Belfield v Belfield and 2 Ors
[2011] NSWSC 1146
•19 October 2011
Supreme Court
New South Wales
Medium Neutral Citation: Belfield v Belfield and 2 Ors [2011] NSWSC 1146 Hearing dates: 22/08/11, 23/08/11 Decision date: 19 October 2011 Jurisdiction: Equity Division Before: Associate Justice Macready Decision: I dismiss the proceedings and subject to any submissions, I order the plaintiff to pay the defendant's costs.
Catchwords: WILLS AND ESTATES - family provision claim - time extended for application to be made - - whether deceased had entered into a prescribed transaction - claimant son had settled family disputes prior to deceased's death - no entitlement to make a claim. Legislation Cited: Conveyancing Act 1919
Family Provision Act 1982
Probate and Administration Act 1898
Testator's Family Maintenance and Guardianship of Infants Act 1916Cases Cited: Basto v Basto (NSWSC, 8 September 1989, unreported)
Cetojevic v Cetojevic [2006] NSWSC 431
D'Apice v Gutkovich - Estate of Abraham (No 2) [2010] NSWSC 1333
De Winter v Johnstone (NSWCA, 23 August 19995, unreported)
Doyle v Blake (1804) 2 Sch & Lef 231
Estate of Hodges Deceased, Re; Shorter v Hodges (1988) 14 NSWLR 698
Fancett v Ware (NSWSC, 3 June 1986, unreported)
Guskett (deceased), Re (1947) VLR 211
Massie v Laundy (NSWSC, 7 February 1986, unreported)
Kerr v Badran; Estate of Badran [2004] NSWSC 735
Kilbee v Sneyd (1828) 2 Moll 186
King v Hudson [2009] NSWSC 1013
Perpetual Trustee Company Ltd v Fairlie-Cunninghame (1993) 32 NSWLR 377
Phillips v Quinton (NSWSC, 31 March 1988, unreported)
Singer v Berghouse [1994] HCA 40
Timbury v Coffee (1941) 66 CLR 277Category: Principal judgment Parties: Richard Edgar Home Belfield (plaintiff)
Charles Home Belfield (first defendant)
Kialami Pty Limited (second defendant)
Taloye Holdings Pty Limited (third defendant)Representation: Counsel:
Mr RD Wilson for plaintiff
Mr L Ellison SC for defendants
Solicitors:
Abbot & Co for plaintiff
File Number(s): 2010/231284
Judgment
This is an application under the Family Provision Act 1982 ('the Act') in respect of the estate of the late Madge Clarendon Belfield who died on 16 July 2004 aged 95 years. The deceased was survived by her sons Richard Belfield (the plaintiff) and Charles Belfield (the defendant). Her husband, Edgar Belfield, predeceased her.
Last will of the deceased
The deceased made her last will 5 February 1990, by which she gave her estate to her youngest son Charles and appointed him executor
Assets in the estate
The deceased left no actual estate. The plaintiff sought an order to have 20 shares in Kialami Pty Ltd designated as notional estate. The third defendant Taloye Holdings Pty Ltd held those 20 shares in Kialami Pty Ltd on trust for the C H Belfield No 1 Family Trust. This shareholding represents the deceased's 40 percent interest in the 2,602 hectare farming property known as Kialami, which is owned by the second defendant. Tremain Prowse Valuers valued the Kialami property on 25 August 2010 at $5,670,000.
The defendant holds the other 60 percent interest in the Kialami property. That interest has become part of the C H Belfield Family Trust No 2. The property was subject to various facilities to Westpac and the current outstanding amount is $1,519,000. This leaves and net amount of $4,151,000 making the deceased's interest through the trusts at $1,660,400.
Costs have been incurred. The plaintiff's costs on the ordinary basis are estimated at $102,800 and on the indemnity basis $110,500. The first, second and third defendants' costs on the ordinary basis are estimated at $84,701.59.
Family history
The deceased was born in August 1908. She married Edgar Belfield and they had two children, Richard, born in December 1937 and Charles born in March 1944. The family lived on the property at Kialami which is to the west of Armidale in the New England area.
After leaving school in 1953, Richard started working on Kialami. In 1956, he acquired his first bulldozer and he worked on and off Kialami.
In August 1956, the family partnership commenced, which comprised the parents and the two children. In 1958, Edgar retired from the partnership and in July 1962, he died aged 82. In 1964, pursuant to the terms of Edgar's will, title to Kialami was transferred to the deceased as to a one fifth share, Richard as to a two fifth share and Charles as to a two fifth share.
In November 1967, Richard married Elspeth Margaret Belfield and in March 1971, Charles married Gillian Belfield.
At this time there was disharmony between Richard and Charles and Richard resigned from the partnership. In 1972, he commenced proceedings in the Supreme Court of New South Wales Equity Division in respect of that partnership dispute. The deceased and Charles were defendants in the proceedings.
On 30 June 1972, the proceedings were settled and for the purpose of the proceedings Kialami had an agreed value of $179,069. As part of the settlement Richard transferred his share in the partnership and property to be held by Charles as to a six tenths share and the deceased as to a four tenth share.
In April 1974, Richard was paid his settlement sum of $21,000.
In November 1978, two trusts were established being the C H Belfield Trust No 1 and the C H Belfield Trust No 2. At that time various deeds of appointment were executed by Sandon Nominees Pty Ltd as trustee and Charles as appointor to which I will return later.
The CH Belfield Trust No 1 was for the benefit of the deceased and the CH Belfield Trust No 2 was for the benefit of Charles.
In March 1979, the deceased and Charles transferred their interest in Kialami to Kialami Pty Limited. The deceased's 40 percent interest in Kialami became part of the CH Belfield Trust No 1 and Charles' 60 percent interest in Kialami became part of the CH Belfield Trust No 2.
In the course of the transfers to the trusts, the deceased lent $129,000 to the C H Belfield Trust No 1 so it could pay its 40 percent share of the transfer price of $324,000.
In July 1979, a deed of release was entered into between the deceased and the C H Belfield Trust No 1 whereby the deceased forgave and released payment of $69,600 of the loan $129,600.
In 1994, Richard's wife, Elspeth Belfield, was diagnosed with breast cancer and she underwent surgery.
In 1995, the deceased was diagnosed with bowel cancer and she underwent surgery. In April of that year, no doubt as a consequence of her illness, the deceased granted an enduring power of attorney to Charles. The deceased subsequently was exhibiting signs of Alzheimer's and in 1996 she moved from Kialami into the Autumn Lodge Retirement Village. In May 2001, she moved to the Hilton Nursing Home and she died in 2004.
Richard did not commence these proceedings until 2010 - more than four years out of time. On 8 November 2010, Richard obtained a Probate and Administration Act 1898 s 41A grant.
Eligibility
Richard is an eligible person being the son of the deceased.
