Parker v Australian Executor Trustees Limited
[2016] SASC 64
•1 June 2016
SUPREME COURT OF SOUTH AUSTRALIA
(Civil)
PARKER & ORS v AUSTRALIAN EXECUTOR TRUSTEES LIMITED
[2016] SASC 64
Judgment of The Honourable Justice Lovell
1 June 2016
SUCCESSION - FAMILY PROVISION - REQUIREMENT FOR ADEQUATE AND PROPER MAINTENANCE - WHETHER APPLICANT LEFT WITH INSUFFICIENT PROVISION - CLAIMS BY CHILDREN
Claim by five adult children of testator - majority of estate left to defendant for charitable purposes - no competing claims - whether children left without adequate provision - weight to be given to estrangement.
Held: Allowing the applications. All children have been left without adequate provision for their proper maintenance, education or advancement in life.
Inheritance (Family Provision) Act 1972 (SA) s 7, referred to.
Worladge & Anor v Doddridge & Ors (1957) 97 CLR 1; Brennan v Mansfield & Ors [2013] SASC 83; Singer v Berghouse (1994) 181 CLR 201; Vigolo v Bostin (2005) 221 CLR 191; White v Barron (1980) 144 CLR 431; Andrew v Andrew (2012) 81 NSWLR 656; Bosch v Perpetual Trustee Co Ltd [1938] AC 463; McCosker v McCosker (1957) 97 CLR 566; Goodman v Windeyer (1980) 144 CLR 490; Bowyer v Wood & Ors (2007) 99 SASR 190; Lloyd-Williams v Mayfield [2005] NSWCA 189; Taylor v Farrugia [2009] NSWSC 801; MacGregor v MacGregor [2003] WASC 169; Burke v Burke [2015] NSWCA 195; In re Allen (Deceased), Allen v Manchester & Anor [1922] NZLR 218; Grey v Harrison [1997] 2 VR 359, discussed.
WORDS AND PHRASES CONSIDERED/DEFINED
"family provision", "proper", "adequate", "estrangement"
PARKER & ORS v AUSTRALIAN EXECUTOR TRUSTEES LIMITED
[2016] SASC 64Civil
LOVELL J.
Overview
On 28 January 2013 the testator (Alec Arnold Veit) died aged 83 years. He was survived by his five adult children who are the plaintiffs. The testator and his wife separated in 1976 and were divorced in 1980; he never remarried.
By his will made on 30 March 2012, the testator left a farming property at Sherlock to his son, Alec and a gift of $100,000 to his daughter, Vicky. No provision was made for the testator’s other three children, Julie, David and Sandra. As of 21 January 2016, his net estate was valued at $1,692,250.17. A number of relatively small monetary gifts were left to some of the testator’s grandchildren, siblings, relatives and friends. These particular gifts are not contested. The residue of his estate was left to The Alec Veit Charitable Trust. The testator appointed the defendant, the Australian Executor Trustees Limited (“the AET”) as his executor and trustee. No challenge was made regarding testamentary capacity. All five children have made an application pursuant to section 7 of the Inheritance (Family Provision) Act 1972 (SA) (“the Act”) seeking provision out of the estate. There are no competing claims.
The will
The testator gave the majority of his estate to his executor. He bequeathed some gifts, which appear in broad terms, in the following order in the will;
1. $100,000 to his daughter Vicky Carolyn Parker;
2. $1000 to each of his six grandchildren;
3. $1000 to each of his two sisters and one brother;
4. $1000 to each of his two nieces and three nephews;
5. $1000 to his friend Ingrid Veit;
6. $10,000 to his friend Dianne Joy Callagher;
7. The farm at Sherlock to his son Alec Jeffrey Veit.
The estate
The estate is comprised as follows;[1]
[1] Trial Book p 255.
CASH MANAGEMENT FUNDS
Case management funds
Trust account income balance $88,229.95
Trust account capital balance $1,089,920.22
TOTAL INTEREST BEARING $1,178,150.17
Real estate
25 Stokes Road, KAROONDA $105,000.00
3471 Mallee Highway SHERLOCK $405,000.00
TOTAL REAL ESTATE $510,000.00
Other assets
1990 trailer Reg no TBU 573 $100.00
2003 Mitsubishi sedan Reg no WXU 640 $4000.00
Safe custody packet – NAB $0.00
TOTAL OTHER ASSETS $4100.00
TOTAL VALUE OF PORTFOLIO $1,692,250.17
These gifts are not contested. After the gifts are paid the distributable estate is $1,173,250.17.
The familial background
Growing up on the farm
I intend to refer to the plaintiffs in this judgment by their first name. I intend no disrespect in adopting that course.
It is necessary to consider the plaintiffs’ relationship with their father. The behaviour of the plaintiffs as adults has to be analysed against the background of the way they were treated as children by the testator.
Much of the early history was not disputed. The plaintiffs had a difficult childhood. The testator owned and worked a farm at Sherlock near Karoonda in South Australia. All the children worked on the family farm. Some worked the farm well into their late teenage years and often without pay. His son Alec continued to work the farm during most of his adult years. The testator was a very demanding taskmaster.
The testator was not a loving parent towards his children. The evidence established that he was a difficult man. He never showed his children or their mother any affection. His mood was volatile and he was often irritable and bad tempered. He would verbally or physically abuse them if tasks were not carried out correctly. The living conditions were not ideal and they often went without. As children they were poorly clothed and fed. Special occasions such as birthdays or Christmas were not celebrated. The testator was selfish with money. The allowance he gave their mother was barely enough to make ends meet. He believed providing a roof over their heads was sufficient.
