Farr v Hardy - [2008] NSWSC 996

CITATION: Farr v Hardy [2008] NSWSC 996

HEARING DATE(S): 06/03/08, 07/03/08 and 12/03/08

JUDGMENT DATE :
25 September 2008

JURISDICTION: Equity

JUDGMENT OF: White J

DECISION: Counsel for the defendants to bring in short minutes of order in accordance with the reasons.

CATCHWORDS: SUCCESSION – family provision and maintenance – whether adequate provision made for widow – widow provided with a right of residence and the right to income from one-third of the estate until she marries or enters into a de facto relationship – widow has scant personal resources – widow contributed substantially as a homemaker – normally appropriate for widows to take house in fee simple – clearly inadequate provision - SUCCESSION – wills – construction – restraint of marriage – whether restraint was effective – gift of personalty – gift over – restraint effective

LEGISLATION CITED: Family Provision Act 1982 (NSW)
Trustee Act 1925 (NSW)
Conveyancing Act 1919 (NSW)
Succession Act 2006 (NSW)
Statute Law (Miscellaneous Provisions) Act (No. 2) 2007 (NSW)
Conveyancing (Amendment) Act 1930 (NSW)

CATEGORY: Principal judgment

CASES CITED: Luciano v Rosenblum (1985) 2 NSWLR 65
Re Keenan (1913) 30 WN (NSW) 214
Leong v Chye [1955] AC 648
Jarvis v Duke (1681) 1 Vern 19; 23 ER 274
Scott v Tyler (1788) Dick 712; 21 ER 448; 2 Bro CC 431; 29 ER 241
Lloyds v Branton (1817) 3 Mer 108; 36 ER 42
In re Hanlon [1933] Ch 254
Potter v Richards (1855) 24 LJ Ch 488
Heath v Lewis (1853) 3 De G M & G 954; 43 ER 374
Re King’s Trusts (1892) 29 LR Ir 401
Evans v Rosser (1864) 2 H&M 190; 71 ER 435
Perpetual Trustee Co Ltd v Fenton (1940) 40 SR (NSW) 382
Fenton v Perpetual Trustee Co Ltd (1940) 64 CLR 52
Singer v Berghouse (No. 2) (1994) 181 CLR 201
Dijkhuijs (formerly Coney) v Barclay (1988) 13 NSWLR 639
Re Buckland, Deceased [1966] VR 404
O’Loughlin v O’Loughlin [2003] NSWCA 99
Golosky v Golosky (NSW Court of Appeal, 5 October 1993, unreported)
Bladwell v Davis [2004] NSWCA 170
Szlazko v Travini [2004] NSWSC 610
Moore v Moore (NSW Court of Appeal, 16 May 1984, unreported, BC8400340)
Court v Hunt (NSW Supreme Court, 14 September 1987, BC8701155)
White v Barron (1980) 144 CLR 431
Pontifical Society for the Propagation of the Faith v Scales (1962) 107 CLR 9
Walker v Walker (Supreme Court of New South Wales, Young J, 17 May 1996, unreported, BC9602381)
Kay v Archbold [2008] NSWSC 254
Australian Securities and Investments Commission v Carey (No. 6) (2006) 153 FCR 509
Public Trustee v Smith [2008] NSWSC 397
Re Whitehouse [1982] Qd R 196
Miller v Cameron (1936) 54 CLR 572

TEXTS CITED: Peter Butt, Land Law, 5th ed (2006) Sydney, Lawbook Co
Rowland, Hutley’s Australian Wills Precedents, 6th ed (2004) LexisNexis Butterworths

PARTIES: Maria Lourdes Farr
v
Gregory Hardy & 2 Ors

FILE NUMBER(S): SC 5843/06

COUNSEL: Plaintiff: P H Blackburn-Hart SC, B J Skinner & D V Robinson
Defendants: A Grant

SOLICITORS: Plaintiff: Crane Butcher McKinnon
Defendants: Walsh & Associates

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
FPA RUNNING LIST

WHITE J

Thursday, 25 September 2008

5843/06 Maria Lourdes Farr v Gregory Hardy & 2 Ors

JUDGMENT

1 HIS HONOUR: This is an application under s 7 of the Family Provision Act 1982 (NSW) for an order for provision in favour of the plaintiff out of the estate of the late Barry Farr for the plaintiff’s maintenance, education and advancement in life.

2 Barry Farr died on 29 July 2005. The plaintiff is his widow. He was also survived by two children of the marriage, Dempsey and Meriel. They are now 17 and 13 respectively. The plaintiff and the deceased were married on 2 February 1985. Hence they were married for a little over 20 years before Mr Farr’s death. In a note made shortly before he died, Mr Farr described the plaintiff as a most faithful, dedicated and dutiful wife and mother.

3 Mr Farr was 17 years older than the plaintiff. She is Filipino. They met in the Philippines when he was on holiday. She came to Australia on a fiancee’s visa in 1984. Mr Farr was a successful investor in real estate. There is some dispute as to the extent of the plaintiff’s involvement in those activities and the extent to which she kept books for her husband. He had two concerns in relation to his estate. He considered that the plaintiff lacked the skills to manage the investments. His second concern was that she would be subject to pressure from her relatives in the Philippines to transfer substantial assets to her family in the Philippines to her detriment and the detriment of their children.

4 The plaintiff has no assets of substance, except a debt owed to her by the trustee of the Farr Better Trust of $85,672. In substance, the provision made for the plaintiff in Mr Farr’s will is that she have the right to reside in the matrimonial home, or in a substitute property, for her life or until she remarries or enters into a de facto relationship. She is also given a life tenancy as to one-third of the balance of the estate until she remarries or commences to live in a de facto relationship. The will is unclear as to how the balance of the estate is dealt with.

5 The plaintiff says that the provision made for her by the will and during the deceased’s lifetime is inadequate for her proper maintenance and advancement in life. The defendant executors dispute this. They say that she has been made secure in her home for life, has an income sufficient to permit her to live in the style to which she is accustomed and that the provisions of the will enabling advances of capital to be made, coupled with the plaintiff’s being an object of a discretionary trust known as the Farr Better Trust, means that funds are available to enable her to meet unforeseen contingencies (Luciano v Rosenblum (1985) 2 NSWLR 65 at 69-70).

The Estate

6 At the date of the hearing, the distributable estate had an estimated value of $2,272,662. It consisted of the following:

ASSET	CURRENT ESTIMATED VALUE
The Emerald Beach Property	525,000.00
The Harbord Property	1,325,000.00
Beneficiary account – Farr Better Trust	364,183.46
Loan – Farr Family Superannuation Fund	161,561.44
327 AMP shares	2,623.00
314 IAG shares	1,212.00
Cash	1,169.76
Shares in Fasthaven Pty Limited (97 Ordinary & 1 Variable Dividend)	98.00
TOTAL	$2,380,847.66

7 The outstanding liabilities were as follows:

LIABILITY	CURRENT ESTIMATED VALUE
Loan – Farr Better Trust	85,637.00
Legal fees & disbursements – Walsh & Associates, solicitors	4,597.70
Accounting fees - HQB, Chartered Accountants	17,354.54
Council rates (Harbord property)	378.80
Water rates (Harbord property)	217.75
TOTAL	$108,185.79

8 The Emerald Beach property was the matrimonial home. It is unencumbered. The deceased bought the land at Emerald Beach in 1973. Subsequently, he built on that land. In March 1991, he and the plaintiff and their son Dempsey, who was then only 3 months old, moved to that property.

9 The “Harbord” property with an estimated current value of $1,325,000, is located at Undercliff Road, Harbord. It was purchased by the deceased in his own name in 1983. The mortgages to secure the finance used to purchase the property were discharged in 2005. The property is unencumbered. It is a duplex property currently rented. It is comprised in a single lot. Unless there were a subdivision, the two parts of the duplex could not be transferred separately.

10 The gross profit from the renting of the property at Undercliff Road, Harbord (after advertising, agent’s fees and commissions, insurance, land tax, repairs and maintenance, rates and sundry expenses), has averaged $35,588 for four financial years ended 30 June 2004, 2005, 2006 and 2007. As the property was valued at between $1,150,000 to $1,350,000 in July 2005, $1,200,000 in May 2007 and $1,325,000 in February 2008, this represents a return of less than three percent.

11 The Farr Better Trust is a discretionary trust. At the death of the deceased, the trustee was Fasthaven Pty Ltd. The deceased was the controlling shareholder and sole director of Fasthaven. On 16 August 2007, Fasthaven was replaced as trustee of the Farr Better Trust by Chrystal Cedar Pty Ltd. The defendants are the sole shareholders and directors of Chrystal Cedar. The circumstances in which there was a change of trustee are considered later in these reasons. The plaintiff seeks an order that Chrystal Cedar be removed as trustee and Fasthaven be reappointed as trustee. Alternatively, she claims a declaration that the shares in Chrystal Cedar are held on trust for the estate.

12 The trustee is given a discretion in each accounting period either to accumulate income or to apply income to any of the “General Beneficiaries”. From and after the “Vesting Day”, the trustee had a discretion to appoint the capital and income of the trust, with the prior written consent of Mr Farr, to such of the General Beneficiaries then living, or on such charitable purposes, in such proportions and in such manner as it thought fit. The trustee has a discretion to advance the Vesting Day. The power to appoint capital between the General Beneficiaries lapsed with the death of Mr Farr (clause 2.4). Nonetheless there is a power to pay or transfer capital of the trust fund prior to the Vesting Day for the maintenance, education, benefit or advancement of any one or more of the General Beneficiaries (clause 3.5).

13 In default of the trustee appointing capital or income of the trust on the Vesting Day in accordance with clause 2.4 (which right lapsed on Mr Farr’s death), from the Vesting Day, the trust property as to both capital and income will be held for the Primary Beneficiaries then living (clause 2.5). The “Primary Beneficiaries” are the children or grandchildren of Mr Farr and the plaintiff. The plaintiff is not a “Primary Beneficiary”. She and Mr Farr, along with the children, are included in the class of General Beneficiaries.

14 The “Beneficiary Account” of the estate with the Farr Better Trust of $364,183 represents a debt owed by the trustee of the trust to the estate. It presumably represents income previously distributed to Mr Farr from the trust, and also income distributed to the estate from the trust, less drawings, plus any advances made by Mr Farr to the trust. The plaintiff has a beneficiary account with the trust of $85,672. The children have substantially smaller accounts.

