McDermott v State Trustees Limited
[2000] VSC 532
•14 December 2000
| SUPREME COURT OF VICTORIA | |
| AT MELBOURNE | Not Restricted |
COMMERCIAL AND EQUITY DIVISION
No. 4775 of 2000
IN THE MATTER of an application under S 99 of the Administration and Probate Act 1958
- and –
IN THE MATTER of the Will and Estate of Peter Joseph McDermott deceased
| JEANETTE ANN WALLACE McDERMOTT | Plaintiff |
| v | |
| STATE TRUSTEES LIMITED (which is sued as the Executor of the Will of the late Peter Joseph McDermott deceased) and others according to the schedule | Defendants |
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JUDGE: | Byrne J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 6, 7 and 8 December 2000 | |
DATE OF JUDGMENT: | 14 December 2000 | |
CASE MAY BE CITED AS: | McDermott v State Trustees Ltd | |
MEDIUM NEUTRAL CITATION: | [2000] VSC 532 | |
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Wills – Further provision – extension of time for bringing application – whether acceptable explanation – appreciation of legal advice – prejudice to beneficiaries.
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APPEARANCES: | Counsel | Solicitors |
For the Plaintiff | Mr G. Moore | Goldsmiths |
| For the Firstnamed Defendant | Ms C.H. Sparke | State Trustees Limited Legal Branch |
| For the Second, Third and Fourthnamed Defendants | Mr A.G. Southall QC with Mr R.T.A. Waddell | Shiff & Company |
HIS HONOUR:
The plaintiff, Jeanette Ann Wallace McDermott is the widow of Peter Joseph McDermott who died on 6 October 1998. Probate of his will was on 26 November 1998 granted to the firstnamed defendant, State Trustees Limited. Accordingly, an application for further provision under Part 4 of the Administration and Probate Act 1958 should have been made by 26 May 1999.
By originating motion filed on 23 March 2000 Mrs McDermott seeks an extension of this time pursuant to s.99 to enable her to seek further provision from the estate of her late husband.
It is not suggested that a final distribution of the whole of the estate of the deceased has taken place. The value of the estate as it appears in the inventory is in excess of $1M. It comprised for the most part seven parcels of real estate as follows:
(i)the matrimonial home at 12 Belvedere, Kew valued at $500,000;
(ii)the vacant land situate at McDermott Road, Drysdale valued at $50,000;
(iii)the house and land known as "Flounder Flat", Newcombe Road, Drysdale valued at $185,000;
(iv)the warehouse and office situate at 325-7 Queensberry Road, North Melbourne valued at $180,000;
(v)the vacant land at New Settlement Road, Bellarine valued at $120,000;
(vi)vacant land known as "Flounder Flit" in Scarborough Road, Drysdale valued at $45,000; and
(vii)vacant land at 23 Bayshore Avenue, Clifton Springs valued at $20,000.
In addition there were bank accounts to a value of $12,175.04 and furniture and personal effects at the matrimonial home to a value of $5,000 and at Newcombe Road, Drysdale to a value of $1,500. Liabilities are shown as $1,647.50.
The deceased was a widower at the time he married Mrs McDermott on 21 January 1987. He was survived by three adult children: the secondnamed defendant Gary McDermott then aged 41, the thirdnamed defendant Janet McDermott, then aged 40 and the fourthnamed defendant Ross McDermott then aged 34. There were no children of the second marriage.
By his will dated 1 July 1991 the deceased dealt specifically with these pieces of real estate and left the residue to his three children. The distribution of his estate under the will as things turned out on his death was as follows:
To his widow, the plaintiff -
A life interest in the matrimonial home in Kew and a one-fourth interest in each of 325-7 Queensberry Street, North Melbourne, McDermott Road, Drysdale and Newcombe Road, Drysdale. She is to pay the outgoings and maintain the matrimonial home in good repair.
To his son Gary -
One quarter share in each of 325-7 Queensberry Street, North Melbourne, McDermott Road, Drysdale and Newcombe Road, Drysdale. He receives also the whole of Scarborough Road, Drysdale and his father's piano and one third of residue.
To his daughter Janet -
One quarter share in each of 325-7 Queensberry Street, North Melbourne, McDermott Road, Drysdale and Newcombe Road, Drysdale and one third of residue.
To his son Ross -
One quarter share in each of 325-7 Queensberry Street, North Melbourne, McDermott Road, Drysdale and Newcombe Road, Drysdale. In addition, he receives the whole of New Settlement Road, Bellarine and one third of residue.
To his grandson Toby, the son of Gary McDermott –
Bayshore Road, Clifton Springs.
