James v Rost; Lanagan v Rost
[2022] VSC 98
•2 March 2022
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
TESTATOR’S FAMILY MAINTENANCE LIST
S ECI 2019 05050
IN THE MATTER of Part IV of the Administration and Probate Act 1958 (Vic)
| BERNARD PAUL JAMES | Plaintiff |
| v | |
| MICHAELA CORNELIA ROST (as Executor of the Will of VERA ILSE ELFRIEDA AMERIKA-ROST) | Defendant |
S ECI 2019 05267
IN THE MATTER of the estate of VERA ILSE ELFRIEDA AMERIKA-ROST (deceased)
| MARIANNE LANAGAN | Plaintiff |
| v | |
| MICHAELA CORNELIA ROST (as Executor of the Will of VERA ILSE ELFRIEDA AMERIKA-ROST) | Defendant |
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JUDGE: | Daly AsJ |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 24, 25 August 2021, 1 September 2021 |
DATE OF JUDGMENT: | 2 March 2022 |
CASE MAY BE CITED AS: | James v Rost; Lanagan v Rost |
MEDIUM NEUTRAL CITATION: | [2022] VSC 98 |
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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 step‑children – Moral duty of a testator to make adequate provision for proper maintenance and support – Collicoat v McMillan [1999] 3 VR 803, referred to – Where half of value of estate is referable to claimants’ natural father’s share of property – Appropriate provision for proper maintenance and support – Baxter v Baxter [2014] VSC 377, referred to – Where claimants are retired with limited capacity to substantially improve their incomes – Factors under s 91A(2) of the Administration and Probate Act 1958 (Vic) considered – Re Christu; Christu v Christu [2021] VSC 162 referred to.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff in S ECI 2019 05050 | Mr J Rizzi of counsel | Moores Lawyers |
| For the Plaintiff in S ECI 2019 05267 | Ms E L Coates of counsel | Maurice Blackburn |
| For the Defendant in both proceedings | Mr N J McOmish of counsel | Merton Lawyers |
HER HONOUR:
Introduction and family background
Vera Amerika-Rost (‘Vera’) died on 9 May 2017, aged 98. She left behind a daughter, Michaela Rost, and two step-children, Marianne Lanagan and Bernard James (‘claimants’).[1] In 1963, Vera commenced a relationship with the claimants’ father, Jacob Amerika (‘Jack’). In 1965, Vera and Jack married, and they remained together until Jack’s death in 2006 at the age of 83.
[1]I shall refer to all of the parties by their first names for ease of reading and to avoid any confusion. No disrespect is intended.
Michaela described Vera as warm, effusive, outgoing, outspoken and independent, and Jack as kind, humorous and friendly. While they often argued, they shared several artistic, cultural and political interests, and by all accounts, their 40 year marriage was largely a happy one.
The claimants were born in the Netherlands in 1947 and 1951 respectively, and are the children of Jack’s previous marriage to Henriette Dozeville at the end of the Second World War. Jack and Henriette separated in 1959 or 1960, and divorced in 1964. The claimants emigrated to Australia with their parents in 1952, where they first lived in Victoria, but the claimants were largely raised by their mother in Canberra, with Jack moving to Melbourne in about 1959.
Michaela was born in Berlin in 1951, and is the child of Vera’s first marriage. Vera and Michaela emigrated from Germany to Melbourne in 1954, while Michaela’s father remained in Germany. Michaela has an adult son, Saery, who was born in Australia in 1980, of a relationship which ended many decades ago.
The sole asset of any value in Vera’s estate is a residential property in Avondale Heights (‘property’) valued at $920,000.[2] Vera also held the sum on $20,843.89 in a bank account on trust for Michaela and Saery.
[2]As at 16 August 2021.
Vera and Jack lived together in the property from about 1963. The property was initially purchased by Vera, but was transferred into both of their names as joint proprietors in 1988 after the mortgage over the property was discharged following Jack’s retirement.
Probate of Vera’s final will, which was executed on 1 October 2013 (‘last will’), was granted to Michaela on 22 May 2019. The last will is a handwritten document, which provides that joint ownership of the property and its contents be given to Michaela and Saery, and all of Vera’s jewellery be given to Michaela, save for a gold ring previously worn by Jack, which is to be given to Saery. No provision was made for the claimants in the last will.
Prior to the last will, Vera executed a number of other wills. The terms of her wills changed over time, sometimes materially. As those changes are relevant to the question of whether Vera owed the claimants a moral duty to make provision for them from the estate, the terms of each of these wills, along with the terms of a will made by Jack in 1987 (‘1987 will’), are summarised in the following paragraphs.
Vera’s first will, executed on 12 August 1977, provided that her estate be given to Jack and Michaela in equal shares as tenants in common, and should Jack predecease Vera or die within 30 days of the date of her death, Bernard be given the share that Jack would have otherwise taken.
Vera’s next will, executed on 2 September 1986, provided that should she predecease Jack, Jack be permitted to live in the property for the rest of his life. If Jack predeceased her, or died while living in the property, the property would be given to Michaela. Should Jack no longer wish to live in the property, the property would be sold, with the proceeds of sale to be shared equally between Jack and Michaela.
Jack then executed the 1987 will on 21 October 1987,[3] which provided, relevantly, as follows:
[3]Jack made this will approximately six months prior to the execution of the transfer of land whereby Vera and Jack became joint proprietors of the property. The delay between the execution of the 1987 will (when Jack had no assets of any significance) is unexplained.
(a) all his real estate and personal property be given to Vera; and
(b) should Vera predecease Jack, or die within 30 days of the date of his death:
(i) one quarter of his estate be given to Marianne;
(ii) one quarter of his estate be given to Bernard; and
(iii) the remaining half of his estate be given to Michaela.
Vera’s next will, executed 16 September 1997, provided Vera’s bank accounts be given to Michaela and Saery, Vera’s furniture be given to Michaela provided that Jack have use of the furniture during his lifetime, and the residue of her real estate and personal property be given to Jack absolutely. This will also provided that should Jack predecease Vera or die within 30 days of the date of her death:
(a) one quarter of her estate be given to Marianne;
(b) one quarter of her estate be given to Bernard; and
(c) the remaining half of her estate be given to Michaela.
Vera’s next will, executed 24 May 2000[4] provided that a term deposit with the Commonwealth Bank be given to Saery, and the balance of Vera’s bank accounts be given to Michaela. This will also provided that:
[4]This will was made the day prior to the transfer of the property to Vera and Jack as tenants in common, with the effect that the surviving spouse would no longer take the property by survivorship.
(a) Jack be permitted to live in the property and have use of the furniture in the property for as long as he wished;
(b) when Michaela formed the opinion that Jack had ceased to live in the property permanently, Vera’s interest in the property and the furniture in the property be given to Michaela;
(c) the residue of her real estate and personal property (save for her jewellery and personal effects) be given to Jack absolutely; and
(d) should Jack predecease Vera or die within 30 days of the date of her death:
(iv) one quarter of her estate be given to Marianne;
(v) one quarter of her estate be given to Bernard; and
(vi) the remaining half of her estate be given to Michaela.
Vera’s next will, executed 20 June 2006, was made approximately two months after Jack’s death, and provided that her real estate and personal property be given to Michaela, and should Michaela predecease Vera, her real estate and personal property be given to Saery.
Vera’s will executed 1 April 2008 provided, relevantly, as follows:
(a) any motor car owned by Vera be given to Saery; and
(b) the residue of her estate be converted into money, and be divided equally between Michaela and Saery.
The proceedings and the parties
The claimants each claim further provision from Vera’s estate in accordance with Part IV of the Administration and Probate Act 1958 (Vic) (‘Act’). Marianne and Bernard each seek a lump sum payment of $150,000 from the estate. Michaela says that neither of the claimants is entitled to any provision from the estate whatsoever.
The parties filed and served a number of affidavits concerning the relationships between the parties, their relationship with Vera and Jack, and their personal and financial circumstances. There were a number of objections to the affidavit evidence of each of the parties on the grounds that the evidence was irrelevant, or inadmissible opinion evidence. Rather than rule upon each objection individually during the trial, the parties agreed that any material objections should be dealt with in the course of preparing these reasons.
Each of Marianne, Bernard and Michaela gave evidence at the trial and were cross-examined. Michaela also relied upon an affidavit of Saery, who was not required to attend Court for cross‑examination. Rather than repeat the evidence they gave in further detail, the evidence they gave is reflected in the following narrative regarding the personal and financial circumstances of each relevant party, 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 the claimants’ claims, and have greatly assisted my consideration of the issues in this proceeding, but I do not propose to repeat them at any great length in these reasons.
Bernard
Bernard was born in 1951, and was 70 years of age at the time of the trial. He is married to Deborah, who is 64 years of age, and they live together in their home in Belgrave, which they purchased in about 1985. He is a qualified schoolteacher. However, he was made redundant from his teaching position at St Leonard’s College in 2013 and, save for a leave placement for six months, has never returned to full time teaching. He is currently unemployed, having been made redundant from his part time job as a study centre supervisor at Wesley College as a result of the COVID‑19 pandemic. He and Deborah have two adult daughters, Hayley and Brooke, who both live independently from their parents.
He holds the following assets jointly with Deborah:[5]
[5]As at 11 August 2021.
(a) approximately $10,000 in bank accounts;
(b) their home in Belgrave, which is unencumbered, and valued at approximately $800,000;[6]
(c) $143,733 in Bernard’s superannuation fund; and
(d) $53,150 in Deborah’s superannuation fund.
[6]During cross-examination, Bernard conceded that with the recent escalation of house prices in the Melbourne metropolitan area, his home may well be worth in excess of $900,000, that is, an amount comparable with the value of the property.
Bernard receives a pension from his superannuation fund in the amount of $8,959 per annum, and the aged pension from Centrelink in the amount of $22,864 per annum. Deborah’s annual income from her part-time work as a supermarket checkout assistant is $29,710. Deborah will not be eligible for the aged pension until February 2024, and only received a very modest inheritance from her parents.
Bernard has an interest in cars and motorcycles, and owns two of each. In 2011 he built a garage at a cost of approximately $50,000 for the purpose of working on his motorcycles. Prior to the COVID-19 pandemic, he had hoped to establish a motorcycle restoration business to supplement his income.
Bernard and Deborah both have a number of non-disabling health issues which require monitoring and medication.
Bernard and Deborah’s expenses over the 12 months prior to the trial were approximately $54,500. Bernard expects that their annual expenditure will rise after the COVID-19 pandemic to approximately $67,000 when taking into account additional expenditure for transport, holidays, gifts, and recreation and entertainment. He would also like to obtain private health insurance at an estimated cost of $2,500.[7]
[7]The supplementary court book tendered at the conclusion of the trial included a quotation for private health insurance for Bernard and Deborah of approximately $8,000 per annum.
Turning now to Bernard’s earlier years, when Vera and Jack married in 1965, Bernard, then aged 15, was living with his mother and her partner in Canberra. Bernard was physically abused by his mother’s partner and, as a result, in late 1966 he ran away from home and hitchhiked to Marianne’s house in Berridale, New South Wales. He then contacted Jack and asked to come to live with him in Melbourne to finish school. Jack agreed, and Bernard commenced living with Jack, Vera and Michaela at the property.
