Naismith v Fraser

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

TESTATORS FAMILY MAINTENANCE LIST

S CI 2017 04587

In the matter of Part IV of the Administration and Probate Act 1958

- and -

In the matter of the will and estate of BRIAN ANDREW HAZEL FRASER (deceased)

CATHERINE REBECCA AEDY NAISMITH

Plaintiff

MARY CHRISTINA FRASER (who is sued as the Executor of the will of BRIAN ANDREW HAZEL FRASER deceased) & ORS (according to the schedule attached)

Defendant

---

JUDGE:	ZAMMIT J
WHERE HELD:	Melbourne
DATE OF HEARING:	18–19 June, 22 June and 16 July 2018
DATE OF JUDGMENT:	15 November 2018
CASE MAY BE CITED AS:	Naismith v Fraser
MEDIUM NEUTRAL CITATION:	[2018] VSC 689

---

ADMINISTRATION AND PROBATE – Testator’s family maintenance – No provision made for adult daughter – Where moral duty conceded – Where size of estate disputed – Whether early inheritance – Whether financial contribution – Justice Legislation Amendment (Succession and Surrogacy) Act2014 – Administration and Probate Act 1958 Part IV.

---

APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr B Gillies	Maurice Blackburn
For the Defendant	Mr D Sanders	Armstrong Legal

HER HONOUR:

Introduction

Brian Fraser was born on 4 May 1935 and died on 11 January 2017 at 82 years of age. He is survived by his widow Mary and his five children, Catherine, Belinda, Andrew, Sarah and Anna. Catherine, the eldest, is the plaintiff in this proceeding. Mary, Andrew and Sarah are the first, second and third defendants respectively. To avoid confusion, save for the deceased and the plaintiff, I will refer to the members of the Fraser family by their first names.

The deceased prepared a will dated 17 August 2016 in which he appointed the defendants as executors. Probate was granted on 6 June 2017. Significantly, at that time, the defendants’ inventory of assets and liabilities stated that the net value of the estate was $673,598. Five months later, on 14 November 2017, the plaintiff commenced proceedings under Part IV of the Administration and Probate Act 1958 (‘the Act’). But then, on 10 May 2017, the defendants filed an affidavit explaining that the inventory was incorrect and that the true net value of the estate was $104,421.

The inventory filed with the grant application overlooked a contract of sale dated 28 June 2013 and a deed of family arrangement dated 31 October 2013. As will become clear, in conformity with the family’s succession plan, these instruments had the combined effect of removing certain parcels of land from the deceased’s estate. Self-evidently, the size of the estate is an important factor, which will loom large in consideration of any Part IV claim. Indeed, it was on learning that the net value of the estate had been revised downwards that I brought this matter on for trial, ordering that no more affidavits be prepared and that all witnesses give viva voce evidence.

For the reasons that follow, I agree with the defendants that the net value of the estate prior to trial was $104,421, which leaves little for any successful Part IV claimant. In any event, although eligible, owed a moral duty and in financially necessitous circumstances, I have concluded that the plaintiff should not receive any provision. It is clear from the deceased’s will and surrounding circumstances that he wanted the residuary of his estate to go to his wife of 57 years. What is more, the plaintiff received an early inheritance when her parents sold her a parcel of land at significantly below market value, and nor did she contribute to the building up of the estate (save for the ordinary contribution to be expected in a ‘share farming’ scenario.) The deceased’s paramount duty was to his widow and it would not be appropriate for this Court to interfere with his testamentary intentions.

Background circumstances
The family farm—Heatherlie

The deceased and his wife Mary, through the company Heatherlie (Tallangatta) Pty Ltd (‘the company’), ran a family farm (also known as ‘Heatherlie’) in Tallangatta Valley, to the east of Wodonga, in rural Victoria. It was originally a sheep and cattle farm but expanded in the 1960s to encompass dairy farming.

All of the Fraser family worked on the farm. The children did so while growing up and, to varying extents, continued to do so once adults. Of the five children, it seems the plaintiff and Andrew worked most on the farm both as children and adults, while Belinda, Sarah and Anna pursued opportunities elsewhere.

The Kohnes farm

In or around 1987 the company purchased a property commonly referred to as ‘Kohnes’. Kohnes adjoined Heatherlie. The purchase price was approximately $322,500. The plaintiff and her husband Stephen were at that time living on a farm at Bethanga. The deceased and Mary spoke to them about returning to ‘share farm’ Kohnes. The plaintiff and Stephen decided to take up the offer and initially share farmed a 40% share of Kohnes.

Kohnes was run as a dairy farm. Although the plaintiff and her husband did not provide any capital, they ran the farm with autonomy. The distribution of profits during this period is disputed. The plaintiff complains that she and her husband did not receive any share of the profits, whereas Mary says 40% of the profits went to the plaintiff and her husband and 60% went into the company. The plaintiff further states that her parents promised that if she and her husband lived at Kohnes for five years they could ‘have the house’ for life. Mary, however, only recalls saying that they could ‘live in’ the house for life.

In or around 1999 the plaintiff and her husband indicated that they were not happy with the standing arrangement. They asked if they could lease Kohnes from the company at an annual rent of $40,000 in return for which, rather than dividing the profits, they would receive all of the profits. The deceased and Mary agreed to this rental despite seemingly harbouring misgivings about the extent to which it reflected the market. The deceased later noted in an unsworn affidavit, prepared for an earlier proceeding commenced by the plaintiff,[1] that a nearby dairy had been leased at an annual rent of $90,000.
[1]See [37] below.

The purchasing and maintenance of stock throughout this period is also disputed. The deceased said that the plaintiff and her husband were gifted 120 cattle and 50 calves at the commencement of the share farming arrangement. Mary says a further 80 cows were transferred to Kohnes in 1996 and that the plaintiff and her husband paid $50,000 for them (out of a $100,000 government package designed to relieve farmers affected by the deregulation of the dairy industry). The plaintiff’s recollection is different. She says a package in excess of $100,000 was received but ‘the funds were applied to [the company] and not to Kohnes’.

First phase of succession planning

On 19 May 1999 the Fraser family met with a lawyer, Helen McGowan, to discuss a succession plan. The meeting was recorded in a set of typed minutes. The purpose of the meeting was to discuss the future of family farming business. Each member of the family was asked to share their thoughts as to their current position and what they would like to see in the future.

The plaintiff’s position, as recorded in the minutes, was that she and her husband wished to purchase Kohnes because she felt she had no security after spending her working life in the dairy. While recognising that this was ‘out of step’ with the family’s longstanding position, i.e. that the farm should be kept together, she said she wanted security and independence.

The other siblings, namely Belinda, Andrew, Sarah and Anna, expressed a desire to keep the farm together. The deceased and Mary expressed the same desire. Partly this was because the company needed the income from the dairy. And partly it was because the deceased believed the plaintiff would be financially disadvantaged if she separated from the rest of the family.

The minutes record that the family considered several ways of disposing of Kohnes so as to facilitate the plaintiff’s goals of security and independence. The options included:

(i) a long-term lease;

(ii) a contract of sale allowing the purchase price to be paid in instalments;

(iii) an outright sale, secured by a vendor mortgage, on terms more favourable than those offered by a bank; or

(iv)a sale price based on an early inheritance.

The fourth option was contemplated on the basis that the value of any early inheritance would require the plaintiff to relinquish her shares in the company. The deduction from the sale price would match the value of shares relinquished.
Sale of the Kohnes farm

After the 1999 family meeting the plaintiff continued to express an interest in purchasing Kohnes. In or around 2003/2004 the deceased and Mary agreed to sell it to her. On 8 October 2003 the property was appraised at $598,752. On 30 January 2004 the property was sold to the plaintiff and her husband for $220,000.

The defendants contend that the sale of Kohnes was an early inheritance for the plaintiff. The plaintiff contends that the sale was motivated by a different agenda, namely it allowed the company to purchase a property known as ‘Giltraps’,[2] which was later transferred to Belinda and Andrew and their respective spouses. The parties also dispute the value of improvements made to Kohnes by the plaintiff and her husband prior to settlement.
[2]See [27(b)] below.

The sale of Kohnes appears to have precipitated a deterioration in the relationship between the plaintiff and her family. The plaintiff was henceforth no longer involved in succession planning.

On 9 January 2009 the plaintiff and her husband sold Kohnes to Terralyn Investments Pty Ltd for $1,100,000. She says this was because they had ‘too much debt and no support from the family.’

Second phase of succession planning

On 14 January 2013 the directors of the company held a meeting to discuss the succession plan. A resolution was passed by all present (save for Andrew, who abstained) to transfer fifteen parcels of land to Andrew and Belinda and their respective spouses.[3] The minutes record that these transfers would be ‘an implementation of [the succession] plan’. A second resolution was passed by all present (save for Andrew, who abstained) to execute a deed of family arrangement evidencing the succession plan.
[3]The parcels of land contemplated did not include ‘Brian’s Land’ and ‘Gran’s Block’: see [27(c)] below.

On 31 January 2013 it was agreed that the existing farming partnership would be dissolved and that all activities would be transferred to the Heatherlie Pastoral Unit Trust (‘the unit trust’).