Separation of parents
In 1976 the testator’s wife left him. It occurred while the testator and Alec were at a football game. David, the eldest son, received a phone call from his mother saying that she and his sister Sandra wanted to leave the farm. At the time David was living and working in Victoria. David went over to the farm and picked them up. He later called in on the way through to the football game and told Alec that “Mum and Sandra are leaving home”.[2] All three went to live with their auntie in Irymple, Victoria.
[2] T 38.
Estrangement of Sandra, David and Julie
The issue of the estrangement of Sandra and David from the testator, and to some extent Julie, was raised during the course of the trial.
Since 1976 Sandra and David maintained contact with the testator at family events. Sandra and David would speak to him at family events as would Julie. They did so without rancour or hostility. They still acknowledged the fact that he was their father. Despite this contact, the testator claimed he had “no contact with David and Sandra since [the] divorce in 1978.”[3] The circumstances of the marital separation may explain why he refused to provide for them in his will. To the testator “they left him”.[4]
[3] Trial Book p 247; Exhibit P56 p 4.
[4] T 247 line 28.
Julie had some contact with him outside of family events. In 1976 Julie was living with her then husband (“the Bubners”) away from the family farm when her mother left the testator. She maintained contact with her father up until 1987 when she moved to Victoria with her husband. In the early 1980s, the Bubners leased some farming land off the testator. The lease was terminated after about three years. The testator claimed Julie still owed him some money in relation to the lease. Julie denied she owed this money. She felt the testator never approved of her husband. He told her the relationship would not last.[5] Since 1987 Julie had contact with the testator only at family gatherings. On 8 February 2012, when instructions were taken for the making of his will, the testator claimed that he had “no contact with daughter Julie for 25 years”.[6] He made no provision for Julie in his will.
[5] Exhibit P31.
[6] Trial Book p 247.
Vicky and Alec
There are no estrangement issues in relation to Vicky and Alec. Both kept in regular contact with the testator in particular Alec. Both were provided for in the will.
Legal test
Each plaintiff in this case, being a biological child of the testator, is an eligible claimant under the provisions of the legislation. Each applicant bears the onus of proof in satisfying the Court on the balance of probabilities of the justification for the claim.
The principles governing applications for family provision in estate matters are set out in section 7 of the Act, which provides:
7—Spouse and persons entitled may obtain order for maintenance etc out of estate of deceased person
(1)Where—
(a) a person has died domiciled in the State or owning real or personal property in the State; and
(b) by reason of his testamentary dispositions or the operation of the laws of intestacy or both, a person entitled to claim the benefit of this Act is left without adequate provision for his proper maintenance, education or advancement in life,
the Court may in its discretion, upon application by or on behalf of a person so entitled, order that such provision as the Court thinks fit be made out of the estate of the deceased person for the maintenance, education or advancement of the person so entitled.
The purpose of the Act is to permit a court in certain circumstances to displace a testator’s dispositions. It does not impose any limitation on a testator’s power of disposition but if the statutory conditions are satisfied a court is empowered to alter a testator’s disposition to produce a result that is consistent with the purpose of the Act. The legislation is remedial in character and has been construed to give the most complete remedy which the phraseology will permit.[7]
[7] Worladge & Anor v Doddridge & Ors (1957) 97 CLR 1, 9.
The inquiry as to whether adequate provision has been made involves a two-stage process. The first stage calls for a determination of whether the plaintiff has been left without adequate provision for his or her proper maintenance, education and advancement in life (this has been referred to as the “jurisdictional question”). The second stage, which only arises if that determination is made in favour of the plaintiff, requires the Court to decide what provision ought to be made out of the testator’s estate for the plaintiff.[8]
[8] Brennan v Mansfield & Ors [2013] SASC 83; Singer v Berghouse (1994) 181 CLR 201.
In relation to the two stage process Gleeson CJ in Vigolo v Bostin[9] stated:
What has been described as the two-stage approach to the exercise of such a statutory power was explained by this Court in Singer v Berghouse, and is not in controversy in this appeal. It is evidence that, depending upon the stage of consideration involved, the following judgments are required by the terms of s 6. What kind of provision for the matters referred to in that section should be regarded as adequate? What should be regarded as proper maintenance, support, education or advancement in life in the case of a particular applicant? If the court comes to exercise its discretion to make an order in favour of an applicant, what should it regard as fit provision for the purposes referred to in the section? Upon whom should the burden of such an order fall?
(Footnotes omitted)
[9] (2005) 221 CLR 191 [5].
Thus when considering the first stage of the test the question is whether, in all the circumstances of the case, it can be said that an applicant has been left by the testator without adequate provision for his or her proper maintenance, education or advancement in life. The second stage involves the Court exercising its discretion in all of the circumstances of the case.
The twin tasks facing a court are similar. The first stage involves the application to the facts of a legal criterion although that involves a value judgment by the Court. The second question involves the exercise of a judicial discretion. Although they are separate questions they may in many circumstances come close to each other and a favourable determination of the first may substantially influence the answer to the second. However, the first question is to be decided as at the date of death of the deceased and the second as at the date of any order.[10]
[10] White v Barron (1980) 144 CLR 431; Andrew v Andrew (2012) 81 NSWLR 656.
The Privy Council in Bosch v Perpetual Trustee Co Ltd[11] in relation to the words “proper” and “adequate” stated:[12]
The use of the word “proper” in this connection is of considerable importance. It connotes something different from the word “adequate”. A small sum may be sufficient for the “adequate” maintenance of a child, for instance, but, having regard to the child’s station in life and the fortune of his father, it may be wholly insufficient for his “proper maintenance. So, too, a sum may be quite insufficient for the “adequate” maintenance of a child and yet may be sufficient for his maintenance on a scale that is “proper” in all the circumstances. A father with a large family and a small fortune can often only afford to leave each of his children a sum insufficient for his “adequate” maintenance. Nevertheless, such sum cannot be described as not providing for his “proper” maintenance, taking into consideration “all the circumstances of the case” as the subsection requires shall be done.
