letter dated 11 August 2002 signed by the testator's three daughters.[22] It emerged from the evidence that the letter was written by the fourth defendant's then husband. The letter referred to the meeting of April 2002. The letter asserted that it was agreed at the meeting that the family accountant was to provide the daughters with certain documents relating to the husband's estate. It stated also that the family accountant was to meet alone with the testator to discuss the first alternative that was said to have been agreed in principle. The letter observed that the family accountant had not done these things and asked for his 'prompt attention' to them. The letter also made reference to the brother having made threats and engaged in violent behaviour towards the testator and others. It expressed concern for their mother's safety and alleged that the testator may agree to matters under the duress of the brother. The family accountant discussed the letter with the testator who instructed the family accountant to do no more than respond by saying he was not authorised to provide a response.
The memorial service
[22] Exhibit 19, 12.
The second and pivotal event was a memorial service in August 2002 at the husband's graveside in accordance with the family's religious tradition some six months after the husband's death. The incident led to the final rupture between the testator and the fourth defendant and indeed all her daughters.
The fourth defendant and the brother gave somewhat different accounts of what occurred. The fine detail of those differences was not explored in the evidence. It is clear that all of the family, the testator, the brother, the daughters and their husbands and other extended family were gathered at the graveside. One of the sisters (not the fourth defendant) made an inflammatory comment towards the brother. It is very likely that other inflammatory comments were made by people in attendance, including the brother himself. Whatever its genesis, the provocative exchange caused the brother to leap over the grave and charge aggressively and threateningly towards his sisters and their husbands. He was physically restrained by others in attendance. All three daughters and their husbands promptly left before the memorial service began. That was the last time the fourth defendant saw the testator.
The affidavit evidence of the fourth defendant was that the brother shouted at the sisters 'fuck off, and if any of you bitches come near mum again, I'll put all of you under one of these things for good'.[23] The fourth defendant's evidence was that his brother was pointing at a grave when he said this.
[23] Exhibit 9, [21(j)].
The evidence of the fourth defendant as to what occurred at the memorial service was challenged in cross‑examination. The fourth defendant candidly accepted that she may have been mistaken about whether it was a 40‑day service or a six‑month service, and that the more graphic recollection contained in her later affidavit was not contained in her earlier affidavits. Those concessions did not undermine the cogency of the fourth defendant's evidence about what occurred at the memorial service.
The brother accepted that he leapt over the grave towards his sisters in anger. He denied the threat to put them under a gravestone. In cross‑examination the brother was confronted with the suggestion that he was threatening. He was asked generally whether he could remember any instance where he had made a threat of violence towards the fourth defendant. He replied emphatically 'no'. He was then asked whether he had ever threatened to put her under a gravestone. Again, he replied emphatically 'no'. It was then specifically put to him that he pointed to a gravestone and said to the fourth defendant 'if you approach your mother I will put you under one of these'.[24] The brother's evidence in response was evasive, unhelpful, sarcastic and disrespectful: 'no, I don't live at a cemetery, mate'.[25]
[24] ts 13 October 2021, 267.
[25] ts 13 October 2021, 267.
I accept the fourth defendant's evidence and reject the evidence of the brother as to what occurred at the memorial service to the extent that it differed from the evidence of the fourth defendant. I find that the brother acted in a way that was highly threatening and intimidatory, and specifically that he threatened his sisters with dire consequences if they approached the testator ever again.
The brother's evidence generally
I found the brother's evidence to be generally unsatisfactory. A particular and important example was his evidence in relation to the preparation of the testator's will. In cross‑examination, the brother denied that he had discussed with his mother the content of the Will. That denial was implausible. At par 6 of the statutory declaration I have referred to above, the testator declared that 'apart from the professional advice that I have received, I have only discussed the gift that I make with one of the intended beneficiaries, my son', and 'no person, including [my son] has sought to persuade me or otherwise influence me regarding the nature and value of the gifts that I make'.
The brother maintained that the reference to discussions with him was after the Will had been made. I do not accept that evidence. The brother was asked twice to clarify whether his evidence was that the discussion was after the making of the Will. On both occasions he replied, evasively, 'it was up to her' before finally denying that he had discussed the content of the Will with his mother before she made the Will.[26] The brother was then asked why if that was so, his mother found it necessary to include in her statutory declaration that 'no person, including [my son] has sought to persuade me or otherwise influence me regarding the nature and value of the gifts that I make'.[27] The brother responded 'I don't know. You better ask her'.[28]
[26] ts 13 October 2021, 280.
[27] ts 13 October 2021, 280.
[28] ts 13 October 2021, 280.
That answer was somewhat characteristic of the unhelpfully smug, and supercilious nature of the brother's evidence. The suggestion to ask his dead mother occurred at least three times in response to different questions in the evidence. Another of those occasions was when the brother was challenged in relation to another part of the mother's statutory declaration. In par 8 that statutory declaration the mother had declared her displeasure with the fourth defendant, as she had not seen the fourth defendant since her husband's death and the fourth defendant had not provided her with any assistance in recent years when her health had declined. The brother's evidence was consistently that the mother did not wish to have the fourth defendant in her life at all. The brother was asked why his mother would have made such a declaration if it was the mother herself that did not wish to see the fourth defendant. Again, the brother responded to the question by telling the cross‑examiner to ask his dead mother. The argumentative nature of those answers, and the pugnacious demeanour with which they were delivered, reflected very poorly on the brother's character and preparedness to assist the court. The brother's evidence generally reflected a sense of dismissive superiority rather than a desire to provide helpful and truthful answers to questions.
The fourth defendant said in her evidence that she found her brother generally to be intimidating and threatening. She gave specific examples of her observation of the brother's behaviour that she considered to be volatile and very threatening. It was put to the fourth defendant that these incidents did not happen, a proposition that she strongly denied. The brother in his evidence denied these incidents.
It is not necessary to analyse the details of the evidence to determine whether, and precisely how, these incidents occurred. I am satisfied that incidents occurred that gave the fourth defendant, and I suspect her sisters, a well-founded and reasonable apprehension that the brother could react threateningly and with volatility. The self‑righteous hostility and enmity exhibited by the brother even in the clinical and controlled environment of a court room was palpable.
