Brinkkotter v Pelling
[2006] VSC 101
•24 March 2006
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
No. 4732 of 2003
| Michael Anton Brinkkotter | Plaintiff |
| v | |
| Anna Mary Pelling & Stephen Kevin Brinkkotter (who are sued as the Executors of the Will of Kevin Anton Brinkkotter deceased) | Defendants |
---
JUDGE: | Hansen J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 20-22 October, 16 & 18 November, 7 December 2004 and 5 December 2005 | |
DATE OF JUDGMENT: | 24 March 2006 | |
CASE MAY BE CITED AS: | Brinkkotter v Pelling & Anor | |
MEDIUM NEUTRAL CITATION: | [2006] VSC 101 | |
---
Family provision – Deceased owned and operated poultry farm – Plaintiff was deceased’s adult son – Plaintiff and his brother worked for deceased in poultry farm many years - Deceased, plaintiff and brother subsequently operated poultry farm in partnership – Dispute between plaintiff on one hand and deceased, brother and three sisters on the other – Plaintiff left partnership – Plaintiff left in parlous financial circumstances – Plaintiff estranged from deceased and siblings - Deceased’s will left poultry farm to plaintiff’s brother with house property to deceased’s three daughters and residue to those siblings – Plaintiff received an equal share of a small parcel of shares only – Nominal bequest – Plaintiff had since had some success in business - Whether deceased had moral obligation to provide for plaintiff in will – Financial need of plaintiff - Whether plaintiff’s conduct disentitling – Administration and Probate Act 1958, s 91.
---
APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr R. H. Miller | Campbell Lord |
| For the Defendants | Mr A. Verspaandonk to 18 November 2004 | Lorraine Jones & Associates to 18 March 2005, thereafter Wills & Probate Victoria |
| Mr A.J. Southall QC with Mr A.J. Verspaandonk | ||
| on 7 December 2004 | ||
| Mr A.J. Southall QC with Mr S.P. Newton | ||
| on 5 December 2005 |
HIS HONOUR:
Introduction
This is an application brought by Michael Anton Brinkkotter (“the plaintiff”) under Part IV of the Administration and Probate Act 1958 (“the Act”) against his sister, Anna Mary Pelling, and brother, Stephen Kevin Brinkkotter (“the defendants”) who are the executors of the estate of Kevin Anton Brinkkotter deceased, who died on 17 May 2002 aged 71 years.
The deceased’s wife Joan pre-deceased him, having died in 1976 aged about 44 years. The deceased was survived by his two sons, Michael and Stephen, and his three daughters, Anna, Jennifer Margaret Bourke and Marina Joan Pollock. The plaintiff is the eldest of the five children of the deceased. They are close in age, the plaintiff having been born on 19 January 1957, Anna on 16 May 1958, Stephen on 3 August 1959, Jennifer on 30 November 1960 and Marina on 6 May 1962[1].
[1]Where convenient, I will refer to the plaintiff and his siblings by their first name.
Throughout his life the deceased was a poultry farmer. Consequently, his estate consisted largely of the poultry farm business, known as the Research Poultry Farm, in which the deceased and Stephen were partners, and which was conducted at a property at Lot 7 Crest Road, Research, being the land referred to in [4](e) below.
On 2 September 2002 the defendants applied for a grant of probate of the Will of the deceased dated 10 May 2002. By this Will the deceased provided as follows:
(a) He appointed the defendants to be executors and trustees.
(b)By cl 4 he gave his property at 32 Lindon Strike Court, Research to his daughters Anna, Jennifer and Marina equally as tenants in common.
(c)By cl 5 he gave his interest and entitlements in the Brinkkotter Dudley Street Trust which he believed to be 20 per cent thereof to his trustees upon trust to pay out all mortgage monies and interest owing on the Lindon Strike Court property with any balance to form part of the residue of his estate.
(d)By cl 6 he gave his shares in Woodside Petroleum Ltd equally among his children.
(e)By cl 7 he gave his real estate situate at and known as the Research Poultry Farm (“the poultry farm”) being the land in Certificates of Title Volume 8817 folios 874 and 877, together with his interest in the business known as Research Poultry Farm and including plant and equipment, stock, machinery and motor vehicles, to his son Stephen “he accepting full responsibility for all income and expenditure thereof and all debts due and owing”.
(f)By cl 11 the deceased directed that his trustees after payment of funeral and testamentary expenses hold the residue of his estate upon trust equally for his three daughters and son Stephen. The clause then provided that:
“…AND I DESIRE TO STATE that I make no further provision under this my Will for my son MICHAEL ANTON BRINKKOTTER nor for his issue not from any lack of love and affection but as he has chosen to distance himself from me and his entire family and has taken legal action against me and I perceive my primary obligation is to my children ANNA MARY PELLING, STEPHEN KEVIN BRINKKOTTER, JENNIFER MARGARET BOURKE and MARINA JOAN POLLOCK and their issue.”
On 10 September 2002 the plaintiff’s solicitors lodged a caveat with the Registrar of Probates. The Registrar, acting pursuant to r.8.02(b) of Ch III of the Supreme Court (Administration and Probate) Rules duly gave notice to the plaintiff of the pending application for a grant of probate. However, as the plaintiff did not file a statement of his grounds of objection, the caveat lapsed in accordance with r.8.03(2) of the Rules.
Probate of the deceased’s Will was granted to the defendants on 22 October 2002.
The inventory of assets and liabilities of the deceased’s estate lodged in connection with the application for probate disclosed assets of $1,593,456.80 and liabilities of $596,534.30, a net position of $996,922.50 made up as follows:
Assets
Real Estate
· the poultry farm being the house and land of about 40 acres at 7 Crest Road, Research valued at
$ 675,000
· the land of one acre and two houses thereon at 32 Lindon Strike Court, Research valued at
$ 500,000
$ 1,175,000
Personal Estate
· cash at bank
$ 27,261
· one $1 share of $1 value in Dudley Street Pty Ltd
$ 1
· 2 shares of $1 each in Research Poultry Farm Pty Ltd
$ 2
· 1526 shares in Woodside Petroleum Ltd (“Woodside”)
$ 21,821.80
· loan to Dudley Street Pty Ltd
$ 10,000
· a 50 per cent interest in the Research Poultry Farm partnership valued at
$ 357,576
· motor vehicle
$ 500
· furniture and household effects
$ 1,295
$ 418,456.80
Dudley Street Pty Ltd was trustee of the Brinkkotter-Dudley Street Trust which I will refer to as the Trust. The Trust was created by a Deed of Settlement dated 26 May 1978 with Dudley Street Pty Ltd as trustee. It is in form a discretionary trust with a vesting date of 25 May 2057. The primary beneficiaries named as such in the Deed of Settlement are the deceased, his children and his mother Bridgene Josephine Brinkkotter.
Liabilities
These comprised amounts owing under a mortgage of the poultry farm property of $450,000 plus a quarter’s interest and costs, and a mortgage of the Lindon Strike Court property of $132,000 plus interest owing and costs, and a credit card debt.
On 22 October 2004, at the conclusion of the evidence, counsel provided me with an agreed value of the deceased’s estate, both at the time of death and as at 30 June 2004[2]. The respective net values were $1,067,543 and $1,268,867. The increased value at the time of death over that stated in the inventory was due to the loan to Dudley Street Pty Ltd having been $70,620. However, while adding this amount to the assets, the parties (in their agreed statement, exhibit 17) left in the original amount of $10,000, thus wrongly increasing the amount of the assets by that amount. Hence the revised net value of the estate at death was $1,057,543.
[2]Exhibit 17.
As to the net value at 30 June 2004, counsel proceeded on the basis that this represented the net value at the date of the trial. The asset and liability position is set out in exhibit 17 as follows:
Assets
7 Crest Road
$1,000,000
32 Lindon Strike Court
540,000
Cash
2,190
Woodside shares
4,364
Other shares
2
Motor car
3,429
Furniture and fittings
1,295
Loan Dudley Street Pty Ltd
70,620
Unsecured loan S. Brinkkotter
30,132
Unsecured loan Research Poultry Farm
263,344
Asset in Research Poultry Farm
34,199
$1,956,538
Liabilities Accounts payable
$ 7,032
Mortgage 7 Crest Road
31,964
Mortgage 32 Lindon Strike Court
132,000
Unsecured loan S. Brinkkotter
418,675
Legal fees
62,000
$ 687,671
Net value
$ 1,268,867
The mortgage on 7 Crest Road was reduced with funds of $423,550 which Stephen received from the Trust on 29 February 2004, made up as follows:
Capital appropriation for 25% share
$ 330,890
Loan account proceeds
92,660
$ 423,550
_______
Stephen applied most of these funds to the “partnership” business to pay out the majority of the loan secured by 7 Crest Road. The result of the reorganisation is that he had an unsecured loan to the deceased’s estate of $418,675[3].
[3]See Exhibit 8 paras 19 and 20
It is to be remembered that the above statement of assets and liabilities as at 30 June 2004 was tendered by counsel for the defendants as an agreed position of the parties and, I repeat, counsel thereafter proceeded on the basis that the agreed statement applied at the time of the trial. Accordingly, the evidence of Moroney in exhibit 15 that at 4 October 2004 the value of 7 Crest Road was $800,000, and that at 18 October 2004 the value of 32 Lindon Strike Court had not increased since his assessment of $520,000 in January 2004 is irrelevant in the sense that it differs from the agreed valuations.
In their joint affidavit sworn on 12 December 2005[4] the defendants, as executors, set out the then asset and liability position of the estate, as follows:
[4]Exhibit 21
Assets $ 7 Crest Road $800,000 32 Lindon Strike Court 550,000 Cash 1,087 Woodside shares 306 @ $36.50 11,169 Money in solicitors’ trust 490.66 Research Poultry Farm – partnership loan account 315,094 ____________
1,677,840.66
____________
Liabilities $ Solicitor – revocation proceeding 17,600 Counsel 26,015 Mortgage 7 Crest Road 31,325 Mortgage 32 Lindon Strike Court 132,000 Unsecured loan S. Brinkkotter 418,675 Rates 2,033 Jan Hancock – valuations 1,300 Marina Pollock – unsecured loan 5,300 Jennifer Bourke – unsecured loan 20,800 Anna Pelling – unsecured loan 48,800 Stephen Brinkkotter – unsecured loan 81,800 ________
782,248
________The costs and disbursements of the Part IV claim remain to be determined.
A number of things need to be said about that evidence, and I deal with them sequentially in the order in which the defendants dealt with them in their affidavit.