Bernard lived at the property for three years, during which time Vera and Jack provided and cared for him. He has fond memories of this period, and Vera was supportive of him, and encouraged him to further his education. In 1970, aged 19, Bernard commenced study at La Trobe University and lived on campus. While at university he visited Vera and Jack regularly, but never returned to live at the property after that. He commenced his teaching career in 1974, and married Deborah in 1983.
Vera and Jack attended Bernard and Deborah’s wedding in 1983, and visited the hospital after the births of Hayley and Brooke. Bernard’s daughters were fond of Vera, and she spoiled them with gifts and treats. Bernard’s family often entertained Vera and Jack at their Belgrave home, and were frequent visitors to the property throughout the 1990s.
Bernard gave evidence that he believed that the original purchase of the property was financed by Vera, but that Jack made significant financial contributions to the household and the property, including mortgage repayments and the cost of renovations, landscaping and maintenance, including the construction of gardening beds and walls, painting and decorating, and a major addition of two large rooms on a concrete slab at the rear of the property.
Bernard gave evidence that sometime in the late 1990s, Jack gave him a copy of the 1987 will, and told him that the estate of the survivor of Jack and Vera was to be split between Bernard, Marianne and Michaela in accordance with the terms of the 1987 will, and that Vera had made a will in similar terms.
In 1999, Bernard received a telephone call from Jack, who told him that some of Vera’s jewellery had gone missing and that Vera and Jack believed that Bernard’s daughters had taken the jewellery. Bernard’s daughters denied taking the jewellery, and Bernard informed Jack that he and Deborah were upset that Jack and Vera had accused their daughters of theft, which caused a rift between Vera and Jack on the one hand, and Bernard and his family on the other hand (‘rift’).
Following the rift, some time elapsed without any contact between Bernard and Jack and Vera. When Bernard eventually telephoned Jack, Jack told him that the jewellery had been found in a recliner in the living room some weeks prior, and suggested that Bernard’s daughters had played a trick upon Vera by hiding the jewellery.
In late 2000, after eight further months of no contact, Jack wrote to Bernard about the rift. Bernard responded with a 27 page letter expressing how disappointed he was with Jack and Vera, and stated that he did not want to see Jack or Vera until they apologised for their conduct. Under cross-examination, Bernard accepted that this letter was mainly directed at Vera, and accepted that Vera found his letter insulting. He agreed that the fact that he sent a letter of this nature indicated that there were some underlying problems in his relationship with Jack and Vera, and Vera in particular prior to the rift, saying that Vera’s manner could be quite cutting on occasion.
Following the rift, Bernard saw Jack occasionally, and Jack would visit Bernard’s home to see his daughters for birthday events and so on, but Bernard had limited contact with Vera between 1999 and Jack’s death in 2006.
In late 2005, Bernard learned that Jack was unwell, and Bernard visited the property to see him. At that time, Vera was also unwell. There was no overt conflict between Bernard, Vera and Jack during this period, but they did not discuss or resolve the rift.
After Jack’s health had failed to improve, Bernard took him to a specialist and it was confirmed that Jack had prostate cancer and required surgery. Following the surgery in early 2006, Jack stayed with Bernard and Deborah in Belgrave in order to recuperate. Jack returned to the property on 12 February 2006 and remained there in the care of Michaela, as Vera was in hospital at the time.
Following a major stroke on 26 March 2006, Jack was taken to Sunshine Hospital and then the Western General Hospital in Footscray, where he remained in a vegetative state until he passed away on 15 April 2006. Bernard, Vera and Michaela collectively made the decision to terminate Jack’s life support. Bernard visited Jack on four or five occasions in the hospital before he died.
Following Jack’s death, Bernard had very limited contact with Vera, save for in the immediate aftermath of Jack’s death. During that time, Bernard was upset by conduct of Vera which he felt was insensitive and disrespectful to both him and his father’s memory. Michaela considered that the eulogy delivered by Bernard at Jack’s funeral downplayed Vera’s role in Jack’s life. Accordingly, Bernard and Vera were for all practical purposes estranged for the last decade of Vera’s life. Bernard did not attend Vera’s funeral.
Bernard also relied upon the evidence of Mr Robert Muir, a qualified financial adviser, in support of his claim for a legacy of $150,000. Mr Muir prepared an expert report dated 17 August 2021 regarding Bernard and Deborah’s financial circumstances and needs. Mr Muir produced a model setting out Bernard and Deborah’s income and expenditure over the course of Bernard’s remaining life expectancy (16 years) based on four scenarios.[8]
[8]The third and fourth scenarios are based on the assumption that neither Bernard nor Deborah qualify for the aged pension, an outcome which Mr Muir accepted was very unlikely. As such, these scenarios have limited relevance to Bernard’s application.
In the first scenario, Deborah would retire immediately and commence drawing a pension from her superannuation, and both Bernard and Deborah would be able to access the aged pension.[9] Mr Muir gave evidence that in this scenario, Bernard would require the additional capital sum of $201,082 to ensure that he and Deborah could maintain their current standard of living.
[9]Deborah will be eligible to receive the aged pension from 11 February 2024.
In the second scenario, Deborah would continue to work until she is eligible for the aged pension, at which time she would also commence drawing a pension from her superannuation. Mr Muir gave evidence that, in this scenario, Bernard would require the additional capital sum of $156,257 to maintain Bernard and Deborah’s current standard of living.
Marianne
Marianne, a retired public servant, was born in 1947 and is now 74 years of age. She has been married to Michael Lanagan since 1995. She and Michael live together in their apartment in Belconnen, a suburb of Canberra (‘Belconnen apartment’), which they purchased for approximately $650,000 in 2013. Michael is 60 years of age, and is a quadriplegic as the result of a swimming accident in 1985.
Marianne worked in the Commonwealth Public Service from around 1969 to 1996, when she resigned. She returned to work later as a community support worker to help make ends meet, but retired from the workforce over a decade ago.
Marianne is Michael’s primary carer, although Michael also receives funding and support from the National Disability Insurance Scheme (‘NDIS’). Marianne has two surviving adult children who were the issue of a previous marriage: Daniel, born in 1976 and Suzanne, born in 1977, who live with their own families in Canberra and do not need or receive any financial assistance from Marianne.
The purchase of the Belconnen apartment was funded by the proceeds of sale of another property owned by Marianne and Michael in suburban Canberra, and an inheritance received by Michael from his late father. In around 1996, approximately $100,000 from Marianne’s superannuation and redundancy payout was used to pay down the mortgage secured by the home which was ultimately sold to partly fund the purchase of the Belconnen apartment.
Marianne receives a carer’s payment and carer’s allowance of approximately $700 per week. She has no other income other than some franking credits which she receives from her shares in Insurance Australia Group Limited (‘IAG’). She has a motor vehicle which is 17 years old. Michael receives a disability support pension of approximately $700 per fortnight. He also works casually for up to fifteen hours a week as an accounts clerk for a nursing agency, for which he earns approximately $300 per week. In the year ending 30 June 2021, Marianne and Michael’s combined income was $48,870.71, made up of Marianne’s carer’s pension of $14,769, and Michael’s wages and pension of $34,101.71.
Michael’s NDIS plan for the year commencing 20 October 2020 was in evidence. The NDIS plan provided for the sum of $125,787.13 to be available in the calendar year ending October 2021 in order to fund equipment, consumables and support for assistance with self-care, community and social engagement, transport, therapeutic support and assistive technology. Michael and Marianne receive, on average, 22 hours of support worker assistance per week from the NDIS to assist with Michael’s personal care. Marianne gave evidence that the costs of some NDIS services are increasing, with the effect that they have had to reduce their engagement of support workers to avoid depleting the funds in Michael’s NDIS budget. None of the NDIS funds are used to fund respite care for Marianne. Michael and Marianne also have the company and support of Michael’s brother, who lives in the same building as the Belconnen apartment.
Marianne has the following assets jointly with Michael:[10]
[10]As at 29 July 2021.
(a) the Belconnen apartment, which is now said by Marianne to be valued at approximately $600,000;[11]
[11]Michaela disputes the value attributed by Marianne to the Belconnen apartment, given rising unit prices in Canberra, and noting that the Belconnen apartment is located in an award winning apartment building in an attractive location. Little turns on this dispute for the purposes of determining Marianne’s application.
(b) $75,000 in Michael’s superannuation;
(c) $10,000 in savings; and
(d) IAG shares valued at approximately $6,467.74.
Marianne has a number of medical conditions, including severe carpal tunnel syndrome and bursitis in her left shoulder, which caused her to retire from paid employment over ten years ago. In addition, she has lower limb lymphoedema, posterior vitreous detachment in both eyes, arthritis, osteoporosis, glaucoma, ischaemic heart disease and heart valvular disease. Michael is paralysed from the neck down and has limited hand function. He also has a number of other health conditions and issues largely related to his quadriplegia, which are likely to deteriorate over time.
Marianne gave evidence that she and Michael are reliant on their income from Centrelink and Michael’s wages to make ends meet, but it is not clear how much longer Michael will be able to work, given his medical conditions. They have little scope for discretionary expenditure. By way of example, Marianne would like to purchase a bed which could be attached to and lowered from the wall of their bedroom, so she does not have to lift and move her trundle bed each day to enable Michael to get in and out of bed. However, such equipment would cost thousands of dollars, which she cannot afford.
Turning now to Marianne’s earlier life, following her parents’ separation, Marianne lived with her mother and Bernard in Canberra, and had limited contact with Jack after he moved to Melbourne in 1959. She left school aged 15, despite being a good student, because her mother was struggling to make ends meet, and could not afford to assist her to further her education. She began work as a cashier/accounts clerk at McEwan’s hardware store in Canberra in 1963, giving her wages to her mother, as Jack stopped paying child support once Marianne began working. She spoke to Jack from time to time by telephone, and he sometimes sent her gifts.
Marianne had a difficult relationship with her mother, who suffered from mental illness and was physically abusive to her. In 1965, when Marianne was 19 years of age, she left home and moved to Queensland with her then partner.
Marianne did not attend Jack’s wedding to Vera, as she was not aware they were getting married and was not invited. Despite being invited, neither Vera nor Jack attended Marianne’s first wedding in 1966. After the end of her first marriage, Marianne returned to Canberra with her young son and began to work in the Commonwealth Public Service. Prior to securing full-time employment, she struggled financially, and was dependent upon her parents‑in‑law for accommodation for some time.
Marianne gave evidence that, following her second marriage in 1971, she visited Vera and Jack on a number of occasions with her family, usually staying at the property for days at a time. Her family attended many outings and social events with Vera and Jack, and Bernard and his family when they visited Melbourne. Jack also visited her in Canberra annually, but Vera rarely accompanied him, because Vera did not like Marianne’s second husband. She kept in touch with Vera and Jack by telephone, and sent flowers and cards for birthdays and other special occasions. Jack would visit Canberra every three or four years to see Marianne and her children, but Vera only accompanied him a handful of times. Marianne’s second marriage ended in 1992.