[11] [1938] AC 463.
[12] Bosch v Perpetual Trustee Co Ltd [1938] AC 463, 476.
The relationship between “proper” and “adequate” was discussed in McCosker v McCosker[13] where Dixon CJ and Williams J stated:[14]
…As the Privy Council said in Bosch v Perpetual Trustee Co (Ltd) the word “proper” in this collocation of words is of considerable importance. It means “proper” in all the circumstances of the case, so that the question whether a widow or child of a testator has been left without adequate provision for his or her proper maintenance, education of advancement in life must be considered in the light of all the competing claims upon the bounty of the testator and their relative urgency, the standard of living his family enjoyed in his lifetime, in the case of a child his or her need of education or of assistance in some chosen occupation and the testator’s ability to meet such claims having regard to the size of his fortune. If the court considers that there has been a breach by a testator of his duty as a wise and just husband or father to make adequate provision for the proper maintenance, education or advancement in life of the applicant, having regard to all these circumstances, the court has jurisdiction to remedy the breach and for that purpose to modify the testator’s testamentary dispositions to the necessary extent.
[13] (1957) 97 CLR 566.
[14] McCosker v McCosker (1957) 97 CLR 566, 571.
Thus it can be seen that “adequate” and “proper” are relative concepts. A court must come to a conclusion on the basis of its “own general knowledge and experience of current social conditions and standards”.[15]
[15] Goodman v Windeyer (1980) 144 CLR 490, 502.
As Debelle J stated in Bowyer v Wood & Ors:[16]
It is well established that the word “proper” is not intended to give the court power to rewrite the will in accordance with its own ideas of justice and fairness. Instead, the use of the word “proper” is intended to require the adequacy of the provision which has been made to be determined by reference to all relevant circumstances including the size of the estate: …
[16] (2007) 99 SASR 190, 202 [41].
Adequacy of the provision that has been made is not to be decided in a vacuum or by simply looking at the question of whether an applicant has enough upon which to live. It will depend upon all of the relevant circumstances of the case including age, means and competing claims of other potential beneficiaries.[17]
[17] Vigolo v Bostin (2005) 221 CLR 191 [122].
The expression “advancement in life” is not confined to an advancement of an applicant in his or her younger years.[18] The principles applicable to a claim by an adult son or an adult daughter are the same that apply to other claimants.[19]
[18] Lloyd-Williams v Mayfield [2005] NSWCA 189.
[19] Bowyer v Wood& Ors (2007) 99 SASR 190 [45].
Where a child, even an adult child, falls on hard times and where there are assets available, then the community may expect parents to provide a buffer against contingencies including a lack of adequate superannuation funds.[20] An adult child’s lack of reserves to meet the demands of advancing years, particularly of ill health, is a relevant consideration.[21]
[20] Taylor v Farrugia [2009] NSWSC 801.
[21] MacGregor v MacGregor [2003] WASC 169 [179].
In Vigolo v Bostin[22] the majority of the High Court held that when the jurisdictional question was being considered a court could have regard to considerations of a moral claim and moral duty. They are considerations which connect the general but value–laden language of the statute to the community standards and give it practical meaning.[23] However, a moral claim cannot be a claim founded upon considerations not contemplated by the Act. A court should not rewrite the will simply by reference to notions of fairness.[24]
[22] (2005) 221 CLR 191.
[23] Bowyer v Wood& Ors (2007) 99 SASR 190 [44].
[24] Worladge & Anor v Doddrige & Ors (1957) 97 CLR 1.
Estrangement of a child and parent should not ordinarily result, on its own, in the child not being able to satisfy the jurisdictional requirement. However it is a factor that can be taken into account. The Court should take into account the whole of the circumstances regarding the relationship. It is for the Court to evaluate all the relevant circumstances, including a period of estrangement and the circumstances of that estrangement, when considering the jurisdictional question.[25]
[25] Burke v Burke [2015] NSWCA 195.
Determination of the second stage of the enquiry, should it arise, involves similar considerations to that under the first. As the Court needs to arrive at an assessment of what is the proper level of maintenance and what is adequate provision, this assessment will largely influence the order which should be made.[26]
[26] Singer v Berghouse (1994) 181 CLR 201, 210.
The basic principle the Court should consider is that explained by Salmond J in the case of In re Allen (Deceased), Allen v Manchester & Anor:[27]
The provision which the Court may properly make in default of testamentary provision is that which a just and wise father would have thought it his moral duty to make in the interests of his widow and children had he been fully aware of all the relevant circumstances.
[27] [1922] NZLR 218.
This test has been followed and applied many times by the High Court.
The exercise of the discretion has been compared with “assessing damages” in personal injury matters and the “instinctive synthesis” approach to sentencing in the criminal courts. What is required is that a court take into account all relevant circumstances and give them due weight.[28]
[28] Grey v Harrison [1997] 2 VR 359.
Bearing those principles in mind I now turn to consider the situation of each of the individual plaintiffs.
The plaintiffs’ circumstances
First plaintiff
Vicky’s background
The first plaintiff Vicky Parker is 61 years of age, married and has two sons. She had health problems in 2005 but is now in relatively good health. Vicky, like her siblings worked on the family farm as a child without pay. The living conditions were not ideal and money was very tight. The testator never showed her affection. She lived on the family farm until she was 16 when she went to live with her auntie but returned for a short time prior to getting married. In 1970 she left school and worked in a number of jobs until she married in 1975. Vicky undertook some seasonal work in the past which has earned her $1715.17 in superannuation.[29]
[29] Exhibit P57.