Applications under the Family Provision Act , the High Court in Singer v Berghouse [1994] HCA 40 set out the two-stage approach the Court must take:
"In applications under the Family Provision Act the High Court in Singer v Berghouse (1994) 181 CLR 201 has set out the two stage approach that a Court must take. At page 209 it said the following:-
'The first question is, was the provision (if any) made for the applicant 'inadequate for (his or her) proper maintenance, education and advancement in life'? The difference between 'adequate' and 'proper' and the interrelationship which exists between 'adequate provision' and 'proper maintenance' etc were explained in Bosch v Perpetual Trustee Co Limited . The determination of the first stage in the two-stage process calls for an assessment of whether the provision (if any) made was inadequate or what, in all the circumstances, was the proper level of maintenance etc appropriate for the applicant having regard, amongst other things, to the applicant's financial position, the size and nature of the deceased's estate, the totality of the relationship between the applicant and the deceased, and the relationship between the deceased and other persons who have legitimate claims upon his or her bounty.
The determination of the second stage, should it arise, involves similar considerations. Indeed, in the first stage of the process, the court may need to arrive at an assessment of what is the proper level of maintenance and what is adequate provision, in which event, if it becomes necessary to embark upon the second stage of the process, that assessment will largely determine the order which should be made in favour of the applicant. In saying that, we are mindful that there may be some circumstances in which a court could refuse to make an order notwithstanding that the applicant is found to have been left without adequate provision for proper maintenance. Take, for example, a case like Ellis v Leeder where there were no assets from which an order could reasonably be made and making an order could disturb the testator's arrangements to pay creditors.'"
Extension of Time and special circumstances
Because the application is out of time it is necessary for the court to consider section 16 of the Family Provision Act which allows an application to be made notwithstanding it is out of time. There are a number of cases which refer to the principles to be applied in an application for an extension of time. In Re Guskett (deceased) (1947) VLR 211 the following was said:
"It is necessary for the applicant to make out a case that will justify the grant of the indulgence sought. He is to show reasons why his failure to apply within the time allowed should be excused. Every case will have to be dealt with on its own facts but it would seem necessary for the applicant to satisfy the court that the circumstances are such as to make it unjust for him to be penalised for being out of time. As moreover he is seeking an indulgence he should apply promptly for an extension of time."
His Honour Young J in several cases has dealt with the principles governing application to extend time under this Act. In Massie v Laundy (NSWSC, 7 February 1986, unreported) he indicated that when looking at 'sufficient cause" under 16(3) of the Act the factors which one looks at include the following:
(a) is the reason for making a late claim sufficient?
(b) will the beneficiaries under the will be unacceptably prejudiced if the time were extended?
(c) has there been any unconscionable conduct on either side which would enter into the equation?
Apparently he also accepts a view which was expressed by his Honour Needham J in Fancett v Ware (NSWSC, 3 June 1986, unreported) that there is no purpose in extending the time with respect to a claim which must fail. In Phillips v Quinton (NSWSC, 31 March 1988, unreported) Powell J, when considering the matter at the substantive hearing, leaned towards the view that a plaintiff seeking an extension of time under the Testator's Family Maintenance and Guardianship of Infants Act 1916 must now demonstrate not merely a reasonable prospect but at least a strong probability of obtaining substantive relief. His Honour Hodgson J did not accept that view in Basto v Basto (NSWSC, 8 September 1989, unreported).
In De Winter v Johnstone , an unreported decision of the Court of Appeal on 23 August 1995, his Honour Powell J referred to this matter and in particular the fact that nowadays the application for extension of time is invariably dealt with at the time of the application for substantive relief. He said at page 23:
"In such a case, so it seems to me no extension of time ought to be granted unless it be established (inter alia) that the applicant for an extension of time would, in the event of that extension being granted, be entitled to an order for substantive relief."
His Honour Mr Justice Sheller considered that it was only necessary to show that the application was not bound to fail. His Honour Mr Justice Cole seems to have adopted the parties' approach of looking at the strength of the plaintiff's case.
The case of De Winter v Johnstone is also useful in that Sheller J commented on the meaning of "unconscionable". He was dealing with an appeal from Master McLaughlin and he referred to the Master's comments to the following effect:
"Unconscionable conduct in this context of course relates to such matters as whether the plaintiff has made an informed decision not to make a claim against the estate and has then decided after the limitation period has expired to make such a claim on account of some change in her financial and material circumstances which has occurred after the expiry of the limitation period."
With regard to the Master's comments, His Honour observed:
"...with all respect I would not have thought this to have been unconscionable conduct. No doubt it depends on the circumstances. However the concept of unconscionable conduct is to be directed towards a deliberate holding off designed to lull beneficiaries into false sense of security. There is nothing to suggest anything of that sort in the present case."
I will deal first with the extension of time application.
In August 2004, after the deceased's death in July, Richard sought advice from a solicitor about obtaining a copy of the deceased's will. The solicitor obtained a copy of the deceased's will and when the deceased's solicitor forwarded a copy of the will to Richard's solicitor it was said that Charles did not believe there were any significant assets in the estate.
Richard concedes that at the time he made enquiries about making an application he was informed of the 18 month time limit. Apparently Richard did not do anything further on the basis of what he had been told although plainly he knew that the property existed and was still in the family.
In late 2005, Richard took advice from a barrister who suggested that it would be expensive to try and test the position.
In 2009, Richard made further enquiries about a possibility of a claim, which included hiring a private detective.
In October 2009, with the help of a friend who was a former solicitor Richard drafted and wrote a long letter to Charles seeking detailed information about what had happened to the property and his mother's interest. This renewed activity may have been prompted by the fact that he had heard that Charles and his wife were separated and no doubt it occurred to him that there might have to be a division of property between them. At the end of October, the initial response produced little in the way of documentation. On 17 December 2009, Richard's solicitors wrote to Watson, McNamara & Watt advising that an application for preliminary discovery would be made unless documents were produced. This led to the provision in January 2010 of the various trust deeds and deed of appointment together with other documents that allowed the history of the property to be traced.
After considering the documents and obtaining advice, Richard commenced the proceedings on 12 July 2010.
The availability of the trust deeds and deed of appointment to which I will refer later enabled Richard to be in a position to make a claim that there was appropriate notional estate.
Although the deeds went back to 1978 and were held by the estate solicitors, they were not provided to Richard until January 2010.
Richard relies upon this circumstance as an appropriate explanation for the delay as well as special circumstances in respect of his claim for the designation of notional estate.
In cross-examination Richard maintained he was not aware of the trust deeds until January 2010. However, it transpired that he had a letter dated 27 July 1982 from Dibbs, Crother & Osborne who acted on his dispute in 1982. That letter reported that company searches showed the shareholding in Kialami Pty Ltd was held for the CH Belfield Family Trust No 1 and CH Belfield Family Trust No 2. The letter pointed out that the contents of the trusts were not known and not publicly available.
