Phillip Seeto v Kim Yum Bong Seeto
[2013] NSWSC 1232
•28 August 2013
Supreme Court
New South Wales
Medium Neutral Citation: Phillip Seeto v Kim Yum Bong Seeto & Ors [2013] NSWSC 1232 Hearing dates: 26, 27 August 2013 Decision date: 28 August 2013 Jurisdiction: Equity Division Before: Slattery J Decision: Plaintiff granted extension of time to bring family provision proceedings.
Wiley Park property designated as notional estate of the deceased.
An order for provision by way of a legacy to the plaintiff in the sum of $400,000.
Catchwords: SUCCESSION - deceased died in 1998 - leaving his estate to a corporate trustee of a family trust - deceased's wife died in 2013 - deceased's younger son and executor in control of the family trust - deceased's older son brings an out of time application under Family Provision Act 1982 - plaintiff has no contact with his parents for 10 years - dispute as to the extent of family reconciliation - whether "sufficient cause" shown within Family Provision Act s 16(3) for application not having been made within time - plaintiff believed that his father's estate passed to his mother - whether executor aware of and contributed to the plaintiff's belief and remained silent - whether plaintiff was misled - whether prejudice due to delay - estate distributed - whether Family Provision Act 28(5)(d) "special circumstances" exist to justify making an order designating notional estate - whether plaintiff left without adequate provision - whether an order for provision should be made. Legislation Cited: Family Provision Act 1982 Cases Cited: Bearns v Bearns-Hayes (unreported 6 May 1997)
Zirkler v McKinnon [2002] NSWSC 285
John v John [2010] NSWSC 937
Campbell v Chabert-McKay [2010] NSWSC 859
Singer v Berghouse (No 2) (1994) 181 CLR 201
Re Fulop (dec'd) (1987) 8 NSWLR 679
Vigolo v Bostin [2005] HCA 11; (2005) 221 CLR 191
Taylor v Farrugia [2009] NSWSC 801
Mayfield v Lloyd-Williams [2004] NSWSC 419
Anderson v Teboneras [1990] VR 527Category: Principal judgment Parties: Plaintiff: Phillip Seeto
Defendants: Kim Yum Bong (Raymond) Seeto, Wing On Investments Pty LimitedRepresentation: Counsel:
Plaintiff: M Gorrick
Defendant: L Ellison SC
Solicitors:
Plaintiff: Vincent Butcher
Defendants: Warren Smith, Macpherson + Kelley Lawyers (Sydney)
File Number(s): 2011/405719
EX TEmpore Judgment
In 1971, a 22 year old Phillip Seeto, the plaintiff in these proceedings, quietly slipped away from his parent's merchandise store in Rabaul in Papua New Guinea and left for Australia. He did not tell his parents he was leaving but he left a note for them explaining why he had left. He did not see them again until 1981 when he returned to Australia from London with his first wife. He found then that his parents had followed him to Australia and there the family was re-united.
Not surprisingly, Phillip's flight from Rabaul and his 10-year absence from the family were difficult for his parents to bear. The events troubled his father, Kim Hung Seeto and his mother Yu Mey Seeto. It affected their attitude to Phillip all their lives.
Kim died in 1988 leaving a will dated 31 May 1994. Yu Mey died on 9 May this year, also leaving a will made the same date as her husband's will. Under neither will was any provision made for Phillip. Both Kim's and Yu Mey's wills gave the whole of their respective estates to a company Wing On Investments Pty Limited ("Wing On"), a corporate trustee of a family trust controlled at all material times from 1994 by Phillip's brother, Raymond Yum Bong Seeto, a doctor and now the executor of his parent's wills.
Phillip now brings a claim under the legislation applying as at Kim's death in 1998, the now repealed Family Provision Act, seeking provision out of his father's estate. His application is well out of time. He seeks an extension of time under Family Provision Act s 16(3). Raymond submits that no such time extension is warranted.