Probate was, as I have mentioned, granted to the State Trustee on 26 November 1998. It seems that, in January 1999, the State Trustee sought a direction from the beneficiaries as to how the three properties of which they were co-beneficiaries should be dealt with. It wrote to Mrs McDermott on 25 January enclosing valuations of these properties and seeking her instructions. Mrs McDermott had her solicitors, Prescott & Associates, obtain valuations of 325-7 Queensberry Street, North Melbourne, which valuation was obtained as at 6 May 1999 and valuations of McDermott Road, Drysdale and Newcombe Road, Drysdale which were obtained on 1 October 1999. Meantime, the three children were pressing for a decision, at least as to the two Drysdale properties, for they submitted to the State Trustee transfers into their names of the three one quarter shares in these properties as was their entitlement under the will. The State Trustee on 13 September 1999 wrote to Prescott & Associates stating that it would delay executing these transfers for 21 days to enable Mrs McDermott to put forward a proposal with respect to them. The October valuations of these properties to which I have referred were presumably obtained in response to this request. These three one-quarter shares in the two Drysdale properties have now been transferred to the children.
The position with respect to 325-7 Queensberry Street, North Melbourne, the third property which passed to Mrs McDermott and the three children, is less clear. Michael James Richards, the Estate Management Officer of the State Trustee, in his affidavit of 5 December 2000 says that the State Trustee has executed a transfer of the three one-quarter shares in favour of the children. I was told that these transfers were delivered to them for them to lodge in the Office of Titles. Mr Richards says that he understands that they have not yet been lodged. In the course of the trial a recent search of the title to this property was produced showing that the transfers of these shares were registered on 12 April 2000, 19 days after this application was brought. It does not appear when the dealing was lodged.
The two properties passing under the will to Garry McDermott and Ross McDermott respectively have also been transferred to them. The titles show that the transfers were registered on 30 August 1999. The remaining properties, namely the matrimonial home and Bayshore Road, Clifton Springs remain in the name of the State Trustee as does the one quarter share of Mrs McDermott in 325-7 Queensberry Road, North Melbourne, McDermott Road, Drysdale and Newcombe Road, Drysdale.
I mention all of this because, by s. 99, no distribution may be disturbed by reason of an application which I might permit to be made in this proceeding. Placing to one side the property which she receives under the will, it was accepted before me that Mrs McDermott may, if this application be granted, seek further provision from the following assets, the interest in remainder of the three children in the matrimonial home and the interest of Toby in Bayshore Road, Clifton Springs. I express no view as to whether this is correct. I am content to proceed on this basis.
In addition, counsel for Mrs McDermott contended that the three one-quarter shares in 325-7 Queensberry Street, North Melbourne, were also available because no distribution had been affected prior to the bringing of this application. This was not accepted by counsel for the children and I consider it very doubtful having regard to the decision of the High Court in Easterbrook v Young[1] and that of Brooking J in Re Lago, deceased[2].
[1](1977) 136 CLR 308
[2][1984] VR 706
It is evident that this application has been brought 16 months after the grant of probate, 10 months after the expiry of the statutory period. This is, in terms of these applications, a substantial delay, a factor which tells against the application.[3]
[3]Re Guskett [1947] VLR 212
The substantial issue in this application turns upon the knowledge of Mrs McDermott within the statutory six month period of her right to seek further provision and upon her reasons for not bringing the application with due expedition.
It appears that, for some years before her husband’s death, Mrs McDermott had the benefit of legal advice. On 25 November 1995 she made an application to the Guardian and Administration Board for an order for the appointment of an administrator. The son Ross McDermott made a similar application. On 18 January 1996 an order was made, on her application, appointing Ross, a chartered accountant, to be his father's administrator. On that occasion she was represented by a solicitor, Mr McLusky, who had been recommended to her by the State Trustee when it prepared her husband’s will some years earlier. Difficulties soon arose in the administration of the affairs of her husband and Mrs McDermott approached the board again in October 1996 and again in March 1998. In each case she retained Mr Prescott and was represented by counsel on at least one occasion. It is not for me in this application to pass on the disputes which existed in these years between Mrs McDermott and her stepchildren. It is sufficient that I record that she said that they existed and that, in part at least, they concerned the sufficiency of the provision, which her stepson Ross was making for her maintenance out of the estate of her husband. I accept, too, that when she last appeared before the board in October 1998 the board member told her that it was no part of the board's function to deal with her complaints about insufficient maintenance. He told her that she might apply for maintenance under the Family Law Act and, after the death of the protected person, she might make application for further provision under the Administration of Probate Act 1958 if the will made insufficient provision.