15 The principal asset of the trust is a property at Park Avenue, Coffs Harbour. The property is leased as a paint shop and returned gross rents of $34,733 in 2004, $35,526 in 2005, $36,373 in 2006, and $39,353 in 2007. The net operating profit of the trust (after adding back a $15,000 superannuation contribution in 2004) has been $27,468 in 2004, $26,713 in 2005, $27,940 in 2006, and $15,916 in 2007, an average of $24,509 per annum over the last four years. The profits for the year ended 30 June 2007 were adversely affected by an expense for land tax of $21,860 which had not been provided for in previous years. In the 2004 and 2005 financial years, the net profit of the trust was distributed to the plaintiff, presumably for taxation reasons. The distribution was not paid to the plaintiff but was credited to her beneficiary’s current account. In the 2006 and 2007 financial years, the income has been distributed to the estate, thereby adding to the debt owed by the trustee represented by the beneficiary account. The trust has also made a loan to the estate of $85,637.

16 The asset of $161,561.44 being a loan to the Farr Family Superannuation Fund arose in the following circumstances. Fasthaven, as trustee of the superannuation fund, owns a property at 39 Bonville Street, Coffs Harbour. Originally an old three-bedroom house stood on the end of the site facing Bonville Street. Prior to his death, Mr Farr decided to build a second house at the opposite end of the property facing a back lane and to renovate the existing house. He intended to make sufficient contributions to the superannuation fund to enable the trustee of the superannuation fund to pay for the building work. On 9 May 2005, Fasthaven entered into two building contracts for this work. Mr Farr may have underestimated how ill he was. He did not make sufficient contributions to the superannuation fund to fund the building work. Following his death, there was insufficient cash or other liquid assets in the superannuation fund for the superannuation fund to pay the builder. The executors decided to lend funds from the estate to pay the progress payments as they fell due. A loan of $22,090 was also made by Fasthaven as trustee for the Farr Better Trust to itself as trustee of the superannuation fund.

17 Although Mr and Mrs Farr were both members of the superannuation fund, only Mr Farr had accumulated a member entitlement in the fund. At his death, his entitlement was valued at $379,498. Pursuant to clause 5.1.4 of the superannuation fund trust deed, the amount allocated to Mr Farr’s “Accumulation Account” was a member’s “Death Benefit” which, upon the death of the member, became payable in accordance with that clause. Pursuant to clause 5.2.4 the amount was payable to such of the following persons as the trustee reasonably considered to be appropriate in the circumstances, namely:

(i) The Member’s Designated Beneficiary.

(ii) The Member’s present Spouse.

(iii) One or more of the Member’s past Spouses.

(iv) One or more of the Member’s natural or adopted children, grandchildren or great-grandchildren.

(v) The Member’s personal legal representative.

(vi) As the Member has directed the Trustee, in writing.

18 On 22 July 1997, Mr Farr had designated his wife and both his children as designated beneficiaries and expressed his wish that in the exercise of the trustee’s discretion it consider paying any lump sum death benefit to them in equal proportions. On 20 February 2008, Mr Hardy and Mr Walsh, as directors of Fasthaven, noted that the current estimated value of Mr Farr’s death benefit was then $385,507.47.

19 The increase in the estimated benefit from $379,498 at the date of Mr Farr’s death to $385,507.47 as at 20 February 2008 appears to be the result of allocating the small operating net income in 2006 and 2007 to Mr Farr, that is, the estate. By a resolution made on 20 February 2008, the directors of Fasthaven (that is, Mr Hardy and Mr Walsh) resolved that Fasthaven exercise its discretion under clause 5.2.4 of the trust deed to apply the whole of the death benefit of the late Mr Farr to the Public Trustee for the children in equal shares. The death benefit is estimated to have a current value of $385,507.47. It represents the difference between the assets and liabilities of Fasthaven in its capacity as trustee of the superannuation fund. Its principal asset is the land and buildings in Bonville Street, Coffs Harbour. Apart from a provision for income tax, its only liabilities are its debts for the loans advanced to it from the Farr Better Trust of $22,090 and from the estate of $167,561. Payment of the death benefit requires the sale of the Bonville Street properties, the repayment of the loans to the estate and to the Farr Better Trust, and the payment of the difference to the Public Trustee for the benefit of the children.

20 The making of loans to the superannuation fund had the potential to jeopardise the concessional income tax treatment of the fund. However, it appears likely that the Australian Taxation Office will not treat the fund as non-compliant. In any event, in final submissions the plaintiff did not press her challenge to the application of the death benefit to the children.

Income of the Estate

21 The income of the estate for the 2006 financial year, the 2007 financial year, and the 7 months to 31 January 2008 are as follows:

2008 $ (7 months)	2007 $	2006 $
INCOME
Gross profit from rental activities	20,305	38,943	31,569
Navigator Trust – Distribution Received	-	2,056
Farr Better Trust – Distribution Received	22,220	15,916	27,940
Dividends Received	194	223	320
Interest Received	189	1,030	5,778
42,908	56,112	67,663
LESS EXPENDITURE
Accountancy Fees	-	99	-
Investment Expenses	-	1,996
Legal Fees	10,074	11,704	(2,233)
10,074	11,803	(237)
32,834	44,309	67,900
32,834	44,309	67,900

22 The expenses for legal fees relate to moneys paid from the estate to indemnify the executors in respect of the costs for the current proceedings. To date, the executors have not recouped their professional charges for administration of the estate and they have not been included as expenses in the above figures. Billed expenses of Mr Walsh’s firm are $15,987.71 and $17,523.78 in the case of Mr Hardy. These amounts have not been paid. The defendants estimate there is work-in-progress and disbursements not yet billed of $28,776.47 in the case of Mr Walsh’s firm and $8,264.30 in the case of Mr Hardy’s firm. Thus the total likely amount for the executors’ costs in relation to the administration of the estate from 29 July 2005 to the date of the hearing is $70,552.26. If the payments of legal costs for the current litigation were excluded as extraordinary items, but the expenses of administration were booked, the annual income from the estate would average $37,265 per annum (net income $145,043 (over 31 months) + $11,704 + $10,074 - $70,552 = $96,269 over 31 months, or $37,265 per annum). The executors’ expenses may be higher in the initial stages of administration and the need to give frequent consideration to the plaintiff’s request for payment of particular bills not paid from her regular drawings, but even if they were reduced by half, the ongoing income from the present investments would be in the order of $50,921 or $4,243 per month. On an estate valued at $2,272,662 that is a return of only 2.3 percent.

23 The estate’s assets are invested primarily in real property which is yielding a low income although it may have substantial prospects of long-term capital growth. The plaintiff is entitled under the will only to one-third of the income. She has no prospect of sharing in the capital growth. The defendants have given no evidence that they have considered changing the investments of the estate to higher income yielding assets.

Plaintiff’s Financial Position

24 Apart from the benefits to which the plaintiff is entitled under the will, and the debt owed to her by Chrystal Cedar as trustee of the Farr Better Trust, she has almost no assets. She was wholly dependent on her husband during his life. He did not allow her to take up employment. She does not own any real property. She does not own a car. She has about $2,000 in a bank account, personal effects which she values at $1,500, and furniture which she values at $10,000.

25 Accordingly, critical to the question as to whether or not the deceased made adequate provision in his will for the plaintiff’s proper maintenance and advancement in life are the terms of his will.

The Will

26 The will was made on 4 July 2005. It is divided into Parts A, B and C. Clauses 1 to 12 are in Part A. Clause 2 provides for the appointment of the defendants as executors and trustees of the will. The will contains the following relevant provisions:

3. Parts of Will

This Will is in three main parts – in general terms,

sets out how my estate is to be divided,

sets out the instructions and discretionary and other powers I give to my executors and

includes general administrative provisions.

4. Executors to Hold on Trust

My executors shall hold my estate on trust and, subject to the powers set out in this Will, after the:

(a) selling, calling in or converting into money any part of my estate; and

(b) payment of all or any debts and testamentary expenses associated with my death or the administration of my estate;

shall deal with the balance of my estate as provided hereafter.

...

6. Existing Trusts and Corporate Trustees

My executors shall hold both:

(a) the powers of appointment in relation to; and

(b) any shares that I hold in any company acting as trustee of;

any trust for which I hold, directly or indirectly, the power to appoint a trustee, guardian, appointor or other position (in this clause only referred to as ‘my trusts’).

7. Right of Occupation for My Wife

7.1 My executors shall hold the property that constitutes my principal place of residence at my death (currently the property located at 10 Beacon Crescent, Emerald Beach (‘the house’), and subject to all the powers in Part C of this Will, including the power to postpone such sale, without any liability for any loss as a result of such postponement, shall deal with it in accordance with the remainder of this clause.

7.2 My Wife

LOURDES FARR

may personally reside in the house as long as she wishes for her life provided that she pays the rates, taxes and insurance premiums on the property and keeps it in repair to my executor’s satisfaction.

7.3 Until Lourdes in the opinion of my executors, has ceased to live in the house permanently or has failed to comply with the conditions of her right of occupation, the house shall not be sold without her written consent or the written consent of her duly constituted attorney.

7.4 At the written request of my Wife or her legal personal representative, my executors shall sell the house (or a residence or property substituted under this clause) and buy another residence or an interest in or right to accommodation, whether freehold, leasehold, contractual, licence, right of occupation, right to residential care or otherwise, to be held for the benefit of Lourdes on the same provisions as those expressed in this clause.

7.5 In the case of a sale under this clause:

(a) my executors may only use a maximum of the proceeds of sale of the house to acquire any substituted property (including any acquisition costs); and

(b) if there is any amount remaining from the proceeds of sale of the house after acquisition of any substituted property, such amount shall form part of the fund created in clause 9 of this Will.

7.6 When my Wife Lourdes ceases to live permanently in the house or in any residence provided in substitution for the house or she remarries or commences to live in a defacto relationship, then the house or the residence provided in substitution, shall devolve in accordance with the succeeding clauses of this Will.

7.7 In this clause, ‘legal personal representative’ includes a duly appointed:

(a) administrator; and

(b) enduring or other attorney;

with authority to make legal and financial decisions.