The brother's undoubted devotion to his mother made him the gatekeeper of her relationships. It is not difficult to appreciate why the testator's daughters would have genuinely feared the physical and emotional burden of seeking to reconcile with the testator and why they despaired of their ability to resurrect and cultivate a conventional relationship with their mother.
It is against that background that I come to assess the estrangement and dysfunction in the relationship between the fourth defendant and the testator. A fulsome understanding of the complexities and difficulties that beset that relationship are beyond the reach and competence of this court. In my view however, it is tolerably clear, and I find, that the brother played a material and influential role in the enduring dysfunction in the relationship between the testator and the fourth defendant. The brother enjoyed an undeniably close relationship with his mother. The close nature of the relationship with his mother deepened after the husband's death. At the same time, the brother had an undeniably deep and enduring antipathy towards the fourth defendant. I find that the brother's deep antipathy towards the fourth defendant influenced the attitude of the testator towards the fourth defendant generally, and specifically following the husband's death when the opportunity arose for some level of reconciliation. At that time, the brother did not seek to facilitate any reconciliation; indeed, he was a significant factor in the growing estrangement. The brother's attitude towards his sisters generally, and the fourth defendant in particular, impacted on the testator's view of the meeting on 27 April 2002 and in turn must have influenced the decision she made in relation to the Will, as reflected in the content of her statutory declaration. The brother's attentive care of his mother, his superior perception of his own role and entitlement, and his resentment of his sisters, particularly the fourth defendant, all combined tragically to extinguish any prospect of reconciliation.
That is not to say that without the brother's influence the relationship between the testator and the fourth defendant would have been an entirely happy one. The fourth defendant may well bear some responsibility for the estrangement. But on the evidence that has emerged I am satisfied that the dysfunction and estrangement was, at the very least, significantly contributed to and compounded by the brother. Whatever the genesis of the dysfunction may have been, the brother was the principal barrier to its resolution in the testator's final years.
The financial position of the fourth defendant
The fourth defendant is currently 61 years old and presently not working.[29] She was not working at the time of the testator's death. Her last employment was at the end of 2017 as a casual retail assistant.[30] She is in receipt of Centrelink payment and rents a villa in East Perth for $730 per week. She shares the accommodation and its cost with her son. The fourth defendant's weekly income is $1,247 which is derived roughly half from Centrelink and half from her children. That is to say, the fourth defendant's income is based entirely on social security and the generosity of her children. The assistance from her children appears to be a long‑term loan. The available evidence suggests the debt to her children is in the hundreds of thousands of dollars. The fourth defendant's written trial submissions suggest that evidence in the Family Court proceedings estimated the debt at $234,851 in 2016. In the table annexed to her affidavit of 6 September 2021, the fourth defendant estimated that debt to be $500,000.[31]
[29] Fourth defendant's Amended Substituted Outline of Submissions and List of Authorities (11 October 2022) [84]; ts 13 October 2021, 253 – 254.
[30] Second Defendant's Substituted Submissions (7 October 2021) [21].
[31] Exhibit 13, 13.
Turning more generally to the fourth defendant's financial position, it is as complex as it is dire. That is principally because of the extraordinarily protracted and financially devastating impact of the fourth defendant's Family Court proceedings.
Proceedings between the fourth defendant and her former husband were on foot by August 2006. They are still not resolved some 16 years later. They have spawned multiple orders and decisions.
The most recent relevant episode was the decision of the High Court in Charisteas v Charisteas delivered on 6 October 2021. In the first paragraph one confronts a sad and sobering overview:
The appellant ('the husband') and the first respondent ('the wife') married in 1979 and separated in 2005. In 2006, the husband commenced proceedings under s 79 of the Family Law Act 1975 (Cth) (the Act) for orders settling the property of the parties to the marriage. The ensuing and still unfinished litigation was aptly described by the trial judge as 'long-running' and 'staggeringly expensive'. There has been a litany of applications, hearings, orders and appeals. For present purposes, it is necessary to refer to only some of this unfortunately long and tortured history.[32]
[32] Charisteas v Charisteas, 389.
The jarring discomfort of those observations is amplified when one considers that the comments attributed to the trial judge were made more than four years ago and since that time there has been a plethora of further litigation. It is important to observe that by the date of the testator's death in January 2019, the toxic, protracted and 'staggeringly expensive' nature of the dispute in the Family Court was well‑established.
The highlights of the litigation history are summarised in the High Court's reasons and need not be repeated. In addition to the matters referred to in that outline, there were many more applications and orders over the same period. These included applications for significant costs and spousal maintenance. The most recent of these is the decision of Sutherland CJ published in September 2021. That decision related to the fourth defendant's application to enforce orders for the payment of interim spousal maintenance of $900 per week and an outstanding amount of $124,200.[33] Notwithstanding findings that aspects of the evidence of the fourth defendant's former husband were 'completely unsatisfactory', the fourth defendant's enforcement application was dismissed because Sutherland CJ was 'unable to identify a source from which part or all the arrears may be paid'. On the basis of the material provided from the Family Court proceedings, it appears there is very little, if any, prospect that the fourth defendant will have any success in the pursuit of spousal maintenance from her former husband.
[33] Exhibit 12, 4.
The outcome of the High Court decision is complex. It restores, at least in part, orders made by the original trial judge in 2011 which were set aside on appeal, leading to the further trial and orders which were in turn set aside by the High Court. Although those original orders provided significant benefit to the fourth defendant, an assessment of their present value is fraught with difficulty. The value of the assets referred to has diminished considerably since that time. For example, on the evidence before me, the trial judge's orders in 2011 appear to contemplate an equity in the matrimonial home in the vicinity of $2 million. That sum in the controlled money account of the solicitors is now $642,471. In addition, the effect of the High Court's decision is that the Family Court could conceivably reach a different result from that of the original trial judge.[34] In addition, the High Court awarded costs against the fourth defendant which will no doubt be significant.
[34] Charisteas v Charisteas [27].
The fourth defendant has no assets other than those she might have expected from the Family Court proceedings. It is now not possible to assess what financial benefit might ultimately emerge, if any, from those proceedings.
There is a further overwhelming problem. In addition to the fourth defendant's debt to her children of some $500,000, she has debts for legal costs and litigation funding which at 6 September 2021 were in the vicinity of $3.5 million and accruing interest daily.