On 28 June 2013 the company transferred the fifteen parcels of land contemplated in the 14 January 2013 resolution to Belinda and Andrew and their respective spouses. The transfers were registered under s 45 of the Transfer of Land Act 1958. The company received $1 by way of consideration.

Sale of Brian’s land

On 28 June 2013 the deceased sold Brian’s Land to Andrew and his spouse, Joanne, for consideration of $200,000. The essential terms of the contract of sale (‘the contract’) were as follows:

(a) on the settlement date, nominated as 31 July 2013, the purchasers were to pay the vendor $50,000;

(b) the balance of the purchase price, being $150,000, was to be deemed notionally paid and loaned back on completion;

(c) the purchasers were required to grant the deceased a mortgage over the land to secure payment of the loan sum of $150,000;

(d) the mortgage was to provide that the loan sum must be paid within five years of the date of transfer, free of interest; and

(e) completion was conditional upon the purchasers granting to the vendor and his wife (i.e. the deceased and Mary) a life-long lease over their residence, which is located on Brian’s Land, for the fixed sum of $1 per annum.

As will become clear, while the contract has not been performed in strict accordance with its terms, there can be no doubt as to its status at law. And nor does it matter that the sale of Brian’s Land was not at that time registered on the land’s title.

The deed of family arrangement

On 31 October 2013, as had been contemplated at the 14 January 2013 family meeting, a deed of family arrangement (‘the deed’) was entered into.

The deed stated that its purpose was to give effect to the deceased and Mary’s wish to retire from the family farming partnership. There were nine parties to the deed: the company, the deceased, Mary, Belinda and Andrew and their respective spouses, the ‘generational transferees’ (defined as Belinda and Andrew and their respective spouses) and a newly registered trust company, Heatherlie Pastoral Company Pty Ltd, as trustee of the aforementioned unit trust. The plaintiff and her siblings Sarah and Anna were not parties to the deed.

The deed expressly stated that it would be binding on the parties and any administrators, liquidators or executors who might later have dealings with their assets and liabilities.

The deed first described the current ownership of family farming lands. The position at that time was as follows:

(a) the company was the registered proprietor of 18 parcels of land commonly grouped together and referred to as ‘Heatherlie’, ‘Ferri’, ‘Schafer’, ‘Ross’, ‘Plemmings house block’, ‘Plemmings broad acres’ and ‘Plateau’;

(b) the company was purchasing on terms four parcels of land commonly grouped together and referred to as ‘Giltraps’. This was to be completed on 31 January 2014;

(c) the deceased was the registered proprietor of three parcels of land commonly grouped together and referred to as ‘Brian’s Land’ and ‘Gran’s Block’; and

(d) the deceased and Mary were the joint registered proprietors of a parcel of land commonly referred to as ‘Johnny’s Hill’.

The deed then recorded several agreements between the parties. Four are relevant for present purposes.

The first was that the generational transferees would purchase the interest of the deceased and Mary in the partnership and by way of consideration would jointly and severally:

(a) release the deceased and Mary from their overdrawn capital accounts;

(b) transfer to the deceased and Mary fifty sheep;

(c) licence the deceased and Mary to run twelve head of cattle on land on which the farming business was conducted;

(d) supply all heating fuel required by the deceased and Mary in their lifetime; and

(e) release and indemnify the deceased and Mary from all claims relating to or arising out of the conduct of the old partnership.

The second was that the generational transferees would purchase the interest of the deceased and Mary in the company and by way of consideration would jointly and severally:

(a) pay the deceased and Mary $50,000 on executing the deed;

(b) pay the deceased and Mary a recurring annual payment of $50,000 until the death of the last surviving of the deceased and Mary, payable by equal monthly instalments starting at $4,160;

(c) cause the company to transfer ‘Plemmings house block’ to the deceased and Mary; and

(d) cause the company to grant a license to the deceased and Mary to use the premises known as ‘Gran’s Cottage’ and ‘Belinda’s Workshop’ for a bed and breakfast business or other purposes.

The third was that the deceased and Mary would transfer their shareholdings in the company to Belinda and Andrew. Belinda and Andrew would then cause the company to transfer ‘Heatherlie’, ‘Ferri’, ‘Schafer’, ‘Ross’, ‘Plateau’ and ‘Plemmings Broad Acres’ to the generational transferees. I pause here to note that these lands had already been transferred to Belinda and Andrew and their respective spouses on 28 June 2013.[4]
[4]See [21] above.

The fourth was that the deceased and Mary would transfer the parcels of land that they owned privately. Brian’s Land would be transferred to Andrew and his spouse on largely the same terms as under the contract.[5] And Gran’s Block and Johnny’s Hill would be transferred to the generational transferees. Once again, as with the fifteen abovementioned parcels of land, the deed purported to transfer land that had already been transferred.
[5]See [22] above.

I will explain why this somewhat artificial arrangement was necessary a little later in these reasons.

The prior proceeding

On 5 December 2014 the plaintiff commenced proceedings in this Court against the company (‘the 2014 proceeding’). The company had requested that she sell her shares for $5,000. The plaintiff disagreed that this reflected the value of the shares.

The plaintiff alleged that, as a class ‘A’ shareholder, she was entitled to inspect certain documents held by the company. The company replied that she had renounced beneficial ownership of her shares on 30 January 2004 as part of the consideration for the Kohnes farm. The company’s financial statements also recorded an outstanding loan to the plaintiff of $378,752.

Terms of settlement were entered into which provided that the plaintiff be remunerated $65,000 for her shares (inclusive of a $35,000 contribution to legal costs). Liability was not admitted by either party. The parties also released each other from any future litigation arising from these matters.

I note in passing that the deceased prepared an unsworn affidavit for use in the 2014 proceeding. This document was tendered as evidence in the instant proceeding under s 63 of the Evidence Act 2008.

The deceased’s will

As I have said, the deceased prepared a will dated 16 August 2017, which appointed the defendants as executors.

In the event that the deceased was survived by Mary, the will made the following bequests:

(a) Brian’s Land and Gran’s Block to Andrew;[6]
[6]The will refers to these properties as ‘the Heatherlie Land’ and ‘the Other Properties’. Nevertheless, it is clear from the listed certificates of title that these are the same parcels of land referred to throughout these reasons as ‘Gran’s Block’ and ‘Brian’s Land’.

(b) any other land owned by the deceased at the date of his death (apart from any land he owned jointly with Mary) to the company;

(c) one ordinary share in Krata Industries Pty Ltd to Mary; and

(d) the residue of his estate to Mary.

The will made no provision for the plaintiff, Belinda, Sarah or Anna.

It will be observed that the terms of the deceased’s will purported to bequeath Brian’s Land and Gran’s Block to Andrew when, under the contract and the deed, these parcels of land had already been transferred to Andrew and his spouse and to the generational transferees respectively. There is a simple explanation for this. As will become clear, because the contract and deed had not been fully performed, the deceased was advised by his solicitor to insert these terms into the will as a ‘safeguard’ to ward off any legal challenge.

Procedural history

On 31 May 2017 the defendants applied for probate of the deceased’s estate. Their inventory of assets and liabilities indicated that the net value of the estate was $673,598. The assets were said to include Brian’s Land, estimated at $403,000, and Gran’s Block, estimated at $191,000, these being the only parcels of land in the estate. The total value of real property in the estate was therefore said to be $594,000.

Probate was granted on 6 June 2017. On 14 November 2017 the plaintiff commenced the current proceeding. Her originating motion states that the net value of the estate is $673,598 as indicated in the defendant’s inventory of assets and liabilities. It further says she is a person for whom the deceased had a responsibility to make adequate provision and who claims relief under Part IV of the Act.

On 10 May 2018 the defendants filed an affidavit of financial position in which the net value of the estate was revised downwards to $104,421. This was comprised of assets of $225,798 and liabilities of $121,377 (including legal expenses of $43,815). The estate no longer included Gran’s Block or Brian’s Land. On the same day the parties attended a judicial mediation at which the matter did not resolve.

The matter was fixed for trial on 18 June 2018 on an estimate of one day. It was ultimately heard over four days in June and July 2018, with written closing submissions filed by parties on 27 July 2018 and written submissions in reply filed on 17 August 2018.

An offer of settlement was made in open court on day three of the trial and was refused by the plaintiff. The terms of the offer were recorded as follows:

MR SANDERS:    But Your Honour - as Your Honour pleases. On the ruling, I raise a preliminary point that … the defendants made an offer last week to resolve the whole of this matter of $25,000 all in. I’m instructed to again put that offer in open court [on behalf of] the defendants. The result of that is the complete exhaustion of the estate but less of a fight about costs and so on afterwards.
HER HONOUR: All right.
MR SANDERS:    I’m not sure [what] my friends wants to do with that offer, but [I] did feel it was prudent to put it before the Court.
HER HONOUR: No. Well, you’ve got instructions to do so and so it’s done. Well, Mr Gillies, the offer’s been made. It’s been made in open court. Ms Naismith is in court, did you want some time or - - -
MR GILLIES:       No. I don’t concede the motion.
HER HONOUR: All right.

The estoppel argument

I note for completeness that on the second day of the trial the plaintiff sought to agitate a new cause of action in relation to an equitable estoppel.

