Graham v Graham
[2011] NSWSC 504
•03 June 2011
Supreme Court
New South Wales
- Amendment notes
Medium Neutral Citation: Graham v Graham [2011] NSWSC 504 Hearing dates: 23, 24 May 2011 Decision date: 03 June 2011 Jurisdiction: Equity Division Before: Hallen AsJ Decision: (i) Having found that the Plaintiff is an eligible person and that the provision made for her in the Will of the deceased is inadequate, order that the Plaintiff receive a lump sum of $1,100,000.
(ii) The first Defendant should be allowed an opportunity to decide the manner in which he will satisfy the payment of the lump sum, and, therefore, which property should be the subject of a notional estate order.
(iii) The lump sum should be paid within 28 days of the making of orders, or within such other time as the parties agree, failing which, interest on any amount not so paid, should be paid, such interest to be calculated at the rate prescribed on unpaid legacies by the Probate & Administration Act , 1898, from that date until the date of payment.
(iv) If the parties are unable to reach agreement on the way in which the lump sum is to be paid, I shall, hear further short submissions on which property should be designated as notional estate, and any consequential orders.
(v) Subject to any argument about costs, I would propose to make the usual order for costs.
(vi) The Exhibits should be dealt with in accordance with the Uniform Civil Procedure Rules and the Court Books may be returned.
(vii) The parties are to bring in short minutes.
(viii) The proceedings are adjourned to a date to be fixed.
Catchwords: The Plaintiff, the widow of the deceased, sought a family provision order out of the estate or notional estate of the deceased and an order designating property as notional estate - The deceased provided for the whole of his estate to pass to his children by his first marriage - Large estate and notional estate - Whether provision should be made for the Plaintiff and, if so, the nature of the provision to be made Legislation Cited: Family Provision Act 1982
NSW Succession Act 2006
Probate & Administration Act 1898
Succession Amendment (Family Provision) Act 2008Cases Cited: Alexander v Jansson [2010] NSWCA 176
Allardice, Allardice v Allardice, In Re (1910) 29 NZLR 959
Allen (deceased); Allen, in re v Manchester [1922] NZLR 218
Anasson v Phillips (NSWSC, 4 March, 1988, unreported)
Anslow v Journeaux & Anor [2009] VSC 250
Aroney v Aroney (McLelland J 26 July, 1988)
Auckland City Mission, The v The Salvation Army & Ors [2002] NZCA 33
Bladwell v Davis [2004] NSWCA 170
Bosch v Perpetual Trustee Co Ltd [1938] AC 463
Buckland v Trustees Executors and Agency Co. Limited (1966) 40 ALJR 164
Buckland deceased, re
Clifford v Mayr [2010] NSWCA 6
Collins v McGain [2003] NSWCA 190
Cooper v Dungan (1976) 50 ALJR 539
Crewe (deceased); Crewe, in re v Corbett [1956] NZLR 315
D'Albora v D'Albora [1999] NSWSC 468
Devereaux-Warnes v Hall [No 3] [2007] WASCA 235; (2007) 35 WAR 127
Diver v Neal [2009] NSWCA 54
Foley v Ellis [2008] NSWCA 288
Goodman v Windeyer (1980) 144 CLR 490
Gorton v Parks (1989) 17 NSWLR 1
Grainger v The Public Trustee (SCt of WA, Library No 950670, 6 December 1995, unreported)
Gregory v Hudson (No. 2) (18 September 1997, unreported)
Luciano v Rosenblum [1985] 2 NSWLR 65
McCosker v McCosker (1957) 97 CLR 566
McKenzie v Topp [2004] VSC 90
Magill v Magill [2006] HCA 51; (2006) 226 CLR 551
Marshall v Carruthers [2002] NSWCA 47
Marshall v Carruthers; Marshall v Marshall [2002] NSWCA 47
Mayfield v Lloyd-Williams [2004] NSWSC 419
Neil v Jacovou [2011] NSWSC 87
Permanent Trustee Co Ltd v Fraser (1995) 36 NSWLR 24
Petschelt v Petschelt [2002] NSWSC 706
Pogorelic v Banovich & Ors [2007] WASC 45
Pontifical Society for the Propagation of the Faith v Scales [1962] HCA 19; (1961) 107 CLR 9
Puckridge, Deceased, In the Estate of (1978) 20 SASR 72
Richard v AXA [2000] VSC 341
Samsley v Barnes [1990] NSWCA 161; (1991) DFC 95-100
Sayer v Sayer; Garbutt v Sayer (1999) NSWCA 340
Singer v Berghouse (No 2) [1994] HCA 40; (1994) 181 CLR 201
Stern v Sekers; Sekers v Sekers [2010] NSWSC 59
Tchadovitch v Tchadovitch [2010] NSWCA 316
Vigolo v Bostin [2005] HCA 11; (2005) 221 CLR 191
Walker v Walker, NSWSC, 17 May 1996, unreported
Welsh v Mulcock [1924] NZLR 673
Wentworth v Wentworth [1992] NSWCA 268
Worladge v Doddridge (1957) 97 CLR 1Category: Principal judgment Parties: Margaret Elizabeth Graham (Plaintiff)
Ian Ross Graham (first Defendant)
ACN 065 403 572 Pty Ltd ATF "The AJ Graham Family Trust" (second Defendant)Representation: Counsel:
Mr L J Ellison SC (Plaintiff)
Mr M S Willmott SC; Mr A P Cheshire (Defendants)
Solicitors:
Miller Noyce Lawyers (Plaintiff)
Clinch Long Letherbarrow with Cropper Parkhill (Defendants)
File Number(s): 2010/61509
Judgment
The Proceedings
HIS HONOUR: Margaret Elizabeth Graham ("the Plaintiff), who is the widow of Anthony James Graham ("the deceased"), applies for a family provision order under Chapter 3 of the NSW Succession Act 2006 ("the Act"). The Act applies in respect of the estate of a person who died on, or after, 1 March 2009. The Act replaces the Family Provision Act 1982 ("the former Act"), which was repealed, effective from 1 March 2009. A family provision order is an order made by the court, under Chapter 3, in relation to the estate, or notional estate, of a deceased person, to provide from that estate for the maintenance, education, or advancement in life, of an eligible person.
The Plaintiff commenced the proceedings by Summons filed on 10 March 2010, that is, within the time prescribed by s 58(2) of the Act (not later than 12 months after the date of the death of the deceased). The first Defendant named in the Summons is Ian Ross Graham, the executor appointed in the Will of the deceased. He is a son of the deceased from a prior marriage of the deceased.
The Plaintiff filed an amended Summons on 21 September 2010, in which she sought an additional order designating certain property as notional estate of the deceased. A company, ACN 065 403 572, which is the trustee of the A J Graham Family Trust, was joined as a second Defendant.
As there was no conflict of interest between the Defendants, they appeared, in the proceedings, with the same senior and junior counsel and with the same solicitors.
Background Facts
The following facts are uncontroversial.
The deceased died on 6 April 2009. He was then aged 73 years, having been born in September 1935. He was married in 1960 to Sally Graham, (nee Rylance) and divorced from her in about 1983. There were three children of their marriage, being the first Defendant, who was born in February 1964, Kim Jeanne Graham, who was born in September 1960, and Lissa Kirsty Graham, who was born in March 1962.
The deceased married the Plaintiff in August 1984 and remained married to her at the date of his death. There were no children of their marriage.
The deceased left a Will that he made on 31 January 2001 and a Codicil to that Will made on 15 December 2008, Probate of which was granted, on 12 November 2009, by the Supreme Court of New South Wales, to the first Defendant.