a)The first matter is the valuation of 7 Crest Road at a figure of $200,000 less than that agreed in October 2004. At that time, notwithstanding that the defendants’ valuer had valued the property at $800,000 the parties agreed on a value of $1,000,000. Indeed, in cross-examination Anna Pelling herself was shown the agreed list (which became exhibit 17) and said that the statement represented “all the agreed values”[5]. In the circumstances of this agreement it was not necessary for counsel to call, and cross-examine, the respective valuers whose affidavits had been filed. The valuers were David Matler for the plaintiff and Moroney for the defendants. As the plaintiff points out in his affidavit sworn on 16 December 2005 Matler’s valuation of 7 Crest Road was $1,150,000. In view of the parties’ agreement, confirmed by Pelling, it was unnecessary for Matler’s affidavit to be tendered and it was not. It remains for perusal on the court file. The ultimate result of agreement on the values was that I did not have to determine issues concerning the witnesses and the value of the property. What the defendants have now done is engage a different valuer, Jan Hancock, to value the properties and who has valued 7 Crest Road as at 6 December 2005 at $800,000 and 32 Lindon Strike Court at $550,000. The value for 7 Crest Road happens to be the same amount as the defendants’ previous valuation, which the defendants departed from at the trial. In my judgment, I should continue to act on the basis that the value of 7 Crest Road is the value agreed at trial. That agreement was reached in the context of a trial in which both parties had valuers ready to give evidence. I should treat the parties as having made a considered and advised decision in reaching their agreement on the value of the property. All that has happened now is that the defendants have exhibited the new valuations by Hancock, but without Hancock swearing an affidavit. In that circumstance the Hancock valuations are inadmissible in the trial, as being hearsay. And, the valuations being produced in this way, Hancock could not be cross-examined. In truth, in my view, regard should not be had to the Hancock valuations. If it was desired to rely on them and to depart from the agreement at trial, counsel should have been explicit as to this and the valuations should have been put before the court in a proper way, thus exposing Hancock to cross-examination and possibly to a reopening of evidence on the issue by the plaintiff. There is a risk of considerable unfairness to the plaintiff in the defendants doing what they have done with these valuations. That is, it is an uncross-examinable valuation in an apparent attempt to depart from a previously agreed value without explicitly saying so. I reject the attempt. The defendants should be kept to the values agreed at trial. I note that Hancock increased the value of 32 Lindon Strike Court by $10,000, a relatively insignificant amount in context.
b)The loan to Dudley Street Pty Ltd has been called in.
c)The Woodside shares still held represent the plaintiff’s one-fifth share of the total number held by the deceased at death. The balance was sold on 10 December 2002 to raise funds to pay accounts.
d)The value of the deceased’s interest in the partnership at death, $357,576, was the product of the mortgage of $450,000 less partners’ loan account at death of $92,424. As to this, the defendants stated as follows. The mortgage was used for business purposes but because it was secured against 7 Crest Road it was a debt of the deceased. A book entry was made in the farm accounts to transfer the mortgage to partners’ loan account, thus changing the deceased’s loan account from $92,424 in debit, being his share of the carried forward losses, to $357,576 equity. Stephen has a higher share of the carried forward losses as the deceased had injected personal funds into the partnership. Stephen has reduced his loan account to the partnership in the past three years as he has paid in personal funds to clear debts. The partnership does not have the asset backing to support the partners’ loan account. The business was not financially viable for some years prior to the deceased’s death and will require a “huge” financial commitment to inject vitality and profitability into it. Since the death the business has further suffered in profitability. The present proceeding has meant that Stephen has been unable to implement plans to develop and expand the business. The asset of $315,094 owing to the estate by the partnership can only be realised if it is paid by Stephen. It is therefore not the market value of the business but a figure produced from historic accounting practice. A balance sheet of the business for the five month period to 30 November 2005, prepared by Anna Pelling, showed net assets of $20,743 and a profit and loss statement for that period showed a loss of $9,978.
I first observe as to this evidence that it is given by the defendants, and Anna Pelling prepared the accounts. There are traces of the argumentative in the evidence. Overall it presents the worst impression of the farm business and the value of 7 Crest Road, and Stephen’s position. Further, as the plaintiff points out, the presentation including the accounts seems based on an apparent fallacy namely that the partnership has continued whereas in law it ceased on the death of the deceased, since when Stephen has conducted the business. Moreover, at trial the parties agreed on the relevant values.
e)The shares in Research Poultry Farm Pty Ltd have been transferred to Stephen. The company has no assets.
f)The mortgage over 7 Crest Road for $450,000 was reduced by $418,675. Stephen assigned all but 2% of his interest in the Trust to the mortgagee for that amount. He therefore now has an unsecured loan to the estate. The reduction in the mortgage has reduced interest payments by around $20,000 per annum. Further, $31,325 being the balance of the $450,000 is owed by the estate to the mortgagee.
g)The unsecured loans to Anna Pelling, Stephen, Jennifer Bourke and Marina Pollock relate to the estate’s legal costs incurred in respect of this proceeding and the probate proceeding.
[5]T 189.
The plaintiff submits that the deceased had a responsibility or a moral obligation to make adequate provision for his proper maintenance and support and failed to do so. As at the date of death the value of the gift to the plaintiff of one-fifth of the Woodside shares was $4,364 and $11,169 at 12 December 2005.
When the case first came before the Master on 16 September 2003 counsel for the plaintiff stated that he sought further provision to the extent of a one-third interest in the Research Poultry Farm business and the land at 7 Crest Road, Research. Then, on the second day of the trial, immediately following the plaintiff’s case, counsel stated that the plaintiff sought as appropriate provision one-fifth of the net estate. On the following day and in final address counsel qualified that by saying that the plaintiff sought a monetary award without touching the devise to his sisters of 32 Lindon Strike Court. The principal asset from which the award would come was the farm. There was also the residue. In his final address counsel quantified the amount sought as $400,000. That would enable the plaintiff, who did not own a property, to buy a moderate to good family home.
The defendants opposed the application submitting that by the time of his death the deceased bore no responsibility to provide for the plaintiff. Furthermore, the plaintiff should fail for the simple reason that he was not in need of provision, being well able to look after himself. If, however, the Court found the deceased was obliged to provide for the plaintiff the amount to be awarded was “very minimal”.
The Trial
Overview
The trial commenced on 20 October 2004. The evidence concluded on 22 October. At that point the trial was stood over with directions for the sequential provision of written submissions. The hearing resumed for oral addresses on 16 November 2004. On that date, having heard counsel, I reserved my decision subject to any submission that counsel for the plaintiff may wish to make on a matter that had been disclosed by counsel for the defendants at the commencement of his address. The matter disclosed was that earlier on the day on which the deceased made the will admitted to probate he had made another will more favourable to the plaintiff in that it left all of the Woodside shares to the plaintiff. The plaintiff had not been aware of this further will.
The case came on before me again on 18 November 2004 when counsel for the plaintiff stated that he required time to consider with his instructing solicitor the future conduct of the case in particular whether the plaintiff should apply for revocation of the probate. For that purpose I adjourned the further hearing of the proceeding to 7 December 2004 by which day, on counsel for the plaintiff announcing that the plaintiff wished to apply for revocation, I made orders and directions for the purpose of such an application.
In accordance with those orders, by Summons filed on 14 December 2004 the plaintiff duly applied in the Probate jurisdiction for orders including that the probate granted to the defendants be revoked, that the penultimate will dated 10 May 2002 not be admitted to probate, and that the deceased’s will dated 14 August 1995 be admitted to probate[6]. Grounds of revocation filed on 14 December 2004 were lack of testamentary capacity, that the will was obtained by the defendants who took a benefit thereunder, and undue influence exercised by the defendants.
[6]In proceeding Probate No 13 of 2005.
In light of the application for revocation I had to withhold judgment on the Part IV claim. If probate was revoked and the 1995 will was admitted to probate it was clear enough that there would not then be a need to decide the Part IV claim. Further, while the judgment was substantially written it could not be completed.
The revocation proceeding came on for hearing before me on 5 December 2005. Numerous affidavits had been filed concerning the health and testamentary state of the deceased and the events of 10 May 2002 when the wills were executed. The trial duly commenced but after allowing the parties some time to talk they requested a consent order, which I duly made, that the proceeding be dismissed. There was no order for costs. In view of the elapse of time since initially reserving my decision on the Part IV claim I directed the filing of affidavits to bring financial matters up-to-date. On the basis that such affidavits would be provided, and subject to any cross-examination thereon, I again reserved my decision on the Part IV claim. The parties duly filed affidavits but there was no cross-examination thereon. It is in these circumstances that this judgment has been completed and is now published.
Evidence
Evidence was given by affidavit with supplementary oral evidence in chief and cross-examination.
Evidence for the plaintiff was given by the plaintiff himself, his son Nicholas Bradley Brinkkotter and his solicitor. More particularly, for the trial in October 2004 the plaintiff had sworn three affidavits, on 11 August 2003[7], 15 October 2003 (a statement of financial circumstances)[8] and 15 December 2003[9] respectively. Following the trial, on 16 November 2004 the plaintiff swore an affidavit dealing with a property at 26 Albert Street, East Brunswick which his wife had contracted to purchase in the week before the trial[10]. The plaintiff’s next affidavits were sworn on 12 December 2005[11] and 16 December 2005[12] in relation to financial matters.
[7]Exhibit B.
[8]Exhibit C.
[9]Exhibit D.
[10]Exhibit L.
[11]Exhibit Q.
[12]Exhibit R.
The affidavit of Nicholas[13] was tendered without the need to call him. In tendering it counsel said that he relied on that part of it which related to Nicholas spending a night at the deceased’s house.
[13]Exhibit P.
The plaintiff’s solicitor, Susan Regine Thomson, swore an affidavit on 17 November 2004[14], which was tendered at the hearing on 18 November 2004, in which she deposed to writing to the defendants’ solicitors on 28 September 2004 with a request that they provide a copy of the will executed by the deceased which was replaced by “the most recent Will which has been probated”. She deposed that in a written reply dated 4 October 2004, signed by the defendants’ solicitor, Lorraine Jones, the defendants’ solicitors forwarded a “copy of the penultimate Will of the deceased”. The will enclosed was that made on 14 August 1995. There was no disclosure of the first will made on 10 May 2002 which was revoked by the later will admitted to probate.
[14]Exhibit O.
The following affidavits were tendered in the defendants’ case:
a) By Anna:
· To the time of the trial, affidavits sworn on 14 November 2003[15], 15 December 2003[16], and 19 October 2004[17], the first dealing with facts including answering the plaintiff’s first affidavit, while the latter two dealt with the financial position of the estate.
[15]Exhibit G.
[16]Exhibit H.
[17]Exhibit J.
· On 3 December 2004[18], in which she explained why the defendants’ solicitors provided the plaintiff’s solicitors with the deceased’s will dated 14 August 1995 in response to their request for the last will executed prior to the probated will. The affidavit was filed for the hearing on 7 December 2004.
[18]Exhibit 17.
· Two affidavits on 12 December 2005, the first, which was sworn jointly with Stephen, dealing with financial matters concerning the estate[19], and the second with her financial position[20].
[19]Exhibit 21.
[20]Exhibit 22.
b) By Stephen:
·To the time of the trial, affidavits sworn on 14 November 2003[21] and 18 October 2004[22] which dealt with facts and responded to the plaintiff’s affidavits.
[21]Exhibit 7.
[22]Exhibit 8
·On 12 December 2005, to bring up-to-date the evidence concerning financial matters[23]. On the same date he swore the joint affidavit with Anna as to the estate’s financial position.
[23]Exhibit 23.
c) By Jennifer:
·To the time of the trial, an affidavit sworn on 14 November 2003 which responded to the plaintiff’s first affidavit and dealt with facts[24].
[24]Exhibit 6.
·On 12 December 2005, to state her up-to-date financial circumstances[25].
[25]Exhibit 24.
d)By Kenneth John Moroney sworn 18 October 2004[26], an estate agent and valuer, who at the request of the defendants’ solicitors, Lorraine Jones & Associates had valued the properties at 7 Crest Road and 32 Lindon Strike Court, Research, and deposed as to his valuations thereof. He also deposed as to a kerbside valuation of the properties owned by the Trust and a property at 33 Lindon Strike Court, Research. The affidavit was tendered without the need to call the deponent. As mentioned already, the parties agreed on a value of the properties at 7 Crest Road and 32 Lindon Strike Court and to that extent the tender was not necessary. At the same time the description of those properties might have been of assistance in a general sense. Apart from that, counsel for the defendants wished to have in evidence the material concerning the properties owned by the Trust.
e)Lorraine Jones, the principal of the firm Lorraine Jones & Associates who were solicitors for the defendants until 18 March 2005, who swore affidavits as follows:
·To the time of the trial, on 18 October 2004 relating to the Trust[27]. This affidavit was tendered without the need to call her.