The basis for relief was said to lie in the representation that had been made by the defendants in their inventory of financial position of the estate. The argument, as I understood it, was that the plaintiff had suffered detrimental reliance in bringing this proceeding and that the defendants should now be estopped from saying that the net value of the estate was less than $673,598. This was effectively to say that the force of the contract and the deed should be put to one side even though these instruments preceded the impugned representation.

I disallowed this argument in the plaintiff’s case by way of an oral ruling. The reasons I gave were twofold: the application was too late and effectively disclosed a new cause of action which had not been pleaded; and the estoppel claim was misconceived.

On reflection, and for completeness, I add the following. I note that the parties relied on written submissions.

As I have said, at the start of day two of the trial, the plaintiff sought to commence a new cause of action in the proceeding. It appeared that the plaintiff sought a new remedy and also a new cause of action. The relief sought was not disclosed in her originating motion. Further, the equitable relief she sought was not available under Part IV of the Act, nor was it referred to at the opening of her case.

The plaintiff’s submissions made a somewhat vague reference to a common law estoppel. It was said that the defendants represented the size of the estate in the inventory of assets and liabilities at $666,727 and that the plaintiff relied on that representation to her detriment to commence these proceedings. She submitted that the detriment suffered is the loss of the claim for further provision and her costs expended in reliance on the representation.

Having considered the defendants’ written submissions, for the reasons that follow, I agree that the plaintiff’s application to add a new cause of action in the form of an equitable estoppel must fail.

Firstly, given the timing of the application—on day two of the trial and after the completion of the plaintiff’s evidence in chief—it would be unfair to allow it. I note that the plaintiff has not given any evidence which would support her application. The application was made without notice to the defendants in circumstances where the plaintiff has been aware of the issue about the reduced size of the estate since at least May 2018 and so too the reasons why the defendants say the net value of the estate was initially incorrectly estimated. Further, even if I were to allow the application, the plaintiff’s proposed new claim is misconceived. The first difficulty is the nature of the representation: the inventory of assets and liabilities of the estate is no more than an indication of the gross value of all known assets and a statement of all known liabilities for probate purposes.

Secondly, the plaintiff makes a bare assertion without any evidence of her reliance on the representation and the alleged detriment. Common law estoppel requires the plaintiff to demonstrate that she was induced into bringing proceedings by the defendants. There is no evidence of the defendants inducing the plaintiff into commencing the litigation. The plaintiff’s submissions fail to address this point.

Thirdly, the plaintiff now seeks relief which would inappropriately affect the rights of third parties, that is the parties to the deed.

Fourthly, it is difficult to understand what detriment the plaintiff has suffered. The plaintiff submits that her detriment is the loss of further provision. The difficulty with this argument is that the estate is what it is. At best, the plaintiff incurred legal costs on the basis that she understood the estate’s value to be in the vicinity of $666,727.

Fifthly, the plaintiff’s conduct is inconsistent with her claim now for further relief. She knew by May 2018, and probably earlier, of the defendants’ revised net value of the estate but continued with the proceeding.

In conclusion, given the timing of the application and the fact that the plaintiff lacks any real prospect of success in her proposed cause of action, the application must be dismissed.

Applicable legislation and principles

The principles to be applied in making a family provision order were recently summarised by McMillan J in Re Marsella; Marsella v Wareham.[7] I adopt those principles as restated below:
[7][2018] VSC 312.

Pursuant to s 91(2) of the Act, the Court must not make a family provision order under s 91(1) of the Act unless it is satisfied that:
(a) an applicant is an eligible person;
(b) at the time of death, the deceased had a moral duty to provide for the eligible person’s proper maintenance and support; and
(c) the distribution of the deceased’s estate fails to make adequate provision for the proper maintenance and support of the eligible person.

In making a family provision order, s 91A(1) provides that the Court must have regard to:
(a) the deceased’s will, if any;
(b) any evidence of the deceased’s reasons for making the dispositions in the will; and
(c) any other evidence of the deceased’s intentions in relation to providing for an eligible person.

In making a family provision order, s 91A(2) of the Act provides that the Court may take into account:
(a) the nature of the relationship between the deceased and the eligible person, including, if relevant, the length of the relationship;
(b)any obligations or responsibilities of the deceased to the eligible person, any other eligible persons, and the estate’s beneficiaries;

(c) the size and nature of the estate;
(d)the current (at the time of the hearing) and foreseeable future financial resources, including earning capacity and financial needs, of the eligible person, any other eligible persons and any beneficiary;
(e)any physical, mental or intellectual disability of any eligible person or any beneficiary;

(f) the age of the eligible person;
(g)any contribution (not for adequate consideration) of the eligible person to building up the estate or to the welfare of the deceased or the deceased’s family;

(h) any previous benefits to the eligible person or any beneficiary;
(i)whether the eligible person was being wholly or partly maintained by the deceased, and if so, the extent and basis of such maintenance;

(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 effect that a family provision order would have on the amounts received from the deceased’s estate by other beneficiaries; and

(m) any other matter the Court considers relevant.
Pursuant to ss 91(4)(a) and (b) of the Act, in determining the quantum 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.
In relation to all claims, pursuant to s 91(5)(a) of the Act, a family provision order must not provide for an amount greater than is necessary for the eligible person’s proper maintenance and support.[8]
[8]Ibid [75]–[76], [78]–[80] (emphasis added).

Issues in dispute

It is not in dispute that the plaintiff is an eligible person to whom the deceased owed a moral duty. What is in dispute is whether the distribution of the deceased’s estate failed to make adequate provision for her proper maintenance and support.

The issues that fall to be determined, having regard to the factors that the Court must take into account under s 91A(1) and may take into account under s 91A(2), are as follows:

(a) the deceased’s intentions as revealed by his will and its surrounding circumstances (including the family succession plan);

(b) whether the size of the estate is $673,598 as contended by the plaintiff or $104,421 as contended by the defendants (with reference to the contract and the deed);

(c) whether the plaintiff was given an early inheritance in the form of a discounted purchase price for the Kohnes farm;

(d) the extent of the plaintiff’s estrangement from the deceased;

(e) the extent of the plaintiff’s financial resources and need; and

(f) the relationship between the deceased and Mary, any obligations he had to her, and the extent of her financial resources and needs.

Before I turn to these questions I will briefly summarise the submissions of the parties and give a general overview of the plaintiff as a witness.

Submissions
Plaintiff’s submissions

The plaintiff submitted that she is an eligible person to whom the deceased owed a moral duty and for whom he made no provision.

The plaintiff did not dispute that the deceased’s intentions are revealed by his will and its surrounding circumstances. She highlighted the fact that the will purported to leave Brian’s Land and Gran’s Block to Andrew and submitted that, as such, the deceased clearly believed that these parcels of land formed part of his estate. She submitted that there is no evidence that the contract or the deed was acted on. Nor was any evidence adduced (especially from the solicitors who had carriage of these matters) as to why, if the land was transferred, the deceased then determined to leave it to Andrew in his will. In these circumstances, in which there is a ‘gap in the evidence’, the Court should not speculate that the lands owned by the deceased had been, or were subject to be, transferred out of the estate. It cannot be asserted that there is equitable ownership without explanation. Nor has any evidence of significant part performance been put before the Court. She submitted that the true net value of the estate is therefore $673,598.54.

The plaintiff denies that she received an early inheritance in the form of a discounted purchase price for Kohnes; rather, the price was a negotiated bargain, for which the deceased’s estate was repaid by the plaintiff providing and operating the dairy. To even characterise it as an ‘early inheritance’ is to misunderstand the nature of the relationship between the deceased and the plaintiff and, in particular, the arrangement by which the latter operated a valuable and profitable property for the benefit of the former. Further, even if she did receive such an inheritance, this does not disentitle her but is merely something to be weighed in the Part IV statutory exercise.

The plaintiff submitted that she paid $220,000 for Kohnes and made capital improvements which added $380,000 to its value. These were chiefly in the form of applied superphosphate performance, artificial insemination, fencing and tree planting. She disputed the contents of the document entitled ‘Sale to Catherine’ dated 2 January 2007 in which the deceased stated that the value of the property (as per the valuation on 8 October 2003) was $598,752, the sale price was $220,000, the allowance for improvements to the property was $90,000 and the differential, namely $288,752, was the plaintiff’s early inheritance. The plaintiff submitted that this document was prepared four years after the sale and is not accurate. Further, the defendants conceded that Heatherlie would not have been viable but for the dairy farm, which effectively subsidised other family activities.

The plaintiff agreed that, since leaving Kohnes, she has had little contact with her family. However, she submitted that any estrangement as such was a result of her abusive brother-in-law, who was rude to her. She highlighted the fact that extensive diaries referred to by the defendants, which were supposedly kept by the deceased, have not been put into evidence. She submitted, relying on Greely v Greely,[9] Walker v Walker[10] and Brandon v Hanley,[11] that character and conduct are relevant but not disentitling factors. What is more, the most important relationship was between the plaintiff and the deceased, which was a close one all their lives.
[9][2011] VSC 63.
[10](1996) NSWSC 188,
[11][2014] VSC 103 [23].

