Butcher v Craig
[2010] WASCA 92
•17 MAY 2010
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
TITLE OF COURT : THE COURT OF APPEAL (WA)
CITATION: BUTCHER -v- CRAIG [2010] WASCA 92
CORAM: PULLIN JA
NEWNES JA
MURPHY J
HEARD: 15 MARCH 2010
DELIVERED : 17 MAY 2010
FILE NO/S: CACV 76 of 2009
BETWEEN: RONALD JAMES BUTCHER
Appellant
AND
DELYS JOAN CRAIG as Executor of the Estate of Elsja Henrietta Charlotte BUTCHER (DEC)
First RespondentDELYS JOAN CRAIG
Second RespondentTRIGG ALEXANDER CRAIG
Third RespondentELSJA ELIZABETH CRAIG
Fourth RespondentMANSON BASIL CRAIG
Fifth Respondent
ON APPEAL FROM:
Jurisdiction : SUPREME COURT OF WESTERN AUSTRALIA
Coram :MASTER SANDERSON
Citation :BUTCHER -v- CRAIG [2009] WASC 164
File No :CIV 1886 of 2006
Catchwords:
Succession law - Application under Inheritance (Family and Dependants Provision) Act 1972 (WA) - Application refused by master - Competing claims of children and grandchildren - Turns on own facts
Legislation:
Inheritance (Family and Dependants Provision) Act 1972 (WA), s 6(1)
Result:
Appeal allowed
Category: B
Representation:
Counsel:
Appellant: Mr L A Tsaknis
First Respondent : No appearance
Second Respondent : Mr A Metaxas
Third Respondent : Mr A Metaxas
Fourth Respondent : Mr A Metaxas
Fifth Respondent : Mr A Metaxas
Solicitors:
Appellant: Minter Ellison
First Respondent : No appearance
Second Respondent : Metaxas & Hager
Third Respondent : Metaxas & Hager
Fourth Respondent : Metaxas & Hager
Fifth Respondent : Metaxas & Hager
Case(s) referred to in judgment(s):
Andre v Perpetual Trustees WA Ltd [2009] WASCA 14
Bondelmonte v Blanckensee [1989] WAR 305
Butcher v Craig [2009] WASC 164
Pogorelic v Banovich [2007] WASC 45
Singer v Berghouse (No 2) [1994] HCA 40; (2004) 181 CR 201
Vigolo v Bostin [2005] HCA 11; (2005) 221 CLR 191
REASONS OF THE COURT: The appellant brought an application under the Inheritance (Family and Dependants Provision) Act 1972 (WA) (the Act). The application was dismissed by the master. The appellant appeals against that decision.
The following is a recital of the facts found by the master in Butcher v Craig [2009] WASC 164:
The plaintiff is the son of the late Elsja Henrietta Charlotte Butcher (the deceased). The deceased died on 15 December 2005 aged 93. Her last will was made on 6 May 2003. The second defendant is the daughter of the deceased. The third, fourth and fifth defendants are all children of the second defendant.
By her will the deceased left a net estate of approximately $1,261,818.32. The principal asset of her estate was, and is, a house at Busselton. According to the statement of assets and liabilities sworn 4 October 2006, at the date of the deceased's death this house was valued at $1.2 million. All parties accepted that, for the purposes of this application, the value put on the house in the statement of assets and liabilities was to be taken as the value of the house as at the date of death of the deceased.
The statement of assets and liabilities showed that in addition to the house the deceased had moveable property totalling $61,818.32. Again there is no dispute between the parties that this was the value of the moveable estate as at the date of death of the deceased.
The deceased's husband had predeceased her. She was survived by the second defendant who was aged 69 at the date of death of the deceased and by the plaintiff who was aged 67 at the date of death of the deceased.
By her will the deceased bequeathed all her interest in the house to her three grandchildren. She bequeathed to the second defendant the contents of the house which, based upon the statement of assets and liabilities, had an estimated value of $10,000. She also left to the second defendant a legacy of some $20,000. The balance of the estate was to be paid to the plaintiff.
According to the evidence of the second defendant, the disposition to the plaintiff under the will was in the region of $20,000. However, having regard to the value of the moveable property and the legal costs of these proceedings, there will not be any balance remaining to be paid to the plaintiff. This was accepted by the defendants.
By written agreement dated 23 January 1999 the deceased made a loan to the plaintiff in the sum of $50,000. Interest was payable on the loan and was paid by the plaintiff to the deceased up until the time of the deceased's death. It was provided in the written agreement that if the deceased predeceased her son the debt was to be forgiven. So, independent of the will and pursuant to the written agreement, the plaintiff received a benefit of $50,000 upon the death of the deceased.
…
As I have said, as at the date of death of the deceased the plaintiff was 67 years of age. [The plaintiff] has never married and has no dependants.
The plaintiff commenced working in the family business in 1954 when he left school aged 16. He remained with the business until 1967. During that time he learnt butchering and farming skills from his father. The family business comprised a 3,000 acre farm at Busselton and an abattoir and retail butcher shop (the Business). The Business ceased to operate in approximately 1981.
The plaintiff lived with his sister and his parents at the family home until he was 23. Then he moved to the family farm in Busselton where he lived and worked. He lived by himself on the farm. The farm was owned 1/3 by the plaintiff's father and 1/3 by his uncle. There seems to be a dispute whether the plaintiff and his sister each owned 1/9 or 1/12 of the Business. However that may be, they agree they owned equal shares. The balance was owned by another uncle.