Under cross-examination, Marianne accepted that between 1971 and 1995, she did not have a close relationship with Vera, and that Vera did not attend Marianne and Michael’s wedding in 1995. However, Marianne said that her relationship with Vera improved and strengthened over time. Marianne gave evidence that she viewed Vera as a substitute mother, who looked out for her and provided helpful advice and support, knowing that Marianne’s own mother suffered from poor mental health.
Following Jack’s death in 2006, Marianne and her children visited Vera once or twice and stayed at the property, kept in touch with Vera by telephone between visits, and sent Vera cards, gifts and occasionally flowers. She attended Vera’s funeral in 2017.
Marianne gave evidence that she understood that, when Jack died, Vera showed Bernard a copy of Jack’s will, which in turn led Marianne to believe that she and Bernard were to inherit from Vera upon Vera’s death. However, under cross‑examination, she accepted that, as at the time of Jack’s death in 2006, she did not really know whether she was going to receive any inheritance after Vera’s death.
Michaela
Michaela was born in 1951 and is now 70 years of age. Her son Saery was born in 1980 and is now 41 years of age. Michaela has raised Saery as a single parent since 1982. Michaela and Saery live together in a small, three-room worker’s cottage in Drummond Street, North Carlton (‘North Carlton property’), which Michaela has rented from the Carlton Rental Housing Cooperative and its successor organisations since 1991. Since 2007, her tenancy has been administered by a state‑funded housing authority, Common Equity Housing Ltd (‘CEHL’). The North Carlton property is aging, and has problems with leaks and mould.
Michaela works casually (with a six monthly contract) as a yoga teacher for the City of Melbourne and receives the aged pension. She has previously worked as a secondary schoolteacher, among other things. In 2020 and 2021, she lost 34 weeks of income due to the COVID‑19 pandemic, and was only reimbursed for eight weeks of lost income by the City of Melbourne. In the 2020/2021 financial year, she received approximately $5,292.00 from the City of Melbourne and $20,714.00 from the aged pension. Her taxable income for the 2020/2021 financial year was $26,006.00. She has an ABN for the business name Yoga Dimensions, which is said to be based at the North Carlton property, and intends to develop this business, which she promotes on social media.
Michaela has a number of health conditions, including distorted sight and a cataract, basal cell carcinoma, pulmonary embolisms, and dental issues.
Michaela’s current assets comprise the following:[12]
(a) $7,571.44 in a bank account; and
(b) $6,291.41 in a superannuation fund.
[12]As at 15 August 2021.
On 14 June 2019, Moore J made orders in a proceeding in this Court in which Bernard sought orders to compel Michaela to make an application for probate of the last will (‘s 15 proceeding’)[13] that Michaela pay Bernard’s costs of the proceeding from her share of the estate. Those costs have been quantified by Bernard’s solicitors as amounting to $17,715.36, and remain unpaid.
[13]S ECI 2019 01016.
Michaela drives a 20-year-old motor vehicle. Her most substantial expense is the rental payments for the North Carlton property, which is assessed at 25 per cent of household income, up to a maximum of $645 per week. At the time of trial, Michaela pays $293.85 per week rent for the North Carlton property.[14] Michaela gave evidence that the tenancy of the North Carlton property includes the following conditions:
[14]Which I can safely assume is well below the market rental for the North Carlton property, given the desirability of its location.
(a) she has a direct tenancy with a secure lease;
(b) her rent assistance payments from Centrelink are paid directly to CEHL;
(c) she is not permitted to conduct a business from the North Carlton property;
(d) if a tenant inherits or otherwise acquires property, the tenant must notify the housing authority and the tenancy is not certain thereafter;
(e) there is currently no limit to the assets which may be held by an existing tenant, although this is a grey area and may be subject to change, as CEHL’s policies are currently under review; and
(f) adult children are not able to apply for a joint tenancy, and if a tenant dies then their adult children are not able to remain living in the property.
The source of the evidence given by Michaela about the terms of her tenancy and the potential consequences to the security of her tenancy should Michaela inherit real estate or a substantial amount of cash is unclear. There is no document in the court book which evidences these matters, and while Michaela gave evidence that she recently made enquiries of CEHL regarding these matters, she did not give precise evidence regarding who she spoke to and what questions she asked.
Prior to moving into the North Carlton property in 1991, Michaela and Saery’s housing situation was insecure and unstable. Michaela found renting as a single parent with a low income difficult, and as a result they usually lived with friends and acquaintances. They moved frequently, living in 12 different residences in a number of different suburbs between 1980 and 1991. Michaela is very concerned about her housing security, and believes that obtaining a rental property through the private rental market is near impossible in her circumstances.
As for Michaela’s earlier life, Michaela moved to Australia with Vera in 1954. Her parents had divorced in 1953, and her father remained in Germany. Her father paid Vera child support for Michaela until 1968, and funded the first year of her tertiary education. Michaela saw him three times before his death in 2011, and she received nothing from his estate.
Following their arrival in Australia, Michaela and Vera lived in the Benalla Migrant Camp for several months. Subsequently, from 1955 to 1963, Michaela and Vera moved frequently, living predominantly in rented rooms in the homes of other families. From 1956, Vera worked long shifts as a tram conductor. She formed a friendship with Jack after she met him on a tram in 1962.
Vera purchased the property in 1963, which was a block of land in a new housing estate, with a substantial deposit, which may have been sourced from the proceeds of sale of a block of land she previously had purchased in Kinglake. In August 1963 (a time when it was notoriously difficult for women to obtain bank finance), Vera obtained a housing loan of £3,500 to build a house on the property, and soon after its construction Vera, Jack and Michaela moved into the property.
Michaela gave evidence that Vera purchased the furniture, light fittings, carpets and blinds for the property, while Jack painted and wallpapered the walls and contributed much to the interior decorating and gardening. She believed Jack contributed to household expenses from his earnings, but Michaela does not know if and when he began contributing to mortgage repayments.
Michaela gave evidence that in 1966, Vera left her work as a tram conductor with a workers’ compensation payout for varicose veins caused by the long hours of standing required by the job. Vera then found clerical employment with a payroll company, and subsequently worked as a library assistant/technician at the Sunshine Library for approximately ten years until her retirement in 1983.
Michaela gave evidence that Jack was originally a pastry chef who specialised in continental cakes and delicacies, but he was unable to establish a successful pastry business in Australia given Australian tastes at the time. He worked in many different manual occupations in Melbourne and Canberra before eventually finding secure, but poorly remunerated employment with the National Gallery of Victoria, initially as an attendant and later as a member of the exhibition installation team. She believes that throughout their working lives, Vera’s income was higher than Jack’s income. Bernard agreed that Vera may have earnt more than Jack during their marriage.
In the early 1970s, Vera and Jack built an extension to the property, which was constructed with the assistance of building contractors. Michaela said that Jack’s contribution included sourcing second-hand materials, painting and exterior paving.
In 1968, Michaela began studying dentistry at the University of Melbourne, before changing to study biochemistry at what is now Swinburne University in 1969. In the same year, she moved out from the property to a student house in Carlton. In 1970, she enrolled in Melbourne State College (then a specialist teacher’s college), and moved back to the property, where she lived until 1972. She is a qualified schoolteacher, and taught in a secondary school for a few years before moving on to pursue more creative endeavours.
Michaela gave evidence that there were only a few family events after the rift, and that Bernard had limited contact with Jack and Vera from 1999, although in February 2000, Vera, Jack, and Michaela attended a lunch with Bernard’s family, and they also had lunch together at Easter. There was further communication, including telephone calls and meetings between Jack, Bernard, and Bernard’s children, and a lunch for Jack’s birthday in August 2000. Marianne visited Vera and Jack in September 2000, staying for a few nights at the property. Michaela gave evidence that Bernard’s letter (see paragraph 32 of these reasons) caused great distress to Jack and Vera, which resulted in a “lasting disruptive impact on familial relations”.
Michaela and Jack enjoyed a good relationship. Michaela provided care and assistance to Jack in the last years of his life when his health deteriorated, including taking him to medical appointments, providing support in hospital and assisting with domestic chores. Michaela agreed that Bernard also provided assistance to Jack, including taking him to medical appointments, assisting with Jack’s transition to a rehabilitation hospital following surgery in late 2005, and having Jack to stay at his home in Belgrave in February 2006. Following Jack’s stroke in March 2006, Michaela visited him almost daily at the Western General Hospital. Marianne and Bernard also visited Jack in hospital.
Michaela gave evidence that from May 2006, following Jack’s death, Bernard was estranged from Vera, who had no further contact with Bernard during the last 11 years of her life. She does not recall Bernard contributing anything to the improvement or maintenance of the property at any time.
Michaela provided considerable support to Vera in the last years of her life. From 2006 until her death in 2017, Michaela was Vera’s registered carer. Among other things, Michaela was responsible for taking Vera to medical appointments, attending to her personal care, preparing food, maintaining the property, shopping and facilitating social engagement. From June 2016, Vera required 24-hour care, and Michaela began staying at the property. Michaela gave evidence that because so much of her time was spent caring for Vera, her earning capacity and her ability to develop her yoga teaching practice was significantly curtailed.
Michaela also gave evidence that, following Vera’s death, she has contributed to the maintenance and improvement of the property, including cleaning, gardening services and repairs, at a cost of $2,897.50. She visits the property regularly to feed Vera’s cats and to do housework, and stores papers concerning this proceeding there, but has not moved into the property because it is not yet her property.
When pressed by counsel for Marianne regarding her intentions regarding the property, she denied that she did not intend to live in the property because she preferred to remain in the North Carlton property. She gave evidence that if she had a cash sum of more than $487,000 she would lose the pension, unless that sum was tied up in her own home. If some provision was made for the claimants, and she was unable to retain the property, she would only be able to afford to purchase a house in the outer suburbs, not a middle ring suburb such as Avondale Heights, which is within an easy distance from the CBD.
Michaela disputed Bernard’s evidence to the effect that Vera had made a “mirror will” to Jack’s 1987 will, and said that Vera told her on several occasions that she wanted to provide for the future security of Michaela and Saery, as Vera knew that Michaela was single and did not have any assets. In cross-examination, Michaela stated that she was not involved in any discussions with Vera about the will Vera made in 2006 (which excluded the claimants), but accepted that she drove Vera to the solicitor’s office and sat in on the start of the appointment.
The 2006 will was drafted by Vera’s long-term solicitor and friend, Ms McManus. Michaela gave evidence that the 2008 will was drawn by a different solicitor, as Ms McManus had told Vera that she did not want to be involved in the drawing of Vera’s will due to a conflict of interest.[15]
[15]While Michaela made a number of references to Ms McManus’ “conflict of interest” during the course of giving her evidence, it is difficult to see how a solicitor, even a solicitor who was a friend of Vera, could have a true conflict of interest when drawing a will, in circumstances where the solicitor was not a beneficiary. Perhaps she did not agree with the terms of the 2008 will, but the only material difference between the 2006 will and the 2008 will was that Saery became a beneficiary, Bernard and Marianne having already been excluded as beneficiaries of Vera’s estate by the terms of the 2006 will. Little turns on this issue though.
