Cassegrain v Cassegrain

[1999] NSWSC 1165

CITATION:	CASSEGRAIN v CASSEGRAIN & ANOR [1999] NSWSC 1165
CURRENT JURISDICTION:	Equity
FILE NUMBER(S):	3609/98; 3610/98; 3612/98 & 3613/98
HEARING DATE(S):	24-28/5; 1-4/6; 24&25/6/99
JUDGMENT DATE:	1 December 1999
PARTIES :	Patrick A. Cassegrain v Claude George R. Cassegrain & Anne-Marie Cameron Catherine Brigette Dunn v Claude George R. Cassegrain & Anne-Marie Cameron Denis Patrick Cassegrain v Claude George R. Cassegrain & Anne-Marie Cameron John Baptiste Cassegrain v Claude George R. Cassegrain & Anne-Marie Cameron
JUDGMENT OF:	Bryson J at 1

COUNSEL :	P. Hallen SC for first and second plaintiffs B. Coles SC and G. Colyer for third and fourth plaintiffs D. Murr SC and M. Gorrick for defendants
SOLICITORS:	McCabes Lawyers for Plaintiffs Falvey Byrnes Associates for Defendants
CATCHWORDS:	FAMILY PROVISION - claims by four adult sons and daughter - extensive powers conferred by will on trustees over discretionary trust of residue and shares in company which owned family business - established state of conflict between plaintiffs and trustees - provision made by controlling exercise of trustees' powers over residuary trust and controlling voting and disposition of estate's shares in family company.
CASES CITED:	Singer v Berghouse (1994) 181 CLR 201
DECISION:	See para.46

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

BRYSON J.

Wednesday 1 December 1999

ESTATE OF THE LATE FRANCOISE GENEVIEVE ANDREE CASSEGRAIN & THE FAMILY PROVISION ACT

3609 OF 1998 PATRICK ANTHONY CASSEGRAIN v CLAUDE GEORGE RENE CASSEGRAIN and ANNE-MARIE CAMERON

3610 OF 1998 CATHERINE BRIGETTE DUNN v CLAUDE GEORGE RENE CASSEGRAIN and ANNE-MARIE CAMERON

3612 OF 1998 DENIS PATRICK CASSEGRAIN v CLAUDE GEORGE RENE CASSEGRAIN and MARIE CAMERON

3613 OF 1998 JOHN BAPTISTE CASSEGRAIN v CLAUDE GEORGE RENE CASSEGRAIN and ANNE-MARIE CAMERON

JUDGMENT

1   HIS HONOUR: Four claims for provision out of the estate of the testatrix were heard together. The testatrix was born on 11 January 1921 at Versailles in France. She emigrated to Australia with her eldest three children to join her husband in 1952 and lived here until her death on 18 May 1998. Her husband Gerard Renee Jean Francois Cassegrain was born at Orleans on 26 November 1923, emigrated to Australia about 1951 and died on 29 October 1993. 2   The testatrix and her husband had six children all of whom survived her and are parties to this litigation. They are:

Catherine Brigitte Dunn who was born in France on 27 September 1946;
Claude George Rene Cassegrain who was born on 27 September 1947;
Patrick Anthony Cassegrain who was born on 22 August 1950.
John Baptiste Cassegrain who was born in Australia on 14 January 1956;
Denis Patrick Cassegrain who was born on 10 January 1962;
Anne-Marie Cameron who was born on 1 April 1963.

