Iacono v Iacono
[2021] VSC 444
•30 July 2021
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
TESTATORS FAMILY MAINTENANCE LIST
S ECI 2019 02401
| IN THE MATTER of the Estate of SALVATORE IACONO, deceased | |
| - and - | |
| IN THE MATTER of Part IV of the Administration and Probate Act 1958 (Vic) | |
| BETWEEN: | |
| ROSE GIOVANNA IACONO | Plaintiff |
| - and - | |
| GIOVANNI IACONO (who is sued as Executor of the Estate of SALVATORE IACONO, deceased) | First Defendant |
| EMANUELE IACONO | Second Defendant |
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JUDGE: | Daly AsJ |
WHERE HELD: | Melbourne |
DATES OF HEARING: | 2, 3, 17, 19 March 2021, written submissions filed by the parties on 7, 12 and 19 April 2021 |
DATE OF JUDGMENT: | 30 July 2021 |
CASE MAY BE CITED AS: | Iacono v Iacono & Anor |
MEDIUM NEUTRAL CITATION: | [2021] VSC 444 |
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TESTATORS FAMILY MAINTENANCE – Application for family provision order under Part IV of the Administration and Probate Act 1958 (Vic) by adult daughter – Where parties concede that further provision should be made but quantum of provision is in dispute – Where provision to children is unequal – Where substantial part of the estate was accrued during the deceased’s previous marriage – Administration and Probate Act 1958 (Vic) ss 90, 90A, 91, 91A, 97 applied – Capacity of applicant to provide for herself – Applicant in poor health, receives Centrelink benefits and support from the National Disability Insurance Scheme, and has limited financial resources and earning capacity – Other beneficiaries not in financial need - Factors under s 91A(2) of the Administration and Probate Act 1958 (Vic) considered – Re Christu; Christu v Christu [2021] VSC 162 referred to – Where the applicant and deceased were estranged – Whether adequate provision made for proper maintenance and support – Re Marsella; Marsella v Wareham [2018] VSC 312, referred to – Where burden of further provision should fall – Gift of property inter vivos relevant to where burden of further provision falls.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr M C McKenzie | Constable Connor & Co Pty Ltd |
| For the First Defendant | Mr J Rizzi | Prompt Legal Services Pty Ltd |
| For the Second Defendant | Mr A P Dickenson | Bediaga Xavier & Ramon |
HER HONOUR:
Introduction and family background
Salvatore Iacono (‘deceased’) died on 11 June 2018, at the age of 94. He left behind a widow, Rowena, who was then aged 53, and four adult children. Maria, the eldest, was born in Italy in 1948, and was the issue of his first marriage. The other three children, Emanuele, Giovanni (‘John’) and Rosa (‘Rose’),[1] were born in Australia in 1958, 1962 and 1967 respectively, and were the issue of the deceased’s second marriage to Gina. Gina died in 1999, and the deceased married Rowena in 2000.
[1]Given all of the parties to the proceeding share a common surname, I shall refer to all of the parties by their first names. No disrespect is intended. I shall refer to John by name save where he acts in his capacity as executor of the estate, and John Iacono, accountant and distant cousin of the parties, as ‘John Iacono’.
The deceased had substantial assets at the time of his death, largely comprising real property, with a total value of approximately $3.5 million.[2] The deceased’s assets (‘estate’), included the following:
[2]As at 24 February 2021.
(a) the family home in Essendon North (‘Essendon North home’), where Rowena continues to live, which is valued at $1,040,000;
(b) an investment property in Airport West (‘Airport West property’), where Rose lived for a number of years between 1996 and 2006, which is valued at $840,000;
(c) five residential units in a single block in Tullamarine (‘Tullamarine units’), valued at a total of approximately $1.6 million;
(d) a 1968 Holden Monaro, valued at approximately $80,000;[3] and
(e) approximately $300,000 in cash. Since the death of the deceased, funds have been used to pay for the deceased’s funeral, for Rowena’s expenses, property related expenses and for the legal costs of the estate. The cash resources of the estate have been augmented by rental income received by the estate for the Tullamarine units and the Airport West property (‘investment properties’) although arguably, that income should be paid to the recipients of the gifts of the investment properties in the will.[4]
[3]The Monaro was originally valued in the statement of financial position of the estate as at 24 February 2021 at $65,000. A later valuation, following a successful application by Emanuele during the course of the trial, valued the Monaro at $95,000. I agree with the submissions of the executor that I should adopt the midpoint of the two valuations.
[4]See s 97(4) of the Act.
Probate of the deceased’s last will dated 15 March 2013 (‘will’) was granted to the executor on 5 September 2018. The will provided, relevantly, as follows:
(a) $50,000 to be given to Rose;
(b) two of the Tullamarine units to be given to Emanuele;
(c) three of the Tullamarine units, along with the Airport West property and the Holden Monaro, to be given to John;
(d) the Essendon North home to be held on trust to be divided into two notional equal parts, and to pay or transfer one part to Rowena absolutely, and to pay or transfer one part to the executor, to permit Rowena to occupy during her widowhood;
(e) all of the deceased’s cash and chattels (save for the specific bequests to Rose and John referred to above) to be given to Rowena; and
(f) on the death or remarriage of Rowena, a half share of the Essendon North home be transferred to John’s stepson and daughters (‘grandchildren’) as tenants in common in equal shares. Alexander, Ava and Mia were born in 1997, 2008 and 2009 respectively.
The will provided for any residue to go to Rowena, but there is no residue.
In 2013, some years prior to the death of the deceased, and shortly after the deceased made his will, the deceased transferred a holiday home in Rosebud (‘Rosebud holiday home’) to John for natural care and affection.
No provision was made for Maria in the will. Maria was raised by her mother in Italy, and had little or no contact with the deceased until the later years of his life and even then, their relationship was not close. A claim by Maria for further provision from the assets of the estate was compromised on 2 March 2021, in the hours prior to the commencement of the trial, with John agreeing to pay Maria $150,000 inclusive of costs from his share of the estate. The estate also has as yet unquantified liabilities to pay part or all of the parties’ costs of this proceeding, depending upon the outcome of Rose’s application for further provision, and determination of the question of where the burden for any further provision should fall. There may also be some liability to pay tax on revenue generated by the investment properties. Any order for further provision may also affect the taxation payable by the beneficiaries of the estate.
The proceeding and the parties
In this proceeding, Rose claims further provision from the deceased’s estate under Part IV of the Administration and Probate Act 1958 (Vic) (‘Act’). She seeks the transfer of the Airport West property to her, plus the sum of $200,000 in addition to the $50,000 provided for in the will, which would amount to a provision valued at $1,090,000. She considers the Airport West property is appropriate for her needs, as it is large enough for her furniture and pets, she is familiar with the property, and she feels safe in that neighbourhood.
The executor concedes that Rose is entitled to further provision from the estate, but says that further provision should fall within the range of $200,000 to $400,000 in cash, with any provision to come from the gifts to John and Emanuele in the ratio 73:27, reflecting the comparative value of the gifts to them in the will.
Emanuele, the second defendant, also agrees that further provision should be made for Rose, but in the sum of approximately $700,000, and that John should bear the burden of most, if not all, of the further provision payable to Rose, given the unequal treatment of the deceased’s children in the will, and the gift of the Rosebud holiday home to John in 2013, which Emanuele contends should be considered part of the estate for the purposes of this proceeding.
As is commonplace in proceedings of this nature, the parties and Rowena filed and served a number of affidavits concerning the relationships within the family, their relationship with the deceased, and their financial and personal circumstances. There were objections to some of the affidavit evidence which were dealt with in the course of the trial.[5] Each of Rose, John, Emanuele and Rowena gave evidence at the trial, and were cross‑examined.[6] Rather than repeat the evidence they gave in further detail (much of which was uncontentious), the evidence they gave is reflected in my discussion of the personal and financial circumstances of each relevant party which, except where it is necessary for the purpose of explaining why I have reached the conclusions I have reached. Further, each of the parties prepared comprehensive written submissions, which referred to the legal principles applicable to Rose’s claim, and have informed my consideration of the issues in this proceeding, but I do not propose to repeat them at any great length in these reasons.
[5]There was some evidence of Rose which was not the subject of any cross-examination or submissions which was hotly contested by another family member, but had limited relevance to the question of what further provision ought to be made for her, and as such does not need to be considered in these reasons. I also made orders excluding evidence regarding the dimensions of her current residence, not because of lack of evidence, but because it was sought to be tendered very late, and had the potential to extend the trial. As will be seen later in these reasons, the admission of that evidence would have no material effect on my determination.