The fourth defendant explained in her affidavit of 12 September 2019 that in 2006, she entered into a contract with Ask Funding Ltd, then known as Impact Capital Ltd, pursuant to which she borrowed $900,000 for legal fees and living expenses. The contract was guaranteed by the fourth defendant's daughters. Due to a high interest rate and significant delays, the debt has grown out of proportion to the original loan. On 22 January 2016, Ask Funding Ltd obtained a judgment against the fourth defendant and the fourth defendant's daughters for $2.5 million dollars, comprising the principal and interest accrued according to its terms, as well as judgment interest. The judgment has not as yet sought to be enforced.
It was agreed by counsel for both the fourth defendant and the brother that whatever uncertainties obscure the fourth defendant's position, one thing is plain: irrespective of the ultimate outcome of the proceedings in the Family Court, the fourth defendant's liabilities will exceed her assets by some, probably between two and three, million dollars. Senior counsel for the brother submitted that 'that is probably the position at date of death and date of trial, largely'.[35]
[35] Transcript, AB v FGH, Supreme Court of Western Australia, 20 October 2021, 325.
Having read the various decisions, including those of the High Court, the appeal decisions, and the reasons of the trial judges it is tolerably clear that there is no basis to suggest that the fourth defendant is by her conduct, responsible for the disastrous and extravagant course of the Family Court proceedings. In the course of oral submissions, senior counsel for the brother confirmed that he made no submission to that effect. The harsh reality therefore is that the present dire circumstance of the fourth defendant cannot be said to be of her own making in any significant way.
There is no evidence before the court to suggest that the fourth defendant was suffering any particular ill health of any enduring nature. However, given the fourth defendant's age there is naturally a level of uncertainty about her care and health as time unfolds.
In relation the fourth defendant's financial position, I make the following findings.
The fourth defendant has no independent means of supporting herself. She has no assets to speak of and no independent source of income. Given her qualifications and age, her prospects of future employment or income are very poor. The prospects of the fourth defendant receiving payment of spousal maintenance from her former husband are very poor notwithstanding orders from the Family Court in her favour. The fourth defendant's asset position is extremely uncertain because it is not possible to assess what the ultimate outcome of the Family Court proceedings is likely to be. However, irrespective of the outcome of the Family Court proceedings it is highly probable, if not inevitable, that the fourth defendant's debts will greatly exceed her assets by an overwhelming amount.
The fourth defendant is not an undischarged bankrupt and on the evidence before the court, never has been. There is no evidence of any bankruptcy proceeding having been commenced. However, she has significant debts and no capacity to satisfy those debts. She has a significant judgment against her that she cannot meet. If the fourth defendant were to receive any significant capital sum it is very likely that it will find its way to her creditors either by agreement or by legal process (which may include bankruptcy). The bankruptcy of the fourth defendant is a real possibility but not inevitable as her creditors may not consider it commercially worthwhile, or may not pursue that course for other reasons.
The law
The fourth defendant's application is brought under s 6(1) of the Act which provides:
If any person (in this Act called 'the deceased') dies, then, if the Court is of the opinion that the disposition of the deceased's estate effected by his will, or the law relating to intestacy, or the combination of his will and that law, is not such as to make adequate provision from his estate for the proper maintenance, support, education or advancement in life of any of the persons mentioned in section 7 as being persons by whom or on whose behalf application may be made under this Act, the Court may, at its discretion, on application made by or on behalf of any such person, order that such provision as the Court thinks fit is made out of the estate of the deceased for that purpose.
The fourth defendant, as a child of the testator, is a person mentioned in s 7 of the Act and is therefore entitled to make an application under s 6(1).
Two stage process
In Deveraux-Warnes v Hall [No 3], Buss JA explained the two‑part nature of an application under the Act as follows (with citations omitted):
The first stage involves the determination of whether the disposition of the deceased's estate effected by will or the law relating to intestacy is not such as to make adequate provision from his or her estate for the proper maintenance, support, education or advancement in life of the claimant. The first stage has been described as the 'jurisdictional question', which means no more than that the court's power to make an order in favour of the claimant is conditioned upon the court first being satisfied of the state of affairs referred to in the opening passage of s 6(1), ending with the words 'made under this Act'.
The first stage involves a question which is strictly one of fact, notwithstanding that it involves the exercise of value judgments. The evaluative character of the decision arises from the fact that the court must determine whether the claimant has been left without 'adequate' provision for his or her 'proper' maintenance, etc.
The second stage, which only arises if the 'jurisdictional question' is determined in favour of the claimant, involves the exercise of discretion: the court may order that such provision as the court thinks fit be made out of the deceased's estate for the proper maintenance, etc, of the claimant.[36]
[36]Devereaux-Warnes v Hall[No 3] [2007] WASCA 235; (2007) 35 WAR 127 [67] – [69].
Buss JA then explained the relevant times at which the first and second stages are to be determined:
The question which arises at the first stage must be formulated and determined as at the date of death of the deceased, having regard to all material facts that existed at the date of death, whether the deceased knew of them or not, and all material eventualities that might at that date reasonably have been foreseen by a deceased who knew the facts.
At the second stage the court exercises its discretion to order adequate provision for the proper maintenance, etc, of the claimant by reference to the circumstances as they exist at the date of the order.[37]
The first stage
[37] Devereaux-Warnes v Hall [No 3] [70] – [71].
Buss JA went on to set out the principles relevant to an application under s 6, and in particular the concepts of 'adequate' provision, 'proper' maintenance, 'need', and the concepts of 'moral duty' and 'moral claim'. Those passages need not be repeated.[38]
[38] Devereaux-Warnes v Hall [No 3] [72] – [89].
In Lemon v Mead, Buss P, in a manner that has particular relevance to this matter, summarised the relevant task for the court at the first stage:
Although the existence or absence of 'needs' which a claimant cannot meet from his or her own resources will always be highly relevant and, often, decisive, the statutory formulation, and therefore the issue in every case, is whether the disposition of the deceased's estate was not such as to make adequate provision for the claimant's proper maintenance, etc.[39]
[39] Lemon v Mead [2017] WASCA 215; (2017) 53 WAR 76 [73].
In Deveraux-Warnes v Hall [No 3], Buss JA provided the following overview of the principles applicable to the issue of whether the applicant has been left without adequate provision (omitting citations):
The determination of whether the provision, if any, made for the claimant is 'adequate' for his or her 'proper' maintenance, etc, involves not only a scrutiny of the requirements of the claimant for maintenance, etc, that were reasonably foreseeable by the deceased, but also an examination of the totality of the relationship between the claimant and the deceased.