Phillip has not yet brought a claim against Yu Mey's estate. The possibility of such a claim was mentioned in these proceedings, but only mentioned. The Court knows very little about either the assets of Yu Mey's estate or about any claim against it. I need not further consider Yu Mey's estate in these proceedings.
Kim's estate consisted principally of real estate. Between Kim's death and Yu Mey's death Raymond and Yu Mey used Wing On as a composite corporate vehicle for property investment and to operate Raymond's medical practice.
The principal identifiable estate asset, a block of home units in Wiley Park was distributed from Kim's estate to Wing On in 1999. Phillip claims that this property should be designated as a notional estate in these proceedings. Raymond disagrees.
Phillip and Raymond have one other sibling, an older sister Julie, who has taken no part in these proceedings and has not made a claim on Kim's estate.
As these reasons already show, this case largely involves the members of one family. I hope without any disrespect to any family member, I will for convenience use the first names of family members when referring to them in these reasons. I will also refer from time to time, to Kim as the deceased, to Raymond as the executor and to Phillip as the plaintiff.
The Court has been much assisted by counsel and solicitors appearing for both sides in these proceedings. Mr Gorrick of Counsel appears for the plaintiff and Mr Ellison of Senior Counsel appears for the defendant.
Issues to be determined
The issues to be determined in these proceedings are the following:
(1) First, whether time should be extended to bring Family Provision Act proceedings to allow Phillip's claim to be brought out of time.
(2) Whether the Wiley Park property now an asset of the family trust should be designated as notional estate.
(3) Whether an order for provision should be made out of the deceased's estate.
(4) If so, in what amount should an order for provision be made.
A narrative of my findings of Seeto family events relating to the plaintiff assists in understanding these issues. The structure of the narrative in these reasons is one essentially taken from Phillip's account of family events which I almost entirely accept. Phillip's credit was challenged in a number of ways in the proceedings but in my view his evidence survived that challenge well.
The first challenge related to the disclosure of and completeness of his financial affairs. But for reasons that I will explain later that attack in my view was not effective, though put by Mr Ellison with his usual skill.
There were other attacks made on Phillip's credit, in particular, about his outlook and his sense of entitlement in relation to his parent's estate. But for reasons I will explain, in my view his credit remains unimpaired by these attacks.
The Seeto Family from Phillip's Birth until the Family Reunion - 1948 to 1981
Hong Kong and Papua New Guinea. The plaintiff was born on 9 March 1948 in Hong Kong. He lived with his mother and other family relatives in Hong Kong until he was in his mid teens.
Shortly after World War II Phillip's father, Kim left Hong Kong to open a merchandise store in Papua New Guinea. Phillip did not know his father well for the first 15 years of his life. His account of this period, which I accept is that when Phillip was about 15 years old Kim sent for him, his sister Julie, and his mother Yu Mey, to migrate to join him in Papua New Guinea, which they did. His grandmother stayed in Hong Kong.
The plaintiff recalls, and I accept, that from the time of his arrival in Papua New Guinea, he began assisting the deceased in the family's merchandise store. It was a retail store selling, by both wholesale and retail, all kinds of merchandise to both the local native population and to missionaries on the island of Rabaul in Papua New Guinea.
The deceased was not able to speak English. But he had positive views about extending his son's education. In 1965 Kim sent Phillip to a boarding school in Sydney to fast track his learning of English. This created Phillip's connection with Australia. He was there for about the next three years flying backwards and forwards between Sydney and Rabaul during school holidays. During those school holidays he helped out in the family store.
In about 1967 Phillip's sister, Julie, married and moved away from the family's home in Rabaul to set up in Port Moresby.
The defendant, Raymond, was born 20 years after the plaintiff, in 1968. It is not surprising given this 20-year gap in their birth dates that they grew up in different worlds. It is quite evident from the evidence in these proceedings that they never had a good relationship.