·On 16 November 2004[28], following the hearing that day and in accordance with my request made during that hearing for such an affidavit, following the disclosure that a will had been made earlier on 10 May 2002. In this affidavit Jones deposed as to the circumstances surrounding the making of the last will of the deceased, including the making of an earlier will on 10 May 2002, each of which she drew. She produced a diary note of the day’s events and a copy of the first will made on that day. The will is identical to the last will save that in the earlier will the Woodside shares were left to the plaintiff alone. To produce the second will Jones merely had to change that clause to a gift to the five children. The affidavit was made an exhibit at the hearing on 18 November 2004.
·Two affidavits on 6 December 2004, the first of which[29] related to the plaintiff’s affidavit of 16 November 2004 concerning the purchase by his wife of the property at 26 Albert Street, East Brunswick. The second[30] dealt with her firm’s letter to the plaintiff’s solicitors dated 4 October 2004 enclosing a copy of the 1995 will, and provided an explanation which included that the plaintiff’s solicitors had not, apart from their letter dated 28 September 2004, requested a copy of wills other than that admitted to probate.
f)Ken Gleeson Collins, the principal of the firm of solicitors now acting for the defendants, swore an affidavit on 14 April 2005[31] to which he exhibited title searches of properties of the plaintiff’s wife.
[26]Exhibit 15.
[27]Exhibit 16.
[28]Exhibit N.
[29]Exhibit 18.
[30]Exhibit 19.
[31]Exhibit 20.
There was no cross-examination of any deponent of an affidavit sworn subsequent to 22 October 2004.
Disclosure of the Penultimate Will
It is now convenient to deal with this matter. As referred to above, the disclosure of the first 10 May will led to the further hearings on 18 November and 7 December 2004 followed by the proceeding to revoke probate. That the revocation application ultimately came to be dismissed does not mean that the matter and circumstances of the late disclosure of the will first executed on 10 May 2002 is of no relevance in the case. It is relevant as I will now demonstrate. To do so it is necessary to engage in some explanation of what happened.
I mentioned earlier that probate was granted to the defendants after the lapse of a caveat lodged by the plaintiff. In the papers lodged in connection with their application for probate the defendants did not disclose the fact of the first will executed by the deceased on 10 May 2002. That is not to say that they should have but, as a result of not doing so, nothing in the application could have alerted the plaintiff to the existence of the earlier will.
It is apparent, and I find as a fact, that the plaintiff and his advisers were not aware of this earlier will until the disclosure of it in Court on 16 November 2004.
The next step is to refer to the affidavits of the plaintiff that dealt with the facts of the case, Exhibits B and D. In the first affidavit (Exhibit B) the plaintiff referred to and produced the will admitted to probate. In paragraph 23 he said that after their mother died the deceased would often say to Stephen and himself that the farm was left to them in his will and accordingly they needed to work hard. He said, in paragraph 48, that until the deceased made his last will on 10 May 2002 his will had, in essence, left the farm to the boys and 32 Lindon Strike Court and his other assets to the girls. This had been his will since their mother was alive.
I interpolate that the first will executed on 10 May 2002 left the farm to Stephen only, not to “the boys”.
As referred to above, the defendants and Jennifer each swore an affidavit on 14 November 2003. Each answered the plaintiff’s above affidavit and gave evidence as to facts. In doing so, however, Anna and Jennifer bypassed paragraphs 23 and 48 of the plaintiff’s affidavit without comment, and Stephen bypassed paragraph 48 without comment thereon. Stephen did comment on paragraph 23 saying that he had no recollection of the deceased saying such things to them, adding that the deceased did not speak or behave like that. But paragraph 48 was left unanswered.
The plaintiff replied to these affidavits in his second affidavit, Exhibit D, sworn on 15 December 2003. In concluding this affidavit the plaintiff said, in paragraph 71, after saying that he had no involvement in the management of the farm since 1994, that “My father did not change his will until he was in hospital just 10 days before his death. I do not know why he did this at this time”.
On 18 October 2004, just two days before the trial, Stephen swore an affidavit[32] in which he responded to the plaintiff’s affidavit. As to the above paragraph 71 he said (in paragraph 18) “ … that Dad did change his will on 14 August 1995 after Michael had left the farm”, and produced a copy of that will. He did not mention that between the making of that will and the probated will was another will made on 10 May 2002.
[32]Exhibit 8.
It is then seen how counsel conducted the trial. The plaintiff’s case throughout was that there were three wills. In oral evidence in chief the plaintiff said, in elaborating on his affidavit evidence[33] that he and Stephen accepted their remuneration in the expectation that one day they would own the farm equally, that the deceased showed him his will in 1980, when his pay went from $250 to $300 per week. The will said that the farm went to Stephen and himself, that Anna and himself were executors and that the girls received his other assets. The deceased said the same thing in 1986 when the partnership deed was signed. The plaintiff also gave the evidence referred to in paragraph 23 of his affidavit. Further, in paragraph 22 of that affidavit the plaintiff referred to the expectation that the farm would one day be owned equally by Stephen and himself. In her evidence Jennifer corroborated that expectation. This is the first will.
[33]Exhibit B paragraph 22.
The second will was the will dated 14 August 1995. This will was made about one month after the deceased and Stephen sought arbitration of the partnership dispute. By this will the deceased left the 7 Crest Road land and the business to Stephen and the residue equally to his five children.
The third will was the will dated 10 May 2002 admitted to probate.
The cross-examination of the plaintiff was thorough. It concentrated on financial matters and did not question him on the matter of prior wills or their contents or the expectations of the children or the plaintiff’s evidence of the deceased’s statements as to the disposition of his property.
Then, when Stephen gave evidence he elaborated on his affidavits with oral evidence in chief. But counsel did not direct him to, and he gave no evidence on, the above evidence of the plaintiff. However, in cross-examination he was asked about these matters. He said that his father had not said to him that he wanted Michael and himself to run the farm and he did not say he was going to leave them the farm and his other assets to his daughters, although he agreed that the deceased’s expectation was that he and Michael would inherit and run the farm. He denied having seen his father’s will or discussed it with him in 1980. He further said that Michael’s evidence that the deceased had shown him his will about the time Michael got married was wrong. He gave similar evidence concerning Michael’s evidence as to the deceased having produced his will in 1986, and the deceased then saying that he and Michael would inherit the farm and the business. Michael, he said, was “Mistaken and has just got it wrong”. As I have mentioned, the plaintiff was not cross-examined on these matters. It is to be noted that a little later in cross-examination Stephen said that the deceased had told Michael and Anna that they were his executors, they – but not the deceased – had told him that. That was all he heard about the will.
Later in cross-examination Stephen was referred to paragraph 18 of his affidavit in which he referred to the 14 August 1995 will. He agreed that that will was “significantly different … from the last will” made some few days prior to his father’s death. He was then asked about another matter. Counsel for the plaintiff had no inkling of the first will made on 10 May 2002 and Stephen did not let on.
Stephen was re-examined but with no reference to the matter of prior wills or his above evidence.
It is not necessary to refer to the evidence of Anna and Jennifer as there was no reference to prior wills.
It was thus that counsel for the plaintiff addressed his final submissions on the basis of there having been three wills, the changes in the provisions of which he traced. As it happened, he addressed first. In concluding his submissions counsel sought to make a point of the deceased being in hospital in declining health when he made his last will, contending that in those circumstances the will was not the act of a wise and just testator. In the discussion that followed I said that the deceased must be taken as having had testamentary capacity but counsel said that the earlier wills bore on the soundness of the deceased’s judgment. I said to counsel “ … why would it have been that he made this will, changing what he had provided in the 1995 will, why did he do it?” I further said “ … what was it that led to the deceased calling for his solicitor and giving instructions and executing a will? Something happened”. Observing that there was no evidence as to that counsel concluded his submissions.
Immediately counsel for the defendants commenced his address he said that he was “probably bound to say there was actually a will made that day prior to the last will in which the whole of the Woodside shares” were given to Michael and that the will was changed that day. He was telling me that because of my comment to the plaintiff’s counsel that the previous will went right back to 1995. He felt it incumbent to indicate that there was another will that day. It had “never been an issue in the case, I’m just trying to be frank”. Counsel for the plaintiff then stated that this had never been disclosed. I observed that it may have been material for counsel for the plaintiff to have known, and that the case had been conducted on the basis that the prior will was that executed in 1995. I suggested that Jones swear an affidavit as to what happened and counsel said that would be done that day. Counsel then proceeded with his final address.
It was in those circumstances that later in the day Jones swore her affidavit in which she set out the circumstances surrounding the making of the deceased’s wills on 10 May 2002. It is not necessary to set out the content of the affidavit. It discloses the initial receipt of instructions from children of the deceased, to drawing a will and taking it to the deceased in hospital where it was executed. She said that the deceased said that the Woodside shares should go five ways. It appeared to Jones that she had misunderstood her instructions but as the deceased was ill she recommended he sign the will and he did. Later that day she received instructions from Stephen that the will was incorrect in respect of the shares and should be changed. She then amended the will to its final form and attended the hospital with the new will where it was signed. It is not necessary to refer to the greater detail of the occasion that is contained in her diary note.
As I have said, the matter came on again on 18 November 2004. By that time the plaintiff’s solicitor, Thomson, had sworn her affidavit deposing to her request for the will that was replaced by the probated will and the answer thereto. In the course of the discussion that day counsel for the plaintiff stated, and I accept, that he had run his case on the basis that there were two prior wills, being those mentioned above.
The hearing on 18 November 2004 occupied little time. The recent affidavits of Jones and Thomson were tendered and counsel for the plaintiff discussed the course he wished to take. He asked that Jones’ file containing instructions for the will be made available, and requested time in which to consider the future conduct of the case, an option being an application to revoke probate. In the course of the discussion I observed that it was important, in determining the case, to be in possession of all the facts.
When counsel for the defendants followed I said, as is the fact, that I had been led by the conduct of the case and by Stephen’s affidavit[34] to believe that the 1995 will was the penultimate will of the deceased, that Stephen’s affidavit finessed the fact, and that he (defendants’ counsel) had to all appearances also conducted the case on that basis. I also observed that the plaintiff was not cross-examined on his evidence as to his father having spoken to him on two occasions about how the estate would pass on his death, and as to showing him a will, and that Stephen did not give oral evidence in chief on that. Counsel for the defendants responded that “there was nothing deliberate or calculated about that”. He pointed out that the plaintiff had lodged a caveat which lapsed as to which, as I observed, I had no evidence. He then pointed out that the only time that counsel for the plaintiff mentioned the circumstances of 10 May 2002 was in his oral closing submission. Counsel said that at that point, and with me “thinking about it”, instead of “letting it all roll over” he got to his feet. I said to counsel that he should not have permitted his opponent to operate under a misconception. Finally, counsel stated that there was no attempt to mislead and that was why, at the death knock, he got to his feet.
[34]Exhibit 8.
When the case came on again on 7 December 2004 the further affidavits of Anna[35] and Jones[36] had been provided. The affidavits went to explain Jones’ letter dated 4 October 2004 in which she described the 1995 will as the penultimate will of the deceased. Jones’ affidavit also explained what happened with the plaintiff’s caveat and produced her notes of instructions for the deceased’s will. It is necessary only to refer to the account concerning the letter, and to that I now turn.