Plainly, the totality of that relationship would include:
(a) any sacrifices made or services given by the claimant to or for the benefit of the deceased;
(b) any contributions by the claimant to building up the deceased's estate; and
(c) the conduct of the claimant towards the deceased and of the deceased towards the claimant.[40]
The second stage – amount of provision
[40] Devereaux-Warnes v Hall [No 3] [74] – [75].
If an applicant meets the jurisdictional threshold of the first stage, the court then exercises a discretion by evaluating the proper provision that it considers ought to be made out of the deceased's estate, and the manner in which that provision should be granted. How that evaluation is undertaken has been described in various ways.
In a widely cited passage of the Supreme Court of Victoria, the Court of Appeal in Grey v Harrison observed:
There is no single provision of which it may be said that that is the provision that a wise and just testator would have made. There is instead a range of appropriate provisions, in much the same way as there is a range of awards for pain and suffering or a range of available sentences. Minds may legitimately differ as to the provision that should be made. Furthermore, it is not at all clear that reasons for an appropriate provision need be fully articulated. To borrow again from the analogy of sentencing, what is required is an instinctive synthesis that takes into account all the relevant factors and gives them due weight.[41]
[41] Grey v Harrison[1997] 2 VR 359, 366 - 367 (Callaway JA with whom Tadgell and Charles JJA agreed).
In Curnow v Curnow, Hallen J gathered a number of other descriptions of the evaluative exercise:
It was said in the Court of Appeal (by Basten JA) in Foley v Ellis[2008] NSWCA 288, at [3], that the state of satisfaction 'depends upon a multi-faceted evaluative judgment'. In Kay vArchbold[2008] NSWSC 254, at [126], White J said that the assessment of what provision is proper involved 'an intuitive assessment'. Stevenson J has described it as 'an evaluative determination of a discretionary nature, not susceptible of complete exposition' and one which is 'inexact, non-scientific, not narrow or purely mathematical, and fact and circumstance specific': Szypica vO'Beirne[2013] NSWSC 297, at [40] (citing Manuel v Lane[2013] NSWCA 61, at [9], per Emmett JA, speaking in relation to s 20 of the Property (Relationships) Act 1984 (NSW)).[42]
[42] Curnow v Curnow [2014] NSWSC 896 [109].
In Haskakis v Hatzopoulos, White J, in relation to the question of what provision for the plaintiff's maintenance and advancement in life ought to made, concluded:
The question of what provision for the plaintiff's maintenance and advancement in life is proper having regard to all of the circumstances of the case cannot be answered in any logical or reasoned way. It involves an intuitive or evaluative judgment that is not assisted by appeals to community standards or community expectations.[43]
[43] Haskakis v Hatzopoulos [2015] NSWSC 1408 [96]. See also Chu v Ngar [2015] NSWSC 1505 [313].
In this jurisdiction, Beech J (with whom Buss and Mazza JJA agreed) said:
[T]he court's task in undertaking the second stage must be taken into account. That task has been described as 'instinctive synthesis' or 'intuitive assessment', in respect of which reasons for the appropriate provision need not be fully articulated.[44]
[44] Stone v Braun [2015] WASCA 103; (2015) 13 ASTLR 444 [91].
Mitchell and Beech JJA in Lemon v Mead said:
It is impossible to describe, in terms of universal application, what adequate provision for proper maintenance etc will entail for a parent in respect of an adult child. In many cases adequate provision for proper maintenance will not require the parent to support a capable adult child for the rest of his or her life. However, each case will depend on its own circumstances. As the decisions of the High Court in Coates, McCosker and Buckland v Trustees Executors and Agency Co Ltd illustrate, in certain circumstances an award in favour of a capable adult child will be justified.[45]
The second stage – manner of provision
[45] Lemon v Mead [273].
As to the form in which provision may be granted, s 6 of the Act provides that the court may attach such conditions to the order as it thinks fit, and may order that the provision consist of a lump sum or a periodical or other payment. The authorities discussed below make plain that the section and materially similar provisions in other jurisdictions confer a broad and flexible power on the court to craft the grant of provision in a manner that is adapted to the particular circumstances of the applicant.
Central issues
There are two issues that emerged from the evidence and submissions advanced by the parties as the principal foci, and the determinative features of the fourth defendant's application. In broad terms, they are the relationship between the fourth defendant and testator, and the dire financial circumstances of the fourth defendant. It is therefore necessary to turn to the applicable legal principles in respect of each of those matters.
Estrangement
A central issue in this matter is the breakdown in the relationship between the fourth defendant and the testator which endured for many years up to the testator's death. This is often referred to in the authorities as 'estrangement'. The applicable principles in circumstances of estrangement have been summarised in a number of cases, most recently in Georgopoulos v Tsiokanis.[46]
[46] Georgopoulos v Tsiokanis [2022] NSWSC 563 [313].
The relevant principles may be summarised as follows:
(a)Estrangement between an applicant and a testator is relevant because the determination of whether the provision made by the will of the deceased is adequate, necessarily includes an examination of the totality of the relationship between the claimant and the deceased. The totality of the relationship includes the conduct of the claimant towards the deceased and of the deceased towards the claimant.[47]
[47] Deveraux-Warnes v Hall [No 3] [74] – [75].
(b)Estrangement, or 'disentitling' conduct, is relevant not only to the first stage, that is, the determination of whether adequate provision has been made, but also the second stage, that is the quantum or conditions of any provision that the court may be minded to order.[48] Whether the claim is extinguished or merely reduced, and the extent of any reduction, depends on all the circumstances of the case.[49]
[48] Georgopoulos v Tsiokanis [315(g)].
[49] Lysaght v John Francis Lysaght as Executor of the Estate of Paul Joseph Lysaght [2018] WASC 88 [58].
(c)To the extent that the estrangement reflects on the character or conduct of a claimant, s 6(3) of the Act provides that the court may attach conditions to, or may refuse to make, an order in favour of a claimant on the ground that the claimant's conduct is such as to disentitle the claimant to the benefit of an order.
