Oldereid v Chan
[2013] NSWSC 434
•29 April 2013
Supreme Court
New South Wales
Medium Neutral Citation: Oldereid v Chan [2013] NSWSC 434 Hearing dates: 10 and 11 April 2013 Decision date: 29 April 2013 Before: Ball J Decision: See paragraphs 67 and 68 of this judgment.
Catchwords: SUCCESSION - family provision - operation of ss 59 and 60 of the Succession Act 2006 (NSW) - provision for adult sons Legislation Cited: Family Provision Act 1982 (NSW)
Succession Act 2006 (NSW)Cases Cited: Andrew v Andrew [2012] NSWCA 308; (2012) 81 NSWLR 656
Cooper v Dungan (1976) 50 ALJR 539
Goldsmith v Goldsmith [2012] NSWSC 1486
Goodman v Windeyer (1980) 144 CLR 490
Gorton v Parks (1989) 17 NSWLR 1
Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298
Keep v Bourke [2012] NSWCA 64
McCosker v McCosker (1957) 97 CLR 566
Kleinig v Neal (No 2) [1981] 2 NSWLR 532
Morgan v Bohm [2013] NSWSC 145
Nowak v Beska [2013] NSWSC 166
Ratcliffe v Watters (1969) 89 WN (NSW) Part 1 497
Singer v Berghouse [1994] HCA 40; (1994) 181 CLR 201
Verzar v Verzar [2012] NSWSC 1380
Vigolo v Bostin [2005] HCA 11; (2005) 221 CLR 191Category: Principal judgment Parties: Martin Grieg Oldereid (First Plaintiff)
Thore Hans Oldereid (Second Plaintiff)
Turid Bente Chan (Defendant)Representation: D W Elliott (Plaintiffs)
M Gorrick (Defendant)
McCabes (OMB Parties)
HWL Ebsworths (Bank Parties)
File Number(s): 2011/410174 Publication restriction: No
Judgment
This is an application by two adult sons under Division 1 of Part 3.2 of the Succession Act 2006 (NSW) for family provision orders in favour of each of them in relation to the estate of their mother, Zizka Frances Oldereid (the deceased), who died on 2 January 2011 at the age of 95.
Factual background
The deceased was survived by three children: the first plaintiff, Martin Oldereid, the second plaintiff, Thore Oldereid, who I will refer to by their Christian names, and a daughter, Turid Chan, the defendant, who I will also refer to by her Christian name.
By her last will made on 10 November 2001, the deceased appointed Turid to be her sole executrix. She left legacies of $100,000 to each of Thore and Martin and the residue of her estate to Turid. The will contained the following explanation for the gifts made by the deceased:
... I have given the major part of my estate to my daughter Turid as adequate provision has been made for my sons during my husband's lifetime and as Turid did for some time before my late husband's death look after her father and myself and since my late husband's death she has looked after me on a daily basis and I know that it was my late husband's wish and it is my desire that the home at ... Roseville remain in the possession of the family and I have decided that this would be best achieved by devising it to my daughter Turid ...
The will also provided:
... if any beneficiary named in this Will should dispute it or institute or join in any legal proceedings under the Family Provision Act or any other legal proceedings relating to the quantum of the legacies or devises under this my Will the share that he or she would have taken but for the participation in such legal proceedings as an applicant, claimant or plaintiff shall pass equally to any beneficiary or beneficiaries who did not participate in such proceedings as an applicant, claimant or plaintiff.
Turid, however, has not sought to enforce that provision and has paid Martin his legacy of $100,000. Her solicitors also provided Thore with a cheque for $100,000 in payment of his legacy. However, Thore returned that cheque, apparently on legal advice. Notwithstanding that, Turid remains willing to pay Thore his legacy.
According to the inventory of property lodged on 11 March 2011 in connection with Turid's application for a grant of probate of the deceased's will, the value of the estate was $1,370,385.01. The principal asset was the family home at Roseville. It was valued at $1.2 million. The balance of the estate consisted of cash and a small number of shares. The defendant has not obtained an up to date valuation of the property at Roseville. However, on the assumption that it has not increased in value and on the assumption that Thore's legacy of $100,000 is paid, the net distributable estate after making an allowance for the defendant's legal costs (estimated to be $75,000 on an indemnity basis) is now approximately $1,083,000. The plaintiffs' legal costs are estimated to be $144,000 (on the ordinary basis). However, under the terms of the costs agreements between the plaintiffs and their solicitors, the costs attributable to each plaintiff are only payable if that plaintiff is successful.
The deceased migrated to Australia with her husband, Torvald, in 1965, having lived for a time first in Egypt and then the United Kingdom after leaving Norway. At the time of their arrival in Australia, Thore, who was born in Norway in 1947, was 18, Turid, who was also born in Norway in 1951, was 14 and Martin, who was born in the United Kingdom in 1960, was 5. They are now 66, 62 and 52 respectively.