Richard in giving his evidence said the first he knew of the trust was in January 2010. This was plainly wrong. However, given the nature of what information he did have, it was not of much more assistance than the information he had obtained from the estate's solicitors shortly after the date of the deceased's death.
In my view there is an explanation for the failure to make the claim within time and it does not seem to be a matter of a change of heart connected with some other factor.
Apart from the work that Charles has continued to do on the property since the deceased's death, no prejudice arises and questions concerning that work are probably more appropriately addressed when considering whether or not there should be a designation of notional estate.
There does not seem to be any unconscionable conduct of the type referred to by his Honour Justice Sheller.
I will refer to the situation of Richard and Charles before returning to the questions of notional estate.
Richard Belfield
Richard is presently aged 73 years. He is married with no dependent children. He and his wife live on a 180 acre property Kinleigh near Armidale valued at $900,000. He and his wife own the property jointly. He has plant and equipment worth $773, bank accounts of a little over $5,500 and a motor vehicle worth $4,250. He owes $378,005 to his wife and his two children who over the years have been lending him funds. The funds have in the main been reinvested in the Kinleigh property owned by him and his wife. The $378,005 is secured by a mortgage over the property.
Richard has an income of $3,254 per month and he estimates his expenses to be $3,638 per month. He no longer does work with the earth moving equipment which he had used most of his working life. He now receives a modest income writing articles about earthmoving.
So far as the relationship with the deceased is concerned it is plain that in 1972 there was a substantial break between the plaintiff and the defendant. The deceased refused to become involved and she left her sons to sort out the problem. The deceased continued to live on the property Kialami where Charles and his family also lived. In these circumstances, until his mother moved from the property in 1995, Richard only saw his mother occasionally in that period, although it is not clear in the evidence precisely how often they saw each other. The plaintiff was somewhat evasive on this aspect. He said he saw her more often once she moved into town to the nursing homes but there was no detail given on this aspect.
It is clear that there was a complete break in the financial relationship between the parties with the result that the parties compromised their position and accepted the result of that compromise. In these circumstances, it is plain that since then there has been no contribution to the property by the plaintiff. On one or two occasions the plaintiff did some paid work in relation to earth works on Kialami.
Apart from having had cancer, Elspeth Belfield was involved in a motor vehicle accident in which she sustained serious injuries. As a result she is not able to work.
Charles Belfield
Charles is 67 years of age and until recently he was married to Gillian. His children are not dependent upon him. He has worked all his life on the property Kialami as well running a contracting business for harvesting.
Before taking account of the property settlement arrangements with his wife, as a result the deceased's will, the property at Kialami was held by the various trusts, subject to the mortgages, to which I have referred earlier.
Charles owns another adjoining property, which has been purchased which he owns with his former wife worth some $400,000 and shares and superannuation of $170,410.
In addition the plant and equipment amounts to $401,000 and his contracting plant $190,000. He has livestock worth $838,000.
As part of his divorce settlement he has purchased his former wife a property in Armidale.
The other elements of the agreement with his wife are that he is obliged to pay $714,00 to Gillian by 3 July 2011, transfer superannuation to her of $170,000 and pay her $400,000 by instalments of $40,000 per annum commencing in July 2012. There are provisions he has to make in his will concerning this matter and there are also provisions for further payments to his wife depending upon the outcome of the present proceedings. There is a payment of $280,000 on completion of these proceedings.
It is plain that Charles had a good relationship with his mother during her lifetime. He made generous provision for her during her later years particularly when she no longer had a substantial interest in the partnership.
Charles provided funds for his mother to travel overseas every year for many years and she lived a comfortable lifestyle.
Notional estate claim
From 1972 up until 16 March 1979, the property Kialami was owned by the deceased as to a 40 percent interest and by Charles as to a 60 percent interest. On 16 March 1979, the deceased and Charles transferred Kialami to Kialami Pty Ltd.
Kialami Pty Ltd was incorporated on 21 February 1978. Its issued capital comprised 52 shares, 20 of which were owned by Sandon Nominees Pty Ltd on trust for the C H Belfield Family Trust No 1 and 30 of which were owned by Sandon Nominees Pty Ltd on trust for the C H Belfield Family Trust No 2. The deceased and Charles each owned one share beneficially.
The C H Belfield Family Trust No 1 was settled on 20 November 1978 with Sandon Nominees Pty Ltd as trustee. The " eligible beneficiaries " are defined in clause 1(e) to mean Charles, his wife Gillian, their children and " such other person or persons as the Trustee may by deed nominate PROVIDED such person(s) are alive or in existence at the date hereof or capable of being determined before the Closing Date ".
The C H Belfield Family Trust No 1 relevantly conferred on Sandon Nominees Pty Ltd and its successor, the third defendant, the following powers:
(a) the power to nominate other persons as " eligible beneficiaries ";
(b) the power to bring forward the closing date (clause 1(e)(ii));
(c) the power to pay income for the maintenance, education, advancement in life of eligible beneficiaries (clause 4(i));
(d) upon the closing date to hold the trust fund upon trust to pay the capital to the eligible beneficiaries (in such proportions ... as the Trustee shall in its absolute discretion determine" (clause 5).
(e) the power to appropriate any property or investment forming part of the trust fund in its actual state of investment and condition towards the beneficial interest of any person in the trust fund (clause 8(h));
At the time of settling the C H Belfield Family Trust No 1, the trustee also on 20 November 1978, entered into an overriding deed of appointment with the deceased, which remained in force until the deceased's death on 16 July 2004. The deed of appointment relevantly conferred on the deceased the power with respect to the C H Belfield Family Trust No 1 to direct the trustee to, inter alia, " exercise any discretion and powers conferred upon it under the said settlement in such manner as Madge Clarendon Belfield shall direct " (see clause 1(d)).
It was submitted that pursuant to the deed of appointment the deceased and her legal attorney, Charles, retained the power to:
(a) nominate either the plaintiff or the deceased as an eligible beneficiary;
(b) to pay income or appropriate trust property including 20 shares in Kialami Pty Ltd in favour of the plaintiff or the deceased;
(c) bring forward the closing date and thereupon hold the capital including 20 shares in Kialami Pty Ltd on trust for the plaintiff and/or the deceased in such proportions as she shall direct.
There appears to be no dispute that from the date of transfer of Kialami to Kialami Pty Ltd on 16 March 1979, the trustee Sandon Nominees and its successor Taloye Holdings Pty Ltd (from 1 May 2007), held 40 percent of Kialami on trust for the C H Belfield Family Trust No 1.
The CH Belfield Family Trust No 2 provisions were similar except that the trust related to Charles rather than the deceased.
The relevant parts of section 22 of the Family Provision Act are as follows:
"22 Prescribed transactions
(1) A person shall be deemed to enter into a prescribed transaction if:
(a) on or after the appointed day the person does, directly or indirectly, or omits to do, any act, as a result of which:
(i) property becomes held by another person (whether or not as trustee), or
(ii) property becomes subject to a trust,
whether or not the property becomes in either case so held immediately, and
(b) full valuable consideration in money or money's worth for the first mentioned person's doing, or omitting to do, that act is not given.