[6]John Iacono, a distant cousin of the deceased, and the accountant for each of the deceased, John and Emanuele, also gave evidence regarding the potential tax liabilities of the estate.
Rose
Rose was born in 1967, and at the time of trial was 53 years of age. She is single, and lives alone in a fairly rundown rental property in Melton South with a number of pets. She is unemployed, and has been effectively unemployed for a number of years. She has no formal qualifications, having left school at the start of Year 11. In the past, she has worked as a clerk, a receptionist, as a mail sorter, and in the retail industry. She did earn a little bit of money from hosting shopping tours in the years prior to 2020, but those tours ceased once the COVID-19 pandemic was under way. She has a number of chronic physical and mental health conditions, which limit her ability to take on paid employment or take courses to improve her qualifications. She receives cash and in-kind support in managing her various conditions through the National Disability Insurance Scheme (‘NDIS’). She has no assets, not even a working motor vehicle. While some of her health problems, such as her back and neck pain, may have been work related, there is no evidence that she received any lump sum compensation for those injuries.
Soon after leaving the Airport West property in 2006, she purchased a home in Melton West, but the bank forced her to sell it after a few years because she fell behind on her mortgage repayments. She received a reasonable profit on the sale of the house, but those funds have now been exhausted by paying off debts and living expenses. At the time of trial, her income from government benefits was about to be reduced by the withdrawal of the coronavirus supplement on 31 March 2021. Her prospects of generating a reasonable income and accumulating assets (other than from the estate) are poor, and no doubt will diminish further as she approaches retirement age.
The Centrelink statement in evidence shows that Rose receives $270 per fortnight after fixed payments for rent and utilities are deducted. Also in evidence was an application made by her for the disability support pension, which would increase her disposable income by approximately $200 per fortnight if she is successful in her application.
Rose’s NDIS plan for the year commencing in September 2020 was also in evidence. The NDIS plan provides for the sum of $48,887.96 to be available in order fund support for improved daily living, increased social and community engagement, consumables, funding for daily activities, and increased social and community participation.
The evidence at trial indicated that Rose was likely to use all of the funding available through the NDIS plan by the end of September 2021, when the plan will be reviewed. She manages her own support, with the assistance of a funded support co‑ordinator. In his written outline of submissions, the executor observed that Rose has used her NDIS funding to fund the following services:
(a) whatever she needed doing around the house, including housework and helping her to organise her home;
(b) a service to prepare and cook her food;
(c) someone to do her laundry (including washing, ironing and folding);
(d) glass cleaning services;
(e) carpet steam cleaning;
(f) mowing and gardening services;
(g) carers to take her shopping, to medical appointments, and to the vet; and
(h) a hairdresser to wash, style and treat her hair on a weekly basis.
As an adult child of the deceased, she is an eligible person within the meaning of s 90 of the Act, and her financial position would ordinarily qualify her as a person with a meritorious claim for further provision from the deceased’s estate. While the provision of ongoing support from the NDIS has alleviated some of the difficulties caused by her health conditions, her receipt of that assistance does not alter the fact that she has limited income, no assets, and no long term financial security.
However, Rose’s position as a claimant in this proceeding is complicated by the fact that she had an extremely poor relationship with her father for many decades, and by the fact that the deceased provided her with free accommodation for many years at one of the Tullamarine units and then the Airport West property, until they fell out completely in 2006. The latter matter cuts both ways of course: while the provision of free accommodation for over ten years or more amounts to a benefit provided by the deceased during his lifetime, it also amounts to a tacit acceptance by the deceased of a duty to provide care and support for Rose, given the hardships she has faced during her adult life.
The conflict between Rose and the deceased began when she was a teenager. Rose said her father was violent, hot-tempered, strict, and controlling. While John denied that her father was physically abusive to his children, he agreed that their upbringing was strict, and, like other parents of his generation with an Italian background, the deceased did not permit Rose to go on school camps or weekends away with friends. The conflict between Rose and her parents escalated once Rose reached her twenties. She took out two intervention orders against her father, in 1990 and 1993, and stopped speaking to her parents.
After the troubles in the early 1990s, Rose says she reconciled with her parents prior to her wedding in 1995. It appears that there was occasional contact between Rose and her parents after she suffered some mental health crises after the breakdown of her marriage in 1996, following which she commenced living at the Airport West property. Her parents visited her at the Airport West property, as her father looked after the yard, and tended to a vegetable plot at the property. Rose’s mother Gina helped her with housework, including ironing. John says that while Rose and Gina had their moments, Rose had a far better relationship with her mother than with her father.
Rose’s relationship with her father deteriorated after Gina’s death in 1999, and after an altercation between them at a mass held for the first anniversary of Gina’s death in April 2000. Rose said that her father humiliated her in public. They have rarely spoken since. Rose accepts that she behaved disrespectfully to her father, but considered that he was not worthy of being showed respect, as he showed no respect to her.
The deceased evicted Rose from the Airport West property in 2006, after an incident on a hot day in January 2006. Rowena says that she and the deceased visited the Airport West property from time to time to mow the lawns and tidy the yard. According to Rowena, when the deceased knocked at the front door to ask for a glass of water, Rose responded rudely, saying that there was a tap outside. While Rose at first denied that this incident occurred, she backtracked somewhat during the course of the cross‑examination, saying that she had been unwell, and her sleep had been disturbed by the deceased. It is not necessary for present purposes to make a conclusive finding about precisely what occurred on this occasion, save to note that I found Rowena to be a generally reliable witness. In any event, whatever occurred, the incident seemed to be the final straw for the deceased, and he evicted her from the Airport West property not long afterwards. After that time, Rose only visited her father once, in 2009 or 2010. According to Rowena, Rose visited the Essendon North home with her then partner, and aggressively demanded that the deceased hand over the jewellery owned by her late mother. Rose says she merely asked about its whereabouts.
It was accepted by all parties, and confirmed by all witnesses, that Rose and her father had a poor relationship, and there was extremely limited, if any, contact between them this century. Rowena in particular attests to Rose addressing her father in a rude, aggressive and disrespectful manner on the rare occasions when they did have contact. Father and daughter were, for all intents and purposes, estranged for the best part of twenty years.
Rose does not deny the fact that she was estranged from her father, and that there was conflict between them. She did seek to underplay specific incidents referred to by John and Rowena in their evidence, and to provide an explanation as to why her conduct might have been exaggerated or misinterpreted. Her counsel suggested that her mental health conditions may have played a part in the breakdown of the relationship, as well as a clash of values often found in immigrant families between traditional fathers and strong-willed daughters raised in Australia. He submitted that in any event, the incidents referred to in the evidence were of “passing moment, not long term significance”, and the reasons given by the deceased for providing less than equal provision for Rose and Emanuele evidence the deceased’s placing great store on gratitude and respect, and amounted to petty and vindictive behaviour.
It is not possible, or necessary for present purposes, to reach any conclusions or to dwell too much on the rights and wrongs of the relationship between Rose and her father. The fact is, Rose was in effect not part of the family, and provided little or no comfort or support to the deceased in his later years.
John and the grandchildren
John is the deceased’s younger son, and presents as a personable and successful man. He seems to have been the deceased’s favoured child, having been gifted several properties and a treasured vintage car by the will and prior to his father’s death. By all accounts, he was a loving and dutiful son. According to Rowena (whose evidence I have no reason to doubt), he and his wife and children regularly spent time with the deceased, and the deceased relied upon John, who has been a builder for nearly thirty years, to maintain and renovate his various properties. The deceased and Rowena spent each January with John and his family at the Rosebud holiday home.
John and his wife Maria have substantial assets. Their family home in Essendon is valued at around $3 million, perhaps more, although it is encumbered with loans and lines of credit, approximately $500,000 of which is what John describes as a personal loan. John and his wife are employees of Ikon Homes Pty Ltd (‘Ikon Homes’), a building business, of which John is the only shareholder. While he and his wife draw modest salaries from Ikon Homes, it is apparent that the business supports a prosperous lifestyle. The balance sheet for Ikon Homes shows that, as at 30 June 2020, it is owed $1,048,420 by its directors, an increase of $118,013 over the previous year. Both John and his wife drive prestige cars owned by Ikon Homes, and in 2022 their younger daughter will join their older daughter at a private school. There is no suggestion that the value of the business has been improved by anything other than the skills and hard work of John and his wife. However, it could not be said that he is in any particular financial need, although it is notorious that the building industry can be cyclical and at times precarious. While John deposed that he holds no superannuation, the accounts of Ikon Homes shows that it has a liability to pay superannuation to John and his wife, which has not yet been called upon.
