MacLeod v Kraemers
[2000] TASSC 116
•23 August 2000
[2000] TASSC 116
CITATION: MacLeod v Kraemers [2000] TASSC 116
PARTIES: MACLEOD, Sigrid Maria
v
KRAEMERS, Viljams Erics
TITLE OF COURT: SUPREME COURT OF TASMANIA
JURISDICTION: ORIGINAL
FILE NO/S: M121/1999
DELIVERED ON: 23 August 2000
DELIVERED AT: Hobart
HEARING DATE: 25, 26 July 2000
JUDGMENT OF: Cox CJ
CATCHWORDS:
Succession - Family provision and maintenance - Failure by testator to make sufficient provision for applicant - Whether applicant left with insufficient provision - General principles - Sufficiency of provision - Principles upon which determined.
Singer v Berghouse (1994) 181 CLR 201; Bosch v Perpetual Trustee Co [1938] AC 463, referred to.
Testator's Family Maintenance Act 1910 (Tas).
Aust Dig Succession [309]
REPRESENTATION:
Counsel:
Applicant: R Wells
Respondent: D M Rees
Solicitors:
Applicant: Wallace Wilkinson & Webster
Respondent: E R Henry Wherrett & Benjamin
Judgment Number: [2000] TASSC 116
Number of paragraphs: 18
Serial No 116/2000
File No M121/1999
SIGRID MARIA MACLEOD v VILJAMS ERICS KRAEMERS
REASONS FOR JUDGMENT COX CJ
23 August 2000
This is an application by a testator's daughter for increased provision pursuant to the Testator's Family Maintenance Act 1910 on the basis that the testator failed to make adequate provision for her proper maintenance and support after his death. The net value of the estate is approximately $250,000.
By his will dated 13 May 1995, Arturs Romans Kraemers of Southport in Tasmania, farmer ("the testator") appointed his younger brother ("the respondent") and Scott William Law, executors and trustees and devised to his brother a parcel of land at Southport. In addition, he bequeathed to him all his machinery including bulldozers, tractors, trucks, vehicles, chainsaws, boats, outboard motors, sails, fishing gear and all other tools whatsoever together with all items of personal use or adornment for his own use and benefit absolutely. The value of these gifts is approximately $100,000. He gave all the residue of his estate upon trust to realise the same and after payment of all debts, duties and other expenses to hold the residue upon trust to pay the net annual income arising therefrom to his daughter Sigrid Maria Kraemers (now MacLeod) ("the applicant") during her life and after her death to apply it upon the trusts established by cl 6 of his will. He empowered his trustees to apply any part of the capital to the purchase of a dwelling or apartment for his daughter with a power of sale and purchase of a further dwelling should his daughter so request, provided that she met the usual out-goings and kept such property in repair.
By cl 6, he directed that upon his daughter's death or should she die in his lifetime, his trustees should set up a fund of the residue of his estate and any income added thereto, invest it in authorised investments and in their discretion pay all or any part of the income or capital of the fund to one or more of his grand-nephews, grand-nieces or grand-children in such shares and amounts as they should think fit from time to time without any obligation to ensure equality of payment between them. The trustees were empowered to accumulate income during the 21 years following the testator's death (if the trusts existed so long) and after that time to divide any surplus income equally between the class he had nominated who were then living. He directed that when all members of the class had attained the age of 35 years or had died under that age, the balance of the fund was to be divided equally among his grand-nieces, grand-nephews and grand-children then living without regard to any payment already made to them. His trustees were given uncontrolled power to postpone the sale and conversion of the estate and empowered to manage and conduct it as if they were the absolute owners thereof. The will contained a direction that his body should be cremated, his ashes scattered at sea and that no burial service should be held at his "interment" (sic). He also expressed in it a "wish and desire" that no part of his real estate should be sold to the Forestry Commission of Tasmania. By a codicil dated 10 February 1997 he revoked Mr Law's appointment as an executor and trustee and made a further direction to this effect:
"I DIRECT my Trustee not to pay any of the income or capital from the trust fund established pursuant to Clause 6 of my said Will to any male nephew, male grand nephew or male grandchild or any child or children who comes within the category of niece, grand niece or grandchild as a result of adoption or the marriage of that child's parent to a descendent of mine."
In all other respects he confirmed his will. He died on 11 June 1998 and the respondent was granted probate of the will and codicil on 22 February 1999. These proceedings were commenced on 20 May 1999.