There is no dispute that the children enjoyed a close relationship with their parents during their childhood, although their father, who was a sea captain, was frequently away from home.
After migrating to Australia the family lived in Kogarah for a couple of years and then moved into the house at Roseville.
Thore completed his leaving certificate in 1966. He then moved to Canberra to study at the Australian National University. His parents provided him with financial assistance during that time. While at University, the deceased had a nervous breakdown and Thore returned to Sydney for a short time to be with his mother during her recovery. He completed his arts degree in 1970 and returned to live in Sydney with his parents. He married in 1973 and he and his wife, Vivienne, bought a house located at Mt Colah. In her affidavit, Turid says that she was told by the deceased that Torvald paid the deposit for that house and contributed to the mortgage payments. Thore denies that and it was not put to him in cross-examination that his father had contributed to the purchase price of the property. Rather, what was put to him was that he was able to save to buy the house because he was able to live at home without paying board - a proposition that Thore accepted. I accept Thore's evidence that he and Vivienne paid for the house at Mt Colah.
Thore and Vivienne have two children: Tia, who was born in 1975, and Toby, who was born in 1977.
Thore maintains (and Turid does not dispute) that he continued to have good relations with his parents and his mother, in particular, until about 1980 when the relationship between he and his mother became more distant. The reasons are unclear, although Thore puts it down to the fact that the deceased became preoccupied with Turid's family.
Following the family's arrival in Australia, Turid worked in a number of jobs. There is a dispute between her and Thore about whether she worked part-time with the deceased at Lindfield Nursing Home. Nothing, however, turns on the resolution of that dispute. Turid also attended teacher's college. She married in 1976.
Shortly after Turid married, Torvald transferred a house at Trafalgar Avenue, Umina to her and Turid paid her father the sum of $18,500. Turid's bank statements with the Commonwealth Trading Bank show the same amount being paid into her account two days earlier. Turid says that she does not know the source of those funds, but says it could have been her husband. In my opinion, it is more likely to have been Torvald. It appears that Torvald operated Turid's Commonwealth bank account for her benefit and he kept the bank statements relating to it. Written on the bank statement is a note in his handwriting recording the fact that the $18,500 was paid for the house. Thore gave evidence that his father told him that he was in the process of transferring the house to Turid. According to Thore, for reasons which are unclear, Torvald deposited the $18,500 into Turid's account on 21 June 1976 and then used that sum to repay himself on 23 June 1976 and that that transaction needed to be completed before the end of the 1976 financial year. Martin also gave evidence that Torvald told him that he was giving the property at Umina to Turid. In my opinion, both were plausible witnesses. On the other hand, I do not regard Turid as a satisfactory witness. She was emotional and argumentative in the witness box. In addition, on occasions, she sought to exaggerate the benefits her brothers received from their parents and discount the benefits that she received. It was open to Turid to call evidence from her husband relating to the transaction, but she did not. Moreover, it is clear both from handwritten notes kept by Torvald and other transactions that he was keen to assist each of his children and to do so fairly. The house was acquired as an investment property and it was consistent with the other assistance Torvald and the deceased gave to their children that they would give their daughter a house following her wedding.
In about 1977, Turid and her husband moved to Papua New Guinea where her husband worked in his father's business. They remained there until 1984. During that time, Turid kept in close contact with the deceased and also with her father.
In all, Turid and her husband have six children, the last of whom was born in 1987.
Martin also had a close relationship with his parents and his mother, in particular. When the family arrived in Sydney he was five years old. He lived at home while he went to school. He finished high school in 1979 after which he obtained a cadetship with Dunlop and studied for a business certificate. He continued to live at home until 1987 apart from a period of about six months when he lived at Lithgow while working at a Dunlop plant which was situated there. He did not pay any board while he lived at home.
In about 1980, Martin, at his father's suggestion, bought a block of land at Sussex Inlet for approximately $8,000. His father gave him the deposit for the land, which was about $800 or $1,000. Subsequently, Torvald paid for the costs of constructing a holiday house on the property. The cost of the house was approximately $25,000. Following that, Martin and Thore and his wife and their parents used the house for holidays. Occasionally, it was rented out and the rent was used to pay outgoings.
In 1980 Thore, at Torvald's suggestion, also bought a block of land at Sussex Inlet for $8,000. Torvald paid the purchase price for that land.
In 1981, Torvald retired as a sea captain and took a job as a security officer.
Turid and her family returned from Papua New Guinea in 1984. On their return, they lived first in Willoughby and then moved to Roseville, within easy walking distance of her parents. At some stage, Turid's husband's parents moved next door. The deceased spent substantial time with Turid helping her with the children. There is a dispute concerning precisely how much help the deceased provided Turid. It is, however, unnecessary to resolve that dispute. What is clear is that Turid had a close relationship with the deceased and the deceased out of love for her daughter assisted her with coping with a large and young family. Turid also helped her parents, especially as they grew older. The deceased did not drive and from time to time Turid did their grocery shopping and also prepared meals for them.
