Lewis v Every
[2013] VSC 445
•28 August 2013
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
S CI 2007 6952
IN THE MATTER of Part IV of the Administration and Probate Act 1958
- and -
IN THE MATTER of the Estate of Donald Wright, deceased
| THE ESTATE OF ELVA JANIS LEWIS (DECEASED) and PETER NILS JOHN LEWIS | Plaintiffs |
| v | |
| TIMOTHY AFRIC ROGERS and ROBERT WINSTON EVERY (who are sued as the Executors of the Estate of Donald Wright, deceased) AND ORS (according to the schedule attached) | Defendants |
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JUDGE: | DALY AsJ | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 7 and 8 August 2013 | |
DATE OF JUDGMENT: | 28 August 2013 | |
CASE MAY BE CITED AS: | Lewis v Every | |
MEDIUM NEUTRAL CITATION: | [2013] VSC 445 | |
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TESTATOR’S FAMILY MAINTENANCE – Application by son‑in‑law of deceased for further provision – Obligations of testator towards carer of testator’s ill and disabled child – Suitability of life interest – “Extended” life interest.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Mr W. Gillies | Andrew P. Melville Lawyers |
| For the Second Defendant | Mr R. Cook | Rogers + Every |
| For the Third to Seventh Defendants | Mr M. McKenzie | Nicholas W.J. Rolfe Pty Ltd |
HER HONOUR:
Mr Peter Lewis is the son-in-law of the deceased, Mr Donald (“Don”) Wright and his late wife Mabel. He is the surviving plaintiff in this action. His late wife, Elva Lewis, was the only daughter of Don and Mabel. Elva died on 8 December 2009, and prior to her death was the first plaintiff.
Elva suffered ill health for many years prior to her death. She had renal problems for many years, and had a heart attack in 1999, followed by various complications. Also, Elva was profoundly deaf following a childhood accident. While she did work for some years after leaving school, she ceased work shortly after her marriage to Peter in 1978, and never worked again. Peter retired from his employment with Uncle Toby’s in 1999 to become a full time carer for Elva following her heart attack.
Since about 1987, Elva and Peter lived in a house in Rutherglen purchased by Don and Mabel for their use (“Rutherglen property”). Don and Mabel paid the rates and insurance while Elva and Peter paid for other outgoings and their living expenses, at first from Peter’s wages, and later from their social security benefits, with Peter receiving a carer’s pension after 1999.
Don and Mabel maintained regular contact with Elva and Peter over the years, and vice‑versa. There was nothing to suggest that the relationship between them was anything other than warm and familial.
Don died in 2007, Mabel having predeceased him. At the time that probate was granted on or around 4 October 2007, Don’s estate consisted of the following assets:
(a)the Rutherglen property, then valued at $195,000; and
(b)various bank accounts and other managed investments totalling $505,868.23.
Don’s will provided, relevantly, as follows:
3.That should my said wife predecease me or die within thirty days from the date of my death then I DIRECT my Trustees:-
(a)to permit my daughter ELVA JANIS LEWIS to reside in my dwelling house situate at Rutherglen in the said State during her lifetime my Trustees paying out of the income of the residue of my estate all property expenses including rates and other outgoings assessed on the said property and keeping the buildings erected thereon in good repair and keeping the buildings insured against loss or damage by fire and storm and tempest and such other risks as my Trustees may in their absolute discretion determine and paying the insurance premiums thereon AND I EMPOWER my Trustees at the request of my said daughter to sell the said residence and to employ the proceeds of such sale in the purchase or erection of another residence to be held upon the same trusts including the trusts for sale and erection or repurchase as are herein declared in respect of the original residence or alternatively at the request of my said daughter to invest the proceeds of such sale and to pay the nett annual income arising therefrom to my said daughter during her lifetime in addition to any other payments by this my Will directed to be made to my said daughter AND I DIRECT that on the death of my said daughter that the said residence or substitute residence or the proceeds of sale thereof shall fall into and form part of my residuary estate;
(b)to pay and/or apply the income from the rest and residue of my estate for the maintenance advancement in life or benefit of my said daughter in such manner as my Trustees may in their absolute discretion determine; and
(c)upon and after the death of my said daughter to divide the residue of my estate into two equal undivided half parts or shares and to pay one such equal undivided half part or share to my nephews JOHN WRIGHT and MALCOLM WRIGHT and to my nieces SUSAN WRIGHT and FAYE SHEBANI as tenants in common in equal shares and to pay the remaining one equal undivided half part or share to my wife’s niece VALERIE EDITH COOK for her own use and benefit absolutely.