In broad terms, the effect of the testamentary provisions of the will and codicil are that the respondent is to receive assets worth approximately $100,000, while the applicant receives a life interest in the balance of the estate which will provide an income on a capital fund in the order of $150,000. Upon her death, the class which is to receive the residue will consist of any grand-daughters or grand-nieces of the testator, provided they are his blood descendants and are not adopted and they will receive their share in it when the last of them attains the age of 35 years. Prior to the vesting date there is a discretionary power of advancement to any contingent member of the class. At present, the applicant has no children and the only living grand-nieces are the five grand-daughters of his two siblings. They range in age from 23 years to 9 years. Two live in Tasmania and the other three in Victoria. None of them had any close contact with the testator, nor would appear to have any particular claim upon his bounty.
The applicant was born in December 1954 and is the only child of the testator and his wife. Her parents, who were Latvians, met in Germany in the mid-1940s and migrated to Australia after the War. They married in 1952 in New Norfolk, Tasmania. The applicant's mother had two daughters by a previous marriage, her first husband having gone missing in action and being in due course declared to be presumed dead. The marriage with the testator was not a happy one and when the applicant was four years old, her mother left him and settled in Victoria, taking the applicant and her two half-sisters with her. Co-habitation was never resumed, but the marriage was never dissolved. The applicant's mother is now aged 84 and lives near her daughter at Mortlake in country Victoria. She has made no application for provision to be made for her. Initially the testator contributed £30 per month for the applicant's maintenance and after the introduction of decimal currency, the amount was reduced to $30 per month. After the separation in 1958, the applicant saw her father on a few occasions when she came on holidays to Tasmania, staying sometimes with him and sometimes with his brother or sister. She last saw him in 1967, when she was 13 years old. He made derogatory remarks about her mother, which distressed her, and behaved in a somewhat erratic way, moodily sharpening knives in her presence and threatening to shoot a dog which was barking in the middle of the night. She was alone with him on a remote farm and his conduct alarmed her. Notwithstanding this physical estrangement, the applicant continued to write to him about once a month right through to about 1982 and he responded regularly to her letters until about 1980. He also contributed in a modest way to her upkeep. Throughout her early life, she, her mother and one of her half-sisters lived in extremely humble circumstances in Melbourne, but she was a bright student and was selected for secondary schooling in the McRobertson's Girls High School, which catered for girls of better than average academic ability. Upon matriculating, she enrolled at Melbourne University in 1972. The testator offered to pay for her education at the University, but only on condition that she promised to never marry. She was not prepared to give that undertaking, but fortunately she was able to enrol because she was awarded a studenship which relieved her from paying tuition fees and provided a modest living allowance which her father was prepared to supplement by regular monthly payments of $50.
In the next five years she completed a science degree majoring in geology, attaining Honours and a Graduate Diploma of Education. She then undertook three years' teaching to honour her bond with the Education Department. As she was earning income, she wrote to her father and told him that she did not think it right to expect him to continue his monthly payments, which thereupon ceased. She then returned to University for a year doing research work and thereafter worked for a year doing contract field work for the Soil Conservation Authority of Victoria. After this, she went to South Australia to work with a Research Fellow, but differences arose between them and at the end of 1982 she ceased work. She was unemployed for some time and rather depressed and wrote to her father asking for help. For the last two years or so, correspondence from him had been very spasmodic, contrary to his previous practice, and she was concerned that her letters, which, at his request, she sent to a Post Office box in New Norfolk where his brother, the respondent, lived, were not getting through to him. However, to her last letter she received a reply in which he had asked her to come and live with him at Southport, but said she would have to pay half the living expenses. She did not even have the money for an air fare to Tasmania and the offer was quite unsuitable. She did not accept it. In fact, considering that her father, from the tone of his letters, was becoming increasingly negative and distrusting of the world, she decided to discontinue her letters to him. She thought their sombre tone was aggravating her own depression and that she could not communicate with him in any meaningful way. Sadly, no further contact was made between them. She eventually resumed working and married in 1994. Her husband has a cartage business in the Western District of Victoria and they live on a 20 hectare property near Mortlake. It should be said at once that this case differs significantly from such cases as Pontifical Society for the Propagation of the Faith & Ors v Scales (1962) 107 CLR 9 where the claimant's son, throughout the period of their joint lives, disregarded the testator father and the father disregarded the son and after a time expressly disowned him. In the circumstances of that case, Dixon CJ said at 20:
"If one really considers the situation of this old man in the closing stages of a long life in which his son has played no part at all, a son to whom his father has meant nothing and who did not even know him, it is hard to see why the testator, in the interest of his son, should be deprived of his complete freedom of testamentary disposition."