As previously observed, the deceased gave John the Rosebud holiday home in 2013, shortly after he made his will. Given the terms of the will, which provided that the residue of the estate was to go to Rowena, the deceased in effect transferred Rowena’s entitlement to John. Rowena apparently took no issue with that, and John had previously made substantial improvements to the Rosebud holiday home from his own pocket, and paid for some of the outgoings.
There is no direct evidence of the value of the Rosebud holiday home, but John’s wife bought the property next door in 2017 for $545,000, which provides a rough guide as to its value.[7] John has permission to construct five units on the combined lots, at a cost of about $400,000 each. Three of the units will be sold to fund the redevelopment, and John plans to keep two of the units. While there is no properly admissible evidence about the value of the units once complete, the estimates put forward by the parties range between $650,000 and $750,000 per unit, which seems reasonable. John and his wife have secured a line of credit of $800,000 to fund the construction of the units, but the redevelopment project has been put on hold for the time being because of the COVID‑19 pandemic.
[7]In her affidavit in support of her application for further provision, Maria deposed that the Rosebud holiday home was valued at $565,000, but there is no evidence as to how she arrived at that figure.
John also has plans for the Airport West property. It is surrounded by recently redeveloped properties, and he gave evidence that the deceased wanted him to redevelop the Airport West property. Given the size of the site (approximately 600 square metres), two units or townhouses could be constructed on the site, which John would retain to generate rental income to repay the costs of construction and to provide an income stream for him and his family.
John was criticised by both Rose and Emanuele for being somewhat opaque about his financial position. Those criticisms were justified to some extent, but in some respects the somewhat opaque nature of his financial position was due in part to the arrangements put in place by his accountant, John Iacono, no doubt to protect the family’s assets, and to (legally) minimise tax. In any event, given that John does not contend that he is in any particular financial need, and accepts that he has received provision from the estate over and above that received by other beneficiaries, those criticisms have no particular relevance to the determination of Rose’s application.
As for the Holden Monaro, I accept John’s evidence that the vehicle holds considerable sentimental value for him, and accordingly, that gift should be preserved. However, the value of the vehicle is not insignificant, being a collector’s item, and should be taken into account when determining from where any additional provision for Rose should come from.
The grandchildren are also beneficiaries of the will, sharing a remainder interest in half of the Essendon family home. The remainder interest of the grandchildren has been valued by an actuary at $280,800, that is, at over $90,000 per grandchild.
The value of the remainder interest is calculated according to the value of the Essendon North home and the estimated life expectancy of Rowena, who is currently 55 years old. The grandchildren are aged 24, 12 and 11, with the two youngest grandchildren likely to be dependent upon their parents for a number of years yet. However, regardless of when the remainder interest vests in the grandchildren, each grandchild can expect to enjoy a welcome boost to their assets from the estate. It appears from the evidence that the deceased was very fond of the grandchildren, and the grandchildren regularly spent time with the deceased.
Emanuele
Emanuele is the deceased’s eldest son, and also presents as personable and successful. He has been distressed by the unequal treatment of the deceased’s children in the will, as evidenced by his support for Rose getting substantially greater provision than that contended for by John. He was also distressed by the reasons recorded by the deceased in his will for not making greater provision for him. In her evidence, Rowena agreed that the deceased’s statement to the effect that Emanuele had not taken any interest in his wellbeing was not true, and that Emanuele was a dutiful son.
Emanuele originally had his own business as a motor mechanic, and currently holds a management position with a truck dealership. While his base salary is $130,000 per annum, in the 2019/2020 financial year he received in the order of $200,000 from his employer once bonuses and commissions were taken into account. His wife, who works part time in the aviation industry, was receiving the JobKeeper payment at the time of trial, which would have ceased while judgment was reserved. Given her work involves processing passengers on international flights, I can readily conclude that her employment is precarious, at least in the short term. His three children are adults, and each owns an investment property. The family home is valued at approximately $1 million, and is unencumbered. He owns three investment properties valued at nearly $1.6 million, on which loans of approximately $600,000 are secured. His self-managed superannuation fund, of which he and his wife are members, own two investment properties, with the net equity in those properties being approximately $460,000, and his employer also contributes to his self-managed superannuation fund.
Emanuele does not seek any further provision from the estate, but was joined as a party to the proceeding to contend that any further provision from the estate to Rose comes from the assets gifted to John, given that John received more substantial gifts from the deceased under the will and prior to his death than Emanuele did.
Rowena
Rowena is not a party to this proceeding, as she makes no claim for further provision, and none of the claimants or other beneficiaries seek to disturb her entitlements under the will. While the time for making a claim is well past, the approach of the other beneficiaries was sensible, given that she provided substantial comfort and care to the deceased for nearly twenty years prior to his death. Further, given her age, her lack of qualifications, her long absence from the formal labour market, and her health problems, she is unlikely to be able to earn anything other than a modest income for the remainder of her working life. She has applied for a number of jobs in the retail industry, without success, and does voluntary work for a charity.
Rowena has approximately $30,000 in a bank account she held jointly with the deceased. At the time of trial, she received a $750 per fortnight JobSeeker payment (soon to be reduced by the pending withdrawal of the coronavirus supplement), and the deceased’s pension from the Italian government of approximately $120 per month.
General observations
Much was made, understandably, of the poor relationship between Rose and her father in the evidence and submissions relied upon by the executor. That the relationship was poor was undeniable, and Rose must take a degree of responsibility for the conflict between them, given the evidence suggests a level of ingratitude and callousness on her part which is difficult to defend. However, I note that this is a family where, unfortunately, conflict and estrangement is not unusual. John described both the deceased and Rose as “stubborn”. I note that, not only was Rose estranged from her father, and possibly on occasion, her mother, she was also estranged from John, Maria, and until recently, Emanuele. John and Emanuele have been estranged for over fifteen years, and Emanuele’s wife did not speak to the deceased after 2009. The deceased barely acknowledged Maria, the daughter of his first marriage, and resisted her overtures in his later years. He clearly held strong opinions about the conduct of Emanuele’s wife and daughters. While this does not excuse Rose’s conduct and attitude towards the deceased, her conduct must be viewed in the context of a family where conflict was common, and grudges are long held.
Applicable legal principles
The legal principles governing applications of the current kind were recently and conveniently summarised by McMillan J in Re Christu; Christu v Christu[8] (‘Re Christu’), as follows:
[8][2021] VSC 162.
In accordance with s 90A of the Act, an eligible person may apply to the Court for a family provision order from the estate of a deceased person. Upon application, s 91(2) of the Act provides that the Court must not make such provision unless satisfied:
(a) that the applicant is an eligible person;
...
(c)that, at the time of death, the deceased had a moral duty to provide for the eligible person’s proper maintenance and support; and
(d)that the distribution of the deceased’s estate fails to make adequate provision for the proper maintenance and support of the eligible person.
It is only upon satisfaction of those requirements that the Court’s discretionary jurisdiction to award provision is enlivened.
When determining the amount of any provision, the Court must take into account the degree to which, at the time of death, the deceased had a moral duty to provide for the eligible person, and the degree to which the distribution of the estate fails to make adequate provision for the proper maintenance and support of the eligible person. As the plaintiff is an adult child, the Court must also take into account the degree to which he is not capable, by reasonable means, of providing adequately for his own proper maintenance and support. The financial need of an adult child is also to be considered in the context of whether the estate failed to make adequate provision for the eligible person’s proper maintenance and support.
The amount of provision made by order of the Court must not provide for an amount greater than is necessary for the eligible person’s proper maintenance and support.
Section 91A of the Act sets out certain mandatory and discretionary factors for the Court to consider in making a family provision order. The mandatory factors that the Court must have regard to are: the deceased’s will; any evidence of the deceased’s reasons for making the dispositions in his will; and, any other evidence of the deceased’s intentions concerning providing for the plaintiff. Section 91A(2) of the Act then lists a number of discretionary factors to which the Court may have regard.[9]
(citations omitted)
[9]Ibid [6]-[9].