Vicky and her husband (“the Parkers”) are farmers. The Parkers own a 68,000 acre property at Menindee in New South Wales which they purchased in 2005. They had been farmers before that time and funded the 2005 purchase from equity they built up in their previous farming activities. They run sheep and cattle on the farm and also muster feral animals for sale. The business earns an income from its stock and wool sales. Initially the Parkers worked the farm by partnership. In 2010 they started a new partnership with their son Stephen. The former partnership between the Parkers has not been dissolved. Their son resides on the property. He has no wife or partner. The Parkers hope to lease or sell the business to Stephen in the next four to five years.
Since 1975 Vicky has remained a house wife. She worked on and around the farm as required as “a farmer’s wife does”.[30] While the taxation records indicate that the income from the farm was shared, the majority of the physical work was performed by her husband (“Doug”) and more lately their son, Stephen.
Relationship with the testator
[30] T 222 line 36.
Since 1976, Vicky had more contact with the testator compared with Sandra, David and Julie. When they lived in South Australia the Parkers would regularly visit him on Sunday afternoons. Doug played lawn bowls with the testator. They would take the testator with them on family holidays and to family celebrations. The testator would visit the Parkers when they were living in Sandalwood, South Australia. The Parkers would help the testator on his own farm doing shearing, land marking and cooking. They were not given or offered any payment for this work. The Parkers shifted to their New South Wales property in 2005.
The testator visited the Parkers at their Menindee station about five or six times. He would stay for a couple of weeks at a time. During the testator’s final years Vicky took him to some of his doctor appointments. When he was admitted to hospital she would liaise with hospital staff and relay his progress to her siblings.
Assets and income
The farm at Menindee was purchased in 2005 for $900,000. The Council valuation is $704,000. There is a three bedroom timber-framed house on it which was built in the 1950s. The house is “very run down”[31] and the cost of renovating the house is approximately $160,000.[32] The Parkers have made some improvements to the farm, including, fixing up the shearers quarters and sheep yards, replacing tanks and fencing.
[31] T 22.
[32] T 274.
They also own a house in Wentworth, New South Wales which was purchased approximately two years ago for $165,000. A rate notice shows valuation to be $37,800 as of July 2014. Doug Parker resides there in-between working on the farm at Menindee; Vicki now spends most of her time there.
Accounts
As of January 2016, the Parkers had a balance of $1480.46 in a joint bank account with Bank SA. There is also a business account for their farming partnership. It has an overdraft limit of $10,000. As of January 2016 it was in overdraft by $3587.87. The defendant tendered the financial statements of the account for the period between July 2013 and January 2016. At the end of each month the account was generally in overdraft. The Parkers also have $292.39 leftover in an NAB account from previous farming operations undertaken in Sandalwood, South Australia.[33] Finally, there is a joint credit card account. The limit is $5500. As of January 2016, it had a debit balance of $3536.32.[34]
The Partnership with Stephen
[33] Trial Book p 169.
[34] Exhibit P57.
The Parkers are also in partnership with their son Stephen. The partnership has a business account with an overdraft limit of $100,000. The account continually fluctuates depending on monies received from wool sales. At times the income can decrease if sheep are not bred for lambs to sell. At its highest, in February 2014 the account had a credit balance of $225,941.29.[35] At its lowest, in July 2015 there was a negative balance of $56,213.14.[36] As of January 2016, it had a credit balance of $85,233.61.[37]
Income for 2013
[35] Exhibit D60.
[36] Exhibit D60.
[37] Exhibit D60.
Financial statements tendered at the trial indicate that the farming business, although variable, is reasonably profitable. In 2013 the farm earned a net income of $170,442.[38] Vicky’s distribution was $56,814.[39] Doug and Stephen received the same as equal partners. Vicky’s total income for the 2013 taxable period was $61,597 of which $1920 was derived from the Parkers partnership.[40]
[38] Exhibit P7.
[39] Exhibit P7.
[40] Exhibit P5.
Despite the income recorded in the taxation returns, it is clear that the income derived from both partnerships is intermingled. As is often the case with partnerships there is no strict line between personal and farming expenses until the taxation returns are completed. There is unfettered access to the income received. Stephen draws an income from the partnership although Vicky does all the shopping and gives Stephen whatever he needs. The three have access to the business account and spend money as they need. Stephen and Doug now run the business and Vicky physically contributes less than earlier years.
2014 and 2015
The tax returns for the 2014 and 2015 periods have not been done; however profit and loss statements were tendered at the trial. In 2014, a net profit of $253,542.83 was made. Up to June 2015, the records show a net profit of $167,115.83. There are no records for the period between 1 July 2015 and 31 December 2015. Doug gave evidence that the income would probably be more than the gross profit earned in June 2015.
Doug’s finances
In 2013 Doug had $133,204.34 in an ANZ term deposit.[41] In 2014 this money was used to assist in the purchase of the property at Wentworth, New South Wales. The balance of the funds came from the sale of Viterra shares he had. The property was purchased in joint names.
[41] Exhibit P57.
In 2013, Doug’s taxable income was $91,252.[42] His income was partly derived from the income of the two farming partnerships; dividends earned from shares with AMP Limited; the capital gains made when some Vittera shares were sold and other smaller sources.
[42] Exhibit P8.