[35]Exhibit 17.
[36]Exhibit 19.
Anna said that she first saw Thomson’s letter dated 28 September 2004 at a conference at counsel’s chambers on 1 October 2004. Present with Anna and counsel were Stephen, Jennifer and Jones. Anna said that when Jones produced the letter she believed it referred to the will executed on 14 August 1995. She said that she did not honestly believe that the first 10 May will was relevant to the request in the letter as it was, in effect, in the same terms as the will admitted to probate other than for a drafting error relating to the distribution of the Woodside shares. Anna said that in those circumstances she instructed Jones to send the letter dated 4 October 2004. She had no intention of misleading the plaintiff, his solicitors or the Court when instructing Jones to send the 1995 will with the letter, as she believed that that was the will being sought.
Anna added that she said this against the background of a telephone conversation with the plaintiff on 22 June 2004. In the course of that conversation she had said to the plaintiff that the deceased had written him out of his will years ago. She was referring to the 1995 will although she did not recall mentioning that date, or if the plaintiff responded to her statement. Against that background she “naturally assumed” that the plaintiff was requesting a copy of the will she had mentioned in their telephone conversation. It did not occur to her that the request related to the first 10 May will.
In her affidavit Jones said that the conference had been convened to generally discuss the coming trial. When she produced Thomson’s letter Anna read it and said that the plaintiff was wanting the deceased’s 1995 will, and referred to a prior discussion with the plaintiff. Jones said that “After a short discussion, and with the agreement of her brother and sister” Anna instructed her to forward that will to the plaintiff’s solicitors in response to Thomson’s letter. I note that Jones did not set out the discussion that took place.
On 4 October Jones instructed a member of her staff to prepare a letter in response to Thomson’s letter, including providing a copy of the 1995 will. She signed the letter so prepared.
As mentioned earlier, at the hearing on 7 December orders were made for the purpose of the revocation proceeding.
It is unfortunate that this matter of a late disclosure of the penultimate will has led to such elaboration in this judgment. It has had to be explained and developed in order that it may be seen in context. It is not to the point that if Jones had responsively answered Thomson’s letter this whole discussion may never have arisen. But, rather than answer responsively, Jones gave a false answer based, it is said, on Anna’s understanding of the will that the plaintiff wanted. Jones had all the wills in her custody and accepts, as she must, responsibility for her firm’s false and misleading letter. But as an experienced solicitor capable of reading and understanding the English language it defies reasonable belief that when she received instructions from Anna she could have thought that the instructions were responsive to the request. That is, of course, without at the same time advising Thomson of the first will made on 10 May.
The significance of this is that the case is one in which credit is in issue. Counsel for the defendants attacked the plaintiff’s credit, whereas counsel for the plaintiff submitted that I should prefer the plaintiff as a witness of truth. These matters of credit were not confined to an odd point or two of fact. It went deeper than that, because the case involved seeking to understand the actions of family members and the dynamics of the interfamily relationships, and this involved assessments of their character and personality. Hence the relevance and importance of these matters.
To develop the facts a little further, as noted above Jones said that at the conference there was discussion about the response to Thomson’s letter but she did not set out the terms of that discussion. She said that Stephen and Jennifer participated but nothing is disclosed of what they said, whether by Jones, Anna, Stephen or Jennifer. Nothing is said about counsel in whose chambers the conference was held. Indeed it is not really clear to me why Jones needed instructions as to how to reply to Thomson’s letter, a letter which contained a reasonable request, properly made, and expressed in clear terms.
The next point to note is that Stephen swore an affidavit subsequent to this conference. This is Exhibit 8, sworn on 18 October 2004, in which in paragraph 18 he answered paragraph 71 of the plaintiff’s affidavit. Of course what Stephen said in paragraph 18 was correct but it was only part of the story. In light of the plaintiff’s reference in paragraph 71 to his father not changing his will until he was in hospital, it is overwhelmingly apparent that in not also referring to the first 10 May will Stephen finessed the truth. In this respect the answer to paragraph 71 is seen as being consistent with the tack determined in conference on 1 October to refer Stephen to the 1995 will and omit reference to the first 10 May will. The probability is, in my view, that this course was taken so as to avoid informing the plaintiff of the first 10 May will. That this was so is also consistent with the way in which counsel for the defendant conducted the case, as I have referred to above. Every indicator points to a determination by the defendants with their legal advisers to conduct the case in such manner as to avoid reference to the first 10 May will. It is seen that counsel focussed attention on financial matters which were of course relevant.
Furthermore, it seems readily apparent why this course was taken. That was to avoid the risk of a challenge to the probate as a result of minds being excited and suspicion aroused by knowledge of the events on 10 May 2002. Further, in keeping out the first will one avoided reference to the gift of all the Woodside shares to the plaintiff and the need to explain all of the events of that day, which it is right and fair to observe concerned and distressed Jones, and which would have included the role of the deceased’s children in instructing Jones. One can understand the desire to keep it all out.
But the difficulty was the clear and explicit terms of Thomson’s request, a reasonable request that was not honestly answered. That was followed by Stephen’s affidavit which at best was a half truth but which in fact was not responsive to the plaintiff’s affidavit and in its terms was, together with Jones’ letter, misleading. Then followed the conduct of the case without disclosing the first 10 May will or, to put it another way, without correcting the false statement to Thomson. It was little wonder that counsel for the defendant got to his feet after I queried with counsel for the plaintiff why the deceased had “made this will, changing what he had provided in the 1995 will”. As, in fact, the deceased changed his 1995 will earlier in the day it must, by that stage, have been obvious that the misleading had gone too far, to the evident extent of misleading the Court.
I have given anxious consideration to these matters over an extended time. Having considered all of the evidence I am of the view that what is disclosed is conduct that was engaged in for the mere purpose of advantage in litigation and was reprehensible and disgraceful. I do not accept the evidence of Anna as to a conversation with the plaintiff providing her with the basis for a belief that the unequivocally expressed request in Thomson’s letter meant not what it said but something else. Even if Anna might have entertained a thought that the plaintiff might be wishing to have a copy of the 1995 will, that thought could not have prevailed against the clear terms of Thomson’s letter. Further, it must be remembered, Anna had a coexecutor, Stephen, who on this matter has kept his peace. He has not disclosed his understanding of Thomson’s request. At least as executors they should have responded to Thomson’s request with an appropriate sense of the responsibility of that office as distinct from conducting the case for their perceived personal advantage. All of this goes directly and adversely to the character and credit of the defendants and Jennifer (who was at the conference and has also kept her peace) and I take it into account accordingly.
Background
The family history and the relationships between the plaintiff on one hand, and the deceased and the plaintiff’s siblings on the other hand, is detailed and it is clear that there is significant continuing discord. Numerous allegations have been made and denied by both sides and differing versions of events have been put before the Court. In all probability the truth lies somewhere in between with a measure of blame on each side. In the following abbreviated account I have drawn upon the evidence of the plaintiff, the defendants and Jennifer. Several differences exist in the accounts given by the defendants and Jennifer compared with the plaintiff’s account and I shall attempt to indicate those areas accordingly. I note that Marina did not give evidence.
The deceased and his family operated a poultry farm consisting of some 78 acres at 1610 Main Road, Research. This farm was previously owned by the deceased’s father, Anton Brinkkotter who had inherited the poultry farm from his father. Anton’s two sons inherited the poultry farm and his three daughters inherited the remaining assets.
In 1964 the farm and land were transferred to the deceased and his brother Leo with them paying ₤1,000 for stock. The deceased’s portion of the farm included both homes and the farm buildings. From 1965 until 1967 the deceased and his brother Leo operated the poultry farm in partnership when, due to a dispute, Leo left the partnership paying $8,000 to clear his share of the debts. As a result of this dispute, Leo received about 20 acres and the deceased received about 40 acres. The plaintiff says, and Anna denies, that the deceased’s mother Bridgene Josephine Brinkkotter, who is referred to as “Nan” by the deceased’s children, received about 18 acres. Thereafter, the deceased and his wife continued to operate the poultry farm.
In 1973 the balance of the property at 1610 Main Road, Research consisting of approximately 40 acres was sold leaving one acre which became the property at 32 Lindon Strike Court, Research which is also contained in the deceased’s estate. The poultry farm was relocated to its present location at Crest Road, Research. New farm buildings and improvements were constructed, partly funded by borrowings by the deceased and his wife.
A further 20 acre block at 185 Donaldson Road, Research adjoins the existing poultry farm at 7 Crest Road. This property was purchased by the plaintiff and Stephen in 1979/1980 or perhaps later up to 1986; the contract of sale was not produced. They were registered on title in 1986.
The Donaldson Road property was purchased as a buffer from residents so that the poultry farm would not be classified as a noxious industry. Stephen claimed that in the early 1980s the plaintiff had plans drawn up for a house to be built on the Donaldson Road property. The plaintiff and his family were to have lived in it. The plans cost $10,000 but the plaintiff refused to cover the costs with the deceased ultimately paying. The plaintiff denied this and stated that his wife Julie paid the expenses from her joint personal account. Stephen later conceded that the plaintiff and/or Julie paid some of the account but insisted that the farm account paid $3,585.
In April 1997 the plaintiff expressed interest in buying Stephen’s interest in the land. On 18 June 2004 Stephen commenced a partition proceeding for the sale of the land. On 3 August 2004 consent orders were made for a sale and for the plaintiff to pay Stephen’s costs fixed at $6,000, which were paid in September. The property was listed for sale and there were negotiations with an interested buyer whose figure was below the agreed price range. On 17 December 2004 Stephen filed a summons in the proceeding for an order that the plaintiff sign a contract of sale at the price offered. On 21 December 2004 the plaintiff, who had previously made offers to purchase Stephen’s interest, offered $322,500 which was $10,000 more than the offer received. Stephen rejected the offer. On 22 December 2004 the plaintiff filed a summons for an order that Stephen sell his half interest to him for $322,500, which application Stephen opposed. On that day Gillard J made orders providing for the plaintiff to purchase Stephen’s interest. He also ordered the plaintiff to pay Stephen’s costs which were later agreed at $8,150. The plaintiff duly completed the purchase with mortgage finance from Perpetual Trustees Australia Ltd, paying stamp duty of $15,100 and disbursements of $1,728. The mortgage was registered on title on 28 February 2005[37]. The property is 9.7 hectares and cannot currently be subdivided as the minimum size of subdivision is 8 hectares.
[37]See Exhibit KGC1 to Exhibit 20.
There are two houses built on the one acre property at 32 Lindon Strike Court, Research. One of the houses is the original family brick and weatherboard homestead built in approximately 1905. The other house is a 50 square brick home built in about 1935.
From about 1967, at the age of about 10, the plaintiff started work on the poultry farm after school for about four hours a night and full time on the weekends in return for pocket money. When Stephen was old enough he commenced working similar hours on the poultry farm. The daughters also contributed to the poultry farm by collecting the eggs on the weekends in addition to housekeeping duties. All the children were expected to assist on the poultry farm and full time work in the school holidays was paid and taxed at casual rates.
As the years passed the plaintiff took a greater role in the day to day running of the poultry farm, although the deceased continued to have the final decision on matters of importance. The plaintiff’s primary responsibility was sales work. According to Stephen, this required the plaintiff to be away from the poultry farm for about three days each week delivering eggs and chickens. The plaintiff also oversaw the packing of the eggs and the loading of the vans. Most transactions were cash transactions and at the end of the week, the plaintiff would present Jennifer with the cash takings from the week’s run. Stephen took responsibility for the hatchery.
