Daniel v Van Zwol

Case [2015] SASCFC 38

SUPREME COURT OF SOUTH AUSTRALIA

(Full Court)

DANIEL v VAN ZWOL

[2015] SASCFC 38

Judgment of The Full Court

(The Honourable Chief Justice Kourakis, The Honourable Justice Stanley and The Honourable Justice Parker)

7 April 2015

SUCCESSION - FAMILY PROVISION - REQUIREMENT FOR ADEQUATE AND PROPER MAINTENANCE

APPEAL AND NEW TRIAL - APPEAL - GENERAL PRINCIPLES - INTERFERENCE WITH DISCRETION OF COURT BELOW

Appeal from the judgment of a master on a claim pursuant to the Inheritance (Family Provision) Act 1972 (SA).

The testatrix made a will on 14 July 2009 appointing her daughter, the appellant, as the executrix of her estate.  The terms of the will left the residue of the estate, after payment of expenses, in equal shares, to the appellant, her brother Johannes Antonius Van Zwol and their nephew Renae Van Zwol, who is the grandson of the testatrix.  The 2009 will made no provision for the appellant’s remaining brother, Bauke Johannes Maria Van Zwol. The testatrix died on 19 October 2012.  The 2009 will was admitted to Probate as the testatrix’s last will on 17 January 2013. Clause 5 of the 2009 will provided that provision was not made for Bauke as he had received the value of a property of the testatrix and had never repaid the value he received.

Bauke instituted proceedings claiming that by the terms of the 2009 will the testatrix failed to make adequate provision for his proper maintenance.  The action was defended by the appellant and her brother Hans.  Renae took no part in the proceedings. The testatrix’s estate is valued in the amount of $326,761.12 or thereabouts. It principally consists of cash. The master allowed the claim and awarded Bauke the sum of $70,000 from the estate with the three named beneficiaries entitled to the residue of the estate in equal shares.  The master further made orders that the estate should pay Bauke’s costs on a solicitor/client basis, that the estate should pay the appellant’s costs as the executrix on an indemnity basis, and the estate should pay the costs of the appellant and Hans on a party/party basis. 

The appellant seeks to set aside the judgment and orders of the master and seeks an order in lieu thereof that Bauke’s claim be dismissed with costs, including the costs of the appeal.

Held per Stanley J (Kourakis CJ and Parker J agreeing), allowing the appeal:

1. While there is some force in the appellant’s submission that her financial position was not “somewhat similar” to Bauke’s given the master’s error as to the value of the Nilma property, nonetheless the factual error was not material to the master’s finding (at [42]).

2. If the terms of clause 5 of the testatrix’s will were true, as matter of fact, that might establish a basis upon which the Court could exercise its discretion in s 7(3) of the Act to refuse to make an order in favour of Bauke on the ground that his conduct was such as to disentitle him to…

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AGLC
Daniel v Van Zwol [2015] SASCFC 38
Case
[2015] SASCFC 38
Decision Date

CaseChat Overview and Summary

The appellant, Daniel, sought to overturn a judgment and orders made by a master concerning a claim brought by Bauke under the relevant Act. Bauke, a retired transport driver aged 66, suffers from Parkinson's disease and receives aged pensions and a superannuation payment. He and his wife own a property, the valuation of which was a point of contention. The appellant, aged 60, also has a disability pension and lives with her husband. Hans, aged 65, receives a totally and permanently incapacitated returned veterans' allowance and suffers from various other health issues. The dispute concerned Bauke's claim for adequate and proper maintenance and provision from the testatrix's estate.

The primary legal issues before the court were whether the master erred in his assessment of the value of Bauke's jointly owned property, and if so, whether this factual error was material to the master's exercise of discretion in making an award for Bauke's maintenance. The court also considered whether to interfere with the master's costs order, which was made on a solicitor-client basis due to Bauke's successful offer of settlement. The appellant argued that the master's factual error regarding property valuation vitiated his discretion, and that the costs order was unjust.

The court acknowledged that the master had erred in his valuation of Bauke's property, finding it to be approximately $450,000 when evidence suggested a higher value, potentially up to $730,000. However, the court applied the principle of appellate restraint, emphasising that an appellate court should only interfere with a primary decision-maker's discretionary judgment if the error is material and affects the ultimate conclusion, or if the conclusion is plainly wrong. The court noted that the master's reasons for finding Bauke had been left without adequate provision included his ill health, the lack of available cash for medical expenses, and the testatrix's equal moral duty to all her children. The court rejected the challenge to the costs order, finding no good reason to interfere with the master's discretionary judgment on costs, which was presumed correct.

Ultimately, the appeal was allowed to the extent that the award of $70,000 in favour of Bauke was set aside. In lieu of this, the court ordered that a payment be made from the estate to Bauke representing one quarter of the residual estate. The parties were to be heard further on the terms of the formal order and the question of costs.