In this case, communications unfortunately broke down but there was no lack of mutual affection. Although the applicant has not preserved any of her father's letters to her, he retained a large number of hers to him, letters written when she was a small child, a teenager and a young woman. They are written in affectionate terms telling of her activities, enquiring solicitously after his health and well-being and gently reproaching him for his tardiness in replying. They were produced at the hearing by the respondent, who has taken possession of his brother's effects. I think it not an exaggeration to say that they were lovingly preserved by the testator. He certainly acknowledged the moral obligation to the applicant by making the provision he did for her. However, he seems to have been a strange personality, living alone in a relatively remote locality and having very decided and rather misanthropic views. The direction in his will about the scattering of his ashes was motivated by a desire that no part of his remains should rest on his adopted country's soil because of his dislike for his fellow Australians. He seems to have feuded with the Forestry Commission and this led to the request in his will, already noted, that his land should not be sold to that Authority. He was prosecuted by the RSPCA for alleged cruelty to animals and this involved him in costly litigation. He did not get on well with his step-daughters and this may have led to the direction in his codicil excluding adopted or step-children from benefiting under his will. The applicant should not be criticised for having found it so difficult to foster a better relationship with him and for having, in effect, abandoned the attempt because it was becoming too distressing.
The applicant, over the years, has had the capacity to generate a reasonable level of income. For the financial years 1996, 1997, 1998 and 1999 her taxable income has been $25,760, $23,079, $18,643 and $14,800 respectively. For the year ending 30 June 1999, her Group Certificate shows a gross salary of $44,269. This is her second year of teaching at Camperdown College. For the first six calendar months of 2000, she is working a 100 per cent load, compared with 80 per cent for the first six months of the financial year. She will be paid on a 100 per cent basis for the rest of this calendar year and next year is assured of at least 80 per cent. Her mother is nearly blind and in a nursing hostel. She will eventually have to be moved to a nursing home. Her mother is a pensioner and has no assets. One of the applicant's half sisters is dead and the other lives in Queensland and renders little assistance to her mother, although she does communicate with her by telephone periodically. The applicant is the registered proprietor of the 20 hectare property where she lives with her husband, but she acknowledges that he has a substantial equity in it equal to her own. The property, apart from the house, is leased to a dairy farmer at a rental of $3,200 per annum. It is not encumbered, but its value is not in evidence before the Court.
She has a holiday home at the beachside town of Port Fairy in Victoria which she and her husband occasionally use and which she also lets out to holiday makers. It is subject to a mortgage of $64,790. Again, its value is not in evidence. In addition, she has cash reserves of $15,000 and $80,000 in superannuation. In order to procure a reliable car to enable her to get to work, a round trip of some 60 kilometres, she borrowed from a credit union and purchased a Toyota Landcruiser. The outstanding loan is $18,841. Her husband runs his business through a private company and draws $20,000 per annum. The company makes little profit.
The applicant and her husband are anxious to have a child, but she has encountered difficulties in carrying a child to full term. She has engaged in an IVF programme and has been pregnant at least five times. Last year she had a miscarriage at 16 weeks. She has been diagnosed as having a rare blood clotting condition which causes a thrombosis and unless she rests, the foetus will not adhere and miscarries. Stress and the apprehension of losing a child exacerbates her condition and she has been advised not to work during the pregnancy if she does become pregnant again. In addition, high cost medication is required to treat her blood condition if the pregnancy is to be successful. It is her intention to try yet again to have a child, but it will involve abandoning her work for a significant time and she estimates the costs, even allowing for medical insurance, at about $3,000.
The applicant submits that inadequate provision has been made in the will for her proper maintenance. Specifically she submits that although she has been left a life interest in a substantial portion of the residue of the estate and although no suggestion is made that the provision in respect of the respondent should be disturbed, the failure to leave her with any capital sum to which recourse can be made renders the provision inadequate. Furthermore, it is said that having regard to her capacity to generate income professionally, the gift of income will be taxed at a higher rate and hence be of less benefit to her.