3 The testatrix’s family are referred to hereafter by their first Christian names as they usually were in the evidence. No other person eligible to make a claim under the Family Provision Act has been identified by evidence, no claim has been made and none is likely. 4 The testatrix and her husband emigrated to Australia without significant resources and Gerard supported the family by his own labour. For some years they lived in very poor circumstances with some hardship. In the 1960s Gerard established the Expressway Spares business dealing in spare parts for earth moving equipment and large vehicles in premises on the Pacific Highway near Wauchope, New South Wales. Expressway Spares Pty Ltd was formed in 1965, and has grown to be large and prosperous, and although there is no satisfactory valuation of the company as a whole in evidence, its value is at least $11,500,00.00 and probably more. Expressway Spares and money generated by its business was the source of family prosperity and resources used in other ventures for over 25 years until Gerard’s death. 5 During his lifetime Gerard maintained patronal control over the affairs of Expressway Spares and of several other companies in which he held shares, and other family members held shares which he had arranged for them to have. Business matters and the family interests were often discussed among family members in highly informal ways, such as over the dinner table, but regardless of patterns of shareholdings and offices held in various companies, the effectual decisions were made by Gerard, and his decisions were influenced by the views of others only according to his own judgment from time to time. Claude and Anne-Marie had academic training in business management, but formal processes of business management did not have much influence on affairs. When funds were required for some project they were raised in whatever manner seemed expedient at the time, with inter-company loans and sometimes by using the personal credit of a family member to support a venture in which the particular family member had no direct interest. At the end of Gerard’s life the pattern of ownership of shares, land and other significant assets was chaotic. Gerard owned significant parcels of land jointly with Francoise, but the shares which he held did not, on the face of things, confer on him his actual domination of the affairs of Expressway Spares or of other companies. All his significant assets passed under his will or by survivorship in joint tenancies to Francoise. For that reason contributions to the assets of Gerard made by any of his children should be regarded as indirectly contributing to the assets of Francoise. After Gerard’s death new family dynamics operated, and patterns of shareholding and details of entitlement acquired significance which had not earlier been apparent. 6 The contribution made by Francoise throughout her life to the well-being of the family were very substantial. In Gerard’s life time the family members worked together, on the whole with good will, and with diligence each according to his or her ability. The actual values of the contributions of each were different, and the outcomes were different, but all made sincere endeavours with the object of a good outcome for all interests associated with Gerard as well as for the individual members of the family. This state of goodwill and co-operation continued after Gerard’s death, but by 1996 it was being broken up by conflict. This conduct extending over many years, in which the plaintiffs participated sincerely, contributed greatly to the assets which Francoise accumulated, most notably her real estate and Expressway Spares shares. 7 From 1977 until Gerard died Gerard, Francoise and their children each owned 15 shares in Expressway Spares Pty Ltd, except Anne-Marie who owned 35. There were and now are 140 issued shares. The reasons for the disparity are not now clear or important; a statement attributed in evidence to Francoise bases it on the view that Anne-Marie as the youngest could be expected to need greater assistance. Significant disparity first arose when Anne-Marie was three years old and has persisted through all later changes in the pattern of shareholdings. Gerard’s 15 shares passed to Francoise, so she, Claude and Anne-Marie were together able to cast 80 of 140 votes at general meetings and hence achieve practical control of Expressway Spares and its affairs; and they did associate together to do that. 8 A number of other companies in which family members had interests or exercised control were mentioned in evidence and it is significant to refer to three of them. Gerard Cassegrain & Co. Pty Ltd (GC & Co.) was formed in 1960 and first carried on business in log hauling, but from 1967 its business was land acquisition and development. At earlier times shares in GC & Co. were held equally by family members but late in Gerard’s life the conduct of its affairs came to be the principal outlet for Claude’s activities, and the pattern of shareholding was changed. After Gerard’s death there were 120 shares in GC & Co of which Francoise owned 20, Claude owned 30 and his wife Felicity owned 20, and Francoise’s other sons and daughters each owned 10. Francoise, Claude and Felicity acting together could thus cast 70 of 120 votes at general meetings and control decisions. In practical terms GC & Co has been under Claude’s control since Gerard died and still is. 9 Cassegrain Vineyards Pty Ltd operates a winery and vineyard at premises on Pacific Highway close to the Expressway Spares business. Soon after Cassegrain Vineyards was formed in 1980 its shareholding took the form that there were 96 shares on issue, 20 of which were owned by John, 20 by his wife Eva, while Gerard and Francoise and their five other sons and daughters each owned 8 shares. 10 Cassegrain Tradition Pty Ltd was formed in 1988 and established and carried on a business of manufacturing smallgoods. When it was formed Gerard and Francoise and five of their sons and daughters each owned 10 shares and Denis owned 50 shares, a total of 120 shares. Its business of processing smallgoods, in a factory constructed for that purpose, was never established with success and its operations were wound down in 1992. Later from December 1994 to June 1996 it operated a restaurant at the winery. It also for a time earned income by leasing its factory to Midco, a smallgoods manufacturer. 11 In June 1994 the shareholdings in Cassegrain Vineyards and Cassegrain Tradition were reorganised. Expressway Spares became the only beneficial owner of shares in those companies, and still is. 12 It will be seen that for each of these three companies one of Francoise’s sons, himself or with his wife, controlled about 41.67 per cent of the shares. Circumstances in which this ended in June 1994 and only Claude has a company in which he has a significant shareholding are a source of grievances the merits of which I need not decide. 13 One respect in which business affairs of Expressway Spares and the Cassegrain family were strikingly strange is that, although Expressway Spares owned and owns other parcels of land, the land on which its business premises and almost all its operations are conducted has never been owned by it. Expressway Spares has never had a lease or other arrangement recorded in writing, or any other arrangement made in any way, under which it had an entitlement to occupy that land. Some inconclusive entries in the directors’ minutes over 25 years before Gerard died record that attention was given to obtaining a lease, but no lease was ever entered into, and any lease then contemplated would have expired many years before Gerard died. In many building projects over several decades Expressway Spares built and paid for the construction of many buildings, extensions and other improvements on the land, and for some reason which evidence does not explain treated the improvements but not the land as assets of the company in its accounts. No explanation was given in evidence of why this was done or how it could be right, and it obviously was not right; the company had no such asset unless it had some title to the land. The situation in which, for decades, Gerard was in control of Expressway Spares’ affairs and authorised expenditure by the company on improvements on land of which he with Francoise was joint owner provides no basis for inferring that there were some implied or unrecorded arrangements affecting ownership of the land. Gerard and Francoise owned the land; they entered into no lease and received no rent or other income relating to it except the advantages flowing to them as owners of shares in Expressway Spares. They had an interest in the company’s prosperity which could be thought of as supporting their accepting that the company had the advantage of occupation of the land without paying any rent. As land-owners they could only gain by the company’s paying for improvements to be erected on their land. Gerard was the controlling mind of Expressway Spares, and it would not be right to conclude that the company in some way misunderstood the position, or acted on any basis which could give rise to a proprietary estoppel. 14 When she became sole owner of the land Francoise was in the economic position of being able to control Expressway Spares; she could if she wished eject the company and destroy its business, and this gave her a firm hand in its affairs. During her life the strength of her position was reflected in negotiations within the family for her to grant a lease to Expressway Spares and receive the large income which would be generated by an appropriate rent; however, in the continuing state of conflict, no outcome was ever achieved. Anne-Marie to whom the land passed under Francoise’s will occupies a correspondingly strong position. 15 The tests for relevance in subs.9(3) of the Family Provision Act are very wide and the parties omitted from evidence little if anything of the many conflicts and controversies which have occurred among themselves. The evidence included details of many controversies the merits of which it does not seem possible now to untangle or determine objectively. The question whether Claude is a suitable person in whom to place confidence is usually involved in these controversies. Francoise, Claude and Anne-Marie regarded it as appropriate for Claude to have the leading position in the business affairs of the family, while the plaintiffs regarded Claude as highly unsuitable. 16 There have been a number of attempts to resolve family conflicts, and on several occasions overall resolution seemed close but was not achieved. A mediation was conducted while the Federal Court proceedings were pending, without resolution. Justice Davies in his judgment made observations pointing out courses open, and his Honour’s observations if followed would have resolved or minimised conflict. These observations do not seem to have produced any impact on the behaviour of parties. Given this history it is not reasonable to expect that there will be co-operation in the future; the probabilities are that family affairs including affairs of Expressway Spares will continue to be conducted with conflict, hostile exploitation of opportunities and ready resort to litigation. The family’s prosperity could easily be brought down. 17 It was the defendants’ case that events relating to Federal Court proceedings bring the character and conduct of the plaintiffs under consideration within subs.9(3)(b), and that the effect of such consideration should be that no provision ought to be made or that any provision made ought to be moderate. The Federal Court proceedings were commenced in July 1996. At the time of the testatrix’ death the hearing was completed and reserved judgment was awaited. The judgment was published on 15 July 1998. The present plaintiffs obtained a declaration establishing matters adverse to Claude in these terms:

“THE COURT DECLARES THAT:
The actions of the first respondent, Claude George Rene Cassegrain, in treating the $4.25m loan account with Gerard Cassegrain & Co Pty Ltd as his entitlement to be drawn down at his will, in drawing upon the loan account as he saw fit and in causing the passing of a resolution of directors allowing for the payment of retrospective interest thereon were actions which were oppressive of and unfairly prejudicial to the members of the company.
THE COURT ORDERS THAT:
1. The application be otherwise dismissed.
2. That each party abide his, her or its own costs of the proceedings.”

18   They obtained no other relief; the Federal Court did not in any manner intervene in the affairs of the family companies. There were factual findings about many subjects of controversy, and observations by Justice Davies on the conduct of affairs which I would respectfully say appear to have been well considered and wise; however these observations have no force unless those concerned choose to follow them, and they have not. Each party was left to pay the costs which had been incurred. The litigation involved the attention and energies of family members for about two years and the expense relating to it was very great; well over $1,000,000. The relief in the form of a declaration relating to Claude was a ridiculously small outcome from so much effort. The proceedings were a wasteful fiasco, they used up large resources uselessly, and with the benefit of hindsight it can be seen that it was a very great blunder for the plaintiffs to bring the proceedings and involve other family members in them. 19   The proceedings arose largely out of conduct of Claude and the adherence of the testatrix and also of Anne-Marie to Claude, putting him in a very strong position in the affairs of Expressway Spares, and also in other family affairs. The plaintiffs were entitled to approach the Federal Court and seek relief, and in doing so they came under the necessity of joining Francoise, who was one of the shareholders in closely-held family companies, as a respondent. This was not an expression of hostility against her. The attack on Claude was perceived by her as an attack on herself, and she took an active stand in resisting the litigation, making common cause with Claude and Anne-Marie. This continued a position she had clearly adopted before the litigation began in which she adhered to Claude as a suitable person to control family affairs and gave him her practical and moral support. She was entitled to make this choice, but it was not reasonable for her to take the view that no one should see Claude differently. She expressed very strong loyalty to Claude, and hostility towards the plaintiffs, and also other persons associated with family affairs, to an extent which was not reasonable. She could have chosen to see the litigation as having little potential effect on her own interests and have taken a submitting part in it; but she did not do that and took a position which fully accorded with her decision to give her adherence to Claude. A claim introduced late in the proceedings was adverse to her landholding; however Davies J did not uphold this claim, or make an order determining it: nor do I, but it seems to have no substance. She had assurances from Claude that the litigation was directed against him, that he would manage it and that she did not need to worry; see transcript 315-316; these assurances were correct but she does not seem to have accepted them. In evidence in the Family Court proceedings she professed (affidavit of 17 July 1996) “In my attitude and my love I have never, and will never, favour one child over another.” Her conduct and particularly the dispositions of her will do not bear this out. 20   Francoise felt and expressed very strong resentment against the plaintiffs for joining her as a party, and this was developed by expressions of resentment of particular aspects of the litigation such as the need to produce documents including Gerard’s diaries on discovery, and the need for her to give oral evidence. The testatrix expressed strong adverse feelings about her being required to attend for cross-examination. In my view this requirement arose not so much from her being joined in the proceedings as from her taking an active part, in common with Claude and Anne-Marie, in defending the proceedings, making common cause with Claude and Anne-Marie and giving evidence in support of the respondents’ case. That she was cross-examined followed from the position she adopted; and her adopting that position was not wholly the applicants’ doing. In my view the testatrix made more of a grievance of the matter of cross-examination than was truly warranted. In my view she resented these aspects of the litigation to an excessive extent and used the litigation to indulge and to express feelings of hostility to a greater degree than was appropriate, even for a person who had been involved in large-scale proceedings by close family members. In the very last weeks before her death her position moderated, and after refusing or severely limiting contact with the plaintiffs she returned to relatively appropriate conduct and communications with them. This occurred when she was dying and it is likely that she was aware that she was. 21   In my finding the testatrix felt and expressed excessive resentment and hostility towards the plaintiffs in connection with Federal Court litigation, and indulged her feelings to an excessive degree, even though resentment and hostility were not inappropriate. With hindsight it is known that the litigation achieved no practical success and was a gigantic folly, very wasteful of resources and an enormous further disruption of already disrupted family relationships. I see the plaintiffs’ conduct in relation of the Federal Court proceedings as adverse to their claim, not because it was hostile to the testatrix, but because it was folly, wasteful of her resources and those of persons close to her, and for that reason as qualifying any view that provision ought to be made for the plaintiffs out of her estate. After conducting themselves and using resources in this way, they ought not to be treated with generosity. 22   Assets in the estate appear from the following agreed table of values.