It appears that some time after Thore left university, he set up his own business, although what that business was is not disclosed in the evidence. That business got into financial difficulties in the 1980s and, as a result, Thore and his wife sold their newly built home at Killara and moved to their present home at West Pymble, which they purchased for $289,000 plus expenses and financed by a mortgage from Westpac. Thore and his wife also sold the land at Sussex Inlet in 1985 for $13,000.
There is a suggestion in the evidence given by Turid that their father also lent Thore the sum of $27,000 at about this time, which was not repaid. Turid gave the following evidence:
I am aware that Thore was having financial difficulties in about 2006. At around this time my mother said to me words to the effect: "Thore is not a business man. You [sic] father has loaned him $27,000 to prop up his business and it has never been repaid".
I do not accept this evidence. As I have said, Turid was not a satisfactory witness. There is no evidence that Thore was facing financial difficulties in 2006 or, if he was, how Turid became aware of them. Martin gives evidence that their parents provided Thore with some assistance with his business and both he and Thore accept that their parents assisted them with relatively small sums of money from time to time. However, Martin says that he does not know the details of the assistance Thore received. More significantly, there is no evidence of the loan. Turid does not claim to have any direct knowledge of it; and I am not prepared to accept that Thore was advanced that sum of money simply on the basis of a conversation Turid says she had with her mother in 2006.
In about 1987, Martin decided to move out of his parents' home and moved in with some friends at South Curl Curl. In 1988, he purchased a property at Harbord for approximately $86,000. He rented that property out. Turid says that Torvald gave Martin the money for the deposit and assisted him with the mortgage. Martin does not specifically deny that allegation; and, as I have said, both he and Thore accept that their parents assisted them by giving them modest amounts of money from time to time. After Martin moved out of home, he maintained close contact with his parents.
In around 1990, Martin moved into the Harbord property. In 1991, he had a relationship with a woman by whom he had a son, Karl, in respect of whom he has paid child support. Karl is now 21 and is no longer dependent on Martin.
At a time which is unclear, Martin commenced employment with Dragoco Australia and as a result of that employment he was required to do a lot of overseas travel. On one occasion, he travelled to Norway with his father. Shortly before that trip the deceased gave Martin and his two siblings approximately $3,000 each which was part of an inheritance she received from her brother who had recently died.
In 1988, Torvald sold land he owned at Gundy for $54,000. From the proceeds of sale he gave each of Thore and Martin $17,000 and Turid $10,000.
In 1990, Turid was given some Egyptian jewellery that had been kept at Westpac Bank. There is a dispute about the value of that jewellery. Martin says that it was worth approximately $30,000. There is no evidence, however, to support that assertion and Turid denies it. All that can be said is that Turid received some jewellery of some value from her parents. Thore also says that Torvald gave Turid NOR Krone 35,596 from about 1990 to 1997. There are some handwritten notes of Torvald which support that assertion; and Turid does not deny it. The likelihood is that Turid was given that money, although why it was paid into a bank account in Norway is unclear.
Martin married in February 1994 and he and his wife, Sharyn, have two children: Finnean, who was born in 1996 and Brigitta, who was born in 1997. Both are still dependent on their parents.
In about 1999, Martin and Sharyn bought a house in Avalon. Turid says that their father borrowed money to give to Martin as a deposit on his Avalon house because he had not sold his Harbord house. According to her, the deceased said to her "Martin is bleeding us dry". Turid goes on to say "From about 1980 our parents were pensioners and Martin was earning in excess of $100,000 per year". Again, I do not accept that evidence. The parties' parents were not pensioners from about 1980. The implication is that Martin was earning in excess of $100,000 from about 1980. That is not correct. As Martin points out, he was 18 in 1980 and earning nothing like that sum of money. Martin says that he obtained the deposit through an advance from his employer. I accept that evidence.
Torvald died in October 2000. He left his entire estate to the deceased and the family home at Roseville passed to the deceased by survivorship.
Following the death of her husband, the deceased continued to live in the Roseville property for several months and then moved in with Turid in December 2000. For reasons which are unclear from the evidence, Thore and Turid do not appear to have had a good relationship and the relationship seems to have become more strained following the death of their father. It was while living with Turid that the deceased made her last will.
The deceased lived with Turid for approximately four years. During that time, Thore visited her only occasionally. Martin continued to visit her more frequently, although both Thore and Martin say that the visits were made difficult. I accept that evidence. It is clear that by this time the relationship between Thore and Turid was very strained. Martin also did not have a close relationship with Turid. Turid's parents-in-law lived next door and spent time in Turid's house as well. As I have said, Turid had six children. Visiting under those circumstances is likely to have been difficult.
The deceased's health deteriorated and in January 2005 she moved to Southern Cross Nursing Home. Turid visited her frequently there and continued to provide her with assistance. Martin also visited his mother. According to Turid, Thore rarely did. Thore, however, gave evidence that he did visit his mother. I accept that evidence. Having regard to the relationship between Thore and Turid, I accept that it is likely that Thore chose times when it was unlikely that his sister would not be there.