I accept on the plaintiff's account that at the time of Raymond's birth in 1968 the deceased became sick and was suffering from tuberculosis. That meant that he was not able to work in the store as much as he had before. From about that time, the burden of operating the store fell increasingly to the young 19 or 20-year-old plaintiff Phillip, along with two or three other local employees. Kim and Yu Mey decided the plaintiff should quit school to work in the store full-time, which he did.
I wholly accept the plaintiff's account of the next three years of his life. He did much for his parents at this time, as their eldest son. He says he had to work seven days a week, 16 hours a day with little help from his parents and without pay. He says, and I accept, that when he asked his father why he was not on any payroll, his father would say to him words to the effect of:
Why would you need a salary? Your brother is so small; your sister is married and now belongs to another family. Who do you think I'll give this business to? This is a good business. Just keep working hard and one day when I'm not around, it will be all yours.
I accept this was said. But no doubt it was said with an expectation that Phillip would continue to work in the business for a long time. But that is not what happened.
The plaintiff says and I accept that for three years that he lived in a back room in the store. His parents provided him with two meals a day. A typical day involved opening the store at 6am to receive a first rush of bakery products. Goods sold from the store day and night included food, single bottles of beer, liquor, betel nuts, cigarettes and tobacco. The store also operated driveway service for petrol and engine oil. Phillip's duties included, making and receiving purchases, replenishing stocks, stock take, stacking shelves, pricing goods and negotiating with shipping agents about import shipping and containers. He had a job of checking, packing and loading orders for transport to customers away from the store.
Phillip says that it was often after 6pm that after doing deliveries in the local area he would return to the store to serve the village natives who were buying food, alcohol, cigarettes and tobacco after hours. He says that he worked effectively seven days a week, often late at night, throughout weekends and over holiday and festive periods.
Phillip paints a picture of instability and insecurity in the area where the store operated, which I accept. He says "by night fall most of the villagers would be drunk and congregated outside the store. We stood alone in an isolated area of the town." The good trading margins the store earned were won at the price of a degree of risk to the family's personal security. The plaintiff says that his father, mother and he often had to try to close the store by 8pm, because after that time, it became vulnerable to attack by the local population. But they were not always successful and there was continuous danger doing business throughout the night.
Kim's withdrawal from the business due to his tuberculosis led to Phillip cultivating a network of contacts with suppliers, warehouse staff, delivery crews and liquor suppliers. Some of his dealings were in cash. He says that some of the suppliers to the store had special arrangements with him.
Phillip's departure from Papua New Guinea. In 1971 Phillip decided that he wanted to leave Papua New Guinea and finish studies in Australia. He says he missed aspects of his social life and schooling in Sydney, the chance to study music, to read, to play sport, to socialise with some of his friends, to enjoy good food and society, and to have security away from the personal dangers of Papua New Guinea. He says, and I accept, that he was discouraged by his parents from reading books, keeping friends or listening to music even in his spare time in Rabaul. His father said to him on many occasions that these activities were a waste of time, because they interfered with the family making money.
Phillip was coughing and felt unwell when in Papua New Guinea. I accept his evidence that after he came to Australia he sought medical assistance in the Eastern suburbs of Sydney and found out that he had tuberculosis. He thinks he contracted this disease from his father. But it is not necessary to make any such finding. It is self evident from his father contracting it a little earlier that it was apparently endemic in that area of Papua New Guinea.
Phillip has little real understanding of the profits made by the business in Rabaul. But he is able to say from his general recollection, which I accept is accurate on this, that the store was making sales of between $7,000 and $10,000 a week with what he calls "high profit margins". He recalls that in the 1960s his father purchased a block of investment units in Sydney in Wylie Park.
It is unclear on the evidence what was the source of funds for the purchase of the Wiley Park units. It is too long ago for any accurate accounting of such funding sources. The plaintiff makes a notional estate claim over these units. Given that I have accepted the plaintiff's account that the family was making high profit margins I infer that the plaintiff's work in the store at least indirectly increased the probability of this kind of real estate investment being made in Australia.
The purchase of these Wiley Park units made Phillip familiar with the real estate agent in Sydney who managed them for Kim, DR Jones and Co in King Georges Road, Wylie Park.