The plaintiff's duties on the farm included animal husbandry; preparing show and sale cattle; and feeding, grooming and training the cattle. During this period he continued to work in the family butcher shop as a butcher. The plaintiff was responsible for the breeding program of the family's Poll Hereford stud cattle. There is no suggestion other than that the plaintiff was a good and competent manager of the farm and the Business and assisted in the prosperity of the Business.
In 1967 the plaintiff ceased work on the farm. He was away for about two years. He returned to the farm in 1969 and stayed until 1991. Accordingly, from the age of 16 - 43, save for a period of about two years, the plaintiff worked in the Business. For all but seven of those years he was the only person who lived and worked on the family farm at Busselton.
In 1984 the plaintiff left home permanently and moved to Sydney. He was initially self-employed as a cleaner and subsequently self-employed as an importer and distributor of shoe care products. He was carrying on that latter business at the time of the deceased's death.
The plaintiff described his relationship with his mother as a warm and loving one. He said that she was a good mother to him and he loved her very much. Although a good deal of evidence was led on this question it was really not an issue in the proceedings. The plaintiff's evidence was that he flew to Perth an average of twice a year to visit his mother. He says he made these trips for the 10 - 15 years before his mother died. The visits usually lasted 4 - 5 days. In the overall, the evidence made it plain that the plaintiff maintained contact with his mother and he had a warm, close and loving relationship with her. They spoke frequently. There was nothing in the evidence to suggest, nor was it submitted on behalf of the defendants, that there was any conduct on the part of the plaintiff which might disentitle him from making a claim.
The Business was operated through a family company, Butcher Brothers Busselton Pty Ltd. The family company was liquidated in 1981. At that time the assets comprised an unknown amount of cash at bank; an office building and retail shops with an approximate value of $100,000; 150 head of cattle with an approximate value of $100,000; Hannadal Farm with an approximate value of $300,000; and Estuary Farm with an approximate value of $75,000. The Estuary Farm was transferred to the plaintiff in 1981 when the company was liquidated. The plaintiff lived at Estuary Farm and worked there fulltime from mid-1981 until February 1984. He then sold the farm. His evidence was that he undertook considerable improvements on the farm. It was eventually sold for $230,000.
When the plaintiff moved to Sydney in 1984 he purchased a unit in Surrey Hills. The purchase price was approximately $127,000. As at the date of the death of the deceased the unit was valued at $490,000: see affidavit of Kris Ivan Cviker sworn 19 December 2007.
Since 1992 the plaintiff has derived his income from the importation of shoe polish from the United States of America. He is the sole Australian distributor for an American company known as Angelus Shoe Polish. That business has been conducted through a company Shoe Shines Australia Pty Ltd (Shoe Shines). The plaintiff is the sole director and shareholder of that company. There is no formal written agency agreement between Shoe Shines and Angelus Shoe Polish. Thus the agency agreement can be terminated at any time. The principal assets of the Shoe Shines are $20,000 worth of stock and a 1992 Mercedes station wagon. This vehicle is valued for insurance purposes at $17,000 and is shown in the financial statements of the company at $10,796. The business operates from the plaintiff's second bedroom of his flat and his garage.
In recent years the plaintiff's taxable income from his business and from receipt of an age pension has been (for the tax year ending 30 June): 2001 - $9,500; 2002 - nil; 2003 - $6,000; 2004 - $23,157; 2005 - $24,342; 2006 - $23,889; and 2007 - $21,065. For present purposes it is the June 2005 figure which is relevant. In that year, the part of the plaintiff's income attributable to the age pension was $9,637.
In addition the plaintiff has made superannuation payments from his business to a superannuation fund in the following amounts: 2001 - $5,000; 2002 - $5,000; 2003 - $10,000; 2004 - $21,000; 2005 - $20,000; 2006 - $40,500; 2007 - $40,000. That means, in effect, the plaintiff's total income for the 2005 year was $44,642. (That figure takes into account a small amount for profits retained in the business.)
Apart from his business the plaintiff had no other savings. His lifestyle was simple and he lived within his means. Essentially that meant that he was limited in what he could do - for instance, any extended travel or indeed overseas holidays were not within his means.
It was submitted on behalf of the plaintiff that as at the date of death of the deceased, both his earnings and assets were 'modest'. It was further submitted that by reason of his resources, age and health, the plaintiff's future earning capacity and his ability to acquire assets were both extremely limited. There was nothing to suggest that he would be able to develop the Shoe Shines business beyond the modest enterprise that it represented. While the business was generating a reasonable income, at least sufficient to allow him to enjoy a reasonable standard of living, it could not provide him with much beyond his living expenses. The fact that he was 67 years of age at the date of death of the deceased meant that as a normal product of aging, his capacity to carry on the business was necessarily limited. Although he enjoyed reasonable health, he did have a number of medical problems, the cost of which would not be entirely covered by medical insurance. To summarise, it was said that the plaintiff required more than he received from the deceased's estate for his proper maintenance and advancement in life.
It is convenient at this point to consider the position of each of the defendants. The second defendant does not challenge the distribution made to her under the will. It might be noted in passing that the deceased effectively, by the distribution in her will, jumped a generation. Neither the plaintiff nor the defendants made anything of this fact and I simply note it in passing.