...
(4) In particular and without limiting the generality of subsection (1), a person shall, for the purposes of subsection (1) (a), be deemed to do, or omit to do, an act, as a result of which property becomes held by another person or subject to a trust if:
(a) the person is entitled, on or after the appointed day, to exercise a power to appoint, or dispose of, property which is not in the person's estate but the power is not exercised before the person ceases (by reason of death or the occurrence of any other event) to be so entitled and, as a result of the omission to exercise the power and of the person's death or the occurrence of the other event:
(i) the property becomes held by another person (whether or not as trustee) or subject to a trust (whether or not the property becomes in either case so held immediately), or
(ii) another person becomes (whether or not immediately) or, if the person was previously entitled, continues to be, entitled to exercise the power,
...
(5) Except as provided in subsection (6), a prescribed transaction involving the doing of, or omitting to do, an act as referred to in subsection (4) (paragraph (f) excepted) shall be deemed to be entered into immediately before, and to take effect on, the death or the occurrence of the other event referred to in that subsection in relation to that act or omission."
It was submitted that the failure of the deceased to exercise the powers conferred by the 1978 dead of appointment up until her death constituted a failure within the terms of section 22(4)(a).
The matter is made more complex by the deceased's increasing dementia from 1995 onwards as well as the appointment of her son, Charles, as her enduring power of attorney.
The defendant's answer in summary form to these arguments includes the following propositions.
(a) Pursuant to clause 15 of the trust deed, the addition of any other beneficiary must be for the benefit of one of the then eligible beneficiaries and it is not.
(b) Alternatively, the deceased became incapable by reason of her dementia more than three years before her death and therefore she ceased to be "entitled" to exercise the power of appointment.
(c) It is no answer to the deceased's incapacity to rely on the existence of the enduring power of attorney to Charles as any use of the power of attorney would be exercising the power of a trustee contrary to s 163B(2)(a) of the Conveyancing Act 1919.
I will address the question raised in (a) of the defendant's propositions. To understand the arguments it is useful to look at the detailed provision of the trust deed and the deed of appointment.
The deed of appointment was between the trustee and the deceased who was defined in the document as the appointor. It recited the trust deed and its powers and then in its operative parts, other than machinery provisions, it provided as follows:
"1. The Trustee shall and does hereby irrevocably covenant and agree with the Appointor and the legal personal representative of the Appointor that it shall act in relation to any one or more of the matters set forth in the following paragraphs of this Clause and that it shall execute and deliver such deed documents and/or notices relating to any such one or more of the said matters in accordance with any written notice(s) (given by the Appointor or which the Trustee may require the Appointor to give) and which may be served or posted by prepaid post upon or to theTrustee at its registered office signed by Madge Clarendon Belfield, viz
(a) That the Trustee shall retire as a Trustee from the C.H, Belfield Family Trust No. 1,
(b) That the Trustee prior to its retirement shall appoint such person or persons and/or corporation or corporations to be the Trustee or Trustees for the time being of the said C.H. Belfield Family Trust No. 1 as Madge Clarendon Belfield shall nominate,
(c) That the Trustee shall exercise the rights conferred upon it in relation to the appointment of new Trustees under the provisions of the Trustee Act, 1925 as amended in such manner as Madge Clarendon Belfield shall direct, and
(d) That the Trustee shall exercise any discretions and powers conferred upon it under the said Settlement in such manner as Madge Clarendon Belfield shall direct."
The provisions in the trust deed as to who are the beneficiaries were as follows:
"(c) " Eligible Beneficiaries" shall mean:
(i) Charles Home Belfield;
(ii) Gillian Ruth Belfield (the wife of Charles, Home Belfield);
(iii) Samuel Charles Belfield, Juliet Caroline Belfield and Emma Kate. Belfield (being the children of Charles Home Belfield and Gillian Ruth Belfield); and further issue of Charles Home Belfield;
(iv) The children and further issue of Samuel Charles Belfield, Juliet Caroline Belfield and Emma Kate Belfield;
(v) Subject to Clause 8(u) such other person or persons as the trustee, may by Deed nominate PROVIDED such person(s) are alive or in existence at the date here of or capable of being determined before the Closing Date without infringing the rule against perpetuities and excluding therefrom the Ineligible Beneficiaries;
(d) "the Ineligible Beneficiaries" shall mean the settlor or his executors or administrators and Trustee;
(e) "the Closing Date" shall be the earliest of the following dates, that is to say:-
(i) twenty - one (21) years from the death of the last survivor of the lineal descendants now living of his late Majesty King George VI; or
(ii) SUBJECT to Clause 8(u) such date being earlier than the preceding date as Trustee may in its absolute discretion determine;"
In clause 8(u) of the deed there were provisions which allowed the trustee to bring forward the closing date.
The trust deed also contained a very wide power to reconstitute or vary the trusts in clause 15 which is as follows:
15. Notwithstanding the trusts, powers and provisions herein declared and contained the Trustee may at any time or times during the Trust during the Trust Period, if it shall in its absolute discretion think fit either;
(a) Transfer the whole or any part or parts of the Trust Fund (but excluding any part thereof to which any person shall previously have become entitled to an absolute and indefeasibly vested interest in possession) or the income thereof to the trustees or trustee (including the Trustee) of any settlement or trust wherever established or administered, so that upon any such transfer the property so transferred shall be held upon the trusts and with and subject to the powers and provisions declared and contained in the settlement or trust to the trustees or trustee where of the same is transferred freed and discharged from all the trusts powers and provisions of this Settlement;
(b) By Deed alter revoke or add to any of the provisions or powers of this Settlement and make new provisions and powers to the exclusion of or in addition to any of the provisions and powers at the time being in force end any such alteration provocation or addition to the provisions or powers of this Settlement shall be subject in like manner to be altered revoked or added to by a subsequent deed; or
(c) By Deed in accordance with paragraph (b) to add further Eligible Beneficiaries under Clause 1 (c)(v);
PROVIDED ALWAYS as follows;
(i) no such transfer alteration revocation of addition shall be made unless the Trustee is satisfied that the same is for the benefit of all or anyone or more exclusively of the others or other of the Eligible Beneficiaries herein referred to;
(ii) The Ineligible persons shall by terms of such settlement trust or deed be wholly excluded from any benefit there under;
(iii) No such transfer alternation revocation or addition shall offend the rules against the perpetuities or the law relating to the accumulation of income; and
(iv) The Trustee may at any time or times during the Trust Period by any revocable or irrevocable deed or deeds wholly or partially release or restrict the powers contained in this Clause.
The evidence discloses no exercise by the trustee of the powers in this clause apart from the deed of appointment, to which I have referred. That deed would presumably take effect under proviso (iv).