The deceased's Will, relevantly, provided:
(a) a legacy of $10,000 to the deceased's cousin, Carla Rudd;
(b) the rest and residue of the estate, after the payment of debts, funeral and testamentary expenses, to be equally divided between "such of my children as shall survive me and if more than one in equal shares".
The Will went on to state:
"5 I DECLARE that I have made no provision in this will for my wife, MARGARET ELIZABETH GRAHAM because:
(a) on 29 October 1993 immediately prior to the purchase of our home at ... Glenhaven she elected that it be purchased in our names as joint tenants, although I provided the whole of the purchase price and associated costs, it having been my intention that if our said home formed part of my estate my said wife would receive a one quarter share of the estate jointly with my three children; and
(b) my said wife is also the joint tenant proprietor with me of our property at ... Lake Cathie."
(The instructions for this Clause of the Will is referred to in a diary note dated 10 January 2001 of the deceased's solicitor.)
The Plaintiff, when cross-examined, denied that there was any discussion with the deceased, prior to the purchase of the Glenhaven property, relating to how title to that property would be held. She stated that in the Will, the deceased had been untruthful in regard to that matter, but otherwise, was correct in stating that he had provided the whole of the purchase price and associated costs for the Glenhaven property. She also denied knowing anything about the contents of a prior Will of the deceased in which she was to receive one quarter of his estate (although she did know that a Will had been made by him in August 1985). She had not referred to any untruthfulness, or inaccuracy, in Clause 5(a) of the Will, in any of the affidavits sworn by her and read in the proceedings. I shall return to this topic later in these reasons.
The Codicil to the deceased's Will, relevantly, provided:
(a) a gift of specific chattels to the first Defendant;
(b) a gift of a painting, to the deceased's daughter, Lissa;
(c) a gift of a painting, to the deceased's daughter, Kim;
(d) a gift of the balance of household chattels (as defined) and personal effects contained in the deceased's principal place of residence at the date of his death, to the Plaintiff absolutely.
In the Inventory of Property, a copy of which was placed inside, and attached to, the Probate document, the deceased's estate, at the date of death, was disclosed as having an estimated, or known, gross value of $849,041. No liabilities were disclosed. The estate was said to consist of money on deposit ($32,279), a beneficiary loan in the A J Graham Family Trust ($58,495), shares in two private companies ($754,867) and motor vehicles ($2,500).
There was also disclosed, in the Inventory of Property, other property owned by the deceased and the Plaintiff as joint tenants at the date of death, being real estate at Glenhaven ($1,500,000) and at Lake Cathie ($500,000), as well as property owned by the deceased situated outside New South Wales, being shares in public companies (US$123,809).
In an affidavit sworn by the first Defendant on 16 May 2011, the current nature and value of the actual estate was said to consist of the shares in private companies ($531,409) and the shares previously situated outside New South Wales ($158,163). There was also a debt said to be due to the estate by the Plaintiff ($150,000), but at the hearing, I was informed that the debt was not being pursued. Accordingly, the current gross value of the deceased's actual estate was $689,572.
In the first Defendant's affidavit of 16 May 2011, liabilities of the estate were said to total $221,253. The major debts were loan account balances in the Family Trust totalling $191,349.
At the hearing, the parties agreed that the value of the distributable actual estate was estimated to be about $468,320. However, the legacy of $10,000 to Carla Rudd has not yet been paid. As neither party submitted that this pecuniary legacy should bear part of the burden of additional provision, if any, made for the Plaintiff, the value of the actual estate available for distribution is $458,320.
In the first Defendant's affidavit, the agreed value of the assets of the A J Graham Family Trust was disclosed as being $4,957,405, whilst its liabilities were $538,096, leaving a net value of $4,419,309. The parties agreed that $4,419,309 could be designated as notional estate of the deceased.
It follows, subject to costs, if any, payable out of the estate and/or notional estate, that the combined gross value of the distributable actual estate and of property that could be designated as notional estate, is $4,877,629. The parties accepted the correctness of this estimate of value.
In calculating the net value of the estate and notional estate, finally available for distribution, the costs of the present proceedings should be considered, since the Plaintiff, if successful, normally, will be entitled to an order that her costs be paid out of the estate of the deceased, whilst the first Defendant, irrespective of the outcome of the proceedings, normally, will be entitled to an order that his costs be paid out of the estate. The costs, if any, of the second Defendant, would, presumably, be paid out of the Trust property.
The Plaintiff's costs and disbursements of the proceedings, including senior counsel's fees, calculated on the indemnity basis, have been estimated to be in the order of $177,941 (inclusive of GST and upon the basis of a three day hearing). The costs and disbursements of the Plaintiff, including counsel's fees, calculated on the ordinary basis, are said to be about $160,000. Of this sum, the Plaintiff has paid $101,875. (However, if an order is made in her favour, she will be reimbursed some, or all, of that amount.)
The Defendants' costs and disbursements of the present proceedings, including senior and junior counsel's fees, calculated on the indemnity basis (inclusive of GST and upon the basis of a three day hearing), have been estimated to be no more than $288,200.
The parties accepted for the purposes of the hearing, that if all of the costs, as estimated, are paid out of the estate, I should determine the Plaintiff's application upon the basis that the net value of the distributable actual and notional estate will then be $4,429,429.
In fact, the hearing only took 2 days to complete. This occurred because there was no cross-examination of any of witnesses whose affidavits were read on behalf of the Defendants. Accordingly, the combined net value of the distributable actual and notional estate is likely to be greater than the estimated amount referred to. On any view, the combined value of the net distributable actual and notional estate is large.
I was requested by senior counsel for each of the parties, in the event that additional provision is made for the Plaintiff, not to make any order designating property as notional estate, but to allow the Defendants an opportunity to make arrangements to satisfy the provision ordered to be made, failing which a designating order could then be made to the extent necessary to satisfy the order for provision and any costs ordered to be paid. I indicated that I was prepared to adopt that course because it was both practical and sensible.
The persons described as eligible persons, within the meaning of the Act, are the Plaintiff, the deceased's first wife, Ms Graham, the Defendant and the other children of the deceased, namely Kim and Lissa. Each of the children of the deceased has sworn at least one affidavit in the proceedings. There is evidence that Ms Graham was served with the prescribed notice under the Act, under cover of a letter dated 22 April 2010 addressed to her.
Only the Plaintiff has commenced proceedings under the Act.
The Statutory Scheme - The Act
I shall discuss the statutory scheme that is relevant to the facts of the present case. Although I have set out much of what I state hereunder in other cases, it is useful to re-state it for the benefit of the litigants in this case.
The wording of the Act is similar to the wording of the former Act. However, it is necessary to remember the warning of Kirby P in Samsley v Barnes [1990] NSWCA 161; (1991) DFC 95-100, at 76,304:
"Purposive construction of the Act
There is always a danger where a reformed Act borrows heavily upon ideas which previously existed in the common law or in an earlier statute, that lawyers will approach the construction of the Act affected by the previous law. Gamer's Motor Centre (Newcastle) Pty Ltd v Natwest Wholesale Australia Pty Ltd (1985) 2 NSWLR 475, 478. That danger is but an illustration, in the specialised activity of law, of a universal phenomenon of psychology long established in relation to human perception generally. We tend to perceive what we expect. We expect that with which we are familiar.
There is a particular danger in the case of the Family Provision Act in construing its terms by reference to the law which developed around the Testators' Family Maintenance and Guardianship of Infants Act 1916 . That Act was passed in earlier times to govern the entitlements of a testator's family, as narrowly defined. The definition by s 3(1) of that Act confined applications to those made by "the widow, husband or children of such persons". There was no mention in it of former spouses. Doubtless this was because, for the early part of this century, divorce was relatively infrequent and then based upon concepts of matrimonial fault which would make interference in the testamentary disposition of the deceased unlikely. When enacted, the statute was a radical interference in the power of testamentary disposition. That was a significant power over private property, the disturbance of which was regarded as highly exceptional."