The third defendant filed an affidavit sworn 4 December 2006. As at the date of death of the deceased, he worked part-time as a university lecturer. He had modest personal assets valued at just over $22,000. He earned approximately $55,000 per annum and it would seem that his income comfortably exceeded his outgoings. He did not own any real estate and lived in rented premises in Perth. He had superannuation worth approximately $30,000. There was nothing to suggest that as at the date of the death of the deceased, the third defendant had any particular needs. In fact, the evidence establishes that he has subsequently prospered.
The fourth defendant was 39 years of age at the date of death of the deceased. She swore an affidavit dated 22 November 2006 in opposition to the application. The fourth defendant graduated in 1999 from Curtin University with a Bachelor of Commerce majoring in Industrial Relations and Human Resource Management. At the date of the death of the deceased, she had two children aged 2 1/2 years and 6 months. She says that she earned three-fifths of $85,000 per annum on a part-time basis. She said she intended to return to the workforce full-time when her children were older. As at the date of swearing of the affidavit, her husband earned $60,000 per annum. He was employed as an operational manager with Westjet Air Ventures. Although the fourth defendant did not own any property as at the date of swearing her affidavit, she had, together with her husband, owned an apartment in Sydney at the date of the death of the deceased. That apartment was sold and settlement took place on 17 November 2006. The mortgage was paid out leaving the fourth defendant and her husband an amount of $106,000. It is reasonable to assume then that as at the date of the death of the deceased, her assets included an amount of around $100,000 which represented the equity in her then real estate holdings. She had some savings totalling approximately $5,000 and with her husband, owned a motor vehicle on which they had a $15,000 loan. As at the date of the death of the deceased, the fourth defendant and her husband and children were living in the deceased's property in Busselton. There is nothing to suggest that she was paying any rent while she was living in those premises.
While certainly not of substantial means, the fourth defendant as at the date of the death of the deceased did not have any particular unmet needs. She had some capital behind her in the form of real estate and both she and her husband were gainfully employed. There is no suggestion that she is anything other than able-bodied.
The fifth defendant swore an affidavit dated 30 November 2006 in opposition to the application. As at the date of death of the deceased, he was 36 years of age. After completing his school year 12 in 1986, he attained certificates in commercial cookery and business management. He now works as a landscape gardener. Beyond that, he provides scant information. As at the date of swearing his affidavit, he says that he earned $35,000 per annum and had monthly expenses of $2,800. He said he had a credit card debt of approximately $6,000. He lived in rented premises in Quindalup. He had no assets apart from a car and household effects which he valued at about $12,000 [1] ‑ [7], [21] ‑ [39].
The master correctly stated that the first question to be considered when dealing with an application under the Act is whether the disposition of the estate by the deceased was not such as to make adequate provision for the proper maintenance, support, education or advancement in life of the plaintiff. The application is made pursuant to s 6(1) of the Act which reads:
(1)If any person (in this Act called 'the deceased') dies, then, if the Court is of the opinion that the disposition of the deceased’s estate effected by his will, or the law relating to intestacy, or the combination of his will and that law, is not such as to make adequate provision from his estate for the proper maintenance, support, education or advancement in life of any of the persons mentioned in section 7 as being persons by whom or on whose behalf application may be made under this Act, the Court may, at its discretion, on application made by or on behalf of any such person, order that such provision as the Court thinks fit is made out of the estate of the deceased for that purpose.
The master correctly directed himself that the part of the section which has to be satisfied to enliven the court's discretion, the jurisdictional issue as it is often called, had to be determined as at the date of the death of the deceased, and that the question is strictly one of fact, notwithstanding that it involves the existence of value judgment: see Singer v Berghouse (No 2) [1994] HCA 40; (2004) 181 CR 201.
After considering the case of Vigolo v Bostin [2005] HCA 11; (2005) 221 CLR 191, the master said:
However the test of 'moral duty' might be framed, in my view there is nothing in the facts of this case that would justify an order being made. The plaintiff ran his own life for many years. While I accept that he had a close and affectionate relationship with his mother, he lived in New South Wales and contact was necessarily limited. The deceased provided the plaintiff with some financial accommodation and by effectively releasing the plaintiff from liability for the loan she made to him she avoided placing the plaintiff under undue financial stress. I can see no basis for any moral claim.
Nor am I satisfied that the plaintiff has made out that he required provision in the will of the deceased for his proper maintenance and advancement in life. The plaintiff had been independent of the deceased for many years and had set an independent course. While his business activities were not yielding a substantial income, it was adequate for his means. He owned his own home; he was in reasonable health; he had some superannuation assets behind him; and he intended to work on, not constrained by any requirements that he retire at a certain age. Against that of course must be balanced the factors so heavily relied upon by the plaintiff. He was 67 years of age at the date of the death of the deceased and he was not in perfect health. His business while providing an income did have a somewhat shaky foundation. The income derived from the business was modest and did not allow him to improve his living arrangements or undertake overseas travel. I also accept that he was conscious of providing for his old age and the need to make some form of arrangement for what once used to be called his 'declining years'.
I have weighed all these matters in the balance. I have also taken into account the fact that the beneficiaries, while of modest circumstances, had no particular needs. Furthermore, it is difficult to see how in the end there will not be a sale of the property and a distribution to each of the third, fourth and fifth defendants. If that were to occur and the plaintiff were to benefit equally with the other defendants, there would still be substantial benefits to be had by the defendants. This was a matter that was taken into account by McLure J in Vigolo but it did not sway her Honour's decision. Nor has it swayed mine.