8. Creation of Life Interest with My Wife as Primary Life Tenant

8.1 If my Wife

LOURDES FARR

(‘Lourdes’) survives me by thirty (30) days my executors shall hold one third of the balance of my estate (‘the fund’) on trust for sale, and subject to all the powers in Part C of this Will, including the power to postpone such sale, without any liability for any loss as a result of such postponement, and shall deal with the fund in accordance with the remainder of this clause.

8.2 Lourdes shall be the primary life tenant for her life or until she remarries or commences to live in a defacto relationship (‘the term’). At the end of the term, the balance of the fund shall then be distributed in accordance with the succeeding clauses of this Will.

8.3 My Wife must:

(a) pay the rates, taxes insurance policies and other outgoings in respect of the assets in the fund; and

(b) keep assets in the fund in repair to the reasonable satisfaction of my executors.

8.4 During the term of the life interest created by this clause, Lourdes shall have, in addition to all other rights of a life tenant, an express personal right of occupation in relation to any residence forming part of the fund.

8.5 My executors, with the consent of Lourdes may choose to make a binding election to temporarily or permanently refrain from distributing or providing income or capital to or for her benefit.

8.6 While income may be allocated to Lourdes, my executors may, if in any year they consider that the income is insufficient to maintain a proper standard of living for Lourdes as well as my children; access such of up to 50% of the capital of the fund to make the income up to such a sum as my executors consider sufficient for that purpose provided that during the term of the fund, my executors may not access in total more than 50% of the capital of the fund.

8.7 In addition to the powers given to my executors in Part C of this will, they may apply such of the fund as may be required to meet any capital gains tax liability arising during the term on behalf of any beneficiary under this will, as a result of the disposal of all or any part of the fund.

Alternative Provisions

8.8 If my Wife does not survive me by thirty (30) days, or at the end of the term, the remaining clauses of this Part apply.

9. Guardianship of Children

9.1 In the event that I die leaving children under eighteen (18) years and my wife is not living:

(a) I appoint my sister

LORRAINE SOPHIA

to be guardian and to be responsible for their day to day and long term care, welfare and development during their minority; and

(b) it is my wish that my executors exercise their powers so as to ensure that any person caring for any of those children (whether as guardian or otherwise) does not suffer, in the course of such care, a financial burden or loss.

9.2 My executors are specifically empowered, in addition to their other powers, to provide such funds:

(a) as are necessary to ensure that my children’s accommodation, education and other day to day needs are met; and

(b) notwithstanding that their guardians (or their guardian’s children or dependants) may also benefit directly or indirectly from such funds.

10. Division and Distribution of Remaining Balance of Estate

10.1 My executors shall divide the balance of my estate not already dealt with under the preceding clauses of this Will (‘the remaining balance’) into one or more equal parts, sections or portions, and shall hold on trust in accordance with Part C of this Will, and dispose of such parts, sections or portions as follows.

11. Gift to My Children

11.1 This clause is subject to the clause headed ‘Direction to Adjust Entitlements’ in Part B of this Will.

11.2 Each of my children, who:

(a) survive me by thirty (30) days; and

(b) attain the age of twenty five (25) years;

shall receive one such part.

Distributions in Lieu – Gifts to Further Descendants

11.3 If one or both of my children do not survive to attain a vested interest in my estate but leave children who:

(a) survive me by thirty (30) days or are born after my death; and

(b) attain the age of twenty five (25) years;

(‘the survivors’) then the survivors shall receive in equal sections the part that their deceased parent would have received had the parent survived to attain a vested interest.

11.4 If any of the grandchildren who would otherwise have taken the place of a deceased parent do not survive to attain a vested interest in my estate but leave children who:

a) survive me by thirty (30) days or are born after my death; and

b) attain the age of twenty five (25) years;

(‘the further survivors’), then the further survivors shall receive in equal portions the section their deceased parent would have received had the parent survived to attain a vested interest.

...

12.. Reserve Distribution Provisions

12.1 My executors shall hold such of my estate not effectively dealt with under the preceding clauses for my sister

LORRAINE SOPHIA

who:

(a) survives me by thirty (30) days; and

(b) is living on the date of death of the last surviving person who failed to inherit under the preceding clause (‘the reserve date’);

12.2 In the event my sister fails to survive me by the thirty (30) days or is not living at the reserve date, the part shall be distributed to her estate.

13. Direction to Adjust Entitlements

13.1 In this clause a reference to ‘nominated beneficiaries’ is a reference to the beneficiaries nominated in Part A.

Amounts to be adjusted

13.2 It is my intention and my executors are directed to ensure that any division of the balance of my estate in Part A takes into account all of the assets set out in the succeeding paragraphs of this subclause.

a. the gifts referred to in clause headed Gifts;

b. any entitlements to superannuation, life insurance and other death benefits paid to or for the benefit of any of the nominated beneficiaries; and

c. the balance of my estate.

Direction to Adjust Estate Distributions

13.3 I direct that my executors:

(a) treat the amounts referred to in this clause to be adjusted as if they:

(i) formed part of my estate; and

(ii) have been received by or are owed to (as the case may be) the relevant nominated beneficiary; and

(b) adjust the distribution of the balance of my estate accordingly.

14. Nomination as to Death Benefits

It is my strong wish that my executors do all in their power to ensure that any death benefits paid in consequence of my death are paid in accordance with the last valid nomination I may have made in respect of the payment of death benefits.

...

PART C – ADMINISTRATIVE PROVISIONS

16. Interpretation

In this Will:

...

16.5 If by reason of the inclusion of any word, description or provision in this Will, all or any part of this Will would be invalid, then this Will is to be construed as if the word, description or provision were not included in this Will.

...

17. General Powers of Executors and Trustees

17.1 Subject to any express requirement in this Will otherwise, my executors and the trustees of any trusts established by the terms of my Will:

(a) shall have all the powers authorities and discretion of a natural person, including but not limited to the power to invest and change investments freely as if they were beneficially entitled to them, together with the specific powers set out in the succeeding clauses; and

(b) in their exercise of their general and specific powers, shall not be restricted or obligated by provisions relating to trustees contained in any legislation of the Commonwealth of Australia or any of its States or Territories.

17.2 The specific powers set out in the succeeding clauses shall be in addition to, and shall not limit the generality of, the general powers set out in this clause.

...

21. Entitlement to Charge

Any executor or trustee of mine being:

(a) a legal practitioner;

(b) an accountant who is a member of:

(i) the Institute of Chartered Accountants in Australia;

(ii) CPA Australia;

(iii) the National Institute of Accountants;

(iv) the National Tax and Accountants’ Association Limited;

(c) a person referred to in the clause entitled ‘Investment Decisions’;

shall be entitled to charge and be paid all professional or other charges for any business or act done by him or her, or his or her firm, in connection with the trusts hereof. This power extends to acts that an executor or trustee could have done personally as if he or she were not such an executor or trustee.

...

27 Clause 19 conferred various powers on the executors and trustees. There was no further power to advance income or capital to either the plaintiff or her children.

28 It is clear from clause 7 that the plaintiff was given a mere personal licence to reside in the Emerald Beach property which does not amount to a life estate (Re Keenan (1913) 30 WN (NSW) 214; Peter Butt, Land Law, 5th ed (2006) Lawbook Co at [1006]). At common law, the condition that the right of personal residence should cease if the plaintiff remarried would be valid as a mere partial restraint on marriage, provided that the succeeding provisions of the will provide for a gift over in the event of her remarrying. In the absence of such a gift over, the restraint on remarriage would be treated as a provision “in terrorem” and would be invalid, as the gift was a mere personal licence and not a devise of realty (Leong v Chye [1955] AC 648 at 660-663; Jarvis v Duke (1681) 1 Vern 19; 23 ER 274; Scott v Tyler (1788) Dick 712; 21 ER 448; 2 Bro CC 431; 29 ER 241). Clause 7.6 is a sufficient gift over (Lloyds v Branton (1817) 3 Mer 108 at 118-119; 36 ER 42 at 45-46). Accordingly, the restraint on marriage is not merely in terrorem, and is valid. If the plaintiff were to remarry she would lose her right of residence. The condition that the right of residence would come to an end upon the plaintiff entering into a de facto relationship would not be invalid. There is no principle which invalidates restraints on cohabitation or de facto relationships (In re Hanlon [1933] Ch 254 at 260). Given that the law on whole and partial restraints on marriage is derived from the ecclesiastical law, it would be surprising if there were any such principle. It follows that the plaintiff would also forfeit her right of residence if she entered into a de facto relationship.

29 Clause 8.1 requires the executors to hold one-third of the balance of the estate on a trust for sale but with the power to postpone sale. It is that one-third of the balance of the estate which comprises “the fund” dealt with in accordance with the remainder of clause 8.

30 Clause 8.2 creates a limited life tenancy for the plaintiff in respect of the fund. The limitations that the gift apply until remarriage or commencement of her living in a de facto relationship are valid as limitations on the gift, rather than conditions for forfeiture of the gift (Potter v Richards (1855) 24 LJ Ch 488 at 489; Heath v Lewis (1853) 3 De G M & G 954; 43 ER 374; Re King’s Trusts (1892) 29 LR Ir 401 at 409; Evans v Rosser (1864) 2 H&M 190; 71 ER 435). In any event, the conditions would be effective for the same reasons given in para [28].

31 Pursuant to clause 8.4, the plaintiff would have a personal right of occupation of any residence forming part of the one-third balance of the estate. It is unclear how it could be determined, for example, that the Harbord property, or either part of the duplex which comprises the Harbord property, is part of “the fund” (that is, the one-third balance of the estate).

32 Clause 8.6 confers a power on the executors to advance capital to the plaintiff to supplement the income to such amount as the executors considered sufficient for her to maintain a proper standard of living for her and her children. However, only 50 per cent of the capital of “the fund”, that is, one-sixth of the balance of the estate (excluding the Emerald Beach property) could be so advanced during the entirety of the term.

33 Clause 8.8 is important. By expressly providing that the “remaining clauses of this Part” apply “at the end of the term”, it is necessarily implied that the remaining clauses in Part A of the will do not apply prior to the end of the term.

34 Clause 9.1 is not inconsistent with this because “the term” would necessarily have come to an end before clause 9.1 could operate. The power under clause 9.2 for the executors to provide funds necessary to meet the needs of his children for their accommodation, education and other day-to-day needs only arises “at the end of the term”.