(d)Estrangement itself is just the condition which results from attitudes or conduct of one or other or both of the parties. It does not describe the conduct of either party.[50]
[50] Gwenythe Muriel Lathwell as Executrix of the Estate of Gilbert Thorley Lathwell (dec) v Lathwell [2008] WASCA 256 [33] (Lathwell).
(e)The mere fact of estrangement between parent and child should not ordinarily result, on its own, in the child not being able to satisfy the jurisdictional requirement.[51]
[51] Palmer v Dolman [2005] NSWCA 361 [110].
(f)If the estrangement is caused and sustained by the testator's unreasonable conduct, then the estrangement alone could not amount to disentitling conduct.[52] If the estrangement from the testator is explicable, a claimant may still achieve an order for provision under the Act.[53]
(g)A long-standing severance of a relationship with a parent, or even a clearly established termination of all communication, is not in the present age regarded as necessarily putting an end to moral duty; it may do so, but whether it does calls for appraisal in each case and is not reduced to a clear principle.[54]
(h)When there is an estrangement it should be appraised, and its causes should be considered. It may be necessary to apportion blame or responsibility.[55] The nature of the estrangement and the underlying reason for it is relevant to an application under the Act.[56]
(i)Even without attribution of blame or responsibility it is nevertheless relevant to the exercise of the court's discretion that there was no relationship between parent and child for many years and there did not therefore exist between them the love, companionship, and support present in normal parent/child relationships.[57]
(j)In some cases, the estrangement is such that a testator is entitled to make no provision for an estranged child. This is particularly so in respect of children who treat their parents callously, by withholding without proper justification, their support and love from them in their declining years. This is even more so where that callousness is compounded by hostility.[58]
(k)Legislation of this kind has consistently contained provisions that the court may take into account the character or conduct of an applicant if it has been such as would disentitle that applicant to provision from the estate. However, this is but a reflection of the fact that a principal determinant of proper maintenance or support is what the testator in all conscience should have felt bound to provide, and the plaintiff's behaviour is not the essential determinant. It is primarily to the testator's moral obligations that the court has been required to look, rather than the virtues and vices of those who seek provision.[59]
(l)The applicable principles, consistent with the broad discretion conferred by the Act, may only be stated in generalised terms. Close attention must be paid to the facts of each case. The very general directions in the Act require close attention to the facts of individual cases.
(m)While the authorities make plain that the facts of each case must be carefully considered and that the cause and responsibility for any estrangement may require investigation, it is important to recall the limitations of a court's perspective. As Sackville AJA observed in Foley v Elis:
Care should be taken, however, not to oversimplify the complex and nuanced relationships within a family by yielding to the temptation to condemn categorically the behaviour of one party or the other. Events viewed years later through the cold prism of a courtroom may give a different impression than when the events are set in the context of the raw emotions experienced at the time.[60]
[52] Lathwell [33].
[53] Ford v Simes [2009] NSWCA 351 [72].
[54] Wheatley v Wheatley [2006] NSWCA 262 [22].
[55] See Wheatley v Wheatley [22]; Andrew v Andrew [2012] NSWCA 308; (2012) 81 NSWLR 656 [49].
[56] Palmer v Dolman [88] – [94].
[57] Keep v Bourke [2012] NSWCA 64 [3].
[58] Ford v Simes [71] – [72].
[59] Collicoat v McMillan [1999] 3 VR 803 [38].
[60] Foley v Elis [2008] NSWCA 288 [102].
The High Court then observed that although the appeal did not raise the issue, if an order was made which varied the interest of the respondent beneficiary to the extent that no interest remained vested in the beneficiary and therefore in the trustee in bankruptcy, an issue might arise regarding the inconsistency of such an order with the Bankruptcy Act and thereby a possible inconsistency arising under s 109 of the Constitution.[114] Significantly, the High Court noted that the contention of an inconsistency was only advanced in the context of an order that actually deprived (in the sense of disgorged) Mrs Schultz, and hence the Official Receiver, of any property in the chose in action.[115]
[114] Schultz, 315.
[115] Schultz, 315.
In my respectful view, the conclusion of Hallen AsJ in Popovski is consistent with the analysis of the High Court. The claimant in Popovski was seeking to invoke the statutory power to alter an existing and vested right in a manner that was inconsistent with the legislative regime reflected in the Bankruptcy Act as explained by the High Court.
As to the impact upon the claimant for family provision, as distinct from a beneficiary under the will, the High Court explained (omitting citations):
[An] order under s 41 gives rise to a new right in a person in whose favour the order is made, corresponding to the new obligation imposed upon the executor. That right is derived from statute and is independent of the right conferred by the will.
…
[The] person to whom a benefit flows following the making of such an order receives that benefit as the result of the creation of rights pursuant to the making of the order and not by way of variation to any pre-existing rights which that person may have possessed pursuant to the will.[116]
[116] Schultz, 316.
Relevantly, at least two things may be distilled from the observations of the High Court. First, an inconsistency between state legislation for family provision and the Bankruptcy Act, and thereby an inconsistency under s 109 of the Constitution, may arise where an order under family provision legislation deprives a person of an otherwise vested or existing right in a manner that defeats the position that would otherwise prevail under the Bankruptcy Act. There does not appear to be any concern of inconsistency where an order under family provision legislation does not divest or alter any existing rights under the Bankruptcy Act. Secondly, the right created by an order under state legislation for family provision may generally be characterised as the grant afresh of a new right in favour of a claimant for that provision.
It follows in my view that an inconsistency between family provision legislation and the Bankruptcy Act may arise when a vested right is disgorged so as to deprive a trustee in bankruptcy from an entitlement it would otherwise have enjoyed. In contrast the right granted to a claimant, of itself, is the grant of new entitlement. Unless it alters an existing right in a manner that removes a vested entitlement from the bankrupt's estate, the issue of inconsistency does not arise. Where the bankrupt claimant has an existing right that it seeks to alter so as to become entitled after being discharged from bankruptcy (as was the case in Popovski) the grant of provision is not an appropriate exercise of the statutory power.
The fourth defendant drew attention to the commentary contained in Family Provision in Australia. The fourth defendant's submissions referred to the 2017, 5th edition. The passage in the more recent 2021, 6th edition is the same (also at [8.20]). The authors (J K de Groot and B W Nickel) state '…there is nothing to prevent the court from dealing with the estate property in such a way that provision is made for an applicant and the gift to the beneficiary is altered in such a way that capital is not payable until the bankruptcy is concluded'.