The deceased died in January 2011. Although Turid was reluctant to admit it, Martin took on the principal responsibility for organising her funeral.
The parties' financial circumstances
Turid has not put on any evidence of her current financial circumstances.
Originally, Thore put on evidence of his financial circumstances without referring to those of his wife (Vivienne). He put on an amended statement of assets and liabilities and income and expenses shortly before the hearing.
The following is a statement of Thore's and Vivienne's assets and liabilities:
Assets:
Properties
House - West Pymble
$950,000
Investment Units (1/2 share) - Vivienne
1. Chatswood property
$225,000
2. Willoughby property
$275,000
3. Artarmon property
$275,000
Farm - Taree
$500,000
House Contents both properties
$50,000
Total:
$2,275,000
Motor Vehicles
Toyota Land Cruiser Prado 4wd - 2002
$12,000
Honda civic - 2006
$8,000
Total:
$20,000.00
Superannuation:
REST - Thore
$71,982.00
REST - Vivienne
$23,165.21
Total:
$95,147.21
Bank Accounts:
Joint A/c Commonwealth Streamline
$1091.00
ING joint a/c Retirement savings
$64,976.59
HSBC -Vivienne
$1,748.00
HSBC - Thore & Vivienne
$327.32
HSBC - Thore
$8.06
Total:
$68,150.97
Total Assets
$2,544,922.18
Liabilities:
Mortgage:
Commonwealth Bank
$125,521.37
Credit Cards: (all joint)
HSBC Visa
$14,190.04
Commonwealth Visa card
$9,863.21
Total
$149,574.62
Net Worth:
$2,395,347.56
This statement does not include the $100,000 legacy payable to Thore.
An issue was raised in relation to the value of the investment units owned by Vivienne. Those investment units were inherited by her and her brother from their mother. There was no valuation of those units and the value given by Thore was not his own estimate, but was an estimate given by Vivienne and her brother at the time Thore's affidavit was prepared. Mr Gorrick, who appeared for Turid, submitted that an adverse inference should be drawn against Thore arising from the fact that Vivienne did not give evidence although she was available to do so: see Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298. For reasons which will become apparent, nothing turns on this issue. One difficulty with Mr Gorrick's submission, however, is that it is not clear precisely what adverse inference should be drawn from the absence of evidence from Vivienne. His submission was that the court should conclude that the assets had a value which was as high a value as possible consistent with the description of the asset. That, however, still leaves the matter uncertain. In my opinion, all that can be said is that the values given are estimates only. Having regard to who gave them and the context in which they are given, they are more likely to be conservative than exaggerated. However, the evidence also is that the income earned by Vivienne from those assets is $25,400 per year. That evidence was not challenged. The values given for the assets appear to be consistent with that evidence.
The income earned by Thore and Vivienne for the financial year ending 30 June 2012 was $86,624, including the $25,400 earned from the investment units. Thore earned $38,540 working part-time for Bunnings. The balance of the amount was income earned by Vivienne. The evidence is that she recently retired with the result that their joint income is likely to reduce to approximately $65,000. Their expenses are estimated at approximately $50,000 per annum.
Martin and his wife, Sharyn, have faced a period of considerable financial hardship. Martin's health is fair, although he does require some dental work. However, in 2005, Sharyn injured her back while at home. As a consequence, she had to give up work. There is a dispute concerning the extent of her injuries. However, I accept that her injuries are such that she has not been able to work and that she is unlikely to be able to do so for the foreseeable future.
In 2006, Martin was made redundant from his then current job with Symrise. He and Sharyn decided to sell their home at Avalon and to move to Point Frederick on the Central Coast to be closer to Sharyn's family. In about 2006, Martin also sold the property at Sussex Inlet for approximately $300,000. Martin used part of the proceeds of the sale of the Sussex Inlet property to pay maintenance costs for Karl. He and Sharyn used the balance of the proceeds of sale from the two properties to buy a house at Point Frederick. Martin subsequently obtained a job at Sanitarium Health Food Company as production manager. He was retrenched from that position in 2012 and then obtained a job in Sydney with the Australian Red Cross Blood Service. His total income from that job is approximately $81,000 per annum. He commutes a long distance to and from his job and partly for that reason he and Sharyn are keen to return to Sydney.
Sharyn was involved in a car accident on 23 February 2013. Following that accident, medical investigations were inconclusive concerning whether she had suffered a stroke. However, as a consequence of the accident, Sharyn has been unable to drive and Martin has been solely responsible for childcare and home maintenance.