The plaintiff submitted that she is in financially necessitous circumstances. Her financial resources are meagre, while her need is great given her age, large mortgage, limited earning capacity, mental health issues and two dependent adult children, each of whom suffer significant and serious illnesses. By contrast, Mary does not have a competing claim, since she receives an income under the deed as well as rent from Plemmings house block and proceeds from the sale of livestock. Mary’s failure to receive anything under the will cannot therefore make any difference to her lifestyle.

The plaintiff lastly submitted that it is extraordinary and a matter of comment that none of the executors were called to give evidence to explain why the estate suddenly contracted in size.

Defendants’ submissions

The defendants conceded that the plaintiff is an eligible person to whom the deceased owed a moral duty and for whom he made no provision.

The defendants stressed the history of the family farming arrangement and the equal opportunities that were provided to each of the plaintiff and her siblings. They submitted, in particular, that the minutes of the family meeting on 19 May 1999 reveal the plaintiff’s desire to be independent from the family farm, family finances and from the influence of the family. They also stressed the significance of Mary’s evidence, as the one who knew everything that was going on about the farm, managed the finances and spoke regularly with the deceased about the management of the business. They submitted that, contrary to the plaintiff’s evidence, Mary’s explanation for the sale of Kohnes was that it would make the plaintiff and her husband happier, as they could be their own managers, and hence be better for the whole family.

The defendants submitted that the inconsistency between the deceased’s will and the contract and deed can be readily explained. They pointed to evidence that the deceased had been advised by his solicitors to insert certain terms into the will so to ensure that Andrew would inherit Brian’s Land and Gran’s Block. This was in circumstances where Brian’s Land had not been fully paid for. The defendants submitted that they could have argued that the gift of Brian’s Land to Andrew cancelled any outstanding debt. But they have not taken that position because the will contemplated that Mary would receive the residuary of the estate and it would be perverse to deny her this benefit. They submitted that Gran’s Block is held on trust for the generational transferees pursuant to the deed. Andrew is therefore not a beneficiary of the estate; Mary is the sole beneficiary. And the net value of the estate has been correctly calculated at $104,421.

As to the size of the estate, the defendants submitted that the grant of probate was prepared with the assistance of solicitors, who were aware of the deed (as they represented some of the parties to the deed) and should have been aware of the contract. Regrettably, they did not take into account the effect of these instruments or record their existence in the application material, which led to the erroneous inventory of assets and liabilities. Nevertheless, as to their legal force, the defendants submit that either the contract governs the sale of Brian’s Land but is subsumed and varied by the deed or else the deed governs the sale of the land outright. In other words, on either view, the deed is critical. Further, insofar as it reveals the testamentary intentions of the deceased, the deed is a carefully considered and crafted record of the family’s succession plan. It effected an intergenerational transfer of the family farming business and provided a secure though modest retirement for the deceased and Mary.

What is more, the deed has been performed in most respects, with three exceptions: the deceased did not register the transfer of Gran’s Block to the generational transferees; the deceased and Mary did not register the transfer of Johnny’s Hill to the generational transferees; and the deceased did not register a mortgage of Brian’s Land or alternatively the contemplated transfer of Brian’s Land to Andrew and his spouse. Yet these unperformed actions, either singularly or taken together, are not capable of undermining the force of the deed such that the deceased can be said to have retained beneficial ownership. Notably, the deceased and Mary have received significant benefits under the deed, including possession, income, running livestock, releases from debts and income in instalments. In these circumstances, and where the deed has so many parties and effects the transfer of a family farming business, it would be unconscionable for any individual party to resile from any part of the deed or for the Court to prevent its performance in full.

Lastly, even if the sale of Brian’s Land was not governed by the deed but only by the contract, there were significant acts of part performance such that, in the context of special land which contains residences and infrastructure for an operating farm, that component alone would be specifically enforceable. As authority for this proposition the defendants relied on the decision of the High Court in Legione v Hateley.[12]
[12](1983) 152 CLR 406.

In short, in relation to the size of the estate, the defendants submitted that Brian’s Land, Gran’s Block and Johnny’s Hill cannot beneficially be part of the estate. This is because the deed is clearly enforceable either by Andrew and his spouse against the estate of vice-versa. And, as the deed was enforceable against the deceased prior to his death, the estate is held subject to it. It follows that the estate has no beneficial interest in Brian’s Land, which is held on trust for Andrew and his spouse, but has an asset of $25,369, being the unpaid balance of the $146,200 that Andrew owed the deceased under the deed.

The defendants submitted that the deceased considered that the plaintiff had already been provided for by way of an early inheritance. The defendants pointed to the deceased’s unsworn affidavit, prepared for the prior proceeding, as illustrating his firm conviction that the plaintiff had been fairly, even generously, treated as compared to her siblings. He viewed the sale of Kohnes farm as a ‘considerable advantage’ because it gave her not only a sizeable inheritance but premature access to it as well. The defendants submitted that the value of the improvements made by the plaintiff and her husband to Kohnes was estimated by the deceased to be between $165,000 and $75,000. They submitted that, in the circumstances, the reduction in the purchase price from $598,752 to $220,000 was more than adequate to reflect the plaintiff’s inheritance together with a fair estimation of capital improvements.

The defendants submitted that the plaintiff became estranged after the sale of the Kohnes farm. She stopped mixing with her family, she did not attend her sister’s wedding, and did not return phone calls. They submitted that, contrary to the plaintiff’s evidence, the deceased and Mary tried to help the plaintiff and her husband by putting them in touch with a rural financial counsellor. Mary’s contact with the plaintiff ceased after the plaintiff’s husband rang her and told her that she was not to speak to them anymore. The defendants accepted that, in about 2012, the plaintiff received a call from the deceased, from hospital, during which he sounded very confused. The plaintiff immediately rang the hospital and demanded that he be checked. Mary later thanked the plaintiff for saving the deceased’s life and remains thankful for her efforts to this day.

The defendants submitted that, just as she did in the prior proceeding, the plaintiff issued these proceedings without any discussion or warning. This was in circumstances where she had access to all material necessary to assess the size of the estate (and, in particular, the position statement prepared prior to mediation). The defendants submitted that she has unreasonably continued proceedings to the completion of trial with the direct result that the estate will be exhausted and unable to meet likely legal costs. The defendants submitted that the plaintiff was an unreliable witness who gave evidence where it suited her and evaded it where it did not. On all the evidence, including the plaintiff’s evidence, it would be open to the Court to infer that the plaintiff has continued proceedings on some motivation other than seeking need, either recklessly, or with an intention to deprive Mary of her inheritance, or for some other personal motivation, perhaps in retribution for the resentments she holds towards her family.

The defendants lastly submitted that Mary had a loving relationship with the deceased and was intimately involved in raising the family and running the farm. She supported the deceased all his life and he in turn supported her. They were married for 57 years before his death; she is currently 79 years old. The deceased’s paramount duty was to his spouse and, in the circumstances, it would be perverse and unreasonable to deny Mary her inheritance. She is a widow whose assets are meagre and whose income is effectively that remaining from family lands and investments. Mary’s claim is morally more pressing that that of the plaintiff despite the plaintiff’s obvious need and in circumstances where the plaintiff has already received a significant contribution in the order of $285,752. No provision ought therefore be ordered for the plaintiff.

The evidence at trial

The following witnesses gave evidence at trial:

(a) the plaintiff, Catherine Rebecca Aedy Naismith; and

(b) Mary Christina Fraser.

The following affidavits were also tendered into evidence

(a) Affidavit of Catherina Rebecca Aedy Naismith dated 1 February 2018;

(b) Unsworn affidavit of Brian Andrew Hazel Fraser; and

(c) Affidavit of financial position of estate dated 10 May 2018.

Next I turn to the evidence of the plaintiff at trial and compare it to the evidence given by her mother Mary.

The plaintiff as a witness

The plaintiff relied on her affidavit sworn 1 February 2018 as well as giving viva voce evidence.

I found the plaintiff to be a poor historian and an unreliable witness. This is significant because, in this case, many matters can only be resolved by preferring either the plaintiff’s or Mary’s evidence. Two that loom large are whether she received an early inheritance and whether she made any financial contribution to the estate. What is more, in relation to the purchase of Kohnes, the plaintiff’s recollection is at odds with that of her parents.

The plaintiff conceded that, with respect to some issues, she could not recall the critical discussions that were had. For example, she could not recall discussing with her parents the question of an early inheritance, despite their recollections of such discussions.

It was at times unclear whether the plaintiff was genuinely confused about the questions that were being put to her or whether she was being deliberately unresponsive. It bears noting that at the conclusion of the first day of trial, during cross-examination, the plaintiff collapsed in the witness box. The hearing was adjourned to the next day. When asked whether her current state of health was affecting her ability to remember accurately she said: ‘I – I - some – some things I have trouble, but with the major things, I don’t.’ She conceded, however, that when she and her spouse were operating Kohnes, and at the time they purchased it from the deceased and Mary, she was on antidepressants. She appeared to suggest that her mental health problems and medication had impacted her ability to recall matters and give relevant evidence about those matters.