Orders

Orders of the court

Full text does not contain this section.

Background

Background to the litigation

The appellant seeks to set aside the judgment and orders of the master and seeks an order in lieu thereof that Bauke’s claim pursuant to the Act be dismissed with costs, including the costs of the appeal. In the alternative, the appellant asks the Court to interfere with the amount of the award and the terms of the costs order made in Bauke’s favour. Factual background Bauke is a retired transport driver and weighbridge attendant. At trial he was 66 years of age. He is married and lives with his wife, Valerie Van Zwol, in country Victoria. They own this property. The value of the property is a matter of contention. The master found that its value was $450,000. Bauke concedes that this is incorrect. The evidence before the master was that the land had been purchased in an amount of $270,000 and a house had been constructed on the land in 2012 at a cost of approximately $460,000. In August 2012 a council valuation assessed the capital value of the property to be $592,000. The appellant placed considerable weight upon this factual error. I will come back to this. Since 2008 Bauke has suffered from Parkinson’s disease. His condition was diagnosed in 2012. Parkinson’s disease is a degenerative condition and his symptoms have increased over time so as to prove disabling. Bauke retired in 2011. He and Ms Van Zwol are now in receipt of aged pensions totalling $609.40 per week. In addition he receives a payment from a superannuation fund of about $344 per fortnight. The superannuation fund is valued at approximately $180,000. He and Ms Van Zwol jointly own a motor vehicle and a mobile home, each of which is valued at $10,000. They have no significant liabilities. The appellant was at the time of the trial 60 years of age and married with one child. For 11 years she has been in receipt of a disability pension for a physical disability which significantly limits the use of her hands as well as a depressive illness. She lives with her husband who receives a carer’s allowance. They reside in a jointly owned house at Nuriootpa. The land on which they reside was purchased relatively recently for $132,000 and they constructed a house on the land at a cost of approximately $174,000. Further work is needed to complete the house. The appellant and her husband have savings in the vicinity of $25,000. Her husband has a superannuation fund totalling approximately $69,000. There was no evidence of their precise income. Hans was 65 years of age at the time of the trial. He is the recipient of a totally and permanently incapacitated returned veterans’ allowance as a result of Post Traumatic Stress Disorder arising from his service in the Australian Army during the Vietnam War. In addition, he suffers from melanomas, tinnitus, deafness and pain in his knee, back and neck. He jointly owns a house with his wife valued at $706,000. They own two motor vehicles and a caravan. They have modest savings of nearly $20,000, a small parcel of shares valued at $3,000 and superannuation of approximately $155,000. Their combined annual income is in the vicinity of $84,000.

Evidence

Evidence Before The Court

The testatrix’s husband died in 2003. The testatrix entered a nursing home in Adelaide in 2005 where she lived until her death. Evidence at trial The appellant gave evidence at trial as to the above matters. She testified that her parents were dissatisfied with the living arrangements at Golden Grove and moved out of the property some 11 months after it was purchased and bought a house at Tea Tree Gully. She asserted that Ms Johnston did not pay her parents the sum of $26,100 in respect of their interest in the Golden Grove property. She said that while the Memorandum of Transfer purports to acknowledge that payment, her parents could only read limited English and definitely would not have understood legal documents. She told the court she was aware from many conversations with her parents, both at the time of the transaction and subsequently, that no such payment of $26,100, nor any portion of that sum, was ever made. She gave evidence that this was the cause of much anxiety to the testatrix for the rest of her life and the testatrix raised this matter with Bauke on many occasions. The appellant testified that in 2009 the testatrix wanted to remake her will to disinherit Bauke because he had not repaid any of the money advanced to him. She transported her mother to a solicitor’s office for this purpose. Bauke also gave evidence as to the above matters. He deposed to having a good relationship with his parents. After moving to Victoria he continued to see them for several weeks each year. After his father’s death, the testatrix’s health started to deteriorate. At this time all of her sons resided in Victoria. She visited them periodically. During these visits, she expressed a wish to move to Victoria. On one occasion she told Bauke she wished to make changes to her will to accommodate this. She made a codicil to her then will dated 21 January 2003 by which she appointed all her children, including Bauke, as co-executors. She also executed an Enduring Power of Attorney by which she appointed Bauke and his brother Tony as her attorneys. In late 2004 the testatrix informed Bauke that the appellant was unhappy about her relocating to Victoria and wanted her to enter a nursing home in Adelaide. A week or two before she was due to return to Victoria, Bauke was advised that the appellant had arranged to place the testatrix into residential care in Adelaide. The testatrix told Bauke that she thought it best to stay in Adelaide for a while in order to “keep the peace”. Thereafter, Bauke did not visit the testatrix but spoke to her regularly by telephone. He always contacted her on her birthday and at Christmas time and she did the same for his and Ms Van Zwol’s birthdays. She complained to him that no one came to see her. In 2009 the testatrix told Bauke that she had changed her will but he did not discover that he had been excluded from her estate until after his mother’s death. He testified that Ms Johnston had paid the $26,100 to his parents. He denied that the testatrix had ever complained to him that he or Ms Johnston owed her money or had failed to pay her money she was owed. He could not recall paying Ms Johnston any money upon separation nor could he recall subdividing a block for her. He denied being financially advantaged by his parents beyond the support given to his siblings.