Phillip gives a scant account of his 1971 departure from Papua New Guinea. He says he used his savings to catch a flight to Sydney. The evidence from the video recording of Yu Mey, and evidence of what both Kim and Yu Mey said to Raymond, give a rather different picture of Phillip's departure. The picture they paint implies that he took funds from the business and did not use his own savings to catch a flight to Sydney.
On this part of the case, I do not entirely accept the plaintiff. It seems to be more probable that the plaintiff took or diverted some funds out of the business to enable his departure for Australia. I accept the plaintiff's evidence that he was not paid any wages while he worked at the store. And it does not therefore seem possible that he could have been able to accumulate sufficient savings to finance his flight to Australia. He would have needed to take flights from Rabaul to Port Moresby and from Port Moresby to Sydney. In those days that would have needed considerable savings. I accept Raymond's evidence that from the time the family was re-united in about 1981 the deceased and his wife were constantly suspicious of aspects of their son's life and character. I infer that part of the reason for this was that some money had gone missing at the time the plaintiff left for Australia.
But these things must be judged in a broader human perspective. The plaintiff's outlook in 1971, at the optimistic age of 22, was that he wanted to make the best of his life and felt that many more years in Rabaul was not how he wanted to do that. He no doubt had a justified sense of entitlement to some recompense for his many years of unpaid labour at the store, when he used funds from the business to travel to Sydney.
I accept Phillip's evidence that before he left, he left a note for his parents. In the note he said that he was going to study in Sydney. He said: that he hoped they would sell the business; that he wanted a better quality of life away from the insecurity of the local area; that he was contactable through the Wiley Park estate agent, DR Jones. But I also accept that his parents did not try and contact him.
Phillip in Sydney and London. Phillip made much of his move to Australia. He matriculated from the Sydney Technical College and then a few years later, gained a Bachelor of Commerce degree from the University of New South Wales in 1977. He was entrepreneurial. He drove taxis to support himself through his university years and took a head lease on property, which he then sublet to other tenants to make a profit.
Phillip met his wife Delores, a Belgian national who was on holidays in Australia. He married her in 1979 in London. She was then a flight attendant with a European airline, Dan Air. He and she lived in London until the early 1990s. He put his university degree to use and worked as a accountant during this period.
From Phillip's reunion with the family to his return to Australia - 1981 to 1993
But well before moving back to Australia Phillip reunited with his family. In 1981 he took his wife Dolores to meet his sister Julie and his brother-in-law, who had moved to Sydney in the mid 1970s.
In 1981 Phillip was re-united with the rest of his family. There was much disputed evidence as to how happy an occasion this reunion really was. But Phillip says, and I accept, that at their reunion his father said to him "Where have you been? We've been looking for you for years!" Raymond disputed that Kim made the second part of this statement. Raymond was about 14, and old enough to remember this meeting. But in my view as a teenager defensively coping with the sudden re-emergence of his older brother, his views of the event were a little distorted. Phillip's account of this first meeting is consistent with the deceased's and Yu Mey's engagement with Philip during the 1980s and 1990s. Whatever their innermost feelings about their son's conduct for those missing 10 years, after the family was reunited there was on their part civility, politeness and continuing recognition of Phillip as their son.
The plaintiff continued to live in London with Dolores. Their first son, Ben, was born there in April 1985, and their second son, Jason, in July 1986. Following Ben's birth in 1985 the deceased wrote to Phillip a letter of affectionate warmth that would be difficult to feign. Translated from its Chinese characters it read as follows:
My dear son, how lovely it is to receive your letter to day, I hurried to open it to see my lovely grand son's photo, I and your mum and your brother are so proud and happy. I like his English name Benjamin and he looks so cute and sweet, you must take good care of him and grow up be a good boy. But we are now so far apart and we all wish you will be home soon, and then together we will enjoy our good fortune and happy home. I hear London is getting quite warm and Sydney is getting cooler lately. Raymond is staying home on his two weeks school holiday. We are fine and thinking of you. Best wishes for you and your family! PS I have four Chinese names pick for my grandson as follow, let me know which one you choose. PS I will give one of these photos to your sister when I see her, take care. Dad & Mum
Raymond assisted his father in sending that letter. Written only four years after Phillip had re-emerged into the family the letter fulfils a Chinese tradition of allowing a Chinese paternal grandfather to choose the middle name of his grandchild. This was something Kim clearly wanted to do.