As the plaintiff grew up he had a normal father/son relationship with his father, but he was closer to his mother. She died of a heart attack in 1976 when he was 18. Her death was felt deeply in the family and impacted on the business. She had been a busy woman and did the bookwork and made deliveries, which duties the plaintiff largely took over, working very long hours. Anna took over the running of the household as well as working on the poultry farm full time. The death resulted in all of the children adjusting their future plans. The plaintiff postponed plans to do a course in agricultural science and farm management at Glen Ormiston College near Geelong; Anna rejected the offer of an Arts course at Deakin University; Stephen put aside plans to apply for a cadetship at Duntroon Military College; Jennifer left school earlier than planned; and Marina experienced difficulties during the last few years of school. In short, the entire family was affected.
From the age of 17 to 37 the plaintiff worked full time at the poultry farm up to 17 to 18 hours per day, and often seven days a week. Until 1980 he was paid $250 per week, from 1980 to 1986 $300 per week, and from then or 1987 $350 per week until 1996 when the plaintiff was excluded from the partnership. Stephen was paid the same amount or $20 a week less according to evidence. According to the plaintiff, he and Stephen accepted this level of remuneration because of their expectation, based on statements by the deceased, that they would one day own the farm equally. As mentioned earlier, Stephen said that he did not have any recollection of this and that the deceased did not talk in such terms. In any event, it seems clear that all family members worked hard on the poultry farm since the nature of the business called for a seven day a week management. Furthermore, I accept the plaintiff’s evidence as to the expectation that he and Stephen would own the farm, and that that was the expectation both of the deceased and his children. I do not accept Stephen’s evidence. I also accept the plaintiff’s evidence as to the deceased producing his will.
In 1980 the plaintiff married his wife, Julie Ann Brinkkotter, and they subsequently had two children, Nicholas, born on 18 January 1982, and Tristan, born on 10 February 1984. Nicholas and Tristan attended Eltham College, a fee paying school from prep grade. At year 9 Nicholas went to Templestowe Technical College where he did machine metalwork and obtained employment at the end of that year. He is currently an under sea, deep sea welding diver. Tristan went through to VCE. From school she commenced work with Trucom doing general office duties and learning the business. They are in good health.
From 1980 until 1989 the plaintiff and his family lived in the older of the two houses at 32 Lindon Strike Court. They were not required to pay rent but were expected to maintain the property and to look after the other homestead.
From 1980 onwards Julie commenced working on the farm, usually for a few hours on the weekend. It is unclear whether or not she received any remuneration for this. Her workload increased as the children grew older. In 1992 and 1993 she was paid $50 per day for her weekend work. Her work included manual labour, packing eggs and packing up orders.
On 1 July 1986 the deceased, the plaintiff and Stephen entered into a partnership deed whereupon the poultry farm was to be operated by them in partnership (“the partnership”). Prior to this the deceased had operated the poultry farm as a sole trader. The establishment of the partnership enabled the deceased to take advantage of carried forward tax losses which had been incurred by him as a sole trader. The arrangement adopted was this. The deceased continued to own the 7 Crest Road freehold and the equipment while the partnership owned the stock. The deceased charged rent to the partnership and offset his rental income against his tax losses. The rent was invariably higher than the income of the partnership in any year by between $20,000 to $100,000 and the shortfall was met by each of the partners assuming an equal share of such liability in their loan accounts. When the plaintiff left the partnership in 1996 his loan account showed a debt of approximately $170,000. According to Stephen’s evidence, supported by the accounts, the only capital contributions made by him and the plaintiff were their vehicles with the overall capital contributions equating to 70% for the deceased, 29% for Stephen and 1% for the plaintiff.
In 1987 the partnership purchased a vacant block of land at 33 Lindon Strike Court, Research for $75,000, adjoining the property at 32 Lindon Strike Court, and built a house on the property for approximately $150,000. This was done it seems for a number of purposes. First, it was in part to provide accommodation for the plaintiff and his family who moved in during 1989. In return, they were expected to carry out maintenance and improvements to the property, landscaping of the garden and painting. No rent was charged by the partnership. Secondly, the property was also purchased so that the family could continue to be close to and look after Bridgene Brinkkotter (who died in 1995) and, according to the plaintiff, he and his wife maintained close contact with her, seeing her each day and performing jobs for her around the house. This was disputed by Jennifer who claimed that in 1993 the plaintiff had a falling out with Bridgene and had minimal contact with her until January 1995 when she was hospitalised with her last illness, a month prior to her death. During the final 12 months she had lived in a nursing home in Diamond Creek, about 10 km from her home. All family members except for the plaintiff visited her there, although the plaintiff claimed that he too visited her at this time. Thirdly, and primarily according to Stephen, the purpose of the purchase was as an investment with the further benefit of protecting the value of 32 Lindon Strike Court.
In 1991 a swimming pool was constructed at 33 Lindon Strike Court. The further borrowings were serviced by the partnership. There is some dispute as to how this was financed. According to Anna, the partnership borrowed money and serviced the loan. The plaintiff denied this was the case, stating that the money came from partnership profits and no borrowings were required.
Similarly to the plaintiff, Stephen and the three daughters also lived at the farm rent-free up until their respective marriages. In late 1994 Stephen moved out of home with his fiancée Nicole Beasly, whom he later married. They moved into rental accommodation and then bought a home at 6 Bayfield Street, Eltham in 1995 with the assistance of a $130,000 loan secured by a mortgage. Jennifer did not leave home until she was about 30. Anna left home in 1981 and Marina left home in 1983. While the daughters lived at home, they worked on the farm and contributed equally to living expenses. The plaintiff said, and I accept, that rates, utilities, mortgage repayments and other outgoings were met by the business and that at all times the deceased had employed a housekeeper to do household chores with the expenses paid from the income of the farm.
In January 1989 Jennifer left her employment as an accountant at the State Bank of Victoria and was employed by the deceased, the plaintiff and Stephen to complete the bookwork of the farm on a part time basis which later extended to full time work. Prior to this there had been no bookkeeping done at the farm and the plaintiff had been responsible for preparing the business records for Coopers and Lybrand, the partnership accountants, who prepared the tax returns at the end of each financial year.
According to Jennifer, a computer was purchased in 1990 and she commenced keeping a general ledger whereby expenses and income were recorded from cheques issued and receipts from bank deposits. Invoices were not tied to the general ledger and were prepared on a separate system. Most of the customers to whom the plaintiff delivered eggs paid by cash. Only the 10% of customers who paid by cheque had their invoices entered on the invoice system. According to Jennifer, the plaintiff would count the money he received himself and place it in the drawers for banking or give Jennifer the money to count. The plaintiff did not like the idea of a general ledger or accept her offers to show him how it worked.
In turn, the plaintiff denied that he was against having a computerised accounting system, rather he was averse to Jennifer controlling the system and not allowing the partners access to the financial information and records on the computer. He claimed that Jennifer had secured the computer with a password to prevent entry to anyone other than herself. He also denied strongly any inference that he had “embezzled” any money and claimed that half of the customers paid by cash and half by cheque and that he fully accounted for all moneys he received. It became clear during the trial that no such inference had been intended by the defendants.
Jennifer’s involvement in the business appears to have been a significant cause, at least from the plaintiff’s point of view, of the disagreements which ensued between the plaintiff, the other partners and Jennifer. The plaintiff asserted that Jennifer during the 1990s sought to avoid the manual labour she had previously undertaken, focusing instead on her office duties. The plaintiff also asserted that she wanted to play a role in the management of the company. This was denied by Stephen and Jennifer.
Marina was also employed on the poultry farm packing eggs. It is unclear whether this was initially with or without the knowledge of the plaintiff. No issues arose concerning Marina.
In 1993 Jennifer became pregnant with her first child. She informed Stephen and the deceased of this news and left a message for the plaintiff and his wife who were elsewhere on the poultry farm at the time to come and see her. They did not and she claimed that the plaintiff to this day has not acknowledged her children. It was evident in her evidence that she had suffered a deep hurt over this, and still felt it. In turn the plaintiff denied that he was told about Jennifer’s pregnancy and stated that he was not invited to the christening of the child, or to the housewarming when Jennifer and her husband moved into their home in Yarra Glen, or to her 30th birthday.
Later in 1993 as Jennifer’s pregnancy progressed she reduced her time at the poultry farm to four days a week, and then to three. She remained a full time employee by taking it out of her annual leave. On 7 January 1994 she left the farm for annual leave, followed by maternity leave. Later that month, on 25 January 1994, she returned to the poultry farm to finish some bookwork for the accountant. While at the farm she came across the plaintiff in an agitated state and an argument ensued as to her presence on the poultry farm.
It is evident that tensions increased within the family as the years moved on. I refer below to what I find as to the personalities of the deceased, the plaintiff, Stephen, and Jennifer, but for the moment continue with a summary of events. The plaintiff said that the principal difficulty was caused by Jennifer wishing to undermine his influence in the partnership. Stephen and Jennifer denied that. Undeniably the plaintiff resented Jennifer and she sought to stand up for herself. Stephen said that the main difficulty in the partnership was that the plaintiff believed he was always right and that the deceased and Stephen were holding the farm back. Ultimately, the plaintiff said in evidence, in 1993/1994 things got out of hand in the partnership.
By early August 1993 the plaintiff wanted to buy out the deceased and Stephen and said that if he went the farm would be gone in six years[38]. Also in August 1993 the plaintiff handed the deceased a handwritten note giving four months’ notice of resignation from the partnership, dated 23 July 1993, and did not attend work for two weeks. The plaintiff said that this notice was given with a couple of cans of beer and a lot of heated argument over livestock health, which was a reference to a loss of 6,000 birds. He said that they talked the issue out over the next couple of days and that everything was settled.
[38]See Exhibit SKB11 to Exhibit 8.
However, it was apparent, as the plaintiff said, that everything was not settled as, according to him, matters came to a head about a month later. He said that he was striving to make the partnership work and the business go forward. It is to be understood that the business was not a financial success and the partners’ loan accounts were progressively increasing in the circumstances of its operation. The plaintiff said in evidence that he was concerned with streamlining the management of the business.
According to Stephen, the plaintiff left for a period of two weeks in October 1993 without notice and with no indication when he would return. The plaintiff had also retained the delivery van which meant that the remaining partners were unable to keep the larger egg run going and passed the customer list over to a distributor, only retaining responsibility for smaller local deliveries. When the plaintiff returned and learned of changes in the egg run he was angry that they had ruined the business.
At some time, it seems in November 1993, the plaintiff engaged solicitors, William Abbott and Associates, to act for him. On 29 November 1993 they wrote to the deceased and Stephen advising that the plaintiff’s notice of resignation was not effective under the partnership deed and was withdrawn. It was suggested that a meeting be held to resolve the difficulties.
The partners then endeavoured to resolve their differences by mediation, and a mediator was engaged it would seem in December 1993 or early 1994. For the purpose of the mediation the mediator asked the partners to record their views on certain matters. The deceased recorded that his objectives for the future had not changed since 1964, it was to keep the family business for the benefit of the family and himself. As to current problems or threats which may get in the way of achieving that objective he recorded that Michael had “brought this situation about hence my agreement for discussions”.
According to the plaintiff, mediation took place over about six months. He said that there were a number of issues to be resolved including Jennifer’s role in the business, her doing personal work for the deceased and being paid by the partnership, whether Julie worked on the farm, decreases in productivity and increases in expenses. Stephen said in evidence that he and the deceased had no problems with Jennifer’s work and considered her an excellent employee.