It can also be seen in clause 15(c) that the power to add further eligible beneficiaries is specifically dealt with by clause 1(c)(v). Given the terms of clause 1(c), I would have thought it plain that the proviso numbered (i) would apply to an appointment or nomination of any further eligible beneficiary either under clause 15(c) or under clause 1(c)(v).
In this case we are not dealing with whether an addition that has been made by the trustee is valid and within the terms of the trust deed. The deed of appointment is valid and within the terms of the trust deed. What we are dealing with is a submission that it is clear that any appointment of the plaintiff or the deceased as an additional beneficiary would not be for the benefit of any one of the existing beneficiaries. That question involves an exercise to determine the trustee's satisfaction with an appointment and that it is for the benefit of grandchildren or even Charles' further descendants.
A familial situation involving the deceased and a grandchild, perhaps one who is incapacitated, might be such that it could be for such a grandchild's benefit to have his grandmother as a beneficiary perhaps to enable her to provide by will for that grandchild. An alternative situation might be that the deceased's child predeceases the deceased after having first separated from their partner. Other examples may also be possible.
In these circumstances the first of the defendant's arguments should not be accepted.
The next matter involves the incapacity of the deceased by reason of her dementia. The initial question is a factual one as to whether this has occurred.
The evidence in relation to the mental state of the deceased is not particularly satisfactory. This is because all the medical records from the nursing homes in which she spent the last years of her life have been destroyed. I am therefore only left with the evidence given by the parties.
The plaintiff dealt with the matter in his affidavit in chief at paragraphs 59 and 62 to 65. In paragraph 59 Richard referred to the deceased's operation for bowel cancer in 1995 and said that her behaviour at that time indicated that she might have been suffering from the onset of dementia. He spoke about visits to his mother when it was difficult to have any reasonable conversation on those occasions as she was distressed.
In paragraph 62, Richard referred to the fact that in 1996 a doctor assessed the deceased before moving into Wattle Grove, a high care dementia section of the Autumn Lodge Retirement Village. She entered that village on 15 August 1996 and she was transferred to Wattle Grove on 25 November 1996. In paragraph 63, Richard refers to visits to the deceased at the retirement village when she was lucid for some of the time but not on other occasions.
In paragraph 65, Richard said that in late 2000 to 2001, the deceased was admitted to Hilton Nursing Home and her dementia increased dramatically.
Charles agreed with Richard that from 1995 the deceased suffered from dementia and that it was difficult to have any reasonable or sensible conversation with her as her health had deteriorated. Charles also agreed with Richard's statements in paragraph 65 about his mother's dementia increasing dramatically.
There was also some evidence from Elspeth Belfield, Richard's wife, who was a nurse. She gave evidence that she visited the deceased at the Hilton Nursing Home and she agreed that the deceased suffered from dementia. However, she said that during her visits she had conversations with the deceased who appeared to be lucid at times. Elspeth Belfield also gave evidence that in 2003 she saw the deceased in hospital after her operation for a broken hip. She said that the deceased recognised her and Richard and their son.
It is clear from this evidence that the deceased suffered from dementia from at least 1996 taking into account the nursing homes she was admitted to for her care. The difficulty is whether the dementia was so serious that she was incapable of managing her affairs at any particular time. It is difficult because there no evidence as to whether she was capable of addressing financial matters. Given the evidence that from 1996 the deceased was not lucid on a number of occasions and given the agreement between the parties that between 2000 and 2001 that the dementia increased dramatically, I think it is reasonable to infer that from the end of 2000 or the beginning of 2001 that the deceased suffered from severe dementia. She died on 16 July 2004 more than three years after this time.
Generally, in law the test for capacity depends on the task a person is faced with. For example, while a statutory authority may deem a person incapable of holding a drivers licence, that person may still have testamentary capacity. Further a person may be found to be incapable of managing his or her own affairs, but yet still have testamentary capacity , see D'Apice v Gutkovich - Estate of Abraham (No 2) [2010] NSWSC 1333 at [128] and Perpetual Trustee Company Ltd v Fairlie-Cunninghame (1993) 32 NSWLR 377 generally.
There are a number of cases decided in relation to testamentary capacity that contain principles that can be applied to the present question of determining whether the deceased had the capacity to understand and know what her rights were in relation to the deed of appointment and if she could be aware of the effect of her omission to add other beneficiaries, including the plaintiff, to the C H Belfield No1 trust.
In Re Estate of Hodges Deceased; Shorter v Hodges ( 1988) 14 NSWLR 698 Powell J stated:
"14. a duly executed will, rational on its face, is presumed, in the absence of evidence to the contrary, to be that of a person of competent understanding ( Symes v Green (1859) 1 Sw & Tr 401; 164 ER 785; Sutton v Sadler (1857) 3 CBNS 87; 140 ER 671); sanity is to be presumed until the contrary is shown ( Burrows v Burrows (1827) 1 Hagg Ecc 109; 162 ER 524);
15. facts which, if established, may well provide evidence to the contrary include:
(a) the exclusion of persons naturally having a claim on the testator's bounty ( Banks v Goodfellow );
(b) extreme age or sickness ( Battan Singh v Amirchand ; Boreham v Prince Henry Hospital (1955) 29 ALJ 179; Kenny v Wilson ), or alcoholism ( Timbury v Coffee (1941) 66 CLR 277);
16. in relation to the former of these two matters, however, it is appropriate to record that, in the speech of Erskine J, when delivering the advice of the Judicial Committee in Harwood v Baker , the following passage appears (at 290-291; 120):
"... the question which their Lordships propose to decide in this case, is not whether Mr Baker knew when he was giving all his property to his wife, and excluding all his other relations from any share in it, but whether he was at that time capable of recollecting who those relations were, of understanding their respective claims upon his regard and bounty, and of deliberately forming an intelligent purpose of excluding them from any share of his property.
If he had not the capacity required, the propriety of the disposition made by the Will is of no importance. If he had it, the injustice of the exclusion would not affect the validity of the disposition, though the justice or injustice might cast some light upon the question as to his capacity."
17. However, while extreme age ( Bailey v Bailey ; Worth v Clasohm (1952) 86 CLR 439) or grave illness ( Kenny v Wilson ) will call for vigilant scrutiny by the court, neither (even though the testator may in extremis ( In the Goods of Chalcraft; Chalcraft v Giles [1948] P 222)) is, of itself, conclusive evidence of incapacity; it will only be so if it appears that age, or illness, has so affected the testator's mental faculties as to make them unequal to the task of disposing of his property: Battan Singh v Amirchand ; Bailey v Bailey ; Worth v Clasohm ."