…
5.I DECLARE that I have made provision for my daughter in the manner herein provided as my daughter has suffered and continues to suffer from a disability and by reason of such disability has experienced difficulty in accumulating and retaining property and it is my wish that the corpus of my estate be preserved and that my said daughter have the benefit of the income therefrom during her lifetime.
All of the nieces and nephews of Don referred to in clause 3(c) of Don’s will are the children of Don’s youngest brother.
This proceeding was commenced on 29 June 2007. Elva and Peter brought claims against Messrs Timothy Rogers and Robert Every, in their capacities as executors of Don’s estate. In fact, Mr Rogers never assumed the role of executor. The proceeding lay dormant until a summons for directions was issued on 4 December 2008. At the first directions hearing in February 2009, orders were made for the notification of the residuary beneficiaries of the estate (“beneficiaries”). While it is not recorded in the authenticated order, Efthim AsJ made a notation on the court file that “The plaintiffs seek the entire estate”. The beneficiaries filed their appearances in April 2009. There was open correspondence between solicitors in the latter part of 2009 regarding possible settlement options, and an informal mediation was held at around this time. However, the matter was not resolved at the time of Elva’s death in December 2009.
The matter lay dormant again until March 2012, when the beneficiaries filed a summons seeking that the proceeding be dismissed for want of prosecution. This application was dismissed by Zammit AsJ in June 2012, and directions were given for the filing of any further affidavit material, and for a mediation to be held. A mediation was conducted on 1 August 2012, and on 21 August 2012 the proceeding was fixed for trial on 1 March 2013. This trial date was adjourned as a result of the uncertainty regarding the size of the estate as a result of the collapse of Banksia Securities Ltd (“Banksia”), where a substantial proportion of the cash assets of Don’s estate were invested.
In the course of his opening at trial, counsel for Peter sought the following provision from Don’s estate:
(a)transfer of the Rutherglen property to Peter; and
(b)payment to Peter of the sum of $300,000 absolutely.
Counsel for the beneficiaries, supported by counsel for the second defendant (“executor”) conceded that, in hindsight, Don’s will had not made adequate provision for Peter, possibly, it was suggested, because of the not extraordinary assumption that Elva would survive Peter. However, they rejected the contention that adequate provision for Peter required the transfer of the Rutherglen property and a sum of cash to him absolutely, and contended that the provision originally made by Don for Elva in his will ought to be modified, in Peter’s favour, as follows:
(a)Peter to have an “extended” life tenancy in the Rutherglen house, “extended” in the sense that there be sufficient flexibility to enable the Rutherglen property to be sold and the proceeds of sale be applied to fund Peter to live somewhere more suitable, or to gain access to supported accommodation, if necessary;
(b)Peter to have a life interest in the income from the capital sum of $100,000, from which rates, insurance, and other outgoings and expenses could be met; and
(c)the balance of the assets of the estate be paid to the beneficiaries in the proportions provided for in Don’s will.
Peter relied upon four affidavits sworn by him on 11 December 2008, 15 May 2012, 13 February 2013, and 2 August 2013. Counsel for Peter also tendered, without objection, an affidavit sworn by Elva on 30 January 2009, a document prepared by his instructors accounting for the disposition of funds paid by the executor to Elva prior to her death in accordance with the terms of Don’s will, and a bundle of correspondence regarding an open offer made on behalf of Elva and Peter in late 2009. The executor, Mr Robert Every, swore affidavits on 24 April 2009, 17 May 2012, and 6 August 2013. He was not cross‑examined on his affidavits, but a solicitor at his former firm, who now has the day to day conduct of the estate file, gave evidence by telephone regarding certain matters concerning the current assets of the estate.