Stephen said that after October 1993 the plaintiff would turn up to work when it suited him.
The plaintiff said that in or about 1994 tensions had developed between himself and his wife. Julie had developed Carpel Tunnel syndrome as a result of her work on the farm. Her claim was accepted by WorkCover and she subsequently underwent an operation, despite denials from the deceased and Stephen that she worked at the farm. This resulted in a period of separation between the plaintiff and Julie and discord between the plaintiff and the deceased and his family.
As a result of the mediation, in or about September 1994, it was agreed between the partners that Jennifer would leave the employment of the partnership. Stephen was to tell her the following day. Immediately before the cessation of her employment the deceased told the plaintiff that Jennifer had made an allegation against him of sexual harassment which, the plaintiff said, was unfounded.
Jennifer denied making a complaint of sexual harassment. She said that she telephoned the Equal Opportunity Commission as a result of the plaintiff’s attitude towards her at work. She was apparently informed by the Commission that the matter was a family affair, that the Commission had no jurisdiction and suggested that she should leave. She did not inform the plaintiff of this phone call, mentioning it only to the deceased. It is important to note that in cross-examination the plaintiff said that two days after the deceased told him of Jennifer’s allegation, Jennifer came to him and said that the deceased had got mixed up, that the allegation was harassment, not sexual harassment. It is surprising, and reflective upon the plaintiff, that he did not acknowledge this in his affidavit.
On hearing of the complaint the plaintiff sought legal advice and was advised not to attend the farm. He said that he did not go there for about 10 days. Then, on 17 October 1994 he received a notice from the other partners stating that he had missed work on specified dates in August to 11 October and was dismissed from the partnership on the date of receipt of the notice. The plaintiff was also informed that his family should leave their house and he received a bill from the partnership for $178,000 being the balance of his loan account. On legal advice the plaintiff, on 3 November 1994, had published in the Government Gazette notice of dissolution of the partnership. The notice was dated 25 October 2004.
However, partnership issues remained unresolved. Michael retained the van and refused to permit it to be used until the matter was resolved. He also continued living in the house at 33 Lindon Strike Court and was not contributing to the mortgage payments. The plaintiff said that he paid the utility expenses thereof, although that was denied. He also demanded and was paid wages even though he was not working on the farm. The dispute then proceeded to arbitration at the instigation of Stephen and the deceased in July 1995.
On 14 August 1995 the deceased made a Will by which he appointed Anna and Stephen executors and trustees and left the real estate and business comprising the poultry farm to Stephen on the same terms as in his last will. The residue of his estate, after the payment of costs and expenses, was to be held on trust equally for his five children.
The arbitration was resolved on 26 February 1996 by a consent award. Pursuant to the terms of the award, it was declared that the plaintiff had retired from the partnership on 13 October 1994. The plaintiff was not paid any amount for his interest in the partnership, however his loan account was forgiven and assumed by Stephen and the deceased who indemnified him against all liabilities. It was also agreed that the plaintiff and his family leave the house at 33 Lindon Strike Court and that the plaintiff’s interest in the property at Donaldson Road, Research be available as security for a loan to the partnership business for three years.
The plaintiff did not move out of the property at 33 Lindon Strike Court until it was sold by the deceased, Michael and Stephen, at the demand of the mortgagee for $251,250, by a contract of sale dated 27 April 1996 which was settled on 27 June 1996. The amount received at settlement was $242,498.65 which after clearance of the home loan on the property and an overdraft and payment of costs left surplus funds of $5,628.94 which were retained by the bank. These figures do not account for the full purchase price to the extent of $8,751.35 which amount may have been part of the deposit, and duly received, but it is not clear.
When the partnership terminated in October 1994 the plaintiff was aged 37 and his children were aged 14 and 12. When the plaintiff and his family left 33 Lindon Strike Court in 1996 they left with nothing but their personal possessions and never thereafter received any income or other money from the farm. The plaintiff’s only asset was his half interest in the Donaldson Street property (which was given as security for the deceased and Stephen) and his interest as a beneficiary in the Trust. Hence he and his wife had to establish themselves from scratch.
In 1999 the partnership loan was rolled over for a further three years and it was not until 2002 that the Donaldson Road property was released as security. Of course the indemnity of the deceased and Stephen covered the borrowings that the property secured.
After leaving the farm, the plaintiff and his family lived with an aunt for about nine months until he was able to obtain independent accommodation for his family. The plaintiff worked for three years as a night filler with Safeway Supermarkets. During the day he tried “to find other work, labouring work”. Then he started working part time on a commission basis for Trucom Pty Ltd, a small business selling telephones, headsets and communications equipment in about 1996 or 1997. In August 1999 and with the plaintiff being owed commission, the directors of Trucom (who were not actively involved in the business) sold their shares to the plaintiff who took over the business. He paid nothing, the acquisition cost for the transfer of shares being the unpaid commission. The plaintiff is thus the managing director and owner of all the issued shares in Trucom. When he gave evidence in 2004, Trucom had three full time employees (including his daughter) and two part time employees, and some contractors who sold on commission.
The financial statements and income tax returns of Trucom for the years 1998 to 2003 were produced by its accountants under cover of a letter dated 13 October 2004[39] in which it is stated that the plaintiff did not receive any payment from Trucom for those years other than a fully franked dividend of $10,000 in each of the 2002 and 2003 years. The financial statements disclosed the following after tax profits:
[39]Exhibit 5.
| 1998/1999 | $4,125 |
| 1999/2000 | $81,609 |
| 2000/2001 | $95,848 |
| 2001/2002 | ($2,665) |
| 2002/2003 | $130,840 |
The loss in 2001/2002 was caused by the fall in the Australian dollar in the situation that Trucom purchased goods in US dollars. As a result of that experience the company redirected its business from importing all of its stock. Since the start of 2002 it has engaged in refurbishing and reselling old telephone equipment, which had grown to 50 per cent of the business in October 2004. By the 2002/2003 year retained profits accumulated were $284,067 and the balance sheet recorded net assets at $284,167 including cash at bank of $138,000 and stock on hand of $135,000, but trade debtors were $343,629. These trade debtors are a significant component of total assets but there is no allowance for bad or doubtful debts. The plaintiff could not give a percentage estimate of bad or doubtful debts saying that it was “a very iffy subject”, they varied from year to year, one year they had two per cent, the other day one went over for $5,000. He could not give an average over the last two, three or four years. He did say however that of the above debtors of $343,629, “$120,000 of that [was] sitting out at 120 days”. In addition to that being a significant percentage of trade debtors, he agreed that in many businesses that would be regarded as a bad debt. The plaintiff agreed that, if the particular debtor did not pay, Trucom would be in very financially straitened circumstances, adding that “we have been running on a very fine line”. Then, and significantly, the plaintiff said that he cannot obtain bank finance as he has no asset to use as collateral. Thus he is limited in being able to expand the business. In short, he must finance the business, and any expansion, from internal funds and for this reason must retain earnings in the company. He added that his wife will not use her property as collateral for company borrowings.
In his affidavit sworn on 12 December 2005 the plaintiff produced Trucom’s financial statements for the 2004 year. Net profit had increased to $261,660 after allowing for an increase in salaries and wages and consultancy fees of $59,710. The plaintiff said that Trucom’s net assets had increased but they included trade debtors of $390,218 of which $157,000 exceeded current trading terms. It was likely that this amount would be written off when the financial statements for the 2005 year were prepared. Profit after tax was $182,343 and retained profits were $466,410. The balance sheet records net assets of $466,510.
The plaintiff said that in the 2004 and 2005 years he had not drawn a wage or dividend from the company, that earnings have been channelled back into development of the business.
It will be recalled that the plaintiff was not cross-examined on his 12 December affidavit. I accept the plaintiff’s evidence concerning Trucom.
Next it is convenient to refer to the Trust. As mentioned earlier, this is a discretionary trust. The Trust owns two properties in Eltham which are described in Moroney’s affidavit. The first, at 9 Dudley Street, Eltham is at the southern end of the Eltham Shopping Centre and comprises 10 lock up shops built in about 1980 and 28 sealed car spaces. The second, at 12-14 Brisbane Street, Eltham is a brick factory built in 1978 with a gross building area of 854M2 in the northern section of the Eltham industrial precinct. Moroney valued the properties at $2,650,000 and $825,000 as at 12 and 10 October 2004 respectively.
The plaintiff said, and there was no contrary evidence, that he initiated the Trust. He, Stephen, their grandmother Bridgene and solicitor Brian Redmond Smyth invested money in the Dudley Street property. Bridgene contributed more capital than Stephen and the plaintiff. Title searches show that the trustee Dudley Street Pty Ltd was registered as proprietor of that land on 30 April 1982 and of the land in Brisbane Street on 9 February 1984. The properties are let to tenants. I was informed by counsel for the defendants that after allowing amounts owing under mortgage the net value of the properties is in the order of $2.9M.
Finally, by the time the plaintiff went to see his father shortly before he died it was too late to repair the bridges. I should say that I saw nothing in the suggestion that the plaintiff should not have taken his wife with him. She was his wife. I accept the plaintiff’s evidence that it was a traumatic situation and that she was there to support him. It is not established that she had a note pad with her.
(f) Obligations or responsibilities of the deceased
The plaintiff submitted that the deceased had legal, moral and financial obligations to the plaintiff. This was acknowledged by the deceased in three wills, however, in each successive will he reduced the plaintiff’s entitlement.
According to the plaintiff’s evidence, in the first will made in about 1980 the deceased had provided that the plaintiff and Anna were to be the executors; the plaintiff and Stephen were to be given the poultry farm together with the business; and the residue of the estate was to be divided equally among the deceased’s three daughters. I repeat that the plaintiff was not cross-examined on his evidence in relation to this and the subsequent wills. The plaintiff’s expectation that he and Stephen would receive the poultry farm was corroborated by Jennifer.
The deceased’s second will dated 14 August 1995, made approximately one month after the deceased and Stephen had sought an arbitration of their partnership dispute with the plaintiff, provided that Stephen was to receive the poultry farm and business with the plaintiff entitled to an equal share in the residue of the estate with the other siblings.
The deceased’s third will (actually the fourth will), executed seven days prior to his death in hospital, effectively excluded the plaintiff from any share of the deceased’s estate, he being merely entitled thereby to an equal share of the Woodside shares.
The plaintiff submitted that the Court should have regard to each of the earlier wills and their pattern of distribution as they indicate that the deceased acknowledged his responsibility to make proper provision for the plaintiff.