Her Honour then went on to observe that the longstanding general law principle that a court will only interfere with a testator’s testamentary freedom where the court is satisfied that the testator breached their moral duty to a claimant has been codified in the Act by reason of the amendments to the Act effected by the Justice Legislation Amendment (Succession and Surrogacy) Act 2014 (Vic). Her Honour then went on to refer to the following statement of Ormiston JA in Collicoat v McMillan,[10] being that moral duty:
Reflects a duty resting on a testator to make not merely adequate or sufficient financial provision for members of his or her family in the specified class but also the obligation to measure that adequacy or sufficiency by reference to what is right and proper according to accepted community standards. What is right and proper, and thus what the wise and just testator must do, is not determined by the ‘character and conduct’ of each applicant but by what the testator ought to have felt in duty bound to provide notwithstanding any defects in character or conduct but nevertheless having due regard to the nature of their relationship with and their treatment (whether morally reprehensible or the opposite) of the testator during his or her lifetime. It is only when that behaviour has affected, or (arguably) is perceived to have affected, the testator that he or she is in good conscience entitled to make lesser or greater provision for an applicant than that to which the applicant would have been entitled having regard only to the bare bones of his or her financial needs and circumstances.
...
I consider that the expression ‘moral duty’ remains a simple and convenient way of referring to the obligation, hypothetical as it may be in some cases, resting upon a testator to make a wise and just assessment of the interests of all persons who might fairly ask to be taken into account in determining what adequate provision for proper maintenance and support should have been made for them had the testator been fully aware of all the relevant circumstances.[11]
[10](1999) 3 VR 803.
[11]Ibid, 818-819.
Her Honour went on to say as follows:
In accordance with its established legal meaning, when considering the question of ‘moral duty’ the Court places itself in the position of the wise and just testator, judged according to current community standards, and asks whether she or he would have thought it her or his moral duty to provide for the claimant. The concept concerns:
The community’s expectation that a testator should materially support another, given their relationship, personal circumstances and competing claims on resources. It is not, fundamentally, an examination of the personal honesty, probity, uprightness, virtue, integrity, general goodwill or reputation of the testator.
In applying the statutory scheme, it has been recognised that the mandatory and discretionary requirements set out in s 91A are relevant when considering the jurisdictional questions in s 91(2). Further, while evidence of the deceased’s testamentary intentions are a mandatory consideration, such evidence is not elevated to some higher status. As was the approach prior to the Amending Act, the weight it attaches will ‘depend upon the specific circumstances of the particular case’. ‘Reasons can be shown to be incorrect or misconceived, enhancing or boosting the strength or defence of a claim’.[12]
(citations omitted)
[12]Re Christu [10]-[11].
In relation to the moral duty owed to an adult child, her Honour referred to the following summary by Hallen J in Walsh v Walsh:[13]
[13][2013] NSWSC 1065.
...
(a)The relationship between parent and child changes when the child leaves home. However, a child does not cease to be a natural recipient of parental ties, affection or support, as the bonds of childhood are relaxed.
(b)It is impossible to describe in terms of universal application, the moral obligation, or community expectation, of a parent in respect of an adult child. It can be said that, ordinarily, the community expects parents to raise, and educate, their children to the very best of their ability while they remain children; probably to assist them with a tertiary education, where that is feasible; where funds allow, to provide them with a start in life, such as a deposit on a home, although it might well take a different form. The community does not expect a parent, in ordinary circumstances, to provide an unencumbered house, or to set his, or her, children up in a position where they can acquire a house unencumbered, although in a particular case, where assets permit and the relationship between the parties is such as to justify it, there might be such an obligation.
(c)Generally, also, the community does not expect a parent to look after his, or her, child for the rest of the child’s life and into retirement, especially when there is someone else, such as a spouse, who has a primary obligation to do so. Plainly, if an adult child remains a dependent of a parent, the community usually expects the parent to make provision to fulfil that ongoing dependency after death. But where a child, even an adult child, falls on hard times, and where there are assets available, then the community may expect a parent to provide a buffer against contingencies; and where a child has been unable to accumulate superannuation or make other provision for their retirement, something to assist in retirement where otherwise, they would be left destitute.
...
(f)The adult child’s lack of reserves to meet demands, particularly of ill health, which become more likely with advancing years, is a relevant consideration. Likewise, the need for financial security and a fund to protect against the ordinary vicissitudes of life, is relevant. In addition, if the applicant is unable to earn, or has a limited means of earning, an income, this could give rise to an increased call on the estate of the deceased.[14]
(citations omitted)
[14]Ibid [121].
Relevantly, her Honour made the following observations concerning cases where there is and has been family conflict, and arguably poor conduct on the part of a claimant:
Further, it has been noted that the wise and just testator will not be blinded by a degree of intergenerational disappointment or disharmony to the needs of her or his child. An order for family provision is also not a means of obtaining compensation or assigning blame.
The conduct of a claimant may be such that it disentitles them from a claim on the moral duty of the testator. However, such conduct must be ‘considered in the context of, and relative to, other aspects of [the] claim, such as need’.
Estrangement does not describe conduct, ‘but the condition which results from the attitudes or conduct of one or both parties’. The Court is to consider all of the circumstances of the case in determining whether ‘the claim of the applicant on the deceased is totally extinguished, or merely reduced’. Of relevance will be the nature of the estrangement and its underlying cause, and the mere fact of estrangement between a parent and child, on its own, should not ordinarily preclude the child from satisfying the jurisdictional requirement for provision. Equally, the Court is to recognise that in certain circumstances the deceased is entitled to make no provision for a child. This is particularly so where the child treats her or his ‘parents callously, by withholding, without proper justification, their support and love from them in their declining years. Even more so where that callousness is compounded by hostility’.[15]
(citations omitted)
[15]Ibid [12]-[14].
In Re Christu,[16] McMillan J ordered that a son who had been excluded from his father’s will for the benefit of his two sisters by reason of their conflict ridden relationship and lengthy estrangement be provided a modest provision from a small estate, holding that while the fraught nature of the relationship between the claimant and the deceased lessened the moral duty owed by the deceased, it did not nullify it entirely.
[16][2021] VSC 162.
In Joss v Joss,[17] Hollingworth J ordered that the claimant, the daughter of the deceased, receive $3.25 million (admittedly from an estate valued at more than $12 million), in circumstances where the claimant had been provided ample financial support from her parents throughout her lifetime. The claimant had conducted herself extremely poorly, even viciously towards her parents, in part because they refused to accept that she was transgender, and refused to provide funds for gender reassignment surgery.
[17][2020] VSC 424.
Her Honour stated as follows:
Notwithstanding Jessica’s behaviour, including her plans to kill him, Peter continued to support her financially. The weekly allowance that he provided from 1999 onwards was generous enough that she did not need to go and look for work. If she ran up credit card debts, or needed additional financial help, he provided it. The only thing Peter was not prepared to pay for was the gender reassignment surgery which Jessica wanted. So even though she still had reasonable earning capacity after her discharge from hospital in 1999, Jessica chose not to seek employment for more than 20 years. By continuing to support Jessica for all those years, Peter allowed her to become financially dependent on him, and to lose much, if not all, of her capacity for employment. That is the most important consideration in my conclusion that Peter did owe a moral duty towards Jessica, notwithstanding her attitude and behaviour over the years.
Courts have long recognised that family disharmony or dysfunction, and a parent’s disappointment in a child, are commonplace in family relationships; such matters are only one of the factors to be considered by the court under the Act. Accordingly, I do not accept the defence submission that any moral duty that Peter had to provide for Jessica was nullified by their estrangement, as well as by her character and conduct towards Peter and the rest of her family. However, those factors have undoubtedly reduced the extent of Peter’s moral duty, notwithstanding the size of his estate.[18]
[18][2019] VSC 385 [167]-[168].
Accordingly, the poor conduct of a claimant, and any estrangement between the claimant and the deceased, may limit any moral duty owed by a testator, but would not ordinarily completely disqualify any otherwise eligible claimant from receiving further provision if their needs and circumstances so warrant.
In relation to the assessment of the quantum of any further provision, in Re Christu,[19] McMillan J stated as follows:
The quantum of family provision that is adequate and proper for the claimant’s maintenance is to be determined with reference to the parties’ circumstances at the time of the trial. In this regard, the Court’s discretion is to be exercised ‘carefully and conservatively according to prevailing community perceptions of the provision that would be made by “a wise and just testator”’. An ‘instinctive synthesis’ is required, taking into account all of the relevant factors and giving them due weight, and there may be a range of appropriate provisions over which minds may legitimately differ.[20]
[19][2021] VSC 162.
[20]Ibid [20].