The plaintiff agreed that the purchase price for Kohnes was $220,000. She accepted the valuation of $598,752 but disputed the deceased’s allowance of $90,000 for improvements to the property and hence the balance of $288,700. The basis for her disagreement with those figures was:

And that is – that is what I’m questioning. That was never like, the case, because the deductions came off the total amount was between the 220 and the total amount of the valuation was what we contributed into the farm. In providing, like, the costs that we’d put into improving that hadn’t been provided by [the company] … And that’s what I’m saying, it’s incorrect – sorry, but that whole piece of paperwork is, as far as I’m concerned, not correct, because it appeared out of nowhere and it’s not my recollection of what it should be.

The difficulty is that the plaintiff did not put forward any evidentiary basis to support her assertions. There was no evidence of her contributions to Kohnes, what payments were made from the company, what profits they received from the share farming arrangement, or anything of the sort. The plaintiff repeatedly said that she did not do the bookwork and had no knowledge of financial matters. Her spouse, Stephen, did not give evidence despite the plaintiff explaining that he was responsible for the bookwork. There was no documentary evidence to support her assertions.

Although the plaintiff was legally represented, her evidence was often confusing and she was unable to focus on the issue at hand. For example, she was asked if she and her spouse managed Kohnes via a share farm arrangement, to which she replied: ‘[It] was initially, I think. I don’t know, share farm. They were leasing at the start. I’m not exactly sure.’

The plaintiff was then asked:

COUNSEL:Would you accept that initially it was a share farm arrangement on a 40/60 per cent split, with 40 per cent to you and Stephen?
WITNESS:That’s possibly correct. I’m not – I’m not a hundred per cent sure.
COUNSEL:And when you first moved into that farm, did you provide any capital – you and Stephen provide any capital input? By that I mean stock or money or something to acquire the [Kohnes] farm?

WITNESS: Sorry, I – that – I don’t understand your question there.
…
COUNSEL:And initially, you took occupation in [Kohnes farm] and Stephen was paid a wage for a short period of time. Is that correct?
WITNESS:I’m not – you’d have to ask my husband that, that I’m not really sure what they did. I’ve never done, like the financial part of …

The plaintiff’s evidence in relation to what inputs she and her husband were making at Kohnes under the share farming arrangement was equally confusing. For example:

COUNSEL:When you say you’re putting it back into the farm, that was the farm that you were managing that you were responsible for?

WITNESS:      Yes.
COUNSEL:     That you had control of?
WITNESS:      Yes.
COUNSEL:And it wasn’t the case that all of the profits went to Heatherlie, the family company, at all?
WITNESS:I’m saying what we were doing. You’re – you’re just trying to confuse me. I’m sorry, but I don’t understand what you’re saying.
COUNSEL:I’m actually trying to understand what you say, when you say that all of the profits - - -

WITNESS: Well, I’m sorry, but I don’t understand the question.
COUNSEL:You and Stephen were in complete control of how the money was spent whilst you were in the dairy farm?
WITNESS:Complete control of what? I don’t know exactly what money you’re referring to, but if you want to know the details, it would be better to talk to my husband.

The plaintiff repeatedly made assertions in the course of her evidence and when pressed was not able to substantiate them. For example, she was asked about money she and her husband supposedly borrowed to keep Kohnes operating, to which she gave the following evidence:

COUNSEL:The money that you borrowed, that you said to keep the dairy running, what was that spent on?
WITNESS:It was a lot of credit cards and other – that’s pretty much how we operated. Well, my family said they wouldn’t give us a loan of any type because if they did that, they’d have to do it for the others. But in hindsight, we were probably the only ones that never received a loan.

COUNSEL: Who else received a loan?
WITNESS:Well, as far as I’m aware, the others over time have received loans.

COUNSEL:     How are you aware?
WITNESS:      From the paperwork that I was shown at some stage.
COUNSEL:     Are you able to say what paperwork that is?
WITNESS:No. I’ve seen a lot of paperwork, and I’m finding it really confusing.
COUNSEL:So are you directly aware of any form of financial assistance given to the other siblings at that time?

WITNESS:      Well, I saw paperwork that said they were receiving loans.
COUNSEL:     So is the answer to that question no?
WITNESS:      Sorry, I don’t understand what …
COUNSEL:I’m trying to understand. The paperwork – what was the paperwork that …

WITNESS: Well, it indicated they were receiving loans on and off.

Equally unsatisfactory was the plaintiff’s evidence about Giltraps. She said her parents only sold Kohnes to her and her husband because they needed the money from that sale to buy Giltraps. The transcript records the following exchange:

COUNSEL:So is it correct that you approached the parents about buying [Kohnes] somewhere in the early 2000s?

WITNESS: We – we asked way before that, like I said earlier.
COUNSEL: And what was the reason you were given?
WITNESS:Because they all had to stay together for the benefit of the family.
COUNSEL:Now, you gave evidence that the only way the property could be purchased – sorry, you gave evidence that [Kohnes] needed to be sold to get money to buy [Giltraps]. I suggest that you didn’t actually know what needed to be done financially in the company at all at that time?
WITNESS:Well, that was the jewel in the crown, [Giltraps], and that’s what they were always after, and that was the only way, to my knowledge, that they could afford to buy it, by selling us [Kohnes].

The plaintiff was unable to substantiate her assertion that it was necessary to sell Kohnes in order to buy Giltraps. She did not point to any discussions or documents.
Mary as a witness

The plaintiff’s evidence can be contrasted with that of Mary. I found Mary to be a clear and credible witness. She gave her evidence in a straightforward and frank manner.

Mary conceded that she was not particularly involved in the running of the farm but indicated that she knew about everything that was going on. Importantly, she was very conscious of the finances, having helped the deceased with bookkeeping in the late 1980s and 1990s. She also prepared the figures for consultants that they had retained called Halls & Sconnard.

Mary was prepared to make concessions about what she could recall. For example, in evidence-in-chief, she was asked what she recalled about the family meeting on 19 May 1999. She replied:

Oh, I think this is a little difficult for me to recall something that happened in 1999, word for word. I know what the intent of Catherine’s conversation was. She asked if she could own [Kohnes], but I can’t give you anything clearer than that.

Mary denied that she and the deceased had to sell Kohnes so that they could purchase Giltraps. She maintained that Kohnes was sold on the basis that the plaintiff and her husband repeatedly asked if they could buy it. She said they decided to give the plaintiff what she wanted, namely independence and security, so that everybody in the family would be happier.

Once again, in relation to the plaintiff’s early inheritance, Mary gave measured and plausible evidence. The transcript records the following exchange:

COUNSEL:At the time of the sale to [the plaintiff] and [her husband], what conversations did you have with [the plaintiff] or [the deceased], regarding [why] the sale price was $220,000?
WITNESS:Because – I find it really difficult to answer in the way I should be answering. Because, for me, it was [a] conversation [the deceased] and I had, that [the plaintiff] was our daughter, we should be giving her a discount. This would mean an early inheritance and an advantage because the others weren’t getting an inheritance until one of us died – or, both of us died, actually.

COUNSEL: That’s what [the deceased] said to you?
WITNESS:I was present when [the deceased] and I had these discussions and he told me that [the plaintiff]– that he had explained to [the plaintiff]. And I may have been present to that, I just don’t recall.

I found Mary’s recollection of these conversations to be credible and consistent with the documentary evidence.
Conclusion as to the plaintiff and Mary as witnesses

I consider the plaintiff was an unreliable witness. I accept that she found giving evidence stressful and that it had a significant impact on her. Making allowances for the plaintiff’s health, and the stress of giving evidence on her, I still found her to be an unreliable witness. As such, where the evidence of the plaintiff and that of Mary is at odds, I consider that the evidence of Mary should be preferred.

Analysis

For convenience, I will adopt the structure of the Act, moving though each of the ss 91A(1) and 91A(2) factors where relevant. I will address only those factors enlivened by the facts of this case.

The deceased’s will, any evidence of his reasons for making the depositions in it, and any other evidence of his intentions in relation to providing for the plaintiff—s 91A(1)(a)-(c).

I have set out the evidence in relation to the deceased’s will, his reasons for making the dispositions therein and his intentions in providing for his wife Mary in contradistinction to the plaintiff.[13]
[13]See [14]–[43] above.

In summary, the evidence demonstrates the deceased engaged in extensive and careful succession planning, beginning in 1999 and reaching fruition in 2013. The contract, the deed and the will are each a part of that succession plan. The intention was the last survivor, in this case Mary, would make provision for the daughters that were not generational transferees.

The deceased understood his obligation to provide for the plaintiff. He considered that he had adequately provided for her by selling her Kohnes, in his lifetime, at a price significantly below market value. The deceased and Mary considered they had provided the plaintiff with a generous early inheritance and one that advantaged her as compared to her siblings.

The inconsistency between the will on its face and the deed is, as the defendants have submitted, readily explained. The terms of the will are, in the final analysis, consistent rather than inconsistent with the deceased’s succession plan: he wanted to make sure that Brian’s Land and Gran’s Block went to Andrew in the event that there was any legal issue with the contract and the deed. In any event, he was overly cautious, for the pre-existing agreements were more than sufficient to transfer beneficial ownership out of the estate.