In 2015, Doug had $150,000 in term deposits with the ANZ bank.[43] Some of the money is income derived from the farming operations. On occasion the interest earned has been distributed into the farm. Doug also has two life insurance policies with AMP Limited. He has about 100 shares with AMP Limited.[44] The shares were allocated not purchased. He receives about $200 a year in dividends.[45]
[43] Exhibits P57-P59.
[44] T 277.
[45] T 258.
Whilst some assets were only in Doug’s name it is clear that the Parkers have shared their assets and income throughout their time together.
At trial, the Parkers gave evidence. They were both honest and forthright witnesses and I unhesitatingly accept their evidence. They have worked hard over many years to make their farming enterprises successful.
Seasonal factors affect their current farm. The last few years have shown reasonable returns. However, the documents reveal poor returns for the financial years ending 2010 and 2011. Since 2012 the profitability of the farm has improved as the seasons improved.
The Parkers have had health problems over the years. Doug still enjoys working the farm. Vicky now spends most of her time in Wentworth. She is also the carer for her mother. They have no firm plans to retire although passing the operation onto their son in some manner is within their contemplation.
There was some criticism of their evidence by Mr Ower, counsel for the defendant, relating to a lack of disclosure of financial records. Whilst it would have been better if the documents had been provided in a more timely manner, I accept that this related to them not understanding the requirements of the action rather than any attempt to hide information.
Their retirement will have to be funded by the sale of assets and from savings. There is little or no superannuation.
The second plaintiff
David’s background
The plaintiff David Veit is 60 years of age with no children. He suffers from hypertension, but is otherwise in good health. He has a partner who is unemployed. In 1995-1996 she took a separation package and now undertakes home duties.
David has worked as a labourer for about 35 years. His salary is about $791.16 net per week working for Sunbeam Foods as a dry fruit packing shedhand. David owns no real property and has lived with his partner in a house owned by her sister since the 1980s. He pays no rent and buys his own groceries. He also provides a $100 weekly allowance to his partner. As at June 2015 David had $229,460.06[46] in superannuation. As of December 2015 he had about $12,320.41[47] in his bank account. His motor vehicle is worth about $3000. He has long service leave, which if converted, would amount to approximately $17,750.
[46] Exhibit P13.
[47] Exhibit P13.
David earns a reasonably modest income. For the 2012 taxable period, his taxable income was $57,941 and $60,901 in 2013. For the 2014 taxable period David’s taxable income was $78,757.[48] As of 30 June 2015 his income was $64,280.[49] He plans to keep working until at least the age of 65.
Growing up on the farm
[48] Exhibit P12.
[49] Exhibit P12.
David worked on the family farm from a young age. He would assist by clearing the land, putting up fencing and laying pipelines. In 1971, he left high school when he was 15 and worked on the farm without pay until 1976. During this time David did casual work for other farmers namely shearing, hay-carting and crop harvesting. He would get paid for this work.
In early 1976 the testator promised David and Alec half a crop if they agreed to harvest it. The testator was selfish with money. He did not keep his promise. He said “there’s too much here for you bastards”.[50] David then travelled to Mildura to work on his uncle’s fruit block. He resided with his auntie in Irymple, Victoria and never returned to live or work on the family farm. David described the testator as domineering and volatile. He would get angry when things were not done his way. David received beatings when his father was upset or angry.
[50] T 46.
Despite this background David maintained contact with his father at family celebrations and functions although such events were spasmodic. They would speak to each other without any hostility or rancour.
David was a good witness and I accept his evidence. Whilst there does not seem to be any immediate prospect of him separating from his partner, his accommodation is clearly contingent on that relationship continuing. He has no real property assets. The amount in his superannuation fund could only be described as modest.
The third plaintiff
Sandra’s background
The plaintiff Sandra Veit is 57 years of age; she is not married and has no children. She left school at the end of Year 10. She suffers from hypertension and hypercholesterolemia. Sandra has worked as a food process worker at Sunbeam Foods for the last 34 years. She receives a weekly gross income of $984.58. Sandra purchased a house in Mildura for $120,000. It is valued at approximately $113,000. The property is mortgaged. She plans to keep renovating the house. Sandra has a vehicle valued at $5550. She has approximately $25,000 in bank accounts[51] and some $359,000 in superannuation. It appears from the tendered documents that she has increased her superannuation contributions recently.
[51] Exhibit P18.
For the 2013 taxable period her taxable income was $55,253. In 2014 it increased to $69,549 but decreased in 2015 to $51,499.
Growing up on the farm
Whilst at school Sandra worked on the family farm without pay. At about age 11 she recalls being made to work on the family farm until late at night. She would go to bed without washing and would have to get up early the next morning for school. The testator was verbally abusive towards her. In 1976 when she was 17 she left the family farm with her mother. They went to live with “her auntie” in Irymple, Victoria. In about June 1976 she received a letter from the testator. He informed her that she was welcome to return to the farm if she wished but her mother was not. He enclosed a cheque for her. She never returned to live on the farm.
Like David, Sandra maintained contact with her father through family functions and celebrations. She would talk to him without hostility or rancour.
Sandra’s evidence was not contested. She was a good witness and I accept her evidence. Whilst she owns her property it is substantially mortgaged. Her superannuation savings are modest.
The fourth plaintiff
Julie’s background
The plaintiff Julie Bubner is 63 years of age and has two children. She was previously married but divorced in 2012. She suffers from hypertension. Julie only has part-time employment. She earns $736.64 a fortnight working for the Department of Education and Training.[52] She also works about five hours per week at a newsagency. Julie had a cleaning contract which gave her approximately $1082 per month but this contract expired in December 2015. In February 2010, she purchased a home in Apsley, Victoria for $145,000 and she has a mortgage, as at January 2016 of $111,286.83.[53] The property is valued at $106,600. She owns a vehicle worth approximately $1500. As of 30 June 2015, Julie had $48,107.28 in superannuation.