As noted earlier, the executor referred to my decision in Schmidt v Walter[21] as authority for the proposition that the advent of the NDIS has scope to modify (that is, reduce) the moral duty imposed upon a testator towards any eligible person who suffers from a disability. As the NDIS is not means tested, payments from the NDIS do not fall within the scope of the prohibition in s 91(3) of the Act upon taking into account means tested government benefits an eligible person receives or is eligible to receive when determining whether a testator owes a moral duty to provide for claimants who fall within certain classes of beneficiaries. Accordingly, a claimant’s receipt of benefits under the NDIS, or eligibility to receive benefits, is a factor to be taken into account in determining the scope of any moral duty, and in the ‘instinctive synthesis’ referred to by McMillan J in the passage in Re Christu[22] extracted in the paragraph above. I shall refer to the relevance of Rose’s assistance from the NDIS to Rose’s claim for further provision later in these reasons.
[21][2019] VSC 385.
[22][2021] VSC 162.
Finally, s 97 of the Act provides as follows:
Contents of family provision order
(1)Every family provision order making provision for any person shall specify (inter alia)-
(a) the amount and nature of the provision;
(b)the manner in which the provision shall be raised or paid out of some and what part or parts of the estate of the deceased; and
(c)any conditions restrictions or limitations imposed by the Court.
(2)Unless the Court otherwise orders the burden of any such provision shall as between the person beneficially entitled to the estate of the deceased be borne by those persons in proportion to the values of their respective estates and interests in such estate:
Provided that the estates and interests of persons successively entitled to any property which is settled by such will shall not for the purposes of this subsection be separately valued but the proportion of the provision made under this Part to be borne by such property shall be raised out of or charged against the corpus of such property.
…
(4)Subject to this Part, a family provision order operates and takes effect-
(a)if the deceased dies leaving a will disposing of the whole or any part of the deceased’s estate, as if the provision made by the family provision order had been made by the deceased by executing a codicil to that will immediately before the deceased's death; or
(b)if the deceased dies without leaving a will-
(i)as a modification of Part IA in respect of so much of the deceased’s estate as is affected by the family provision order; and
(ii)as if the provision made by the family provision order had been made by the deceased in the deceased’s will.
…
Accordingly, unless the Court makes a special order to the contrary, the Act establishes a presumption that the burden of any further provision be applied rateably across the remaining beneficiaries. Like any presumption, it is rebuttable. While I was referred to no authority on this point, common sense indicates that the burden of establishing that the presumption should not apply falls upon the party seeking to rebut the presumption, and the mandatory and discretionary factors in s 91 and s 91A of the Act are also relevant when determining where the burden of any further provision should fall. Given that all parties agree that the provision for Rowena should be quarantined, the burden then falls to Emanuele to persuade me that any further provision for Rose should come exclusively from John’s share of the estate.
The mandatory relevant considerations
Section 91A(1) of the Act sets out what matters the Court must take into account in making any order for provision, being the contents of the deceased’s will, any evidence of the reasons for making the gifts in the will that he did, and any other evidence of the deceased’s intentions in relation to providing for Rose. Further, s 91(4)(c) of the Act provides that, in determining the amount of any provision for an adult child, the Court must take into account the degree to which the claimant is not capable, by reasonable means, of providing adequately for their own proper maintenance and support. The authorities referred to in the preceding section of these reasons give colour and flavour to the statutory provisions under Part IV of the Act.
The inclusion of the contents of the will as a mandatory relevant consideration in the Act codifies the longstanding general law principle that freedom of testation is a fundamental human right, and in applications of this kind, the courts must give great weight to a testator’s wishes as expressed in their will.[23] It is only when the testator fails to fulfil their moral duty to a claimant that a court should interfere. Even then, if there is a finding that the deceased has failed to fulfil his moral obligation to Rose (and that issue is not really in dispute in the current case), the deceased’s wishes, as evidenced by the will, should inform the extent of further provision made, shape the manner in which further provision is made, and where the burden of any further provision should fall.
[23]Grey v Harrison [1997] 2 VR 359, 366.
It is apparent from the contents of the will that the deceased intended that:
(a) Rowena have secure accommodation in the family home for the rest of her life, or at least until she remarries;
(b) the different bequests made to John, Emanuele and Rose reflected the esteem in which he held them (and their families) rather than their degree of financial need; and
(c) he wanted the grandchildren to receive some benefit from his estate.
The unequal treatment of the three Australian born children, and the failure to make any provision for Emanuele’s children, suggested that the primary factor the deceased took into account was his personal views of the character and conduct (towards him) of his various family members. That the assets in his estate were assets which had originally been acquired by him and his late wife (who may well have held a different view as to how best to provide for her children and their families) does not appear to have been a relevant consideration. That said, there is no legal obligation on the part of a testator to treat their children equally,[24] although it could be said that equitable treatment of equally deserving claimants is consistent with current community standards.
[24]See Re Marsella; Marsella v Wareham [2018] VSC 312 [82].
Accordingly, any further provision for Rose should take into account the following matters:
(a) the deceased’s desire to ensure that Rowena would have secure accommodation for the rest of her widowhood;
(b) the deceased’s desire to make special provision for John and the grandchildren;
(c) the deceased’s view that Rose should be less favourably treated than other family members; and
(d) the deceased’s desire to reward John for the support and assistance provided to him during the course of his life.
Turning now to the second mandatory relevant consideration, the best evidence of the deceased’s reasons for making lesser provision for Rose and Emanuele are to be found in the will itself, as follows:
I DECLARE that I made a smaller provision for my daughter ROSA IACONO due to the following reasons:
(a) My daughter has not spoken to me for approximately seven (7) years:
(b)My daughter has lived in two (2) of my properties for the past eighteen (18) years and my daughter had made no payments towards rental, utilities or insurance.
(c)My daughter has taken two (2) Intervention Orders against me and has taken me to Court two (2) times.
(d)My daughter shows no respect towards me.
I DECLARE that I made a smaller provision for my son EMANUELE IACONO due to the following reasons:
(a)My son’s grandchildren and wife show no respect towards me;
(b)My son’s wife has not spoken to me since approximately 2009;
(c)My son’s children only come to visit me during the festivities to collect money and they do not telephone me.
(d)My son has not taken any interest in my wellbeing;
(e)I provided a 1995 Mazda Astina worth approximately $7,000.00 to my granddaughter ADRIANA IACONO and I have not received payment or gratitude.
(f)I loaned to my son the sum of $20,000.00 in 1990 and the sum of $12,000.00 in 1998 and I have not received payment.
While Rose takes issue with the details of the reasons provided by the deceased in the will, and contended that the deceased should bear some, if not all, of the responsibility for the breakdown of the relationship between them, she does not take issue with the general thrust of the deceased’s reasons. Rather, she says that the estrangement between her and her father does not negate the moral obligation of the deceased to make provision for her, particularly given her acute needs, and given that the deceased’s estate is largely constituted of assets built up by both of her parents, not the deceased alone.
As for Emanuele, while he said nothing about the observations made by the deceased in the will regarding his wife and daughters, he emphatically rejected the suggestion that he was not a dutiful son, or that he took no interest in his father’s wellbeing. While in her affidavit Rowena somewhat underplayed Emanuele’s relationship with his father, at trial Rowena confirmed that the deceased’s characterisation of Emanuele in the will was unfair and untrue.
As for the evidence of any intention on the part of the deceased to provide for Rose, the uncontested evidence is that the deceased acknowledged that he had an obligation to provide for Rose by providing her with free accommodation for more than ten years, but withdrew that support after the “last straw” incident in 2006.
Turning now to the question of Rose’s capacity to make adequate provision for her own property maintenance and support, this provision requires consideration of two issues: first, what amounts to adequate provision for Rose’s proper maintenance and support, and secondly, Rose’s capacity to use reasonable means to provide for herself.
In Re Marsella; Marsella v Wareham,[25] McMillan J made the following observations regarding what amounts to adequate provision for proper maintenance and support for a claimant, as follows:
Generally, ‘proper maintenance and support’ means provision from the estate not simply to alleviate poverty, but also to take into account the vicissitudes of life, whereas ‘adequate’ means something that it may be insufficient for an applicant’s proper maintenance. What constitutes adequate provision for the proper maintenance and support of an applicant involves a consideration of the mandatory and discretionary matters under the Act, having regard to the meaning of these terms as developed in the jurisprudence of the family provision jurisdiction. This also involves a consideration of the nature, extent and character of the estate and the other demands upon it, and also what the testator regarded as superior claims or preferred dispositions. In determining these questions, a balance must be struck between the established claims of named beneficiaries, the needs of an applicant, the size of the estate, and the benefits provided to an applicant and others with legitimate claims upon the testator. The Court’s function is not to ensure a fair distribution of the testator’s estate or to achieve equality amongst various claimants but goes no further than making adequate provision for the proper maintenance and support of an applicant.[26]
[25][2018] VSC 312.
