Daniels v Hall
[2014] WASC 152
•2 MAY 2014
DANIELS -v- HALL (as Administrator of the Estate of Arnold Edward Daniels) [2014] WASC 152
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2014] WASC 152 | |
| Case No: | CIV:1703/2012 | 10-12 FEBRUARY 2014 | |
| Coram: | EM HEENAN J | 2/05/14 | |
| 51 | Judgment Part: | 1 of 1 | |
| Result: | Application dismissed | ||
| B | |||
| PDF Version |
| Parties: | ROBERT GRAEME DANIELS MARILYN DENISE HALL (as Administrator of the Estate of Arnold Edward Daniels) MARILYN DENISE HALL JANICE PHYLLIS McMILLAN DEBRA ANNE DANIELS HELEN JAN DANIELS KAYE PATRICIA BROUWER |
Catchwords: | Family provision Family Provision Act 1972 as Amended Application by adult son Estate of deceased divided equally between three of four children or their immediate descendants Plaintiff son omitted from benefit under will Extensive farming properties transferred by deceased to plaintiff son during the former's lifetime Claim for provision by plaintiff son from deceased's estate Relevant factors Threshold tests |
Legislation: | Family Provision Act 1972 (WA) Supreme Court Act 1935 (WA) |
Case References: | Alabakis v Alabakis [2012] VSC 437 Ansett v Moss [2007] VSC 92 Butcher v Craig [2009] WASC 164 Caska v Caska [1999] NSWSC 289 Coates v National Trustees Executors & Agency Co Ltd (1956) 95 CLR 494 Collicoat v McMillan [1999] 3 VR 803 Daniels By His Next Friend the Public Trustee v Daniels [2007] WADC 118 Daniels v Daniels (By his Guardian ad litem the Public Trustee) [2008] WASCA 230 Daniels v Daniels (By his Guardian ad litem the Public Trustee) [2009] HCASL 150 Delacour v Waddington [1953] HCA 64; (1953) 89 CLR 117 Devenish v Devenish [2011] WASC 129 Goodman v Windeyer [1980] HCA 31; (1980) 144 CLR 490 Grainger v The Public Trustee (Unreported, WASC, Library No 950670, 6 December 1995) BC 9502708 Hogan v Hogan [2013] NSWSC 1405 Hughes v National Trustees, Executors & Agency Co of Australasia Ltd [1979] HCA 2; (1979) 143 CLR 134 Kitson v Franks [2001] WASCA 134 Lloyd-Williams v Mayfield [2005] NSWCA 189; (2005) 63 NSWLR 1 Mayfield v Lloyd-Williams [2004] NSWSC 419 McCann v Ward & Burgess [2012] VSC 63 Oldereid v Chan [2013] NSWSC 434 Peters v Salmon [2013] NSWSC 953 Pontifical Society for the Propagation of the Faith v Scales [1962] HCA 19; (1962) 107 CLR 9 Roberts v Roberts (1992) 9 WAR 549 Roche v Varnavides [2004] WASC 164 Singer v Berghouse [1994] HCA 40; (1994) 181 CLR 201 Strano v Jovcevski [2008] NSWSC 380 Vigolo v Bostin [2005] HCA 11; (2005) 221 CLR 191 Vincent v Rae [2006] VSC 346 Walker v Walker [1996] NSWSC 188 Walker v Walker [2005] NSWSC 1024 White v Barron [1980] HCA 14; (1980) 144 CLR 431 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
and
In the Matter of the Estate of Arnold Edward Daniels, late of Esperance Aged Care Facility, 1 Eyre St, Esperance, Western Australia, dec
- Plaintiff
AND
MARILYN DENISE HALL (as Administrator of the Estate of Arnold Edward Daniels)
First Defendant
MARILYN DENISE HALL
Second Defendant
JANICE PHYLLIS McMILLAN
Third Defendant
DEBRA ANNE DANIELS
Fourth Defendant
HELEN JAN DANIELS
Fifth Defendant
KAYE PATRICIA BROUWER
Sixth Defendant
Catchwords:
Family provision - Family Provision Act 1972 as Amended - Application by adult son - Estate of deceased divided equally between three of four children or their immediate descendants - Plaintiff son omitted from benefit under will - Extensive farming properties transferred by deceased to plaintiff son during the former's lifetime - Claim for provision by plaintiff son from deceased's estate - Relevant factors - Threshold tests
Legislation:
Family Provision Act 1972 (WA)
Supreme Court Act 1935 (WA)
Result:
Application dismissed
Category: B
Representation:
Counsel:
Plaintiff : Mr J R Birman
First Defendant : Dr P MacMillan
Second Defendant : Mr T Retallack
Third Defendant : Ms M A Kershaw
Fourth Defendant : No appearance
Fifth Defendant : No appearance
Sixth Defendant : No appearance
Solicitors:
Plaintiff : Birman & Ride
First Defendant : Lavan Legal
Second Defendant : Culshaw Miller
Third Defendant : Kershaw Legal
Fourth Defendant : No appearance
Fifth Defendant : No appearance
Sixth Defendant : No appearance
Case(s) referred to in judgment(s):
Alabakis v Alabakis [2012] VSC 437
Ansett v Moss [2007] VSC 92
Butcher v Craig [2009] WASC 164
Caska v Caska [1999] NSWSC 289
Coates v National Trustees Executors & Agency Co Ltd (1956) 95 CLR 494
Collicoat v McMillan [1999] 3 VR 803
Daniels By His Next Friend the Public Trustee v Daniels [2007] WADC 118
Daniels v Daniels (By his Guardian ad litem the Public Trustee) [2008] WASCA 230
Daniels v Daniels (By his Guardian ad litem the Public Trustee) [2009] HCASL 150
Delacour v Waddington [1953] HCA 64; (1953) 89 CLR 117
Devenish v Devenish [2011] WASC 129
Goodman v Windeyer [1980] HCA 31; (1980) 144 CLR 490
Grainger v The Public Trustee (Unreported, WASC, Library No 950670, 6 December 1995) BC 9502708
Hogan v Hogan [2013] NSWSC 1405
Hughes v National Trustees, Executors & Agency Co of Australasia Ltd [1979] HCA 2; (1979) 143 CLR 134
Kitson v Franks [2001] WASCA 134
Lloyd-Williams v Mayfield [2005] NSWCA 189; (2005) 63 NSWLR 1
Mayfield v Lloyd-Williams [2004] NSWSC 419
McCann v Ward & Burgess [2012] VSC 63
Oldereid v Chan [2013] NSWSC 434
Peters v Salmon [2013] NSWSC 953
Pontifical Society for the Propagation of the Faith v Scales [1962] HCA 19; (1962) 107 CLR 9
Roberts v Roberts (1992) 9 WAR 549
Roche v Varnavides [2004] WASC 164
Singer v Berghouse [1994] HCA 40; (1994) 181 CLR 201
Strano v Jovcevski [2008] NSWSC 380
Vigolo v Bostin [2005] HCA 11; (2005) 221 CLR 191
Vincent v Rae [2006] VSC 346
Walker v Walker [1996] NSWSC 188
Walker v Walker [2005] NSWSC 1024
White v Barron [1980] HCA 14; (1980) 144 CLR 431
1 EM HEENAN J: By originating summons filed on 26 April 2012, Robert Graeme Daniels, seeks orders that:
1. The will of Arnold Edward Daniels dated 15 September 1997 be varied so as to make adequate provision for Robert Graeme Daniels pursuant to s 6 of the Inheritance (Family and Dependants Provision) Act 1972 (WA); and
2. The costs of this application be paid from the estate of Arnold Edward Daniels.
2 The Inheritance (Family and Dependants Provision) Act 1972 has since been amended and is now entitled Family Provision Act 1972 (WA). Nothing in that amendment affects these proceedings.
3 Arnold Edward Daniels, late of Esperance Aged Care Facility, Randell Street, Esperance, pensioner, died on 31 December 2010 at the District Hospital Esperance. At the date of his death he was aged 96 years, having been born on 14 August 1914. At that time Mr Daniels was a widower, his wife, Annie Daniels (known in the family as 'Nancy') had predeceased him, dying on 24 July 1999. He never remarried.
4 Mr Daniels' last will was made on 15 September 1997 and by this he appointed his elder son, Malcolm Ronald Daniels, as his sole executor and trustee. After making provision for the disposition of certain of his minor personal effects Mr Daniels provided for the whole of his residuary estate, after payment of all debts, funeral and testamentary expenses, to be given to three of his four children – his elder son, the said Malcolm Ronald Daniels, his eldest child, his daughter Janice Phyllis McMillan (the third defendant) and his second daughter and youngest child, Marilyn Denise Hall (who appears in these proceedings as both the first and second defendant) as tenants in common in equal shares or to the survivor or survivors of them absolutely. The will also contained a clause that if any of the three residuary beneficiaries should predecease him leaving issue living at the testator's death, such issue should stand in the place of such deceased's son or daughter and take equally between them, if more than one, the share which his, her or their parent would have taken under the will if he or she or they had survived and attained a vested interest.
5 The named executor, Malcolm Ronald Daniels, predeceased his father, dying on 31 July 2002. Malcolm Ronald Daniels left three daughters, Debra Anne Hughes (nee Daniels), born in October 1970; Helen Jan Daniels, born in September 1977; and Kaye Patricia Brouwer (nee Daniels), born in February 1973. These three children took equally between them the share of their grandfather's estate which, otherwise, would have passed to their father had he survived. They are the fourth, fifth and sixth defendants respectively in these proceedings. None has taken any active part in this case, nor entered an appearance. The trial has been conducted on the basis that the fourth, fifth and sixth defendants will abide by any decision of the court.
6 Because the sole executor named in the will had predeceased his father, his sister, Marilyn Denise Hall, applied for letters of administration with the will annexed of her late father. These were granted to her in the Probate jurisdiction of this court on a non-contentious application, on 31 October 2011. Mrs Hall has since embarked on the administration of her late father's estate.
7 The four children of the deceased have, by now, all been identified but it is convenient to place them in order of birth:
1. Janice Phyllis McMillan, born December 1939 – third defendant.
2. Malcolm Ronald Daniels, born May 1941 (predeceased his father).
3. Robert Graeme Daniels, born June 1948 – plaintiff.
4. Marilyn Denise Hall, born January 1951 – administrator of her father's estate with his will annexed and also second defendant.
The estate of the deceased
8 In the statement of assets and liabilities in the estate filed by the first defendant in support of the application for letters of administration, the financial position showed that the net value of the estate at death was $1,504,549.55. That comprised total assets of $1,549,024.30 less estimated liabilities of $44,474.75, by far the largest portion of which was legal fees due to the Public Trustee and to counsel in connection with long-running litigation between the deceased, by his guardian, the Public Trustee, and the plaintiff. It will be necessary to explain the nature and result of this litigation in detail later in these reasons.