Mrs McDermott told me that her marriage with the deceased was a happy one. In 1991, however, her husband started to suffer from fits and he underwent brain surgery in April 1992. After this, his condition did not entirely improve and in 1992 there were signs of early dementia. His condition continued to deteriorate in 1995 and 1996 so that his affairs were the subject of the Guardianship and Administration order in January of 1996. In early 1997 it was necessary to place him in a nursing home which was not far from the matrimonial home where Mrs McDermott continued to live. This was a very stressful time for her and, in late December 1996, she made an attempt on her life. She was admitted to the Melbourne Clinic under the care of Dr Robert Yewers until she discharged herself on 5 January 1997. Dr Yewers has provided a medical report in which he describes her treatment but expresses no opinion as to the cause of her crisis or as to the prospect of her long-term adjustment.
Mr McDermott died on 5 October 1998. In the period from this date until the end of May 1999 Mrs McDermott sought legal advice on a number of matters arising out of her disputes with her stepchildren and her claims that the family company, McDermott Pty Ltd, was indebted to her late husband. The evidence showed that she conferred with Mr Bravender-Coyle of counsel on 18 February 1999, on 26 April 1999 and perhaps on a third occasion in this period, in May of that year. Counsel provided to Mr Prescott written memoranda of advice dated 25 February 1999, 8 April 1999 and 11 May 1999 respectively, which are in evidence. In these memoranda counsel dealt with a number of matters including the possibility of her seeking further provision under Part 4 and adverted to the six month time period which was then running. Mr Bravender-Coyle in his affidavit deposed to the fact that he explained these matters to her in conference on 26 April, one month before the time expired. But she caused no application to be made.
During these months she was, not suprisingly, very distressed following her husband’s death. In the period to December 1998 to 19 March 1999, she consulted her general practitioner Dr John Lanyon on eleven occasions for support of psychotherapy. One of these occasions was on 15 March 1999, the day on which she spoke by telephone to Mr Richards mentioning, or at least giving him the impression, that an application for further provision was likely. Her next consultation with Dr Lanyon, and the last for four months, was on 19 March, a week before her second conference with Mr Bravender-Coyle. Dr Lanyon in a report which was not challenged before me, described her as “a shy, dependent, obsessional woman who finds it difficult to deal with interpersonal relationships”. In response to a question as to her ability since her husband’s death to handle her financial and legal affairs, Dr Lanyon says this.
“This has been very poor. Mrs McDermott’s judgement and ability to act decisively has been greatly reduced by her personality, by her conflict with her stepchildren and by conflict with her mother. She’s been unable to handle fairly ordinary matters such as interaction with previous own solicitor and conversations with the State Trustee. She was unable to take up practical suggestions I offered, preferring instead to wait, or to take a religious position, that all would come well by providence.”
I accept Dr Lanyon’s evidence.
Mr Bravender-Coyle swore an affidavit in this matter on 6 December 2000. He dealt with his advices to his client in conference and by memoranda. She was concerned to pursue claims for maintenance unpaid prior to her husband’s death and to pursue her husband’s claims against McDermott Pty Ltd and perhaps against Ross McDermott. He told her on 26 April 1999, as he had advised in writing on 8 April 1999, that she, instead of seeking to pursue a claim for maintenance in respect of the period before her husband’s death, could make a claim for further provision under Part 4 of the Act. He left her to think about this. He said he heard nothing further about it. Mr Bravender-Coyle concluded his affidavit with a general observation that she was a client who presented a strong emotional barrier to practical advice. He said that, at the end of the conference, she appeared to understand what she was told because she expressed words of assent. But at the next conference it would be necessary to go through the whole process again. He said, “I do not know whether that was because she had forgotten some aspect of what I had said previously or whether she merely required emotional reassurance”. This evidence was objected to but I admitted it as the observation of an experienced barrister, who, although lacking psychological training, professed some experience with dealing with clients. I accept his evidence.
In April or May of the same year she received informal advice from a neighbour, Marilyn Laurie Panichi, a solicitor of some years experience. She was told by Mrs Panichi on this occasion, too, that "she should challenge the will" and that she might seek further provision. Mrs Panichi offered to speak to Mr Prescott about this but Mrs McDermott demurred, saying that she believed that "God would look after her".