ASSET	AGREED VALUE	BENEFICIARY
Jewelry & Watches	$14,700.00	Anne-Marie & Felicity
Household Contents	$59,400.00	Claude
19th Century French Clock	$4,000.00	Denis
Vintage Cars	$190,000.00	Trust
Folio Identifier 92/805549 (2.832 Hectares - Le Clos Verdun)	$67,500.00	Anne-Marie
Folio Identifier 35/776681 (Home site and Vineyard - Le Clos Sancrox)	$69,000.00	Denis
Folio Identifier 6/805548	$6,250.00	Clos Farming Estates Pty Ltd
3/100080 (part sub-division 1&2/591340)	$4,000,000.00 (LAND & BUILDINGS) $1,150,000.00 (LAND ALONE)	Anne-Marie
4/100080 (part subdivision 1&2/591340) (Land and orchard)	$162,500.00	GC & Co
5/100080 formerly 4/540304 (Land and residence)	$275,000.00	GC & Co.
6/100080 1/43082 (Road)	$34,900.00	GC & Co
Peugeot Motor Vehicle	$25,000	Anne-Marie
CTK Shares	$35,000	Claude
Loan Accounts - CV & CT	$98,024 (Defendants’)	Trust
Red Cedar Desk	$3,250 (Defendants’)	Trust
Falvey Byrnes Trust Account	$9,174 (Defendants’)	Trust
Port Macquarie Tea Tree Account	$74,780 (Defendants’)	Trust
Priests Trust Account	$11,877 (Defendants’)	Trust
Diocesan Investment Fund	$1,061	Trust
Wines	$500 (Defendants’)	Trust