In an undated affidavit sworn some time in 2012, Martin listed his assets and liabilities and income and expenses. He did not file an affidavit updating that information. According to that affidavit, his assets and liabilities are as follows:
Assets
Point Frederick property
$750,000.00
Bendigo bank account
$400.00
Life insurance policy
$800.00
Car - Subaru Liberty Station Wagon
$2,000.00
Toyota Corolla
$6,000.00
Bicycle, surfboard, trailer
$2,000.00
Superannuation
$131,302.54
Total:
$892,502.54
Liabilities:
Mortgage
$431,038.00
Westpac credit card
$10,716.00
NAB credit card
$7,575.00
ANZ credit card
$10,150.00
High school fees
$1,719.50
Dentist
$3,000.00
State dance
$800.00
Rates
$500.00
Total:
$465,498.50
Martin lists his weekly income as being $1,710.42 and his weekly expenses as $2,251.56. Those expenses are made up as follows:
Joint Expenses (per week)
Food
$300.00
Household supplies
$10.00
House repairs
$20.00
Gas
$12.00
Electricity
$36.00
Telephone/internet
$74.00
Motor vehicle petrol
$120.00
Motor vehicle maintenance
$40.00
Fares/ car parking
$9.40
Clothing and shoes
$20.00
Children's activities
$50.00
Medical, dental and optical
$46.00
Entertainment/ hobbies
$10.00
Education expenses, including fees and levies
$77.00
Chemist/ pharmaceutical
$100.00
Gardening/ lawn mowing
$10.00
Cleaning house/ pool
$5.00
Books and magazines
$5.00
Hairdressing, toiletries
$5.00
Income tax:
$237.67
Mercer Super trust
$137.81
Mortgage to ANZ
$640.00
Council rates
$61.36
Water rates
$14.60
Life Insurance with Mercer Super Trust
$6.91
Home Insurance with NRMA
$23.17
Car Insurance with Budget Direct
$14.30
Registration for Corolla
$24.00
Credit Card repayments
$142.34
Total:
$2,251.56
Since giving that evidence, Martin has received the legacy of $100,000. He has used some of that money to pay his outstanding debts and to reduce the mortgage. He has also retained the sum of $40,000. As a result, his and Sharyn's joint assets have increased by $40,000 and their liabilities have reduced to $425,000. In addition, their weekly expenses should be reduced by the amount of the credit card repayments - that is, by $142.34 per week.
Applicable legal principles
Section 59 of the Succession Act relevantly provides:
(1) The Court may, on application under Division 1, make a family provision order in relation to the estate of a deceased person, if the Court is satisfied that:
(a) the person in whose favour the order is to be made is an eligible person, and
(b) ... , and
(c) at the time when the Court is considering the application, adequate provision for the proper maintenance, education or advancement in life of the person in whose favour the order is to be made has not been made by the will of the deceased person, or by the operation of the intestacy rules in relation to the estate of the deceased person, or both.
(2) The Court may make such order for provision out of the estate of the deceased person as the Court thinks ought to be made for the maintenance, education or advancement in life of the eligible person, having regard to the facts known to the Court at the time the order is made.
Section 60 provides:
(1) The Court may have regard to the matters set out in subsection (2) for the purpose of determining:
(a) whether the person in whose favour the order is sought to be made (the applicant) is an eligible person, and
(b) whether to make a family provision order and the nature of any such order.
(2) The following matters may be considered by the Court:
(a) any family or other relationship between the applicant and the deceased person, including the nature and duration of the relationship,
(b) the nature and extent of any obligations or responsibilities owed by the deceased person to the applicant, to any other person in respect of whom an application has been made for a family provision order or to any beneficiary of the deceased person's estate,
(c) the nature and extent of the deceased person's estate (including any property that is, or could be, designated as notional estate of the deceased person) and of any liabilities or charges to which the estate is subject, as in existence when the application is being considered,
(d) the financial resources (including earning capacity) and financial needs, both present and future, of the applicant, of any other person in respect of whom an application has been made for a family provision order or of any beneficiary of the deceased person's estate,
(e) if the applicant is cohabiting with another person-the financial circumstances of the other person,
(f) any physical, intellectual or mental disability of the applicant, any other person in respect of whom an application has been made for a family provision order or any beneficiary of the deceased person's estate that is in existence when the application is being considered or that may reasonably be anticipated,
(g) the age of the applicant when the application is being considered,
(h) any contribution (whether financial or otherwise) by the applicant to the acquisition, conservation and improvement of the estate of the deceased person or to the welfare of the deceased person or the deceased person's family, whether made before or after the deceased person's death, for which adequate consideration (not including any pension or other benefit) was not received, by the applicant,
(i) any provision made for the applicant by the deceased person, either during the deceased person's lifetime or made from the deceased person's estate,
(j) any evidence of the testamentary intentions of the deceased person, including evidence of statements made by the deceased person,
(k) whether the applicant was being maintained, either wholly or partly, by the deceased person before the deceased person's death and, if the Court considers it relevant, the extent to which and the basis on which the deceased person did so,
(l) whether any other person is liable to support the applicant,
(m) the character and conduct of the applicant before and after the date of the death of the deceased person,
(n) the conduct of any other person before and after the date of the death of the deceased person,
(o) any relevant Aboriginal or Torres Strait Islander customary law,
(p) any other matter the Court considers relevant, including matters in existence at the time of the deceased person's death or at the time the application is being considered.