In Timbury v Coffee (1941) 66 CLR 277, Rich ACJ stated:
"The factors of competency are that the party must know what he is about, have sense and knowledge of what he is doing and the effect his dispositions will have, knowledge of what his property was, and who those persons were that then were the objects of his bounty"
Justice Ward in King v Hudson [2009] NSWSC 1013 stated:
"[57... In Worth v Clasohm (1952) 86 CLR 439 at 453, the effect of doubt as to the question of testamentary capacity was discussed:
A doubt being raised as to the existence of testamentary capacity at the relevant time, there undoubtedly rested upon the plaintiff the burden of satisfying the conscience of the court that the testatrix retained her mental powers to the requisite extent. But that is not to say that he was required to answer the doubt by proof to the point of complete demonstration, or by proof beyond a reasonable doubt. The criminal standard of proof has no place in the trial of an issue as to testamentary capacity in a probate action. The effect of a doubt initially is to require a vigilant examination of the whole of the evidence which the parties place before the court; but, that examination having been made, a residual doubt is not enough to defeat the plaintiff's claim for probate unless it is felt by the court to be substantial enough to preclude a belief that the document propounded is the will of a testatrix who possessed sound mind, memory and understanding at the time of its execution . (my emphasis)
[58] Mr Willmott accepts that the onus in this case lies on the executors to satisfy the court that the deceased had testamentary capacity. He posed five discrete points for consideration:
(i) Was the deceased able to understand the nature of the act of executing and publishing a will and the effect of the instrument?
(ii) Was the deceased able to call to mind the property it was in his power to dispose of in that will?
(iii) Was the deceased able to call to mind the persons who may have claims upon his testamentary bounty?
(iv) Was the deceased able to weigh the relative claims of those persons?
(v) Was the deceased's mind possessed of a delusion that influenced the disposition of his property which, if his mind had been free of that delusion, would not have been made?
[59] Those questions provide a useful approach in respect of the matters outlined by Cockburn CJ in Banks v Goodfellow and I consider the evidence in that manner."
In relation to these questions, it is worth noting that the accuracy of a person's understanding of their assets might be quite different depending on a person's age. This was explained by Windeyer J in Kerr v Badran; Estate of Badran [2004] NSWSC 735:
"[49] Younger people can be expected to have a more accurate understanding of the value of money than older people. Younger people are less likely to suffer memory loss. ... Older people living today may well be aware that they own substantial shareholdings or substantial real estate, but yet may not have an accurate understanding of the value of those assets, nor for that matter, the addresses of the real estate or the particular shareholdings which they have. Many people .. may understand that they have assets ..., but at the same time they may not have a proper understanding of the value of the assets .... They may however be well able to distribute those assets by will. I think that this needs to be kept in mind in 2004 when the requirement of knowing "the extent" of the estate is considered. .... What is required is the bringing of the principle to bear on existing circumstances in modern life. The decision of Gleeson CJ in Estate of Griffith dec'd; Easter v Griffiths (unreported NSWCA 7 June 1995) must be kept in mind where he said:
The formulation of the onus of proof, well established by authority and not in dispute in the present case, invites caution. The power freely to disclose one's assets by will is an important right, and a determination that the persons lacked (or, has not been shown to have been possessed) a sound disposing mind memory and understanding is a grave matter. Where a testatrix exhibits florid symptoms of psychotic disturbance, such a conclusion may be reached relatively easily. However where, as in the present case, what is claimed is that a woman who presented to the world an appearance of intelligence and rationality, had formed an aversion to her child so unfounded and unreasoning that it evidences an unsoundness of mind, the decision may be very difficult.
This, of course, was a case of alleged delusion, but the general requirement for care is involved in all contested probate actions. Although he was in dissent, Kirby P in para 8 of his judgment, emphasised the need for caution and stated that medical evidence must be carefully looked at to ensure that it was considered in light of the relevant test and not what the medical expert using medical terminology considered to be the legal position.
[50] Next it is important to bear in mind the decision in Worth v Clasohm (1952) 86 CLR 439. This explained that in a case where a doubt as to capacity is raised - thereby as explained in Shorter , satisfying the evidentiary onus on the defendant, the onus passing to the propounder to satisfy the court that the will propounded is valid - this does not mean that a doubt is enough; the doubt must be such that the court considers it sufficient to prevent its finding for the will propounded."
Further on the question of evidentiary onus, in Timbury v Coffee at 283, Dixon CJ noted that due execution and testamentary capacity is a rebuttable presumption:
"If a will rational on the face of it is shown to have been executed and attested in the manner prescribed by law, it is presumed, in the absence of any evidence to the contrary, that it was made by a person of competent understanding. But if there are circumstances in evidence which counterbalance that presumption, the decree of the court must be against its validity, unless the evidence on the whole is sufficient to establish affirmatively that the testator was of sound mind when he executed it."
However, in D'Apice v Gutkovich (No 2) , Justice White held that the onus of proving that the deceased, who suffered from moderately severe dementia during the time the relevant documents were executed, had the capacity to make the will in question or to execute a codicil lay with the plaintiff who was seeking to rely on it.
In the present situation, as discussed, the parties agree that the deceased was suffering from dementia. The onus would therefore appear to be on the plaintiff to establish the deceased's capacity to exercise the powers given under the deed of appointment. I am not satisfied that the deceased was capable of addressing the matters to be considered in exercising powers under the deed of appointment.
On the basis that the deceased became incapable of managing her affairs more than three years before her death, the next question which arises is whether the deceased ceased to be "entitled" to appoint or dispose of property as a result of that incapacity within the meaning of that expression in s 22(4)(a) of the Act. It was suggested by Richard that entitlement did not encompass a situation where there was a lack of ability to exercise the power. Charles for his part pointed out that if a person is incapable they cannot make a will or give a power of attorney.
Given the structure of s 22(4)(a), which specifically is predicated upon the person ceasing by reason of death or the occurence of any other event to be so entitled, I would have thought that a supervening incapacity would be any other event such as to make the deceased not entitled to exercise the power of appointment. Unfortunately, section 23 of the Act does not explain the operation of the term "any other event" in addition to the event of death as is found in section 22(4)(a). Therefore, although a prescribed transaction may have been entered into immediately before the deceased's incapacity occurred, it seems clear that this could only have occurred more than three years before the deceased's death.
I have noted that Richard seeks to sidestep any such conclusion by relying upon the power of attorney which was given on 20 April 1995 presumably before the surgery the deceased underwent that year. I note that there is no suggestion from either party that the power of attorney was not valid. The deceased's signature was appropriately witnessed and it became an enduring power of attorney.
The problem with this argument are the terms of s 163B(2) of the Conveyancing Act 1919 (which was repealed in 2004) which is as follows:
"The authority conferred by an instrument referred to in subsection (1) does not include:
(a) authority to exercise or perform any power, authority, duty or function as a trustee conferred or imposed on the person executing the instrument, or
(b) unless it is expressly conferred by the instrument - authority to execute an assurance or other document, or do any other act, as a result of which a benefit would be conferred on the attorney appointed by the instrument."
The question that arises is whether any exercise by the deceased of the powers in the deed of the appointment would be the exercise of any power, authority, duty or function as a trustee. True it is that under the deed of appointment the deceased was merely able to give directions to the trustee who was bound to honour them. Given that the trustee was bound to follow her directions, in effect, the deceased had the power to exercise the functions in the trust deed.