Raymond does not see this letter as affectionate. He says the deceased is being polite and expressing civility to his son but without real affection. Exactly where the dividing line between affection and politeness is to be drawn is always difficult in the subtlety of human relationships. But this letter illuminates family feelings at an important moment, the birth of a grandchild. It proves that the connection between family members was being celebrated at the initiative of the deceased. And whatever difficulties there undoubtedly are in penetrating the differences between politeness and affection, in my view the objective text of the letter clearly lies at the affectionate end of the emotional spectrum.
By the late 1980s - early 1990s the plaintiff and his wife began preparing to come back to Australia. This coincided with a number of family enquiries about the sale of an apartment in Hong Kong, which was owned by Yu Mey, and in which Yu Mey's mother was living. There was much evidence about this issue, which I do not regard as particularly close to the issues that I have to decide. But in my view the episode shows the plaintiff assisting his parents about aspects of that apartment sale; and it further shows initiative both on his side and their side in joint family interests.
Phillip and Dolores back in Sydney - 1993 to 1998
The recession of the early 1990s put the airline that Delores worked for out of business. Dan Air folded in 1992 and was absorbed by British Airways. Shortly after that in 1993, the plaintiff decided to come back to Australia with Dolores and their two young children.
In this next phase of his life, he was able to be with the deceased and his mother in Australia for about five years, before his father died in 1998. This period was the subject of photographic evidence. The family photographs from period show Delores and the plaintiff, and all family members together at festive and other gatherings.
Raymond says that those family gatherings were more polite than affectionate and that festive gatherings were the only family gatherings there were. But the fact that these gatherings took place at all, shows that Kim, Yu Mey, Phillip and Delores placed value upon their family relationships between 1993 and 1998. In my view the photographs show family relationships were the subject of effort on both sides. I cannot judge the sincerity of the smiles and other indications of affection in these photographs. But the clear images show no evidence of family members faking affection and enjoyment.
An important family conversation took place just after Phillip came back to Australia in 1993. It concerned where Phillip would stay, and how he would be able to afford to keep himself and his young family. I accept that Raymond and Phillip conversed in the following terms:
Raymond: Are you still looking for a place to rent? Dad said you can live in the Wylie Park unit if you want.
Phillip: That's a good idea. How much is the rent?
Raymond : Not Sure, probably $150 a week. That works out to be $7,800 a year. Okay.
The deceased intruded into this conversation. And the following was said:
Phillip: Dad, Wiley Park is good and I can give you $150 cash in hand for the rent so you don't have to pay tax
Kim: No, no. No! No need to pay. I'm not short of money and property. You are my son. I only have two of you and if I can't even take care of my own son when in need I would not be a good father.
I accept this conversation took place. First, I generally accept the plaintiff's evidence. Secondly, the plaintiff actually lived rent free in this apartment until 2003.
The product of this conversation, rent-free accommodation, is another point of recognition of a filial bond between Phillip and his father. Whatever had happened in the missing 10 years Kim as father still felt that he should give financial support and assistance to his son to assist his progress in life, when he was seeking to re-establish himself in Australia.
Kim's death - 1998
The deceased's health began to deteriorate in the mid 1990s. He developed Alzheimer's disease. In 1996 he could no longer live at home. He was admitted to a Hurstville nursing home. The plaintiff says and I accept that the plaintiff visited him regularly there with their two sons until his death in July 1998. Whatever had happened in the past, during Kim's last few years Phillip was attentive to maintaining their relationship.