Prior to the enactment of the Succession Act, the right to seek orders in the nature of family provision orders was governed by the Family Provision Act 1982 (NSW). It was well accepted that consideration of whether to make an order under that Act involved a two-stage process. The first stage involved the court determining whether it could make an order for provision for the maintenance, education or advancement in life of a particular applicant. Section 9(2) of the Family Provision Act provided that a court could not make an order unless it was satisfied that the provision made out of the estate was inadequate for the proper maintenance, education and advancement in life of the applicant. If the court was so satisfied, the second stage involved a determination of what provision, if any, should be made: see Singer v Berghouse [1994] HCA 40; (1994) 181 CLR 201 at 208-9; Vigolo v Bostin [2005] HCA 11; (2005) 221 CLR 191 at [5] per Gleeson CJ; at [56] per Gummow and Hayne JJ; and at [112] per Callinan and Heydon JJ.
Until recently, it was generally thought the same approach applied to claims for family provision orders under the Succession Act: see, for example, Keep v Bourke [2012] NSWCA 64. However, in Andrew v Andrew [2012] NSWCA 308; (2012) 81 NSWLR 656, Basten JA took a different view. His Honour said:
[26] As appears from the language of the relevant provisions set out at [66]-[67] below, the Succession Act differs from the Family Provision Act in three significant respects. First, although both conferred similar powers on the court, the conditions of their exercise differ. The Family Provision Act required that the court "shall not make an order ... unless it is satisfied that" the provision made by the testator is "inadequate": s 9(2). The Succession Act provides that the court "may ... make a family provision order ... if the Court is satisfied that" the testator has not made "adequate provision" for the applicant: s 59(1). The changes in language may have been intended to remove double negatives, but there is a resultant change in emphasis. The apparent effect is to widen the discretion vested in the court. That which could satisfy a court that the provision made is "not adequate", for the purposes of the Succession Act, might not have been sufficient to remove the prohibition under the Family Provision Act, which operated in the absence of affirmative satisfaction that the provision was "inadequate". There may well be no bright line boundary between adequacy and inadequacy.
[27] The second difference is of a different kind. Under the former scheme the statute identified a non-inclusive list of considerations which might be taken into account in determining what provision (if any) ought be made, a step only to be taken once the prohibition had been lifted. That is not to say that the listed considerations were not relevant at the first stage of the inquiry, but only that the earlier statute did not address the issue. The Succession Act, by contrast, states that the listed factors may be taken into account in determining "whether to make a family provision order and the nature of any such order". The intention of a two-stage process is no longer apparent in the structure of either ss 59 or 60 of the Succession Act.
[28] The third difference is to be found in the expanded list of permissible considerations. While the earlier list was non-exhaustive, as indeed is the new list, the multiplicity of factors now identified gives greater direction to the courts and, consistently with the second change, invites consideration of a broader range of factors than were formerly considered. (How these considerations work is a separate question which will be explored below.)
[29] The combination of changes requires that the court address the nature of the exercise being undertaken. Three potential consequences may be identified. First, there is a simplification of the structure of the process. There is no longer a two-stage process required. A degree of artificiality has thus been removed. The court should now ask what, taking all relevant factors into account, would have been adequate provision for the applicant. There is no first stage of determining whether the actual provision was "inadequate", followed by a discretionary exercise of determining what would be adequate and what should in fact be done.
Allsop P agreed that "the expression of the task in s 59 is subtly different from the previous legislation. A prohibition against making an order unless satisfied of circumstances of an evaluative character, is different in emphasis from a permission to make an order if satisfied of circumstances of an evaluative character" (at [6]). However, his Honour went on to say that "Whether the process engaged in by the court in s 59 can still be described as "two-staged" in the sense discussed in Singer v Berghouse [1994] HCA 40; 181 CLR 201 at 208-211 may be an analytical question of little consequence". His Honour agreed with Basten JA that further provision should be made for the applicant, an adult daughter, who had been estranged from the deceased, her mother, and whose financial position was, to say the least, poor. In doing so, his Honour considered that the trial judge fell into error by wrongly assuming that a testator had an entitlement to make no provision if love and support were withheld "unjustifiably" over a period of many years, instead of weighing the many factors to which the court may have regard under s 60 of the Succession Act.
Barrett JA (who delivered the leading judgment in Keep v Bourke) dissented both in the result and on the question whether the Succession Act imposed a different test. In his view, "[t]he court's task under the new legislation is in substance the same as that under the old" (at [82]).