35 Likewise, clauses 10-12, which are all contained in Part A, do not apply until the end of the term, that is, until the plaintiff dies, remarries, or commences living in a de facto relationship. In my view, the gift to the children of “the remaining balance” in clause 11.2 gives them a contingent interest in the estate. They did not obtain a vested interest in any part of the estate on reaching the age of 25. They are not entitled to receive any part of the estate until after their mother’s death, or her remarriage or entry into a de facto relationship, and only then if they have reached the age of 25.

36 Clause 10.1 requires the executors to divide the balance of the estate “not already dealt with under the preceding clauses of this Will”. It is that “remaining balance” which is to be divided into portions and disposed of under clause 11. If the gift to the plaintiff were to fail during her lifetime because she married or entered into a de facto relationship, the children, on attaining the age of 25, would acquire a vested interest in “the remaining balance” of the estate. The will contains no provision for Mr Farr’s children to inherit “the house” or the remainder interest in the one-third of the balance of the estate in respect of which the plaintiff has a limited life interest.

37 The gift to the children is said to be subject to the clause headed “Direction to Adjust Entitlements” in Part B (clause 11.1). That presumably refers to all of clause 13 and not only to 13.1. The purpose of clause 13 appears to be that in dividing the “remaining balance” of the estate in accordance with clause 10.1 into parts which are to be equal, one of which is to be received by each child, the executors are to make adjustments if one child has received more by way of superannuation or death benefits than the other child.

38 The “house” (as defined) and the “fund” (as defined) had been dealt with under clauses preceding clause 10.1. Clause 12.1 provided that such of the estate as was not “effectively dealt with” should pass to either the deceased’s sister or her estate. At the end of “the term” (assuming the validity of the partial restraint on marriage), or, in any event, on the death of the plaintiff or on her commencing a de facto relationship, neither “the house”, nor the remainder interest in “the fund” was disposed of by the will. Such property would either pass on an intestacy, in which event the deceased’s children would inherit, or it would pass under clause 12 to the deceased’s sister or her estate. Although that property was dealt with by clauses conferring limited rights on the plaintiff, it was not “effectively dealt with” because there was no provision as to who should inherit the property once the plaintiff’s rights in respect of the house, or interest in the fund, came to an end. Accordingly, the better view is that that property would pass to the deceased’s sister or her estate under clause 12.

39 Mr Grant of counsel who appeared for the executors, submitted that upon turning 25, the deceased’s children would inherit two-thirds of the balance of the estate. He also submitted that upon the plaintiff’s interest in the estate coming to an end, on her death, remarriage or entry into a de facto relationship, the children would inherit “the house” and the remaining one-third balance of the estate. However, counsel was unable to identify any provision which brought about this result. He submitted that it is what should be inferred from the construction of the will as a whole. I am very willing to believe from the testator’s correspondence and the evidence of Mr Hardy that the deceased did intend to benefit his children in this way. However, there is no claim for rectification of the will. The will fails to give effect to that intention.

40 Mr Hardy deposed that in his opinion the persons beneficially entitled to the distributable estate were the plaintiff, her son Dempsey and her daughter Meriel. Clause 1.9(2)(c) of Schedule J to the Supreme Court Rules 1970 (NSW) required notice to be given in accordance with Form 89B on every person entitled to share in the distributable estate. Notice was not given to the deceased’s sister. Presumably neither executor regarded her as being entitled to such a share. The executors’ failure to serve the notice on her does not preclude my dealing with the plaintiff’s claim (Luciano v Rosenblum). The notice which should have been given in accordance with Form 89B directs a recipient’s attention to the possibility that he or she may be entitled to, and may wish to apply for, an order for provision out of the estate. It says what they need to do if they are entitled and wish to do so. Mr Farr’s sister is not an eligible person.

Powers of Advancement

41 As noted in para [32], clause 8.6 gives the executors power to make advances to the plaintiff of up to 50 percent of the capital of “the fund”, that is, one-third of the balance of the estate, to such sum as the executors consider sufficient to maintain a proper standard of living for the plaintiff and her children. By reason of clause 8.8, the power to make advancements to the children under clause 9.2 does not arise until the end of “the term”.

42 The defendants have power under s 43 of the Trustee Act 1925 (NSW) to make payments from the income of the property to which the children are contingently entitled towards their maintenance and education or benefit whilst they remain infants. Counsel for the plaintiff submitted that it was doubtful whether the children would be entitled to income derived from their contingent shares of the balance of the estate. Mr Blackburn-Hart SC who appeared with Mr Skinner and Ms Robinson for the plaintiff submitted that s 36B of the Conveyancing Act 1919 (NSW) which formerly provided that a contingent or future specific or residuary devise or bequest of property and a specific or residuary devise or bequest of property to trustees upon trust for a person whose interest is contingent or executory, should carry the immediate income of the property from the death of the testator except insofar as it was otherwise expressly disposed of, had been repealed by s 59 and clause 3.5[3A] of Sch 3 of the Succession Act 2006 (NSW). That clause was introduced by the Statute Law (Miscellaneous Provisions) Act (No. 2) 2007 (NSW) s 3 and Sch 1 Clause 1.23[22]. Section 34 of the Succession Act provides that a contingent future or deferred disposition of property, whether specific or residuary, includes any intermediate income of the property that has not been disposed of by will. Section 34 applies to a will whenever made if the testator dies on or after 1 March 2008 (Succession Act, Sch 1, Clause 3(3)). The Statute Law (Miscellaneous Provisions) Act (No. 2) also amended Sch 3 to the Succession Act to include Pt 7 to Sch 9 of the Conveyancing Act, clause 13 to provide that s 36B, as in force immediately before its repeal, continues to apply to wills and instruments that came into operation before the commencement of the Conveyancing (Amendment) Act 1930 (NSW) as if that section had not been repealed. Hence, counsel submitted that s 34 of the Succession Act was inapplicable because the testator had died before the commencement of the section and that s 36B of the Conveyancing Act had been repealed, except in relation to wills coming into operation before 1930. That would appear to be so, although the task of tracking all the legislative amendments is labyrinthine. However that may be, at common law a residual bequest of mixed realty and personalty, whether vested or contingent, carried the intermediate income (Perpetual Trustee Co Ltd v Fenton (1940) 40 SR (NSW) 382 per Jordan CJ at 389-390, affirmed Fenton v Perpetual Trustee Co Ltd (1940) 64 CLR 52). Accordingly, the trustees have power to make advances of income for the maintenance, education or benefit of the children until they turn 21.

43 There is no power to make advances of capital to the children. Section 44 of the Trustee Act is inapplicable because the shares to which the children are entitled greatly exceed $4,000 (Trustee Act, s 44(1A)).

44 The burden of the submissions for the executors was that the provision made in favour of the plaintiff was adequate having regard to the needs of the testator’s children. A proper analysis of the children’s entitlements under the will shows that the will makes inadequate provision for their likely needs. After they turn 21, they will not be entitled to the benefit of advances of income. Unless the plaintiff marries or enters into a de facto relationship, they will not inherit their share of the estate until the plaintiff dies. The life expectancy of women of the plaintiff’s age is 85. It may be 35 years or more before the deceased’s children inherit their shares of two-thirds of the balance of the estate. In the meantime, the estate will incur administration expenses of the defendants who, at least in the case of Mr Hardy, are entitled to charge his usual professional rates. Mr Walsh might or might not be in the same position, depending upon whether the deceased gave his informed consent to the legacy to his solicitor under clause 21 of the will.

Administration of the Estate

45 Prior to his death, Mr Farr gave Mr Walsh and Mr Hardy a general enduring power of attorney. Shortly before Mr Farr’s death, Mr Walsh and Mr Hardy arranged for a weekly payment of $450 to be made by direct debit from the deceased’s building society account to the plaintiff’s building society account. This was a sensible arrangement which provided the plaintiff with some funds following Mr Farr’s death. She had none of her own. This arrangement continued until about February 2006. Apart from receiving $450 per week, the plaintiff presented particular bills that needed payment and these were paid by cheques drawn by the executors. On 2 February 2006, there was a meeting between the plaintiff and Mr Walsh and Mr Hardy. Following the meeting, Walsh & Associates wrote to the plaintiff confirming that:

“ As discussed our aim is to come to an arrangement whereby you will receive ongoing funds to cover your expenses for yourself and your children in accordance with Barry’s Will. We also discussed the realisation of Barry’s assets so that we may afford to pay you your fund in addition to all building liabilities and other liabilities of the Estate.

We confirm that the following was decided by you:

1. That you wish to continue living at 10 Beacon Crescent, Emerald Beach.

...

8. That once the town house at Bonville is completed it may be rented out.

46 The executors asked the plaintiff to provide a budget. She did so in a document dated 7 February 2006. The budget presented was for a monthly amount of $3,560. It included sums for groceries, school excursions and activities, pocket money for the children, telephone, school fees, medical expenses and insurance, clothes, electricity, rates, gas and water.

47 The executors agreed to the budget. From February 2006, they have paid $3,560 per month to the plaintiff. This is the equivalent of $42,720 per year.

48 The plaintiff is unable to live within the budget of February 2006. She incurred numerous additional expenses for which she requested payment from the executors. All such requests for payment, other than requests in respect of legal fees of her own solicitors, have been met. If the executors charged the professional fees which they are entitled to charge, at least in the case of Mr Hardy, this is an expensive process.

49 Mr Hardy deposed that:

“ As at 11 May 2007, the sum of $35,414 had been distributed to Mrs Farr, Dempsey and Meriel from the Estate.

Since that date [up to 20 February 2008], the sum of $3,560 per month ... has continued to be paid to Mrs Farr. ... In addition, Mrs Farr has continued to request that the Executors pay amounts for various items over and above this monthly payment, which Mr Walsh and I have also usually paid.

Since 11 May 2007, net income of the Estate has increased and it has been able to meet the payments. Further, repayment of capital previously used to fund these payments before 11 May 2007 has been possible in the sum of $3,316. Accordingly, as at [20 February 2008] , a total of $32,098 in this regard has been distributed to Mrs Farr, Dempsey and Meriel from the Estate.

In addition to these payments, there has also been distribution of the following assets of the Estate to the following beneficiaries:

ASSET	ESTIMATED VALUE	DISTRIBUTED TO
Cash from Deceased’s Greater Building Society account (29 September 2005)	$5,479.00	Mrs Farr
Motor vehicle trailer	$200.00	Mrs Farr
Toyota Landcruiser motor vehicle (Reg No. BF 365)	$3,000.00	Dempsey

As at the date of swearing of this affidavit, a total of $40,770 has therefore been distributed from the Estate.