The plaintiff says, and I accept, that his sister Julie, and her husband, his mother, and his brother Raymond and his wife, and Phillip's then wife, Delores, and their two sons were all with the deceased when he died in July 1998.
The 1998 conversation between Phillip and Raymond after Kim's death
Phillip and Delores' marriage broke down in 1999. Shortly afterwards Phillip married his present wife, Roxanne, who also gave evidence.
Phillip had been living with Delores and partly in the unit at Wylie Park. He wanted to continue to live there on a rent-free basis with Roxanne. He did so until 2003. But in 2003, as a result of a series of conversations between Raymond and Phillip, rent was first charged for Phillip's occupation of the Wiley Park unit.
These conversations show that the plaintiff thought, as a result of an enquiry he made of Raymond, that his father's estate had gone entirely to his mother, Yu Mey. This caused the plaintiff to suspend any further enquiries about the disposition of his father's estate until 2011 shortly before Yu Mey died. I accept the plaintiff's account both of his motivation for making these inquiries of Raymond and of his resulting state of mind.
Three main conversations took place. The first one was just after Kim's death in 1998. The others were in 2009 and 2011 I accept most of the plaintiff's account of the first 1998 conversation between himself and Raymond, which started with discussion about arrangements for Kim's funeral and burial. Raymond says, and I accept, that he was not then aware of the Chinese tradition of purchasing a cover blanket as part of Chinese burial custom. So, I am not convinced that there was any discussion between Phillip and Raymond about that particular subject.
But there was a conversation between them about the placing of death notices and other aspects of the funeral arrangements. And in the course of that conversation Raymond mentioned the reimbursement of this expenditure to Phillip and used the expression "estate planning". That caused Phillip to initiate the following exchange with Raymond:
Phillip: How is Dad's estate distributed?
Raymond: It all passes on to Mum.
Phillip: So there's nothing for us?
Raymond: That's correct.
Apart from my general acceptance of Phillip's evidence, this is an objectively probable conversation. From the time of the creation of the family trust in 1994 there was a more distant relationship between Phillip and his parents than they had with Raymond. Both Raymond and Phillip would each have recognised that Raymond was the one who knew more than Phillip about the affairs of the deceased's estate. Phillip was a natural initiator and Raymond a natural receiver of such an enquiry at that time.
Raymond's answer was not complete. "It all passes on to Mum" was not the whole truth. In fact Kim's 1994 will provided:
2. I appoint my son Raymond Yum Bong Seeto to be the executor and trustee of this will.
3. I give the whole of my estate to Wing On Investments Pty Limited (A.C,N 064-775-113) as trustee of the Wing On discretionary Trust settled by Arthur Yip by deed dated 20 May 1994 to hold on the same trusts as those created by the said deed.
4. I declare that if the gift under the preceding paragraph (3) shall fail, then my said son Raymond Yum Bong Seeto shall take absolutely the estate or interest which Wing On Investments Pty Limited would otherwise have taken.
Yu Mey's will was in the same terms.
Kim's, and later also Yu Mey's, estate passed to Wing On, as trustee of the family trust. Raymond acknowledged in his evidence that he always controlled Wing On and the trust since their establishment in 1994, through his majority shareholding in the trustee and through his power of appointment of the trustee of the family trust.
Raymond's representation to his brother was effective. Phillip made no further enquiry about the subject of Kim's estate for thirteen years. In 2011, something else triggered him to investigate the affairs of the estate. I accept his evidence that throughout this whole period he thought that Kim's estate had passed to his mother. As a result of his incorrect understanding, Phillip for many years after his father's death did nothing to enquire after his own interests in relation to Kim's estate.
I assess the plaintiff as someone who was sufficiently independent minded to leave Papua New Guinea at the age of 22, attain for himself a degree in commerce in Australia and then go with his new wife to London to live for a number of years. He is the kind of person who, had he the slightest inkling that what his brother had said to him about Kim's estate passing to his mother was wrong, would have followed it up, found out the truth, and asserted his claims against the estate. He did not do that in my view because he accepted what his brother had said to him.