[52] Exhibit P27.
[53] Exhibit P23.
For the 2014 taxable period her taxable income was about $24,138. In 2015 it increased to $35,023. No payslips or taxation documents were produced by Julie.
Relationship with the testator
While at school Julie worked part-time on the farm without pay. In 1970 she graduated from high school. In 1973 she moved to Sherlock to live with her husband and his mother. She was not living at the family farm when her mother and Sandra left. The Bubners would often visit the testator every Sunday night for tea even after his wife left. Her husband would take the testator out to clearing sales and to shopping at Murray Bridge. He would also assist the testator in levelling scrub on his farm.
Julie’s ex-husband was a share-farmer. He worked at a property at Buccleuch, South Australia. In the 1980s the Bubners leased some farming land off the testator. The lease lasted about three years. The Bubners then decided to buy and work their own farming land. In about 1987 the Bubners purchased a farming property in Edenhope, Victoria. They did not live on the farm. They rented a house at Charam then later at Paris Creek.
In 2010, the Bubners separated. Julie wrote to her father asking him to assist in the refinancing of one of their farming properties. The property was approximately 319 acres. The testator responded with interest and queries about the number of sheep and condition of the property. He also raised the fact that Julie still owed him about $16,000 from leasing the farm at Sherlock from him. Julie denied she owed this money. The property was also put up for tender. In about December 2010 it was sold to a third party for approximately $310,000. She therefore did not require her father’s assistance although the sale was not enough to clear the mortgage. Julie had to borrow and extend the mortgage she had over other properties.
Gejurama Pty Ltd
Julie also has an interest in the assets of Gejurama Pty Ltd (“Gejurama”), a company she shares with her ex-husband. They are both equal shareholders. In the mid-1990s Gejurama acquired two blocks of farming land in Edenhope, Victoria totalling approximately 170 hectares. The purchase price was estimated at $138,000.[54] As at 30 June 2015, there was a mortgage in place of $73,722.49.[55] For the 2015-2016 periods the council rates value the land collectively at $275,200.[56] The land is used primarily to run sheep. Gejurama earns an income from its wool sales. The company has not filed a tax return since about 2009.
[54] T 100-101.
[55] Exhibit P25.
[56] Exhibit P62.
When the Bubners separated in 2010, her husband also resigned as a director of Gejurama. There has been little communication between them since. She cannot afford to pay an accountant. No valuation of Gejurama was produced. For the last couple of years there have not been any wool sales. Julie has been purchasing hay to feed the stock. Since about 2010, she has been running the farm with the help of her son and his partner. Her duties have included feeding stock, tailing lambs, organising shearing and crutching. There is some wool in storage, which if sold, could derive $10,000-$12,000.[57]
Accounts
[57] T 103.
Julie has three personal accounts with the Bendigo Bank. As of 1 January 2016 there was $5900.73 in the Money Extra Cash Management account. Between the 2013 and 2015 periods the account has maintained a consistent positive balance between $2455.02 and $13,724.06. The income earned by Julie from the cleaning contract was paid into this account. She has frequently used funds from this account to assist Gejurama with buying hay and paying hay freights.
Julie’s income from the newsagency and the Department of Education and Training were paid into her Ultimate Cheque account. Between the 2013 and 2015 periods the account maintained a consistent positive balance between $980.67 and $6585.55. Her home loan repayments are also deducted from this account and paid into her Mortgage Loan account.[58] She pays $400 per fortnight towards her mortgage.
[58] Exhibit P23.
Gejurama has a Primary Producer account[59] with the Bendigo Bank. Income received from wool sales are deposited into this account. On 27 March 2013 a payment of $5662.15 was made by Queensland Cotton Corporation. Julie has been unable to produce all of the financial statements for the 2013, 2014 and 2015 periods. As of January 2016 Gejurama had $46.76 in its bank account.
[59] Exhibit P26.
Julie was a good witness and I accept her evidence. Like David and Sandra she had contact with her father at the family events.
Julie mentioned her interest in Gejurama in her initial affidavit. She estimated that it had assets of around $200,000. However, little or no financial documentation was produced at trial. I accept that there was no intention to mislead the Court or hide the documentation. Her ex-husband appears to have not been willing or interested in finalising their shareholding in Gejurama. It is not clear what her interest in that company may be although it appears likely that it has assets of more than $200,000. Clearly it has ongoing running costs in addition to liabilities; Julie is currently financing the running of the properties.
Whilst she owns her home it is substantially mortgaged. She has little by way of superannuation savings.
The fifth plaintiff
Alec’s background
The plaintiff Alec Veit is 59 years of age, married and has two children. He has worked as a labourer with the Murray Bridge Council since 1996. His weekly wage is about $805. He also earns some money from farming. Alec is in good health. He plans to work until he reaches the age of 65. His wife (“Barbara”) works on a casual basis as a carer at the Karoonda Hospital. At trial, he was separately represented.
Financial position
Alec derives his income primarily from his work at the council. He has accrued some 987 hours of long service leave.[60] From 2013 to 2015, his taxable income totalled $157,133. For his wife it was $99,885. Alec also earns an income from farming cattle on his “hobby block”[61] at Sherlock. From 2013 to 2015, the farm earned $49,008. As of 2015, deferred losses have added up to $121,200. Alec has approximately $75,000 in superannuation.[62] His wife has about $32,000.[63] The hobby block is valued at $62,000. Other joint assets comprise of three motor vehicles, farming machinery and cattle, which have value up to $80,000.[64] They (“the Veits”) have around $320,000 in savings.[65]
Relationship with the testator
[60] Exhibit P39.