50 The drawings of $47,720 per annum based on the 2006 budget are insufficient to meet the expenses of the plaintiff and her family. She complains of having to go “cap in hand” to the executors for payment of further expenses. On the other hand, the income of the estate as summarised at para [21] totals $145,043 for the 31-month period from 1 July 2005 to 31 January 2008. This is about $56,146 per annum but this is before expenses of administration. As noted in para [22], the maintainable income is about $37,265 per annum after taking account of the costs of administration. This is less than the plaintiff’s 2006 budget which is itself inadequate. There have been drawings on capital for the benefit of the plaintiff and her children, but the only power to draw on capital is in respect of one-sixth of the estate. That power is limited to supplementing the income of the plaintiff and her children and does not include power to access capital for any future needs of the plaintiff’s children for capital sums, such as may be required for Meriel’s university education.

Provision for the Plaintiff’s Maintenance and Advancement in Life is Inadequate

51 Sections 7 and 9 of the Family Provision Act establish a two-stage process for dealing with applications under the Act. The Court may not make any order for provision in favour of an eligible applicant unless it is satisfied that the provision made in favour of the applicant by the deceased person either during his lifetime or out of his estate is, at the time of determining whether or not to make such an order, inadequate for the proper maintenance, education and advancement in life of the applicant (s 9(2)). If the Court is satisfied that the provision so made for the applicant is inadequate for his or her proper maintenance, education and advancement in life, it has a discretion under s 7 to order such provision out of the estate or notional estate of the deceased person as, in its opinion, having regard to the circumstances at the time the order is made, ought to be made for the maintenance, education or advancement in life of the applicant. In the determination of both the first and second stage of the inquiry, it is necessary to have regard, amongst other things, to “the applicant’s financial position, the size and nature of the deceased’s estate, the totality of the relationship between the applicant and the deceased, and the relationship between the deceased and other persons who have legitimate claims upon his ... bounty.” (Singer v Berghouse (No. 2) (1994) 181 CLR 201 at 210). The Court may take into consideration (Family Provision Act, s 9(3).):

“ 9 Provisions affecting Court’s powers under secs 7 and 8

...

(3) ...

(a) any contribution made by the eligible person, whether of a financial nature or not and whether by way of providing services of any kind or in any other manner, being a contribution directly or indirectly to:

(i) the acquisition, conservation or improvement of property of the deceased person, or

(ii) the welfare of the deceased person, including a contribution as a homemaker,

(b) the character and conduct of the eligible person before and after the death of the deceased person,

(c) circumstances existing before and after the death of the deceased person, and

(d) any other matter which it considers relevant in the circumstances.

52 The applicant’s financial position has been summarised at para [24] above. It is perilous. The plaintiff has few assets of her own. She has not participated in the workforce. This was in accordance with her husband’s wishes, possibly at his direction. She is dependent for her welfare either on distributions from the estate or social security payments. Having regard to the size of the estate, there is no proper basis for saying that the plaintiff should be dependent on welfare. She will need capital sums to meet her liability for income tax on distributions from income already made to her and her liability under the order for costs made in relation to her unsuccessful application to set aside subpoenas.

53 I have no doubt that an order for provision should be made for the plaintiff to put her in funds to pay such costs. The subpoenas the defendants successfully set aside sought financial records of the superannuation fund and the Farr Better Trust. There should have been no need for the plaintiff to have issued subpoenas for information relating to the affairs of the superannuation fund and the trust. Quite apart from the duty of trustees to provide accounts, the executors in Family Provision Act applications have a duty “to place all relevant evidence before the court. If there is evidence in the possession of the executor relevant, whether positively or negatively, to the ‘factors which warrant the making of the application’ under the Act. [There is] ... nothing in the procedure envisaged by s 9(1) of the Act which will relieve the executor of the duty to provide that evidence to the Court. The duty of the court to have regard to ‘all the circumstances’ of the case signifies the potential with the court’s inquiry. ... the terms of the subsection reinforce the duty of the executor to ‘place before the court ... evidence which might have any bearing on any issues ... raised by the applicant’s evidence or which might arise at the hearing’ ...” (Dijkhuijs (formerly Coney) v Barclay (1988) 13 NSWLR 639 at 654; 92 FLR 67.)

54 The financial position of the superannuation fund and the Farr Better Trust, and the rights of the plaintiff and her children in respect of the superannuation fund and the trust are plainly relevant circumstances. The executors are under a duty to make full disclosure to the plaintiff of the financial position and circumstances in relation to the superannuation fund and the trust. The fact that the assets of the superannuation fund and the trust are not assets of the estate does not in any way derogate from that duty. Unfortunately, it was only on my insistence on the first day of the hearing that the executors produced financial statements of the superannuation fund and the trust and of the income of the estate. It should be unnecessary to re-emphasise the duties of executors in these respects, but it is plainly necessary to do so. That observation is not confined to the circumstances of the present case.

55 There is no appeal before me from the decision of the Registrar setting aside the subpoenas and ordering the plaintiff to pay costs of the application to have the subpoenas set aside. The decision to set aside the subpoenas would be justified on the basis that their issue should be unnecessary, although that consideration would not have warranted the costs order. I cannot order the executors to pay the costs personally. But the plaintiff should be indemnified from the estate in respect of such costs. That may be done by giving her a legacy for the same amount as she might be found to be liable to pay in respect of such costs.

56 As noted above, the estate is reasonably substantial, being in excess of $2.38 million.

57 The relationship between the deceased and the plaintiff was a close one. As noted at the outset of these reasons, the deceased described the plaintiff as a “most faithful, dedicated and dutiful wife and mother”. They lived together as man and wife for 20 years until Mr Farr’s death. Little more need be said to establish the moral claim of the plaintiff on the deceased’s bounty. The plaintiff submitted that there were particular contributions by the plaintiff to be taken into account, namely:

(a) her work in a business conducted for 5 years prior to the birth of their son in selling baked potatoes from a mobile van. Whilst the profits in this venture are doubtful, there is no doubt that the plaintiff contributed substantially to it;

(b) the plaintiff did all the housekeeping and parenting tasks;

(c) she handled book keeping for the deceased’s business and ensured leases, business statements, CPI indices were up to date;

(d) she lodged BAS statements for the deceased;

(e) she prepared yearly tax returns;

58 There was no real dispute about these contributions which the plaintiff made. There was an issue as to the skill with which she kept books, but that is hardly material. These matters are simply particular aspects of the role the plaintiff carried out as a “most faithful, dedicated and dutiful wife and mother”. I would regard her contribution as a wife and mother to the family as vastly exceeding those particular contributions which the plaintiff’s counsel emphasised.

59 The other persons with legitimate claims on the deceased’s bounty were his children. It is clear that the deceased intended to benefit his children, although, for the reasons I have given, his will gives very inadequate expression to that intention. His son Dempsey is currently aged 17. Although he did well at school, he left school in Year 11 and took up an apprenticeship as a cabinetmaker. This entails full-time employment in the vicinity of the family home at Emerald Beach, together with a three or four-year course at Newcastle TAFE which he is required to attend on three or four days a month. This involves payment of course fees and travel and accommodation expenses to Newcastle. Mrs Farr gave evidence that at the end of his apprenticeship, Dempsey Farr is likely to seek to establish himself in business as a cabinetmaker. The defendants submit that this is likely to involve substantial cost. Unfortunately, unless an order for provision is made in favour of the plaintiff and consequential orders are made under s 10 of the Family Provision Act to adjust all of the interests of the parties concerned under the will to do justice in all the circumstances, the executors would have no power to advance capital for that purpose unless an application were successfully made, except pursuant to an application under s 81 of the Trustee Act, which itself would involve expense, to vary the trusts to permit an advance of funds for that purpose. Clause 8.6 only permits recourse to one-sixth of the capital to make up income to maintain a proper standard of living for the plaintiff and her children.

60 The defendants also submitted that Dempsey has a need for a new utility motor vehicle. Again, the will gives no power to the executors to advance funds out of capital for such a purchase.

61 Meriel Farr is currently in Year 8. She is doing well at school and both the testator and the plaintiff contemplated that she may undertake university education. The plaintiff gave evidence that a typical four-year degree by the time Meriel is in a position to commence such education may be in excess of $150,000. The defendants did not dispute this figure. Rather, they embraced it as showing that Meriel had needs in competition with the plaintiff. Mr Blackburn-Hart said that this figure might include the cost of college or residential accommodation during university education.

62 As indicated in para [3] above, the deceased’s concern was partly that the plaintiff lacked the skills to manage the investments. His second, but primary concern, was that he believed the plaintiff was likely to succumb to pressure from relatives in the Philippines to remit money to family there to the detriment of her and her children. The plaintiff contended that these fears could be attributed to the deceased’s illness. However, he expressed the same concerns as long ago as 1995 in giving instructions for the preparation of earlier wills. The plaintiff says that there was no rational basis for such fears. She gave evidence that her family in the Philippines was wealthy and had no need to call on her for moneys. She also said that she would not give money away to members of her family in the Philippines because that would be contrary to the interests of her children which she held paramount. I accept that evidence.

63 However, even if there is a serious risk that the plaintiff might send moneys which she inherits from the estate to her family in the Philippines, as the deceased feared, nonetheless, the provision made for the plaintiff by the deceased under his will and during his lifetime is inadequate for her proper maintenance and advancement in life. At present, all of the income of the estate plus some capital is needed to meet the expenses of her and her dependants.

64 The plaintiff was not cross-examined to suggest that her expenditure was extravagant. However, the defendants submitted that the moneys the plaintiff received from the estate together with the family allowance from Centrelink, which totalled $51,120, was substantially more than the family’s income before the deceased’s death. According to Mr Farr’s tax returns, his annual income in the four years prior to his death averaged $39,432 per annum. It was not suggested to the defendant that her and her family’s expenses had substantially increased after her husband’s death. All of the moneys she received from the estate were spent on living expenses. It follows that if the deceased’s tax returns accurately stated his income (a question which was not litigated), the family’s expenses were not met wholly out of income during the deceased’s lifetime. It is not the case that the plaintiff has adopted a more extravagant lifestyle for which she has sought funding from the estate.