Not surprisingly, counsel for the defendants relied on the deceased’s statements in cl 11 of his last will that his primary obligation was to the plaintiff’s siblings and their issue. It was submitted that by cl 11 the deceased recognised no obligation or responsibility to the plaintiff. I comment on that submission as follows. If regard is had to cl 6 alone, to the exclusion of all other provisions in the will, the plaintiff is seen to be treated equally with his siblings. It is only in the context of the will as a whole, together with the value of the Woodside shares, that it is seen that the plaintiff is dealt the most minimal or token gift. So understanding the disposition of the estate the gift to the plaintiff in cl 6 gave scant recognition to an obligation or responsibility to the plaintiff. The deceased, however, did not say that he felt or had no obligation to the plaintiff. He described a primary, not a sole, obligation to the plaintiff’s siblings and their issue, but only after first making provision for the plaintiff and then stating the reason for that provision being of limited kind. He did not eschew all sense of obligation or responsibility to the plaintiff although the benefit provided was near to manifesting such a state of mind. Furthermore he expressly disavowed any lack of love or affection on his part. What he did do was state two reasons for the disposition. I have already referred to the circumstances of or in which the “distance” arose between the plaintiff on the one hand and his father and the family on the other hand. The deceased’s second reason was incorrect. It was not the plaintiff but the deceased and Stephen who took legal action when they initiated the legal proceeding in the form of the arbitration, having first given the plaintiff notice of termination. It was suggested that the deceased’s reference to taking legal action could be a reference to the plaintiff being the first to involve lawyers in the dispute that occurred in 1993. That was when the plaintiff went to a solicitor after the deceased had asked if he was going to act on his resignation. Thus prompted, the plaintiff went and saw a solicitor who thereafter acted for him in the dispute. Perhaps this is an explanation, but in truth it was the deceased and Stephen who initiated the arbitration, I infer on legal advice in each respect, as their response to the breakdown in the working of the partnership. That was the reality of the situation. In my view the explanation for the statement is that the deceased was searching for reasons to explain and justify his change in treatment of the plaintiff. He may, of course, have been of the view that, regarded overall, the breakdown of the partnership was the plaintiff’s fault, although he did not say that, and that is significant, but what he did say was not correct.
The defendants submitted that the deceased owed a responsibility to his four other children for several reasons. They had retained a good relationship with him, they had assisted with the farm in some way or other, the deceased and Stephen had assumed the plaintiff’s partnership liabilities, and Stephen had continued on the farm. It was further said that the plaintiff had had the assistance of rent free housing for a longer time than had Stephen. Further, the plaintiff’s seven year occupation of the 33 Lindon Strike Court was at the expense of Stephen in that it was owned and paid for by the partnership. There is substance in all of these matters, they reflect what happened. It is, however, to be remembered that the arrangements were those considered appropriate by all, that the rent free housing may be seen as an offset for low wages and that the 33 Lindon Strike Court property was purchased by the partnership and not merely to provide accommodation for the plaintiff, and that the deceased and Stephen (and not the plaintiff) had the benefit of the proceeds of sale. It is also to be borne in mind that the deceased and Stephen had the benefit of using the plaintiff’s interest in the Donaldson Road property as security for six years. Furthermore, the benefit of the plaintiff’s labour and contribution to the deceased and the business over two decades is not to be overlooked, and could fairly and justly be seen as founding an obligation to him.
(g) Size and nature of the estate
I have already dealt with this matter. It was said by counsel for the defendants that the farm business has no real value, the asset of value being the 7 Crest Road land.
(h) Financial resources and needs
I have already referred to the financial position of the plaintiff and his siblings at the date of death of the deceased and in December 2005. The plaintiff does not seek to disturb the dispositions to his sisters under the will. On that basis the gift to Stephen would bear any provision ordered.
Briefly, as to the plaintiff and Stephen, the plaintiff is aged 47, and since leaving 33 Lindon Strike Court in 1996 has acquired a business which depends for its success on his initiative, energy and good health. The business seems evidently not to have succeeded in the hands of its previous owners who gave it up to the plaintiff on a consideration of the plaintiff’s unpaid commission. In the plaintiff’s hands it is developing, but it is a small business, has no goodwill, is partially subject to currency fluctuations, and trade debtors are significant. It is vulnerable in that as a result of the plaintiff not having an external asset to use as collateral he cannot obtain bank finance and must therefore rely on the generation and retention of funds from its business activity. I accept the plaintiff’s evidence that the business runs on a fine line. That he and his wife have managed to be where they are, and to have educated their children, reflects endeavour and application doubtless driven by their parlous situation in 1996. Significantly the plaintiff still does not own a house which is both a limiting factor in terms of being able to raise money for his business and something he would like to own for occupation as a family home, in lieu of their present rented accommodation. He does have the benefit of a 25 percent interest in the Trust and there is some suggestion in the evidence that that may be vested in 10 years or so. The value of his interest may be gauged by the value placed on Stephen’s interest in 2004, and it may be assumed that that value will increase over time as the Trust’s land increases in value and the mortgages thereon are reduced. At the moment it would seem that one could think of a present value of about $300,000. To say that, however, is not to assume an early vesting of the Trust. Nor is it to suggest that that amount is available or could be made available or that the plaintiff has any intention of seeking a capital distribution. His greater wisdom would seem to lie in the Trust continuing as at present with the prospect of a greater capital distribution in the future and income distributions in the meantime. But when and if that will happen is speculative.
In the above summary I have not referred to but do not overlook the financial circumstances of the plaintiff’s wife or their combined position. I note that her car is financed by Trucom.
Stephen is aged 45, not married, lives on the poultry farm and conducts the farm business from which in evidence in October 2004 he said he had drawn $2,285 per annum. Self evidently, he must have had more money than that to live on. As mentioned earlier, it is to be inferred that he draws funds from the business. He also has the entitlement in the Trust which is now reduced to two percent. His financial liabilities emanate from the financial burdens left by the deceased of the mortgage on 7 Crest Road and a business with internal debt and a history of relatively poor profit. Clearly Stephen needs time and good fortune, which hopefully will come with application and endeavour, to improve the business. The evidence satisfies me that he will, and has commenced to, achieve this. There is an incentive on him to do so. As the years go by the value of 7 Crest Road may be expected to increase. At the same time, as returns from the farm improve, Stephen will have an increasing capacity to reduce his debt. Finally, Stephen is single with no dependents.
(i) Disabilities
This is not relevant.
(k) Contributions of plaintiff to building up the estate or to welfare of the deceased or his family
Self evidently the efforts of the plaintiff in working on the farm for 20 years for long hours and with no remuneration to 1994 contributed significantly to building up the estate and to the welfare of the deceased and the family. Of course, as already mentioned, the other siblings worked on the farm in one way or another and to greater or lesser extents, with the plaintiff and Stephen doing the farm work with their father. The plaintiff, and Stephen, worked seven day weeks with every second weekend off, working eight to ten hours a day and sometimes longer as the plaintiff deposed. And, after leaving the partnership, the plaintiff further contributed by the provision of his interest in the Donaldson Road property as security for the partnership mortgage for six years to 2002.
For the defendants it was said that there was no evidence that the value of the 7 Crest Road land was enhanced by the operation of the business. Let it be accepted that that was so, yet the submission overlooks that the business conducted thereon was the source of the funds applied to pay the mortgage thereon and various other costs and expenses. Without that funding the land may not have been able to be held, and retained, while its value has doubtless increased over the years. The same is true of 32 and 33 Lindon Strike Court.
(l) Benefits previously given by the deceased
The plaintiff and his siblings received an education.
The plaintiff was provided with rent free accommodation for himself and his family. At first, from 1980, this was provided by the deceased at the old family home at 32 Lindon Strike Court, which the plaintiff renovated. Then, subsequent to establishment of the partnership in 1986, the plaintiff and his wife occupied rent free the new home built at 33 Lindon Strike Court. This was not provided by the deceased alone, but by the partnership. They lived there until April 1996 which included 18 months when the plaintiff was not working in the partnership. I referred earlier to the sale of the property in 1996 which enabled clearance of the mortgage, an overdraft and payment of a small balance to the deceased and Stephen.
Finally, it is pointed out by the defendants that pursuant to the arbitration award they forgave the plaintiff his loan account of $115,511[54].
[54]Exhibit SKB4 to Exhibit 7.
(m) and (n) Plaintiff being maintained by deceased or others
These are not applicable.
(o) Character and conduct of plaintiff or any other person
I have dealt with this matter in the course of the judgment. Perhaps because of the deceased’s statement in his will as to the plaintiff having chosen to distance himself counsel’s submissions referred to the situation after the plaintiff left the partnership.
Counsel for the plaintiff submitted that the plaintiff’s conduct did not amount to disentitling behaviour and that the period of separation from the deceased was not long, nothing like the period of 46 years in Pontifical Society for the Propagation of the Faith v Scales[55]. Here the plaintiff was of good character, had worked hard and long on the farm, had been involved with his family in the local Fire Brigade where he had met his father after functions, and the six year period of alienation was not very long. It was also submitted that the plaintiff had sought a reconciliation with his father when he saw him shortly before he died, however it was clear from the plaintiff’s evidence that the submission overstated the purpose of the visit. The plaintiff recognised that so much had happened that reconciliation could not then and there have occurred. In all, the circumstances were quite unlike those in Scales case.
[55](1962) 107 CLR 920.
As against that, the defendants submitted that the plaintiff’s conduct after leaving the partnership caused the deceased great distress. And, rather than the plaintiff being excluded, it was that he ignored his father and siblings. Despite living in the area he did not keep up contact with his father and cut his children off from his father. That was in the face of evidence of his father having attempted to keep in touch with the children by presents and cards. Stephen also gave evidence that post 1996 their father attempted to reconcile with the plaintiff although Stephen did not know exactly when.
Then it was noted that following his visit to his father the plaintiff did not visit him again in the two weeks before he died. Of course, if one accepts that the plaintiff’s experience of his visit was as he described it, it may be understandable that he did not visit his father again, for a variety of reasons including the unnecessary stress it may have caused. I accept that the particular visit was an unhappy and unsuccessful one which distressed the deceased and the plaintiff.
Finally, the evidence of Nicholas showed the deceased responding in the circumstances as a loving and caring grandparent who doubtless would have liked continued contact with the plaintiff’s children. The denial of that conduct is to be attributed to the plaintiff, in my view. As such it was an unfortunate reaction to the circumstances, carrying with it an element of punishment of the deceased who would be expected to have liked to see his grandchildren. It also served to deprive the grandchildren of the benefit of that ongoing relationship.
(p) Any other matter
Neither counsel suggested any matter under this heading.
Decision
The first issue is whether the deceased had a responsibility to make provision for the proper maintenance and support of the plaintiff.
Counsel for the plaintiff submitted that in the circumstances, according to accepted community standards, the deceased had such a responsibility and that the gift of one-fifth of the Woodside shares was insufficient to discharge that responsibility. In so providing for the plaintiff the deceased failed to act as a wise and just testator would have in all the circumstances. In so submitting counsel acknowledged, correctly, that the question was not one of fairness of disposition between the children, there being no principle of equality of treatment between children as was recognised in Blair. Nor, as counsel correctly acknowledged, was the Court free to remake the testator’s will according to considerations of justice in a general sense as distinct from confining attention to that provision which is proper for the maintenance and support of the claimant[56], assuming, of course, that the testator had a responsibility to make provision for the claimant.
[56]Worladge v Doddridge (1957) 97 CLR 1 at 20 per Kitto J.
On the other hand it was submitted for the defendants that the deceased had no moral obligation to maintain the plaintiff at the date of his death given the benefits he had received, the way he had behaved toward the deceased and his capacity to maintain himself.
In dealing with these submissions I do not propose to repeat the discussion and findings earlier in this judgment. I have dealt at length with the character and personality of those involved, the conduct of the farm and the unfortunate breakdown in the partnership and in the family relationship between the plaintiff and the deceased. Among other things, in the course of doing so I observed on something that struck me with the benefit of seeing the plaintiff and Stephen at the trial, namely that the plaintiff impressed as having a mind and personality more attuned to business matters. And I was well satisfied on the balance of probabilities that the deceased was to be equated to Stephen in this respect. I did not earlier refer to, but I do now, a submission of counsel for the defendants in his closing address that the rift in the relationship between the plaintiff and his father was attributable to the plaintiff. In the course of that submission counsel said that the evidence showed that the plaintiff was “a fairly shrewd competent business person and it may well be that the intergenerational conflict to which Mr Miller [counsel for the plaintiff] is referring is an eldest son basically trying to do things the way he thinks they should be done for the good of the farm and the good of the partnership etc, and not brooking any opposition essentially”. A little later he submitted that the plaintiff’s notice of resignation in 1993 showed that he considered he was in control of his comings and goings so far as the business was concerned. It was consistent with a man “who is probably competent in business, perceiving others around him to be less so and not wishing his interests to be prejudiced”.