I am satisfied on balance that the will of the deceased did make adequate provision for the plaintiff. I would dismiss this application. I will hear the parties as to costs [45] ‑ [48].
Before reaching the decision referred to above, the master had directed himself in the following terms [18] ‑ [19]:
In his submissions, counsel for the plaintiff suggested that in the context of applications made by grandchildren it has been recognised that it may often be the case that grandchildren have a lesser claim on the estate then do the children of the deceased. With respect, this perhaps misstates the position slightly. Counsel, in making that submission, was presumably referring to the second stage of the process. In the first stage the focus is upon whether adequate provision had been made for the proper maintenance of the applicant. The fact that beneficiaries under the will are grandchildren would only be relevant when considering competing demands upon the estate. Moreover, it is difficult to see that the mere fact that the beneficiaries are grandchildren as opposed to children or indeed cousins would have particular relevance.
In Kitson v Franks [2001] WASCA 134, Parker J put the position in this way:
'The issue of child or grandchild may also be a relevant consideration, if the jurisdictional test has been satisfied, when it comes to the exercise of discretion as to what provision should be made especially when there are competing claims and there is insufficient in the estate to satisfy all of them. As has been observed by King CJ the relative remoteness of the relationship of grandchildren is a factor to be taken into account in determining what would be adequate provision for their advancement in life; In the Estate of Puckridge (1978) 20 SASR 72 at 77. [71]'
Appellant's grounds of appeal
The appellant's grounds of appeal are lengthy - too lengthy to warrant setting them out in full. In short though, the grounds contend that the master erred:
(a)in fact by finding that the appellant was in reasonable health when that was not the case;
(b)in fact by '[describing] the appellant's income derived from his business as "not yielding a substantial income" and "modest", when the [appellant's] income … was "meagre"';
(c)in law in the directions that he gave to himself in [18] of the reasons; and
(d)in law by reaching a decision which was so plainly unjust that the master failed to properly exercise the discretion reposed in the court.
Ground (a) - was the appellant in reasonable health?
The master found that the appellant enjoyed reasonable health. The master mentioned that he did have a 'number of medical problems', but these comments diminished the extent of the appellant's problems. The master did not set out and refer to the evidence about the appellant's recent medical background. His medical history included the following:
1999- Cervical laminectomy
2000- Bowel perforation secondary to diverticular disease (Hartman's procedure) later reversed
2002- Abdominal incisional hernia repair
2004- Radical abdominal lipectomy
2005- Lumbar laminectomy
November 2005 - Right shoulder cuff repair
He also required significant dental work involving gum realignment and crowns. The appellant did not discuss his health or financial position with his mother because he did not wish to worry her unnecessarily.
The master's finding that the appellant's health was 'reasonable' was a finding against the weight of the evidence. The appellant's significant bout of surgical intervention in the five to six years before the testator died and his need for dental work showed that. He was in poor health. To describe him as being in reasonable health diminished the importance of a factor favouring the appellant's claim. He might have been in reasonable health for a person who had suffered many surgical interventions, but the correct description was that the appellant had not enjoyed and did not enjoy 'reasonable health'. Ground (a) should be upheld.
Ground (b) - the appellant's income
The appellant alleges by this ground that the master erred in describing the appellant's income from his business as 'not yielding a substantial income' and 'modest' when the appellant's income was 'meagre'. There is no suggestion that the master did not correctly identify the relevant evidence. This is a debate about adjectives which have similar meanings and reveals no error. This ground should be dismissed.
Ground (c) - erroneous direction in relation to the law
The appellant submits that in [18] and [19] of the reasons, the master wrongly directed himself in relation to the law. The overall effect of what the master said in [18] and [19] was that the moral claims of the beneficiaries would only be relevant when considering the competing demands upon the estate if the jurisdictional question was answered in favour of the appellant. That revealed error.
There is no doubt that when determining the jurisdictional question, namely whether adequate provision had been made for the proper maintenance, support, education or advancement in life of the appellant, what is adequate financial provision is assessed by reference to the size of the estate, the need and moral claim of the applicant and the need and moral claim of other persons who have a legitimate claim upon the bounty of the testator: Andre v Perpetual Trustees WA Ltd [2009] WASCA 14 [53]. Thus, insofar as the master directed himself that the moral claims of the grandchildren as beneficiaries were relevant only to the second stage of the process, that is after the jurisdictional question was answered, the master erred.
However, even though the master wrongly directed himself, he did not apply what he had said, because in subsequent paragraphs he examined the circumstances of the grandchildren while addressing the jurisdictional issue. The only conclusion open is that the master erred in directing himself on the law, but then proceeded as though he had not made the error. The misdirection led to no miscarriage. The ground should be dismissed.
Ground (d) - was the decision on the jurisdictional issue unreasonable?
The principles governing appellate review of discretionary decisions apply to a review of a decision on the jurisdictional question: Singer (212); Vigolo [82] (Gummow & Hayne JJ). Consequently, if the result is perceived by the Court of Appeal to be so unreasonable as to indicate some latent error, then that will be a ground for overturning the decision of the primary judge: Andre [47].