65 The monthly receipts of $4,260 have proved insufficient to meet the plaintiff’s expenses. The plaintiff estimated that the outgoings for both children are approximately $17,000 per annum. In an affidavit sworn on 23 March 2007, the plaintiff estimated that her average living expenses, including those of her children, were approximately $5,200 per month or $62,400 per annum. She provided no breakdown of the estimate. On 25 January 2007, she prepared a monthly budget which totals $4,293 per month or $51,511 per annum. On 16 March 2006, the plaintiff’s solicitor had submitted to the executors that the plaintiff’s expenses per week, excluding any money for replacements or house maintenance, was $1,440. They asked that in the short-term her income be increased to $1,440 per week.

66 The monthly payments have not been increased in respect of any of these estimates of weekly or monthly expenditure. The plaintiff conceded in cross-examination that her estimates of expenses were completely unreliable. Nonetheless it is clear that the monthly payments she receives and the family allowance are fully consumed in meeting day-to-day expenses and even then, she has found it necessary to ask the executors to pay additional bills. These have included $600 for Christmas presents in December 2006, $849 for a new washing machine in December 2006, $259 for endodontic expenses in December 2006, and numerous other smaller additional expenses. Her annual expenses, including the expenses of her children, appear to be in the order of $55,000 per year.

67 The plaintiff has not yet paid tax on the distributions she has received. Nor has income tax been paid by the estate. At present the income generated by the estate is not taxable in the hands of the executors until they make a determination that the beneficiaries are presently entitled to the income. However, the time will inevitably come when tax has to be paid. I calculate that the before-tax income which the plaintiff requires to meet her current expenses is approximately $72,000 per year or $1,385 per week. It can be expected that her needs will reduce after both children have completed their education and are in full-time employment. Dempsey has left school after Year 11 and is currently apprenticed to a cabinetmaker. Whilst still living with the plaintiff at Emerald Beach, he is enrolled at Newcastle TAFE. He travels to Newcastle for three days and three nights per month. He earns, with overtime, about $400-$450 per week. He does not pay board. Meriel is in Year 8. She is a good student and will be encouraged to attend university. As noted above, the plaintiff estimates that the cost of attending university might be in excess of $150,000. The defendants did not dispute this. To the contrary, they contended that the children’s needs were to be balanced against the plaintiff’s claims on the estate. The difficulty with the defendants’ position is that under the will, the executors have no power to make advances of capital to the children to meet such needs.

68 As set out at para [10] above, the estate income has averaged $35,588 for four financial years. Even if adjustments are made to endeavour to calculate maintainable earnings, such maintainable earnings on the present state of the investments appear to be in the order of about $51,000 per year.

69 The plaintiff’s entitlement under the will to one-third of the income is manifestly insufficient to meet her expenses. It is likely to be insufficient even if the estate’s investments were changed to achieve higher rates of return than those at present.

70 As this is a reasonably substantial estate, what is adequate for the plaintiff’s maintenance and advancement in life is not confined to a provision sufficient to meet the plaintiff’s necessities. What is proper maintenance and advancement in life is to be determined having regard, amongst other things, to the size of the estate. In Re Buckland, Deceased [1966] VR 404, Adam J said (at 411), in a passage subsequently cited with approval by the Court of Appeal in O’Loughlin v O’Loughlin [2003] NSWCA 99 at [22], that proper maintenance denotes maintenance to be measured, not by a standard considered appropriate to the circumstances of the dependant, but by what in all of the circumstances of the case is proper for the testator to have provided as maintenance for the dependant.

71 In Golosky v Golosky (NSW Court of Appeal, 5 October 1993, unreported), Kirby P, with whom Cripps JA agreed, said (at BC9302134 at 16-17):

(c)... It is in the detail that the answer to the proper application of the Act is to be discovered. No hard and fast rules can be adopted. Nevertheless, it had been said that in the absence of special circumstances, it will normally be the duty of a testator to ensure that a spouse (or spouse equivalent) is provided with a place to live appropriate to that which he or she has become accustomed to. To the extent that the assets available to the deceased will permit such a course, it is normally appropriate that the spouse (or spouse equivalent) should be provided, as well, with a fund to meet unforeseen contingencies ...

(d) A mere right of residence will usually be an unsatisfactory method of providing for a spouses, [sic] accommodation to fulfil the foregoing normal presupposition. This is because a spouse may be compelled by sickness, age, urgent supervening necessity or otherwise, with good reason, to leave the residence. The spouse provided and [sic] will then be left without the kind of protection which is normally expected will be provided [sic] by a testator who is both wise and just. ...

72 In Bladwell v Davis [2004] NSWCA 170, Bryson JA said (at [18]):

“[18] In my respectful view there is an inconsistency between an approach, in the context of competing claims, to the claims of widows as paramount, and the application to the facts and circumstance of each case of s 7 and the approach established by Singer v Berghouse . Preconceptions and predispositions are likely to be the source of inadequate consideration of the process required by the Family Provision Act 1982.

[19] In the application of the test in s 7, and of the exposition thereof in

by Mason CJ, Deane and McHugh JJ at 409–411 it would be an error to accord to widows generally primacy over all other applicants regardless of circumstances and regardless of performance of the stages of consideration described in

, in full and with reference to the instant facts.”

73 Ipp JA agreed with Bryson JA, but added (at [2]) that:

[2] ... where competing factors are more or less otherwise in equilibrium, the fact that one party is the elderly widow of the testator, is permanently unable to increase her income, and is never likely to be better off financially, while the other parties are materially younger and have the capacity to earn more or otherwise improve their financial position in the future, will ordinarily result in the needs of the widow being given primacy. That is simply because, in such circumstances, the widow will have no hope of improving herself economically, whereas that would not be the position of the others. In that event, the need of the widow would be greater than that of the others.”

74 In Szlazko v Travini [2004] NSWSC 610, Young CJ in Eq dealt with a clause in a will similar to the present case. The widow was given the right during her life to reside in a property on a condition that she be responsible for its maintenance and upkeep and that she not remarry or live in a de facto relationship, or otherwise enter into a permanent relationship with another man. His Honour cited what was said in Moore v Moore (NSW Court of Appeal, 16 May 1984, unreported, BC8400340 at 2 per Hutley JA) repeated in Golosky v Golosky in the passage quoted above, and repeated an observation he made in Court v Hunt (NSW Supreme Court, 14 September 1987, BC8701155 at 3) that “in many cases these days a life estate would not be sufficient because it does not cover the situation of the plaintiff moving from her own home to a retirement village to nursing home to hospital.” His Honour had no difficulty in finding (at [33]) that the provision made for the widow was “entirely inappropriate for modern conditions. Indeed it is surprising to see a solicitor draw a will containing such provisions but it may well be that the client insisted upon them.”

75 Mr Grant for the executors emphasised that in the present case the will does provide for alternative accommodation for the plaintiff as her needs change throughout her life. He submitted that she was secure in her residence and that it was reasonable for the deceased to have considered that if she remarried or entered into a de facto relationship, the deceased should give priority to the interests of his children rather than be required to provide for her further accommodation. A difficulty with this submission is that the will does not provide for the children to inherit “the house” if the plaintiff remarries or enters into a de facto relationship.

76 The conditions to the gifts in favour of the plaintiff are inappropriate in current times (White v Barron (1980) 144 CLR 431 at 438-440, 444). Nor would a life estate of the Emerald Beach house free from the conditions in restraint of marriage or a de facto relationship be adequate, even if the deceased’s fears of the plaintiff being importuned by her family were well-based. Having regard to the plaintiff’s devotion to the deceased and the fact that his children can nevertheless be adequately provided for, adequate provision for her proper maintenance and advancement in life requires that she enjoy the fee simple of the matrimonial home to deal with as seems best to her. If she considered that her interests were best served by selling and making the proceeds available to her family (which I consider to be unlikely), it would presumably be in the expectation of family support. Adequate provision requires that the plaintiff have the flexibility to deal with the reasonable amounts of capital as her circumstances might require.

77 For the reasons above, the gift of one-third of the income of the estate to the plaintiff for her life is manifestly inadequate to provide proper maintenance. It is inadequate even to meet her basic expenses. According to the financial statements for the estate for the year ended 30 June 2006, which have been signed by the executors, in that financial year there were drawings from the estate by the plaintiff of $32,935, by Dempsey Farr of $22,469 and by Meriel Farr of $20,246, a total of $75,650. The net income of the estate for that financial year was $67,900. In other words, there were drawings on capital. The drawings attributed to the plaintiff of $32,935 substantially exceed the share of the income to which she would be entitled under the will. The accounts for the year ended 30 June 2007 and for the seven months to 31 January 2008 have not been finalised. The net income for the year ended 30 June 2007 was $44,309. The draft accounts provide for drawings from the estate by the plaintiff of $23,538, by Dempsey Farr of $24,368 and by Meriel Farr of $21,861, a total of $69,767. Again there is a drawing on capital. Again, the drawings of the plaintiff substantially exceed her entitlement to one-third of the income.

78 The will does not provide for a legacy in favour of the plaintiff to meet contingencies. Mr Grant submitted that contingencies were in fact being met by Mrs Farr out of the estate. He submitted that the size of the estate together with the resources of the Farr Better Trust ensure that there were ample funds to meet any unforeseen contingencies for the plaintiff.

79 There is power to access one-sixth of the capital (excluding “the house”), but it lies at the discretion of the executors whether or not recourse should be had to that capital. Whilst I accept that one-sixth of the capital of the estate (excluding the house) would be a sufficient fund for contingencies, I do not consider that the provision is adequate as it is not controlled by the plaintiff and is not a provision for contingencies.

80 The deceased did not want the plaintiff to have control of the assets, partly because he considered her to be naïve in financial and business matters, and partly because he believed that she would succumb to pressure from her family in the Philippines to transfer money to which she might be entitled to them. The plaintiff’s lack of sophistication in the management of investments is no reason she should not have a legacy to provide for unexpected contingencies. The plaintiff said that the testator’s fears as to her being under pressure from her family in the Philippines were misplaced. Her family is wealthy. She also said that she had no intention of sending money to her family because she would use it for her own benefit and that of her children. She would not sacrifice herself and her children under demands from her family, even if such demands were made. I accept that evidence.