If by those words, the authors intended to convey that a court may order that which the court in Popovski declined to order, then I would respectfully disagree, at least as a matter of the appropriate exercise of the court's discretion. I note that the text does not make reference to the Popovskidecision. The footnote states that such a position was expressed by Salmond J in Welsh v Mulcock.[117] That case was an application for provision by the youngest daughter of a farmer who died in 1921 leaving seven daughters and five sons. He left his residuary estate upon trust for all his children except the applicant daughter and one other daughter. He excluded the applicant because he did not approve of her marriage. The applicant was not without means but faced some possible financial uncertainty in the future. No question of insolvency or bankruptcy arose. On the contrary, the principal issue was whether the applicant could be said to have been left without adequate provision and 'in need' in circumstances where she and her husband owned a modest farm from which they were able to earn income. At first instance the court had ordered that £1,000 from the estate should be charged to meet any payments which might be ordered by the court at any time in the future for the maintenance and support of the applicant.
[117] Welsh v Mulcock and Anor [1924] NZLR 673, 688 (Welsh v Mulcock).
The Court of Appeal upheld the daughter's claim but varied the 'suspensory' order made by the trial judge which was to take effect in the event of a requirement in the future. In contrast, the Court of Appeal granted an immediate award to the daughter. Salmond J 'did not think that there is any jurisdiction to make suspensory orders of this description'.[118] In explaining the flexibility available to the court in making an order, Salmond J explained (with citations omitted):
[T]he provision so made for a dependent is not necessarily an immediate provision to which that dependent is presently entitled in possession. It may be a provision taking effect in the future as in the case of the order made by the Court of Appeal in E v E. In that case a specified sum was ordered to be satisfied and invested, the income to be paid to the testator's widow during her life…and after her death to the testator's daughter as a provision for her maintenance under the Family Protection Act 1955 [(NZ)]. Such settlement orders in as much as they amount to an actual and present exercise of the jurisdiction to make further provision out of the estate, are essentially different from those merely suspensory orders to which the observations made by me relate.[119]
[118] Welsh v Mulcock, 687.
[119] Welsh v Mulcock, 687.
In other words, Salmond J was explaining that the court could make orders establishing a present mechanism by which future payments could be made for maintenance. But the court could not suspend its orders to take effect depending upon circumstances into the future. Salmond J does not grapple at all with the intersection between family provision and bankruptcy legislation.
With respect, properly understood, the decision in Welsh v Mulcock provides no support for the proposition referred to above in Family Provision in Australia.
Here, the fourth defendant seeks the grant of provision and thereby a new right. The fourth defendant is not a bankrupt and never has been. There is no existing or vested right that will be disturbed by the grant of that new right. The question is whether any provision granted can be quarantined from existing creditors who can be expected to take the benefit of any such provision.
In my view in addressing that question, the following summary of principles may be distilled from the cases discussed above:
(a)Family provision legislation is remedial in character and is to be construed to give the most complete remedy which the phraseology of the statute permits.
(b)Statutory provisions such as s 6 of the Act provide a wide and ample power to enable the court to craft and condition the grant of provision so as to meet the particular circumstances of the claimant.
(c)The object of the Act is to enable the grant of provision from the estate for the proper maintenance, support, education or advancement of the claimant. This may be achieved by granting the applicant a capital sum from the estate, but that mechanism is not, and should not be confused with, the statutory object of the Act.
(d)The courts do not order provision if it is merely to go to the applicant's creditors. That is because the object of the legislation is to provide for the maintenance, support, education or advancement of the claimant, not a benefit to the claimant's creditors. That object is not achieved where the funds are absorbed by the claimant's creditors rather than for the claimant's advancement and support.
(e)Where, however, the grant of provision will confer a tangible benefit on the claimant even if it used to satisfy creditors, then an award of provision may nevertheless be justified.
(f)Notwithstanding the breadth of the statutory power, it would not be an appropriate exercise of the statutory discretion to disturb the existing or vested rights of a claimant in a manner that would deprive the claimant's creditors of funds to which they would otherwise be entitled, through a bankrupt's estate or otherwise.
(g)The grant of provision under the statutory power does not of itself alter or disturb vested rights. Rather it is the grant of a new right from the time of the court's order.
(h)Where the court is persuaded that provision from the estate is justified, it is a permissible exercise of the statutory discretion to condition that provision in a way that benefits the claimant so as to facilitate the person's maintenance, support, education or advancement in life but in a manner that quarantines the provision from creditors, provided it does not alter existing or vested entitlements so as to deprive creditors of funds to which they would otherwise be entitled.
(i)The grant of such provision does not remove or disgorge something that would otherwise vest in or belong to the claimant so as to deprive creditors of funds they would otherwise be entitled to claim. The claimant is granted a benefit to which the claimant or the claimant's creditors did not have any right or entitlement. There is no relevant inconsistency with the Bankruptcy Act.
(j)The means by which that is to be achieved may include a discretionary trust in which the claimant is the primary but not the sole beneficiary and the other beneficiaries are members of the claimant's own family. Such a mechanism may reflect precisely what a just and wise testator would do in circumstances where a child is facing financial difficulties.
(k)A distinction may be observed in the authorities. One concern is to ensure that a claimant does not generate wasteful debt and unnecessary creditors by using the grant of provision to incur imprudent or extravagant expenditure. That course is illustrated by cases such as Herszlikowicz v Czarny and Carrol v Cowburn. There is no doubt that in those circumstances the court may craft the grant of provision so as to inhibit the ability of a claimant to incur such expenditure. A related but separate concern is to avoid the grant of provision simply being absorbed by existing creditors. In my view, provided the court is not seeking to disgorge an asset or proprietary interest that has already vested in the claimant or the claimant's trustee in bankruptcy, the court is no less able to fashion the grant of provision so as to quarantine that provision from creditors.
Determination
The first issue for determination is whether the disposition of the testator's estate through the Will was not such as to make adequate provision for the fourth defendant's maintenance, support, education or advancement in life. That determination requires an assessment of the fourth defendant's requirements that were reasonably foreseeable in January 2019 at the time of the testator's death (whether the testator was conscious of them or not) and an examination of the totality of the relationship between the fourth defendant and testator.