9 The major assets of the estate comprised cash in the Public Trustee cash account of $474,724; publicly listed shareholdings of $318,496; and a house and land at 28 Gibson Way, Hopetoun, being the retirement residence of the deceased valued at $300,000. There was also a series of significant debts due by the plaintiff to his late father arising from the litigation already mentioned; costs payable by the plaintiff as the result of that litigation; an outstanding loan by the deceased to the plaintiff, interest accruing on a judgment debt against the plaintiff; and lease payments due by the plaintiff under the lease which had been confirmed as owing by that litigation. Those debts, after credit had been given for some payments made by plaintiff, totalled approximately $420,543 (see ts 32, 10 February 2014) or, put another way, something over 30% of the total net value of the estate.
10 The late Arnold Edward Daniels had, for much of his life, been a farmer. He had taken up land near Hopetoun in the south-east farming area of the State and farmed there, gradually taking up additional land when there was the opportunity and the means to do so. All four children helped in various ways when they were young in the farming activities. Both sons assisted their father in working and extending the family farming operations but Malcolm later left the farm, married and began farming nearby at Jerdacuttup, raising his own family, with his wife. Malcolm died at the age of 61 years in 2002.
11 The plaintiff continued to live on the family farm and was persuaded, he would say compelled, by his father to leave school early and to devote the whole of his time and efforts to working the family farm and, in the process, to take up additional land in the plaintiff's own name and to work that in conjunction with the home farm. According to the plaintiff, he did this out of respect for his father's demands and worked hard for small financial reward.
12 The time eventually came for Arnold Daniels to retire from active farming operations and the management of the family properties. Some of the farming lands had, by then, already been given by the father to the plaintiff. Advice was taken from the family solicitors in relation to succession planning and a programme of land transfers, leases and other payments was agreed upon which had the result of transferring all the remaining farming lands owned by the deceased to the plaintiff.
13 The position of the second and third defendants is that the earlier gifts and this programme of succession planning in effect provided for the plaintiff to receive his 'inheritance' in advance. Their case is that their father's testamentary disposition of his estate equally between his three other children took this into account and represented a just and reasonable division of the estate, having regard to the inter vivos benefits which had, by then, been conferred on the plaintiff. For this reason, the second and third defendants submit that no case has arisen to enliven the jurisdiction of the court under the Family Provision Act to make any provision for the plaintiff or that, if the contrary, no provision should be made for him in the exercise of a discretion in view of the benefits which he received from his father's estate, the nature and extent of his own assets (especially when contrasted with the position in life of the second defendant and third defendant). The second and third defendants also submit that, by the plaintiff's conduct in relation to the litigation to which I have referred, he has unjustifiably caused the estate large losses; and has failed to take any steps to repay or propose repayment of the debts due to the estate, all of which is conduct which should preclude him from any discretionary award.
14 The overall financial issues in the case have been complicated, and to a degree initially obscured, by the plaintiff's own present financial difficulties. Although he owns substantial areas of farming land comprising the original Daniels lands and other property which he himself acquired, the plaintiff is heavily indebted to his bankers and to others, to such an extent that he has defaulted under securities to the bank which has taken steps to enforce the mortgage, although it has not yet put the properties up for sale. The bank has refused all further credit to the plaintiff and demanded repayments with which the plaintiff is not fully compliant. As a result, the plaintiff has been reduced to borrowing money from friends and neighbours and has significant other debts. He has leased the property to a farmer in the district but the return on the lease is not sufficient to meet the interest on the various loans, let alone repay capital.
15 Despite these large debts, particulars of which will be examined more fully later, the plaintiff refuses to sell any of his farming lands notwithstanding that he has an estimated net equity in them of $1,867,214.37. His debts to the ANZ Bank, at the time of trial, were $1,524,333.44 which, as mentioned, he cannot service. Mr Robert Daniels refers to his present financial plight as demonstrating the need which he has for financial provision out of the estate or, for present purposes, as illustrating why, at the date of death, the terms of his late father's will failed to make adequate provision for his proper maintenance and welfare.
16 As a result of the position so adopted by the plaintiff considerable time, effort and evidence, has been directed to how his farm might be conducted profitably if more capital were to be introduced and how, if that could be done, he could stabilise his position, satisfy his creditors and achieve a future which, so he contends, his father always intended for him, namely the continuation of himself and his son on the long-established Daniels farming lands at Hopetoun indefinitely.
17 This concentration by the plaintiff on what is needed to make the farm viable under the present circumstances is something of a distraction from the essential task which the court has to perform of determining whether or not a case has been made out according to the statutory test for further provision from the estate having regard to the position at death. Nevertheless, the issue having been raised, it was met by contentions on behalf of the second and third defendants that the present financial dilemma of the plaintiff is due to a long period of poor farming management and planning and also to the wasteful efforts of the plaintiff in pursuing, as far as the High Court of Australia, unsuccessful attempts to challenge judgments originally entered against him in the District Court of Western Australia for, comparatively speaking, modest amounts. The original obligation under those District Court judgments and the estate cross-appeal was approximately $227,000 but with costs of the proceedings, unsuccessful appeals and accruing interest it has ballooned to about $420,543. That does not take into account money spent by the plaintiff himself in opposing the estate's claims and then afterwards in pursuing unsuccessful appeals.
The Daniels' lands at Hopetoun
18 The Daniels family farming lands near Hopetoun on the south coast of Western Australia were taken up by members of the family over the years from 1949 until 1974. These are the family lands and do not include the house and land in Hopetoun bought as a vacant block by the late Mr and Mrs Daniels in 1984, with a view to building a retirement home for them to live on once they left the farm. That land is known as 28 Gibson Way, Hopetoun. A house was ultimately built there and occupied by Arnold and Nancy Daniels until ill-health forced them successively to leave for a retirement home first in Ravensthorpe and then in Esperance. It forms part of the estate of the deceased and its estimated value at the date of death is $300,000 (valued at the same figure as at 23 January 2014 for the purposes of this action).
19 There are six separate locations for the farming lands, all Oldfield locations, which are the subject of five separate certificates of title, the details of which are set out in the tables below. Oldfield locations 21, 37 and 38 were taken up by the deceased in or about 1949 and form the original lands first farmed by the family. Together they comprised approximately 388.35 hectares. Two further locations were acquired by the late Mr Daniels later, Oldfield location 609 in or about 1955 and Oldfield location 335 at some other time (the details of the original acquisition of this land do not emerge distinctly from the evidence). Each of these was a much larger parcel than all three original locations together. The sixth location, Oldfield location 817, was the subject of a conditional purchase lease to the plaintiff, Robert Daniels, first granted in 1974. That land was later freeholded but the interest in it, first leasehold, now freehold, was always in the name of Robert Daniels. It comprises 936 hectares. From the beginning the family lands were farmed together and, as additional land was acquired or leased, that too was farmed together with other existing lands.
20 All the six locations are now owned by the plaintiff, Robert Daniels, having been transferred to him at various intervals, with the exception of Oldfield location 817 which, as already noted, was originally obtained in his name. Oldfield location 335 was given by the deceased to his son, Robert, in November 1985. Oldfield location 619 was given by the deceased to his son, Robert, in or about June 1997.Oldfield locations 21, 37 and 38 were leased by the deceased to his son, Robert, in September 1997. These were later sold, subject to the lease, by the deceased to the plaintiff under a contract of sale dated 25 February 1998. It was this lease and the associated contract of sale which eventually led to the litigation between the plaintiff and his late father whose affairs were then being administered by his guardian, the Public Trustee.
21 The details of the respective lots, certificates of title and their areas, in total and arable, are set out in these tables which are taken, in the latter case with some additions, from the report of Mr E Nankivell, tendered by the plaintiff (exhibit 8).
| Deposited Plan |
| Registered Proprietor |
| |
| |||||
21 | 80825 | 1199 | 327 | R G Daniels | 64.7497 |
37 | 80898 | 1122 | 510 | R G Daniels | 161.8742 |
38 | 80897 | 161.6719 | |||
335 |
| 1590 | 504 | R G Daniels | 658.9623 |
619 |
| 1482 | 498 | R G Daniels | 510.8018 |
817 |
| 2585 | 838 | R G Daniels | 936.5008 |
| Total Area (Ha) | Arable Area (Ha) | Non Arable (Ha) |
| Percentage Arable (%) |
21 | 65 | 21 | 44 | 32% | |
37 | 162 | 158 | 4 | 98% | |
38 | 162 | 124 | 15 | 23 | 77% |
335 | 659 | 295 | 364 | 45% | |
619 | 511 | 229 | 282 | 45% | |
817 | 936 | 865 | 71 | 92% | |
|
|
| 735 |
1. Current market value of locations 21, 37, 38, 335 and 619 at 17 April 2013: $2,330,000.
2. Current market value of location 817 at 17 April 2013: $1,660,000.
3. Aggregate current value of all six locations now registered in the sole name of the plaintiff as at 17 April 2013: $3,990,000.
4. Market value assessment of location 335 at 27 November 1985: $120,000.
5. Market value assessment of location 619 at 30 June 1997: $300,000.
6. Market value assessment of locations 21, 37 and 38 at 25 February 1998: $205,000.
23 On 27 November 1985 the deceased transferred location 335 to the plaintiff as a gift. According to Mr Nankivell, it was then worth $120,000. Similarly, on or about 30 June 1997 the deceased transferred Oldfield location 619 to the plaintiff as a gift. According to Mr Nankivell, it was then worth $300,000.
24 Oldfield location 817 had been acquired, first as the subject of a CP lease and then later as freehold, by the plaintiff. The initial payment was made by the plaintiff but the costs for the leasing and improvement of that location were met from the funds of the partnership between the deceased, his late wife and the plaintiff from 1974 until 1997. It follows that from the first acquisition of that land until the dissolution of the family partnership in September 1997 two-thirds of the leasing and other costs of that land, together with its running expenses, were met from the shares of capital or income from the partnership of the plaintiff and his late mother and father. No accounts of that partnership were adduced in evidence, nor were they the subject of any specific evidence. There is, therefore, no basis to conclude that in the partnership accounts the expenses associated with the improvement of location 817 were charged solely to the account of the plaintiff, Robert.