81 No submissions were made addressed to the provision made for the plaintiff by the deceased during his lifetime. The provision made by the deceased for the plaintiff during his lifetime was not such as to provide her with any capital of her own. The defendants did not contend that the provision made by the deceased for the plaintiff during his lifetime had any significance in assessing the adequacy of the provision made by the will for the plaintiff’s proper maintenance and advancement in life.

82 The plaintiff’s position as a discretionary object of the Farr Better Trust does not provide her with an adequate sum for contingencies. The calculation of the net value of the estate assumes recovery of the full amount of the debt owed by the trustee of the Farr Better Trust to the estate. That debt, and the debt owed to the plaintiff, could only be realised by selling the trust’s investments. The principal investment is the land in Coffs Harbour known as the Paint Barn. It would only be if the assets of the trust were realised at more than their book value that there would be remaining assets in the trust after the discharge of debts to be applied to any discretionary object. In any event, as with the power to appoint one-sixth of the capital, the possibility that the directors of the trustee, that is, the defendants, might exercise a power to appoint property in favour of the plaintiff if unforeseen contingencies arose, is not a sufficient security against unforeseen adverse contingencies.

83 For these reasons, I conclude that the provision made in favour of the plaintiff by the deceased under his will and during his lifetime is inadequate for her proper maintenance and advancement in life.

What Provision Should be Made?

84 The plaintiff submitted that she should receive the entirety of the estate. In support of that contention, the plaintiff said that the reason for the deceased not making proper provision for the plaintiff should be rejected on the basis of the plaintiff’s evidence.

85 I have accepted that evidence. But it does not follow that the plaintiff should receive the whole of the estate. The testator’s intentions are not to be disturbed except to the extent to which it is necessary to achieve the purposes of the Act (Golosky v Golosky at BC9302134 at 16; Pontifical Society for the Propagation of the Faith v Scales (1962) 107 CLR 9 at 19; Walker v Walker (Supreme Court of New South Wales, Young J, 17 May 1996, unreported, BC9602381 at 30-31); Kay v Archbold [2008] NSWSC 254 at [121]-[124]).

86 For the reasons already given, adequate provision for the plaintiff’s proper maintenance and advancement in life requires that she receive the Emerald Beach property as an absolute gift. The net balance of the estate is valued at about $1.75 million.

87 Adequate provision for the plaintiff’s proper maintenance and advancement in life also includes a sum for contingencies. The will includes provision enabling the executors to advance up to one-sixth of the remaining capital to provide the plaintiff and her children with a proper standard of living. On the estimated current values of the estate, that equates to $291,277. It is not clear how much capital has already been advanced to the plaintiff. However, the advances to the plaintiff out of capital have not truly been to meet contingencies but to meet current expenses. Any advances already made out of capital are not to be deducted from the legacy which the plaintiff should have for contingencies. In my view, a legacy of $300,000 for contingencies is an appropriate sum. For the reasons in paras [53] and [55], the plaintiff should also have a legacy by way of forgiveness of the debt owed by her pursuant to the costs orders made on the application to set aside subpoenas.

88 After deducting the value of the Emerald Beach property and the sum of $300,000 from the value of the estate, the net value is about $1.45 million. On the current returns from the estate investments of less than 3 percent per annum, the income from that sum is insufficient to meet the expenses of the plaintiff and her dependants. It is to be expected that consideration will be given to those investments and the appropriate balance between the interests of the life tenant to income and the interests of the children in remainder. Once that is done, I consider that adequate provision for the plaintiff’s proper maintenance would be provided from the whole of the income of the estate for her life. It is not possible to be precise about her future needs or about the future income which should be generated from the estate. The legacy of $300,000 will provide a buffer. If on a reconsideration of investments the income of the estate substantially increases, the plaintiff’s receipt of additional income will be entirely merited.

89 I do not consider that the position of the children militates against making such provision. The plaintiff does not now seek to disturb the allocation of the death benefits from the superannuation fund to them. They will each be entitled to a substantial capital amount on turning 18. There is no reason to doubt that the plaintiff will continue to support them to the extent her means enable her to do so. Upon their completing their education or apprenticeship, they will be able to earn their own income. Moreover, whether or not it was the deceased’s intention, under the will they would not be entitled to any income from the estate until the plaintiff died, remarried or entered into a de facto relationship.

90 For these reasons I consider that provision should be made from the estate in favour of the plaintiff by providing that in lieu of her entitlements under the will, she should receive the Emerald Beach property, a legacy of $300,000, a further legacy by way of forgiveness of the debt owed for costs, and that she be entitled for life to the income of the balance of the estate.

Orders under ss 10 and 13

91 Sections 10 and 13 of the Family Provision Act provide:

“ 10 Consequential provision

Where, on an application in relation to a deceased person, the Court makes an order for provision in favour of an eligible person out of the estate or notional estate of the deceased person, the Court may make an order in favour of any other eligible person or any other person by whom, or any purpose for which, property in the estate or notional estate of the deceased person is held or would, but for the order for provision in favour of the eligible person, be held that provision be made in such manner and to such extent as the Court thinks necessary to adjust all the interests concerned and to do justice in all the circumstances.

...

13 Burden of provision out of estate

Where the Court makes an order for provision out of the estate of a deceased person it may specify the beneficial entitlements in that estate which shall bear the burden of that provision and, in relation to each of those entitlements, the part of the burden which it shall bear.”

92 Section 10 gives the Court a wide power to do what is necessary to adjust all of the interests concerned to do justice in all of the circumstances. The position taken by the executors on this application, one of whom I infer took instructions from the deceased for the will, coupled with the deceased’s correspondence and the evidence of Mr Hardy, makes it clear that the deceased intended to benefit his wife and his children. In making provision in favour of the plaintiff, it is also necessary in order to do what is just in the circumstances, to adjust the interests of the children in the estate. On the determination of the plaintiff’s life interest in the balance of the estate, the children should be entitled to the corpus. As matters presently stand, the deceased’s sister would be entitled to the house and one-third of the corpus. Because the plaintiff will receive the house as an absolute gift, the sister will not inherit the house. I also consider that the remainder of the one-third interest, which under the will would pass to the sister, should pass to the children.

93 Accordingly, provision should be made that in lieu of the entitlements of the children under the will, they should be entitled to the remainder interest in the residue of the estate, that is, after the specific devise to the plaintiff of the Emerald Beach property, the legacies to the plaintiff, and her life interest in the residue.

94 The children’s interests under the will are contingent on their turning 25. Clearly, the deceased intended that the children should not enjoy any inheritance until they turn 25. However, their gifts are contingent and do not vest until the end of “the term” or upon their turning 25, whichever is the later. The deferment of vesting until the end of “the term” will be annulled by the orders for provision in favour of the plaintiff. The question remains whether orders should be made under s 10 to adjust the time at which the children obtain vested interests. The significance of this is that if orders were made under s 10 to provide for the children to have vested remainder interests, even though such interests would not be vested in possession until they turn 25, then, upon Meriel turning 18, the children and the plaintiff, could, being then sui juris and together absolutely entitled, if they wished, put an end to the trust. That would require them to agree between themselves as to the disposition of the trust assets, but there may be considerable advantages in their doing so to reduce the expense of the trusteeship.

95 Understandably, no submissions were addressed to this question. I will direct the plaintiff’s counsel to bring in short minutes of order in accordance with these reasons. I will then hear submissions on this question.

The Farr Better Trust

96 Counsel for the plaintiff submitted that the assets of the Farr Better Trust formed part of the estate and should be included in the provision made for the plaintiff by way of her receiving the whole of the estate. I have rejected the plaintiff’s claim to the whole of the estate. In any event, I do not accept that the assets of the Farr Better Trust are assets of the estate. The basis for that contention was that through Mr Farr’s control of Fasthaven as trustee and pursuant to the powers given to him under the trust deed, he controlled the assets of the Farr Better Trust during his lifetime. It was submitted that by reason of that control, the assets of the trust were “in reality” his assets. Counsel referred to and relied on Australian Securities and Investments Commission v Carey (No. 6) (2006) 153 FCR 509. I dealt with the same argument in Public Trustee v Smith [2008] NSWSC 397 at [104]-[139]. For the reasons there given I reject the submission that the assets of the Farr Better Trust are assets of the estate because of the control which Mr Farr exercised over the trust during his lifetime.

97 It was not submitted that the assets of the Farr Better Trust could or should be designated as notional estate and provision made from them. In any event, the assets of the estate include the debt of $364,183.46 owed by the trustee of the Farr Better Trust to the estate.

98 The plaintiff seeks the removal of Chrystal Cedar Pty Ltd as trustee of the Farr Better Trust. She seeks to have Fasthaven reappointed as trustee and to have the shares in Fasthaven vested in her so that she would obtain control of the trustee. The executors acknowledge that the shares in Chrystal Cedar are held by them on behalf of the estate. The same result could be achieved by an order making further provision for the plaintiff by vesting the shares in Chrystal Cedar in her. The plaintiff says that the defendants have not shown impartiality in carrying out their duties as directors of the trustee of the Farr Better Trust, that they have acted to secure their own position, and have disregarded the plaintiff’s interest as a beneficiary of the trust.

99 Mr Farr was the sole shareholder and director of Fasthaven. The defendants as executors of the estate became registered as the shareholders of Fasthaven and were appointed as directors. Clause 20 of the trust deed provided that Mr Farr, and after his death, the plaintiff, if she survived him as his widow, had the power to remove the trustee. Clause 21 gave the trustee power to vary the trusts. On 7 November 2006, Fasthaven exercised its power to vary the trusts by amending clause 20 of the trust deed by deleting the provision empowering the plaintiff to remove the trustee, and by substituting a provision that the power to appoint or remove trustees be vested in Mr Farr or his legal personal representative. On 16 August 2007, Fasthaven was replaced as trustee by Chrystal Cedar in exercise of the power conferred by the amending clause.

100 These steps were taken following a mediation in November 2006 at which a comment was made that Fasthaven would be removed as trustee of the Farr Better Trust. The defendants moved to amend the trust deed to prevent the plaintiff from appointing a new trustee in place of Fasthaven in order to ensure that the assets of the trust were maintained for the benefit of the deceased’s children. The trustee was changed to Chrystal Cedar because the defendants considered it good commercial practice to have separate trustees for the superannuation fund and for the trust, particularly as the superannuation trust deed was “non-compliant”. The change of trustee made no difference to whether the superannuation fund was compliant, but the defendants considered it was prudent to appoint a new trustee to the Farr Better Trust given that the superannuation fund was under scrutiny by the regulators. Mr Hardy said that it was not a consideration in changing the trustees to bring about a situation where the Court could not vest control of the shares in the trustee company in the plaintiff. I accept that evidence. It is consistent with the defendants’ acknowledgment in the proceedings that the shares in Chrystal Cedar are held on behalf of the estate.