23 Francoise’s 30 Expressway Spares shares are not the subject of agreement as to their value. The value of those shares is very difficult to see; there is no market in them and no means ready to hand for realising their value; the practical advantages of owning the shares depends on the manner in which company affairs are conducted. The company paid a dividend in 1998, but that has been its only dividend. The company is now operating very successfully and may continue as a going concern for many years; but in the absence of a market in them the shares will be of little value except in relation to dividends which may be paid; and there is no basis for any confident prediction about whether or not earnings will be reflected in dividends. Consideration of what would happen if Expressway Spares were wound-up and the proceeds of sale of its business were distributed among shareholders is subject to there being no basis for a confident prediction about whether that will happen. The holder of the testatrix’ shares is not in a position to bring about either result. 24 The material in evidence bearing on the value of Expressway Spares Pty Ltd and its shares is Exhibit 14, a report by Mr Grant Harrison of NorthCorp Accountants which was completed on 28 April 1999. This is not a valuation but a compilation of materials from a number of sources largely assembled by Claude and those advising him. On the material before him Mr Harrison gave the total realisable value of the assets of Expressway Spares as $24,449,804.00, liabilities as $12,937,009.00, and excess of assets over liabilities of $11,512,795.00. By direct proportion the estate shares were valued at $2,467,027.00. The values of many assets and the amounts of many liabilities are however open to further consideration. The choice of approach to valuation of stock could produce huge variations in the overall conclusion. The book value at 30 June 1998 was $2.8 million at scrap value; this is an understatement. Mr Harrison saw a valuation by G.E. Capital Asset Services & Trading Asia Pacific Pty Ltd as of January 1999 at $10.7 million in an orderly liquidation and he adopted this figure. However he also saw a valuation by Steers Pty Ltd as of February 1999 which gave the fair market value, which apparently means retail value, of the stock at $37.7 million and the realisation at a forced auction at $20.1 million. Mr Harrison also included goodwill at $3,860,000 when giving the realisable value of the assets; however he pointed out forcefully the difficulties of quantifying valuation of goodwill. 25 The reasoning which produced $2,467,027 as the value of the shares owned by the testatrix would support attributing $1,233,513 to the shareholdings of each of the plaintiffs. With good management they could well bring much more; the possibility that they are worth over $2 million for each plaintiff could easily be realised. For any consideration of the value of the plaintiffs’ shareholdings or of the estate shareholdings, the difficulties of realisation both of capital and of income should always be kept well in mind. Mr Harrison’s conclusion appears to me to be conservative and the position could well be that with good management the value of Expressway Spares and of shares in it will be much greater than the figures he gives, whether valued in terms of earnings or of realisation on disposition of the business. However the whole subject of valuation is highly indeterminate, assumptions that affairs will be well managed cannot be confidently made, and the plaintiffs do not have the power to realise the value of their shares suggested by arithmetically applying direct proportion to the total value of the company’s assets. 26 The estate appears to have only one substantial liability, namely the testatrix’ joint and several liability to the solicitors retained for the respondents for costs of the Federal Court proceedings. The evidence of a member of the solicitors’ firm is that the outstanding legal fees, and interest to the time of hearing, amount to $557,745.61. The evidence shows that there was no special arrangement and no detailed arrangement defining the basis on which costs would be charged or establishing which of the respondents would bear them, or that they would be borne in any particular proportions. It follows that as she joined in giving the instructions Francoise incurred joint and several liability to the solicitors for whatever is an appropriate sum for them to charge; and in the entire absence of any other arrangement, the ordinary consequence, which appears to apply here, is that each of the respondents who joined in retaining the solicitors would be liable for the whole amount but entitled to contributions from each other respondent so that overall the burden was borne equally; this would include each respondent who retained the solicitors, whether an individual or a corporation, as an equal contributor. If the only persons under a common liability were the individuals and if they contributed equally the testatrix’ estate would be liable for $185,915.20, and this liability would fall on the residuary estate. Claude and Anne-Marie are at risk, including risk as to their continuing in office as trustees, if they throw an inappropriate part of the common liability for the costs to the Federal Court proceedings onto the estate; their own interests are involved, and it would be perilous for them to give themselves any unfair advantage. 27 The testatrix dealt extremely generously with Anne-Marie and also with Claude in her will, and also made dispositions to companies. The benefits which she provided for them were far greater than any benefit which it could be appropriate for the court to order for them. However she had a legal right to dispose of her own assets, subject only to any order which the court may make under the Family Provision Act 1982. It is not part of the court’s function to consider whether her generosity was excessive, or to correct it or produce an overall fair result. 28 The testatrix, who made three earlier wills, made the will which took effect on 23 April 1998 in the last weeks of her life, when the Federal Court proceedings were under reserved judgment and her estrangement with the plaintiffs was moderating. The table of agreed values illustrates the gifts. There are a number of specific gifts; Francoise’s jewellery and watches were given to Anne-Marie and Felicity (who is married to Claude), the household contents were given to Claude and an antique clock was given to Denis. A Peugeot motor car of no great value was given to Anne-Marie. Claude was also given a parcel of shares in CTK Pty Ltd, a company of no great value in which other family members have shareholdings. Anne-Marie and Denis were each given a small holding of vineyard land; these gifts have no real relation to the activities or interests of either of them. Anne-Marie lives nearby but in relation the interests and activities of Denis, gifts of a home site and vineyard at Wauchope and an antique clock are all but irrelevant. The testatrix’ most significant parcel of land, on which the Expressway Spares’ business is conducted, was given to Anne-Marie and its agreed value is $4,000,000. She gave several parcels of land to companies; a minor parcel to a vineyard company and three parcels of some economic significance to GC & Co, which is under Claude’s control. A number of relatively minor assets were given to her residuary trust, as were her 30 shares in Expressway Spares. 29 While her many other gifts were of value and should not be lost sight of, their value was greatly outweighed by the principal gifts, the land to Anne-Marie and the Expressway Spares shares to the residuary trust. The residuary trust is a discretionary trust as to capital and income until the year 2015. Whatever may be the assets of this trust in 2015 will be distributable equally among 19 named beneficiaries who are children and grandchildren of the testatrix. Until then however the assets of the trust are subject to discretionary powers of distribution as to capital and income among those 19 persons. These discretionary powers are expressed to be absolute, and Claude and Anne-Marie may exercise them in favour of themselves and their own children as well as of any others. In reality there is no prospect of challenge to any decision they make, unless they give reasons which show that the decision was made for an improper purpose. Claude and Anne-Marie are entitled to cast the votes of trust shares at general meetings of Expressway Spares, and these votes with their own place them in practical control of the company’s affairs if they act together and notwithstanding wishes of the plaintiffs. The plaintiffs have practically nothing to hope for in terms of exercises of discretion favourable to them, and they have no real prospects of resisting distribution of all trust assets to persons other than themselves before the distribution date, which is still about 16 years in the future. 30 In different ways each of the plaintiffs involved his or her life and working career in the family’s business affairs. In no case is there any basis for finding that their conduct towards the testatrix was inappropriate until the first half of 1996 when her firm adherence to Claude became evident. It is not disputed that each of the plaintiffs made honest efforts to contribute to the family prosperity. 