Whilst the relevant amendments made by the Act are not as significant to those made by the former Act, it remains necessary to bear his Honour's warning in mind in construing the statutory framework. In doing so, a construction that promotes the purpose, or object, of the Act is to be preferred to a construction that would not promote that purpose or object. In my view, the principles applied by the courts to the former Act continue to apply, except to the extent that the Act otherwise requires.
The former Act was repealed by s 5 of the Succession Amendment (Family Provision) Act 2008. A new Chapter 3 was added to the Act, which dealt with the topic of family provision from deceased estates. The long title of the Act describes that new Chapter as one to ensure that adequate provision is made for the members of the family of a deceased person, and certain other persons, from the estate of the deceased person. Importantly, this should not be taken to mean that the Act confers upon those persons, a statutory entitlement to receive a certain portion of a deceased person's estate. It neither creates legal rights of inheritance nor imposes any limitation on the deceased's power of disposition by his, or her, will. It is only if the statutory conditions are satisfied, that the court is empowered, under the Act, to alter the deceased's dispositions to produce a result that is consistent with the purpose of the Act. Even then, the court's power to do so is discretionary.
An application for a family provision order may be made in respect of the estate of a deceased person. In s 3 of the Act, "deceased person" is defined as including "any person in respect of whose estate administration has been granted". Although "estate" is not defined in s 3, in s 63(2), if the deceased died leaving a will, his, or her estate is defined as including property that would, on a grant of probate of the will, vest in the executor of the will, or would on a grant of administration with the will annexed, vest in the legal representative appointed under that grant. "Notional estate" of a deceased person means property designated by a notional estate order as notional estate of the deceased person: s 3 of the Act. Section 55 of the Act sets out the circumstances in which "administration is granted in respect of the estate of a deceased person".
The key provision is s 59 of the Act. The court must consider, first, whether the applicant is an eligible person within the meaning of s 57 (s 59(1)). There are six categories of persons by, or on whose behalf, an application may be made. In the case of an applicant who falls within s 57(1)(d), (e) or (f), the court must next consider whether the court is satisfied that there are factors which warrant the making of the application (s 59(1)(b)). Then, if those considerations are satisfied, the court must determine whether adequate provision for the proper maintenance, education and advancement in life of the applicant has not been made by the will of the deceased, or by the operation of the intestacy rules in relation to the estate of the deceased, or both (s 59(1)(c)). It is only if it is satisfied of the inadequacy of provision, that the court considers whether to make a family provision order (s 59(2)). It may take into consideration, then, the matters referred to in s 60(2) of the Act. In this way, the court carries out a two-stage process.
Other than by reference to the provision made in the will of the deceased, or by the operation of the intestacy rules in relation to the estate of the deceased, or both, s 59(1)(c) leaves undefined the norm by which the court must determine whether the provision, if any, is inadequate for the applicant's proper maintenance, education and advancement in life. The question would appear to be answered by an evaluation that takes the court to the provision actually made in the deceased's Will, or on intestacy, or both, on the one hand, and to the requirement for maintenance, education and advancement in life of the applicant on the other. No criteria are prescribed in the Act as to the circumstances that do, or do not, constitute inadequate provision for the proper maintenance, education and advancement in life of the applicant.
It was said in the court of Appeal (per Basten JA) in Foley v Ellis [2008] NSWCA 288 at [3], that the state of satisfaction "depends upon a multi-faceted evaluative judgment".
Importantly, there no longer appears to be any sanction to consider, in s 59(1)(c) of the Act, the provision made by the deceased during his, or her, lifetime for the applicant (see, s 9(2) of the former Act).
Under both s 59(1)(c) and s 59(2) of the Act, the time at which the court gives its consideration to the question is the time when the court is considering the application.
"Provision" is not defined by the Act, but it was noted in Diver v Neal [2009] NSWCA 54 at [34], that the term "covers the many forms of support and assistance which one individual can give to another. That support and assistance will vary over the course of the person's lifetime".
Neither are the words 'maintenance' and 'advancement in life' defined. However, in Vigolo v Bostin [2005] HCA 11; (2005) 221 CLR 191, Callinan and Heydon JJ, at [115], said, of the words 'maintenance', 'support' and 'advancement':
"'Maintenance' may imply a continuity of a pre-existing state of affairs, or provision over and above a mere sufficiency of means upon which to live. 'Support' similarly may imply provision beyond bare need. The use of the two terms serves to amplify the powers conferred upon the court. And, furthermore, provision to secure or promote 'advancement' would ordinarily be provision beyond the necessities of life. It is not difficult to conceive of a case in which it appears that sufficient provision for support and maintenance has been made, but that in the circumstances, say, of a promise or an expectation reasonably held, further provision would be proper to enable a potential beneficiary to improve his or her prospects in life, or to undertake further education."
In In the Estate of Puckridge, Deceased (1978) 20 SASR 72, at 77 King CJ said:
"The words 'advancement in life' have a wide meaning and application and there is nothing to confine the operation of the provision to an earlier period of life in the members of the family: Blore v Lang (1960) 104 CLR 124, per Dixon CJ at 128."
In Mayfield v Lloyd-Williams [2004] NSWSC 419, White J noted:
"In the context of the Act the expression "advancement in life" is not confined to an advancement of an applicant in his or her younger years. It is phrase of wide import. ( McCosker v McCosker (1957) 97 CLR 566 at 575) The phrase "advancement in life" has expanded the concept used in the Victorian legislation which was considered in Re Buckland permitting provision to be made for the "maintenance and support" of an eligible applicant. However Adam J emphasised that in a large estate a more extravagant allowance for contingencies could be made than would be permissible in a small estate and still fall within the conception of maintenance and support."
The word 'adequate' connotes something different from the word 'proper'. 'Adequate' is concerned with the quantum, whereas 'proper' prescribes the standard, of the maintenance education and advancement in life: Devereaux-Warnes v Hall [No 3] [2007] WASCA 235; (2007) 35 WAR 127 at [72] and at [77] per Buss JA.
Each of the words were considered by Lord Romer in delivering the advice of the Privy Council in Bosch v Perpetual Trustee Co Ltd [1938] AC 463, at 476:
"The use of the word 'proper' in this connection is of considerable importance. It connotes something different from the word 'adequate'. A small sum may be sufficient for the 'adequate' maintenance of a child, for instance, but, having regard to the child's station in life and the fortune of his father, it may be wholly insufficient for his 'proper' maintenance. So, too, a sum may be quite insufficient for the 'adequate' maintenance of a child and yet may be sufficient for his maintenance on a scale that is 'proper' in all the circumstances."
Dixon CJ and Williams J, in McCosker v McCosker (1957) 97 CLR 566 at 571, after citing Bosch v Perpetual Trustee Co Ltd , went on to say, of the word 'proper', that:
"It means "proper" in all the circumstances of the case, so that the question whether a widow or child of a testator has been left without adequate provision for his or her proper maintenance, education or advancement if life must be considered in the light of the competing claims upon the bounty of the testator and their relative urgency, the standard of living his family enjoyed in his lifetime, in the case of a child his or her need of education or of assistance in some chosen occupation and the testator's ability to meet such claims having regard to the size of his fortune. If the court considers that there has been a breach by a testator of his duty as a wise and just husband or father to make adequate provision for the proper maintenance education or advancement in life of the applicant, having regard to all these circumstances, the court has jurisdiction to remedy the breach and for that purpose to modify the testator's testamentary dispositions to the necessary extent."