As for the last will, Michaela agreed that she discussed the contents of the 2008 will with Vera, and Vera told her that she wished to change her will. By that time, Vera was too frail to leave the house to visit a lawyer, and Michaela was not able to organise a lawyer to come to the property. Michaela’s evidence was that she discussed the contents of the last will with Vera, and was present with Vera when she wrote the last will out by hand. Michaela posed questions to Vera about her intentions with respect to the intention of the last will, and suggested that the property be left to Michaela and Saery as joint owners to avoid the property being sold, consistent with Vera’s express wishes to that effect. Her evidence shed no light upon why Vera chose to exclude the claimants as beneficiaries of her estate.
Saery
Saery is 41 years of age. He is single and lives with Michaela at the North Carlton property. He is unemployed and receives benefits from the JobSeeker program. In the 2020/2021 financial year, he received $21,685.00 in benefits. Aside from an 18‑year‑old motor vehicle, his assets as at 15 August 2021 included $10,280.76 in a bank account and $12,480.46 in a superannuation fund.
Since 1989, Saery’s father has lived overseas and has provided no child support to Michaela, nor maintained any contact with Saery. In 1993, Saery’s half-brother passed away at age 23, which affected Saery deeply.
Saery left school in year 11 and trained as a motor mechanic. In 2004, Saery was violently assaulted, suffering serious injuries which resulted in hospitalisation. The assault and consequent trauma has had a severe impact on him, and he has been assessed by a psychiatrist to have suffered some memory loss, anxiety, depression and symptoms of a post-traumatic stress disorder. He has also suffered from chronic severe abdominal pain for the past five years, which, according to a medical certificate provided by a general practitioner in March 2020, has precluded him from working during that time.
Saery’s evidence was that he began contributing to the maintenance of the property as a teenager, and enjoyed a close relationship with Jack, who taught Saery how to undertake various household repairs. Following Jack’s death, Saery carried out regular maintenance work on the property, including the garden, and assisted with the care of Vera, with whom he also had a close and loving relationship. He has continued to carry out gardening and other repairs and maintenance at the property since Vera’s death.
Some comments on the evidence
Prior to turning to the issues in the proceeding, I will make some brief comments upon the evidence. Credit is not an issue which looms large in the current case, as in the end there were few significant factual matters in dispute. Bernard frankly conceded that his relationship with Vera was poor following the rift, and perhaps less than ideal prior to the rift, and he was open about his financial position.
Counsel for the claimants pressed Michaela about the circumstances in which the last will was made, an error made in her affidavit regarding the contents of a letter sent to her by Marianne in 2018 which could be seen to reflect poorly on Marianne, and Michaela’s intentions with respect to living in the property should the claimants’ application in this proceeding fail.
While Michaela’s responses in relation to these issues were a little less than satisfactory, in the end, they had limited bearing on the critical issues in this proceeding. First, there was no evidence that Vera lacked testamentary capacity up to and including 2013, such that the cross‑examination of Michaela regarding the circumstances in which the last will, and the wills made in 2006 and 2008 were made, can only be relevant to Vera’s intentions when making those wills, and that evidence sheds little light on that issue. The letter from Marianne to Michaela in 2018 was in evidence, and while it is correct to say that Michaela mischaracterised its contents in her affidavit, the contents of the letter speak for themselves, and the sentiments expressed by Marianne in that letter are consistent with her position in this proceeding. I do share some of the claimants’ reservations as to whether Michaela and Saery plan to live at the property in the long term, but I could not reach a positive conclusion that they definitely do not intend to live at the property.
No criticisms could be made of Marianne’s evidence: she was entirely open and forthcoming when giving her evidence, including her evidence about her contact with Vera and Jack over time and the depth of her relationship with them, and she produced a number of documents relevant to her current and past financial position and dealings with property at short notice without objection.
As noted earlier in these reasons, there were a number of objections to the affidavit evidence filed by the parties, with the joint table of objections prepared prior to the trial running to some 20 pages.
Turning first to the affidavits sworn by Michaela in both proceedings, it should be noted that Michaela’s affidavits were directly responsive to the affidavits filed by Marianne and Bernard, which no doubt contributed to their rather argumentative flavour, which in turn meant that many of the objections were accepted by her lawyers. A number of the objections which were accepted related to the source of funds for the purchase of the property by Vera in 1963, the financial arrangements between Jack and Vera over the course of their marriage, and Vera’s intentions and motivations in dealing with her estate in the way that she did.
Ultimately, all that could be ascertained from the admissible evidence was that while the funds for the deposit paid for the property almost certainly came from Vera, Jack’s contribution to the household in the two decades after the purchase of the property justified, at least in Vera’s mind, her enabling Jack to become a joint proprietor of the property in 1988. As for the other matters raised by Michaela’s evidence which was subject to objections, they were (properly) the matter of submissions rather than evidence, and, in the case of Michaela’s observations concerning the dynamics within the family, were ultimately not a matter of great dispute between the parties.
Michaela’s objections to Bernard’s affidavit evidence focussed upon, among other things, Bernard’s observations regarding Vera’s life as a young woman in Germany during the Second World War, and some of his observations regarding Vera’s attitudes and beliefs. I agree that his commentary in that regard was irrelevant, in some respects gratuitous, and in any event, was probably not based upon his direct knowledge. Bernard’s affidavit evidence also appeared to be directed at maximising Jack’s contribution (and his own) to the upgrading and maintenance of the property, and the quality of his and Vera’s relationship with him and his daughters prior to the rift. However, again, not much turns on those matters for the purpose of determining Bernard’s application for provision from Vera’s estate, particularly given that he accepts that their relationship was not perfect, and that he was for all intents and purposes estranged from Vera for the bulk of the last two decades of her life.
Michaela’s objections to Marianne’s evidence largely focussed upon two issues: Marianne’s assertions regarding the quality of her relationship with Vera, and her assessment of her own financial position and needs, particularly given the substantial funding available to Michael through the NDIS. Ultimately, these issues were the subject of direct evidence at trial, and Marianne’s financial position is readily ascertainable from the documents in the court book.
Turning first to Marianne’s relationship with Vera, I accept that the relationship between Marianne and Vera (and Jack) may not have been particularly close. However, I do not consider that the nature of their relationship should unduly detract from Marianne’s claims in this proceeding: after all, she has lived in Canberra for most of her life, has been busy in raising and caring for her own family in sometimes difficult circumstances, and, despite Michaela’s submissions regarding her superior financial position, has never lived a particularly affluent lifestyle, such that frequent travel to Melbourne would cause her no hardship or inconvenience. There is no suggestion that Marianne’s relationship with both Vera and Jack was anything other than familial and cordial, or, as described by counsel for Marianne, “geographically distant but enduring”.
The only real dispute about Marianne’s current financial position is the current value of the Belconnen apartment. However, even if it is worth the amount suggested by Michaela (approximately $800,000 rather than $600,000) it would still be worth less than the property, and one might suspect there is limited scope for Marianne and Michael to downsize much more than they already have.
The only part of Saery’s evidence to which objection was taken was his evidence to the effect that, given his low income, negligible assets, and health conditions, he was unlikely to ever be successful in obtaining a loan to fund the purchase of a property. However, the possibility of Saery being able to improve his financial position over time was the subject of submissions by the claimants at trial, to the effect that he has a trade qualification, is still a relatively young man, and does not suffer any disability severe enough to qualify him for a disability support pension. Those submissions are uncontroversial, but in any event, given that Saery is a beneficiary of the estate, rather than a claimant, it is not necessary for him to justify his entitlement to his inheritance. His financial circumstances and prospects, along with his status as Vera’s non‑dependent grandchild, are merely factors to be taken into account in the determination of the claimants’ application, but are hardly decisive.
During the course of the trial, Marianne gave evidence to the effect that at Vera’s funeral, Saery had told her that he wanted Michaela to sell the property so that he (in Marianne’s words) “could get on with his own life and get married and have kids”. Marianne gave her evidence before Michaela opened her case, such that it would have been open to Michaela to call Saery to rebut this evidence. However, it would have also been open to the claimants to require Saery to attend for cross‑examination to put Marianne’s evidence to him, but they did not do so. That said, it would be inconsistent with my overall impression of Marianne and the evidence that she gave to find that she made up this conversation.
Finally, counsel for Michaela described the report prepared by Mr Muir, a qualified financial advisor, as “flawed”, on the basis that Deborah’s income in the financial year she becomes eligible for the aged pension was an underestimate, and because the model that he used to calculate the amount of additional capital Bernard and Deborah required to maintain their standard of living was unduly conservative.
However, it became apparent during the course of Mr Muir’s evidence that any underestimate of Deborah’s income for the relevant year would be largely counterbalanced by Deborah’s pension income, and Bernard’s increased income from the aged pension. As for the validity of the rate of return used in the model, I accept Mr Muir’s evidence that the rate of return (which is an unalterable integer in the modelling software used by him and his firm), is a conservative, but appropriate rate to use when preparing forecasts and recommendations for people in their retirement years.
I also accept Mr Muir’s evidence (over Michaela’s objection) that annual expenditure of $66,000 for a couple in Melbourne is a reasonable assumption to utilise for the purpose of calculating the additional capital required for retirement, and his evidence that one disincentive for retirees to downsize their accommodation is the potential impact upon their access to the aged pension.
The issues in the proceeding
In this proceeding, the Court is dealing with a not uncommon scenario in blended families, where the children of one party to a second or later marriage feel they have been unfairly treated by their natural parent’s spouse or partner in the disposition of their estate, in circumstances where both parties to the marriage have contributed to the assets of the estate. In the current case, Bernard and Marianne originally sought provision equivalent to what they would have received had Jack outlived Vera, and his estate had been distributed in accordance with the terms of the 1987 will. From the claimants’ point of view, the reduction of their claims from an equal share of half of Vera’s estate (approximately $230,000 each) to $150,000 each represents a substantial compromise upon what they see would be a just outcome.
The claimants also say that while they were not necessarily very close to Vera and Jack, their relations with them were largely cordial, save for the rift, the blame for which Bernard says should largely lay with Vera. In Marianne’s case, she says her work commitments, family responsibilities and limited income prevented her from undertaking any more than an occasional visit to Melbourne, but that her relationship with both Vera and Jack was solid, and strengthened over time. In short, both of the claimants deny that there has been any disentitling conduct on their part.
As for the claimants’ financial position, Marianne says she is in a position of considerable financial need. She is not destitute, but apart from the Belconnen apartment, she has limited assets, and a very modest income, with no buffer for contingencies. Bernard accepts that he is in a reasonably secure financial position, but he is not wealthy, and says that further provision from the estate is necessary to enable him and Deborah to maintain their comfortable but modest lifestyle in their retirement years, given that without any additional capital, Bernard’s superannuation fund will be exhausted in eight years, and he will then be solely dependent upon the aged pension.
Michaela, on the other hand, says that the claimants should receive no provision from the estate, as any provision for Bernard and Marianne would require the property to be sold, thus condemning Michaela and Saery to a life of ruinous poverty. Vera was entitled to dispose of her estate in the manner she saw fit, and her gift of the property to Michaela and Saery reflected Vera’s concern for their parlous financial position, in particular, their lack of housing security.
Michaela says that neither of the claimants should have had any expectation from the estate. Neither claimant was particularly close to Vera (or, for that matter, Jack), and Bernard was, in effect, estranged from Vera for the best part of two decades. She, on the other hand, provided comfort and support to Vera and Jack in their later years, and even more so to Vera as her care and support needs intensified over the last years of her life, prejudicing her own ability to earn income as a result. Michaela says that it is unreasonable for Michaela and Saery to continue to have insecure housing simply to enable the claimants to top up their capital.