The beneficiaries relied upon the affidavits sworn by each of them, as follows:
(a)Valerie Edith Cook (Mabel’s niece) sworn 14 May 2012;
(b)Faye Carolyn Shebani (Don’s niece) sworn 15 May 2012;
(c)Susan Wright (Don’s niece) sworn 15 May 2012;
(d)John Stuart Wright (Don’s nephew) sworn 30 July 2012; and
(e)Malcolm Bruce Wright (Don’s nephew) sworn 30 July 2012.
Each of Valerie Cook, Faye Shebani, and Susan Wright were cross‑examined on their affidavits. Neither John or Malcolm Wright attended court, but their affidavits were tendered without objection. However, counsel for Peter submitted that I should give them little weight.
The original affidavits sworn by Elva and Peter in support of their claim substantially mirrored each other. The following narrative can be derived from their affidavits, none of which is a matter of any dispute.
Elva was adopted by Don and Mabel when she was about three years old. They had no other children. She has been profoundly deaf since a childhood accident at a swimming pool. She left Echuca High School after Year 8. She moved to Melbourne when she was 15, and worked as a process worker at Cash’s labels, and then at the Nugget factory. She ceased work after she married Peter in 1978, to try and start a family, unsuccessfully.
Peter was born in 1945, and left school at about 15. He holds no qualifications, and has worked in various unskilled labouring or warehouse jobs until being transferred to the Uncle Toby’s factory near Rutherglen in 1980. Peter worked there as a process worker until 1999, when he retired to become Elva’s fulltime carer after her heart attack.
Elva’s health problems were significant and wide ranging. She underwent extensive periods of medical treatment in hospital in Melbourne, Wodonga, Wangaratta and Corowa. Prior to her death she was receiving dialysis treatment three to four times per week in Wangaratta. Neither Elva nor Peter drove a car, so all trips were made by public transport or taxi (the latter paid for by the relevant hospital). They received companionship and support from a small circle of friends and neighbours in Rutherglen. Peter’s health, while not poor, is not excellent. He requires daily medication for hypertension and hypercholesterolaemia.
For most of their time in Rutherglen, Elva and Peter lived in the Rutherglen property, purchased for them by Don and Mabel. They enjoyed a good relationship with Don and Mabel while they were alive, and they would visit each other from time to time. They lived modestly, first on Peter’s wages, and then on social security benefits. Peter’s superannuation payout has been consumed by living expenses. Apart from some payments from the estate under the terms of the will (which ceased upon Elva’s death), Centrelink remains the sole source of Peter’s income. At the time of trial, Peter gave evidence that he receives $720 per fortnight from Centrelink. From this he pays for his food, utilities and other expenses. He “gets along” on the pension. He has no funds put aside for a rainy day, and cannot afford to pay the sum of $10,000 required to repair the damage caused to the Rutherglen property by a tornado which swept through Rutherglen in March this year.
The beneficiaries, Elva’s cousins, swore brief affidavits regarding their financial circumstances and their relationship with Don, Mabel, Elva and Peter.
Valerie Cook was Mabel’s niece. She was only a few months younger than Elva, and they spent a lot of time together as children. They remained in some contact until her death. She had a close relationship with Don and Mabel, visiting them regularly in Bendigo while her son lived in Bendigo. She took on some of the responsibilities that a natural child would have for his or her parents.
When she attended Elva’s funeral, she told Peter that: “No matter what anyone was saying he could stay in the house.”
Since Elva’s death she has only spoken by telephone to Peter once, despite trying on numerous occasions. During her oral evidence, she confirmed that she spoke to Peter again on the telephone after the tornado.