The Act permits me to make provision out of the estate in favour of the applicant if she establishes that in terms of the testator's will she has been left without adequate provision for her proper maintenance and support after his death. Only if this precondition is established do I have any discretion as to what provision should be made. In Singer v Berghouse (1994) 181 CLR 201, Mason CJ, Deane and McHugh JJ said in their joint judgment at 209 - 210:
"The first question is, was the provision (if any) made for the applicant 'inadequate for (his or her) proper maintenance, education and advancement in life'? The difference between 'adequate' and 'proper' and the interrelationship which exists between 'adequate provision' and 'proper maintenance' etc. were explained in Bosch v Perpetual Trustee Co [1938] AC 463 at 476. The determination of the first stage in the two-stage process calls for an assessment of whether the provision (if any) made was inadequate for what, in all the circumstances, was the proper level of maintenance etc. appropriate for the applicant having regard, amongst other things, to the applicant's financial position, the size and nature of the deceased's estate, the totality of the relationship between the applicant and the deceased, and the relationship between the deceased and other persons who have legitimate claims upon his or her bounty.
The determination of the second stage, should it arise, involves similar considerations. "
In Bosch v Perpetual Trustee Co (supra) at 478, Lord Romer, delivering the judgment of the Privy Council, said:
"The amount to be provided is not to be measured solely by the need of maintenance. It would be so if the Court were concerned merely with adequacy. But the Court has to consider what is proper maintenance, and therefore the property left by the testator has to be taken into consideration."
Later, at 478 - 479 he said:
"Their Lordships agree that in every case the Court must place itself in the position of the testator and consider what he ought to have done in all the circumstances of the case, treating the testator for that purpose as a wise and just, rather than a fond and foolish, husband or father."
In this case, the applicant is far from penurious, but her physical condition and the understandable desire to have a child before her child-bearing years are over, have created a special need which could be better met if the provision made for her in the will and codicil were not necessarily increased but at least varied by ensuring that she has access to some capital. She is in a stronger position so far as a claim on her father's bounty is concerned than the applicant in Blore v Lang (1960) 104 CLR 124, of whom it was said by Fullagar and Menzies JJ at 135:
"In such a case as this, where the applicant is a married woman with a healthy husband in satisfactory employment who supports her in reasonable comfort, her need is not for the bread and butter of life but for a little of the cheese or jam that a wise and just parent would appreciate should be provided if circumstances permit."
Her need for extra support and special medication during pregnancy, if successful implantation can be achieved as she wishes and intends, is a need for far more important things to her advancement in life than cheese or jam. In determining the adequacy of the provision made for an applicant's proper maintenance, the relationship between that applicant and the testator, and the relationship between the testator and other persons who have legitimate claims upon his or her bounty, are relevant considerations (Singer v Berghouse (supra) at 210). Although, with respect, it would be wrong to elevate into principles of law the instances cited by Sholl J in In re Hodgson, deceased [1955] VLR 481 because they perhaps reflect views of a society significantly different from our own, his words nevertheless underline the fact that some claims are stronger than others. At 494 he said:
"There is no rule of law that a widow, qua widow, is in a stronger position as a claimant than a child ¾ see per Mayo J in Re Traeger, [1949] SASR 180, at p 184. It may be more likely, as a general rule, that a widow will be able to show a breach of the testator's moral duty to her, and present need. But the facts of every case must be looked at, and a married daughter may undoubtedly in a proper case be allowed provision from the estate. Mr Griffith instanced the case of a daughter, herself in good health, but married to a sick husband without means. That is an obvious case. But in a case where there is a substantial estate, and the husband is quite healthy and able to earn, but not affluent, it may be proper to make an allowance as in Allardice's Case [1911] AC 730 was done for each of the three married daughters. Where the estate is very large, or, though not very large, is left to strangers, it may be right to make an allowance to a married daughter, even if her husband is in very comfortable circumstances, upon the basis that there are cases where a daughter should have, and is entitled to expect, some provision independent of her husband; cf Re Osborne, [1928] St R Qd 129; Re Brown, deceased, [1952] St R Qd 47."
In the present case the relationship between the testator and his daughter remained a loving one, although circumstances deprived it of intimacy. The children entitled to the ultimate residue have not been shown to have had any special claim upon the testator's bounty and their enjoyment of it, although subject to discretionary powers of advancement, will be postponed for a lengthy time, even should the applicant's enjoyment of her life interest be short. All claims are contingent and are subject to diminution by the possible advent of further female children swelling the class. In my view, the applicant's claim upon the testator's bounty far exceeded theirs.