[61] T 128.
[62] Exhibit P40.
[63] Exhibit P41.
[64] Trial Book p 178.
[65] Exhibit P43.
Alec had a tough childhood like his siblings. He agreed with their evidence about how his father behaved. In 1972 he left high school at age 15 and worked on the family farm without pay until 1976. From 1976 to 1980 the testator paid Alec $10 a week for the work he did. Alec also worked for other farmers in the area on a casual basis. This became his primary source of income. In about 1973 he worked for a farmer full-time for a 12-month period. In about 1976 the testator purchased this additional farm at Sherlock. Alec worked both farms with the testator. In September 1980 Alec married Barbara. The Veits went to live on the farm at Sherlock at the request of the testator. They have lived there ever since.
In the 1980s Alec entered into a share-farming arrangement with the testator. Alec was to receive one-third of the crop. In about 1982 the testator terminated this arrangement and leased the property to other farmers. Alec then had to claim social security benefits to support Barbara and their two children. In the early 1990s Alec worked for a fencing contractor. In October 1991, the Veits purchased their own little hobby block at Sherlock. They paid $27,500. It is used for beef cattle production. The block is about 200 acres. Given the size, it makes little income. Alec planned to build a house if “things went funny”[66] with his father. He always felt wary that the testator might terminate his living arrangements on the farm at any time.
[66] T 128 lines 9-10.
Alec described his relationship with the testator as like being on a “rollercoaster”.[67] He could be totally unapproachable one day but easy going the next.
[67] Trial Book p 176 [17].
In 1996 Alec obtained full-time employment with the council. He would still help with the farm after hours and on the weekends. He received no pay for his work although he and his family got to stay in the house.
In about 1998 the testator moved to Karoonda. The Veits would still see the testator once a week and take him grocery shopping. They would also assist him with the garden. Barbara would visit him when she would go to work at the Karoonda Hospital. Despite moving to Karoonda, the testator would often visit the farm at Sherlock. He still controlled the running of the farm. From about 2005 he allowed Alec to work two small paddocks on the farm, one for cattle, and the other for cropping. He sold the older family farm at Sherlock after moving to Karoonda.
The testator told Alec not to spend too much money on the farm as “he might sell the property”.[68] He never told Alec he would leave him the farm.[69] Consistent with his generally poor behaviour towards his children the testator was unwilling to pay for any major maintenance on the farm as he thought there was “no real benefit to him”.[70]
The Sherlock farm
[68] Trial Book p 177 [24].
[69] An earlier will did in fact leave the farm to Alec.
[70] Trial Book p 177 [24].
The testator bequeathed to Alec the remaining farm of 1928 acres. It is located in Sherlock, approximately 126 kilometres from Adelaide. It has a 1950s asbestos clad house. It could only be described as basic accommodation. I have taken into account the photos of the farm that were tendered. There is no hot water system; a stove is used to heat all water. The roof is in poor condition. The gutters are damaged. There is no modern water supply to the farm. Bore water is extracted using a submersible pump to distribute water to all the stock troughs. Alec has spent money redrilling the bore upon which the farm relies. There is another bore that still requires repair. The windmill on the property has not worked for some years. Due to inadequate fencing in some of the paddocks stock can escape. There are areas of salt that affect the farm land. A report tendered valued the farm at $410,000 but Alec considers it to be worth less than that. However no alternative valuation report was tendered. Barbara was present when the valuation inspection was undertaken. She gave evidence that the valuer inspected the house and the land immediately surrounding the house but other areas of the farm were not inspected. Barbara told the valuer about the state of repair of the farm and the house. I note that a hot water system was recorded as being present in the valuation report.
The Veits have lived at the farm since 1980. Although they paid no rent; they were responsible for the upkeep of the farm. They paid certain expenses. Over the last few years they also paid the rates. The testator refused to spend money or undertake major maintenance required on the farm. Alec says the farm is run down and requires significant repairs. Since 2007, Alec has spent $28,413.89 out of his own pocket in farming expenses. The testator did not reimburse him.
Alec hopes to run the property as a cattle farm. He would like to make repairs to the house and farm for that purpose. He tendered repair and rebuild estimates for the house and farm. Some of the repairs are obviously necessary; others would improve its profitability and comfort. The Veits have been living on the farm some 36 years. They have raised their children there. It is their wish to retire on the farm.
Findings
The Veits were excellent witnesses and I accept their evidence. Alec, like his siblings had a “tough”[71] childhood; his father was a very difficult man. However he managed to keep a relationship of sorts with the testator. The testator made it difficult for him to ever earn a reasonable living. Financially things have improved for him since he began work at the council.
The defendant’s submissions
[71] Trial Book p 175 [9].
Role in the case
The defendant submitted that its role in this particular case was to assist the Court, rather than oppose any application for family provision. At trial, the defendant accepted without formally admitting, that it was open to the Court to find that each plaintiff had passed the “jurisdictional” question. The defendant tendered a table of proposed ranges for each plaintiff.
Disclosure
Mr Ower, on behalf of the defendant, raised the issue about the “inadequate disclosure”[72] regarding the financial position of Vicky and Julie. No submission was made by counsel that either was deliberately misleading the Court as to their financial position. In relation to Vicky, the disclosure was affected by the geographical distance involved between her and her solicitor. For Julie, it appears disclosure was affected by the strained relationship she has with her ex-husband. I have already found that neither plaintiff intended to mislead the defendant or the Court. I am confident that the material produced enables me to make an appropriate assessment of their financial position.
[72] T 26.