Mrs Cook deposed that she was divorced, having been married for nearly 30 years. She has four adult children, one of whom, her daughter, has been unable to work since an emotional breakdown in or around 2011. In her oral evidence, she deposed that she has drawn down upon $20,000 of the equity in her home in order to financially assist her daughter. She owns her own home in Lockington, north of Bendigo, for which she paid $109,000 in 2006. Prior to the draw down referred to above, she had repaid the mortgage originally secured over the property, in part with funds from a property settlement with her ex husband, and also from funds borrowed from one of her sons. She has no superannuation, and has savings of $10,500. She drives a 1988 Hyundai Lantra station wagon valued at about $1,500. She is dependent upon the widow’s pension of $808 per fortnight. She meets her expenses by being very careful with money.
Faye Shebani, a niece of Don, was born in 1972. She did not have a close relationship with Elva, given the substantial age difference between them. However, her father and Don were very close (her parents having moved to Echuca to live near Don and Mabel) and her family often visited Don and Mabel and received visits from them in turn. She considered Don a “father figure” after the unexpected death of her father when she was 21, and regularly visited Don and Mabel in Bendigo.
Ms Shebani is married, and has recently returned to work for two days per week. She lives with her husband and two young children at their home in Echuca, which is valued at approximately $260,000. Their combined income is $68,000 per annum, and her husband provides some financial support to his family in Libya.
Susan Wright is a niece of Don’s. She is 45 years of age, and lives in rental accommodation in Ocean Grove. She is employed casually as an emergency school teacher. Her earnings over the past few years have ranged between $18,615 to $32,432 per annum. She has a modest superannuation, a car valued at $15,000 and savings of $137,566. Her savings have been substantially boosted by recent gifts of $50,000 from each of her two brothers.
During her childhood, Ms Wright and her family spent quite a lot of time with Don and Mabel. When she moved to Melbourne in the 1980s to attend university, Don and Mabel helped her settle in to her accommodation. In 2002 and 2003 she was living and studying in Bendigo and she visited Don and Mabel regularly, driving them to do errands as Don was struggling to drive. She helped them move into their aged care facility in Bendigo. However, she rarely saw Elva or Peter, as Elva was much older than her, and rarely travelled from Rutherglen.
John and Malcolm Wright both swore affidavits, but did not attend court. John is a dairy farmer in Lockington, having purchased the family farm and a neighbour’s farm. He has a substantial debt, and a taxable income of $40,000 per annum. He is divorced, and shares custody of his two children. He regularly visited Don and Mabel in Bendigo.
Malcolm is a qualified plumber, and lives in Adelaide. He owns a house with a mortgage. He earns $1,150 per week, and pays child support for his child. His income is consumed by his expenses.
Counsel for Peter criticised the affidavits of John and Malcolm as being lacking in detail regarding their true financial position, and noted that each were in a position to give their sister Robyn $50,000 each.
There was no real dispute between the parties as to the applicable law, or the principles to be applied. The classic test as to whether the court’s jurisdiction to make further provision for an applicant is enlivened, having regard to the matters set out in s 91(4) of the Administration and Probate Act 1958 (Vic) (“Act”), is:
Whether the deceased – as a wise and just testator – has fulfilled his moral obligation to make adequate provision for the claimant’s proper maintenance and support.[1]
[1]Blair v Blair , (2004) VSCA 149, at [13].
Section 91(4) of the Act provides as follows:
(4)The Court in determining—
(a)whether or not the deceased had responsibility to make provision for a person; and
(b)whether or not the distribution of the estate of the deceased person as effected by—
(i)the deceased's will; or
(ii)the operation of the provisions of Part I, Division 6; or
(iii)both the will and the operation of the provisions—
makes adequate provision for the proper maintenance and support of the person; and
(c)the amount of provision (if any) which the Court may order for the person; and
(d)any other matter related to an application for an order under subsection (1)—
must have regard to—
(e)any family or other relationship between the deceased person and the applicant, including the nature of the relationship and, where relevant, the length of the relationship;
(f)any obligations or responsibilities of the deceased person to the applicant, any other applicant and the beneficiaries of the estate;
(g)the size and nature of the estate of the deceased person and any charges and liabilities to which the estate is subject;
(h)the financial resources (including earning capacity) and the financial needs of the applicant, of any other applicant and of any beneficiary of the estate at the time of the hearing and for the foreseeable future;
(i)any physical, mental or intellectual disability of any applicant or any beneficiary of the estate;
(j)the age of the applicant;
(k)any contribution (not for adequate consideration) of the applicant to building up the estate or to the welfare of the deceased or the family of the deceased;
(l)any benefits previously given by the deceased person to any applicant or to any beneficiary;
(m)whether the applicant was being maintained by the deceased person before that person's death either wholly or partly and, where the Court considers it relevant, the extent to which and the basis upon which the deceased had assumed that responsibility;
(n)the liability of any other person to maintain the applicant;
(o)the character and conduct of the applicant or any other person;
(p)any other matter the Court considers relevant.