At the time of the testator's death, the appellant was 67 years old with a life expectancy of about 17 years. He owned a unit valued at $490,000 and a small business which could continue to operate only so long as the appellant's health and age permitted. It had stock and assets worth approximately $30,000. His income had been either at about the average wage or below the average wage for about five years before 2003 and was in the region of $50,000 to $60,000 for two years before the testator died. He had superannuation of $241,000. In our view it may be inferred that his income was likely to reduce due to advancing age and the effect of his medical conditions. He had the poor medical history set out above. The age of the appellant and his medical history allows an inference to be drawn that he will have an increasing need to meet the cost of medical attention, an increasing need for capital to provide a source of income as his ability to run his business diminishes, and a need for a little luxury which was reasonable to expect given the size of the estate.
The other beneficiaries named in the will included the second respondent, the appellant's sister, but she did not proffer any information about her situation and she does not challenge the provision made for her in the will. The other beneficiaries are the three children of the second respondent. They are all employed and, as the master found, have no unmet needs.
All members of the family were supportive of the testator and had a good relationship with her. The appellant maintained a good relationship with his mother, but he lived in the east and could not make frequent visits to Western Australia. The fourth and fifth respondents also lived out of Western Australia for a number of years. The fifth respondent only returned three years before the deceased passed away and the fourth respondent only returned in the week before she passed away.
As at the date of death, apart from the two bequests, the asset of substance was the deceased's house, valued at $1.2 million.
In our opinion, a wise and just testator who had knowledge of the appellant's health and income and taking into account his assets, would have made greater provision for the appellant. In our opinion, no reasonable decision‑maker could have come to a conclusion other than that a disposition of about $20,000 to the appellant out of an estate of $1.2 million did not make adequate provision for the proper maintenance, support, education or advancement in life of the appellant, bearing in mind the size of the estate and the competing claims of the appellant and the other beneficiaries under the will. The master's decision to the contrary reveals latent error.
The respondent submitted that the appeal should fail because the appellant had originally conducted the case on the basis that he would need fulltime home care as he grew older, and that this evidence established that adequate provision for the proper maintenance etc had not been made for the appellant. The respondent submitted that this argument was abandoned at the hearing and the appellant, at the hearing of this appeal, conceded that this estate would not bear the cost of such care and that a wise and just testator with the estate available, would not have made provision for such care. The respondent submitted that this left the appellant merely with evidence that his expenses were $1,400 per month and that he needed nothing more to provide for himself in future.
Such an argument assumes that, if an applicant can provide the bare necessities of life for himself or herself, an application under the Act must fail. That submission must be rejected. The submission ignores the fact that the inquiry must be about whether adequate provision has been made for the 'proper' maintenance etc of the applicant. The use of the word 'proper' requires consideration to be given to more than satisfying the basic needs of an applicant. The standard of living of an applicant during the lifetime of the deceased is relevant, but the fact that an applicant has lived frugally or has become accustomed to a life of relative penury, does not mean that the testator's obligation under the Act is satisfied so long as the applicant can continue in that state: see Pogorelic v Banovich [2007] WASC 45 [62].
The respondent also submitted that it was relevant that the appellant had gained title to the Estuary farm in 1981 which was at the time valued at about $75,000. The evidence revealed that the appellant had a close connection with the farm because he had worked in the family business from 1954 until 1981 save for a two year break. For part of his life he lived on the farm. The appellant was a good and competent manager of the farm and associated business and he assisted in building the prosperity of the business. Gaining title to the farm has the appearance of a quid pro quo for his long connection with the farm and its maintenance. Once he gained title to the farm, he lived there and worked full time from mid‑1981 until 1984 when he sold the farm for $230,000. This allowed him to buy his Sydney unit and helped put him in the position he was in at the date of the testator's death. The fact that he gained title to the farm in 1981, in the circumstances described above, is an event which occurred so long ago that it has very little relevance to the claim he makes under the legislation.
We would uphold ground (d).
The second stage
The parties are agreed that if there was error then rather than sending the case back for reconsideration, this court should make the order that should have been made. This court has all the material available to make such an order. The second stage requires the court to decide what provision ought to be made from the deceased's estate for the appellant (Singer (208)). In answering that question, the court will take into account the relevant facts as they existed at the time of making the order: Bondelmonte v Blanckensee [1989] WAR 305, 307; Andre [45]. The position as at the present time is that the deceased's house has a value of at least $1.5 million. It was not contended otherwise by the respondent. The appellant has the medical history referred to above and is now suffering from mild cerebral ataxia and arthritis. In the year after the testator's death, he underwent further abdominal surgery.
The appellant still has his unit and his business. When valued on the basis of maintainable earnings, the business is valueless, but it does have stock and the motor vehicle valued at about $30,000. The appellant had modest superannuation, totalling about $240,000. This was reduced by legal fees involved in conducting this litigation. The expenditure on legal fees is not relevant.
The appellant gave evidence that his expenses were about $1,400 per month, which the court may infer is far from an over‑estimate. Those expenses do not take account of any likely costs associated with future health problems and the consequences of aging. His present income, which is around $50,000 to $60,000, is an income which does not permit him to travel abroad and has made it difficult for him to meet estimated expenses associated with his health, ie, the estimated cost of dental treatment. The appellant's income will only continue so long as his age and his health enable him to run his business.
In our opinion, the provision of a 30% interest in the deceased's house would, when added to the appellant's accumulated superannuation, allow him to meet his ongoing expenses and to maintain himself and advance himself in life in a manner which is appropriate given the size of the estate and all the circumstances. This would disturb the testator's intentions as little as possible because it will leave the balance of 70% to be divided between the other relevant beneficiaries.