More recent decisions at first instance have differed on whether the decision in Andrew v Andrew requires the court to apply a two stage process or not. Lindsay J in Verzar v Verzar [2012] NSWSC 1380 thought that a single judge of the court is bound "to regard the two-stage decision-making process identified in Singer v Berghouse ... as superseded by enactment of ss 59-60 of the Succession Act" (at [92]). Hallen J, on the other hand, has continued to apply the two stage test: see Goldsmith v Goldsmith [2012] NSWSC 1486 at [67]; Nowak v Beska [2013] NSWSC 166 at [113]. A third approach, adopted by Macready AsJ in Morgan v Bohm [2013] NSWSC 145 at [110], is to consider the case on both bases. There are, however, difficulties with that approach. If the two approaches involve real differences, then presumably there are cases where they will produce different results. What, then, is to be done applying both approaches? On the other hand, if the two approaches are bound to produce the same result, the dispute about which test should be applied has no significance.
In my opinion, there is clearly a tension between the decisions of the Court of Appeal in Keep v Bourke [2012] NSWCA 64 and Andrew v Andrew [2012] NSWCA 308; (2012) 81 NSWLR 656 which only the Court of Appeal or High Court can resolve. In the meantime, the duty of a trial judge is to follow the later decision: see Ratcliffe v Watters (1969) 89 WN (NSW) Part 1 497 at 505 per Street J. In Andrew v Andrew, both Allsop P and Basten JA regarded the reformulation of the test in s 59 of the Succession Act as changing, perhaps only subtly, the threshold that must be satisfied before an order can be made. Basten JA regarded that change as also changing the way in which the court should approach the question. Allsop P regarded it as an analytical question of little consequence. However it is analysed, though, it is clear from the terms of s 59 that the court must ask itself the question whether it is satisfied that "adequate provision for the proper maintenance, education or advancement in life of the person in whose favour the order is to be made has not been made". If it is so satisfied, it must consider whether to make an order and, if so, the terms of that order. In undertaking each of those steps, it may have regard to the matters set out in s 60. Whether those steps should be seen as separate stages that must be followed or as convenient steps in undertaking what is required by the legislation does not matter for present purposes.
Three other principles are relevant in the present context.
First, there are no special rules that apply to adult children: McCosker v McCosker (1957) 97 CLR 566; Kleinig v Neal (No 2) [1981] NSWLR 532; for discussion see Goldsmith v Goldsmith [2012] NSWSC 1486 at [96] per Hallen J. The considerations that determine whether an order should be made in favour of an adult child may well be different from those applying to one who has not reached adulthood. But if that is so it is because the factors which are relevant to the determination of whether and, if so, what order should be made will change in significance as the child develops and the relationship between parent and child alters with the passage of time.
Second, the purpose of an order is not to achieve a fair distribution of the deceased's assets: Gorton v Parks (1989) 17 NSWLR 1 at 6 per Bryson J; Cooper v Dungan (1976) 50 ALJR 539 at 542 per Stephen J. The purpose of an order is to make adequate provision for the applicant's proper maintenance, education or advancement in life where the deceased has failed to do so.
Third, "adequate" and "proper" are relative terms. As Gibbs J said in Goodman v Windeyer (1980) 144 CLR 490 at 502:
"[T]he words 'adequate' and 'proper' are always relative. There are no fixed standards, and the court is left to form opinions upon the basis of its own general knowledge and experience of current social conditions and standards.
Similarly, in Vigolo v Bostin [2005] HCA 11; (2005) 221 CLR 191 at 228, Callinan and Heydon JJ said:
[T]he use of the word "proper" ... implies something beyond mere dollars and cents. Its use, it seems to us, invites consideration of all the relevant surrounding circumstances and would entitle a court to have regard to a promise of a kind which was made here...The use of the word "proper" means that attention may be given, in deciding whether adequate provision has been made, to such matters as what used to be called the "station in life" of the parties and the expectations to which that has given rise, in other words, reciprocal claims and duties based upon how the parties lived and might reasonably expect to have lived in the future.
Is Thore entitled to further provision?
The context in which this question must be answered is one where the net estate is valued at approximately $1,100,000 before making any allowance for the claimants' legal costs. The only three eligible persons are the parties to the proceedings. The bulk of the estate was left to Turid. She does not claim to have any financial needs. But it is not for her to prove that she has any needs. She has the benefit of the will. She had a close and loving relationship with the deceased and made considerable personal sacrifices to look after the deceased over a period of 4 years before the deceased became so frail that she had to move into a nursing home. After the deceased moved into the nursing home, Turid continued to visit the deceased every other day and did what she could to assist the deceased. She was a natural recipient of the deceased's bounty.
In his affidavit evidence and in his written submissions, Thore identified his needs precisely. They were:
a. Replacement vehicle $55,000
b. Replacement tractor $30,000
c. Repairs to floors at Pymble $10,200
d. Repairs to dining room table $1,900
e. Allowance for medical treatment to wife $10,000
f. Top up to superannuation $200,000
The total of these amounts is $307,100. Thore justifies this claim on the basis that the three children had always previously been dealt with equitably by their parents and it was always contemplated by the sons that their mother's estate would be distributed equitably.