In Goodman v Windeyer (1980) 144 CLR 490, Gibbs J said at 502:
"[T]he words 'adequate' and 'proper' are always relative. There are no fixed standards, and the court is left to form opinions upon the basis of its own general knowledge and experience of current social conditions and standards."
Santow J pointed out in Gardiner v Gardiner, Butterworths, unreported judgments (28 May 1998) BC 9802209, "adequate" and "proper" are independent concepts.
"Adequate" relates to the needs of the applicant. It is determined by reference to events occurring up to the death of the deceased, but also encompassing what the deceased might reasonably have foreseen before death. "Proper" depends upon all the circumstances of the case. These include the applicant's station in life, the wealth of the deceased, the means and proper claims of all applicants, the relative urgency of the various claims on the deceased's bounty, the applicant's conduct in relation to the deceased, the applicant's contribution to building up the deceased's estate, the existence of dependents upon the applicant, the effects of inflation, the applicant's age and sex, and whether the applicant is able-bodied..."
In Vigolo v Bostin at [114], Callinan and Heydon JJ said:
"[T]he use of the word "proper" ... implies something beyond mere dollars and cents. Its use, it seems to us, invites consideration of all the relevant surrounding circumstances and would entitle a court to have regard to a promise of a kind which was made here...The use of the word "proper" means that attention may be given, in deciding whether adequate provision has been made, to such matters as what use to be called the "station in life" of the parties and the expectations to which that has given rise, in other words, reciprocal claims and duties based upon how the parties lived and might reasonably expect to have lived in the future."
Thus, "proper maintenance" is not limited to the bare sustenance of an applicant, but requires consideration of the totality of the claimant's position in life including age, status, relationship with the deceased, financial circumstances, the environs to which he, or she, is accustomed, and mobility: Alexander v Jansson [2010] NSWCA 176 at [18].
The first stage of the process provided for by s 59(1)(c) has been described as "the jurisdictional question": Singer v Berghouse (No 2) [1994] HCA 40; (1994) 181 CLR 201 at 208-209. At this stage, the court will consider whether it can make an order for provision for the maintenance, education and advancement in life of a particular applicant.
Whether the applicant has a 'need' is a relevant factor at the first stage of the enquiry. It is an element in determining whether 'adequate' provision has been made for the 'proper' maintenance education and advancement in life of the applicant in all of the circumstances: Collins v McGain [2003] NSWCA 190 [42] (Tobias JA, with whom Beazley and Hodgson JJA agreed).
Tobias JA said:
"42. There can be no question that, at least as part of the first stage of the process, the question of whether the eligible person has a relevant need of maintenance etc is a proper enquiry. This is so as the proper level of maintenance etc appropriate for an eligible person in all the circumstances clearly calls for a consideration of his or her needs. However, the question of needs must not be too narrowly focused. It must, in my view, take into account, depending upon the particular circumstances of the case, present and future needs including the need to guard against unforeseen contingencies.
...
47. As I have observed, the issue of need is not confined to whether or not an eligible person has, at the date of hearing, a then need for financial assistance with respect to his maintenance etc. It is a broader concept. This is so because the question of needs must be addressed in the context of the statutory requirement of what is "proper maintenance etc" of the eligible person. It is the cause of that context that, in the present case, the "proper maintenance etc" of the appellant required consideration to guard against the contingency to which I have referred."
In Devereaux-Warnes v Hall [No 3] at [81]-[85], Buss JA said, in respect of the first stage of the process:
"The term 'need' has been used to refer to the claimant's inability to satisfy his or her financial requirements from his or her own resources. See Singer per Gaudron J at 227.
'Need' has also been used in the context of a value judgment or conclusion, namely, that the claimant is 'in need' of maintenance, etc, because inadequate provision has been made for his or her proper maintenance, etc. See Gorton v Parks (1989) 17 NSWLR 1 per Bryson J at 10-11.
The determination of whether the disposition of the deceased's estate was not such as to make adequate provision for the proper maintenance, etc, of the claimant will always, as a practical matter, involve an evaluation of the provision, if any, made for the claimant on the one hand, and the claimant's 'needs' that cannot be met from his or her own resources on the other. See Hunter per Kirby P at 575.
Although the existence or absence of 'needs' which the claimant cannot meet from his or her own resources will always be highly relevant and, often, decisive, the statutory formulation, and therefore the issue in every case, is whether the disposition of the deceased's estate was not such as to make adequate provision for his or her proper maintenance, etc. See Singer per Gaudron J at 227. Compare Gorton per Bryson J at 6-11; Collicoat v McMillan [1999] 3 VR 803 per Ormiston J at 816 [38], 820 [47]."
In the event that the court is satisfied that the power to make an order is enlivened (i.e. it is satisfied that the applicant is an eligible person, and, where necessary, that factors warranting have been satisfied, and that adequate provision for the proper maintenance, education or advancement in life of the person has not been made), then, the court determines whether it should make an order, and if so, the nature of any such order, having regard to the facts known to the court at the time the order is made.
The second stage of the process arises under s 59(2) and s 60(1)(b). Mason CJ, Deane and McHugh JJ, in Singer v Berghouse , at 211, affirmed that the decision made at the second stage involves an exercise of discretion in the accepted sense. The fact that the court has a discretion means that it may refuse to make an order even though the jurisdictional question has been answered in the applicant's favour.
Section 60 of the Act, at least in part, is new. It provides:
"(1) The court may have regard to the matters set out in subsection (2) for the purpose of determining:
(a) whether the person in whose favour the order is sought to be made (the "applicant") is an eligible person, and
(b) whether to make a family provision order and the nature of any such order.
(2) The following matters may be considered by the court:
(a) any family or other relationship between the applicant and the deceased person, including the nature and duration of the relationship,
(b) the nature and extent of any obligations or responsibilities owed by the deceased person to the applicant, to any other person in respect of whom an application has been made for a family provision order or to any beneficiary of the deceased person's estate,
(c) the nature and extent of the deceased person's estate (including any property that is, or could be, designated as notional estate of the deceased person) and of any liabilities or charges to which the estate is subject, as in existence when the application is being considered,
(d) the financial resources (including earning capacity) and financial needs, both present and future, of the applicant, of any other person in respect of whom an application has been made for a family provision order or of any beneficiary of the deceased person's estate,
(e) if the applicant is cohabiting with another person-the financial circumstances of the other person,
(f) any physical, intellectual or mental disability of the applicant, any other person in respect of whom an application has been made for a family provision order or any beneficiary of the deceased person's estate that is in existence when the application is being considered or that may reasonably be anticipated,
(g) the age of the applicant when the application is being considered,
(h) any contribution (whether financial or otherwise) by the applicant to the acquisition, conservation and improvement of the estate of the deceased person or to the welfare of the deceased person or the deceased person's family, whether made before or after the deceased person's death, for which adequate consideration (not including any pension or other benefit) was not received, by the applicant,
(i) any provision made for the applicant by the deceased person, either during the deceased person's lifetime or made from the deceased person's estate,
(j) any evidence of the testamentary intentions of the deceased person, including evidence of statements made by the deceased person,
(k) whether the applicant was being maintained, either wholly or partly, by the deceased person before the deceased person's death and, if the court considers it relevant, the extent to which and the basis on which the deceased person did so,
(l) whether any other person is liable to support the applicant,
(m) the character and conduct of the applicant before and after the date of the death of the deceased person,
(n) the conduct of any other person before and after the date of the death of the deceased person,
(o) any relevant Aboriginal or Torres Strait Islander customary law,
(p) any other matter the court considers relevant, including matters in existence at the time of the deceased person's death or at the time the application is being considered."