In my view these assessments of the plaintiff as a business person were correct, and accord with my impression and the findings I made earlier. And, as I observed earlier, the possession by the plaintiff of an aptitude for business not possessed in the same measure by the deceased, and Stephen, is not surprising. It happens in family. There can be differences in aptitude between parent and child and as between siblings. Where this happens and where father and sons are engaged in a family business, differences in view as to the conduct of the business can arise and produce arguments and breakdown of the relationship. That, I find, is what happened in this case, and the resulting problems were not able to be managed. That does not mean that there was not an underlying loving relationship, but in this case, I find, the hurt in the breakdown went so deep the relationship was not able to be recovered before the deceased died.
It was thus in my view too simplistic by far for counsel for the defendants to assert that the plaintiff, in the sense of the plaintiff alone, was responsible for the rift with his father. It was also simplistic to say that the deceased did not choose the alienation. Doubtless, if the clock was to be wound back, no one did. It happened, unfortunately, as a result of events over a period of time but basically, in my view, stemming from differences in the conduct of the business which produced frustration in the plaintiff as to that matter and as to his position which in the end resulted in intolerant behaviour to the deceased, Stephen and Jennifer. In the end, with the deceased and his sons being unable to work out how to continue, termination of the partnership may be seen as an inevitable result.
As I have mentioned, the terms on which the partnership was ended were harsh to the plaintiff. I do not repeat my earlier analysis. I referred above to the defendants’ submission that a factor favouring the conclusion that the deceased did not have a moral obligation to the deceased was the benefits he had received. Related to this was a submission that the plaintiff had received greater benefits than Stephen. This seems to be related to the provision of rent free accommodation. In short, the benefit the plaintiff received from occupying premises rent free, as Stephen did also, must be seen in context of the plaintiff’s contribution over 20 years at low wages, that the terms were agreed by the deceased and then the partners, that at the end of it all when he left Lindon Strike Court in 1996 he did so in the parlous financial circumstances described, and that the deceased continued to occupy the farm, as Stephen resumed doing and now has the benefit of the farm under the will.
There is however the contention as to need, that is that the plaintiff had not established a financial need for provision. Whatever his circumstances had been, it was submitted that by the time of death he had established himself in work, was well able to maintain himself and was likely to be able to continue to do so.
I have earlier referred to the financial circumstances of the plaintiff and his wife. They have worked very hard to be at their present position. They have both worked for income with which to live and educate their children and, as well, the plaintiff (on the consideration of his unpaid commission) has acquired Trucom which he is building up. But his ability to do so is much restricted by his lack of collateral which goes back, I find, to the time he devoted to the farm and which he did not leave until 1996. It was only six years to the date of the deceased’s death, eight years if you measure from the termination of the partnership. At his age at those times he had to start from nothing save for income from the Trust, an amount that would readily have gone in family expenses. While he worked on the farm, for the deceased and the partnership, it was understandable that he was prepared to work for low wages as his expectation was that he and Stephen would ultimately own the farm land, but then he had to leave, and as a result of the deceased changing his will, that expectation was not to be fulfilled. He was then in the position of having to save to have capital with which he could purchase land and establish himself. That takes time, even years, particularly when he is seeking to establish a business which requires the retention of profit. Circumstances of this nature were foreseeable by the deceased who was well experienced with borrowing money on mortgage for the purchase of land and, thereby, was aware of the money and effort it takes to do so. In addition to the lack of collateral is the level of trade debtors in Trucom which is a constant business risk particularly with no support of bank finance.
I do not overlook the assets of the plaintiff’s wife, although she has significant borrowings. I have regard to their combined asset and income position.
In my view, having regard to all the relevant circumstances, the deceased had a responsibility to make provision for the proper maintenance and support of the plaintiff. In changing his will to confine the plaintiff to the mere benefaction provided in cl 6 he failed to bear in mind the overall circumstances of the plaintiff. He overlooked the decades of profound, heavy commitment of the plaintiff given to the deceased and then the partnership in the most active and vigorous years of his adult life. He overlooked the financial circumstances of the plaintiff when he left the partnership and ultimately residence at 33 Lindon Strike Court with a wife and two children and how at that age he would have to start all over without a capital base other than his interest in the Donaldson Road land which remained tied up for the benefit of the deceased and Stephen until 2002. He erred in stating in cl 11 that the plaintiff had taken legal action against him. I find that he overlooked the full circumstances and reasons for the discord between he and Stephen on the one hand and the plaintiff on the other hand, and the role and causative effect in that regard of the character and personality of himself and his sons including the plaintiff’s business capacity. I find that he overlooked and did not have proper regard to and understand the depth of hurt of these events on the plaintiff’s side, as well as his own. Perhaps an insufficient period of years had passed for a reconciliation to have occurred, but it had not, and the deceased for whom farm and family were one and the same thing should have had broad regard to all the circumstances. Once the plaintiff had left the deceased was dependent on Stephen, in whom he saw the future as he had hoped it to be, and Stephen had a deep distrust and dislike of the plaintiff, which the deceased must have been aware of. In the result, while the deceased in cl 11 referred to love and affection for the plaintiff he was, it would seem, unable to see any love and affection from the plaintiff in return, as to which there was in my view a lack of appreciation of the consequences to the plaintiff of all that had happened. That the plaintiff had not been able to put aside his disadvantage, hurt and diminished standing and self respect within the family may be one thing, although requiring particular capacities to do so, but it aids in understanding the plaintiff’s conduct and should have to the deceased. This is not a case in which properly regarded in the circumstances, the conduct of the plaintiff was such as to disentitle him from consideration by the deceased. Of course there was provision but it was minimal or token.
I add that his estate was of such a size that the deceased was readily able to provide for the plaintiff, and at a level significantly greater than that provided in cl 6.
The second question is whether the distribution of the estate by the deceased’s will does not make adequate provision for the proper maintenance and support of the plaintiff.
It was submitted for the plaintiff that the gift in cl 6 was of such small value as to bespeak inadequacy. It was minimal or token.
Counsel for the defendants submitted that the following matters were relevant. What was adequate and proper involved consideration of the nature, extent and character of the estate, the other demands upon it and what the testator regarded as superior claims or preferable dispositions. The moral claim of an applicant will be taken into account in determining what would be proper for his maintenance and support. As to that, it was submitted that the plaintiff had no moral claim, and was in no need. Further, any additional provision for the plaintiff would impinge on the entitlement of Stephen, who had stood by his father and helped absorb a share of the plaintiff’s farm liability. The farm is now Stephen’s only substantial source of income. In those circumstances community standards would not hold the testator’s small bequest to the plaintiff to be an abuse of his testamentary freedom.
I reject the defendants’ submission. Again, I do not repeat all that has been discussed so far, and the findings made. I find that the plaintiff had a moral claim based on his contributions and assistance to his father over so many years, bearing also in mind that he (like the other children) following his mother’s death did not undertake the course of training he wished to, and those contributions assisted the farm generally which Stephen is to take absolutely. Of course there were and are associated debts but their existence when the plaintiff was involved, including the partners’ loan accounts, can be seen to be related to the business structure and operation the efficiency of which, I find, was a matter which provided a source of discord. Further, although the deceased and Stephen indemnified the plaintiff in respect of partnership debts the plaintiff had remained liable to creditors. Further, the partners’ loan account may, as I have said, be seen to be related to the business model and unprofitability of the farm, a matter on which the plaintiff had views, I find. It is with regard to such matters, in the wider considerations generally concerning the relationship, and the plaintiff’s financial position at the termination of the partnership, that the question of the plaintiff’s claim, or moral claim, is to be regarded.
As to the matter of need I have referred to this above. Further, it is self evident in my view and should have been to the deceased that the plaintiff would have required, and be much assisted by the provision of, a capital sum to aid him in establishing himself in the circumstances that he was no longer to share in ownership of the farm and its assets, to the maintenance, improvement and preservation whereof he had given so much. Furthermore, whether regard is had to the estate as a whole or only to that given to Stephen, the estate was large enough to be able to provide a sum of reasonable proportion to the plaintiff without disproportionate diminution of that passing under gifts to his siblings.
I conclude, having regard to all the circumstances and community standards, that the bequest to the plaintiff in cl 6 of the will does not make adequate provision for the proper maintenance and support of the plaintiff. It was not the act of a wise and just testator. In the language of the authorities it constituted an abuse of his testamentary freedom.
This brings me to the third question as to the amount which the Court may order. I referred at [15] to statements of the plaintiff’s counsel as to what the plaintiff sought. Ultimately it was $400,000 but without affecting the devise of 32 Lindon Strike Court to his sisters. At [16] I referred to the defendants’ position that any award should be “very minimal”.
In his written submissions counsel for the plaintiff pointed to the value of 7 Crest Road of $1M. Counsel said that there was a net equity of $968,036 in the farm. I note that I have referred to the estate liabilities and those of Stephen above. Counsel said that an order for $400,000 would enable the plaintiff to buy a family home and he referred to Penn v Richards[57] where an order was made for that purpose. It is sufficient to say of that case that the facts are much removed from the present. Moreover the submission that the plaintiff should receive an amount sufficient to be able to buy a house is over-ambitious by far, in my view.
[57][2002] VSC 378.
In my view provision should be made for the plaintiff by providing a legacy of $75,000 in addition to the bequest in cl 6. The legacy should be borne by Stephen and be charged upon the Research Poultry Farm referred to in cl 7 of the will. I agree with counsel for the plaintiff that the gift to the deceased’s daughters, being the specific devise of 32 Lindon Strike Court should not bear the burden of the award. I further consider that their gift of residue should also not be affected. That is consistent with the long standing and well understood intention of the deceased, and the reality of the estate as to the likelihood of any residue in view of the administration to date of the estate and the burden of costs. Furthermore, it would accord with the act of a wise and just testator having regard to his moral obligation, in the circumstances of this case, to place the burden of the legacy upon Stephen and the Research Poultry Farm as defined in cl 7 of the will.
The amount of $75,000 is not calculated on an arithmetical basis. It is an amount that will provide the plaintiff with some capital that may aid in the purchase of a house or the conduct of his business or be retained as an investment and as such provide a measure of security for future expenses and contingencies. It is a measure of that which the deceased ought have recognised as proper to provide for the plaintiff in all of the circumstances. It is a measure of recompense, of recognition of loyalty and service provided, and of the filial relationship the affecting of which was not the sole fault of the plaintiff. I consider this sum to be the minimum, conservatively estimated, that the deceased should have provided for the proper maintenance and support of the plaintiff, eschewing any principle of fairness or equality between the deceased’s siblings or any of them.
Accordingly there will be orders on the following lines, namely that the estate of the deceased be administered on the basis that there be paid to the plaintiff a legacy of $75,000 in addition to the bequest contained in cl 6 of the deceased’s will, and that the devise and bequest to Stephen in cl 7 of the said will be conditional on the payment by Stephen to the plaintiff of the said sum and that pending payment the plaintiff be entitled to lodge a caveat against the subject land being the property at 7 Crest Road. I will hear counsel as to the terms of the orders appropriate to be made, and as to costs.
4
3
0