Applicable legal principles
The legal principles governing applications of the current kind were recently summarised by McMillan J in Re Christu; Christu v Christu[16], as follows:
[16][2021] VSC 162 (‘Christu’).
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.[17]
(citations omitted)
[17]Ibid [6]-[8].
As for the meaning of moral duty, 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’.[18]
(citations omitted)
[18]Ibid, [10]-[11].
In the current case, there is no question that both of the claimants are eligible persons. Secondly, given that the last will made no provision for the claimants, if it is found that Vera owed a moral duty to make provision for them, then it goes without saying that she did not make adequate provision for them. Accordingly, the critical issue in this proceeding is whether Vera owed the claimants a moral duty to make provision for them from her estate.
The reference to a testator’s moral duty in s 91(2)(c) of the Act is a clarification of the long standing general law principle that a Court will only interfere with a testator’s freedom to dispose of their assets as they see fit when the testator has breached their moral duty to provide for a claimant. As such, the following statement of Ormiston J in Collicoat v McMillan[19] remains relevant today:
the expression ‘moral duty’ remains a simple and convenient way of referring to the obligation … resting on 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 … It is sufficient to say that the word ‘moral’ used in connexion with the legislation is apt to describe what is generally considered according to accepted community standards to do what is right and proper for those members of his family whom one would expect to be entitled to a share in the distribution of his or her estate on death.[20]
[19][1999] 3 VR 803.
[20]Ibid 819.
The mandatory relevant considerations
In addition to the threshold requirements in s 90A of the Act, s 91A(1) of the Act sets out what matters the Court must take into account when determining the amount of any order for further provision if a moral duty to make provision is established, being the contents of Vera’s will, any evidence of Vera’s reasons for making the gifts in the will that she did, and any other evidence of Vera’s intentions in relation to providing for Bernard, Marianne, Michaela and Saery. 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 discretionary considerations
Section 91A(2) of the Act enumerates the matters which the Court may take into account when making a family provision order, as follows:
(a)any family or other relationship between the deceased and the eligible person, including—
(i) the nature of the relationship; and
(ii) if relevant, the length of the relationship;
(b) any obligations or responsibilities of the deceased to—
(i) the eligible person; and
(ii) any other eligible person; and
(iii) the beneficiaries of the estate;
(c)the size and nature of the estate of the deceased and any charges and liabilities to which the estate is subject;
(d)the financial resources, including earning capacity, and the financial needs at the time of the hearing and for the foreseeable future of—
(i) the eligible person; and
(ii) any other eligible person; and
(iii) any beneficiary of the estate;
(e)any physical, mental or intellectual disability of any eligible person or any beneficiary of the estate;
(f)the age of the eligible person;
(g)any contribution (not for adequate consideration) of the eligible person to—
(i) building up the estate; or
(ii) the welfare of the deceased or the deceased’s family;
(h)any benefits previously given by the deceased to any eligible person or to any beneficiary;
(i)whether the eligible person was being maintained by the deceased before that deceased's death either wholly or partly and, if the Court considers it relevant, the extent to which and the basis on which the deceased had done so;
(j)the liability of any other person to maintain the eligible person;
(k)the character and conduct of the eligible person or any other person;
(l)the effects a family provision order would have on the amounts received from the deceased's estate by other beneficiaries;
(m)any other matter the Court considers relevant.
Discussion
As noted above, the threshold question in the current proceeding is whether Vera, who is presumed to be a wise and just testator, owed a moral duty to make provision for the claimants from her estate. The primary argument in support of the contention that Vera owed the claimants a moral duty to make provision for them is that they should be, all other things being equal (which, I hasten to add, they are not), entitled to Jack’s half share of the property (had he lived), or at least a substantial portion of Jack’s notional share of the property.
In Petersen v Micevski,[21] a claimant, relying upon the decision of Nettle J in McKenzie v Topp,[22] sought to elevate the following statement to a statement of principle applicable to cases of the current kind:
Where a substantial part of a deceased estate has been derived from a person who in the ordinary course of events would have made provision therefrom for family members who, but for some intervening event, would have been persons for whom the person being the source of funds would have a responsibility to provide, then the recipient of those funds will be found to have an obligation or responsibility to similarly provide for those family members.[23]
[21][2007] VSC 280.
[22][2004] VSC 90.
[23][2007] VSC 280 [136].
Hansen J rejected the proposition that any statement of principle to the effect above is binding upon this Court in applications for further and better provision under Part IV of the Act, observing that the determination of disputes in the family provision jurisdiction is necessarily very fact dependent. Rather, the fact that part or all of the funds in an estate were sourced from someone who might ordinarily be considered to have a moral duty to provide for the claimants (in this case, Jack) is simply a matter which can be taken into account when determining the objects and content of a moral duty owed by a testator.
The moral duty owed by a testator to step-children in circumstances where their natural parent has been the source of part or all of the assets in the estate has on a number of occasions been recognised as giving rise to a moral duty on the part of a testator, or, in cases prior to the enactment of Part IV of the Act in its current form in 2015, one of the matters going to the discretion of the Court when determining whether to order further provision. A further basis for imposing a moral duty upon a testator in favour of step-children in certain circumstances is that, in many such cases, the step-children have on the occasion of the death of their natural parent stepped aside in order to protect the resources of the surviving spouse, but need not hold back their claims upon the death of the surviving spouse. Alternatively, their forbearance from making claims against the estate of their natural parent has been considered to be a material contribution to the resources of the surviving spouse which warrants recognition in the disposition of their estate.[24]
[24]See McKenzie v Topp [2004] VSC 90, where Nettle J said (at [58]) that “… once the widow is gone, and therefore no longer in need of provision, her needs no longer warrant that the [step-children] rank behind her or thus her chosen successors.” See also James v Day [2004] VSC 290; Keets v Marks [2005] VSC 172, where it was held that a natural parent’s responsibility to provide for her adult child “transferred itself” to her surviving spouse; Robertson v Koska [2010] VSC 134; Re Williams; Smith v Thwaites [2017] VSC 365, where the step-child’s failure to receive provision from the estate of their natural parent was considered to be a material contribution to the testator’s welfare; and Busuttil v DeGabriele [2013] VSC 215, where Digby J held (at [63]) in a claim by a disabled step-child, that bequests to the claimant in the step-parent’s prior wills (made when the claimant’s natural parent was still alive) reflected a recognition of the testator’s moral duty to her step-child, and the only material event which took place prior to making of the later wills (which reduced the provision for the step-child) was the death of the natural parent.
Another relevant factor in claims by step-children, regardless of the source of the funds for the step-parent’s estate, is whether the step-parent had assumed responsibility for the financial and emotional security of the step-child(ren), or in other words, the step-parent has acted in loco parentis.[25]
[25]Paola v State Trustees Limited [2012] VSC 158 [15].
Accordingly, the claim by Marianne and Bernard for a share of Vera’s estate is hardly a novel or unsupportable claim, given that both Marianne and Bernard were teenagers when Jack married Vera, and Jack gifted his half share of the property to Vera without any challenge by the claimants to the 1987 will. In other words, the claimants stepped aside after Jack’s death to allow Vera to inherit Jack’s share of the property, in circumstances where a claim by them against Jack’s estate, or at least to a remainder interest in Jack’s share of the property, would not have been a hopeless claim. The question in the current case is whether any moral duty said to arise from the circumstances above is outweighed or indeed entirely negated by, first, the principle of freedom of testation, and secondly, the particular needs and circumstances of Vera’s chosen beneficiaries, Michaela and Saery. Also relevant to the question of whether Vera owed the claimants a moral duty to make provision for them are the quality of the relationship between the claimants and Vera, Michaela’s contention that Vera was the primary contributor to the purchase of the property, the asserted lack of financial need on the part of the claimants, and the relatively modest size of the estate.
It should be noted that while the fact that part of Vera’s estate is made up of Jack’s share of the property, is a relevant matter to be taken into account in determining whether Vera owed a moral duty to the claimants, a testator’s moral duty is not to be determined by or equated with abstract notions of “fairness”.[26] That is, Vera had no obligation to treat each of Michaela, Marianne and Bernard equally in her will, or to faithfully adhere to Jack’s wishes, as expressed in the 1987 will. That said, given that the content of the moral duty of a wise and just testator has been said to be informed by contemporary community standards,[27] the time when step-children in the position of the claimants would be considered to have a far inferior claim to the natural child of a testator has well passed.
[26]See Stott v Cook (1960) 33 ALJR 447, 453; Petrucci v Fields [2004] VSC 425 [83]; MacEwan Shaw v Shaw [2003] VSC 318 [48].
[27]Collicoat v McMillan [1999] 3 VR 803, 819; Bentley v Brennan [2006] VSC 113.
What remains a critical matter in determining whether a testator owed a moral duty to the claimants, or either of them, is their degree of financial need, at least relative to other potential recipients of the testator’s estate, and relative to the size of the estate.[28] However, it is not necessary for an applicant for further provision to establish that they are destitute, or in urgent need of financial assistance, as such a limitation would not conform with the reference to “the proper maintenance and support” of a claimant in s 91(2)(c) of the Act.[29]
[28]Vigolo v Bostin (2005) 221 CLR 191 [122].
[29]Unger v Sanchez [2009] VSC 541 [99].
In my view, the claimants have established that Vera owed the claimants a moral duty to make provision for them, by reason of half of the value of the estate being referable to Jack’s share of the property, the claimants’ forbearance from making any claim against Jack’s estate after their death, and the fact that, while their financial position is not as precarious as that of Michaela, they are in some need, with limited or no capacity to improve their financial position in retirement. The matters referred to above as potentially detracting from or even negating that moral duty are, in my view, matters relevant to determining the amount of provision to be ordered rather than the question of whether Vera had a moral duty to make provision for the claimants.
It is apparent from the numerous wills executed by Vera and the changes in the title of the property between 1988 and 2000 that Jack and Vera had given some thought to how the property should be dealt with upon their passing. This is consistent with Bernard’s evidence to the effect that Jack told him that the survivor of Vera and Jack would leave the property to the claimants and Michaela. That the claimants should have had no “expectation” that the property would be dealt with in that way given the terms of the 1987 will (where Jack left his share of the property to Vera outright, thus enabling her to dispose of the property in her will as she saw fit) is somewhat beside the point: the limited evidence available is otherwise consistent with an arrangement or understanding between Jack and Vera to the effect that each party’s share of the property would ultimately devolve to their respective biological children.
I can also comfortably conclude that the 1987 will was made by Jack in anticipation of his acquisition of an interest in the property as joint proprietor. This conclusion is consistent with the evidence given by Bernard regarding what Jack told him in the late 1990s about the arrangements made by the couple, and consistent with Vera having made a will largely mirroring the terms of the 1987 will in 1997. Michaela’s submission to the effect that the 1987 will is irrelevant, because at that time Jack had no interest in the property, is inconsistent with the transactions which took place in 1987 and 1988, being the application to replace the lost title for the property, the discharge of the mortgage over the property, and the transfer of the property to Vera and Jack as joint proprietors. If Jack had no property to dispose of, why would he have made the 1987 will? Significantly, the 1987 will was drawn by the same solicitor who drew the wills made by Vera in 1986, 1997, and 2000, and registered the transfer of the property from Vera to Vera and Jack as joint proprietors in 1988, which bolsters my view that these transactions should not be considered in isolation from each other.