I do not accept that submission or the approach that Thore has taken to his claim. As I have said, the purpose of a family provision order is not to achieve equity where the deceased has failed to do so. Accepting that Torvald was keen to treat his children equally, the same cannot be said of the deceased as is apparent from her will, which was made shortly after her husband's death. Whether it was fair or not or wise or not, the deceased was entitled to leave estate as she pleased, subject to the operation of Part 3.2 of the Succession Act. The operation of those provisions depend on whether Thore has been left without adequate provision for his proper maintenance, education and support.
In my opinion, that question cannot be answered by a precise analysis of what Thore claims he needs. Rather, it needs to take account of Thore's general financial position, the support he can expect from his wife and the legacy he will receive considered against the other matters I have referred to.
At present, Thore and Vivienne are able to live a comfortable life. They own their own home, which is subject to a relatively small mortgage. They would be in a position largely to discharge that mortgage with the legacy Thore is entitled to receive. They have a hobby farm. Following Vivienne's retirement, their income still exceeds their expenses. Thore is now 66 and it is unclear for how much longer he will continue to work. At present, however, the state of his health appears to be good and there seems to be no reason why he should not continue to work at Bunnings for a number of years yet. He and Vivienne have some savings and assets that can be realised if necessary - such as the farm and the investment properties in which Vivienne has an interest - to support them as they grow older. I accept that Thore had a good relationship with his mother. On the other hand, he and his siblings were treated generously by their parents when they were alive. The estate is not large. For reasons which will become apparent, I have concluded that further provision should be made for Martin. Having regard to those circumstances, I am not satisfied that Thore has been left without adequate provision for his proper maintenance, education or advancement in life.
Is Martin entitled to further provision?
In my opinion, the position of Martin is different. He and Sharyn have faced significant hardships in recent years. They have a substantial mortgage and two dependent children. Apart from superannuation of approximately $130,000, they have no savings. Martin now appears to have a secure job, but it is unlikely that Sharyn will be able to work in the foreseeable future, if at all. At present, their expenses exceed Martin's income. Martin had a good relationship with his mother. Like his siblings, he was treated generously by his parents when they were alive. However, it is to be expected that his mother would have continued to be concerned about his welfare. Although Mr Gorrick did not specifically concede that Martin was left without adequate provision, he did not seriously contest that that was the case. He submitted that, if the court was minded to make a family provision order in his favour, further provision in the order of $100,000 to $150,000 was appropriate.
Originally, Martin like Thore, provided a list of specific needs. They were:
a. Balance of mortgage approximately $435,000.
b. Replacement vehicle $40,000.
c. Kitchen renovations, appliances and plumbing $42,000.
d. Roof repairs $8,500.
e. Travel for family to meet Norwegian relatives $25,000.
f. Language lessons, say $20,000.
g. Educational expenses $44,000 per annum.
h. Private health insurance $6,000.
i. Dance classes for 3 years for Brigitta $18,000.
j. Drumming lessons for Finian [sic] $5,000.
k. Credit cards and consumer debt estimated at $20,000.
In oral submissions, however, Mr Elliott, who appeared for both Martin and Thore, conceded that Martin's real need was to reduce or to eliminate his mortgage. I accept that submission. In my opinion, having regard to the size of the estate, the provision that would be appropriate is one that would place Martin's financial position on a more secure footing. In my opinion, a further legacy of $300,000 would do that. It would permit Martin to reduce the mortgage to $125,000. On that basis, the weekly mortgage payments should be in the order of $190 per week, with the result that Martin's weekly income would exceed his weekly expenses by a small amount. Martin would also retain the $40,000 that remains from his legacy of $100,000 to meet contingencies.
It is unclear whether a consequence of an order in those terms would mean that the Roseville house would have to be sold. Turid's husband lent the estate some money to enable it to pay Thore and Martin the legacies left to them. It is unclear whether he is in a position to and would be willing to lend the estate additional money to meet the order that I propose and the costs that will be payable. I am conscious that the deceased expressed a desire in her will that the house not be sold. However, in my opinion, that desire cannot outweigh the considerations that have led me to reach the conclusion I have.
Orders
I make the following orders:
(1) Order that the first plaintiff receive, in addition to the legacy left to him by the deceased, a lump sum of $300,000.
(2) Order that no interest is to be paid on the lump sum if that lump sum is paid within 14 days of the making of these orders; otherwise, interest calculated at the rate prescribed by s 84A(3) of the Probate and Administration Act 1898 on unpaid legacies is to be paid from that date until the date of payment.
(3) Order that the second plaintiff's claim be dismissed.
If the parties can reach agreement in relation to costs, I will make orders in chambers to reflect that agreement. If not, I stand the matter over until a date to be fixed with my Associate for any argument in relation to costs.
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Decision last updated: 29 April 2013
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