25 Similarly, in the absence of any such accounts in evidence, there is nothing to show that the costs and expenses of acquiring the town land at Hopetoun as an eventual home for the late Mr and Mrs Daniels at 28 Gibson Way, Hopetoun, were charged to their separate capital or income accounts in the partnership. The evidence of the plaintiff was that all expenses for that house were met from the partnership without differentiation. This explains his evidence that the cost of acquisition of the town lot in Hopetoun and the subsequent cost of building a home upon it was met partially from his share of partnership funds. As there was no controversy about this point at the trial, I shall proceed on that basis.
Robert Graeme Daniels – financial position
26 Despite being the sole registered proprietor of these farming properties estimated to be worth, in April 2013, a total of $3.99 million, the plaintiff's financial position had been deteriorating over recent years and he is now faced with heavy liabilities. There was controversy between the parties as to whether the current state of these existing liabilities is so great that a sale of some or all of the farming lands has become inevitable or whether, as the plaintiff contends, he has the prospect of trading out of these difficulties, with or without the benefit of a capital sum which might come from success in this litigation and/or with further support from his bank. That controversy will be examined later. For the present, it is only necessary to notice the effect of these liabilities on the plaintiff's overall net asset position.
27 Robert Daniels has supplied statements of his assets and liabilities at various dates showing the then net values of his assets:
(a) as at 31 December 2011 (annexure RGD35) - $2.079 million
(b) as at 12 April 2012 (annexure RGD36) - $1.898 million
(c) as at 4 July 2013 (annexure RGD39) - $1.669 million
(d) as at 19 December 2013 (annexure RGD45) - $1.867 million
28 These various statements are found in his several affidavits, namely, the affidavit of 13 April 2012 (exhibit 1), in his affidavits of 25 January and 4 July 2013 (exhibits 2 and 3), and his two further affidavits, each sworn 6 January 2014 (exhibits 4 and 5) together with a supplementary affidavit of 10 February 2014 (exhibit 6).
29 The latest of these statements, as at 19 December 2013 (exhibit 4) shows his assets being worth $4,292,500, made up of:
(a) Oldfield locations 21, 37, 38, 335 and 619 – $2,330,000
(b) Oldfield location 817 - $1,660,000
(c) farm, plant and equipment (market value) - $ 300,000
(d) 1996 Holden Commodore - $ 500
(e) caravan - $ 1,000
(d) personal effects and furniture - $ 1,000
$4,292,500
30 At the same date his total liabilities were listed as $2,425,285.63. These comprised:
(a) total liabilities to the ANZ Bank - $1,698,701
(b) loans from various neighbours and friends
for carry-on finance - $ 226,000
(c) outstanding bills – approximately $ 93,000
(d) debt due to the estate - $ 408,543
$2,426,244
31 This decline in the plaintiff's net capital over the past four years or longer has been due to a number of factors. He puts it down to adverse seasonal conditions and their effect on farm income together with unsuccessful investments in cattle, followed by large falls in cattle prices. However, his own farm advisor, Mr Grieve, who was called by the second defendant, gave evidence that over recent years the farm had been generating repeated losses in the order of approximately $80,000 per year and that the deterioration in the plaintiff's net capital position, and his consequent heavy indebtedness to the bank and others, were due to poor farming management and practices. It was Mr Grieve's evidence and opinion that, under present circumstances, the farm is not viable and will have to be sold to meet the liabilities. Indeed, the bank has already taken steps to that end consequent upon unremedied defaults under its securities. In the view of Mr Grieve, it would take a capital injection in the order of $900,000, if not more, to allow the farm to operate profitably and then to commence a programme of repayments to reduce the debt further as necessary.
32 The financial difficulties which face Mr Robert Daniels with his present level of debt could be fully resolved if the farm were to be sold. On his own evidence, if that were done he would still be left with capital of approximately $1.8 million or more which could be used for investment or retirement.
33 If the plaintiff were to sell Oldfield location 817, on the evidence of value given by Mr Nankivell, that could be expected to fetch $1.6 million, which would go quite some way to reducing his present indebtedness of $2.426 million.
34 However, Mr Robert Daniels is entirely opposed to either of those options or to the sale of any of his six locations at Hopetoun. His reasons are, essentially, that it was always his intention and ambition, known to and encouraged by his late father, that the farming land would pass to him and that he and succeeding generations of the Daniels family would continue to live and farm on the property at Hopetoun. Secondly, he says that the sale of location 817 or, indeed, any significant land sale of other locations, would leave the remaining property unviable and would defeat his own expectations for his son to follow him in farming the family properties.
35 When asked about how, under all the circumstances, he hoped to be able to continue with the level of present indebtedness and with the bank and his father's estate pressing for satisfaction of the liabilities due to them, he was not able to offer any cogent explanation beyond saying that he hoped to be able to come to an accommodation with the bank which would allow it to restore financial support to him so that he could then trade profitably and eventually pay off the remaining debts over time. He had no specific proposals for the reduction of his indebtedness of $420,543.38 to his late father's estate. It has been evident that, for years, he has made no effort whatever to reduce that indebtedness. Indeed, his attitude, as demonstrated when giving evidence, was that he did not treat that as a liability which called for any immediate action; that his father would never have allowed a situation to arise which led to a debt of that magnitude whether as a result of litigation or not, and that the success, which he hopes for in this litigation, could be expected, in some unspecified way, to resolve that problem.
36 I am afraid that I must observe that having had the benefit of hearing Mr Robert Daniels' evidence and his responses in cross-examination, and particularly having regard to his dealings with the bank, his characteristic approach to financial liabilities is to ignore them. He has avoided any genuine discourse with his creditors about proposals to satisfy his obligations by some agreed progress over time; and has rejected unpalatable advice about the seriousness of his financial position even when coming from a competent and former trusted advisor such as Mr Grieve. There was a marked impracticality and apparent blindness to his troubles by Mr Daniels which, unfortunately, seems to have aggravated his financial difficulties.
37 As for his ambition that his son will be able to take over and continue the Daniels' farming tradition on the Hopetoun lands, there is very little evidence to support this. The plaintiff is now aged nearly 66 years and suffers from diabetes. He must, therefore, soon be in the position where he will be facing retirement from the demanding activities of farming a large broadacre property. His son was not called to give evidence and the only details of his involvement with the farm were those given by the plaintiff. These were that Mr Daniels' son returns to the farm periodically and helps out in various farming activities, but is presently away working on another farm or farms in the region in and around Munglinup. There was no evidence of any special aptitude or interest, let alone qualifications, by the plaintiff's son in farming or operating an enterprise of this size. Furthermore, taking over the Daniels' lands at Hopetoun with anything like the existing level of debt would appear to be a very unpalatable and heavy obligation for any young man starting out. However, I consider that I must accept that it is the plaintiff's hope and intention that, somehow, eventually his son may be able to take over and run his farming lands at Hopetoun, but I consider that, on all the evidence, there must be a very big question hanging over the possibility or practicability of that ever happening.
38 There is no evidence of the plaintiff's financial position at the time of his father's death on 31 December 2010. This is the date at which the adequacy and propriety of the testamentary provision by the deceased for the plaintiff must be determined. The earliest set of accounts of the plaintiff's position is in his latest affidavit where annexure RGD35 shows his net asset position at 31 December 2011, a year after his father's death, as being $2.079 million. At that date he had loans of $1,650,578 due to the ANZ Bank and other loans totalling $109,000 to other creditors, not including the debts due to his father's estate associated with the litigation.
39 There is evidence from the second defendant that their father was concerned and apprehensive about the plaintiff's level of expenditure and borrowing on the farm, but it is not possible to say at what level the indebtedness was over the period leading up to the deceased's death. That may be of some relevance because of the effect which it might produce in the mind of a wise and just testator when considering what testamentary provision, if any, should be made for his son, Robert, in his will or, in the circumstances, whether there may be a need to revise his existing will to take into account those circumstances.
40 A factor of significance is that the late Arnold Daniels had, for some years, prior to his death been suffering from progressive dementia. Following his diagnosis and treatment for cancer in late 1998 his dementia deteriorated significantly and he was no longer able to manage his own affairs, resulting in the Public Trustee becoming his guardian. The deceased, therefore, was in no position to assess or reassess any need to alter his will or to make provision for his son, Robert, over the last 12 years of his life. However, the plaintiff submits that, notwithstanding this disability, the jurisdictional question must be posed and addressed as if the deceased were fully aware of all material circumstances at the date of death. I shall address that submission later.
The 1997 Daniels family succession plan
41 Mr Arnold Davies and his wife lived and worked on the family farm near Hopetoun from about 1952 until they both moved off the farm to live in town some time in or around 1989. Their son, Robert, worked on the properties full-time from about 1964 and has continued to do so ever since. Although the late Mr Arnold Daniels was living in Hopetoun from about 1989 he continued to be fully engaged in the farming activities until his retirement from the family partnership in September 1997. Even after this date he continued to visit the farm most days and to take a role in the farming operations although, from that point on, the enterprise was run solely on Robert's account.
42 Mr Arnold Daniels, continued with this arrangement until the latter part of 1998 when he was diagnosed with lymphoma and underwent chemotherapy. He was quite ill following that treatment and was admitted to hospital. The effects of chemotherapy and also accelerating progress of dementia meant that Arnold Daniels was admitted to an aged care facility in March 1999. In December 2002 the Public Trustee was appointed as the plenary administrator of Arnold's estate.
43 The plaintiff's mother, Mrs Annie Daniels, began to suffer dementia from about 1990 and in August 1994 she moved into care at the Ravensthorpe District Hospital. When Mr Arnold Daniels was ill and required full care he was admitted to the Recherche Hostel of the Esperance Aged Care Facility on 9 March 1999. To persuade him to agree to this the family arranged for Mrs Annie Daniels to be admitted to the same facility and she was then transferred from Ravensthorpe to Esperance and remained at the Esperance Aged Care Facility until her death on 24 July 1999. She left her entire estate to her husband.
44 From 1974 until 1997 the Daniels' farming business at Hopetoun had been conducted in a partnership between the deceased, his wife, Mrs Annie Daniels, and the plaintiff, Robert Daniels. This was pursuant to a partnership agreement of 9 April 1974. The brief partnership document is annexure RGD7 to the affidavit of the plaintiff sworn 13 April 2012 and it is headed 'Re Oldfield Location 817' which was the block that Robert was acquiring under the conditional purchase lease. The partnership agreement simply states that the deceased, Mrs Daniels and Robert have agreed on a partnership to work 'both properties' for three years each to have one third of the profits after capital expenditure and personal expenses of each partner 'have been sorted out'. It states that:
We will develop his block. 200 acres of pasture this year and 200 acres of fallow and the same for three years. If in the case of my death Robert has the right to use any of our machinery to develop his block for the three years from this date and Robert has agreed to work with us for three years as directed.