It is unclear why in 2000 Vera and Jack considered it necessary to sever the joint tenancy with respect to the property. There was nothing in the evidence to suggest any connection between this transaction and the rift, which occurred in 1999. However, the severance of the joint tenancy (which was given effect at the same time that Vera made her 2000 will) also suggests some consciousness on the part of Vera and Jack that they ought to hold their assets independently, perhaps because of their perceived responsibilities to their respective biological children, and to give each of them the freedom to deal with their share of the property, rather than a half share of the property automatically passing to the surviving spouse by survivorship. That said, the authorities concerning claims of the current kind (where step-children have stepped aside to allow the surviving spouse to inherit from their natural parent) do not necessarily distinguish between testators who receive a property by a gift under a will and those who receive property by way of survivorship.[30]
[30]Robertson v Koska [2010] VSC 134 [114].
Finally, it is noteworthy that Vera did not alter her will to in effect disinherit the claimants until shortly after Jack’s death. The significant change in her testamentary disposition, and the speed with which it occurred after Jack’s death could be seen as reflecting an acknowledgment on Vera’s part that she had owed the claimants an obligation to ensure that the claimants ultimately received Jack’s share of the property, but once Jack was no longer alive, she decided, for whatever reason, to resile from her previous intention to comply with that obligation.
To elaborate, given the terms of the wills made by her in 1997 and 2000, prior to Jack’s death in 2006, Vera must have considered on those occasions that she owed a moral duty to the claimants to leave them a half share of the property. At that time, Michaela had no assets and was at that time living in the North Carlton property with Saery, there was no evidence to suggest she was in stable employment, and both Bernard and Marianne, together with their spouses, owned their own homes. Accordingly, the only material change in circumstances which occurred between the making of Vera’s will in 2000 and her will in 2006 was that Jack died.
It is difficult to reach any conclusion other than that it was only after Jack’s death that Vera was prepared to take an action inconsistent with any arrangement or understanding she had with Jack during his lifetime as to what was to happen with the property after their deaths. It is not necessary for present purposes to determine whether there was in fact any such arrangement or understanding, or the legal effect of any such arrangement or understanding: rather, the contents of the 1987 will, the contents of the wills made by Vera prior to 2006, and the transactions concerning the property after 1987 are relevant to the content of the moral duty owed by Vera to potential beneficiaries of her estate, and, importantly, her acknowledgment of that moral duty.
In support of her contention that Vera did not owe a moral duty to make provision for the claimants, Michaela asserted that Vera had made a greater contribution to the purchase price of the property.
However, I do not consider that argument carries much weight. First, the evidence about the financial contributions made by each of Vera and Jack was vague and inconclusive, understandably given that the parties were teenagers when Jack and Vera married, save that I accept that the initial deposit appeared to have been paid by Vera, and she assumed the legal obligation to pay the mortgage over the property. However, there was other evidence to suggest that Vera and Jack contributed equally to household expenses.
However, the most telling argument against the assertion that Jack’s contributions to the property and the household fell short of Vera’s arises from the conduct of Vera herself in bringing Jack onto the title of the property as a joint proprietor (which would enable the entire property to pass to him by survivorship on her death) and then, when severing the joint tenancy in 2000, allowing Jack to take a half share of the property.
By all accounts, Vera was an independent and strong‑willed woman, with experience in commercial matters, and she had the benefit of legal advice when drawing her wills and undertaking transactions concerning the property. If she had considered that Jack’s contributions to the property were significantly less than her contributions, then it would have been open to her to ensure that those unequal contributions were reflected in the manner in which the property was held between them.
The most compelling argument against finding that Vera owed a moral duty to make provision for the claimants are, in roughly descending order of importance, the following matters:
(a) the principle of freedom of testation, and Vera’s intentions in making the final will;
(b) the acute financial need of Michaela, and, to a lesser extent, Saery;
(c) the nature and quality of the relationship between Vera and Michaela and Saery on the one hand, and Vera and the claimants on the other hand; and
(d) the financial circumstances of the claimants (ignoring at this point the differences between Bernard and Marianne), and their capacity to provide for themselves in their retirement years.
As observed by counsel for Michaela in his submissions, freedom of testation is a notable human right.[31] Even in the absence of Michaela’s evidence regarding what motivated Vera to dispose of her assets the way that she did, it is evident from the terms of wills made in 2006 and 2008 and the final will that Vera wanted the property to go to Michaela and then Michaela and Saery, her direct descendants, in circumstances where Vera knew that they both had no assets and limited income.
[31]Grey v Harrison [1997] 2 VR 359, 363.
But freedom of testation is not an inalienable human right. The very existence of Part IV of the Act recognises this, by providing a statutory framework for the Court to intervene where a testator’s freedom of testation has been abused by failing to make provision for those to whom the testator owes a moral duty. In my view, Vera’s failure to make any provision whatsoever for the claimants, given that the source of half of the assets of the estate was Jack’s share of the property, and given the claimants’ forbearance from making what would have been at least a meritorious claim against Jack’s estate after his death, supports a finding that she abused her freedom of testation, and, on the evidence, knowingly so.
The fact that Michaela was, objectively speaking, in no greater financial need in 2006 than in 2000 (when she was only to receive a half share of the property after Vera’s death), diminishes to some extent the weight which should be given to Michaela’s competing needs when ascertaining whether Vera owed the claimants a moral duty to make provision for them, noting that by 2000, the rift had already commenced. Further, while in 2008 (when he first became a significant beneficiary of Vera’s estate) Saery was no doubt still recovering from the serious assault he sustained in 2004, he was still a young man (28 years of age) and was a qualified motor mechanic, such that his current lack of employment and dependence upon his mother for accommodation would not necessarily have been readily foreseeable by Vera at the time. Again, the only material change in circumstances between 2000 and 2006 was that Jack died.
Setting the position of Saery aside for the moment, there is no dispute that Michaela is in a position of significant financial need. While her health remains generally good given her age, and she currently has secure accommodation, her assets are negligible, and her income is low, and unlikely to significantly increase, save at the margins if her yoga teaching practice rebounds after the pandemic. The submission that the gift of the property to her and Saery provides Michaela their only opportunity to secure a home of their own is a powerful one, particularly in circumstances where both Bernard and Marianne (with their respective spouses) own their own unencumbered homes. I can accept that Michaela’s desire for secure accommodation is, for a woman with her personal history and current circumstances, particularly acute, and I also accept that her prospects of obtaining secure and affordable accommodation in the private rental market, at least given her current circumstances, are quite slim.
However, the question in the current case is whether Michaela’s lack of assets, in particular, the lack of a home of her own, along with the care she provided for Vera in her later years entirely negatives the moral duty owed by Vera to make some provision for the claimants.[32] Connected with that question is the issue of whether the gift of the property to Michaela and Saery would make as dramatic a difference to Michaela’s housing security as contended for by her.
[32]Noting, that generally, a testator does not necessarily owe a duty to provide an adult child with an unencumbered home (see Taylor v Farrugia [2009] NSWSC 801 [57]); or to provide a reward for services rendered (see Niehoff v Niehoff [1995] 2 VR 356, 369-370).
Michaela has lived (for most of the time with Saery) in the North Carlton property for 30 years, with the rent charged limited to 25 per cent of her income. While Michaela has some complaints about the condition of the North Carlton property, CEHL is presumably obliged to maintain the North Carlton property in good repair and in a reasonably fit and suitable condition for occupation,[33] and indeed Michaela gave evidence CEHL plans to upgrade the North Carlton property. The duration of Michaela’s residence at the North Carlton property, along with the relatively modest rent currently payable by her, suggests that her current accommodation is secure.
[33]Residential Tenancies Act 1997 (Vic), s 68(1).
What was tellingly absent from the evidence was any precise or reliable evidence about the potential impact upon her tenancy with CEHL of either of the following scenarios:
(a) if Michaela was to inherit the property as co‑owner with Saery; or
(b) Michaela was to inherit a substantial cash sum from Vera’s estate.
Michaela submitted, without any supporting documentary evidence, that her tenancy would be jeopardised in either of the above scenarios. Michaela’s evidence was to the effect that there is no asset test imposed upon existing tenants of CEHL, and that there is no periodic evaluation of the assets held by current tenants, although the rent payable by her would increase if her income increased.
It is quite surprising that a publicly funded agency such as CEHL would not have reasonably clear and well‑documented policies for determining who is eligible to obtain and maintain community housing provided by CEHL.[34] If Michaela’s tenancy would truly be in jeopardy by, say, the inheritance of real estate or a substantial cash sum, I expect that she would have been able to adduce evidence to that effect. Similarly, I am not in a position to conclude that Michaela’s tenancy of the North Carlton property would be in jeopardy if, say, she and Saery decided to sell or rent out the property if it was transferred to them as joint proprietors, or if Saery decided to live in the property alone, leaving Michaela in the North Carlton property. I am also not convinced that it would not be open to Michaela and Saery, say, to sell the property and retain the proceeds, and continue to live in the North Carlton property and pay rent well below market levels.
[34]For the avoidance of doubt, I have not undertaken my own enquiries in this regard.
Given the significance of this issue to the current application, the (unexplained) absence of any precise evidence about the potential impact of any inheritance upon Michaela’s ability to continue to occupy the North Carlton property tells against an unquestioning acceptance of the proposition that Michaela faces ruinous and irremediable poverty and precarious housing security should the gift in the last will be reduced in value in order to make provision for the claimants. Put another way, I cannot be confident that the claimants’ applications should be dismissed solely on the basis that Michaela’s only pathway to housing security is to inherit and live in the property. If I were to accede to Michaela’s submissions in that regard in such an evidentiary vacuum, the otherwise legitimate claims of the claimants would be denied on a false, or at least uncertain premise.
Further, I am not persuaded that the emotional attachment of either or both of Saery to the property is so strong such that it carries much weight in the current proceeding so as to, in effect, defeat the claimants’ applications for provision from Vera’s estate. While I accept that the property was the long standing family home, there are many estates where the primary asset is a long held family home, to which family members will have a degree of sentimental or emotional attachment. It is only in extreme cases where the emotional attachment of a beneficiary to a particular property will materially affect the determination of a claimant’s application for further provision, or shape the manner in which further provision is ordered.[35]
[35]In Warriner v Warriner [2015] VSC 314 and Schmidt v Walter [2019] VSC 385, the very poor mental health of the relevant beneficiaries was a material factor in refusing to disturb the gift of a particular property, but such cases are rare.
In the current case, Michaela only lived in the property for about a decade, during the time she was undertaking her secondary and tertiary studies, and Saery has never lived at the property.