As a result, the deceased's will should be altered by inserting in cl 4 of the will after the word 'to' first appearing in line one the words 'my son Ronald James Butcher and', and by deleting the words 'equal shares' and inserting in place of those words:
the following shares: to my son Ronald James Butcher 30%, to my grandchild Trigg Alexander Craig 23 1/3%, to my grandchild Elsja Elizabeth Craig 23 1/3%, and to my grandchild Manson Basil Craig 23 1/3%, and direct that the property be sold and the net proceeds from the sale be distributed in the proportions given in this paragraph 4.
Those alterations are to operate and take effect as if made by codicil to the will of the deceased executed immediately before her death.
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
TITLE OF COURT : THE COURT OF APPEAL (WA)
CITATION: BUTCHER -v- CRAIG [2010] WASCA 92 (S)
CORAM: PULLIN JA
NEWNES JA
MURPHY JA
HEARD: 15 MARCH 2010 AND ON THE PAPERS
DELIVERED : 17 MAY 2010
SUPPLEMENTARY
DECISION :13 OCTOBER 2010
FILE NO/S: CACV 76 of 2009
BETWEEN: RONALD JAMES BUTCHER
Appellant
AND
DELYS JOAN CRAIG as Executor of the Estate of Elsja Henrietta Charlotte BUTCHER (Dec)
First RespondentDELYS JOAN CRAIG
Second RespondentTRIGG ALEXANDER CRAIG
Third RespondentELSJA ELIZABETH CRAIG
Fourth RespondentMANSON BASIL CRAIG
Fifth Respondent
ON APPEAL FROM:
Jurisdiction : SUPREME COURT OF WESTERN AUSTRALIA
Coram :MASTER SANDERSON
Citation :BUTCHER -v- CRAIG [2009] WASC 164
File No :CIV 1886 of 2006
Catchwords:
Inheritance Act - Costs - Whether costs should be ordered on a solicitorclient basis
Legislation:
Inheritance (Family and Dependants Provision) Act 1972 (WA), s 14(6)
Result:
Appellant's costs of the trial and appeal to be taxed on a partyparty basis
Category: B
Representation:
Counsel:
Appellant: Mr L A Tsaknis
First Respondent : No appearance
Second Respondent : Mr A Metaxas
Third Respondent : Mr A Metaxas
Fourth Respondent : Mr A Metaxas
Fifth Respondent : Mr A Metaxas
Solicitors:
Appellant: Minter Ellison
First Respondent : No appearance
Second Respondent : Metaxas & Hager
Third Respondent : Metaxas & Hager
Fourth Respondent : Metaxas & Hager
Fifth Respondent : Metaxas & Hager
Case(s) referred to in judgment(s):
Adkins v Adkins (No 2) [2009] TASSC 32
Anfrank Nominees Pty Ltd v Connell (1991) 6 WAR 271
AWA v Daniels (Unreported, NSWSC, 8 October 1992)
Bentley v Brennan; Re Bull, deceased (No 2) [2006] VSC 226
Bouras v Grandelis [2005] NSWCA 463; (2005) 65 NSWLR 214
Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225
Collins v Westralian Sands Ltd (1993) 9 WAR 56
Cuplovic v Sacilotto [2001] WASC 360
Curran v Duncan as Executor for the Will of Jean Frances Hogg (Dec) [2006] WASC 9 (S)
Dehnert v The Perpetual Executors & Trustees Association of Australasia Ltd [1954] HCA 47; (1954) 91 CLR 177
Flotilla Nominees Pty Ltd v Western Australia Land Authority [2003] WASC 122; (2004) 28 WAR 95
Hughes v National Trustees Executors and Agency Co of Australasia Ltd [1979] HCA 2; (1979) 143 CLR 134
In Re Bennett [1909] VLR 205
In the Will and Codicils of Read, deceased [1910] VLR 68
In the Will of Mailes [1908] VLR 269
Johnston as Executor of the Will of Elsie Birks v Marsh (Unreported, WASC, Library No 990207, 23 April 1999)
Kitson v Franks [2001] WASCA 134 (S)
Lathwell v Lathwell [2008] WASCA 256 (S)
Lawrence v Lawrence [2004] WASC 90 (S)
Marks v Williams as Executor of the Will of the Deceased [2002] WASC 197
Nelson v Nelson [1999] WASCA 302
Owen v The Public Trustee for the State of Western Australia as Executor of the Will of Arthur Owen (Dec) [2006] WASC 276
Pogorelic v Banovich [2007] WASC 45 (S)
Re Bond Corporation Holdings Ltd (1990) 1 WAR 465
Roadshow Films v iinet (No 4) [2010] FCA 645
Roche v Varnavides In His Capacity as Executor of the Estate of the late Lillian Rose Varnavides [2004] WASC 164 (S)
Szombathy v The Public Trustee as Executor of the Estate of Margit Lidia Szombathy (Dec) [2002] WASC 89
Unioil International Pty Ltd v Deloitte Touche Tohmatsu (1997) 18 WAR 190
PULLIN JA: On 17 May 2010, this court allowed an appeal by the appellant against a decision of Master Sanderson and ordered that the deceased's will be altered to make further provision for the appellant. The appellant then sought costs on a solicitor‑client basis to be paid out of the estate. This order was opposed by the respondents.