45 In this context, the reference to 'both properties' is to be taken as a reference to all the then existing locations owned by the deceased (Oldfield Locations 21, 37, 38, 619 and 335) on the one hand and to Oldfield Location 817 which had been acquired by Robert under the CP lease in 1974. Although the agreement refers to a partnership only for three years, the arrangement continued, as previously stated, until 1997. Quite how the capital expenditure and personal expenses of each partner were to be 'sorted out' was not explained in the partnership agreement and there is very little evidence to establish any systematic pattern or practice. Robert's evidence is that he paid the deposit of $600 for Location 817 from his own funds, but from 1974 to 1997 the partnership paid the biannual instalments of $105, thereafter Robert paid the instalments, and became the registered proprietor in February 2005. It seems that the formalisation of the partnership between the three was prompted, at least to some degree, by the desire to demonstrate that Robert had sufficient resources and capacity to earn income to be a suitable applicant for the conditional purchase lease then being released by the Land Board - namely Location 817.
46 On 14 September 1994 the late Mr Arnold Daniels appointed his son Malcolm Ronald Daniels as his attorney under an enduring power of attorney which his son Malcolm formally accepted. On 23 December 1994 Mrs Annie Phyllis Daniels appointed her husband, Arnold Daniels, and her son, Malcolm Daniels, jointly and severally as her attorneys under an enduring power of attorney which both formally accepted.
47 There is no doubt that Robert Daniels was an attentive and assiduous worker on the farm and in the partnership right from the inception, that is, before the formalisation of the partnership in 1974. Indeed, he claims that he was constantly working on the farm from the age of 10 and that he had abandoned an ambition to have a working career as a pilot because of his father's insistence that he should stay and work on the farm. It is also clear that Robert was attentive to the needs of his mother and his father, the deceased, particularly when they were in declining health. As already mentioned, he helped build the house on the block at 28 Gibson Way, Hopetoun and he used to visit his mother at regularly intervals when she was in care at the Ravensthorpe Hospital. He continued to see his father regularly after the dissolution of the partnership in 1997 with his father visiting the farm almost every day until his cancer diagnosis. Robert assisted with the care and treatment of Arnold by driving him to Perth and back on occasions when chemotherapy was administered and in bringing Arnold to his own home at the farm during intervals between treatment when he needed care and attention.
48 All in all, the relationship between the deceased and the plaintiff seems to have been good in the sense that it was a satisfactory working relationship with Robert deferring, in most cases but not always, to his father's wishes. According to Robert's evidence the late Mr Arnold Daniels was single-minded and somewhat authoritarian in that he would make his own decisions about farming methods and expect Robert to follow them. On occasions when there were differences and Robert met with his mother and father to discuss them he says that his mother would take his father's side and that he would then have to fall in. As a consequence partnership meetings or conferences seldom occurred.
49 Over several years before 1997 it seems that the working relationship between Robert and his father became more difficult and that there were disagreements about approaches to farming and about Mr Arnold Daniels' somewhat authoritarian ways and insistence on running and controlling most of the financial affairs. This led to discussions in 1996 about Robert withdrawing from the partnership. He and his father consulted lawyers about proposed arrangements but it became apparent that their interests and approaches were different and that this necessitated Robert obtaining separate legal representation.
50 Robert maintains, and his evidence in this regard was not challenged, that his father had repeatedly told him from a young age that one day the farm would be his and that it was this promise which led him to continue working and to eschew any other career. At times when he expressed a thought of leaving the farm he was told by his father that that would necessitate a sale of the property and that he should stay on because eventually it would all be his.
51 The deceased gave Oldfield Location 335 to Robert, that transfer occurring in November 1985. As already recorded the opinion of the valuer, Mr Nankivell, is that at the time of that gift Oldfield Location 335 was worth about $120,000. In the period leading up to the dissolution of the partnership the deceased also agreed to transfer to Robert as a gift Oldfield Location 619. That was transferred on 30 June 1997 and again Mr Nankivell's opinion is that it was then worth about $300,000. So by mid 1997 Robert had been given by his father two properties which were worth in total, at the time of the gifts, $420,000 and he was in the course of acquiring Location 817 under the CP lease. The current aggregate values of Locations 335 and 619, according to Mr Nankivell, are in aggregate $2,330,000. Similarly, Mr Nankivell's opinion is that the current value of Location 817 in April 2013 was $1,660,000. Together those three locations totalled 2,106 hectares and so comprised the major part of the family farming lands. The remaining Locations 21, 37 and 38 totalled an area of some 388.35 hectares. This meant that by mid 1997 Robert owned either as freehold or under conditional purchase lease proceeding towards freehold, the major proportion of the family lands.
52 The dissolution of the partnership was recorded by an agreement dated 10 July 1997 (annexure RGD24 to the affidavit of the plaintiff of 13 April 2013). This document recorded the following conditions having been agreed between father and son:
1. The partnership bank, the Challenge Bank Ravensthorpe Branch, agreed to release Mr Arnold Daniels from any financial liability from the date of termination.
2. Plant and equipment valued at $250,000 shall be taken over by Robert Daniels.
3. The existing stock will be utilised during the next four months with the clearing of the existing partnership debt incurred by father and son at the bank and for the provision on the basis of the home for the son.
4. A capital sum of $50,000 shall be paid by Robert to his father Arnold.
5. The three blocks of farm land being Oldfield Locations 21, 37 and 38 belonging to Arnold Daniels should be free of mortgage and the Certificate of Title handed to the father.
6. A farm tenancy agreement relating to the three blocks, Locations 21, 37 and 38 shall be entered into between father and son together with an acknowledgement of the right of the son by father for the continued supply of water as hitherto used for many years from the adjoining land belonging to the father for the benefit of the land farmed by the son and will pay an annual rent based on a commercial rent of $15 per acre to father producing an income of approximately $15,000 for him.
7. The son shall make funds available to father for the payment of approximately $800 per month to meet the hospital fees for Mrs Daniels and a further sum of $5,000 per year to provide additional income for father.
8. Son will replace father's existing vehicle using it for a trade-in for the purchase by him of a new vehicle to the value of $30,000 for father AND will meet all fuel, maintenance and insurance costs for the new vehicle together with the father's telephone, electricity and water accounts during his lifetime.
9. It is acknowledged by the son that although father has retired from the farm partnership he shall always be free to continue his interest in the farming of the land to look over the land whenever he wishes to do so.
53 The consequences of this agreement are that Mr Arnold Daniels became free of all liability to the bank for partnership debts and received a capital sum of $50,000 from his son Robert together with monthly payments of $800 for Mrs Annie Daniels' hospital expenses and an additional sum of $5,000 per year for further income to Mr Arnold Daniels. Consequently, Robert was obliged to pay his father $80,000 ($50,000 plus a car for $30,000) as an initial capital outlay plus $5,000 per year income and $9,600 per year ($800 x 12) for hospital fees for his mother. In addition, he was to pay approximately $15,000 a year rent under a proposed letting for Oldfield locations 21, 37 and 38 for as long as that tenancy lasted. In return, Robert became fully entitled to the plant and equipment on the farm of $250,000, his share therein increasing from $83,333 to $250,000, a benefit of $166,666, although this effected little immediate change because all the plant and equipment continued to be available for use on the farm as it had been before.
54 On the other hand, Robert became solely responsible for the debt (unspecified) then due to the bank whereas before, as between the three partners, his share was only one-third of that liability. The implication is that Robert also attained full ownership of all the stock then on the property (again unspecified in number or value) and that the stock could be sold to liquidate the liability to the bank and still leave a nucleus sufficient to establish a new herd.
55 There are no accounts or other evidence which might establish, in monetary terms, the countervailing benefits or liabilities produced by this dissolution. Assuming that the liability to the bank was more or less matched with the benefit obtained by full ownership of the stock, Robert was then in a position where the capital value of his assets was improved by obtaining full ownership of all the plant and equipment but for all this he had to pay an immediate capital outlay of $80,000 plus future annual outgoings of $29,600 indefinitely. Ownership of locations 21, 37 and 38 remained with his father.
56 The arrangements for the renting of the locations 21, 37 and 38 by the deceased to the plaintiff were later fixed by a lease between the two dated 11 September 1997. This lease was of the three Oldfield locations still owned by the father for a term of one year and eight months commencing from 1 September 1997 and expiring on 30 April 1999, with an option to renew thereafter on a yearly basis during the lifetime of Mr Arnold Daniels but terminating on 30 April in the year following his death. The rent was $20,000 per month, payable in advance. The lease contained specific provisions dealing with the amount of livestock to be run; cropping; superphosphate; and other similar covenants. Mr Robert Daniels, as lessee, was to pay all shire rates and had the responsibility for all costs in relation to improvements and repairs. The default clause provided that if the rent or other moneys payable were not paid within 14 days from the due date, the outstanding amounts would bear interest from the dates due until payment at 12% per annum and that there would also be interest payable at 12% per annum on any judgment debt which the lessor might obtain against the lessee.
57 It may be noted that the rent of $20,000 per annum payable under this lease was greater than the $15,000 per year for the tenancy arrangement referred to in the dissolution of partnership. However, as the latter also provided for an additional $5,000 per annum to be paid by Robert to his father, the explanation appears to be that the increase of the rental to $20,000 per annum absorbed that additional obligation and treated the total moneys payable as rent for those three locations.
58 The implications are clear that both father and Robert recognised that the farm was the principal source of income available to them and Mrs Daniels at the time.
59 The lease conferred on Robert Daniels a right of first refusal to purchase the land at a price to be negotiated between the parties.
60 The next transaction of significance is that by a contract for sale of land by offer and acceptance dated 25 February 1998 Mr Arnold Daniels agreed to sell the three locations, 21, 37 and 38, to his son on terms. This agreement to sell occurred during the unexpired term of the lease, as extended, and, as will be seen, did not terminate the obligations for the payment of rent by Robert under the lease. It was that effect which was the subject of the ensuing litigation. The purchase price for the three lots was $300,000 payable by a deposit of $1,000 at the time of the offer and a further $49,000 by 1 March 1998. The balance of $250,000 was payable by annual instalments of $50,000, each due on 1 March 1999, 2000, 2001, 2002 and 2003 free of interest. That is, by five annual instalments of $50,000, but with the purchaser having the right to discharge the outstanding balance at any time before 1 March 2003. Significantly, the contract of sale included a term:
5. The purchaser undertakes to continue the rental payments under the Lease Agreement until the total purchase price has been paid under this contract.
61 This meant that the rent of $20,000 payable under the lease continued to be payable each year unless or until the whole of the purchase price for the land had been paid.