There is no doubt that the fourth defendant was in dire financial circumstances by the time of the testator's death. By that time, as noted above, the fourth defendant already had a judgment against her for $2.5 million. In addition, as I have also noted above, her Family Court litigation was already, by then, extremely protracted and staggeringly expensive. It is clear that by that time, the fourth defendant's circumstances were radically different from the description at par 8(d) of the statutory declaration referred to at [7] above. The position was that the fourth defendant had no independent financial means at all and was plainly in need of assistance for her future maintenance and support. The Will did not provide that assistance by the relatively paltry sum of $25,000. There is no question that the fourth defendant did not have adequate means for her maintenance, support or advancement. The remaining question is whether the estrangement and the breakdown in relationship between the fourth defendant and the testator is such that it can nevertheless be said that the Will left the fourth defendant without adequate provision.
For the reasons I have explained, I have found that the cause of the estrangement cannot be laid at the feet of the fourth defendant.
My observations and findings set out above are also to be understood against the more general background I described regarding the dynamics in families that have endured physical and cultural displacement. For many fortunate families, the bonds of familial affection are sufficient to overcome the tensions created by those upheavals. For other migrant families, the ordinary stresses that accompany the challenges of family life are amplified by the experience of cultural upheaval and difference. For some, that amplification contributes to incurable breakdowns in relationships.
The law is applied most easily and conveniently when it can apportion blame and responsibility for the breakdown in human relations of whatever variety. This is an example of a breakdown in family relationships that is far too complex to adopt the convenience of apportioning blame to a daughter who did not so much as seek to restore her relationship with her ailing mother for the last 16 years of her mother's life. In my respectful view, the law is not so blunt and lacking in nuance as to require the court to identify the single person responsible for that sad predicament.
In hindsight there is always more than at any person might have done to avoid conflict or repair relationships. But I have found that in the emotionally and socially complex family dynamic that existed, the fourth defendant cannot be held responsible for the enduring breakdown in her relationship with her mother so as to disentitle and exclude her from the scope of the testator's duty to provide for her maintenance and support in the circumstances that prevailed and that were reasonably foreseeable at the time of the testator's death.
Accordingly, I find that the breakdown in the relationship between the fourth defendant and the testator was not such as to preclude a finding that the testator's Will failed to make adequate provision for the fourth defendant's maintenance, support, and advancement in life. Having regard to the requirements of the claimant for maintenance and support that were reasonably foreseeable by the testator at the time of her death and having regard also to the totality of the relationship between the claimant and the testator, I find that the disposition of the testator's estate was not such as to make adequate provision for the fourth defendant's maintenance, support and advancement in life.
I turn then to the submission of the brother that, in broad terms, there should be no favourable exercise of the discretion because the grant of any provision would simply flow through to creditors, and that to craft the grant of provision so as to quarantine it from creditors would be an impermissible, or at least an inappropriate exercise of the statutory discretion.
Applying the principles I have summarised above, I consider that it is not appropriate to grant the fourth defendant a capital sum from the estate. The fourth defendant's debt is so overwhelming that it is not possible to foresee a situation where the funds will achieve anything other than reducing her debts, likely leaving her either bankrupt or still bearing very significant and irredeemable debt. The provision will therefore not serve the statutory purpose embodied in the Act.
However, as explained, the grant of a capital sum is neither the object of the Act nor necessary for its fulfilment. As the fourth defendant is and never has been an undischarged bankrupt, the grant of provision through a discretionary trust will achieve the object of the Act without disturbing any entitlement of the fourth defendant's creditors. The creditors have no entitlement to the funds of the estate. They will not be deprived of anything to which they have, at any time enjoyed, an entitlement.
By a Minute of Relief Sought filed on 31 August 2021, the fourth defendant set out in detail the relief she seeks by her application (to address the requirement of cl 3 9.2.2 of the Consolidated Practice Directions). By that minute the fourth defendant seeks that the Will be altered to devise the sum of $1,292,762.46 to a trust with the fourth defendant as the sole beneficiary. The terms of the proposed trust require the trustees to apply such of the income or the capital (including the whole of the capital) as they think fit for the maintenance, support, education or advancement in life of the fourth defendant, but reserving to the trustees the power of accumulation of income in any year. The terms empower the trustees to pay funds directly to third parties for the fourth defendant's benefit. The minute does not identify the proposed trustees. Upon the fourth defendant's death, any remaining capital or income is to form part of the fourth defendant's estate.
Quite apart from his broader objection to the grant of provision, the brother objects to the terms of the proposed trust on a number of bases. The brother maintains that the rule in Saunders v Vautier would permit the fourth defendant to require the winding up of the trust and transfer the whole of the corpus to herself. In those circumstances, the imposition of a trust would achieve no better outcome than simply granting a capital sum to the fourth defendant.
In CPT Custodian Pty Ltd v Commissioner of State Revenue of the State of Victoria, the High Court referred to the rule as follows:
Saunders v Vautier is a case which has given its name to a 'rule' not explicitly formulated in the case itself, either by Lord Langdale MR (at first instance) or by Lord Cottenham LC (on appeal). In Anglo-Australian law the rule has been seen to embody a 'consent principle' recently identified by Mummery LJ in Goulding v James (94) as follows:
'The principle recognises the rights of beneficiaries, who are sui juris and together absolutely entitled to the trust property, to exercise their proprietary rights to overbear and defeat the intention of a testator or settlor to subject property to the continuing trusts, powers and limitations of a will or trust instrument'.[120]
[120] CPT Custodian Pty Ltd v Commissioner of State Revenue of the State of Victoria [2005] HCA 53; [2005] 224 CLR 98 [43].
The High Court referred to the 'modern formulation' of the rule in the following terms:
Under the rule in Saunders v Vautier ([101]), an adult beneficiary (or a number of adult beneficiaries acting together) who has (or between them have) an absolute, vested and indefeasible interest in the capital and income of property may at any time require the transfer of the property to him (or them) and may terminate any accumulation.[121]
[121] CPT Custodian v Commissioner of State Revenue of the State of Victoria [47].