[26]Ibid [82].
Accordingly, the authorities make it clear that what amounts to “adequate provision for proper maintenance and support” is not to be determined in a vacuum. The family relationship between a claimant and the deceased is relevant: what amounts to proper maintenance and support will differ between a loyal long term spouse, and, for example, an estranged adult child. The size of the estate and the resources of other potential recipients of the deceased’s bounty are also relevant: the larger the estate, the less likely is the provision necessary for bare survival considered to amount to proper maintenance and support. Further, while other beneficiaries of the estate should not be penalised for improving their financial position through their own efforts, with or without the assistance of the deceased, the living standards of other family members provide a very rough guide as to what amount to proper maintenance and support.
In the current case, each of the primary beneficiaries owns their own home, or at least, in the case of Rowena, have secure accommodation. Both of Rose’s siblings have, largely through their own efforts, but with some modest assistance from the deceased, been able to provide well for themselves and their families in retirement. And further, while I accept that the deceased’s views about Rose’s conduct influenced what he considered to be proper maintenance and support for Rose, he appears to have not taken into account what Rose’s mother might have considered to have been adequate provision for Rose. While it appears the relationship between Rose and her mother had its ups and downs, there was no suggestion that her mother would have endorsed effectively disinheriting Rose, and the deceased made ample, if unequal, provision for Gina’s other children.
Given the size of the estate, the position of the other beneficiaries, and Rose’s stage of life (including her lack of dependents), what would amount to adequate provision for the proper maintenance and support of Rose is sufficient resources to fund a (modest) home of her own, and a reliable motor vehicle of her own, along with a modest nest egg to generate some income and/or meet any financial emergencies.
Rose is clearly in no position to realistically provide for herself beyond a minimum subsistence level. Her one attempt at home ownership was unsuccessful. The evidence regarding her poor physical and mental health was not contested. Rose’s only prospect of improving her rather parlous financial position is through further provision from the estate.
I reject the submission advanced by John that Rose has not positively established that she is in need, as required by the authorities.[27] She is entirely dependent upon means tested government benefits for her income, and that state of affairs will almost certainly continue. While the home she lives in seems to be on a sizeable block of land (Rose herself says she has a large backyard), it is run down, and she has no security of tenure, and cannot afford a reliable motor vehicle. While her NDIS plan provides services to treat and manage her disabilities, those funds do not materially alter her income.
[27]See, for example, Re Janson; Gash v Ruzicka [2020] VSC 449 [37].
Turning now to the other relevant considerations, s 91A(2) of the Act sets out the factors which the Court may take into account when making a family provision order. My comments upon each of these relevant factors follow.
The family relationship between the deceased and Rose
As the deceased’s daughter, Rose is a close relative of the deceased. While the parties have different views upon where the responsibility for the poor relationship between Rose and the deceased lies, there can be no dispute that the relationship between Rose and her father was poor, and, for many years, non-existent.
The obligations of the deceased towards Rose, Rowena, his sons and the grandchildren
Clearly, the primary obligation owed by the deceased was to Rowena, his wife of nearly twenty years, who cared for him and nursed him during the latter part of his life, and during her prime income earning years. Arguably, the deceased fulfilled that obligation by supporting her financially during his lifetime, and by the provision he made for Rowena in the will, but, also arguably, the provision he did make was the minimum required. In any event, no party seriously suggested that the provision made for Rowena should be disturbed.
As for the deceased’s children, the deceased owed obligations to each of John, Emanuele and Rose, although arguably his obligation to provide for Rose was greater, given that John and Emanuele are financially secure. On another view, his obligation to John was greater, given the work that John had done to assist his parents with maintaining their properties, although that work was arguably compensated with the gift of the Rosebud holiday home to him in 2013.
The deceased owed no obligation to support the grandchildren.
The size and nature of the estate and the liabilities to which the estate is subject
The size of the estate is approximately $3.5 million. While this is not a small estate, it is not exceptionally large either, when measured against an objective measure, such as the median house price in the Melbourne metropolitan area,[28] particularly given the number of primary beneficiaries of the estate. That said, it is large enough to provide for all of the primary beneficiaries of the estate. The family home, which is, and should be, effectively quarantined from the pool from which any further provision should be made, makes up nearly a third of the value of the estate. Less than ten per cent of the value of the estate is in cash, which may well be eroded by the liabilities of the estate, and which the will provides should largely go to Rowena.
[28]On 16 April 2021, shortly before the last of the parties’ submissions were filed, the Real Estate Institute of Victoria reported that the median house price in metropolitan Melbourne was $1,004,500.00.
The remainder of the estate comprises tenanted investment properties, which are no doubt capable of being readily realised. The Airport West property may be of particular value to Rose and John, for different reasons: it was formerly Rose’s home, and it is a suitable property for John to redevelop, and he has the means and skills to do so.
The financial position of Rose and other beneficiaries
Rose’s financial position can only be described as poor, and it is unlikely to substantially improve unless and until she qualifies for more generous government benefits, such as the disability pension or the aged pension (the latter being many years away). She has no assets of any substance. She may be able to undertake some paid work in the future, but that is unlikely to be on a full-time basis, or be well‑remunerated. One suspects that prospects of her being able to do so would be greater if she had secure housing, and a reliable motor vehicle. While she receives substantial financial and in-kind support from the NDIS, which enables her to receive additional treatment from allied health professionals, and to enjoy some comforts such as regular visits to the hairdresser, the support is provided in the form of services, which are not convertible to cash. The thorough analysis undertaken of Rose’s bank statements by counsel for the executor did not demonstrate anything but the fact that Rose leads a frugal existence, and is poorly equipped to be able to deal with everyday emergencies of life.
Rowena’s financial position is also not strong. She devoted the bulk of her income‑earning years to caring for the deceased, is currently in receipt of JobSeeker, and she has been forced to use some of the cash in her joint accounts with the deceased to pay for her day to day living expenses. She has some health problems which require ongoing monitoring and treatment, and she has limited qualifications. She is not confident about obtaining paid employment, given her age. She does, however, have the advantage of secure accommodation. Taken as a whole though, Rowena’s financial position is yet another reason for the provision made for her in the will not to be disturbed.
As for John and Emanuele, both are in a solid financial position. While John’s prospects of generating further income and assets through his building business may be greater than Emanuele’s, Emanuele has clearly focussed upon investing well for his retirement, and John and his wife still have school age children to support. The position of both men will be improved by any gifts in the will, and they are no doubt able to put those gifts to good use, but it is difficult to reach a conclusion that their long term financial security is dependent upon them receiving their gifts in the will.
As for the grandchildren, it is difficult to make any assessment of their financial position and prospects given their age, save to note that they will no doubt be supported by their parents until the completion of their education, and will probably ultimately be the beneficiaries of their parents’ assets.
The physical and mental health of the parties
Rose’s health is poor. She suffers from chronic back and neck pain, severe headaches and depression and anxiety. She has not always coped well with the setbacks in her life. Despite this, she presented as being confident and articulate, and well able to advocate for herself with authorities and service providers.
In a letter to Rose’s solicitors dated 15 April 2020, Rose’s general practitioner summarised Rose’s medical condition as follows:
Major depressive disorder, anxiety, panic attacks, PTSD, chronic lower back pain (disc protrusion, nerve root impingement at L5 root).
Rose’s treating psychiatrist, Dr Stella Kwong, suggests that Rose should live in a spacious home on her own to limit her risk of anxiety and panic attacks, and that Rose’s lack of financial resources is impeding her psychological recovery. In her letter to Rose’s solicitors dated 20 March 2020, Dr Kwong concluded as follows:
It is my opinion that Ms Iacono will continue to manage her physical and mental health if she could have financial means to live in a house independently preferably in Airport West where she remains close to me and major hospitals.[29]
[29]Dr Kwong practices from rooms in Footscray. The reference to a house in Airport West presumably reflects her discussions with Rose about her claims in this proceeding.
Rowena suffered from depression after the deceased’s passing, but appears to have recovered. She does however suffer from some chronic health conditions, including cardiomyopathy, arthritis, type two diabetes, and high blood pressure.