62 According to Robert Daniels (exhibit 1, par 110) at about the time of the dissolution of the family partnership his father proposed giving to Robert, without any charge, all his remaining land, namely, locations 21, 37 and 38. However, Robert says that he refused this offer, saying that he wanted to buy the land instead because he did not want the rest of his family to believe that he was taking advantage of his father.
63 In the result, the $300,000 payable for that land spread over six years, but without interest, was in aggregate more than Mr Nankivell considers was the market value of those properties at the time. His valuation for those three lots as at 25 February 1998, as already stated, was $205,000. No attempt was made in the evidence to quantify what was the then net present value of $300,000 payable by annual instalments of $50,000 over six years without interest. Obviously, it would be less than the total of $300,000 so the extent of payment beyond the then capital value of the land, if any, has not been established. It may not have been greatly in excess of Mr Nankivell's estimate of the market value of the property in 1998.
64 As already noted, Mr Arnold Daniels was showing signs of dementia before 1998 and in late 1998 was diagnosed with cancer. Due to ill health following his chemotherapy, he was admitted to the Ravensthorpe Hospital in late December 1998. A family meeting was held, together with nursing care givers at the Ravensthorpe Hospital, on 6 January 1999 to consider the nature of the future care which Mr Daniels required. The result was that all agreed that Mr Daniels should be relocated to a place where suitable care was available for him and, if possible, his wife as well. The Esperance Hostel was one of the alternatives and was ultimately selected. It was also recommended that guardianship arrangements should be made. He was admitted to the Recherche Hostel at the Esperance aged care facility on 9 March 1999. He spent Christmas 2002 with his son Robert and family at Hopetoun, returning to the hostel a week later.
The litigation
65 Having taken over the administration of Arnold Daniels' affairs after appointment in December 2002, the Public Trustee discovered that Robert was in arrears in making payments to his father under the lease and also had defaulted in paying the annual instalments of the purchase price in full for locations 21, 37 and 38 as they fell due. Robert had stopped paying the rent under the lease after the first 18 months, that is, in about mid-1999.
66 A full account of the ensuing litigation over the lease payments can be obtained from an examination of the reasons for decision of Commissioner Stevenson (as his Honour then was) in Daniels By His Next Friend the Public Trustee v Daniels [2007] WADC 118 and in the ensuing decision of the Court of Appeal in Daniels v Daniels (By his Guardian ad litem the Public Trustee) [2008] WASCA 230. An application by Robert Daniels for special leave to appeal from the decision of the Court of Appeal to the High Court of Australia was dismissed with costs by an order of the High Court made on 12 November 2008 by Gummow and Keifel JJ with reasons given in Daniels v Daniels (By his Guardian ad litem the Public Trustee) [2009] HCASL 150.
67 Those several reasons explain how Robert Daniels failed to pay the full $300,000 due under the contract of sale for his purchase of locations 21, 37 and 38. Having paid a total of $279,000 in instalments up to and including 10 December 2002. He failed and refused to pay the balance of $21,000 of the purchase price and was sued by his father's guardian for that amount. Furthermore, the Public Trustee contended that the rent for those three locations continued to be payable for so long as the entire purchase price for the land had not been paid. Robert had ceased making payments of rent under the lease on 30 April 1999, being the date upon which he contended the lease expired and contending further that he had no obligation to pay rent after that date, notwithstanding condition 5 of the contract of sale and the fact that he had not then paid the purchase price in full. The Public Trustee, as next friend of Mr Arnold Daniels, also claimed interest on the unpaid balance of the lease payments and sought a declaration that Robert was obliged to continue paying monthly payments of rent of $1,667 until the whole of the purchase price for the three locations had been paid.
68 In the District Court Commissioner Stevenson found that Robert Daniels had failed to pay $21,000 of the purchase price for the three locations – having failed to pay the initial deposit of $1,000 and paying only $30,000 of the second instalment of $50,000 of the purchase price on 1 June 1999. Accordingly, his Honour gave judgment for the plaintiff for that $21,000, part of which was the subject of an earlier judgment entered by the registrar for $20,000 on 3 September 2004. His Honour also held that Robert Daniels was in default in payment of the rent due under the lease which continued to be payable for so long as the full purchase price for the lands remained unsatisfied. Included in the judgment entered in the District Court on 6 July 2007 was an amount of $98,353 for this rent liability. His Honour also declared that Robert Daniels was obliged to pay to his father's estate $1,667 per calendar month on the first day of each month from and including 1 March 2004 until the whole of the purchase price for the three locations had been satisfied. The plaintiff's claim for interest in the District Court was not dealt with. Robert Daniels was ordered to pay the taxed costs of the District Court action, including indemnity costs, after 29 March 2007.
69 In his appeal to the Court of Appeal Robert Daniels contended that there was no obligation to pay rent under the lease after he had gone into possession under the contract of sale, that condition 5 of the contract of sale was ambiguous and that the doctrine of merger meant that once he obtained the freehold he was free of any obligations under the lease. On behalf of Arnold Daniels, the Public Trustee cross-appealed against the failure of the District Court judgment to provide for the payment of any interest on the arrears of rent. The result was that the Court of Appeal dismissed Robert Daniels' appeal, concluding that condition 5 of the contract of sale clearly provided for the continuation of lease payments, notwithstanding possession and ownership of the land under the contract of sale, and that there was nothing ambiguous about the contract to suggest or permit a contrary construction. The Court of Appeal also concluded that the Judge in the District Court should have awarded interest on the arrears of rent and fixed interest at 6% per annum pursuant to s 32 of the Supreme Court Act 1935 (WA), resulting in the cross-appeal succeeding. The practical result was that Robert was ordered to pay an additional sum of $41,691.12 as interest. This award of interest granted by the Court of Appeal included a component for interest on the unpaid $21,000, being the balance of the purchase price for the three locations of land. Robert Daniels was ordered to pay 90% of the costs of the appeal and the cross-appeal incurred by his father's guardian ad litem.
70 In the High Court Gummow and Keifel JJ rejected Robert Daniels' submission that the Court of Appeal had erred in the meaning which it had attributed to cl 5 of the contract of sale, saying that no error in that regard had been demonstrated and that the Court of Appeal had applied settled principles of construction. Their Honours also rejected the applicant's contention that the Court of Appeal had erred in awarding interest. Accordingly, because no arguable case of error was demonstrated and also because the application concerned the construction of a private agreement between the parties, such that no principle of public importance would be advanced by a grant of special leave, the application for special leave was dismissed with costs.
71 In addition, there was a second set of proceedings against Robert Daniels in the District Court of Western Australia (No 1873 of 2009). These resulted in a judgment by consent in favour of the estate of Arnold Daniels, inclusive of costs, for $86,847.96, being entered on 26 November 2010. No part of that judgment debt has been paid by the plaintiff and, consequently, it also accrues interest at 6% per annum as from 26 November 2010, which obligation is still continuing to accrue. This judgment debt plus accruing interest is included in the aggregate of the liabilities of the plaintiff to his father's estate.
72 The sequel to this litigation was that Robert Daniels then paid his father's guardian and trustee the sum of $21,000, being the unpaid balance due for the purchase price of the three locations. That payment terminated his obligation to pay rent under the lease. This payment of $21,000 was made by Robert on 31 July 2007. However, it left $98,353 for the arrears of the lease due up until the end of the period for which that rent was claimed in the original action. Nor did Robert Daniels pay any part of the additional $41,691.12 interest which had been ordered as a result of the cross-appeal. In addition to these amounts, further instalments of rent had accrued due under the lease before the purchase price had been paid in full. Interest continued to accrue due on so much of the judgment debts as remained outstanding. Further, the taxed costs of the estate of Arnold Daniels for the original District Court actions, the appeal and cross-appeal in the Court of Appeal, and the special leave application to the High Court were payable and these also accrued interest progressively.
73 The consequence of this litigation and the unpaid judgment debts and accrued interest is that by the date of this trial Robert was indebted to his father's estate for an aggregate amount of judgment debt, costs and accrued interest of $415,071 with interest continuing to accrue. Particulars of the components of this total are to be found in the plaintiff's statement of assets and liabilities as at 19 December 2013, annexure RGD45 to Mr Robert Daniels' affidavit of 6 January 2014. This liability forms part of the assets of the estate of the deceased which are the subject of the present claim.
74 In the plaintiff's written submissions for this trial he contends that, if successful, the court should make an order varying the terms of his father's will to allow him a 50% interest in the net value of the estate or, if other variations of the will are to be preferred, then that outcome could be achieved in part by making an order that the plaintiff's debts due to the estate should be treated as being forgiven. The latest available estimate of the current net value of the estate is approximately $1,598,125 - see the affidavit of the first defendant, administrator Marilyn Hall, sworn 23 January 2014. If that latter alternative were to be adopted, it would reduce the net value of the estate to $1,183,054 ($1,598,125 - $415,071 = $1,183,054). It is likely that the value of the estate may vary because of further interest payable by the plaintiff which would increase its net value but that it may be decreased by the cost of these proceedings.
Robert Daniels' liabilities to his banker
75 The first defendant called Mr M S Murrell, who is the manager of the ANZ Bank for Lending Services in the Corporate and Commercial area and who has the oversight of Mr Robert Daniels' accounts. Subject to referring certain matters up the line in complex situations he is, generally speaking, the decision maker for the control and enforcement of loans due by the plaintiff to that bank. Mr Murrell confirmed that the bank at present has a judgment debt against Mr Robert Daniels in the amount of $1,700,000.
76 During October 2013 the bank was in communication with Mr Robert Daniels by email demanding satisfaction of that obligation because the plaintiff had previously agreed to pay by August 2013 the first component of an amount of $650,000 in reduction of that debt. This was to be done by two instalments, the first of $350,000 by the end of July 2013 and the second of $300,000 was then due to be paid by the end of February 2014. Subject to complying with those arrangements, the bank's position had been that it would look at Mr Robert Daniels' overall position in early 2014 and decide whether or not to resume normal banking facilities. However, Robert Daniels failed to make either payment and the bank's present position is that it requires a significant payment from him in order withhold from execution under the judgment. Mr Murrell referred to this as a 'standstill agreement' and explained that the bank was still looking for repayment of its debt either in full or to a level at which the bank is comfortable - or, in other words, to an amount which it is satisfied Mr Daniels can service. Consequently, if the $650,000 were to be paid by Mr Daniels, that would leave a balance outstanding of approximately $1.2 million which the bank may be prepared to finance.
77 Mr Murrell was unable to say whether the bank would then demand a further capital repayment or on what terms it might finance the balance, but made it clear that it was prepared to consider the continuation of credit in those circumstances if a substantial repayment were made.