Counsel for Peter relied upon, in particular, s 91(4)(e), (f), (g), (h), (i), (j) and (m) of the Act.
It was not really in dispute that Don, in all of the circumstances, owed a moral duty to make provision for Peter. After all, Elva was a person who was not physically or intellectually well equipped to take care of herself throughout her life. She suffered a lifelong disability, which was, among other things, socially isolating. Her education was limited, and her limited capacity for employment was reduced to nil following her heart attack in 1999. Her need for treatment and care escalated to the extent that, in reality, she needed full time or close to full time care in the decade prior to her death. If it had not been for the loving care and companionship provided to her by Peter, the task of providing or arranging for care to be provided to Elva would have no doubt fallen to Don and Mabel, just as they reached their declining years. It may well not have been anticipated that Peter would have survived Elva, but, that eventuality should have been considered, and addressed by Don in his will.
The real issue between the parties is not whether further provision should be made, but the nature and quantum of that provision. Counsel for Peter submitted that only a transfer of the freehold title of the Rutherglen property to Peter, along with a nest egg of $300,000, would amount to adequate provision for Peter from Don’s estate. Awarding a life tenancy only would not amount to proper provision, because it will not allow for sufficient flexibility for Peter, and, given that none of the beneficiaries have expressed or demonstrated any interest in Peter’s welfare, it would not be appropriate for any of them to be a trustee of Peter’s life interest. Further, counsel submitted none of the beneficiaries have had the degree of relationship that Elva and Peter had with Don and Mabel, and, while their financial positions vary, none are as poor as Peter. None were dependent upon Don and Mabel in the manner in which Elva and Peter were dependent upon Don and Mabel, or at all. Each of them has at least one parent who is still alive, such that they may have expectations of further improvements in their financial circumstances by way of inheritance.
The beneficiaries, supported by the executor, submitted that the proposal advanced on behalf of the beneficiaries, that Peter hold an “extended” life interest in the Rutherglen property and the income from the sum of $100,000, amounted to more than adequate provision for Peter, having regard to the principle of freedom of testation, and Don’s declared intention that his assets ultimately be deployed for the benefit of his and Mabel’s family. If a substantial part of Don’s estate were to pass to Peter, this would be directly contrary to Don’s wishes, as Peter has given evidence that in his will, he would leave his estate to various hospitals in which Elva was treated. Counsel for the beneficiaries submitted that an extended life interest provided more than adequate flexibility to meet Peter’s current and future needs, and that the beneficiaries had no difficulty with any proposal that any trust imposed in favour of Peter be managed by either his solicitors in this proceeding, or some other appropriate trustee acceptable to him.
I agree, with some qualifications, with the position advanced by the beneficiaries and the executor that a life interest in the Rutherglen property (incorporating sufficient flexibility in its terms to enable the financing of alternate accommodation as Peter’s needs change over time) is adequate and proper provision for Peter from Don’s estate. This outcome also acknowledges Don’s clear testamentary intention to benefit the beneficiaries, with whom Don and Mabel clearly enjoyed a close and enduring relationship, and probably a stronger relationship than many equivalent relationships in other families. While there is no evidence that there are any other nieces and nephews that could have benefited under Don’s estate, I can infer that it is likely that there would be other nieces and nephews, given that there is evidence from the beneficiaries that both Don and Mabel came from reasonably large families. (Don was the eldest of six, and Mabel was one of eight). If that is indeed the case, then Don, and presumably Mabel before him, made a careful, considered decision as to where they wanted their assets to go after meeting their responsibilities for Elva.