It can be seen that s 60(2) enumerates 15 specific matters which the court may take into account, together with "any other matter the court considers relevant", for the purposes of determining eligibility, whether to make a family provision order , and, if so, the nature of any such order. There is no mandatory command to take into account any of the matters enumerated. None of the matters differentiate in their application between classes of eligible person. Similarly, there is no distinction based on gender.
Considering each of the relevant matters does not prescribe a particular result, and whilst there is likely to be a substantial overlap in the matters that the court may take into account when determining the answers to what is posed in s 60(1), those matters are not identical. For example, when considering eligibility under sub-s (1)(a), many of the matters in sub-s (2) will be largely, if not wholly, irrelevant.
Furthermore, consideration of some of the matters in s 60(2) not only permits, but requires, a comparison to be made between the respective positions of the applicant and of other eligible persons as well as of the beneficiaries named in the deceased's will, whilst others do not. Importantly, also, many of the matters in sub-s (2), of themselves, are incapable of providing an answer to the questions posed in s 60(1).
Leaving aside the question of eligibility, the matters referred to in s 60(2) may be considered on "the discretionary question", namely whether to make an order and the nature of that order. Importantly, under s 60(2), attention is drawn to matters that may have existed at the deceased's death, or subsequently.
This does not mean, however, that some of the matters referred to in s 60(2) will not be relevant to the jurisdictional question to be determined at the first stage. I am comforted in reaching this conclusion by the following comments made in Singer v Berghouse (at 209-210):
"... The determination of the first stage in the two-stage process calls for an assessment of whether the provision (if any) made was inadequate for what, in all the circumstances, was the proper level of maintenance etc appropriate for the applicant having 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 deceased and other persons who have legitimate claims upon his or her bounty.
The determination of the second stage, should it arise, involves similar considerations. Indeed, in the first stage of the process, the court may need to arrive at an assessment of what is the proper level of maintenance and what is adequate provision, in which event, if it becomes necessary to embark upon the second stage of the process, that assessment will largely determine the order which should be made in favour of the applicant."
And by the comments of Callinan and Heydon JJ in Vigolo v Bostin (at 230-231):
"We do not therefore think that the questions which the court has to answer in assessing a claim under the Act necessarily always divide neatly into two. Adequacy of the provision that has been made is not to be decided in a vacuum, or by looking simply to the question whether the applicant has enough upon which to survive or live comfortably. Adequacy or otherwise will depend upon all of the relevant circumstances, which include any promise which the testator made to the applicant, the circumstances in which it was made, and, as here, changes in the arrangements between the parties after it was made. These matters however will never be conclusive. The age, capacities, means, and competing claims, of all the potential beneficiaries must be taken into account and weighed with all of the other relevant factors."
Section 61 of the Act permits the court to disregard the interests of any other person by, or in respect of whom, an application for a family provision order may be made (other than a beneficiary of the deceased person's estate), but who has not made an application. However, the court may disregard any such interests only if:
(a) notice of the application, and of the court's power to disregard the interests, is served on the person concerned, in the manner and form prescribed by the regulations or rules of court, or
(b) the court determines that service of any such notice is unnecessary, unreasonable or impracticable in the circumstances of the case.
Section 65(1) of the Act requires the family provision order to specify:
(a) the person or persons for whom provision is to be made,
(b) the amount and nature of the provision, and
(c) the manner in which the provision is to be provided and the part or parts of the estate out of which it is to be provided, and
(d) any conditions, restrictions or limitations imposed by the court.
The order for provision out of the estate of a deceased person may require the provision to be made in a variety of ways, including a lump sum, periodic sum, or "in any other manner which the court thinks fit" (s 65(2) of the Act). If the provision is made by payment of an amount of money, the order may specify whether interest is payable on the whole, or any part, of the amount payable for the period, and, if so, the period during which interest is payable and the rate of interest (s 65(3) of the Act).
Any family provision order under the Act will take effect, unless the court otherwise orders, as if the provision was made in a codicil to the will of the deceased, or in the case of intestacy, as in a will of the deceased (s 72(1) of the Act).
Section 66 of the Act sets out the consequential and ancillary orders that may be made.
The court, also, may, at the time of distribution of an estate that is insufficient to give effect to a family provision order, make such orders concerning the abatement, or adjustment, of distributions from the estate, as between the person in whose favour the family provision order is made and the other beneficiaries of the estate as it considers to be just and equitable among the persons affected (s 72(2) of the Act).
The Act, in Part 3.3, deals with notional estate orders. It is only necessary to deal with the applicable sections of the Act briefly in light of the agreement of the parties that the property held by the second Defendant could be designated as notional estate.
Section 80(1) of the Act provides that the Court may, on application by an applicant for a family provision order, or on its own motion, make a notional estate order designating property specified in the order as notional estate of a deceased person, if the Court is satisfied that the deceased person entered into a relevant property transaction before his, or her, death, and that the transaction is a transaction to which this section applies.
Section 75(1) provides that a person enters into a relevant property transaction if the person does, directly or indirectly, or does not do, any act that (immediately or at some later time) results in property being:
"(a) held by another person (whether or not as trustee), or
(b) subject to a trust,
and full valuable consideration is not given to the person for doing or not doing the act."
Section 76 relevantly provides that certain circumstances, subject to full valuable consideration not being given, constitute the basis of a relevant property transaction for the purposes of s 75. One such circumstance is:
"(a) if a person is entitled to exercise a power to appoint, or dispose of, property that is not in the person's estate and does not exercise that power before ceasing (because of death or the occurrence of any other event) to be entitled to do so, with the result that the property becomes held by another person (whether or not as trustee) or subject to a trust or another person (immediately or at some later time) becomes, or continues to be, entitled to exercise the power."
Section 77(1) relevantly provides that a relevant property transaction is taken to have effect when the property concerned becomes held by another person or subject to a trust.
Section 80(2) refers to the types of property transactions to which s 80(1) applies, namely:
"(a) a transaction that took effect within 3 years before the date of the death of the deceased and was entered into with the intention, wholly or partly, of denying or limiting provision being made out of the estate of the deceased for the maintenance, education or advancement in life of any person who is entitled to apply for a family provision order,
(b) a transaction that took effect within one year before the date of the death of the deceased and was entered into when the deceased had a moral obligation to make adequate provision, by will, or otherwise, for the proper maintenance, education or advancement in life of any person who is entitled to apply for a family provision order which was substantially greater than any moral obligation of the deceased person to enter into the transaction,
(c) a transaction that took effect or is to take effect on or after the deceased person's death."
Section 80(3) provides that property may be designated as notional estate by a notional estate order under the section if it is property that is held by, or on trust for:
"(a) a person by whom property became held (whether or not as trustee) as the result of a relevant property transaction, or
(b) the object of a trust for which property became held on trust as the result of a relevant property transaction,
whether or not the property was the subject of the relevant property transaction."
Section 78(1) provides that the Court may make an order designating property as notional estate only for the purposes of a family provision order to be made under Part 3.2, or for the purposes of an order that the whole, or part, of the costs of proceedings in relation to the estate or notional estate of a deceased person, be paid from the notional estate of the deceased person. However, the Court must not make an order for the purposes of a costs order unless the Court makes, or has made, a family provision order in favour of the applicant.