78 On further examination Mr Murrell explained that if new arrangements could be made with Mr Robert Daniels, after a significant capital repayment had been made, the bank would be looking for a programme for the repayment of its debt and interest over an acceptable period, which could vary anywhere between one to 15 years, depending on how the bank viewed the lending proposition facing it. In view of Mr Robert Daniels' age, the bank would probably look at a programme for repayment of the balance of its loan over 10 years which, with capital and interest, would require annual payments of about $240,000 or more. Counsel for the plaintiff put to Mr Murrell that the position of the bank was that if Mr Robert Daniels did not come up with a capital repayment of approximately $600,000 in the immediate future, the bank would proceed to sell him up by enforcing his mortgage or the judgment. Mr Murrell responded by saying that the bank had not made a final decision in that regard and was awaiting further developments, including the result of this case.
79 In re-examination it emerged that in late 2013 the bank had demanded that Mr Daniels should provide an up-to-date valuation of his properties and at first he responded by offering a valuation from a person who was not on the bank's panel of valuer. However, he later complied and a valuation was performed by a bank approved valuer and submitted to the bank with a valuation dated 23 November 2013. The details of the valuation obtained by the bank were not disclosed or otherwise produced in evidence, being confidential to the bank. Mr Murrell acknowledged that it would be quite normal for the bank to lend a farmer funds equivalent to 60% of an accepted valuation of the farm in question. Nevertheless, Mr Murrell accepted that the present exposure of the bank to the total liabilities of Mr Daniels was well within the bank's normal loan to equity ratios and that the bank's concern was chiefly upon his capacity to service the loan rather than about the sufficiency of the value of the secured property.
80 In December 2013 Mr Robert Daniels had made a repayment to the bank of approximately $142,600 but that was not credited to the secured loan but, rather, to his overdraft account, which has been stopped. No other repayments have been made by Mr Robert Daniels since. Because of seasonal conditions if the property were to be sold, the usual course is for a farm to be put on the market around late December, early January/February, with the expectation that settlement would take effect by the following March/April to allow the purchaser to prepare the farm for the next season.
81 For obvious reasons, Mr Murrell was non-committal about what course the bank would follow and emphasised that no decision had been taken by the bank in that regard by the date of trial. The probabilities are that a substantial reduction of the farm loan to the extent of $600,000 to $650,000 is likely to be required by the bank over the next few months, followed by insistence upon a viable plan for the repayment of the balance of the farm loan over about 10 years. Accepting that the figures which were discussed with Mr Murrell were approximations, it is also probable that such future annual payments of combined capital and interest would be expected to be in the region of $240,000 each. The effect of this is that, in order to persuade the bank to stay its hand and not to enforce its present judgment or realise on it securities, Mr Robert Daniels would be expected to repay the bank approximately $840,000 to $890,000 ($600,000 or $650,000 plus $240,000) over the next 12 months or perhaps a little longer, followed by further annual repayments of approximately $240,000.
82 This evidence from the bank must be taken in conjunction with the evidence of Mr R G Grieve, who is a farm business management consultant in Albany, whose occupation is to advise farming clients in the South Coast and Great Southern areas, including the Shires of Esperance, Ravensthorpe, Jerramungup and Gnowangerup. Mr Grieve has extensive experience as a farm business management consultant, an economist, formerly with the West Australian Department of Agriculture and as a farm management adviser. He has an Honours degree in Science (Wool and Pastoral Science) with a major in Farm Management Economics from the University of New South Wales in 1986 and a Graduate Diploma in Business Management 1989 from the West Australian College of Advanced Education. He is a member of the Australian Association of Agricultural Consultants.
83 Robert Daniels had been a client of Mr Grieve's business since early 2001 and Mr Grieve had visited the Daniels' Hopetoun properties at least 10 times over that period. He carried out a detailed appraisal of the viability of the farm, which is exhibit 25, dated 14 June 2013. In Mr Grieve's opinion, the Hopetoun properties need a capital injection of $950,000 to $970,000 to make the farm viable. This figure does not include Mr Daniels' liability to the estate of his late father which Mr Grieve assumed to be $408,000 (less than the $420,543 established by the latest evidence). Including that liability, the necessary capital injection would rise to $1.402 million to $1.422 million and, in addition to that, a further $226,000 would now be needed to satisfy private creditors of the plaintiff.
84 In his review of the present viability of the six locations at Hopetoun, Mr Grieve based his conclusions on historical farm data, known actual expenditure on the Daniels property over the preceding 10 years with costs inflated 3% year on year. His conclusion is that the farm is unviable in the present setting and that there is not sufficient income to satisfy these liabilities.
85 Mr Grieve accepted that most banks would lend a farmer up to 60% of the value of the land but would only take land and not machinery, plant or other movable items as security. He considered that borrowing to 60% of the value of the lands at Hopetoun would leave the borrower 'fully stretched'. He attributed Mr Robert Daniels' present financial predicament to a combination of bad luck with adverse seasons, falling stock prices and poor management. His possible solution was to sell location 817 to bring in an estimated net price of $1.66 million to pay off existing liabilities. Mr Grieve was of the opinion that the remaining land was of a reasonable size and that the farm could continue after the sale of location 817 so long as there was some form or source of supplementary income. In his view, that was the only way of survival for the plaintiff. As already noted, Mr Robert Daniels is unwilling to contemplate the sale of location 817 and has no prospect of any significant source of off farm income.
86 The conclusions to be drawn from this can only be based upon probabilities but I am satisfied that they are very likely. Unless Mr Robert Daniels can find a capital amount of $900,000 or more and enter into an arrangement with the bank to repay the balance of the bank loan over 10 years, it is probable that by the end of the current year or by early in 2015 the bank will force a sale of the properties. If that were to be done and Mr Daniels was then to pay out his other creditors, including his father's estate, he would be left with a net capital amount of approximately $1.8 million with which to invest for his future and that of his family. This is not an insignificant sum and should be sufficient to provide him with an adequate lifestyle and income and with capital to pass on to his family should he choose.
87 In cross-examination it also emerged that Mr Daniels and his wife separated some time ago, after many years of marriage, and that his wife is contemplating divorce proceedings against him, including a claim for some form of financial settlement. No details of any actual claim being made by his wife appeared from the evidence and it seems to be Mr Daniels' hope that any claims by his wife would, from his point of view, be manageable. The prospect of some such demand or settlement resulting is a factor which also needs to be considered when addressing Mr Robert Daniels' present and future financial prospects.
Plaintiff's lifetime efforts on the farm
88 Robert Daniels has set out an extensive account of his role in working on the family farm and devoting himself, to the exclusion of all other opportunities, to the running of the farm in compliance with his father's wishes. In his affidavit, exhibit 1, he explains that even in the years when he was a student at primary school he would help his father on the farm and that his final year of primary school was completed by correspondence while he was helping his father and his brother, Malcolm, on the farm. This pattern of assistance while at school continued throughout his secondary schooling while attending at Gnowangerup and Denmark Agricultural Junior High School, concluding in late 1964, when he began working permanently on the farm. It seems that he did not get on well with his brother, Malcolm, whom he claimed threatened him during arguments. In his evidence Robert Daniels claims that from 1965 to mid-1974 he worked mostly unpaid on the farm for about 10 hours a day seven days a week, taking over Malcolm's responsibilities when the latter left the family farm in 1965 to concentrate on building up his own farm at Jerdacuttup. During 1965 he worked at clearing on Oldfield locations 21 and 38 and from 1966 until about 1973 he was given by his father, on three occasions, some of the wheat harvest as payment for his work on the farm. The value of the commodity supplied appears to be only modest.
89 Over succeeding years Robert continued to work on the farm and in 1971 did most of the farm work on the Daniels' properties and those of an adjoining farmer, Don Letton, who entered into a share farming agreement with his father. This pattern of farming went on until the formation of the partnership in 1974 which, as already mentioned, was prompted to a large degree by a desire to make Robert an eligible applicant for the CP land then about to be leased. Nevertheless, according to Robert Daniels, the partnership arrangements did not make much difference to his financial position in practice because, although he continued to work steadily on the farm, there was little money distributed to him. He was credited with a salary from time to time but he claims that this was an expense which the partnership claimed for taxation purposes and that the money payable was rarely distributed.
90 As the years went on, Robert seems to have had a steadily increasing role in the actual farm activities and labour but again received little in the way of financial distributions. There is extensive detail in the affidavit about activities from year to year and moneys withdrawn from the partnership account for occasional holidays and travel, coupled with explanations about increasing demands by Robert's father for work on the farm. Annexure RGD8 to exhibit 1 is a list of partnership operating profit and net profit for the years from 1 July 1975 to 1 April 1992 but with a number of years where the details are incomplete. Generally, the farm made a net operating profit but in 1977/78, 1981/82, 1991/92 and 1992/93 had net operating losses, although it was not clear whether some of those years a net profit nevertheless resulted. This is but another example of the paucity of financial records in this case.
91 Similarly, annexure RGD12 to exhibit 1 is a lengthy tabulation of work completed by the plaintiff, either alone or with others, over the period 25 March 1987 to 8 June 1990, from which it is apparent, as one would expect, that there were many major tasks undertaken, including much cartage, construction and dismantling of plant and equipment and general farm husbandry. The plaintiff also records (in annexure RGD16 to exhibit 1) details of hospital expenditure for his mother which he paid over the years 1994 to 1999, totalling some $28,375, which occasionally exceeded, although then only by small amounts, the monthly contributions of $800 which he had agreed to make in the partnership dissolution agreement with his father and mother of 10 July 1997.
92 It is unnecessary to detail all the evidence relating to Robert's activities on the farm from his childhood until his father's death because this is not a case in which there is any claim for the recognition of some proprietary estate in the land resulting from the non-performance of promises or the reliance upon assurances of the deceased during his lifetime.
93 It is clear that Robert did work assiduously on the farm for many years and, no doubt, for limited financial reward. Nevertheless, he gained his living from those endeavours, was able to marry, raise two children and progressively develop the farm in combination with his father as well as undertake the clearing and improvement of location 817 under the CP lease. Due, no doubt, in part to his efforts and those of his father, the property is now well developed and an established agricultural and pastoral enterprise which has appreciated very considerably in value because of rising land value, as the current values described in Mr Nankivell's valuation attest.
94 By February of 1998, well before his father's death, Robert Daniels was the proprietor of all the farming lands at Hopetoun, having at that date just purchased locations 21, 37 and 38 from his father under the contract of sale for $300,000 payable over six years. That process included the gifts to Robert by his father of locations 335 in 1985 and 619 in June 1997.