Further, I agree with the submissions advanced on behalf of the claimants to the effect that owning the property as a joint proprietor with Saery does not necessarily provide Michaela with the security she prizes so deeply. While I accept that, given Saery has lived with Michaela for most of his life, he is likely to continue to do so, that cannot be a foregone conclusion, given that at 41 he is still a relatively young man, and family relationships and personal priorities change. If Saery wanted to sell the property in order to realise his half share of the property, he would be legally entitled to do so, and doing so would be a relatively straightforward exercise. If that was to occur after Michaela relocated to live at the property, Michaela would arguably be in a worse position than she is now, at least as far as security of accommodation is concerned, as she would have surrendered her secure and affordable tenancy of the North Carlton property, and might be left with a cash sum insufficient to purchase a home of her own.
Accordingly, while the comparative financial needs of Michaela and the claimants (and each of them) are certainly relevant to the question of whether Vera owed the claimants a moral duty to provide for Marianne and Bernard, I do not accept Michaela’s submission that it is inconceivable that the Court could find such a moral duty by reason of the asset and income position of Michaela and Saery.
In particular, I do not accept that the uncompromising position adopted by Michaela in this proceeding, being that she (and Saery) should remain the sole heirs of Vera’s estate, adequately recognises the moral duty owed by Vera to the claimants given that the source of half of the assets of Vera’s estate was a person who owed a moral duty to the claimants, that the claimants have stood aside for more than two decades for the benefit of Vera, and that the claimants are now in their retirement years, with limited incomes and income earning capacity, and limited ability to improve their financial position. Further, while I accept that Saery has limited income and assets, he is still a relatively young man, and I accept that the moral duty owed by Vera to the claimants outweighed any moral duty owed by Vera to Saery.
While of course Saery does not have to establish need or otherwise justify his position as a beneficiary of the estate, it has long been accepted by the authorities that in circumstances where there are competing claims, particularly upon a modest estate, the claims of children (and by extension step-children) rank ahead of the following generation, as the responsibility for their maintenance and support is said to lie with their own parents.[36] Further, given that Michaela is single, and Saery is her only child, one would expect that any assets Michaela receives from Vera’s estate will ultimately make their way to Saery in due course.
[36]MacEwan Shaw v Shaw [2003] VSC 318 [216].
Michaela relied upon the decision of the New South Wales Supreme Court in Stevenson v Public Trustee (‘Stevenson’),[37] where a claim by two adult step‑children against an intestate estate (all of which went to the natural daughter of the deceased) was dismissed, as being analogous to the claims of the claimants in this proceeding. I disagree. In Stevenson,[38] the claimants were still in their prime income earning years, and were in a vastly superior financial position to the deceased’s natural daughter. There was no evidence that the claimants’ mother had made any material contribution to what was a very modest estate, and the claimants had also received substantial inheritances from their father. To the extent that the disposition of claims in other proceedings can give any guidance in what is a very fact dependent jurisdiction, Stevenson[39] is of limited, if any, assistance.
[37][2007] NSWSC 1464.
[38]Ibid.
[39]Ibid.
Finally, another argument advanced on behalf of Michaela and Saery in support of the proposition that Michaela’s need for housing security completely negates any moral duty owed by Vera to the claimants rests upon a series of propositions which are, on balance, not particularly persuasive, being:
(a) inheriting the property is Michaela’s (and Saery’s) only real prospect of obtaining housing security; and
(b) the claimants’ applications should not succeed, not only because they are unmeritorious in themselves, but because if the applications fail, the claimants will have to bear their own costs and pay the estate’s costs, and therefore it will not be necessary for the property to be sold in order to pay the parties’ legal costs in this proceeding.
It can be accepted for the sake of argument that the retention of the property maximises Michaela’s prospects of achieving home ownership, given the cost of residential property in metropolitan Melbourne, and the fact that Michaela has no other assets of substance (subject to the caveat that it would be a relatively simple matter for the joint tenancy between Michaela and Saery to be severed). However, Michaela’s submission to the effect that, the claimants’ applications should not succeed, because Vera’s estate should not be eroded by the costs incurred by the parties ignores two matters. First, in the absence of any evidence to the effect that the estate’s solicitors are acting pro bono, or on some kind of deferred payment plan, or any certainty that the claimants will be ordered to pay the estate’s costs, there is a real prospect that the property will need to be sold in order to meet the costs of the estate (estimated to be about $92,000), regardless of the outcome of the claimants’ applications.
Secondly, Michaela’s submissions to the effect that the claimants should not succeed so as not to burden the estate with costs ignores the fact that Part IV of the Act is beneficial legislation, focussed upon the question of whether a testator has failed to comply with their moral duty. While the question of costs may well be relevant to the quantum of any award for provision, particularly where there are competing demands upon a modest estate, it is difficult to see how the potential exposure of an estate to legal costs incurred by a claimant can inform the question of whether a testator owes a moral duty to make provision for a claimant, particularly a person with an otherwise meritorious claim, save perhaps in the case of very small estates. To accede to this submission, I would not only need to conclude that Vera owed no moral duty to the claimants (or that such a duty was completely outweighed by the needs of Michaela and Saery), but I would also need to find, in the absence of any argument on the issue, that not only would both of Marianne and Bernard fail in any application to have their costs paid from the estate if their applications were unsuccessful, but also that they would be liable to pay the estate’s costs of the proceeding. Neither outcome is a foregone conclusion.
Accordingly, I consider there is scope for the Court to make orders for provision for Marianne and Bernard so as to remedy Vera’s failure to fulfil her moral duty to the claimants, which will still leave Michaela and Saery with a significant capital sum which can contribute to the purchase of an alternative property, or can be invested to materially supplement their incomes. I shall now proceed to discuss the matters relevant to the quantum of the provision to be awarded to each of Marianne and Bernard.
Mandatory relevant considerations
As noted earlier in these reasons, having found that Vera owed the claimants a moral duty to make provision for them, when determining the amount of any further provision to be made to the claimants, the Court must have regard to the terms of the last will, any evidence of Vera’s reasons for making the dispositions she made in the last will, and any evidence of Vera’s intentions in relation to providing for the claimants.
It is abundantly clear from the terms of the last will and the wills made by Vera in 2006 and 2008 that she was, consistently with the evidence given by Michaela, very keen to ensure that Michaela and Saery had secure accommodation. The amendments made in the last will were said to have been made to ensure that the property could not be sold. I can infer that this arrangement was probably put in place to provide greater security of tenure for Michaela, although as previously observed, this arrangement can easily be circumvented by either Michaela or Saery.
It is also abundantly clear from the terms of the last will (and the terms of the wills made by Vera in 2006 and 2008), that Vera did not wish to make any provision for the claimants, and that as soon as she felt able to do so, she gave effect to those intentions. However, there is no other evidence as to why she considered that she did not owe any moral duty to the claimants, and accordingly excluded them as beneficiaries after Jack’s death.
Determining that Vera owed the claimants a moral duty to make provision for them requires Vera’s expressed intentions to be disregarded to some extent. However, Vera’s intention that Michaela and Saery be the primary beneficiaries of her estate can be given effect by providing pecuniary legacies to the claimants in amounts less than the sum which will ultimately go to Michaela and Saery, which in any event has already been tacitly conceded by the claimants.
Section 91(4)(c) of the Act provides that when determining what further provision ought to be made for each of the claimants, the Court must take into account the degree to which Bernard and Marianne are not capable, by reasonable means, of providing adequately for their own maintenance and support. Further, s 91(5)(a) of the Act provides that the amount of provision must not provide for an amount greater than is necessary for each claimant’s proper maintenance and support.
What amounts to “proper maintenance and support” has been the subject of considerable discussion in the authorities over the years. While I do not propose to traverse those authorities in any great detail here, the thrust of the authorities is to the effect that what amounts to adequate maintenance and support is not limited to provision for the bare necessities of life, or, on the other hand, complete protection from all potential headwinds, but should reflect to some extent the size of the estate, the competing demands upon the estate, and the testator’s view of the competing claims on the estate.[40] Accordingly, in order to establish what amounts to adequate provision for their proper maintenance and support, it is not necessary for the claimants to establish that further provision from Vera’s estate is necessary to alleviate poverty, but that further provision is necessary to maintain them in an appropriate station in life, and to assist them to guard against the vicissitudes of life, in the context of the size of the estate and the competing claims upon the estate.[41]
[40]Pontifical Society for the Propagation of the Faith v Scales (1962) 107 CLR 9, 19.
[41]Vigolo v Bostin (2005) 221 CLR 191 [122].
In the current case, both Marianne and Bernard are in their retirement years. While Bernard arguably has a better income earning potential than Marianne, given that he is younger, in better health, has less caring responsibilities, and is a qualified schoolteacher, the practical reality is that neither of the claimants has the capacity to substantially improve their incomes in the future given that they are both in their 70s. While both are married to younger spouses, Michael has a significant disability, the consequences of which are likely to become more severe over time, and Deborah works in relatively unskilled, low paid employment in the retail sector. Further, while both Bernard and Marianne own their own homes, they are co‑owned with their respective spouses, such that they would be financially vulnerable in the event of any marriage breakdown.
While Bernard has some superannuation, his overall financial position could be described as modestly comfortable rather than affluent, with there being some scope to generate further income from investments should he and Deborah downsize from their family home, but not necessarily a substantial income. Further, on current trends, his superannuation will be exhausted within eight years. Marianne, on the other hand, has no superannuation, no savings of any significance, and Michael’s superannuation is also quite modest. Without the provision of a capital sum of some substance from the estate, she has no buffer for any contingencies, or any ability to generate additional income to supplement her pension. Accordingly, while I accept that each of the claimants are in a better financial position than Michaela and Saery, the provision of a modest legacy to Marianne and Bernard will make a material difference to their financial wellbeing as they move into the later years of their lives, and provide them with greater financial security to meet any unforeseen contingencies, while still leaving the greater part of Vera’s estate available to provide for Michaela and Saery.
Discretionary factors
As noted above, when determining the amount of any provision to be awarded to a claimant, the Court may take into account the matters enumerated in s 91A(2) of the Act. My comments upon the discretionary factors follow.
(a)Any family relationship between the claimants and Vera, including the nature and length of the relationship
Vera became the claimants’ step-mother when they were teenagers. However, while Bernard did live with Vera and Jack for three years in the late 1960s, he was in his last years of secondary school at the time, so it could hardly be said that Vera acted in loco parentis. However, while Vera did not raise the claimants, with the exception of the rift, Bernard and Marianne were treated by Vera and Jack as members of the family for many decades, albeit that the degree of contact with Marianne was limited by reason of her living in Canberra. Further, Bernard was for all intents and purposes estranged from Vera (but not necessarily Jack) from about 1999. However, I agree that Bernard’s estrangement from Vera should not disqualify him from receiving any provision from Vera’s estate.
(b) Any obligations of Vera to the claimants, Michaela, and Saery
The obligations of Vera to the claimants have been discussed at some length earlier in these reasons. Vera clearly owed Michaela, her adult child, who had cared for her and is in financial need, an obligation to make substantial provision for her. Vera owed no particular obligation to Saery, as a non-dependent grandchild.
(c) The size and nature of the estate
The sole asset of the estate is property valued at $920,000. It is a house in fairly dated and worn condition, such that the main value of the property is attributable to the land it occupies. It will need to be sold in the event that further provision is made for the claimants.