True it is that the defendants did not call Andrew or their former solicitors to give evidence. No explanation was given. However, in the circumstances of this case, I am not prepared to draw a Jones v Dunkel inference that the deceased did not intend to rely upon the contract or deed. I do not consider there is an evidentiary ‘gap’ in relation to why the properties were left to Andrew in the will. I accept that there is no explanation as to why the executors initially advised that the estate was worth $673,598 and later that it was worth $104,921. However, the failure to call the former solicitors is relatively unimportant, in light of the balance of the evidence. The drafting of the will and the bequeathing of those properties to Andrew is explained by Mary. There is evidence that the contract was acted on. Finally, Andrew did give evidence as he was a deponent to the affidavit of financial positon, which included cattle (part of a down payment of $37,000 owed on the balance of Brian’s Land) and acknowledges the binding nature of the contract and deed.

For the avoidance of doubt, as I have said, I accept Mary’s evidence that the deceased acted on advice from his then solicitors and drafted his will in such a way as to safeguard these parcels of land in circumstances where Brian’s Land, in particular, had not been fully paid for.

The nature of the relationship between the deceased and the plaintiff including, if relevant, the length of the relationship—s 91A(2)(a).

The plaintiff is the deceased’s daughter. The plaintiff candidly admitted that she had little contact with her family after leaving Kohnes.

The plaintiff deposed that she got on well with her father. She said he was often moody and depressed and that she was ‘often able to talk him out of it’.

I accept that the plaintiff received a phone call from the deceased while he was in hospital, in or around 2012, after which she contacted the hospital and insisted that they check on him. It was discovered that the deceased had triple pneumonia, was delirious and near death. I accept, as did Mary in her evidence, that the plaintiff saved the deceased’s life at this time.

I accept that the plaintiff had a close relationship with the deceased up until she purchased Kohnes farm in 2004 but not for all of the deceased’s life. On her own testimony, she had little or no contact with the deceased since approximately 2004.

Any obligations or responsibilities of the deceased to the plaintiff and the beneficiaries of the estate—s 91A(2)(b)

Mary is the deceased’s widow. She is a named beneficiary under the deceased’s will. The will stipulates that the residuary of the deceased’s estate is to go to Mary. There can be no question that the deceased owed a paramount duty to Mary to provide for her as his widow.

The size and nature of the estate—s 91A(2)(c)

The size of the estate plainly turns on the effect of the contract and the deed. The two relevant parcels of land are Brian’s Land and Gran’s Block. The basic question is whether the contract or the deed (or both) have caused beneficial ownership in these lands to pass out of the estate.

With Brian’s Land, the question is whether the contract and/or the deed have caused beneficial ownership to pass to Andrew, with only the balance of the purchase price remaining as an asset of the estate. With Gran’s Block, the question is whether the deed has caused beneficial ownership to pass to the generational trustees, such that this land is held on trust by the estate.

The starting point is to note that the plaintiff did not put any evidence before the Court to suggest that the contract or the deed are in any way deficient. There is some evidence that they have not been fully performed but this does not raise a presumption that they are lacking in force. Rather, these instruments are presumed to be valid, and the relevant test to be applied is whether the purchaser has ‘an “interest” that is commensurate with the availability of specific performance.’[14] In other words, if the vendor were to insist upon its contractual right to terminate, would equity grant specific performance of the agreement?
[14]Tanwar Enterprises Pty Ltd v Cauchi (2003) 217 CLR 315, 332 [53] (Gleeson CJ, McHugh, Gummow, Hayne and Heydon JJ). See also Brown v Heffer (1967) 116 CLR 344; Chang v Registrar of Titles (1976) 137 CLR 177, 184 (Mason J); Legione v Hately (1983) 152 CLR 458, 456-457 (Brennan J).

The answer depends on whether the subject instrument is the contract or the deed. There is an argument to say that, if the deceased were to insist on termination of the contract, equity would not grant Andrew specific performance. However, this argument would only need to be examined in the absence of the deed, since on either analysis—whether it is a fresh agreement or a variation—the deed governs the sale of Brian’s Land. The deed also governs the transfer of Gran’s Block to the generational transferees. So, for present purposes, the sole question to be answered is whether the deed is legally binding on the estate. Putting that around the other way, has the plaintiff adduced any evidence to suggest that the deed is not binding, from which this Court might conclude that equity would not grant the generational transferees specific performance?

There is no evidence to suggest that the transferees under the deed, namely Andrew and the generational transferees, could not obtain specific performance in relation to Brian’s Land and Gran’s Block respectively. There is no suggestion in the deed that time is of the essence or that the terms relating to consideration with respect to Brian’s Land and Gran’s Block were essential conditions. I agree with the defendants that the deed is a complex and carefully crafted legal document, with nine parties (including members of the Fraser family, their spouses, a company and a trust), whose purpose, after considerable negotiation, discussion, consultation and legal advice, was to effect an intergenerational transfer of the family farming business and all related activities and, crucially, to provide for the deceased and Mary into their retirements.

The deed has been performed in almost every respect (there are too many to list here) save for the following: the deceased did not register a mortgage on Brian’s Land or alternatively a transfer to Andrew and his spouse as required by the contract and/or the deed; the deceased did not register the transfer of Gran’s Block to the generational transferees as required by the deed; the deceased and Mary did not register the transfer of Johnny’s Hill to the generational transferees as required by the deed. There is no evidence before the Court as to why the deceased did not complete these actions. In any event, nothing turns on it, as the deed does not expressly or impliedly indicate that these are essential conditions. Moreover, failure to register transfer (or a mortgage) is not sufficient to defeat a legitimate beneficial interest, which Andrew/the generational transferees clearly have under this agreement.

As the defendants submit, one could speculate that the deceased held on to the registerable title as a form of security of performance, but it is not necessary to reach a concluded view about this. With so many parties to the deed, and given its underlying nature being concerned to effect an intergenerational transfer of farming activities from the deceased and Mary to Belinda and Andrew and their respective spouses, it would be unconscionable for any party to resile from the deed. Indeed, as the background circumstances to this case exhaustively demonstrate, no party has sought to resile from the deed: the Fraser family’s succession plan was painstakingly developed and there is no good reason now to go behind the deed as a concrete realisation of that plan.

In short, on any view, the beneficial owner of Brian’s Land must be Andrew and the beneficial owner of Gran’s Block must be the generational transferees. Either could, if necessary, obtain specific performance. Andrew has an equitable interest in Brian’s Land arising out of his payments, in cash and cows, to the deceased; he continues to make down payments to the balance owed to the estate. I consider that an agreement for the sale of Brian’s Land remains on foot. The generational transferees, meanwhile, have an equitable interest in Gran’s Block as a result of the consideration provided under the deed.

For these reasons the true net value of the estate, prior to trial, was correctly estimated by the defendants to be $104,421.

The financial resources, including earning capacity, and the financial needs at the time of the hearing and for the foreseeable future of the plaintiff and Mary—s 91A(2)(d)

The plaintiff deposes that she suffers from depression, high blood pressure, anxiety and is being treated for post-traumatic stress disorder. I accept that she has a limited capacity to work.

The plaintiff has $173.35 in a Westpac account and $15.43 in a Commonwealth Bank Pensioner Security Account. The plaintiff’s husband had a taxable income of $81,600 for the financial year ending June 2016 and $93,280 for the financial year ending June 2017. A partnership tax return for 2017 records a total business income of $20,979.

The plaintiff deposes that she and her husband own a seventy-seven acre farm at 77 Talgarno Gap Road, Bethanga worth $400,000 with a mortgage of $310,000. They earn between $14,000 to $20,000 per annum from selling farm stock. The plaintiff has no superannuation and her husband has approximately $30,000 in superannuation. They have assets worth approximately $50,000.

The plaintiff has been caring for her adult daughter since approximately 2011. The plaintiff’s daughter suffers from an autoimmune disease and cervical cancer and has returned home to live with her parents. Her son also lives at home and suffers from depression and anxiety and last year was diagnosed with an aggressive melanoma. There is no medical evidence before the Court in relation to the plaintiff’s daughter or son. I accept that they have health issues and that the plaintiff cares for them and as such this further limits her capacity to work.

I accept that the plaintiff has financial needs and is in necessitous circumstances.

Mary owns the following assets:

(a) Plemmings house block (valued at $250,000 by Paul & Scollard). The block has a capital improved value of $319,500. It was transferred to Mary and the deceased under the Deed and is hers by survivorship;

(b) a WAW Credit Union account with a balance of $573.23 as at 31 March 2018; and

(c) 50 sheep.

Mary has a Bendigo Bank credit card with $2611.58 owing as at 10 April 2018. She also has a legal interest in Johnny’s Hill. However, pursuant to the deed, she holds this land on trust for the generational trustees. She has no superannuation or other significant assets.

Mary’s evidence in relation to her income was as follows:

(a) $4160 per month under the Deed, which is currently being paid in the form of $4000 per month plus her electricity bills;

(b) about $600 ‘and something’ a month from rent of Plemmings, when it is rented, ‘but I use that mostly for maintenance, because I had to spend money on it to paint it and do other things. And it does need more work done on it’;

(c) possibly some income (or loss) from Krater, though that seems unlikely as it hasn’t been actively trading and the last sale fell through, and the accountant has not provided books;

(d) about $25,000 per year from cattle and sheep, though that is currently put aside for legal expenses and ‘for Anna’; and

(e) a periodic payment from Centrelink of $90.84 which Mary presumes to be a non-means tested aged based amount, not a pension.