95 As for enduring the obligations and travails of working on the property for these many years as well as foregoing many other opportunities in view of his father's promise that one day the faming property would all be his, it can be said that the deceased, Mr Arnold Daniels, did honour this promise and that by the time he died all the property had been transferred to his son by a combination of gifts, purchase and Robert's own acquisition of the CP block. It cannot, therefore, be said that the deceased, Arnold Daniels, failed to honour his promises to his son, Robert.
96 In about April 1990 Robert Daniels met his future wife, Ms Kim McRae, and married her on 2 December 1990. Their first child, Ross John Daniels, was born on 16 January 1992. Their second child, Kirsten Victoria Daniels, was born on 30 November 1995. However, the plaintiff and his wife separated in about 2005 and Mr Robert Daniels has since lived alone on the farm. His wife is now living in Bunbury and has established a relationship with another man there. It is likely that divorce proceedings will be brought by her before long.
97 The plaintiff's son, Ross Daniels, has been working as a sprayer in Gingin and more recently at Munglinup but during periods when that work is not available he returns to Hopetoun to help his father on the farm. He remained on the farm throughout the whole of 2010 and, according to the plaintiff, desires to return to the farm and work for his father but that the plaintiff does not have the funds to employ him. Accordingly, he has been doing a variety of different farm work in other locations and at the time of the trial was working in the Munglinup area. The plaintiff's desire is to pass the farm on to Ross when he retires or dies if he is able to do so.
98 The plaintiff's daughter, Kirsten, lives with her mother in Bunbury but visits the farm at Hopetoun as often as she can, usually during the school holidays and at Christmas. Kirsten has a disability, being blind in one eye since birth. She has had extensive medical treatment but still has a continuing problem. Ross also has problems with his eyes as a result of a disease as a child. The plaintiff and his wife have, in the past, shared the cost of their children's medical expenses but for the time being these costs relate only to check-ups but further surgery may be needed for Kirsten. The plaintiff is not able to pay any child support for Kirsten due to his current financial position.
99 The issue in this case is not whether Robert has, in some way, been disappointed because of his father's failure to see that, in the end, all the family farming lands were his but whether, having done that, the late Mr Arnold Daniels then failed, by his testamentary disposition in excluding his son, Robert, from any share in his residuary estate, to provide him with adequate provision for his proper maintenance, support, education or advancement in life. That is the question which has to be addressed having regard to all the circumstances, including considerations which the deceased could be expected to address in deciding what, if any, provision he would make for his other children or their descendants.
100 When describing the arrangements made at the time of the dissolution of the family partnership in 1997 and the terms of the agreement between the deceased, his late wife and the plaintiff, attention has already been directed to the farm being the principal source of capital and income for the family. This explains the terms of the dissolution which provided for Mr Arnold Daniels to retain unencumbered ownership of Oldfield locations 21, 37 and 38, to be paid rent for Robert's use of them and for Robert to pay hospital and nursing expenses for Mrs Annie Daniels, his mother, then in care at Ravensthorpe. These arrangements were changed slightly, but not materially, by the terms of the contemporary lease to Robert of locations 21, 37 and 28 and, a little later, by the contract of sale for those properties to him.
124 Mr Derek James Hall, the second defendant's husband, also swore and filed an affidavit (exhibit 20) in which he confirms the matters set out in Mrs Hall's affidavits and describes more fully the operation of the family travel agency conducted through the company MDM Nominees (Australia) Pty Ltd. Because he and his wife have not recently been able to work in that business, it is presently operated by their daughter. He does not consider that it has any significant resale value. He also describes the make and date of the three motor vehicles owned by himself and his wife and the use made of them. Copies of the financial accounts for MDM Nominees (Australia) Pty Ltd trading as 'Champagne Travel - Centro Travel at Mandurah and Halls Head' for the financial year ended 30 June 2012 together with a copy of the company's taxation return for that year are annexed to Mr Hall's affidavit.
125 Both Mrs Marilyn Hall and her husband, Mr Derek Hall, were required to attend for cross-examination upon their respective affidavits by the plaintiff and this occurred. However, nothing emerged from those cross-examinations to refute or cast doubt upon any of the evidence contained in their several affidavits, which I accept.
126 From this evidence I consider that both Mrs Marilyn Hall and her husband and her sister, Mrs Janice Phyllis McMillan, and her husband are living in relatively modest circumstances but that, because of her husband's recent illness and inability to work, the financial position of the Halls has deteriorated and at present they are managing on only a small joint income supplemented by resort to capital. Neither she nor her sister in New Zealand could be described as being well off or as having no need for the relief and security which would come from the inheritance bequeathed to them by their father. No finding can be made about the financial circumstances of the fourth, fifth and sixth defendants for reasons already given.
Legal principles
127 The powers conferred on this court by s 6(1) of the Family Provision Act 1972 (WA) are well established. The court is required to follow a two-stage approach, the first stage, often called the 'jurisdictional test' is to determine whether the provision, if any, made for the plaintiff by the will of the deceased was adequate for his proper maintenance, education and advancement in life. If it is not, the court is empowered to make an order and the court then embarks on the second stage of the test, which is to consider what provision ought to be made out of the estate of the deceased for the plaintiff. This second stage, unlike the first, involves a component of discretion – Singer v Berghouse [1994] HCA 40; (1994) 181 CLR 201, 201 – 211.
128 In embarking on this process the court is required to take into account all material facts which existed at the date of the death of the deceased, whether he knew of these or not - Coates v National Trustees Executors & Agency Co Ltd (1956) 95 CLR 494, 508, 515 - 526, 526 - 528 (Dixon CJ); Hughes v National Trustees, Executors & Agency Co of Australasia Ltd [1979] HCA 2; (1979) 143 CLR 134, 147 - 148; White v Barron [1980] HCA 14; (1980) 144 CLR 431, 437, 441, 448 - 449; Goodman v Windeyer [1980] HCA 31; (1980) 144 CLR 490, 498 - 499; Vigolo v Bostin [2005] HCA 11; (2005) 221 CLR 191. This determination of whether or not the deceased made adequate provision for the proper maintenance or education or advancement in the life of a claimant is one of fact, although it will often involve a determination of various value judgments – Devenish v Devenish [2011] WASC 129 [9].
129 The need to make the determination at the date of death of the deceased is significant in the present case because Mr Arnold Daniels' last will was made on 15 September 1997. That date is important because it is closely proximate to the date of the dissolution of the partnership between the deceased, his wife and Robert (10 July 1997) and the subsequent lease of locations 21, 37 and 38 by the deceased to the plaintiff (11 September 1997) and the later contract of sale of those properties by the deceased to the plaintiff (25 February 1998). It is highly probable, and I find, that the structure and design of Mr Arnold Daniels' will was influenced by the considerations which were recognised and implemented in what has been called the 'family succession plan' which was put into effect in mid-1997, involving Mr Arnold Daniels' retirement from the partnership and the passing of control of the farming properties largely, if not entirely, to Robert but under terms which secured future financial provision for the deceased and his wife at a time when age and deteriorating health made it obvious that they would need capital and income to provide for their future needs.
130 The result was, as already described, to complete the transfer of all the farming lands to Robert but to continue lease payments for locations 21, 37 and 38 until the purchase price for those lands had been paid in full and also for Robert to provide $800 per month for the medical and care costs of his mother. It was with these plans, partly implemented but clearly in view, that the will was made providing for the residuary estate to be left equally between the three other children. Mr Arnold Daniels, of course, lived for another 13 years after that but by 1999 he had suffered a serious illness and his dementia, previously incipient, progressed rapidly. It is unlikely that he was in any position to review or reconsider the adequacy of his testamentary provisions over the last 10 years or so of his life but, nevertheless, the test to determine the adequacy and propriety of his testamentary provisions needs to be undertaken as at the date of death and the circumstances which then prevailed.
131 In undertaking this first stage determination or, in other words, addressing the jurisdictional test, the court must make an assessment of whether the deceased's testamentary provisions were adequate for what, in all the circumstances, was a proper level of maintenance appropriate to the plaintiff having regard, among other things, to:
• the totality of the relationship between Robert Daniels and his father
• the plaintiff's contributions and sacrifices made to build up the deceased's estate
• the plaintiff's financial position
• the relationship between the deceased and other family members
• the size and nature of the estate
132 In making this determination, the court has regard to what is right and proper according to accepted community standards: Collicoat v McMillan [1999] 3 VR 803 [818]; Ansett v Moss [2007] VSC 92 [24] (Harper J); Grainger v The Public Trustee (Unreported, WASC, Library No 950670, 6 December 1995) BC 9502708. This determination has to be made in regard to the entire context of the life of the deceased and the claimant and other members of the family. As was said by Dixon CJ in Pontifical Society for the Propagation of the Faith v Scales [1962] HCA 19; (1962) 107 CLR 9, 19, that the words 'adequate' and 'proper' must be considered as words which are always relative and must be treated as elastic but cannot be pressed beyond their fair meaning. The concept goes well beyond provisions for the bare sustenance of a claimant and requires regard to the claimant's position in life including age, status, relationship with the deceased, financial circumstances, customary standard of living and all associated matters viewed in context.
133 Counsel for the plaintiff has referred to the observations in Hogan v Hogan [2013] NSWSC 1405 [130] to the effect that where a child, even when an adult, falls on hard times and when there are assets available, then the community may expect a parent to provide a buffer against contingencies and that where a child has been unable to accumulate superannuation or make other provision for retirement, something to assist in retirement is proper or adequate if otherwise they would be left destitute.
134 The plaintiff emphasises that he had a close relationship with his father and was devoted to his mother, spending most of his life working and improving the family farm. He says that in doing this he did so to the detriment of his own education and advancement. While I am satisfied that the choice involved sacrifices, it was nevertheless voluntary and it provided for the plaintiff a secure living and eventual access to a large scale valuable farming enterprise. Nevertheless, it is obvious that by his vocation the plaintiff assisted and supported his father and mother throughout the whole of their lives and during their declining years.
135 The plaintiff's submissions are that this resulted in a greater expectation that his father would provide for him and make suitable provision for him. In all the circumstances, I consider that that proposition should, broadly, be accepted. It is clear that, by his lifetime activities, Robert had a closer relationship with his father and did more to support his father than his brother, Malcolm, or his two married sisters. That does not involve any implied criticism of the other members of the family. It is simply a recognition that their careers and marriages meant that they had less occasion or opportunity to assist their father. Nevertheless, I am satisfied that the bonds of affection between the deceased and his other children were strong and that each of the three children was devoted to the deceased and, so far as was practicable having regard to the circumstances, paid attention to his needs and that of their mother and helped in all ways reasonably possible. However, that does not overshadow the fact that the plaintiff, by reason of his continuation on the farm, had a closer regular relationship with his father over many years.