Counsel for the fourth defendant responded by reference to the decision of Parker J in Perpetual Trustees (WA) Ltd v Naso, where the court was dealing with the outcome of a personal injuries compensation award to a minor and a court order that the compensation be held on trust until further order.[122] In discussing the rule in Saunders v Vautier, Parker J observed that no case had been referred to the court in which 'the rule has been applied to a trust constituted pursuant to an order of a court'. Parker J added that there did not appear to be any basis upon which the rule would extend to allow a beneficiary to terminate a trust notwithstanding the order of the court. On that basis, counsel for the fourth defendant maintained that the rule in Saunders v Vautier did not apply as it was a trust created by a court. Senior counsel for the brother disagreed that a trust ordered under s 6 of the Act was in substance a trust ordered by the court of the ilk considered by Parker J. Senior counsel contended that the effect of s 10 of the Act (which provides that the provision made by an order of the court takes effect as if it had been made by a codicil to the will before death), is that the trust arises under the will and not by a court order and the rule in Saunders v Vautier therefore continues to apply. The trust was therefore not a trust created by court order but by the will of the testator.
[122] Perpetual Trustees (WA) Ltd v Naso [1999] WASCA 80; (1999) 21 WAR 191 [25].
I would think it doubtful that the rule in Saunders v Vautier could take effect in circumstances where provision under the Act was expressly ordered to take the form of a trust. The terms of s 10 of the Act are relevantly the same as s 4(1) of the statute considered in McLeod v John and yet the benefit was said to derive from the court order, not the will. The High Court endorsed that position in Schultz, explaining that the person to whom a benefit flows following the making of an order receives that benefit as a result of the creation of rights pursuant to the making of the order, not the will.[123]
[123] Schultz, 316.
In any event, I do not consider it necessary to determine that issue because under the trust that I propose, the fourth defendant will be the primary beneficiary, but her issue will also be beneficiaries. In those circumstances, the rule in Saunders v Vautier would ordinarily not apply.[124]
[124] See Lygon Nominees Pty Ltd v Commissioner of State Revenue [2007] VSCA 140; (2007) 23 VR 474 [71] – [83].
The brother's objections also included the suggestion that a trustee in bankruptcy may have access to the trust funds under the provisions of the Bankruptcy Act.
In Dwyer v Ross, Davies J explained the position of an undischarged bankrupt beneficiary under a discretionary trust. Davies J explained that the property of a bankrupt divisible in bankruptcy 'includes property of every kind', including a chose in action or entitlement which a beneficiary of a trust has to the due administration of the trust.[125] Davies J went on to explain:
However, where the interest in the trust is a mere discretionary interest, the right to be considered for the purposes of a distribution, it is difficult to see that the right to enforce the due administration of the trust can be property which passes to the trustee in bankruptcy. The interest in the trust would seem to be a personal right which remains with the bankrupt. Of course, if a distribution of money or property is made to the bankrupt during the period of the bankruptcy, the trustee will be entitled to it as after-acquired property. See ss 58(2) and 116(1)(a) of the Bankruptcy Act.
However, that may be, if [R's] estate is sequestrated, the operation of ss 58 and 116 of the Bankruptcy Act will not entitle the Trustee in Bankruptcy to claim the [trust fund] or any aliquot share thereof. The distribution of the income and assets of the trust fund will continue to be a matter for the trustee of the [trust] and in the trustee's discretion.[126]
[125] Dwyer v Ross (1992) 34 FCR 463, 466.
[126] Dwyer v Ross, 466.
The position explained in Dwyer v Ross remains a correct statement of the law.[127]
[127] Fordyce v Ryan [2017] 2 Qd R 240 [29] – [30]; Pleash v Tucker [2018] FCAFC 144; 361 ALR 96 [43]. See also Murray M and Harris J, Keay's Insolvency (11th ed, 2022) [4.45].
It may well be that the trustee/s of the trust will need to be mindful of the limitations of the fourth defendant's capacity to receive 'income' as defined by s 139L(1)(iv) of the Bankruptcy Act. However, that appears to be a matter that can be managed sensibly and does not present a barrier to the grant of provision.
The fourth defendant quantifies her claim as being for 25% of the residual estate. Putting to one side that the residuary estate is now considerably less than it was when the fourth defendant first formulated her claim, that formulation of the claim appears to proceed on the basis of seeking to create a level of equality between the testator's four children. The Act is directed to facilitating appropriate provision, not equality. That basis of quantifying the fourth defendant's claim is therefore not appropriate.
The needs of the fourth defendant are manifold because she has virtually nothing of her own account and remote prospects of anything in the future. As she ages, she confronts a future with no financial capacity at all. In those circumstances one might conclude that it is difficult to identify limits to the fourth defendant's most fundamental needs.
At the same time, I consider that the applicable principles I have referred to above require me to take account of the fact that, whatever the cause, the fourth defendant had no meaningful relationship with the testator for many years leading up to the testator's death. Whatever the quality of influences that bore upon her, it is fairly plain that the testator did not wish to benefit the fourth defendant in any substantial way. The authorities indicate that it is appropriate to reduce the quantum of the provision in those circumstances.
In the end, I must conduct an intuitive and unscientific synthesis having regard to all relevant circumstances including the size of the estate, the nature of the relationship between the testator and the fourth defendant, the fourth defendant's age and financial and other circumstances, and contingencies which may arise in the future.
The court must also take account of the nature of the relationship between the testator and other persons with legitimate claims on the estate, and what the testator regarded as superior claims or preferable dispositions in relation to her estate. Those considerations direct attention to the brother's position and in particular to his financial and other circumstances. I have already observed that the brother had a very close and attentive relationship with the testator and was her principal source of care and affection. I have also observed that the brother did not adduce evidence of his own financial circumstances or the benefits that he may have derived from his parents' financial affairs over the years. In those circumstances, I proceed on the basis that the brother has no special claim other than his relationship to the testator and that he has sufficient of his own resources.[128]
[128] Kilkenny v Kilkenny [2018] WASCA 197 [56].
Taking all those circumstances into account I consider that a sum of $850,000 should be set aside from the estate as provision for the fourth defendant's maintenance and support to be held on the terms of a discretionary trust in which the fourth defendant is the primary beneficiary, and her issue are the class of general beneficiaries. The trust will thus continue after the death of the fourth defendant but for the benefit of her issue. The trustees should include a professional person such as a lawyer or an accountant, preferably one that already had a professional relationship with the fourth defendant. Otherwise, I accept that the trust should enjoy the powers and operate in the manner proposed by the fourth defendant.
I will hear the parties as to the terms of the trust and the appropriate orders.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
NW
Associate to Justice Solomon
29 JULY 2022
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