Decision

Reasons for decision

KOURAKIS CJ
I reject the appellant’s challenge to the master’s costs order. A costs order involves a discretionary judgment. There is no good reason to adopt a different approach to an appeal from a costs order in a family provision matter from any other matter. On appeals against discretionary costs orders there is a strong presumption in favour of the correctness of the decision.[18] In order to succeed on an appeal against an order for costs, the appellant must show that the exercise of the discretion of the trial judge as to costs was so unreasonable or unjust as to require the appellate court to substitute its own discretion.[19] The appellant complains that the judge erred in ordering the estate to pay Bauke’s costs on a solicitor/client basis. The order was made by reason of the operation of 6SCR 188 in circumstances where Bauke had filed an offer of settlement on 5 March 2014 which the appellant failed to better at trial. She complains that the master erred in giving insufficient weight to Practice Direction 8.1, the late filing of Bauke’s documents and the belated presentation of supplementary disclosure and affidavits. Considerations of whether the trial judge gave sufficient weight to a relevant factor is not a basis upon which to interfere with a discretionary judgment on costs. [18] Kazar v Kargarian (2011) 97 FCR 113. [19] Southern Resources Ltd v Residues Treatment and Trading Co Ltd (1990) 56 SASR 455; N E Perry Pty Ltd v Judge (No. 2) [2003] SASC 364.Conclusion I would allow the appeal to the extent of setting aside the award made for provision of $70,000 out of the estate in favour of Bauke and, in lieu thereof, order that a payment be made out of the estate in favour of Bauke in an amount which represents one quarter of the residual estate. I will hear the parties as to the terms of the formal order to be made. Further, I will hear the parties as to the question of costs. PARKER J: I agree with the reason of Stanley J and the order he proposes.

Ratio Decidendi

Legal Principle Established

Established by: KOURAKIS CJ

That statement of principle was applied in Vigolo v Bostin[11] in the joint reasons of Gummow and Hayne JJ. Those principles are well understood.[12] Those principles emphasise the importance of appellate restraint. In Singer Mason CJ, Deane and McHugh JJ approved the following comments by Kirby P, made specifically in the context of estate litigation, in Golosky v Golosky:[13]Unless appellate courts show restraint in disturbing the evaluative determinations of primary decision-makers they will inevitably invite appeals to a different evaluation which, objectively speaking, may be no better than the first. Second opinions in such cases would be brought at the cost of diminishing the finality of litigation in a troublesome area and, sometimes at least, with a burden of costs upon the estate which should not be encouraged.[11] [2005] HCA 11 at [82], (2005) 221 CLR 191 at 220.[12] House v The King (1935) 55 CLR 499 at 504 – 505.[13] [1994] HCA 40, (1994) 181 CLR 201 at 212.Consideration I accept that the master erred in finding the value of the Nilma property jointly owned by Bauke and his wife was approximately $450,000. The evidence suggests the value of the property is in the vicinity of $592,000. It could be as high as $730,000, being the aggregate of the purchase price of the land and the cost of construction of the house. This is an error of fact. At issue is whether it is a material error in the sense that the mistake of fact vitiates the exercise of the judicial discretion. In De Winter v De Winter,[14] Gibbs J, with whom Aickin J agreed, said:[15]It may, in some cases, appear that the mistake of fact has not affected the final result, or that its effect has been negligible, or that in any case the conclusion reached was correct, notwithstanding the error… The question is whether the invalid reason has influenced the ultimate conclusion, or whether the error was immaterial; if the error did affect the conclusion, the result may nevertheless be so plainly right that it can be allowed to stand, notwithstanding the unsoundness of some of its foundations.[14] [1979] FLC 90 – 605, (1979) 23 ALR 211.[15] [1979] FLC 90 – 605, (1979) 23 ALR 211 at 217 – 218. In determining whether the mistake of fact made by the master was material to his decision that Bauke has been left without adequate provision for his proper maintenance, it is necessary to analyse the master’s reasons for this finding. He found that at the time of the testatrix’s death Bauke suffered significant ill health which would deteriorate in the future. He found there was no pool of cash available to Bauke from which medical expenses could readily be met. The master considered that Bauke’s health and finances were somewhat similar to the appellant and a little worse than Hans. The evidence did not permit him to make any finding in relation to Renae. The master found that the testatrix had an equal moral duty to provide for Bauke as she did for the appellant, Hans and Renae.