Mary has not lodged a tax return in the last two financial years.

I accept that Mary is not in a perilous financial situation. However, she does not have any superannuation or savings to provide for any unforeseen contingencies as she ages, and she is at an advanced age.

Any physical, mental or intellectual disability of any eligible person or any beneficiary of the estate—s 91A(2)(e)

As I have said, although there is no medical evidence before the Court, I accept that the plaintiff suffers from depression and post-traumatic stress disorder.

The age of the plaintiff—s 91A(2)(f)

The plaintiff is 58 years of age. She is therefore well into her adult life and may be at the end of her working life given her physical and mental health problems.

Any contribution (not for adequate consideration) of the plaintiff or any beneficiary of the estate to building up the estate or the welfare of the deceased or the deceased’s family—s 91(A)(2)(g)

I reject the plaintiff’s contention that she contributed to the building up off the deceased’s estate.

The plaintiff and her husband contributed to the company under the share farming arrangement. The evidence is (rejecting the plaintiff’s evidence that they received nothing) that the profits were divided 60/40 between the company and the plaintiff and her husband respectively. The lease of Kohnes was primarily a commercial agreement between the parties and cannot be viewed as a contribution towards building up the estate. There is nothing in the plaintiff’s description of the work that she and her husband performed to suggest that the company was gaining a benefit beyond what it was commercially entitled to or that went beyond the scope of an ordinary share farming arrangement.

The evidence does not disclose that the negotiations in relation to the share farming arrangement or the lease of Kohnes were in any way unfair to the plaintiff and her husband. The plaintiff and her husband leased Kohnes for $40,000 per annum, which was the amount they offered, and they kept the profits from the dairy. The evidence of the deceased was that a nearby larger dairy was leased for $90,000 per annum. There is nothing to suggest that the lease was commercially unfair or that the plaintiff and her husband did not keep the profits from the dairy during this period.

The plaintiff asserts that they made capital improvements in the form of fixing fences, improving the pasture, paying for fertiliser and artificial insemination of the cows. Mary disputed these claims and described the contributions as no more than one would expect in any ordinary share farming scenario. The plaintiff was unable to quantify the value or extent of the capital improvements or contributions to Kohnes farm during the share farming and lease period. I found the plaintiff’s evidence on this topic unreliable.

The plaintiff made an ambit claim that they were never reimbursed for any capital improvements and that they did not share in any of the profits. The plaintiff gave evidence that they contributed to the capital value of Kohnes by mending fences, planting trees, and ‘superphosphating’ the pastures and the artificial insemination of cattle. In re-examination the plaintiff was asked if she could recollect that the property was ‘superphosphated’. Her evidence was that she could not remember because she had not been interested in such matters at the time. She went on to say that it was done but could not say when.

When pressed in cross-examination for detail of the contributions and their value, the plaintiff was unable to answer and said that her husband was responsible for the bookkeeping. She admitted that she had not done any bookkeeping during the period that they had share farmed at Kohnes. She did not know if her husband was paid a wage at any time. In re-examination the plaintiff said she could not recall the share farm breakdown as it was ‘not part of what I did’. And she said she was highly medicated at that time and so could not recall details such as whether the bank was willing to advance them a loan:

I’m not sure about that because, like I said, I was not of – like, I was under the influence of a lot of medication at that time, and my husband was doing the bookwork, and I was also under the influence of being – having an abusive brother-in-law.

On the topic of contribution, Mary agreed that the plaintiff and her husband had improved the pastures, artificially inseminated the cattle, planted trees and fixed fences. She agreed that the tree planting was a capital improvement and that these works were paid for by the plaintiff and her husband. She confirmed that during the share farming period the costs were divided on a 60/40 basis as well as the profits. Then, after they were granted a lease over Kohnes, the plaintiff and her husband were liable for all the costs and retained all the profits. Mary strenuously denied that the plaintiff and her husband paid for all the improvements throughout the 16 years that they inhabited Kohnes.

Mary also gave evidence with a degree of specificity about the contributions. For example, she gave evidence about a dairy vat that the plaintiff and her husband had installed without any consultation, which she described as an asset of theirs rather than an improvement. She said the deceased had disagreed with the plaintiff’s husband over the value of his fence fixing. Mary agreed that the house on the Kohnes land had been improved while the plaintiff and her husband lived there with their children. Mary’s unchallenged evidence was that the plaintiff and her husband borrowed money to improve the house from a family friend. She conceded that they may have even ‘put some money into that’. The renovation included a new bedroom and an altered bathroom. However, when the loan was called up, the plaintiff and her husband were unable to meet the debt and so the company ‘picked up the tab’.

It goes without saying that, as the moving party in this proceeding, it is for the plaintiff to prove her case. Her evidence on this issue was unreliable.

The plaintiff asserted that she was denied a share in a government financial package to assist dairy farmers at the time of deregulation. She said that the package was in excess of $100,000 and that the funds were applied the company and not to Kohnes. In cross-examination the plaintiff was asked whether the package was shared equally between the company and Kohnes as part of the share farming arrangement. Her evidence was as follows:

COUNSEL:The government financial package… of $100,000 or a bit more, I suggest to you that that was actually divided between you and [your husband] and [the company]?

WITNESS: No, that’s not my recollection.
COUNSEL: There was a share farm arrangement in operation at the time?
WITNESS:That was – I’m not – I just know that’s not – that’s not correct. And, sorry, I had – at this stage when a lot of this was going, I was [on] a lot of antidepressants and medication due to what had happened to me prior. So I – I’m getting quite confused with all this, um, questioning.

The plaintiff had difficulty recollecting salient details and, by her own admission, there were many features of life on the farm that she had no interest in. Mary’s cogent evidence on this issue, on the other hand, was that the $100,000 was:

a dairy deregulation package brought in by the state government when contracts, I think they were, were taken away from some dairy farmers. We didn’t ever have a contract. And so to ease the burden on farmers because their incomes were going to be considered that they wold be reduced, a package was paid. Because I had owned the dairy herd and I gave 80 cows from dairy went into the herd at Kohnes, I got $50,000 and Kate and Stephen kept the balance of whatever that amount was.

The plaintiff conceded that the herd of cows that they began to share farm Kohnes with was owned by the company. This was then effectively another large gift that they were given at the time that they moved on to Kohnes.

The minutes of the 19 May 1999 family meeting record:

[The plaintiff] – Currently share farming at [Kohnes] (481 acres) with the family company and half the dairy income goes back here to [the company]. [The plaintiff’s husband] is very happy working there and they both love working with the cows. When she took on the farming she was told if they live here for 5 years they could have the house for life. Since then they have contributed money and labour (and [the company] has given money to improve the house). [The plaintiff] feels the house is not a good place to live on a public corner with people coming in and would prefer to build their own place up on the site of the hill. [She] wishes to build a new home but they are unable to raise money as they have no security. [She] is not happy with the current position. She feels she has no security even after spending all her working life in the dairy. Their money has gone back into the cows (they own half the herd) but she fears there is no future for her children should they wish to remain with the dairy.

The minutes are consistent with a commercial share farming arrangement. There is nothing to suggest that the plaintiff and her husband were making contributions above and beyond such an arrangement and being deprive of the profits. It is telling that the minutes record that the plaintiff and her husband were very happy working there. Mary’s undisputed evidence was that the lawyer, Ms McGowan, spoke with each member of the Fraser family in private. She then prepared the minutes. The plaintiff deposes to this effect in her affidavit. As she put it, ‘each child’s circumstances were discussed and [they] were provided an opportunity to raise their concerns and what they wanted for the future.’

It may well be that Kohnes and the diary were integral to the operating life of the company. But it does not follow from that that the plaintiff financially contributed to the deceased’s estate not for adequate consideration.

For the reasons set out above, I do not consider that the plaintiff made a financial contribution to the building up of the estate not for adequate consideration.

Any benefits previously given by the deceased to the plaintiff—s 91A(2)(h)

I consider the plaintiff received a benefit by way of an ‘early inheritance’ in the form of a purchase price for Kohnes that was significantly below market value.

There is documentary evidence that supports Mary’s oral evidence that it was an early inheritance. As I have said, a handwritten note signed by the deceased, entitled ‘Sale to Catherine’ and dated 2 January 2007, records that Kohnes was valued at $588,752 yet sold to the plaintiff and her husband for $220,000, with an allowance being made for improvement in the sum of $90,000. The difference, namely $288,752, is described as the plaintiff’s ‘early inheritance from the estate’. Mary’s evidence was that the figure of $588,752 was derived from an appraisal conducted by Paull & Scollard in October 2003.

When asked why she and the deceased authorised the sale of Kohnes for $220,000 Mary replied:

Because [the plaintiff] was our daughter and we thought this was an opportunity for them to have a business of their own. And we made the discount saying this would be her inheritance—early inheritance. And [the deceased] emphasised that, in that she was getting an advantage over her siblings.
…
I was present when [the deceased] and I had these discussions and he told me that [the plaintiff] –that he had explained it to [her]. And I may have been present to that, I just don’t recall.