The court called for written submissions from the parties with the decision to be made on the papers. The respondent recently advised the court that it now agreed that costs should be paid out of the estate. As a result, the only issue is whether costs should be taxed on a solicitor‑client basis.
Appellant's submissions
The appellant submitted that the standard order was that a successful party in an application under the Inheritance (Family and Dependants Provision) Act1972 (WA) be awarded costs on a solicitor-client basis. In support of the submission, the appellant referred to De Groot and Nickel, Family Provision in Australia (2007, 3rd edition) [10.2] which states that:
In Australia, the courts from the beginning made what might be described as a 'standard order' where an applicant was successful. The order was that the costs of all parties were to be taxed on a solicitor-client basis and paid out of the estate.
The appellant referred to Bentley v Brennan; Re Bull, deceased (No 2) [2006] VSC 226 [3] and the cases cited therein, some dating back to the early 1900s, where an order was made that a successful plaintiff should be paid costs on a solicitor-client basis out of the estate. The cases cited in Bentley v Brennan include In the Will of Mailes [1908] VLR 269, 270 (A'Beckett J), InRe Bennett [1909] VLR 205, 207 (A'Beckett J) and In the Will and Codicils of Read, deceased [1910] VLR 68, 72 (A'Beckett J). There are more cases cited in footnote 1 to the paragraph in De Groot and Nickel. No Western Australian cases were referred to. In Bentley v Brennan [3], Byrne J approved the statement in De Groot and Nickel and said that 'this has become so common that it has been described as "the standard order"'.
The appellant also referred to Dehnert v The Perpetual Executors & Trustees Association of Australasia Ltd [1954] HCA 47; (1954) 91 CLR 177, in which the High Court allowed an appeal in an inheritance matter and ordered that the appellant's costs be taxed on a solicitor‑client basis. Similarly, in Hughes v National Trustees Executors and Agency Co of Australasia Ltd [1979] HCA 2; (1979) 143 CLR 134, the High Court ordered that the appellant's costs be taxed on a solicitor-client basis.
Respondents' submissions
The respondents conceded that orders for costs on a solicitor-client basis are often made by consent, but submitted this did not mean that it was the appropriate order if costs are not agreed. The respondent submitted that costs are only awarded on a solicitor-client basis if there is some factor justifying such an order.
The respondents referred to Kitson v Franks [2001] WASCA 134 (S) [5] where the Full Court said (in relation to the question of costs where an applicant had failed) that costs in an Inheritance Act matter may be significantly influenced by the circumstances of the case, and that there is no fixed rule. The Full Court also referred to Western Australian decisions where there had been orders for party-party costs, namely Cuplovic v Sacilotto [2001] WASC 360 (Master Bredmeyer) and Szombathy v The Public Trustee as Executor of the Estate of Margit Lidia Szombathy (Dec) [2002] WASC 89 (Master Bredmeyer).
The respondents referred to the following Western Australian decisions in which costs were awarded out of the estate with no specification whether the costs were on a solicitor-client basis or a party‑party basis: Johnston as Executor of the Will of Elsie Birks v Marsh (Unreported, WASC, Library No 990207, 23 April 1999); Marks v Williams as Executor of the Will of the Deceased [2002] WASC 197; Roche v Varnavides In His Capacity as Executor of the Estate of the late Lillian Rose Varnavides [2004] WASC 164 (S); Lawrence v Lawrence [2004] WASC 90 (S); Curran v Duncan as Executor for the Will of Jean Frances Hogg (Dec) [2006] WASC 9 (S); Owen v The Public Trustee for the State of Western Australia as Executor of the Will of Arthur Owen (Dec)[2006] WASC 276; Pogorelic v Banovich [2007] WASC 45 (S).
The respondents submitted that in Western Australia, with the exception of certain items in the Scale of Costs, and where no costs agreement has been entered into, there should be no difference between the items and amounts allowed under a party-party bill of costs and a solicitor-client bill of costs: Unioil International Pty Ltd v Deloitte Touche Tohmatsu (1997) 18 WAR 190; Anfrank Nominees Pty Ltd v Connell (1991) 6 WAR 271, 284; Collins v Westralian Sands Ltd (1993) 9 WAR 56, 64. The respondents submitted that an order for indemnity costs has less significance in Western Australia than in other jurisdictions and will only be made if there is some special or unusual feature in the case to justify departure from the ordinary practice: Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225, 233.
The respondents acknowledged the existence of decisions from other jurisdictions in which costs were awarded on an indemnity basis but submitted that these revealed something in the circumstances justifying such an order (Adkins v Adkins (No 2) [2009] TASSC 32). The respondents acknowledged that the executor may be awarded indemnity costs or costs on a solicitor‑client basis out of the estate of the deceased (as to which see Lathwell v Lathwell [2008] WASCA 256 (S)).
The respondents submitted that there was nothing before the court in this case to justify anything other than an order that costs be taxed on a party‑party basis.
The court's discretion to award costs
The court is given the power to award costs under s 14(6) of the Inheritance Act which reads:
The Court may make such order as to the costs of any proceeding under this Act as it deems just.