31 Over many years Catherine gave Francoise assistance in many ways appropriate for an eldest daughter of a mother who had five younger children. She was a personal and social support to her mother, who was always much more confident in French than in English, and needed and received her daughter’s help in many ways, including dealings with persons outside the family. Catherine worked as a receptionist in the Expressway Spares business for many years and still does. Her earnings have been modest. She has three adult sons. She participated in dealings in land by or under the control of Gerard and conformed with his wishes in acquiring and also disposing of property. Her husband Jim Dunn turned away from his general building business and development projects and now for over 20 years has worked on building projects associated with Expressway Spares and other Cassegrain interests; he has done a great deal of work on many projects and charged basic carpentry wages for his time. From 1990 he participated in business administration, and he was a director of Expressway Spares for several years. Between them they have built up significant assets, including a commodious family home at Wauchope near the Expressway Spares premises, and a residential property in a Sydney suburb which is occupied by their sons. Building up their assets was at least in part assisted by their association with the Cassegrain business interests; Jim Dunn was able to spend well over a year of his own time on building their house, and he used some company equipment for the purpose. Although the two house properties are significant assets Catherine now has little else apart from her Expressway Spares shares, and Jim Dunn is approaching the end of his working life without any further capital fund for retirement. Apart from her interest in the residuary trust Catherine received no benefit under Francoise’s will. Catherine has involved her adult life largely in family affairs including the affairs of Expressway Spares, and her claim to be put in the position where she can in economic reality enjoy the benefits of her shareholding is strong. If her shareholding is unproductive she will not be adequately maintained in the later years of her life. She has various obligations, most notably relating to costs incurred in the Federal Court proceedings. However plaintiffs, including Catherine, do not have a claim on their mother’s bounty in respect of that folly. 32 Catherine has a special need for provision which relates to road access to the house at Wauchope which she and Jim Dunn jointly own. For many years they have had access under informal arrangements which were made by Gerard with them, under which they have actually been able to pass over a parcel of land owned by Expressway Spares. This parcel of land has not been actively used by Expressway Spares although in the future some use for it may present itself; it appears to have been held for many years as an investment. It has a frontage to Sancrox Road. In the past Catherine and Jim Dunn owned other legal means of access, which they let go because they felt they were in a position to rely on access through the Expressway Spares land. Their evidence was inaccurate and confused as to some details of this history relating to events of many years ago, but it is clear that they were encouraged by Expressway Spares in the person of Gerard to rely on informal access over land owned by that company, that they did so rely and that while they did so they lost opportunities to obtain legal access in other ways. Their claim for grant of a right of way against Expressway Spares on equitable principles appears to me to be a strong one. Expressway Spares is in a position to resolve this need, and at one time appeared to be about to do so; but the grant of a right of way was prevented by action of Claude, who has explained this by dissatisfaction with what he saw as irregular proceedings by other directors to grant the right of way. Catherine’s need for sufficient resources to resolve this problem is very strong, and until it is resolved provision made for her can be no more than an interim order, as in justice it is necessary to reserve the court’s opportunity to award her further resources to enable her to resolve the problem, it may be by buying access from another neighbour. 33 Patrick has spent most of his working life in the employment of Expressway Spares, and has worked for that company continuously since 1977. He has one adult son. He owns a house and his Expressway Spares shares, but otherwise his assets are not significant. Apart from the residuary trust he received no benefit under the will. He spent earlier periods of his life working elsewhere, or working for CTK Engineering Pty Ltd and also earlier in life lived in France for some periods. He too supported Gerard’s ventures by lending his name to a real estate investment. He has worked long and hard in Expressway Spares’ affairs, and was in management positions during the years of the company’s growth to great success. He has not been paid at high rates. Except in relation to the Federal Court proceedings no inappropriate behaviour of his directed against the testatrix has been established. He gave in evidence a list of large capital expenditures, somewhat removed from reality, which he would wish to make. I regard him as having a strong claim on the testatrix’ bounty with respect to giving reality to the provision which Gerard made for him long ago by giving him his shareholding in Expressway Spares. 34 John Cassegrain is married and has two dependent children. For many years throughout the successful development of the winery and construction of its premises he was employed in the Cassegrain winery by Cassegrain Vineyards. For some years he held or expected to hold about 40% of the shares in Cassegrain Vineyards. Development of Cassegrain Vineyards and the prosperity of the winery depended on availability of financial support and continued investments from other Cassegrain interests. After Gerard died the impetus for further large investment for John’s benefit came to an end and Expressway Spares became the owner of all the shares. His employment by Cassegrain Vineyards ended late in 1998 after an unsuccessful struggle with Claude for control of its affairs. Although he owns a house there is a deficiency of his assets to his liabilities, largely because of liabilities incurred in connection with the Federal Court proceedings, unless his shares in Expressway Spares are brought into consideration. He and his wife Eva who had also been employed by Cassegrain Vineyards brought proceedings against Cassegrain Vineyards over employment entitlements, and these were settled on a basis which will bring them $71,300 less applicable tax; they will still have a deficiency of assets to liabilities. After a period without employment John has obtained good employment as General Manager of Pepper Tree Winery at $75,000 per year. This is a good and remunerative position; unlike his earlier positions he is at arm’s-length with his employer. He is highly trained and highly skilled as a wine-maker and has a history of success, and his career prospects are good. He is now facing life in his mid-40s with dependent children, good employment but no significant net capital apart from his Expressway Spares shares. For his maintenance and advancement in life he is in need of having the advantages of owning those shares brought to reality. 35 Denis Cassegrain is 37 years of age and he married on 14 November 1998. For some years he worked in the affairs of Cassegrain Tradition and sought to establish that company’s business in the manufacture of smallgoods. Cassegrain Tradition was well supported by money from family enterprises under the influence of Gerard, and although a large investment said to be more than $1,000,000 went into the construction of the factory and the establishment of its business, it did not succeed. This was not for lack of endeavour on Denis’ part. From 1992 onwards Cassegrain Tradition conducted a restaurant at the winery and Denis worked in that; however this business too came to an end. Cassegrain Tradition for some period received rental income from another smallgoods manufacturer which rented the factory, and Denis drew income from Cassegrain Tradition. He has been supported in this way during long periods when in fact he has had nothing to do. More recently he has found employment elsewhere in the smallgoods manufacturing business. He is not highly qualified, and unlike John he cannot point to a record of success in his chosen industry. He is able to earn sufficient money to support himself, but not to support his wife and their intended family, and it appears likely that they will be dependent to a significant extent on her future earnings. He gave in evidence an unrealistic wish-list of resources, but as a member of the Cassegrain family he ought to have the actual benefit of the provision which Gerard gave to him long ago. 36 Denis was of great assistance to Francoise, and for a long time lived in her home, although this ended after the estrangement associated with the Federal Court proceedings. He is however capable of strange behaviour and uncouth expressions, and very late in the testatrix’ life became involved in an unpleasant confrontation with Claude and Nicholas Cameron, Anne-Marie’s husband, which led to charges of assault and applications for Apprehended Violence orders. Claude’s behaviour in this confrontation was also unsatisfactory; but he is not asking for assistance from the Court. 37 It is desirable that the family’s affairs should be separated to a greater extent than at present or completely, so that each member can control his or her own assets and economic destiny. If this is to happen it will involve in some way reorganising Expressway Spares; and there are a number of different forms which reorganisation could take. These could include selling the company’s business and distributing proceeds to shareholders in a liquidation or by some other mechanism; and the purchasers of the business could be or be related to some family members, or could be wholly unrelated. The reorganisation could also take the form of continuing the company’s business with the shares held by family members but changing the policies of the Board and, it may be, the membership of the Board and bringing about regular distributions of dividends. The Court is not equipped to make the commercial decisions involved or to supervise their being carried out over many months or some years. The parties would be able to do this if the influence of the testatrix’s shares in forming a dominating block of shareholdings and votes in the hands of Claude and Anne-Marie is neutralised and does not represent an augmentation to the strength of Claude and Anne-Marie as shareholders in their own right. Whatever decisions are made and however matters are managed, the possibility of a poor outcome can be clearly seen; this possibility is ever present in commerce and is augmented by internal conflict. 38 The powers of the Court extend far beyond ordering that provision be made by payment of the sum or allocation of an asset to a claimant. Powers are enumerated in s.11 and s.15 and include limiting and controlling the use of powers by trustees. 39 In Singer v Berghouse (1994) 181 CLR 201 at 208-209 Mason CJ Deane & McHugh JJ introduced their consideration, extending to p212, of the jurisdiction of the Court under s.7 and subs.9(2) as follows:

“It is clear that, under these provisions, the Court is required to carry out a two-stage process. The first stage calls for a determination of whether the applicant has been left without adequate provision for his or her proper maintenance, education and advancement in life. The second stage, which only arises if that determination be made in favour of the applicant, requires the court to decide what provision ought to be made out of the deceased’s estate for the applicant. The first stage has been described as the ‘jurisdictional question’. That description means no more than that the court’s power to make an order in favour of an applicant under s.7 is conditioned upon the court being satisfied of the state of affairs predicated in s.9(2)(a).”

As their Honours’ later observations show, the two stages are not wholly distinct.

40 I turn to subs.9(2). In my finding the provision made for each of the plaintiffs by the testatrix in her will has left each of them without adequate provision for proper maintenance and advancement in life. The inadequacy is in respect of the practically uncontrolled influence which the dispositions of the will give the defendants over each of the plaintiffs’ interests in Expressway Spares (which represent provision made in favour of them by Gerard) and also over their interests in the residuary estate provided for them by the testatrix. The defendants have been given practically unchallenged discretionary control and are unlikely to exercise their powers in ways which give substance to the provisions. It cannot realistically be expected that these powers will be exercised objectively. 41 The provisions for the plaintiffs already made by Gerard in endowing them with Expressway Spares shares and by the testatrix in her will indicate what is adequate provision for them in their circumstances. The plaintiffs are without any control over their endowment and without any real access to it. It was within the testatrix’ power not to impose this barrier. 42 Because of the established history of conflict with the plaintiffs Claude and Anne-Marie are unsuitable persons to exercise the very wide discretionary powers which Francoise’s will gave them over her residuary trust; the strong probability is in casting votes at general meetings of Expressway Spares, or exercising the discretionary powers of trustees, they will not act dispassionately or on a fair basis. While it is not impossible that some benefits may flow to the plaintiffs from the exercise of these discretionary powers, it is very unlikely that they will receive any substantial advantage. 43 The scale of provision which ought to be made for the plaintiffs in the circumstances of their lives and their relationships with the testatrix, in the context of their relationships with Gerard during his lifetime and of the family’s resources and prosperity, is in my judgment established by the provision which in fact was made for them by their parents. Although they received other benefits in various forms, and with various continuing effects, the most substantial provision which was made for their maintenance and advancement was that they were given shareholdings in Expressway Spares and interests in the residuary estate. That provision would be adequate in accordance with the family’s standards and circumstances if they were able actually to enjoy the economic benefit, and is inadequate only in respect of obstacles to their doing so. In my opinion each of the plaintiffs would be well provided for if their shareholdings in Expressway Spares and the discretionary trust were freed from the influence of conflict and hostility, and business decisions relating to conduct of business, dividends and otherwise in company and family affairs were fairly based on genuine pursuit of the interests of the company, its members as a whole, and of the family. The closet approach to this ideal outcome which it is practical to achieve is that a majority should be given control over decisions. 44 The obstacles are that Claude and Anne-Marie, who have behaved with active hostility towards the plaintiffs (and the converse is also true) are in a position to control the affairs of Expressway Spares by use of the voting power of the testatrix’ shares, and in that way they can directly or indirectly control decisions about whether or not there should be any dividends, the amounts which should be distributed, whether or not Expressway Spares’ business should continue to be operated by the company or should be sold, whether or not the proceeds of any sale should be distributed to shareholders; and any other significant decision relating to Expressway Spares. The provision which ought to be made by the Court’s order should prevent Claude and Anne-Marie from using that voting power except in accordance with the wishes of the majority of the children of the testatrix, and should limit in a similar way their discretionary powers over the residuary trust fund. The limitation should be that they should be required to cast votes and exercise their powers in accordance with the written direction of a majority of the children of the testatrix, and that they be disabled from doing those things except in accordance with such a written direction. Otherwise, in my judgment the Court should not order any provision under s.7. 45 As Claude and Anne-Marie have given guarantees to Expressway Spares’ bank for credit to it, it will be a condition of relief that each of the plaintiffs give a corresponding guarantee and incur an equal liability with them; unless some arrangements can be made under which Claude and Anne-Marie are released from their guarantee obligation. 46 I have not yet considered questions of the costs of these proceedings. I make the following orders:

3609 OF 1998 PATRICK ANTHONY CASSEGRAIN v CLAUDE GEORGE RENE CASSEGRAIN and ANNE-MARIE CAMERON

(1) Order pursuant to s.7 of the Family Provision Act 1982 by way of provision out of the estate of the testatrix that the exercise of the powers conferred on the trustees by cl.12(iii) and 12(iv) of the last will of the testatrix, the transfer, disposition or encumbrance of shares in Expressway Spares Pty Ltd forming part of the estate of the testatrix, casting any vote in respect of those shares and any act of the trustees relating to new issue of shares shall be controlled as follows:-

the trustees must act in accordance with a written direction of the majority of the children of the testatrix surviving at the time the trustees act; and must not act unless they act in accordance with a written direction of that kind.

(2) This order is made on terms that the plaintiff is to contribute to liability of the defendants under any guarantee to a bank for credit extended to Expressway Spares Pty Ltd at the date of this order on the basis of the contribution which would be appropriate if all six of the testatrix’ children had incurred common liability in respect of the guarantee.

3610 OF 1998 CATHERINE BRIGETTE DUNN v CLAUDE GEORGE RENE CASSEGRAIN and ANNE-MARIE CAMERON
(1) Order pursuant to s.7 of the Family Provision Act 1982 by way of provision out of the estate of the testatrix that the exercise of the powers conferred on the trustees by cl.12(iii) and 12(iv) of the last will of the testatrix, the transfer, disposition or encumbrance of shares in Expressway Spares Pty Ltd forming part of the estate of the testatrix, casting any vote in respect of those shares and any act of the trustees relating to new issue of shares shall be controlled as follows:-

the trustees must act in accordance with a written direction of the majority of the children of the testatrix surviving at the time the trustees act; and must not act unless they act in accordance with a written direction of that kind.

(2) This order is made on terms that the plaintiff is to contribute to liability of the defendants under any guarantee to a bank for credit extended to Expressway Spares Pty Ltd at the date of this order on the basis of the contribution which would be appropriate if all six of the testatrix’ children had incurred common liability in respect of the guarantee.

(3) Order 1 has effect as an interim order for provision and leave is reserved to apply for further consideration of the plaintiff’s claim for provision.

3612 OF 1998 DENIS PATRICK CASSEGRAIN v CLAUDE GEORGE RENE CASSEGRAIN and ANNE-MARIE CAMERON
(1) Order pursuant to s.7 of the Family Provision Act 1982 by way of further provision out of the estate of the testatrix that the exercise of the powers conferred on the trustees by cl.12(iii) and 12(iv) of the last will of the testatrix, the transfer, disposition or encumbrance of shares in Expressway Spares Pty Ltd forming part of the estate of the testatrix, casting any vote in respect of those shares and any act of the trustees relating to new issue of shares shall be controlled as follows:-

the trustees must act in accordance with a written direction of the majority of the children of the testatrix surviving at the time the trustees act; and must not act unless they act in accordance with a written direction of that kind.

(2) This order is made on terms that the plaintiff is to contribute to liability of the defendants under any guarantee to a bank for credit extended to Expressway Spares Pty Ltd at the date of this order on the basis of the contribution which would be appropriate if all six of the testatrix’ children had incurred common liability in respect of the guarantee.

3613 OF 1998 JOHN BAPTISTE CASSEGRAIN v CLAUDE GEORGE RENE CASSEGRAIN and ANNE-MARIE CAMERON
(1) Order pursuant to s.7 of the Family Provision Act 1982 by way of provision out of the estate of the testatrix that the exercise of the powers conferred on the trustees by cl.12(iii) and 12(iv) of the last will of the testatrix, the transfer, disposition or encumbrance of shares in Expressway Spares Pty Ltd forming part of the estate of the testatrix, casting any vote in respect of those shares and any act of the trustees relating to new issue of shares shall be controlled as follows:-

the trustees must act in accordance with a written direction of the majority of the children of the testatrix surviving at the time the trustees act; and must not act unless they act in accordance with a written direction of that kind.

(2) This order is made on terms that the plaintiff is to contribute to liability of the defendants under any guarantee to a bank for credit extended to Expressway Spares Pty Ltd at the date of this order on the basis of the contribution which would be appropriate if all six of the testatrix’ children had incurred common liability in respect of the guarantee.

Last Modified: 01/07/2002