In Pontifical Society for the Propagation of the Faith & Ors v Scales (supra) at 19, Dixon CJ said:
"All authorities agree that it was never meant that the Court should re-write the will of a testator. Nor was it ever intended that the freedom of testamentary disposition should be so encroached upon that a testator's decisions expressed in his will have only a prima facie effect, the real dispositive power being vested in the Court."
In Cooper v Dungan (1975) 9 ALR 93, Stephen J warned against the temptation to re-write the testator's will when he said, at 98:
"It is notorious that in this particular jurisdiction courts must be vigilant in guarding against a natural tendency to reform the testator's will according to what it regards as a proper total distribution of the estate rather than to restrict itself to its proper function of ensuring that adequate provision has been made for the proper maintenance and support of an applicant."
Mindful of these injunctions, I am nonetheless of the opinion that in all the circumstances the provision made in this case is not adequate for the applicant's proper maintenance and support. I accordingly intend to exercise my discretion to make an appropriate provision.
Evidence shows that the value of the land specifically devised to the respondent, that is Lot 1, is $60,000, and of the other bequests to him approximately $40,000. There remain in the estate four other parcels of land in the Southport area. They are as follows:
· Lot 2 ¾ 11.29 hectares. A rural allotment with poorer run out pasture with some native bush. It has a number of old farm sheds on it. It is zoned Rural Residential and is capable of subdivision into one hectare allotments. The valuer did not recommend present subdivision. He put a value on it of $40,000.
· Lot 3 ¾ 8.72 hectares. The property comprises natural well-timbered vegetation with the only improvements being a number of formed four-wheel drive tracks. Like lot 2, it is zoned Rural Residential and is capable of subdivision, but the valuer again did not recommend present subdivision. He valued it at $30,000.
· Lot 4 ¾ 6.02 hectares. A small rural parcel with a poor quality 3 - 4 bedroomed cottage and a storage shed. Its subdivision potential is the same as for lots 2 and 3. The valuer estimated its value at $45,000.
· Lot 5 ¾ 29.45 hectares. This parcel comprises a semi-cleared rural site well suited for future timber plantation. The valuer regarded Forestry Tasmania as an obvious purchaser, but the respondent is reluctant to sell to that organisation, having regard to the testator's request in his will. The land has no subdivisional potential. It was valued at $45,000.
Mr Wells of counsel for the applicant submits that a proper provision would be to put a capital value on the life interest and to satisfy it by directing the transfer to the applicant of lots 2, 3 and 5 in specie (a total estimated figure of $115,000), leaving lot 4 (worth $45,000) to satisfy estate expenses, the cost of these proceedings and establish a fund out of which a small amount should be paid to the applicant and the balance held for the remainder class in accordance with cl 6. There is some merit in ordering a distribution in specie because of the respondent's reluctance to sell to Forestry Tasmania and the wide powers of postponement which he has, and the applicant should be free to sell, as she sees fit, land which yields no present income and from which she can derive no use or pleasure. Some actuarial figures were tendered in written form, but without the benefit of oral evidence from an actuary, I find difficulty in making any accurate assessment of the present value of the applicant's life interest. However, one actuary estimated that using a discount rate of 5.5 per cent on a capital sum of $210,000, the value of the life interest of a female aged 44.96 years would be $180,838 (using Australian "Life Tables 1995 - 1997" published by the Australian Bureau of Statistics in "Deaths Australia 1997"). This translates to approximately 14 per cent of the capital sum or $129,000 if the capital sum is $150,000.
Both parties should receive their costs on a solicitor/client basis out of the residue. Allowing a figure of $129,000 would leave little left in residue to provide for the grand-nieces and grand-daughters (if any). In my opinion, provision on the basis that the applicant receives in specie and freed from the life interest the three lots of land I have mentioned, namely lots 2, 3 and 5 (Certificates of Title Volume 2130 Folio 7, Volume 121159 Folio 1 and Volume 3211 Folio 41 respectively) will provide for her adequately and represents something approximating the capitalised value of the life estate with some discount for the contingency of premature death. The remainder of the estate, after the payment of the taxed costs of these proceedings and the expenses of administration, are to be held upon the trusts set forth in cl 6 ff of the will as varied by the codicil as if the applicant had predeceased the testator.
The applicant sought possession of a number of small items belonging to her father of sentimental rather than monetary value. The respondent, in evidence, said he would give her the testator's wedding ring but made no other offers during the trial. While her desire for some of those other momentos is understandable, I do not consider that I have any jurisdiction to direct their transfer to her in addition to the provision I have already directed be made for her maintenance and support.
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