It is correct to say that Peter demonstrates a greater need than the beneficiaries, save for perhaps Valerie Cook. But those needs can be met quite adequately by the provision of secure accommodation, a modest capital sum to enable him to effect necessary repairs to the Rutherglen house and some minor improvements in keeping with the state and value of the property, and some additional income to supplement his pension to enable him to live with some dignity and comfort.
In making this determination I have had regard to the authorities regarding what might be awarded to claimants outside the traditional class of claimants, but past decisions, while helpfully illustrative, are not determinative. The nature of this jurisdiction and the requirements of the Act necessitate an evaluation of the particular circumstances of each claimant in each case, and classifying claimants into different “classes” is not necessarily always helpful.[2] Counsel for the beneficiaries has attempted to classify this as a “carer’s” case (and once removed at that), where, it was submitted, the courts have been reluctant to find that the testator’s duty to make provision has been triggered, and if so, have been reluctant to order what might be considered an overly generous provision, particularly at the expense of blood relatives.
[2]See Thompson & Ors v MacDonald & Ors [2013] VSC 150, at [10].
In some respects, Peter’s claim could be classified as a “carer’s case”. But, it is more than that. There was an enduring, and by all accounts positive family relationship between Elva and Peter on the one hand and Don and Mabel on the other. Elva’s disabilities, other limitations, place of residence, and ill health meant that she and Peter were not in a position to provide the usual support that a daughter and son‑in‑law would provide to ageing and frail parents, and the evidence suggests that this role was assumed at least to some extent, by some of the beneficiaries, in particular, Valerie Cook, and, perhaps to a lesser extent, by Don’s nieces. However, Peter’s care and support for Elva must have provided great reassurance and comfort to Don and Mabel over the decades since their marriage.
Further, in addition to the overarching moral duty owed by Don to Peter, a number of matters referred to in s 91(4) of the Act are relevant. Peter was Don and Mabel’s son‑in‑law for nearly 30 years. While one can understand Don and Mabel’s desire to provide for certain nieces and nephews, they were not under any particular obligation to provide for them, with the possible exception of Valerie Cook. The beneficiaries’ prospects of making their own claims under the Act would have been poor. The size of the estate, while not large, is not so modest as to be unable to make suitable provision for Peter as well as to fund reasonable legacies for the beneficiaries.
Peter’s financial position is poor, and, in the absence of any provision from the estate, he would be in very difficult straits. His needs are modest, but a supplement to his Centrelink income would be appropriate to help him meet his outgoings and fund modest luxuries such as an occasional holiday. He also could not, from his own resources, fund any necessary repairs and renovations to the Rutherglen property. While it cannot be said that any of the beneficiaries appear to be wealthy, none of them could be said to be impecunious. While Peter’s health is not particularly poor, given his age (68), it is unlikely to improve.
One particularly significant matter of relevance is that, since at least 1987, Don and Mabel maintained Elva and Peter, by providing them with rent free accommodation at the Rutherglen property. This assistance involved at least an implicit recognition by them that, by reason of Elva’s disabilities and lack of skills, and Peter’s limited income earning capacity, combined with their lack of financial sophistication (as confirmed by the manner in which Peter gave evidence at trial), the couple were unlikely to be able to accumulate sufficient assets to be able to own their own home, or even secure appropriate accommodation, without their help. There is no evidence of any alternative means of support for Peter, either before or after Elva’s death.
Accordingly, I consider that proper provision for Peter from Don’s estate requires:
(a)a life interest in the Rutherglen property, with appropriate flexibility to enable him to secure alternative suitable accommodation if necessary; and
(b)the setting aside of a capital sum on trust to generate an income to supplement Peter’s pension, with some provision for a suitable trustee to draw down a portion of that capital sum to fund any necessary and appropriate repairs to the Rutherglen property.
Before determining what the capital sum might be, and what proportion might be allowed to be utilised for capital expenditure, it is necessary to consider the size of the estate, including the value of the Rutherglen property, and Peter’s expenses.