Mrs McDermott told me that, following this conversation, she did return to Mr Prescott. She said that it was about this time, possibly on 26 April 1999, that she saw Mr Bravender-Coyle again. She recalled that Mr Bravender-Coyle advised her that she could seek further provision but that Mr Prescott told her that this was not a viable option. The reason he gave was the cost involved. She said that she accepted his advice. Mr Prescott was not called. Counsel for the children urged me to draw an O’Donnell v Reichard inference from his absence and I will do so. I infer that the evidence which Mr Prescott might give, of which I know nothing, would not assist Mrs McDermott’s cause. I conclude from all of this that, within the six month period after the grant of probate, Mrs McDermott had competent legal advice and that this included advice that she could bring an application for further provision and that she should do so by 25 May 1999. She failed to heed this advice. In the ordinary course this would raise a serious obstacle to her application for an extension of time[4].
[4]Re Barrot, deceased [1953] VLR 308 at 314 per Sholl J; Re Walker, deceased [1967] VR 890 at 891, per Lush J
What is put in answer to this is that, because of her psychological and emotional disabilities, Mrs McDonald did not appreciate the significance of what she was told. It was put on behalf of the children that such a contention might be successful only where such a want of appreciation was due to some permanent and physical disability. No authority in support of this was offered and I reject it in principle. It is true that the court will require cogent evidence before it draws a conclusion that a person of sound mind and body without any linguistic or other communication disability fails to appreciate advice given on such a matter. But I do not accept that the want of appreciation, if it be established, would be ineffective where it was not due to some permanent and physical disability.
What was urged before me was that Mrs McDermott lacked this appreciation from late 1998 until she consulted her present solicitors in late February 2000. I was reminded of the conclusions expressed by Dr Lanyon and Mr Bravender-Coyle. To this was added the opinion of Dr Edward Cole, a consultant psychiatrist, who saw Mrs McDermott on 3 March 2000. He described her as confused and concluded as follows:
“It is my opinion, therefore, that in the six months following the granting of probate on 26 November 1998, her mental state was such that she was in no position to appreciate or discuss with her solicitor the options that were open to her. Even now, if my experience is any guide, you will need to exercise a good deal of patience in your dealings with her if she is to have a proper appreciation of the situation.”
I accept Dr Cole’s evidence but with the qualification that his opinion was the result of one consultation only and this 12 months after the event.
Mrs McDermott filed three affidavits in this application. She was cross-examined intensively over two days by counsel for the children and for a short time by counsel for the Trustee, which joined with the children in opposing this application. I was myself able to form an impression of her as at the present time. This is of a confused woman who, if she does listen to what she is told, does not permit this to deflect her mind from what she thinks is important. She appears to understand much about the financial aspects of her husband’s estate. She is very concerned that, as his widow, she should carry out his wishes. She is persuaded that there exists an antipathy towards her on the part of her stepchildren. Her evidence was often internally contradictory but she was not troubled by this. In many respects her evidence was contradicted by established fact. Notwithstanding this, I do not dismiss her evidence as that of an untruthful person. In short, her evidence, as the cross-examination proceeded, confirmed in general the observations of Mr Bravender-Coyle, Dr Lanyon and Dr Cole. I conclude that she is an obsessive and indecisive woman and that this was her state of mind in the first six months of 1999. I find that she was told about her rights to seek further provision including the time limits and that she intellectually understood and accepted that advice. But she could not bring herself to put it into effect. This is the reason why she did not commence this proceeding within time.
The consequence of her delay has been, as I have mentioned, that the bulk of the estate has been distributed. She has, between November 1998 and February 1999, been living from an allowance made by the State Trustee as an advance against her entitlement. This has totalled some $51,600 and it may be more after bank overdraft and other fees are added. This means, that during this period she has been meeting her living and other current expenses out of capital. This is a situation of which her late husband as an experienced business man would doubtless not have approved.
Further consequence of this delay is that, if the application be brought, and an order for costs be made out of the estate, this order would fall disproportionately upon Mr McDermott’s grandson Toby and, again, upon his widow’s entitlement. This, too, is a result of which, I am confident, Mr McDermott would not have approved.
The matters, which I have set out above, are sufficient to lead me to the conclusion that this application must be refused. It is not, therefore, necessary for me to consider whether there here exists an arguable case that Mrs McDermott is entitled to further provision. I express no view upon that matter.
I will therefore order that the application for extension of time be refused. Mrs McDermott must now abide her late husband’s wishes as he has expressed them in his will.
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SCHEDULE OF PARTIES
| JEANETTE ANNE WALLACE McDERMOTT | Plaintiff |
| STATE TRUSTEES LIMITED (ACN 064 8593 148) | First Defendant |
| GARY McDERMOTT | Second Defendant |
| JANET McDERMOTT | Third Defendant |
| ROSS McDERMOTT | Fourth Defendant |