Defence witnesses
Neil Page is the Legal Counsel with the AET. His evidence explained the process involved as to the distribution of the income of the estate to charities and for charitable purposes. The evidence of Mr Page also covered the executor fees involved in managing the trust. His evidence was uncontested. He was a good witness and I accept his evidence.
Lester Jarmyn is an Estate Planning Specialist employed by AET. On 8 February 2012, he met with the testator for the purpose of taking instructions for the making of his will. He was unaware that the testator made a will in 1982 that made provision for all of his five children. The testator told him he did not want David, Sandra or Julie to have “a f.....g cent”.[73] He was given advice about the family provisions of the Act.[74] Consistent with his general behaviour the testator remained obstinate.
[73] Trial Book p 227.
[74] T 193.
Mr Jarmyn was a good witness and I accept his evidence.
Consideration of the issues
Threshold
Each of the plaintiff’s claims is to be assessed independently. I have discussed their background and financial situation earlier in these reasons. All of the plaintiffs were good witnesses and I have accepted their evidence. I do not intend to repeat my findings.
I am satisfied that each of the plaintiffs has been left without adequate provision for their proper maintenance, education or advancement in life. The estate is relatively large. There are no competing claims. The only evidence led and submission made in opposition to the plaintiffs’ claim was the issue of testamentary freedom. The moral obligation owed by the testator to his children in disposing of his estate arises, in part, from his own conduct towards them during their childhood.
Clearly Alec has the strongest moral claim of the children followed by Vicky. The question of estrangement arises in relation to the other three children but in my view that was largely a product of the testator’s own behaviour. He did little for them during his life and less on his death. That they maintained any relationship with him is to their credit. They did not demonstrate any hostility towards him. They accepted that he was just a difficult man.
For all of the plaintiffs there was a moral and financial basis for their claims although the weight to be given to those factors varied between the plaintiffs.
The testator made no attempt to ascertain the financial position of any of his children. He clearly gave minimal thought about any obligation he may have to his children. He gave no thought to provision for their adequate and proper maintenance, education or advancement in life. He quite simply cared little about his children in life or at death.
He had no relationship with any particular charity.
What provision is to be made?
I accept that the provision which the Court may properly make in default of testamentary provision is that which a just and wise father would have thought it his moral duty to make in the interests of his children had he been fully aware of all the relevant circumstances.
In exercising my discretion I must have regard to all of the circumstances including amongst other things each applicant’s financial position, the size and nature of the deceased’s estate, the totality of the relationship between each applicant and the deceased, and the relationship between the deceased and other persons who have legitimate claims upon his bounty. In this sense similar considerations are relevant to this issue as are relevant to the first stage of the inquiry and the assessment of what is a proper level of maintenance and what is adequate provision, largely determines the order to be made.[75]
[75] Singer v Berghouse (1994) 181 CLR 201, 210; Delisio & Ors v Santoro [2002] SASC 65.
Vicky
Vicky is in the strongest financial position. She has also been bequeathed $100,000 from the estate. The Parkers own two properties. Doug has savings in the vicinity of $150,000. They run a profitable farming business. Both wool and cattle prices have been fairly stable for the last couple of years.[76] The farm should continue to be a reliable income for them. They also have livestock assets; namely cattle, sheep and goats. Despite this, in my view, the provision made to Vicky did not leave her with adequate provision for her proper maintenance, education or advancement in life.
[76] T 280.
Her financial position, while better than that of her siblings, is based on the continued success of the farm which can and has fluctuated depending upon the seasons. They have savings but no super and will rely on selling assets to live on retirement. Combined with the moral duty owed by the testator and taking into account all of the circumstances I consider that a further provision of $75,000 is appropriate in the circumstances.
David
This is not a case where the estrangement constitutes disentitling conduct. It is however a factor to be taken into account.
David owns no property. His income and savings are modest. He has no financial buffer for future contingencies should his current living arrangements dissolve. He is supporting his partner who is unemployed. In these circumstances, I consider that provision of $175,000 is appropriate.
Sandra
Like David this is not a case where the estrangement constitutes disentitling conduct. It is however a factor to be taken into account.
Sandra has a property, but it is highly mortgaged. She has modest superannuation. She has little by way of assets and also no financial buffer for future contingencies. I consider that provision of $150,000 is appropriate.
Julie
Again this is not a case where the estrangement constitutes disentitling conduct. It is however a factor to be taken into account.
The financial position of Julie, particularly Gejurama, cannot be accurately ascertained. However, her financial position could only be described as modest. Like her siblings she has no financial buffer for future negative contingencies. I consider a provision of $150,000 is appropriate.
Alec
In my view, Alec has the strongest moral claim to the estate. He worked the family farm since a child. Since 1980 he has lived and worked the farm at Sherlock with his wife. He has had a difficult life. He lived on the farm not knowing whether he was going to be kicked out by the testator. He worked and lived on the farm under suboptimal conditions. Alec was never in a position to put money into the house or farm to improve the conditions because he did not know what his father was going to do. The testator refused to spend the money required to repair the property. Alec used his own funds to keep the farm going. He was never compensated for this by the testator. There is no hot water system in the house. The farm is still in poor condition and the house needs to be updated. I have had regard to the estimates made by Alec as to the total cost of repairs. I consider that provision of $185,000 is appropriate.
Order
Pursuant to section 7 of the Act I order that provision be made out of the estate of Alec Arnold Veit to the following persons in the amounts indicated:
Vicky Carolyn Parker $75,000 David Arnold Veit $175,000 Sandra Gail Veit $150,000 Julie Ann Bubner $150,000 Alec Jeffrey Veit $185,000
Costs
I will hear the parties as to the form of the orders and costs.
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