The evidence of the executor, as supplemented by the oral evidence of Ms Jackson, the solicitor at Rogers & Every now handling the estate file, shows that the estate includes, along with the Rutherglen property:
(a)a term deposit balance of $427,611.12;
(b)a trust account balance of $114,695; and
(c)an unredeemed balance of a term deposit with Banksia of $176,406.00.
The bank balances at (a) and (b) above include a partial refund of a $500,000 term deposit with Banksia, which was frozen upon the appointment of external controllers to Banksia. The best information available is that Banksia’s depositors will receive a total return of 80 cents in the dollar, so, in the current case, approximately $400,000. As such, only a further $76,000 is likely to be realisable from Banksia, leaving the total net cash position of the estate in the order of $620,000. From this amount, for the purposes of the current analysis at least (and subject to later submissions) the legal costs of the parties, including the costs to be incurred in winding up the estate, the sum of $150,000 needs to be deducted, leaving a cash balance of approximately $470,000.
The valuations of the Rutherglen property vary between a low of $105,000 and a high of $190,000. The parties agreed that a valuation of $150,000 to $155,000 from a recent “drive by” inspection represented a reasonable estimate for the purpose of determining the size of the estate. The potential capital gains tax liabilities which might arise on a scale of the Rutherglen property are uncertain, but are unlikely to make a substantial difference to the size of the estate.
Turning to Peter’s needs, the document provided to the Court by his solicitors shows Elva and Peter’s expenditure from the sum of $65,818.27 paid to them for Elva’s benefit pursuant to Don’s will in 2008 and 2009. This document records a number of substantial “one-off” expenditures, such as the purchase of a wheelchair for Elva and her funeral costs, as well as furniture and legal costs. However, an analysis of the more “routine” expenditure, including modest sums for holidays, along with the executor’s records showing payment for rates and water charges for the Rutherglen property, indicates that an income of approximately $7,000 per annum would be sufficient to meet the outgoings and expenses associated with the Rutherglen property, including rates, utilities and insurance, and provide funds for the occasional purchase of furniture and the occasional holiday. At current (historically low) interest rates,[3] this would require the investment of a capital sum of $180,000.
[3]Assuming a rate of return of 4% per annum is reasonable and achievable.
In addition to that, there is evidence that the Rutherglen property is in need of repair as a result of the March 2013 tornado, and a photograph of the Rutherglen property on or about 6 August 2013 shows that, at the very least, the guttering needs repair. Accordingly, I would order that the sum of $210,000 be set aside, of which $30,000 could be utilised, at the discretion of whoever is appointed as trustee, to effect any necessary and appropriate repairs and improvements upon the Rutherglen property (or any subsequent property in which Peter holds a life interest). The sum of $30,000 does not represent an amount based upon any estimate or in respect of works that need to be done, but is necessarily modest given the value of the Rutherglen property and the risks to the beneficiaries’ interests of overcapitalising the property.
On the basis of the current estimates of the value of the estate, the award of this amount of provision for Peter would leave the sum of $260,000 (subject to any submissions on the question of costs) to be divided between the beneficiaries, with $130,000 to go to Mrs Cook, and $32,500 to each of Don’s nieces and nephews. However, it must be remembered that upon Peter’s death, a further sum of at least $330,000 will be available for distribution to the beneficiaries, assuming there is no increase in the value of the Rutherglen property in the intervening period.
I will hear further submissions from counsel upon the form of order, the identity of the trustee of Peter’s life interest, and the question of costs.
SCHEDULE OF PARTIES
| The Estate of ELVA JANIS LEWIS, deceased | Plaintiff |
| PETER NILS JOHN LEWIS | Plaintiff |
| TIMOTHY AFRIC ROGERS | First Defendant |
| ROBERT WINSTON EVERY | Second Defendant |
| JOHN WRIGHT | Third Defendant |
| MALCOLM WRIGHT | Fourth Defendant |
| SUSAN WRIGHT | Fifth Defendant |
| FAYE SHEBANI | Sixth Defendant |
| VALERIE EDITH COOK | Seventh Defendant |
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