101 Mr Hardy said that in amending the trust deed, he and Mr Walsh “considered the interests of all the beneficiaries, but the overwhelming consideration was the consideration for the benefit of the children.” He later said that in so acting, they were acting in the interests of two of the beneficiaries, being the children. The defendants thought that if the plaintiff secured control of the trust, she might not act in accordance with Mr Farr’s wishes as outlined in his will. They also had regard to the statements by Mr Farr in which he expressed concern about the plaintiff’s ability to manage the assets and her being vulnerable to pressure from her family in the Philippines.

102 The plaintiff submitted that the defendants should be removed from a position where they could control the trust because they had not carried out their duties as directors of the trustee in the interests of all of the beneficiaries of the trust. Counsel for the plaintiff submitted that the defendants should be removed from the control of the trust because they had not acted impartially (Re Whitehouse [1982] Qd R 196 at 207). In Miller v Cameron (1936) 54 CLR 572, Dixon J said (at 580):

The jurisdiction to remove a trustee is exercised with a view to the interests of the beneficiaries, to the security of the trust property and to an efficient and satisfactory execution of the trusts and a faithful and sound exercise of the powers conferred upon the trustee. In deciding to remove a trustee the court forms a judgment based upon considerations, possibly large in number and varied in character, which combine to show that the welfare of the beneficiaries is opposed to his continued occupation of the office.

103 Whilst the defendants acted to secure their own position as directors of the trustee, I am satisfied that they did not do so with a view to securing or advancing their own personal position. Nor do I consider that they showed partiality in the execution of the office of trustee. In amending the trust deed to deprive the plaintiff of her power to remove and appoint trustees, they were acting in what they bona fide considered to be the interests of the deceased’s children. They were not at that time acting also in the interests of the plaintiff, but that does not mean that they were not acting impartially. They bona fide considered that the interests of all of the beneficiaries, in particular the children, would not be advanced if the plaintiff were to control the trust. Given that it is the plaintiff’s position in these proceedings that the trust property is property of the estate and that she should receive an order for provision that gave her the entirety of the estate, the defendants had good reason to be concerned that the interests of the deceased’s children as beneficiaries of the trust would be put in jeopardy if the plaintiff were put in a position to control the trustee. The fact that the pre-emptive action taken to forestall the plaintiff could not be considered to be in the plaintiff’s interest, does not mean that in any relevant sense the defendants did not exercise their functions as directors of the trustee impartially.

104 I do not consider it in the interests of the beneficiaries of the Farr Better Trust that orders be made to vest the shares in Chrystal Cedar in the plaintiff, or that Chrystal Cedar be removed as trustee and Fasthaven reappointed and the shares in Fasthaven be vested in the plaintiff. If the plaintiff controlled the trustee, she would be in a position where her duty to the other beneficiaries of the trust, in particular her children, conflicted with her own interest. Her children are the Primary Beneficiaries. She would be in an invidious position in deciding whether to pay capital of the trust fund to herself for her own maintenance, benefit or advancement (clause 3.5), and in deciding to which of the “General Beneficiaries” income of the trust should be applied (see para [12] above). She also has a claim on the trust as creditor which would exacerbate the conflict.

105 As I have said, the defendants’ consent to a declaration that the shares in Chrystal Cedar are held by them on trust for the estate. There should be a declaration to that effect. However, I decline the further relief sought by the plaintiff in relation to the Farr Better Trust.

Costs

106 The plaintiff is entitled to her costs of the proceedings on the party and party basis. Normally, the executors would be entitled to their costs on the indemnity basis. However, I have reservations as to whether the profit costs of Walsh & Associates should be recovered from the estate on the indemnity basis. I see no reason why their disbursements, including counsel’s fees, should not be paid from the estate on the indemnity basis.

107 I understand there to be no dispute that Mr Walsh drew the will for Mr Farr. Under the will, Mr Walsh was appointed as an executor and is entitled to charge all professional or other charges for any business or acts done by him or his firm in connection with the trusts of the will. The will was made when Mr Farr was terminally ill. The will was in such terms that a claim by the plaintiff under the Family Provision Act was inevitable. Mr Walsh must have known when he drew the will that he or his firm would stand to profit from his appointment as executor both in respect of his general work as executor and trustee and also in respect of the likely litigation under the Family Provision Act if his firm were appointed to act. Mr Walsh and Mr Hardy did appoint Mr Walsh’s firm to act in the litigation. That litigation has been hard fought. As I have recorded, the executors denied that the plaintiff was left without adequate provision for her proper maintenance, and advancement in life. I do not consider that denial to be tenable.

108 There is a serious question as to whether in these circumstances a costs order should be made in favour of the defendants which would entitle one of the executors, Mr Walsh, to derive a profit. I heard no evidence as to what advice Mr Farr received and as to whether any independent legal advice was provided to him in relation to these matters (see generally Rowland, Hutley’s Australian Wills Precedents, 6th ed (2004) LexisNexis Butterworths at [11.6]-[11.9]).

109 I will invite the defendants to make submissions as to the appropriate costs order in their favour and, if they think fit, to adduce evidence relevant to that question.

Conclusion

110 For these reasons, I conclude that provision should be made from the estate in favour of the plaintiff by providing that she receive the Emerald Beach property in fee simple, a legacy of $300,000, a further legacy by way of forgiveness of the debt owed for costs and that the residue of the estate be held on trust for her for her life. Pursuant to s 10 of the Family Provision Act, provision should be made for the deceased’s children that in lieu of their entitlements under the will, they receive the remainder interest in the residue. As indicated in para [95] I will hear further submissions as to whether their remainder interests should be contingent upon their turning 25, or whether their remainder interests should be vested in interest and should vest in possession when they turn 25. There should be a declaration that the shares in Chrystal Cedar are held by the defendants on the trusts of the will, subject to the orders for provision. Otherwise the plaintiff’s claims should be dismissed. There will be an order for costs in favour of the plaintiff on the party and party basis. I will hear submissions from the defendants as to what costs orders should be made in their favour, and the defendants may adduce evidence on that question if they wish to do so.

111 I will stand over the proceedings to a convenient date to deal with the remaining matters. I direct counsel for the plaintiffs to bring in short minutes of order in accordance with these reasons at that time.

******

CITATION:	Farr v Hardy [2008] NSWSC 996
HEARING DATE(S):	06/03/08, 07/03/08 and 12/03/08
JUDGMENT DATE :	25 September 2008
JURISDICTION:	Equity
JUDGMENT OF:	White J
DECISION:	Counsel for the defendants to bring in short minutes of order in accordance with the reasons.
CATCHWORDS:	SUCCESSION – family provision and maintenance – whether adequate provision made for widow – widow provided with a right of residence and the right to income from one-third of the estate until she marries or enters into a de facto relationship – widow has scant personal resources – widow contributed substantially as a homemaker – normally appropriate for widows to take house in fee simple – clearly inadequate provision - SUCCESSION – wills – construction – restraint of marriage – whether restraint was effective – gift of personalty – gift over – restraint effective
LEGISLATION CITED:	Family Provision Act 1982 (NSW) Trustee Act 1925 (NSW) Conveyancing Act 1919 (NSW) Succession Act 2006 (NSW) Statute Law (Miscellaneous Provisions) Act (No. 2) 2007 (NSW) Conveyancing (Amendment) Act 1930 (NSW)
CATEGORY:	Principal judgment
CASES CITED:	Luciano v Rosenblum (1985) 2 NSWLR 65 Re Keenan (1913) 30 WN (NSW) 214 Leong v Chye [1955] AC 648 Jarvis v Duke (1681) 1 Vern 19; 23 ER 274 Scott v Tyler (1788) Dick 712; 21 ER 448; 2 Bro CC 431; 29 ER 241 Lloyds v Branton (1817) 3 Mer 108; 36 ER 42 In re Hanlon [1933] Ch 254 Potter v Richards (1855) 24 LJ Ch 488 Heath v Lewis (1853) 3 De G M & G 954; 43 ER 374 Re King’s Trusts (1892) 29 LR Ir 401 Evans v Rosser (1864) 2 H&M 190; 71 ER 435 Perpetual Trustee Co Ltd v Fenton (1940) 40 SR (NSW) 382 Fenton v Perpetual Trustee Co Ltd (1940) 64 CLR 52 Singer v Berghouse (No. 2) (1994) 181 CLR 201 Dijkhuijs (formerly Coney) v Barclay (1988) 13 NSWLR 639 Re Buckland, Deceased [1966] VR 404 O’Loughlin v O’Loughlin [2003] NSWCA 99 Golosky v Golosky (NSW Court of Appeal, 5 October 1993, unreported) Bladwell v Davis [2004] NSWCA 170 Szlazko v Travini [2004] NSWSC 610 Moore v Moore (NSW Court of Appeal, 16 May 1984, unreported, BC8400340) Court v Hunt (NSW Supreme Court, 14 September 1987, BC8701155) White v Barron (1980) 144 CLR 431 Pontifical Society for the Propagation of the Faith v Scales (1962) 107 CLR 9 Walker v Walker (Supreme Court of New South Wales, Young J, 17 May 1996, unreported, BC9602381) Kay v Archbold [2008] NSWSC 254 Australian Securities and Investments Commission v Carey (No. 6) (2006) 153 FCR 509 Public Trustee v Smith [2008] NSWSC 397 Re Whitehouse [1982] Qd R 196 Miller v Cameron (1936) 54 CLR 572
TEXTS CITED:	Peter Butt, Land Law, 5th ed (2006) Sydney, Lawbook Co Rowland, Hutley’s Australian Wills Precedents, 6th ed (2004) LexisNexis Butterworths
PARTIES:	Maria Lourdes Farr v Gregory Hardy & 2 Ors
FILE NUMBER(S):	SC 5843/06
COUNSEL:	Plaintiff: P H Blackburn-Hart SC, B J Skinner & D V Robinson Defendants: A Grant
SOLICITORS:	Plaintiff: Crane Butcher McKinnon Defendants: Walsh & Associates