(d)The financial resources, including earning capacity, and the financial needs at the time of the hearing and the foreseeable future of the claimants, Michaela and Saery
The differences in the incomes of the parties are not that great, especially if they are calculated on a household basis. Bernard’s household income is $61,533.00, which would be expected to fall a little when Deborah retires, and Marianne’s household income is $48,870.71, which would also be expected to fall a little when Michael ceases work. Michaela’s household income (that is, including Saery’s income) is $47,691.00, which may increase a little if Michaela’s yoga teaching practice resumes, although it would fall significantly if Saery left home. She also pays nearly $300 per week in rent, while Marianne pays approximately $120 per week in body corporate fees. Bernard’s housing related expenses are presumably limited to rates and maintenance. However, the real difference between Michaela and Saery on the one hand, and the claimants on the other hand, is their asset position.
Bernard, together with his wife Deborah own their own home, which is of a similar value to the property, and they have some superannuation. Their income and assets are probably insufficient to maintain the comfortable but modest lifestyle at its current level without an injection of capital from some source. At the age of 70, Bernard is unlikely to be able to work again as a schoolteacher, although part-time employment in a similar field may not be completely out of the question. Deborah is in part-time and low paid employment.
Marianne is 74, and, having some disabling health conditions and significant caring responsibilities, has not worked for more than a decade. Michael, while younger, is unlikely to be able to significantly increase his earnings given the health issues associated with his disability. While Michael (directly) and Marianne (indirectly) receive significant NDIS funding, a substantial part of that funding goes to equipment and consumables, and Michael’s care and support needs are high. Marianne has no superannuation, and very limited income.
Michaela, at 70, has a low income and no assets. While her health is good for her age, and she has an established yoga teaching practice, one might expect that her opportunities to earn additional income in the future are quite limited.
Saery has no assets, and a low income, and what seems to be on the limited evidence available a chequered employment history. At 41, his prospects for earning income and accumulating assets in the future are the main unknown variable in the current proceeding.
(e)Any physical, mental or intellectual disability of the claimants, Michaela and Saery
Bernard and Michaela both appear to be in reasonably good health for their age: Marianne far less so. Saery suffers some physical ailments, and some ongoing psychological consequences of his assault in 2004, but it is unclear as to whether his physical and mental health conditions preclude him from ever gaining employment.
(f) The age of the claimants
Marianne is 74 years of age, while Bernard is 70: that is, both are retirement age, but by current standards would not be considered to be elderly, and they would be expected to live for many years yet.
(g)Any contribution (not for adequate consideration) of the claimants to the building up of the estate and the welfare of Vera and/or her family
Arguably, the claimants contributed to Vera’s estate by refraining from making a claim to Jack’s share of the property after Jack’s death, because, as stated by Marianne in her evidence, it would have been disrespectful to Vera. The claimants made no other material contribution to building up the estate. Bernard did provide some assistance and care to Jack during his last illness. While Marianne lived interstate, there was nothing to suggest that she was other than a caring and dutiful daughter and step‑daughter.
(h) Any benefits previously given by Vera to the claimants, Michaela or Saery
It does not seem that Vera provided any material benefits of any significance to any of the parties, apart from accommodation and board for Bernard and Michaela when they were young.
(i) Whether the claimants were being maintained by Vera
While Vera maintained Michaela when she was young, neither of Marianne or Bernard were maintained by Vera, save for Bernard for a short period in the late 1960s.
(j) The liability of others to maintain the claimants
Both Michael and Deborah have obligations to maintain Marianne and Bernard respectively, but both are somewhat constrained in their capacity to do so, for different reasons. Those obligations are mutual.
(k) The character and conduct of the claimants or any other person
There has been no disentitling conduct on the part of any relevant party, and there is nothing in the evidence to call into question the character of any relevant party. While Bernard and Vera were largely estranged as a result of the rift, I accept that, in the circumstances, the position adopted by Bernard in response to Vera’s accusations concerning the behaviour of his children was understandable. In any event, the rift did not prevent him providing assistance and care to Jack during his last illness. Michaela was clearly a caring and devoted daughter, particularly in Vera’s final years.
(l)The effects a family provision order would have on the amounts received from Vera’s estate by Michaela and Saery
Any order for further provision for the claimants or either of them will have a substantial effect on the further provision for Michaela and Saery, particularly if the claimants’ costs are ultimately payable from the assets of the estate. If no further provision was ordered, Michaela and Saery would be the joint proprietors of a property worth $920,000, with a small sum of cash also being available to meet Michaela’s liability to Bernard for the costs of the s 15 proceeding. If any provision were to be made for the claimants, or either of them, the property will have to be sold. The impact of this further provision upon the prospects of Michaela and/or Saery being able to acquire further property would depend upon the amount of further provision ordered, how the burden of any further provision ordered is to be borne, what arrangements Michaela and Saery come to as between themselves, and the question of costs. However, there is no question that the award of further provision for either or both of Marianne or Bernard will have a real material impact upon the provision which can be made for Michaela and Saery from Vera’s estate.
(m) Any other matter the Court considers relevant
Two matters are relevant here. On the one hand, while not determinative, the fact that half of the value of Vera’s estate was derived from Jack’s share of the estate in effect provides a ceiling upon the quantum of the claimants’ claim, but it also suggests that any award made to the claimants should be more than a token amount, subject of course to the evaluation of the comparative needs of each of the parties. On the other hand, matters which would tell against an award of provision to the claimants in an amount approaching the value of half of the estate are Michaela’s particular financial circumstances (which have already been the subject of discussion in these reasons), and her role in providing substantial care and support to Vera in the decade or so after Jack’s death while her health was declining.
What provision ought to be made for Bernard and Marianne?
Determining the quantum of any order for further provision, having regard to the mandatory and discretionary considerations in the Act, is far from an exact science. Further, while the existence and content of a testator’s moral duty is to be assessed at the time of Vera’s death, by consideration of the facts and matters known to her at that time, the time for assessing the needs of the claimants is at the time of the trial.[42]
[42]Baxter v Baxter [2014] VSC 377 [60].
While Vera would presumably not have had a detailed understanding of the financial position of the claimants at the time of her death, she must have appreciated that they were in or approaching their retirement years, and in the case of Marianne, that she had retired from the workforce. She would of course have been aware that they had received no provision from Jack’s estate. As stated by McMillan J in Baxter v Baxter,[43] (omitting footnotes):
[43][2014] VSC 377.
In determining how much provision to award, the Court is exercising a discretion. The Court’s approach to the quantum of provision is careful and conservative. The authorities are clear that there is no presumption that beneficiaries within the same ‘class’ should be treated equally and the circumstances of each case must be considered by the court.
In Collins v McGain, the Court said that it was not necessary for an applicant for provision to identify particular needs that have not been adequately provided for. This is so because, in determining what is adequate provision for an applicant’s proper maintenance and support, the Court is entitled to allow for contingencies that are no more than mere possibilities, eg, future marriage difficulties or financial mismanagement. Tobias JA said:
the question of needs must not be too narrowly focused. It must, in my view, take into account, depending on the circumstances of the case, present and future needs including the need to guard against unforeseen contingencies.
He has focused too much on the particular or specific needs of the appellant rather than upon his needs in the ‘relevant sense’, namely, in the sense of what was necessary for the appellants’ ‘proper maintenance, education and advancement in life.’
In Sellers v Hyde, Mandie J accepted that, whilst evidence of living expenses, including expert evidence as to the capital sum required to produce a certain income stream over various periods of years, was useful, the Court had to take a ‘broad brush’ approach rather than an arithmetical approach to the award of provision.[44]
[44]Ibid [102]-[104].
Turning now to the position of the individual claimants, Bernard, while not wealthy, is in a clearly better financial position than both Marianne and Michaela. While the income he and Deborah are able to generate (and will be able to generate) from their current assets is quite modest, and on current trends Bernard’s superannuation fund will be exhausted within a decade, it would presumably be open to him and Deborah to free up more capital by downsizing from their family home. The evidence makes it clear that the additional expenditure he expects to incur in the post‑pandemic era is largely expenditure on discretionary items.
The expert accounting evidence relied upon by Bernard indicates that the further capital sum of $156,000 is required to enable Bernard and Deborah to maintain their current standard of living for the rest of Bernard’s life. While this evidence was subject to some criticism by Michaela, on the basis that the assumptions in the model used by Mr Muir to generate this sum undercounted income in one year, and used an unduly conservative rate of return on investment, it seems to me that these criticisms only affect the validity of the model at the margins, if at all. Further, Mr Muir’s model fails to take into account matters which might negatively affect Bernard’s financial position in the future, such as disability or ill health, or the end of his marriage, such that the figure generated by Mr Muir under the second scenario modelled by him provides a reasonably reliable guide to what capital sum would be required to enable Bernard and Deborah to maintain a modest but comfortable standard of living.
However, Bernard’s claim for further provision, to the extent that it relies upon Mr Muir’s evidence, is based upon what capital sum is required to enable Bernard and Deborah to maintain their current standard of living. While I have found that Vera owed a moral duty to make further provision for Bernard, she owed no duty whatsoever to contribute to Deborah’s material wellbeing, particularly in circumstances where there are a number of meritorious competing claims upon what is a reasonably modest estate. Accordingly, and while I accept that is a somewhat crude approach, I consider that an appropriate amount of further provision for Bernard is in the sum of $75,000. Further, I note that Michaela owes Bernard an as yet unfinalised sum for the costs of the s 15 proceeding, which does not appear to have been taken into account in Mr Muir’s model. Accordingly, the amount to be paid to Bernard should be reduced by $10,000 to reflect an approximate amount which may be payable to Bernard by Michaela on account of the costs of the s 15 proceeding, thus reducing the provision to be made for Bernard from Vera’s estate to $65,000.[45]
[45]For the avoidance of doubt, the sum of $65,000 is exclusive of any amount payable by Michaela to Bernard on account of the costs of the s15 proceeding. Further, the reference to the sum of $10,000 in respect of those costs is indicative only, and should not be taken as fixing the amount which may ultimately be recoverable by Bernard with respect to those costs.
As for Marianne, she is clearly in greater need than Bernard, as she has no superannuation, no other assets of substance apart from the Belconnen apartment, and the demands upon her from her health and her caring responsibilities are more acute. It is difficult to calculate with any real precision what is an appropriate sum, such that, again, a broad brush approach is appropriate. In my view, Marianne ought to be awarded the sum of $105,000. This sum in effect replaces the superannuation Marianne had prior to paying down her mortgage in 1996, and provides an additional sum to purchase the wall bed she clearly desires, and which will materially assist her in her day‑to‑day life. While of course the purchasing power of her superannuation fund has declined since 1996, she has also had the benefit of not having to pay mortgage interest on that sum since that time. A legacy of this sum provides a fund which could be invested to generate additional income, or could be drawn down upon to meet any unexpected additional expenses.
Accordingly, I will order that total provision of $170,000 be ordered in favour of Bernard and Marianne. On the assumption that the net selling costs of the property will be in the order of $900,000, this leaves a fund in the estate of approximately $730,000 to meet any successful applications for costs, with the balance to be given to Michaela and Saery.
I shall hear further from the parties as to the form of order to give effect to these reasons, whether I need to hear further submissions upon where the burden of the provision ordered for the claimants should fall as between Michaela and Saery (if that cannot be agreed between them), and the question of costs.
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