Section 83 provides that the Court must not, merely because a relevant property transaction has been entered into, make an order under sections 80, 81 or 82, unless the Court is satisfied that the relevant property transaction, or the holding of property resulting from the relevant property transaction:
"(a) directly or indirectly disadvantaged the estate of the principal party to the transaction or a person entitled to apply for a family provision order from the estate or, if the deceased person was not the principal party to the transaction, the deceased person (whether before, on or after death), or
(b) involved the exercise by the principal party to the transaction or any other person (whether alone or jointly or severally with any other person) of a right, a discretion or a power of appointment, disposition, nomination or direction that, if not exercised, could have resulted in a benefit to the estate of the principal party to the transaction or a person entitled to apply for a family provision order from the estate or, if the deceased person was not the principal party to the transaction, the deceased person (whether before, on or after death), or
(c) involved the exercise by the principal party to the transaction or any other person (whether alone or jointly or severally with any other person) of a right, a discretion or a power of appointment, disposition, nomination or direction that could, when the relevant property transaction was entered into or at a later time, have been exercised so as to result in a benefit to the estate of the principal party to the transaction or a person entitled to apply for a family provision order from the estate or, if the deceased person was not the principal party to the transaction, the deceased person (whether before, on or after death), or
(d) involved an omission to exercise a right, a discretion or a power of appointment, disposition, nomination or direction that could, when the relevant property transaction was entered into or at a later time, have been exercised by the principal party to the transaction or any other person (whether alone or jointly or severally with any other person) so as to result in a benefit to the estate of the principal party to the transaction or a person entitled to apply for a family provision order from the estate or, if the deceased person was not the principal party to the transaction, the deceased person (whether before, on or after death)."
"Principal party to the transaction", in relation to a relevant property transaction, means the person who, under s 75 or s 76, enters into the relevant property transaction.
The Court must not make a notional estate order unless it has considered the following:
(a) the importance of not interfering with reasonable expectations in relation to property,
(b) the substantial justice and merits involved in making or refusing to make the order,
(c) any other matter it considers relevant in the circumstances.
In Petschelt v Petschelt [2002] NSWSC 706, at [68], McLaughlin M (as his Honour then was), considered the meaning of "reasonable expectations" (in relation to a similar section under the former Act):
"That phrase does not, however, indicate the person by whom those reasonable expectations are held. Clearly the Court must consider the reasonable expectations of the First Defendant in relation to property. By the same token, however, the Court should also consider the reasonable expectations of the Deceased herself in relation to property, and also, possibly, the reasonable expectations of the Plaintiff."
In D'Albora v D'Albora [1999] NSWSC 468, at [53], Macready M (as his Honour then was) gave examples of the circumstances which might give rise to reasonable expectations for the purposes of this section:
"Under s 27(1)(a) the Court has to consider the importance of not interfering with the reasonable expectations in relation to the property. Such reasonable expectations may well occur in a number of circumstances. For example, a beneficiary who receives a property may have spent money on the property or worked on the property. ... Another common area where one often sees in this matter is where there is a promise in relation to the property and the acting by an intended beneficiary on the fact of that promise."
In Wentworth v Wentworth [1992] NSWCA 268, Priestley JA, with whom Samuels AP and Handley JA agreed said:
"Section 27(1) for example, says the court shall not make an order designating property as notional estate unless it has considered, amongst other things, the importance of not interfering with reasonable expectations in relation to property. If someone is in possession of property, otherwise than by gift, after having given up something of equivalent value in order to obtain that property, it would be entirely reasonable for that person to expect to remain in possession of it."
Finally, s 88 provides that the Court must not make a notional estate order unless it is satisfied that the deceased left no estate, the deceased's estate is insufficient for the making of the family provision order, or any order as to costs, that the Court is of the opinion should be made, or provision should not be made wholly out of the deceased person's estate because there are other persons entitled to apply for family provision orders or because there are special circumstances.
Applicable Legal Principles
In addition to the above matters, there are some general principles that are relevant to the facts of this case. Whilst most of these principles were given in the context of the previous legislation, they are equally apt in a claim such as this one.
Bryson J noted in Gorton v Parks (1989) 17 NSWLR 1, at 6, in relation to the former Act, that it is not appropriate, to endeavour to achieve a 'fair' disposition of the deceased's estate. It is not part of the court's role to achieve some kind of equity between the various claimants. The court's role is not to reward an applicant, or to distribute the deceased's estate according to notions of fairness or equity. Rather, the court's role is of a specific type and goes no further than the making of 'adequate' provision in all the circumstances for the 'proper' maintenance, education and advancement in life of an applicant.
In Cooper v Dungan (1976) 50 ALJR 539, Stephen J, at 542, reminded the court to be vigilant in guarding "against a natural tendency to reform the deceased's will according to what it regards as a proper total distribution of the estate rather than to restrict itself to its proper function of ensuring that adequate provision has been made for the proper maintenance and support of an applicant".
The court's discretion is not untrammelled, or to be exercised according to idiosyncratic notions of what is thought to be fair, or in such a way as to transgress, unnecessarily, upon the deceased's freedom of testation ( Pontifical Society for the Propagation of the Faith v Scales [1962] HCA 19; (1961) 107 CLR 9, per Dixon CJ at 19); McKenzie v Topp [2004] VSC 90 at [63]. Freedom of testamentary disposition remains a prominent feature of the Australian legal system.
Yet, in considering the question, the nature and content of what is adequate provision for the proper maintenance, education and advancement in life, is not fixed or static. Rather, it is a flexible concept, the measure of which should be adapted to conform with what is considered to be right and proper according to contemporary accepted community standards: The Pontifical Society for the Propagation of the Faith v Scales at 19; Walker v Walker , NSWSC, 17 May 1996, unreported; Vigolo v Bostin at [11]; Stern v Sekers; Sekers v Sekers [2010] NSWSC 59.
The following principles are particularly relevant to a claim by a spouse of the deceased:
(i) A wife, particularly of many years, has a primary right to be considered by her husband, but the extent that he should provide for her is to be governed by her needs, both at present, and in the foreseeable future. It is also governed by the claims and circumstances of the competing claimants, whose positions also have to be weighed with their needs and merits: Bladwell v Davis [2004] NSWCA 170, per Bryson JA, with whom Ipp JA concurred.
(ii) As a broad general rule, and in the absence of special circumstances, the duty of the deceased to the widow, to the extent to which his assets permit him to do so, is to ensure that she is secure in the matrimonial home, to ensure that she has an income sufficient to permit her to live in the style to which she is accustomed, and to provide her with a fund to enable her to meet any unforeseen contingencies ( Luciano v Rosenblum [1985] 2 NSWLR 65 at 69-70). The amount should be sufficient to free her mind from any reasonable fear of any insufficiency as she grows older and her health and strength fail (see: Permanent Trustee Co Ltd v Fraser (1995) 36 NSWLR 24).
(iii) The capacity of the widow, herself, to provide for her own needs must also be considered. In Re Crewe [1956] NZLR 315 at 323 it was said:
"It may probably be said with truth that the proper maintenance which a testator owes to his widow in cases where there are no claims of other dependants is such maintenance as will enable her, taken in conjunction with her own means, to live with comfort and without pecuniary anxiety in such state of life as she was accustomed to in her husband's lifetime, or would have been so accustomed to if her husband had then done his duty to her."
(iv) The broad general rule should not be regarded as one of immutable application: Marshall v Carruthers [2002] NSWCA 47; Clifford v Mayr [2010] NSWCA 6 at [142]-[144].
(v) Concern as to the capacity of the applicant to maintain herself, independently and autonomously, may also bear upon the notion of what is proper provision: Richard v AXA [2000] VSC 341; Anslow v Journeaux & Anor [2009] VSC 250 at [43].
(vi) It should be remembered that the three elements identified in (ii) above are not necessarily mutually independent. While an applicant's standard of living during the lifetime of a deceased may be a useful yardstick, it is not necessarily decisive as to what would be an appropriate provision for the in the future: see Grainger v The Public Trustee , unreported; SCt of WA; Library No 950670; 6 December 1995, per Steytler J at 18; Welsh v Mulcock [1924] NZLR 673 per Salmond J at 687; Pogorelic v Banovich & Ors [2007] WASC 45. The court is not to approach the assessment of what is proper by attempting precisely to replicate the way of life that the deceased and the applicant widow planned to have had he survived: Neil v Jacovou [2011] NSWSC 87 at [163].