It should be noted that the deed of appointment contained the following clause:
"4. Any notice given pursuant to this Deed by Madge Clarendon
Belfield may be given by Madge Clarendon Belfield personally or by a duly authorised attorney or agent AND Madge Clarendon Belfield shall be entitled to (either by deed or will) delegate the rights powers and privileges granted to her pursuant to this Deed to any such person or persons and/or corporation or corporations as Madge Clarendon Belfield may think fit,"
On the face of this clause the donee of the power of attorney could exercise the powers given under the deed. Normally a trustee may not delegate his functions. One common law exception was when the trust deed specifically permitted the delegation. See Kilbee v Sneyd (1828) 2 Moll 186 and Doyle v Blake (1804) 2 Sch & Lef 231. Plainly the deed was drafted with this exception in mind.
However, section 163B of the Conveyancing Act is a later statutory enactment applying to certain prescribed powers of attorney with which we are concerned. It will be noted that s 163B(2)(a) does not, unlike s 163B(2)(b), provide an exception where the instrument permits it. Section 163B(2)(a) is an express prohibition on performing functions as a trustee and thus there is no room for clause 4 to operate in respect of this power of attorney.
In these circumstances the power of attorney would not enable the rights given under the deed of appointment to be exercised by the donee of the power of attorney.
Given my conclusions about the deceased's capacity and the power of attorney, the court is not able to make an order for notional estate under s 23 of the Act. As there is no estate from which provision can be made the proceedings should be dismissed. However, in the event that someone else takes a different view, I will deal with the other remaining matters.
Special circumstances under s 28 (5) (d) of the Act
Section 28 (5) of the Family Provision Act provides as follows:
"28 Designation of property as notional estate-powers and restrictions
...
(5) On an application in relation to a deceased person, being an application:
(a) made pursuant to an order under section 16 allowing the application to be made, or
(b) for an order under section 8 for additional provision,
the Court shall not make an order designating property as notional estate of the deceased person by reason of a prescribed transaction or a distribution unless it is satisfied:
(c) that:
(i) the property was the subject of the prescribed transaction or distribution,
(ii) the person by whom it is held holds the property as a result of the prescribed transaction or distribution as trustee only, and
(iii) the property is not vested in interest in any beneficiary under the trust, or
(d) that there are other special circumstances (including, in the case of an application made as referred to in paragraph (a), the incapacity, during any relevant period, of the person by or on whose behalf the application is made) which justify the making of an order so designating the property."
The question of special circumstances has been dealt with in a number of cases. The more recent considered was given by Campbell J in Cetojevic v Cetojevic [2006] NSWSC 431. In that case his Honour said the following:
"[76] ...I turn to the question of whether there are "other special circumstances", within s 28(5)(d).
[77] The case law shows that no exhaustive account of what counts as "special circumstances" has been attempted to be given. Previous decisions have held them to include incapacity as a result of infancy (Dare v Furness (1997) 44 NSWLR 493; Stojcesvska & Tosevski v Tosevski [2001] NSWSC 274 at [45]), and the strength of an applicant's claim (including her financial and other contributions to the assets of the Deceased), together with the fact that it was through no fault of hers that her application was not made within the prescribed period (Stojcesvska & Tosevski v Tosevski [2001] NSWSC 274 at [46]). They are not limited to the types of circumstance which are expressly mentioned in s 28 or circumstances closely analogous to them: Lewis v Lewis [2001] NSWSC 321 at [85]. I also venture to repeat the remarks I made in Application of O and P [2005] NSWSC 1297 at [57]-[60] concerning the phrase "special reasons" in s 101(5) Adoption Act 2000:
'57 It is fairly common for legislation to confer a power on a court to adopt some course of action if there are "special reasons". In Jess v Scott (1986) 12 FCR 187 the Full Federal Court (Lockhart, Sheppard and Burchett JJ) considered a provision which allowed a court "for special reasons" to permit an appeal out of time. They said, at 195, that what that rule required was:
... that there be shown a special reason why are the appeal should be permitted to proceed, though filed after the expiry of twenty-one days. In that context, the expression "special reasons" is intended to distinguish the case from the usual course according to which the time is twenty-one days. But it may be so distinguished (not necessarily will, for the rule gives a discretion) wherever the Court sees a ground which does justify a departure from the general rule in the particular case. Such a ground is a special reason because it takes the case out of the ordinary. We do not think the use of the expression "for special reasons" implies something narrower than this.
...
It should not be overlooked that r 15(2) enables leave to be given "at any time"; the "special reasons" relevant to such a power cannot but describe an elastic test, suitable for application across a range of situations, from an oversight of a day to a neglect persisted in during a prolonged period. It would require something very persuasive indeed to justify a grant of leave after, for example, a year; equally, it may be said, something much less significant might justify leave where a party is a few days late. "Special reasons" must be understood in a sense capable of accommodating both types of situation. It is an expression describing a flexible discretionary power, but one requiring a case to be made upon grounds sufficient to justify a departure, in the particular circumstances, from the ordinary rule prescribing a period within which an appeal must be filed and served."
See also, to similar effect, Minister for Community Services & Health v Chee Keong Thoo (1988) 78 ALR 307 at 324 per Burchett J; Holpitt Pty Ltd v Varimu Pty Ltd (1991) 29 FCR 576; (1991) 103 ALR 684 at 686-7 of ALR per Burchett J.
58 This meaning of "special reasons" now been decided by the Court of Appeal in Director-General, Department of Community Services v The Adoptive Parents [2005] NSWCA 385 to be applicable in section 101(5). At [44]-[46] Giles JA said:
'44 In Baker v R [2004] HCA 45 [ (2004) 210 ALR 1 ; (2004) 78 ALJR 1483] Gleeson CJ said (at [13]) -
'There is nothing unusual about legislation that requires courts to find "special reasons" or "special circumstances" as a condition of the exercise of a power. This is a verbal formula that is commonly used where it is intended that judicial discretion should not be confined by precise definition, or where the circumstances of potential relevance are so various as to defy precise definition. That which makes reasons or circumstances special in a particular case might flow from their weight as well as their quality, and from a combination of factors.'
45 In the same case Callinan J said (at [173]-[174]) that "special reasons" shared the characteristics of which Lord Bingham spoke in relation to "exceptional circumstances" in R v Kelly (2000) QB 198 at 208, that -
'We must construe 'exceptional' as an ordinary, familiar English adjective, and not as a term of art. It describes a circumstance which is such as to form an exception, which is out of the ordinary course, or unusual, or special, or uncommon. To be exceptional a circumstance need not be unique, or unprecedented, or very rare; but it cannot be one that is regularly, or routinely, or normally encountered.'