That provision does not justify a court imposed restriction on the discretion conferred. It confers on the court 'a very wide discretion': Nelson v Nelson [1999] WASCA 302 [2]. Order 66 r 11(2) of the Rules of the Supreme Court 1971 (WA) states that, in the absence of a costs agreement between a solicitor and client, the Supreme Court Scale applies to both party‑party and solicitor‑client costs: Unioil International Pty Ltd v Deloitte Touche Tohmatsu (191). Thus, in the absence of a costs agreement, there should not be any significant difference between solicitor‑client costs and party‑party costs. A difference may occur where the client of one party demands a much higher degree of attention than would reasonably be justified by the circumstances of the case.
Usually, where indemnity costs are awarded there has been some improper or unreasonable conduct by the parties or their lawyers: Flotilla Nominees Pty Ltd v Western Australia Land Authority [2003] WASC 122; (2004) 28 WAR 95 [9]. Even if there has been unreasonable conduct, an indemnity costs order will not be made if the costs would be covered by a party‑party costs order: Flotilla v Western Australian Land Authority [11]. An order that costs be taxed on a solicitor‑client basis is ordinarily in the nature of an order for indemnity costs although the measure of indemnity under an order simply for solicitor-client costs may be somewhat uncertain: R Quick and D Garnsworthy, Quick on Costs (2010) [4.210]; Re Bond Corporation Holdings Ltd (1990) 1 WAR 465, 479; Bouras v Grandelis [2005] NSWCA 463; (2005) 65 NSWLR 214 [94] ‑ [96], [109]; AWA v Daniels (Unreported, NSWSC, 8 October 1992), referred to in Roadshow Films v iinet (No 4) [2010] FCA 645 [75]. Given the scope for ambiguity in such an order, it is preferable, if indemnity costs are intended, that the order be made in terms which expressly stipulate the content of the order, as in Re Bond Corporation Holdings Ltd (479). Under such an order, costs unreasonably incurred would not be recoverable: Flotilla [28].
The local cases cited by the parties reveal no usual practice and the existence of no principle in this State that costs in this type of case should ordinarily be taxed on a solicitor‑client basis. The statement in De Groot and Nickel set out above is accurate in the sense that it points out that 'courts from the beginning' (at least in some States) made orders that costs be taxed on a solicitor‑client basis. The authors do not, however, suggest that there is any case explaining why such an order should be made and no case was drawn to this court's attention explaining why a successful applicant should have costs taxed on a solicitor‑client basis in the absence of any unreasonable or improper conduct on the part of the respondents.
The appellant's late application for a special costs order
In the course of the appellant's written submissions, an application was made by the appellant for a special order removing the limit under item 11 of the Supreme Court Scale of Costs. Section 280(2) of the Legal Profession Act 2008 (WA) provides:
Despite subsection (1), if a court or judicial officer is of the opinion that the amount of costs allowable in respect of a matter under a costs determination is inadequate because of the unusual difficulty, complexity or importance of the matter, the court or officer may do all or any of the following -
(a)order the payment of costs above those fixed by the determination;
(b)fix higher limits of costs than those fixed in the determination;
(c)remove limits on costs fixed in the determination;
(d)make any order or give any direction for the purposes of enabling costs above those in the determination to be ordered or assessed.
The only liberty given to the parties was to file submissions about the issue of whether costs should be paid out of the estate or on a solicitor‑client basis. No leave was granted to make a fresh application. In any event, the appellant has not filed any material which would justify the lifting of the limit. The only submissions made by the appellant were that the court has authority to make such an order (which is not in doubt) and that expert evidence was adduced from seven witnesses. The appellant referred to Pogorelic v Banovich [24]. In that case, Master Newnes ordered that the limit in item 11 be lifted based on the nature of the hearing and the fact that it ran for three days. This shows that at first instance where the judicial officer is closely acquainted with all of the material and the way the case was conducted, it may not be necessary to provide a great deal of evidence as to the difficulty or complexity of the case. The situation is not necessarily the same on appeal because the court is not always taken to all the evidence.
The respondents filed submissions in which it was said that the case was opened on 24 June 2008, that the respondents gave evidence on the same day, that the case was adjourned part heard towards the end of that day and, on 17 February 2009, the respondents called one other witness and then closed the case. The respondents say this was followed on the same day by some further evidence from three witnesses for the appellant, that that evidence was completed just after midday on that second day and that addresses were completed that afternoon. The respondents also submitted that a number of the affidavits filed by the appellant were unnecessarily long, covered similar material and were not relevant to the case. Further, the respondents say they successfully applied to strike out a number of parts of these affidavits. The respondents also submitted that the significant volume of paper on the court file was the product of the appellant failing to file affidavits complying with the rules, filing unnecessary affidavits and also filing affidavits on an issue which never had any prospect of success. It is not possible to assess the strength of all these assertions. All that it is necessary to say is that it is not possible to be satisfied that a special costs order should be made based merely on a statement by the appellant that seven witnesses were called.
Conclusion
The order should be that the appellant's costs of the trial and of the appeal be taxed on a party-party basis and paid out of the estate. It is appropriate to accede to the parties' agreement that costs be paid out of the estate only because all of the beneficiaries under the will are parties to the
litigation. The parties are also agreed that the respondents' costs also be paid out of the estate. As a result, the orders should be:
(1)The appellant's costs of this appeal be taxed and paid out of the estate.
(2)The appellant's costs of the originating application be taxed and paid out of the estate.
(3)The second, third, fourth and fifth respondents' costs of this appeal and of the originating application be taxed and paid out of the estate.
NEWNES JA: I agree with Pullin JA.
MURPHY JA: I agree with Pullin JA.
20
31
1