(vii) In the case of a widow, the Court will make more ample provision than in the case of children, if the children are physically and mentally able to maintain and support themselves: In Re Allardice, Allardice v Allardice (1910) 29 NZLR 959; Sayer v Sayer; Garbutt v Sayer (1999) NSWCA 340 (per Sheller JA).
(viii) In Magill v Magill [2006] HCA 51; (2006) 226 CLR 551, Gleeson CJ, at [24], said:
"The structure of marriage and the family is intended to sustain responsibility and obligation."
This accords too, with what Hodgson JA said in Marshall v Carruthers; Marshall v Marshall [2002] NSWCA 47:
"In my opinion, a formal and binding commitment to mutual support through good times and bad, other factors being equal, adds strength to a legitimate claim."
In this case, there is one other principle that should be remembered. In Re Buckland deceased , Adam J, at 415, said:
"I consider the proper conclusion to be drawn from the authorities is that the court's jurisdiction, whatever the size of the estate, is limited by the claimant's need for maintenance and support; but that the maintenance and support to which he or she may for this purpose be treated as needing is that appropriate to his or her station or condition in life. ... The greater the estate the more may contingencies, even remote contingencies which may arise in the future, be provided for in the assessment of such maintenance."
An appeal from the judgment of Adam J was dismissed by the High Court in May 1966. The High Court found no significant error of fact or of law in the reasons for judgment of the trial judge, and could not conclude that the amount of the provision ordered in the circumstances of the case, stemmed from some misconception of fact or from some error or misapplication of principle: Buckland v Trustees Executors and Agency Co. Limited (1966) 40 ALJR 164.
In Anasson v Phillips (NSWSC, 4 March, 1988, unreported) Young J (as his Honour then was) said:
"With a very large estate ... there is great temptation on a Court to be overgenerous with other people's money. This is especially so when the Court can see that Plaintiffs have been very hardly done by at the hands of a domineering testatrix. However, the case should not be approached in this way, as the application has to be determined in accordance with the legal principles. These principles include the fact that in Australia there is freedom of a person to leave her property in whatever way she wishes, to love whom she wishes, to hate whom she wishes, and it is only when there has been a failure to comply with a moral duty to those who in the community's eyes she should have made proper provision for, that anyone can legally complain about another person's will. Even then, the Court has no power to rewrite the will, but can only adjust things, in substitution for the testatrix, in such a way as to fulfil her moral duty.
If the estate is a large one, the Court has a slightly different approach. The basic principles are the same, that is, the will can only be affected to the extent that it is necessary to discharge the moral duty by making adequate provision for the Plaintiffs, but where there is a large estate, competition between claimant and claimant, and claimant and beneficiary under the will is much reduced or eliminated. Further, there may be a more liberal assessment of the moral duty owed, to be reflected in what is proper provision for the Plaintiffs. In particular, the lifestyle that has been enjoyed by the Plaintiffs, because they have been associated with a wealthy testatrix, is a relevant factor."
...
I consider, with respect, that Professor Dickey's comment is close to the mark. Ordinarily, a benefit provided under a discretionary trust is a fairly illusory benefit because it can be terminated without reason and there is little likelihood of the discretionary beneficiary being able to force the trustee to pay her a benefit. Hartigan's case shows that even if there is a memorandum of wishes, there is no obligation on the trustee to take that into account.
...
The trustees may change, the investments of the trustees might fail, there may be serious problems with one of the other beneficiaries, or new trustees may be appointed who take a set against the widow and reduce her benefits."
The parties agree that if the Plaintiff receives any further provision, that such provision should be made upon condition that she disclaims and renounces any further interest in the Trust. She is prepared to so disclaim and renounce.
(j) any evidence of the testamentary intentions of the deceased person, including evidence of statements made by the deceased person
There is evidence of the testamentary intentions of the deceased other than his Will and Codicil, Probate of which was granted. An affidavit by his long-time solicitor John Simpson was read in the proceedings.
The deceased made a will on 28 August 1985. A copy of that Will is in evidence. It gave a right of occupation to the deceased's mother in a property in Queensland as long as she wished on certain terms and conditions, provided for all of the deceased's personal effects in or about the residences at Castle Cove and Lake Cathie to the Plaintiff for her own use and benefit absolutely, and divided the rest and residue of his estate, after payment of debts funeral and testamentary expenses between such of his three children as were proved to survive him and if more than one as tenants in common in equal shares.
There appears to have been discussions between the deceased and Mr Simpson, in March 1993, about a new will. It appears Mr Simpson suggested that a sum (about one quarter could be left to the Plaintiff for her life with the balance to the three children). The creation of the will was put off because of what the deceased described as "a circumstantial change" (which referred to his work with Merck Sharp & Dohme).
In May 1994, Mr Simpson discussed with the deceased the establishment of a family trust. He said to Mr Simpson that his Will, which he said, incorrectly, currently provided for a one quarter share of the estate to the Plaintiff, required amendment, as the Plaintiff would receive the jointly held property and that she owned other property in her own name. The deceased told Mr Simpson that he wanted his estate, otherwise, to pass to his three children equally. (The diary note of Mr Simpson records "Will currently each to MEG (the Plaintiff) and children".)
The family trust was established by Deed dated 1 July 1994. It is what may be described as a "discretionary trust". The deceased effectively controlled the Trust because he controlled the trustee. (He owned one share in the Trustee and Mr Simpson held the other share on trust for the deceased.)
In 1995, the deceased transferred all of his solely owned property to the family trust. The Plaintiff is a discretionary object named in the family trust. There is no dispute that she has received no distributions. The records of the Trust show her as being entitled to $140.
The deceased made his Will on 31 January 2001. The explanation for making no provision for the Plaintiff had been the subject of discussion with Mr Simpson in early January 2001 and what he said was included as Clause 5(a) in the Will.
The Codicil was made on 15 December 2008 following instructions taken in October 2008.
The Plaintiff says that the deceased did not discuss the contents of the Will and Codicil with her. Nor did he show her either of these documents and that she did not know, otherwise, the contents of either testamentary instrument.
(k) whether the applicant was being maintained, either wholly or partly, by the deceased person before the deceased person's death and, if the court considers it relevant, the extent to which and the basis on which the deceased person did so
There is evidence that the deceased partially maintained the Plaintiff before his death and during their marriage. He gave her $150 per week for groceries and paid all bills relating to the Glenhaven property, including the utilities and for maintenance. The Plaintiff used her income as she wished, although she did buy certain items for the Glenhaven property.
(l) whether any other person is liable to support the applicant
There is no other person with a liability to support the Plaintiff.
(m) the character and conduct of the applicant before and after the date of the death of the deceased person
The Act does not limit the consideration of "conduct" to conduct towards the deceased.
I have previously dealt with the Plaintiff's conduct before the death of the deceased. After the deceased's death, the Plaintiff collated all of his papers and gave them to the first Defendant. She also gave him the deceased's computer and the pieces of artwork identified in the Codicil to the Will.
I reject the contention raised in the Plaintiff's affidavits that the deceased's children were not particularly attentive towards him. Even if they were, the deceased, as recently as 2008, confirmed the terms of his Will, in which they were the sole residuary beneficiaries. However, I accept that the burden of looking after the deceased fell principally upon the Plaintiff.
There is no conduct relied upon which may reduce the Plaintiff's entitlement to provision. I note, also, that the Defendants' counsel does not assert any conduct that is relevant under this sub-section.