136 In such circumstances, the plaintiff may well have expected, and it would seem to be reasonable in all the circumstances, that greater provision would have been made by the deceased for his son, Robert, than for each of his other children. However, the omission of Robert from testamentary provision under the will does not mean that this did not occur. Having regard to the transfers by the deceased of Oldfield locations 335 and 619 to Robert in 1985 and 1997 respectively, it is clear that by those inter vivos gifts Robert received very valuable property, at the time of the respective gifts estimated to be worth $120,000 and $300,000 respectively. Both these locations have continued to appreciate and are now worth, together, in excess of $2.1 million (see annexure RGD35 to exhibit 1). No gifts or benefits of comparable size or anything approaching it were ever made by the deceased to his other children. It is also to be recognised that the acquisition by the plaintiff of Oldfield location 817, originally by a CP lease, was assisted by revenue from the partnership from 1974 until 1997, although the initial deposit and the subsequent freeholding were met from the plaintiff's own funds.
137 I accept the plaintiff's submissions that the assistance which he rendered to his parents enabled them both to continue to enjoy the lifestyle they desired - Peters v Salmon [2013] NSWSC 953 [86] and the fact that Robert Daniels' contributions towards the building up of the testator's estate put him in a position where he had a special claim on his father's bounty - Goodman v Windeyer [497].
138 I also accept the plaintiff's submissions that at the moment he is in a precarious financial position and that he faces a very real prospect that he will be forced to sell the farm and that, if that occurs, his prospects of future employment given his age and limited qualifications are poor. My attention has also been directed to authorities which recognise that an outcome of keeping a claimant in the lifestyle and accommodation which he or she has enjoyed, provided that it is not extravagant, should if possible be supported: Peters v Salmon [91]; Hogan v Hogan [221]; Oldereid v Chan [2013] NSWSC 434 [95]; Roberts v Roberts (1992) 9 WAR 549, 558; and Mayfield v Lloyd-Williams [2004] NSWSC 419.
139 I accept that no distinct test is to be applied involving special need or special claim simply because the plaintiff is an adult. His current age and status are factors to be weighed in the overall determination of whether adequate provision has been made for him: Roche v Varnavides [2004] WASC 164 [6] – [8] and that greater liberality may be exercised where the size of the estate is substantial and where an order for further provision would not unduly prejudice other beneficiaries: McCann v Ward & Burgess [2012] VSC 63 [30]; and Alabakis v Alabakis [2012] VSC 437 [21].
140 The present value of the deceased's estate is about $1.6 million (including debts due to the estate by the plaintiff) and this certainly means that there is adequate scope for making provision if the conclusion were to be that the plaintiff had been left without adequate provision in all the circumstances.
141 By her counsel the second defendant submitted that in terms of assessing the obligation of the deceased to make provision for Robert Daniels, the following circumstances need to be recognised:
• Robert's substantial net asset position
• the existence of a large debt due by him to the bank
• the unviable nature of the farming operations, at least in the assessment of Mr Grieve
• the existence of a substantial extent of non-bank debt due by the plaintiff to other creditors
• the considerable provision made by his father for Robert during Arnold Daniels' lifetime
• the judgment debts owed by Robert to the estate
• the relatively modest circumstances of the second and third defendants, Marilyn and Janice
142 This is one of those cases in which the plaintiff is asset rich but income poor, although his present financial circumstances are rather more dire than that. For such applicants, success has been achieved in applications under comparable legislation in circumstances where, otherwise, the applicant may be left to depend upon his own net asset base – compare Lloyd-Williams v Mayfield [2005] NSWCA 189; (2005) 63 NSWLR 1 [12] (Bryson JA) and Vincent v Rae [2006] VSC 346, but all such determinations need to be made against the context of the particular case. So, for example, in Walker v Walker [2005] NSWSC 1024 [44] it was observed that:
Where the plaintiff chooses to maintain a lifestyle, as a farmer, which results to him in little financial return, in circumstances where, by giving up the farm he could achieve a greater income from investments without the necessity of conducting … farming business, I am not satisfied that the plaintiff has demonstrated that he has been left without adequate provision for his proper maintenance.
143 Unlike in Lloyd-Williams v Mayfield and in Vincent v Rae, the plaintiff in the present case owns all the farming lands outright and not jointly or in partnership with any other and is therefore in a position to realise some or all of the farming properties without such restraints.
144 Counsel for the second defendant referred to Caska v Caska [1999] NSWSC 289 and Strano v Jovcevski [2008] NSWSC 380, where it has been observed that if any provision to be ordered by the court out of the estate of the deceased would simply go straight to creditors, then that may render it inappropriate to make provision because to do so would not improve the applicant's lifestyle. Nevertheless, there have been cases where provision has been ordered which had the result of allowing repayment of creditors and the continuation of income producing business.
145 However, in the present circumstances, the amount required for Mr Robert Daniels to settle his debts to his father's estate, other creditors and the bank is very large. While it seems that the bank may be satisfied with something less than full repayment, if followed by a programme for eventual repayment over 10 years or more, it will still need a payment of approximately $1.3 million or more to avoid a sale of the farm. Mr Grieve considers that, other than by selling location 817, the farm is unsalvageable. Even if the farm were to be sold and all his debts satisfied, the plaintiff would still be left in a substantial asset position more than adequate to see him through his retirement.
146 Looking at the position at the date of death of Mr Arnold Daniels in December 2010, the situation was that by then his son, Robert, owned all the farming lands at Hopetoun but had substantial debts both to the bank and to his father's estate as a result of the unsuccessful litigation which he had commenced in the District Court and the other litigation which the Public Trustee as guardian of his father's estate had brought against him. The disposition under the deceased's will meant that the net value of the estate (including debts due by Robert) of about $1.6 million, was distributable equally between the three other children, in effect providing for them something in excess of $500,000 each. Robert received nothing under the will but had been given property by his father in 1985 and 1997 worth, at the date of the gifts (without any allowance for subsequent appreciation) $420,000, the current value of which is in excess of $2 million due to later appreciation, a large component of which would have accrued by the date of the father's death.
147 Robert had by the time of his father's death also freeholded location 817 and had purchased locations 21, 37 and 38, so that his total asset position at the time of his father's death was substantial. There can be no doubt that, comparatively speaking, he was far better off than either of his sisters, even taking into account their husbands' assets. It is not possible to say what the comparisons were at the date of death between Robert Daniels' assets and those of Malcolm's children, the fourth, fifth and sixth defendants, but at this point that is not the test. The testator's wishes of equal distribution between his other children, or in the case of the deceased child, between the surviving children and the deceased's children, reveal nothing unreasonable or capricious in the testator's scheme of distributions. On any view, as a result of the transactions between the deceased and Robert during Mr Arnold Daniels' lifetime, Robert was left much better off than any of the deceased's other children.
148 Taking these matters into consideration, I therefore conclude that there was no failure by the deceased, Mr Arnold Daniels, to make adequate provision from his estate for the proper maintenance, support, education or advancement in life of his son, Robert, in view of the benefits which the deceased had conferred on Robert during his lifetime and having regard to the natural wishes of the deceased to provide adequately for his other children from his remaining assets by his will. For this reason, I conclude that the plaintiff has not satisfied the jurisdictional test and that no provision should therefore be made for him out of the estate.
149 In view of this conclusion, it is unnecessary for me to deal extensively with the second stage of the two-stage case; that is, to consider, in the exercise of the proper discretion of the court, what provision might otherwise have been made for Robert. Nevertheless, in view of the submissions of the defendants it is necessary to determine one particular issue. The second and third defendants have both contended that Robert's conduct in failing to meet his lease payments, defaulting in paying the purchase price under the contract of sale for locations 21, 37 and 38, and then contesting his obligation to do so in the court proceedings in the District Court, on appeal to the Court of Appeal and then to the High Court of Australia constitutes disentitling conduct which should debar him from any provision if he were otherwise entitled to some. Reliance in this regard is placed on s 6(3) of the Family Provision Act and on principles explained in Delacour v Waddington [1953] HCA 64; (1953) 89 CLR 117 [127]; Hughes v National Trustees, Executors & Agency Co of Australasia Ltd [1979] HCA 2; (1979) 143 CLR 134, 156; Walker v Walker [1996] NSWSC 188; and Collicoat v McMillan [1999] 3 VR 803, 818.
150 I have had regard to these authorities but I am not satisfied that the conduct of the plaintiff singled out for attention by the defendants is such that if, otherwise, he were to show that his father's testamentary provisions had failed to make adequate provision for him, that would disentitle him to an award or diminish any award which might be made. There can be no doubt that the litigation which occurred was most undesirable and that it was expensive and diminished the resources both of the father's estate and of the plaintiff. It is also, in hindsight, now apparent that the appeal instituted by Robert to the Court of Appeal and the subsequent application for special leave to appeal to the High Court were similarly expensive and fruitless. However, the focus of the litigation was upon a matter of construction of the clause in the lease which, while at the end held to be clear and plain, had resulted in an unusual situation where the purchaser of the freehold continued to be liable for lease payments due to the vendor after transfer of title. Robert's failure to pay the purchase moneys due under the contract of sale is less readily excusable but, having regard to the overall position, I do not consider that his persistence in this litigation, even in a hopeless cause, should be such as to disentitle him to provision under this legislation if, otherwise, he had shown that the court should exercise its powers under s 6.
151 One further observation on this aspect of the case is that no provision which the court might have been likely to make had the jurisdictional test been satisfied would be likely to have saved the farm. The plaintiff in his counsel's written and oral submissions has sought an award of half the value of the estate, or approximately $800,000, but that would not be sufficient to meet all the debts. Even if it was devoted wholly to the debts due to the estate and to the other unsecured debts, that would only leave less than $200,000 available to be paid to the bank. Mr Grieve's evidence is that at least $950,000 would be needed to render the farm viable, that is, deal with the bank debt, without attending to the debts due to the estate or the other $226,000 owed to private creditors. However, if the plaintiff were to face the inevitability of the sale of all or part of the farm, he would still be left with a net asset position sufficient for a secure and comfortable retirement far in excess of the assets of the second or third defendants. Anything less than that would be futile and would not secure the preservation for the plaintiff of the Hopetoun properties. It is for this reason that concentration on the preservation of the farm, while necessary and important, tends to distract attention to the essential task required of the court in determining whether there has been a failure by the deceased to provide adequate and proper provision for the claimant.
152 If one has regard to the overall position of the plaintiff it is apparent that, even with the loss of the farm, if this were to eventuate, he is still reasonably secure and adequately provided for because, in the past, he has received very substantial provision from his father. This means that there has been no failure by the deceased to provide adequate provision for Robert by his will, having regard to all the circumstances.
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