John gave evidence that he suffers from some health conditions, including lymphocytoma cutis, gout, and high cholesterol. His wife has been diagnosed with stage two non‑Hodgkin’s lymphoma, which may require more treatment in the future.
Emanuele did not refer to any health problems in his evidence. As noted in the executor’s written submissions, both John and Emanuele seem to be in good health for their age.
Rose’s age
Rose is currently 53 years of age, and as such, is the youngest of any of the beneficiaries of the will, apart from the grandchildren. In those circumstances, the provision of a life interest in any of the properties in the estate to her is unlikely to be of great benefit for any remainder beneficiary other than the grandchildren.
Any contributions by Rose to the building up of the deceased’s estate, or the deceased’s welfare or that of his family
Rose made no contribution to the deceased’s estate, which was built up through the work of the deceased and, no doubt, the deceased’s late wife (and Rose’s mother). For the reasons which have been canvassed elsewhere in these reasons, Rose made no contribution to the welfare of the deceased: indeed, the poor relationship between the deceased and Rose no doubt detracted from the welfare of the deceased. It appears that Rose is also estranged from John and Maria. It is not entirely clear from the evidence what support Rose provided to her late mother, but it appears that they did have a relationship of sorts. What evidence there was indicated that Rose was helped by her mother rather than the other way around, in that Gina would visit Airport West and help her with her housework and ironing.
Benefits provided by the deceased to Rose and the other beneficiaries prior to his death
The deceased provided the following benefits to his Australian born children:
(a) he transferred the Rosebud holiday home to John in 2013, although this was said to have been to compensate John for the work he had done on the deceased’s properties over a twenty year period;
(b) he provided Rose with rent-free accommodation for over ten years, first at one of the Tullamarine units, and then at the Airport West property;
(c) he lent John the sum of $10,000 in the early 1990s, which was repaid; and
(d) he lent $40,000 to Emanuele in two tranches. It is not clear from the evidence whether these loans have been repaid. Emanuel said that the sum of $20,000 given to him by his father to buy the block of land upon which his house now stands was described as a loan, but was really a gift.
Was Rose maintained by the deceased before his death, in whole or in part?
Rose was partly maintained by the deceased for approximately fifteen years up to 2006, through the provision of rent-free accommodation in his investment properties.
The liability of any other person to maintain Rose
No other person is liable to maintain Rose.
The character and conduct of the parties
The behaviour of Rose towards her father has already been canvassed at some detail in these reasons, and does not need to be repeated here. While the authorities no longer refer to such conduct as “disentitling”, it does evidence why her father chose to treat her far less favourably under the will than the other beneficiaries.
It is accepted that a testator does not owe an estranged adult child the same moral duty as is owed to a loyal and loving child, particularly where the responsibility for the estrangement lies largely, or wholly, with the child. A more sympathetic approach may be taken where the estrangement arises when the child is relatively young and/or immature, or arises out of a clash of generational or cultural values, as is arguably the case here.[30] In any event, the conduct of the claimant is a relevant, but not determinative, matter in determining the quantum of any further provision.
[30]See, for example, Alabakis v Alabakis [2012] VSC 437. In this proceeding, Macaulay J made an order for further provision for a young woman, who had repeatedly clashed with her elderly Greek-Australian father from her early teenage years, observing that less fault could be attributed to an adolescent in determining whether her conduct lessened the moral duty owed to her by the deceased. However, the position might be different had the claimant not softened her position as she matured. In the current case, Rose and her father became completely estranged when Rose was in her early thirties, when one might have expected Rose’s attitude towards her father might soften rather than harden.
The only other party to this proceeding which was the subject of any criticism was John, who was criticised by both Rose and Emanuele for his alleged lack of transparency regarding his financial position, and by Rose for his allegedly sloppy management of the affairs of the estate. I do not place too much weight on these criticisms, as there was no suggestion by John that he had any competing financial need which would necessitate detailed evaluation. Further, there has been a largely complete accounting for the income generated by the investment properties. Finally, given the terms of the will and my determination of the form in which further provision should be made means that any issue concerning the executor’s dealings with the cash in the estate is really a matter between the executor and Rowena.
The impact of any order for further provision upon the other beneficiaries
Given that all parties agree that the provision for Rowena should be quarantined, and given the practical difficulties in interfering with the provision for the grandchildren, the only realistic source of funding for any further provision to Rose is from the investment properties gifted to John and Emanuele. As has been observed earlier in these reasons, both John and Emanuele are reasonably well-off, and are not dependent upon the gifts in the will for their current or further financial security.
Other relevant matters
The only other relevant matter, to which I have alluded to earlier in these reasons, is that the assets of the estate were joint owned by the deceased and his late wife, Gina, who predeceased him by nearly twenty years. No further assets of substance were acquired by the deceased during the course of his marriage to Rowena: indeed, Rowena’s evidence is that she and the deceased lived off the income generated by the deceased’s investment properties. The Airport West property was purchased in 1993, and the Tullamarine units were purchased on an unknown date prior to 1983 (thus not being subject to capital gains tax).
While the fact that the assets in the estate were assets built up during the course of the deceased’s marriage is relevant, it is not determinative, and does not place a substantial constraint upon the deceased’s freedom of testation. For example, it would not negate or substantially detract from the deceased’s obligation to provide for Rowena, although it might inform how generous that provision should be.[31] However, it is a relevant matter.
[31]In Sellers v Scrivenger [2010] VSC 320, in a case of a de‑facto widow seeking further provision from an estate which had largely been built up by the assets inherited by the deceased’s late wife (and the mother of his two adult children), the fact that ordering further substantial provision would unduly interfere with the duty owed by the deceased to the children of his first marriage, was relevant to the size and nature of the further provision ordered for the claimant.
There is evidence that Rose’s mother was well aware of Rose’s physical and mental health issues, and, at the time of her death, Rose was being provided rent-free accommodation in one of their investment properties. Accordingly, when she died, she would have been confident that, notwithstanding her difficulties, Rose had secure accommodation, which she no longer has.
Determination
I will order that further provision be made for Rose through the transfer of two of the Tullamarine units to her (being units 4 and 5), together with the net rental income which has accrued in respect of each of those properties since the death of the deceased, in addition to the $50,000 payable to her under the will. Depending upon the precise calculation of the net rental income from the two units, which I explain further below, this values the total value of the further provision to her of approximately $690,000 as at 30 June 2021.
Turning now to the question of how this further provision ought to be funded, I consider that the cash payable to Rose (being the $50,000 gifted to her in the will, and the actual net rental income from units 4 and 5 since the date of the death of the deceased) should be charged against the properties gifted to Emanuele under the will. Part of this further provision could be satisfied by the assignment by Emanuele to Rose of the net rental income which has accrued on units 2 and 3 since the death of the deceased. The practical effect of this form of provision is that approximately $100,000 in cash would be freed up for the purpose of dealing with the costs of the parties and other liabilities of the estate further down the track. For the avoidance of doubt, this cash is to be quarantined as a separate fund in the estate, it is not to be a source of further provision for Rowena.
Subject to the question of costs, which no doubt will be the subject of further submissions, the impact of this determination upon the gifts made in the will can be summarised as follows:
(a) subject to any accounting which needs to take place between Rowena and the executor regarding the cash holdings of the estate, the provision for Rowena remains undisturbed;
(b) the provision for the grandchildren remains undisturbed;
(c) the gifts of the Airport West property and the Holden Monaro vehicle to John remain undisturbed;[32] and
(d) the gifts to Emanuele remain largely, but not wholly, undisturbed.
[32]It is too early to tell whether the remaining Tullamarine unit will have to be sold.
My reasons follow.
First, the provision for Rose is substantially in excess than as submitted by the executor, slightly in excess of what was submitted for by Emanuele, but substantially less than sought by Rose. I have already explained earlier in these reasons why I consider Rose has considerable financial needs, and limited capacity to provide for these needs. The further provision ordered is intended to provide Rose with sufficient assets and flexibility to determine how to best meet her housing and other needs. She could live in one of the units and let out the other, although I accept that course of action is unlikely given the number of pets she has. She could continue to let out both units, which would increase her disposable income by approximately $17,500 per annum,[33] or nearly $1,500 per month. Or she could sell the units, which would be sufficient to fund the purchase of a property valued just short of two-thirds of the current metropolitan Melbourne median house price, noting that she is single, lives alone, and has spent most of her adult life living in outer north western suburbs. The cash sum would be sufficient to enable her to purchase a reliable car, if she so chooses, and/or have a modest nest egg to meet any financial emergencies.