The plaintiff disputed the documentary evidence. She disputed the accuracy of the deceased’s handwritten note dated 2 January 2007 and the minutes of the 19 May 1999 family meeting. The minutes, as I have said, recorded as an option for the family that the plaintiff be given an early inheritance in the form of a discounted parcel of land in exchange for relinquishing her shares in the company.[15] The plaintiff’s evidence about the deceased’s 2 January 2007 hand written note was as follows:
[15]See [14] above.

COUNSEL:So that document … is dated 2 January 2007. Is that about the time your father gave it to you?
WITNESS:Gave what to me – no. We didn’t see that until years later. This appeared years later. That’s what I’m saying now, that piece …

COUNSEL: When did you see it?
WITNESS:I don’t know exactly, but it didn’t appear until around the time when we were having the problem with the shares. And that just suddenly appeared, like I – I’m stating that other paperwork just seems to suddenly appear.
COUNSEL:So you’re saying that the numbers are wrong. Do you accept that it’s describing [Kohnes]?

WITNESS: I can’t see what it’s describing, I just know it’s wrong.
…
COUNSEL: So you accept that was a fair market valuation at the time?
WITNESS:Yes, but I also explained that it was a lot of our hard work and funds that had gone into that.
COUNSEL:And the sale price of $220,000 that’s what it says underneath that?

WITNESS:      Yes.
COUNSEL:     That’s what you and [your husband] paid for it? Is that correct?
WITNESS:      Yes, we paid 220.
COUNSEL:And then there’s a line that says, ‘Allowance for improvement to property, 90,000’?
WITNESS:And that is – that is what I’m questioning. That was never like, the case, because the deductions came off the total amount was between the 220 and the total amount of the valuation was what we contributed into the farm. In providing, like, the costs that we put into improving that hadn’t been provided by [the company].

COUNSEL: And then there is, the next line down, ‘difference, 288,700’.
WITNESS:And that’s what I’m saying, it’s incorrect – sorry, but that whole piece of paperwork is, as far as I’m concerned, not correct, because it appeared out of nowhere and it’s not my recollection of what it should be.
COUNSEL:There’s a notation there that says, ‘is [the plaintiff’s] early inheritance from the estate’?
WITNESS:I realise. But, I’m saying to you, this piece of paper turned up and I have not set eyes on it until many years later. And as - my understanding is that it’s incorrect. And anybody can make up anything and provide a piece of paperwork that is not correct. It’s not been – have you noticed that it’s not been signed? It hasn’t been signed by myself or my husband.
COUNSEL:Were there any discussions at that time, or beforehand, about you obtaining an earlier inheritance?
WITNESS:I don’t consider we’ve had an early inheritance. We’ve paid for a property with our blood, sweat and tears and money and we’ve receiving nothing in return. The others have benefited from millions of dollars’ worth of land and assets.
COUNSEL:I’ll ask again, were there any discussions about you receiving an early inheritance?
WITNESS:Well, I don’t consider we’ve received an early inheritance.

I then asked the plaintiff whether there were any discussions about an early inheritance, to which she replied:

WITNESS: Well, not that I recall because I don’t recall – because I just recall us being required to pay, so as they could then purchase the other property.
COUNSEL:So, are you saying there were no discussions about early inheritance?

WITNESS: Not that I recall. That’s my answer, not that I recall.
…
COUNSEL:I’m going to try again, Ms Naismith. Were there any discussions between you and your parents about an early inheritance in relation to the sale of [Kohnes] farm, at any time?
WITNESS:Well, not that I recall. I’ve answered it. I’m sorry, but as far as I’m concerned, I’ve answered it.

As the above exchange reveals, the plaintiff accepted the accuracy of the deceased’s note in relation to the appraisal and purchase price of Kohnes, but disputed the amount recorded for improvements, the difference representing her early inheritance and the fact that she received such an inheritance at all. She did not deny that there were conversations about an early inheritance; she merely said she could not recall.

The figures on the deceased’s note all have independent sources of calculation save for the $90,000 allowed for ‘improvements’. The deceased’s affidavit records the disagreement as to the value of the improvements as being between $75,000 and $165,000. The company purchased Kohnes for $322,500 in 1987. This is $100,000 more than the plaintiff and her husband paid for it in 2004. When it was put to the plaintiff that the purchase price of $220,000 was arrived at because of her and her husband’s limited ability to obtain finance, she replied, ‘I’m not sure about that because ... I was under the influence of a lot of medication at that time, and my husband was doing the bookwork.’ Yet both the deceased and Mary’s evidence is that $220,000 was an amount nominated by the plaintiff given what she and her husband could afford after negotiations with their bank manager.

In summary, Mary’s evidence, the minutes of the 19 May 1999 family meeting (recorded by an independent person) and the note signed by the deceased dated 2 January 2007 refer to the discounted purchase price of Kohnes as constituting an early inheritance for the plaintiff. This overwhelming body of evidence compels me to conclude that, contrary to the plaintiff’s evidence, she received a sizeable and generous early inheritance which she had the benefit of since 2004.

The effects a family provision order would have on the amounts received from the deceased’s estate by other beneficiaries—s 91A(2)(l)

Any family provision order made in favour of the plaintiff will have a direct effect on Mary as the primary beneficiary under the will. As I have said, Mary has little cash savings, so any provision for the plaintiff will deprive her of the ability to have security in her advanced old age. And, unlike the plaintiff, Mary no longer has a husband of working age who can maintain her.

If the plaintiff were to receive, for example, the cattle that Mary owns then this would deprive her of a significant asset and source of income. This is equally applicable to Mary’s interest in Krata Industries Pty Ltd. These considerations are amplified in the context of an estate whose net value, as I have said, is likely to be wholly or mostly eaten up by legal fees.

Any other matter the Court considers relevant—s 91A(2)(m)

I agree with the defendants that, while plaintiff is not disentitled by reason of estrangement, her estrangement from the deceased is a factor that diminishes her claim.

The evidence does not show that the deceased and the plaintiff shared a close relationship throughout their lives. On her own evidence, the only significant contact she had with the deceased after purchasing Kohnes was to commence legal proceedings against him (technically against the company of which he was a director), although I accept that he called her several times from hospital when delirious.

In short, from approximately 2003 until his death in January 2017, I do not consider that the plaintiff had a close relationship with the deceased.

Conclusion as to analysis of statutory factors

Although a widow’s claim on an estate is given primacy over other claims, it does not necessarily exclude other claims. It is a question of weighing competing claims and taking account all the circumstances of the case in light of the matrix of factors provided in the statutory regime.

In Luciano v Rosenblum[16] Powell J of the Supreme Court of New South Wales said:

It seems to me that, as a broad general rule, and in the absence of special circumstances, the duty of the testator to his widow is, to the extent to which his assets permit him to do so, to ensure that she is secure in her home, to ensure that she has an income sufficient to permit her to live in the style to which she is accustomed, and to provide her with a fund to enable her to meet any unforeseen circumstances.[17]

[16](1985) 2 NSWLR 65.

[17]Ibid [69]–[70].

In my view, although the plaintiff is in financially necessitous circumstances, her moral claim is secondary to that of Mary. In this case, the deceased’s moral obligation to the plaintiff is reduced by virtue of having received what the deceased and Mary both regarded as an early inheritance, which they discussed with the plaintiff. What is more, for reasons already given, the inescapable fact is that this estate is very small and to interfere with the deceased’s will would jeopardise Mary’s financial security.

Perhaps the strongest argument concerns the deceased’s intentions as revealed by his will and surrounding circumstances. He and the other members of the Fraser family engaged in extensive succession planning. The plaintiff was present at the important meeting in May 1999 at which all of the children, in consultation with each other and with an independent person, recorded their wishes for the family farm. The minutes record the outcome and set in motion what I have called first phase of succession planning.

Following the meeting the family employed lawyers to prepare the deed and the deceased received advice as to the form that his will should take. All of this was designed to implement and further the succession planning that they had formulated as a family and which, regrettably, did not include the plaintiff after the sale of Kohnes and her estrangement. It is clear that the deceased did not wish to sell Kohnes—it was, among other things, hugely inconvenient for the family farming business—but did so against his interests because he thought it would give the plaintiff the independence and security that she craved.

It was then, as the sale of Kohnes was being negotiated in 2004, that the deceased fulfilled his duty to provide for the plaintiff by reducing the purchase price to well below market value. This is in contrast to his son, who did not receive any discounted land until 2013, or, more emphatically, his other daughters, who, although not involved in ongoing farm operations like the plaintiff and Andrew, will not receive any inheritance until the passing of Mary.

The deceased had regard to the wishes of each of the members of the Fraser family and set about implementing a plan that reflected how he wanted his assets to be distributed. Mostly this was done by way of inter vivos gifts and transfers. He prepared a will so as to ensure that the residuary of his estate would go to his widow (if she survived him). Further, having regard to the size of the estate, the fact that the plaintiff received an early inheritance and did not contribute to the building up of the estate for no adequate consideration, her financial needs, health issues, age and limited ability to work, I am not persuaded that the Court should make a family provision order in favour of the plaintiff.

Conclusion

For these reasons, I have concluded that the plaintiff is not entitled to any provision from the estate, and so will make no family provision order.

The proceeding must be dismissed. I will hear from the parties as to costs.

–––

[2018] VSC 689

15 November 2018