(n) the conduct of any other person before, and after, the date of the death of the deceased person
It was not suggested that the deceased's relationship with the first Defendant, or with his other children, had, in any way broken down. They are the chosen objects of the deceased's testamentary beneficence. There is nothing in the Defendant's, or his other children's, conduct that is relevant. No conduct was suggested by senior counsel for the Plaintiff.
(o) any relevant Aboriginal or Torres Strait Islander customary law
This is not relevant in the present case.
(p) any other matter the court considers relevant, including matters in existence at the time of the deceased person's death or at the time the application is being considered
A matter that I think is relevant is that the Plaintiff did inherit, by survivorship, the deceased's interests in the two parcels of real estate that forms part of her property and that she received about $205,000 shortly before he died, part of which she used to repay her business debts. She has some of the principal left, although the precise sum is not known.
There was an extremely large amount of evidence going to the nature of the relationship of the Plaintiff and each of the children of the deceased and their families. This could have led to an inquest into the details of family life and consideration of a multitude of incidents, apparently assumed to be relevant, but not ordinarily regarded as appropriate for family provision cases.
It is plain from the evidence that was read that there continues to exist some animosity between them. The circumstances of animosity between the parties have been given significance in the affidavit evidence far beyond what they reasonably bear.
I point out, for the benefit of those reading this judgment, that though conduct and family relationships may, in some cases, have relevance, the court disapproves of attempts by litigants in cases in which a family provision order is sought to blacken each other's character. Allegations and counter-allegations about incidents that occurred years before the deceased's death are, generally, unlikely to advance either party's case, and when it is sought to support them by lengthy affidavits in chief, which prompt equally lengthy affidavits in reply, they may merely deepen rifts in the family, dishonour the memory of the deceased and unnecessarily prolong the litigation: Re Meier (deceased ) [1976] 1 NZLR 257 at 258, which was cited with approval in The Auckland City Mission v The Salvation Army & Ors [2002] NZCA 33 at [15]. Counsel and solicitors bear a responsibility to their clients, as well as to the court, in this respect.
Mercifully, in this case, senior counsel for each party spent no time on this aspect of the matter.
I have earlier mentioned the returns on her investments that the Plaintiff asserts that she receives. This, in my view, is a relevant matter in my consideration.
Determination
There is no dispute that the Plaintiff is an eligible person within the meaning of that term in s 57(1)(a) of the Act. It is, thus, unnecessary to consider whether there are any factors warranting the making of her application.
As the Plaintiff's proceedings were commenced within the time prescribed by the Act, the first question for determination is whether, at the time when the court is considering the application, adequate provision for the proper maintenance, education, or advancement in life of the person in whose favour the order is to be made, has not been made, by the Will and Codicil of the deceased, or by the operation of the intestacy rules in relation to the estate of the deceased, or both.
Virtually no provision (only household chattels) was made for the Plaintiff in the deceased's Will and Codicil. I have dealt with the fact that she is a discretionary object named in the Family Trust. That adequate provision for the proper maintenance, education, or advancement in life of the Plaintiff was not made by the Will or Codicil of the deceased, in relation to the estate of the deceased is tolerably plain.
The Plaintiff has some financial need. This is not in contest. It founds the basis of the Defendants' somewhat begrudging acceptance of the proposition that the Will and Codicil fails to make adequate provision for the Plaintiff's proper maintenance and advancement in life and that "the real question to be determined in this case is what provision, if any, should be made for the Plaintiff".
Accordingly, the Plaintiff has satisfied the jurisdictional threshold.
Having found that the Plaintiff is an eligible person and that the provision made for her in the Will and the Codicil of the deceased is inadequate, I next consider the nature and quantum of any provision that should be made.
It was submitted that the Plaintiff requires a capital sum to carry out the maintenance and repair of the various properties that she owns, the total of which is about $278,000. I am of the view that in calculating the provision she should receive, I should bear in mind, a capital sum for that purpose.
It was also submitted that she needs a capital sum to meet her shortfall of income over expenditure. Using the 3 per cent tables and using the Plaintiff's life expectancy of 29.5 years, and an amount of $1,400 per week, it is submitted that she should receive about $1.438 million.
Ultimately, senior Counsel for the Plaintiff submitted that the total amount that would be adequate and proper provision out of the deceased's actual and notional estate was $1.5 million.
Senior counsel for the Defendants submitted that if the Plaintiff chooses to invest in high growth investments with the result that the income from those investments was low, then, any calculation based on a shortfall of income should be limited to a number of years rather than for her life. In this way, she would receive some additional income, but at some point in time, particularly as her expenses lessened, it would be necessary to use some part of her capital, which would, by then, have increased in value.
I do not propose to determine the quantum of the provision to be made for the Plaintiff upon the basis of a mathematical calculation of the type one might make in a personal injuries action ascertaining the sum of money paid now that, invested at x%, would enable a payment of $Y per week to be made (using both the income, and ultimately the capital of the fund) for a period of z years. Also, not only is it impossible to predict the future, but futile to attempt precision when trying to do so: Tchadovitch v Tchadovitch [2010] NSWCA 316.
Furthermore, I consider there is some force in the criticism of the Plaintiff's failure to disclose her actual income and expenditure. Even if one wanted to use the process suggested as a guide by Mr Ellison SC, this makes it impossible to determine what figure to use as a starting point in the calculation.
Considering all of the matters that I am required to consider, including amongst other things, the size and nature of the deceased's actual and notional estate, the totality of the relationship between the Plaintiff and the deceased, the relationship between the deceased and other persons who have legitimate claims upon his bounty, I am of the view, that the Plaintiff, who has assets (leaving aside personal property and artwork) in excess of $4.2 million, should receive a lump sum of $1,100,000.
Assuming the payment by her of all of the repairs and maintenance costs immediately, this will leave her with a capital sum of about $870,000, to provide additional income, which, if properly invested, should provide enough income and, if necessary, by use of the capital supplement, to satisfy the reasonable personal expenses that she incurs. She will, thus, be secure in her accommodation (which should be in good repair), she will have an income sufficient to permit her to live in the style to which she is accustomed, and she will available to her a fund to which she might resort in order to meet any unforeseen contingencies. (Of course, if not all of the amount said to be required to be spent on maintenance and repairs is spent immediately, additional income will be able to be earned until it is spent.)
I remember also, in coming to this figure, the gift of $205,000 made by the deceased to the Plaintiff a short time before his death.
Coincidentally, only, the lump sum equates to about one-quarter of the current agreed value of the actual and notional estate.
As in Gregory v Hudson (No 2) the Plaintiff should renounce and disclaim any further benefit from the Family Trust, and upon condition that she does so (which she says she is prepared to do) she will receive, in addition to the provision made for her in the Codicil, a lump sum of $1,100,000.
I shall allow the Defendant an opportunity to decide the manner in which he can satisfy the payment of the lump sum payable to the Plaintiff and, therefore, which property should be the subject of a notional estate order. As requested, I shall not designate any particular property as notional estate.
The lump sum should be paid within 28 days of the making of orders or such other time as the parties agree, failing which, interest on any amount not so paid, should be paid, such interest to be calculated at the rate prescribed on unpaid legacies by the Probate & Administration Act 1898, from that date until the date of payment.
If the parties are unable to reach agreement on the way in which the lump sum is to be paid, or on any other matter necessary to give effect to these reasons, I shall, hear further short submissions on any aspect in dispute.
The Exhibits should be dealt with in accordance with the Uniform Civil Procedure Rules and the Court Books may be returned.
Subject to any argument about costs, I would expect to make the usual order for costs.
The parties are to bring in short minutes. The proceedings are adjourned to a date to be fixed.
**********
Amendments
10 June 2011 - removed unnecessary "and" contained in brackets
Amended paragraphs: 108
Decision last updated: 10 June 2011
9
22
4