[33]I am not in a position to assess the impact of this additional income upon government benefits currently received by Rose, or which she may be eligible to receive in the future.
I have calculated the approximate net rental generated by units 4 and 5 based upon the schedules generated by the managing agent, and the rates notices and land tax notices in evidence in the court book, and, after extrapolating out the net rental payments to 24 February 2021 through to the end of the 2020/21 financial year, the estimate is $48,221.38 through to 30 June 2021, being a month prior to this judgment. What this estimate does not take into account is the share of common expenses (for example, gardening and lawn mowing at the Tullamarine units) some of which should be attributed to units 4 and 5 and possibly some management fees, so the net rental may be a little overstated. Conversely, the land tax assessment notice in evidence was for 2019, and the rates notices were for 2020, so those deductions may be a little overstated. In any event, it will not be difficult for the executor to arrive at a more precise calculation.
As can be seen from the above, I have rejected the executor’s submission that Rose’s conduct towards the deceased, and her support via government benefits and the NDIS should limit the further provision to her to a sum under $400,000. First, the authorities make it clear that while the estrangement between a testator and an adult child may lessen the moral duty owed to that child, it does not eliminate it, particularly where there is clearly need on the part of the adult child.
Secondly, I do not consider that the government support provided to Rose, and the possible increase in that should her application for a disability support pension be successful, is of particular relevance to Rose’s claim. The executor relied on the decision of Cameron J in Re Flavel; Flavel v Flavel[34] as authority for the proposition that while receipt of government benefits cannot be taken into account when determining whether the deceased owed a claimant a moral duty to make adequate provision for the proper maintenance and support of that claimant, a claimant’s receipt of government benefits was relevant to the quantum of any further provision.
[34][2020] VSC 19.
Her Honour reached that conclusion after a detailed survey of the relevant authorities, noting that:
... The general tenor of the authorities is that the entitlement of an applicant to state support should not itself be regarded as a substitute for the testator’s moral obligation, but is nonetheless a factor to which the Court may have regard in the exercise of its discretion, particularly where the estate is small. As is the case with many issues in this jurisdiction, the relevance of state support will vary on a case-by-case basis.[35]
[35]Ibid [73].
Her Honour referred to the following statement of Brereton J in Taylor v Farrugia[36] as reflecting the more contemporary approach to claimants in receipt of government benefits:
The Court’s attitude to the eligibility for means tested pension benefits of eligible persons and beneficiaries varies, depending on the circumstances of the case. Ordinarily, a testator makes a will and provides for those who have a claim on the testator without regard to the claimant’s eligibility for a pension. However, in a small estate where there are competing claims, a testator, and this Court on an application under the Act, may take into account the eligibility of a claimant for a pension as a means of deciding how such limited benefits are available from the estate should be shared between claimants, and how those benefits might be structured. But this qualification to the principle that the burden of support should be borne in the first instance by an estate rather than by social security arises mainly, if not exclusively in smaller estates.[37]
[36][2009] NSWSC 801.
[37]Ibid [59].
I do not quibble with the observations of Cameron J and Brereton J at a general level. However, their application to the current case is limited by the fact that this is not a small estate, and further, apart from Rowena, none of the other beneficiaries of the estate have any particular need.
The executor also relied upon my decision in Schmidt v Walter[38] concerning the impact of the availability of NDIS funding and support upon the moral duty of a testator to make adequate provision for the proper maintenance and support of adult disabled children, where I stated:
... the advent of the NDIS does represent a substantial shift in the landscape against which claims for provision by disabled people, particularly severely disabled people, must be assessed.[39]
[38][2019] VSC 385.
[39]Ibid [135].
While I have no reason to depart from that view, I also observed that the relevance of NDIS support in any particular case was, necessarily, quite fact dependent, depending upon, among other things, the size of the estate, and the competing claims upon the estate.
And, while in Schmidt v Walter[40] I said that it was reasonable to assume support from the NDIS was likely to be ongoing, the claimants in that proceeding were in a somewhat different position than Rose: being profoundly intellectually disabled, they will live fairly confined lives in government funded supported accommodation for the rest of their lives, and are likely to be much less vulnerable to any tightening of eligibility criteria and funding than Rose might be should there be a shift in government policy. Further, in that proceeding, there were a number of other beneficiaries in substantial need of provision and support. Rose, on the other hand, has no secure accommodation, having been in the private rental market since the forced sale of her house in 2010, and, in this proceeding, the other beneficiaries, apart from Rowena, are not in any great financial need.
[40][2019] VSC 385.
Again, this is not a small estate. The estate is of sufficient value to fund a modest home for Rose and a small nest egg to provide her with great security without imposing undue burdens upon the other beneficiaries of the estate.
In reaching the conclusion I have regarding what is adequate provision for the proper maintenance and support for Rose, I am conscious of the requirement under s 91(5) of the Act to order no more than what is adequate provision for her proper maintenance and support, along with the deceased’s intention to treat Rose less favourably than other beneficiaries, no doubt informed by the estrangement between them. If I were to accede to Rose’s claim for the transfer of the Airport West property and a further $200,000 cash, given the practical difficulties in dealing with the remainder interest of the Essendon North home, this would require one of the Tullamarine units to be sold, presumably one of the units gifted to John. That would leave John with, at most, two of the Tullamarine units and the Holden Monaro car. While John has not established any particular financial need to warrant the retention of all of the gifts made to him under the will, it is important to remember that a beneficiary, unlike a claimant, does not have to justify their entitlement to retain the gifts made to them under the will.[41] Further, while counsel for Rose submitted that the value of the Airport West property in Rose’s hands is greater than in John’s hands, by reason of the capital gains tax payable on any sale, John’s evidence is that he hopes to redevelop, not sell, the Airport West property. Finally, while ultimately the quality of the accommodation Rose has is a matter for her, it does seem that the Airport West property may not be particularly suitable for her, especially as she gets older.
[41]Briggs v Mantz [2014] VSC 281 [150].
The advantages of ordering further provision in the manner I have determined is that it limits the disturbance to other gifts under the will, thus respecting, at least to some extent, the deceased’s wishes as expressed in the will. The provision to Rowena remains undisturbed, as it should be, given that the provision made was not as generous as it could have been. The provision to Emanuele is reduced, but to a far lesser extent than the provision to John under the will. While Emanuele is clearly well‑off, and has no financial need to speak of, he will still receive less than the other primary beneficiaries under the will, in circumstances where the reasons given by the deceased for making lesser provision for him were less than fair. Those matters, along with the gift of the Rosebud holiday home to John in 2013, are sufficient to justify the displacement of the presumption in s 97(2) of the Act, and have caused me to reach the conclusion that the further provision ordered should not be borne by John and Emanuele in the proportion suggested by John (being 73 per cent from John and 27 per cent from Emanuele).
John contended that Emanuele should contribute a share of any further provision ordered for Rose reflecting the value of their respective gifts in the will. However, on the assumption that the total cash payable to Rose is in the order of $100,000 (including the original gift in the will), the value of the further provision to Rose is approximately $690,000. My orders will result in Emanuele’s contribution amounting to approximately 14.5 per cent of the further provision. If one takes into account the further provision to be made to Maria of $150,000, the proportion of all further provision payable to Maria and Rose borne by Emanuele falls to approximately 11.9 per cent.
The provision for the grandchildren also remains undisturbed. While I accept that the grandchildren have less call upon the assets of the deceased than his widow or children, the deceased’s wishes to make some provision for the grandchildren should be acknowledged and respected. Further, there are practical impediments to interfering with the grandchildren’s remainder interest, tied up as it is with Rowena’s right of occupancy. The only realistic alternative recipient of the remainder interest is John, but John is three years older than Rowena, which may well render the value of any remainder interest to John illusory.
Further, while the burden of further provision for Rose disproportionately falls upon John, he gets to retain the Holden Monaro, which has great sentimental value to him, as well as being an asset of substance, and the Airport West property provides him with an opportunity to develop the property for his future financial benefit. Further, he still receives more from the estate than either of his siblings, depending to some extent upon how the parties’ costs are ultimately dealt with, even before having regard to the gift of the Rosebud property to him in 2013 (which I accept was made at least in part to compensate John for the work that he had done on his father’s properties), in recognition of his father’s desire to make special provision for him. Further, the grandchildren’s remainder interest indirectly benefits him, by providing a financial boost to the grandchildren and thus perhaps lessening their future dependence on their parents.
I shall hear further from the parties as to the appropriate form of order to give effect to these reasons, and regarding the question of costs.
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