46 Barrett J took up these observations in Application of R M and E S M, re Y at [12], saying that the court could only act "if it positively finds some factor or circumstances related to the best interests of the child that is out of the ordinary course, unusual, special or uncommon and that is not regularly, routinely or normally encountered". I respectfully agree; but it would be a mistake to attempt to define or categorise what might be special reasons related to the best interests of a child.'
59 In exercising a power which is able to be exercised where there are "special reasons",
'doubtless the discretion of the Court is very large, and necessarily so; but it must have as its basis some circumstance which it can reasonably regard as "special reasons" for lifting the particular'
circumstance out of the usual: Gourlay v Casey (1927) 38 CLR 586 at 591 per Isaacs, Gavan Duffy and Powers JJ.
60 When the Court comes to exercise the discretion under section 101(5) from time to time,
'... a discretion to relax the requirement of general rules should not itself become entangled in a web of rules spun out of the Court's discretionary decisions. The tendency in some of the decisions we have discussed to regard a particular factor considered previously, in the light of other circumstances, as requiring the same effect to be given to it in the different situation before a court on a later occasion is a temptation which a court should resist. Decisions are not authorities upon the facts but upon principles; the facts must be regarded as unique to the particular case.'
(per Lockhart, Sheppard and Burchett JJ, Jess v Scott (1986) 12 FCR 187 at 196).'
[78] In my view, a similar approach should be taken to the phrase "special circumstances" in s 28(5)(d) Family Provision Act 1982.
[79] I will assume without deciding, that the structure of the Act requires there to be more demonstrated to prove "special circumstances" than to justify an extension of time under the Act."
In this case Richard suggests that the failure to provide the deeds of settlement and the deed of appointment within the 18 month limitation period is, in addition to being an explanation for the delay in commencing the proceedings, special circumstances within the meaning of this section.
In this case as we are dealing with notional estate the question of special circumstances also arises.
I note that Campbell J in the passage quoted above notes that he would assume without deciding that the structure of the Act requires there to be more demonstrated to prove "special circumstances" than to justify an extension of time under the Act.
For the purposes of extending time, the failure to supply the documents meant that Richard was proceeding on an incorrect basis, namely, that there was nothing in respect of which he could make a claim. In respect of special circumstances there is the additional matter of the late production of the documents which put him in possession of information about the existence of a prescribed transaction. In that sense there was something additional in the circumstances of this case and I would think that there are appropriate special circumstances.
Further consideration
I will consider the nature of the claim made by Richard before returning to the question of whether property should be designated as notional estate after a consideration of the factors referred to s 27 of the Act.
Richard's claim for provision was put in these terms:
"The plaintiff seeks the following provision out of the notional estate of the deceased:
(a) $378,005 to discharge debts owed to his wife Elspeth and his two children;
(b) $40,000 to purchase a Nissan Xtrail four wheel drive;
(c) $5,950 to buy a new bed and a recliner chair;
(d) $4,099 to buy a better heating system;
(e) $104,240 to carry out home repairs including constructing an en-suite; relaying outdoor pavers; painting the house; laying new carpet; constructing a new garage/shed;
(f) A capital sum of $300,000 which can be used to make up the shortfall of income over expenses, provide superannuation; a nest egg and a fund for the vicissitudes of life."
The total of these figures is $832,294. The claim is in fact a claim by Richard to reconstruct his life to provide him with everything he might wish for a happy retirement.
Consideration has to be given to Charles' position and in particular that his asset situation has been affected by the property arrangements with his wife. To make an order for Richard in the amount he requires will have the effect of forcing the sale by Charles of the whole or a substantial part of his property which has been his livelihood for his entire life.
Although the deceased regarded the litigation instigated by Richard in 1960s as a fight between her two sons and she stepped to one side, the litigation left some scars on the family dynamics. True it is that Richard only saw his mother occasionally when she was living at Kialami for twenty or thirty years after the litigation. He also saw his mother on a more frequent basis when she moved into a nursing home. There is no detailed information as to the extent of Richard's contact with his mother and he was extremely reticent about giving further details of the contact. Effectively one has contact which is not extensive.
This has to be contrasted with the very special care and consideration given by Charles to his mother. I have earlier referred to the support given to his mother even though she had no interest or very little interest in the partnership. The support included trips overseas every year.
When considering all these circumstances I do not think that a substantial award in favour of Richard is appropriate.
Section 27 of the Family Provision Act provides as follows:
"27 Designation of property as notional estate - matters to be considered
(1) On an application in relation to a deceased person, the Court shall not make an order designating property as notional estate of the deceased person unless it has considered:
(a) the importance of not interfering with reasonable expectations in relation to property,
(b) the substantial justice and merits involved in making or refusing to make the order, and
(c) any other matter which it considers relevant in the circumstances.
(2) In determining what property should be designated as notional estate of a deceased person, the Court shall have regard to:
(a) the value and nature of property the subject of any relevant prescribed transaction or distribution from the estate of the deceased person,
(b) where, in relation to any such prescribed transaction, consideration was given, the value and nature of the consideration,
(c) any changes over the time which has elapsed since any such prescribed transaction was entered into, any such distribution was made or any such consideration was given in the value of property of the same nature as the property the subject of the prescribed transaction, the distribution or the consideration, as the case may be,
(d) whether property of the same nature as the property the subject of any such prescribed transaction, any such distribution or any such consideration could, during the time which has elapsed since the prescribed transaction was entered into, the distribution was made or the consideration was given, as the case may be, have been applied so as to produce income, and
(e) any other matter which it considers relevant in the circumstances."
So far as the importance of not interfering with expectations, it is perfectly plain that after the settlement of the proceedings between Richard and his mother in 1972, Charles has continued to work and develop the Kialami property. It has been Charles' lifetime work and he has made an enormous effort to build up the property to a point where it is now valued as set out earlier.
In an affidavit dated 5 August 2011, starting at paragraph 10, Charles set out over four or five pages a complete description of all the work that has been done on the property and the cost in present day terms. This has meant that the property which in 1972 was valued at $204,000 is now valued in today's dollars as $5,670,000. The improvements Charles has made to the property in my view have substantially contributed to the high valuation of the property today.
In my view, Charles had a perfectly reasonable expectation following upon the settlement of the disputes between himself and Richard in 1972 that he and his mother, at their own expense, would be able to continue to develop the Kialami property. What this claim by Richard does now is to defeat part of that expectation. Perhaps Charles was nave not to have expected the challenge by Richard to his mother's share but he at least had a legitimate expectation that his own interest would not be put in jeopardy.
The provision of some lesser sum for Richard to give him some relief from his debts would not cause anywhere near such a substantial impact. In these circumstances I would have thought that some award in the order of $300,000 would be appropriate and that amount would have due regard to the legitimate expectations by Charles about the future development of the Kialami property for his and his mother's benefit.
Orders
I dismiss the proceedings and subject to any submissions, I order the plaintiff to pay the defendant's costs.
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Decision last updated: 21 October 2011
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