Moreover, this inference is supported by Phillip's character and his subsequent conduct. Phillip was not close to Raymond. Philip would have been perturbed by any hint that Raymond, not Yu Mey, may have benefited from Kim's estate. And when Phillip did later begin to suspect Raymond had benefited he followed up his suspicions immediately.
The 2009 conversation between Phillip and Raymond
The plaintiff lived in the Wylie Park apartment rent free from 1993 until about July 2003. In the mid 1990s Delores moved to Dolls Point. Since then and before his divorce the plaintiff spent his time between the Dolls Point house and the Wiley Park unit, which he used in part as a music studio.
In 2003 Yu Mey, became concerned about repairs and upkeep for the Wylie Park building. She talked to the plaintiff about him paying rent. He was put on a 12-month lease of $180 a week. He noticed that the landlord was the company, Wing On. But beyond noticing that bare fact, I accept that he did not think to question it. Given what his brother had said to him previously about his father's estate passing to his mother, he had no reason to associate Wing On with Raymond's personal interests. Phillip simply thought Wing On was a company through which Yu Mey was conducting business.
After Kim's death Raymond did not receive any enquiry from Phillip about Wing On's functions, about who controlled it, or about whether it had any relationship to the deceased's estate. The fact that Wing On appeared on Phillip's lease did not indicate to him that the company had anything to do with the deceased's estate or that Raymond might control it. Rather, and consistent with what Raymond had represented to Phillip, what Phillip knew about the company only suggested to him that Yu Mey was using it to do business. And the fact that Raymond never received any enquiry about Wing On from Phillip confirmed in Raymond's mind, in my view, that Phillip did not suspect Raymond controlled Wing On and that Phillip did not see any connection between the Wing On and the deceased's estate.
I conclude that Raymond knew: that Phillip did not know of the connection between Wing On and the estate; and that Raymond's representation that "it all passes on to Mum" had diverted Phillip from enquiring any further about his father's Will.
If Phillip had enquired about his father's will he would have been able to discover the existence of Wing On. And given Phillip's character, as I have described it, he would have done something about it in the first instance by asking his brother about the company. In my view, Raymond did appreciate that; and that is why he was aware, from Phillip's lack of enquiry on that subject that Phillip had not made independent inquiries of his own about Kim's will.
In 2009 it appeared that the rent for the Wiley Park units was going to be increased. Conversation took place between Yu Mey and the plaintiff about the rent increases. She directed the plaintiff to go and speak to Raymond about the issue.
Because of the poor relationship between Phillip and Raymond, one of the only places they actually met was at the Rookwood cemetery, where they were paying respects at their father's grave. The plaintiff and his siblings did attend the grave four or five times a year. On one of those occasions in 2009 Phillip says he had the following the conversation with Raymond:
Phillip: Ray, mum said she does not know about the rent increase. She said it is all down to you and I can ask you for favourable treatment as your brother, you can charge me lesser rent or it would be much appreciated if you return me to rent free like father had provided for me before.
Ray: This is all bullshit; you know this is her property, I have no say in this, I just do what she tells me to do.
Phillip: Excuse me, but this is what she said to talk to you. Anyway, she is not young, she does not go anywhere and I don't see her spending wildly, where does all her money to go?
Ray: I don't know, but I think she sent money overseas to her brother in America. This is mum's property and her money; you should not be too concerned with how she spends it.
Raymond, says that part of this conversation did not take place. He says that when asked by Phillip "where does all her money go" he remained silent. But I do not accept Raymond's evidence about this. He had already said similar things earlier in the conversation. His statement "I have no say in this" was not correct, as he then had control of Wing On and the trust. And Raymond's statements on this occasion are consistent with what he had said to Phillip in 1998, which had already given Phillip the impression that the estate had gone to Yu Mey and not Raymond. I prefer Phillip's evidence about this conversation, which reinforced the wrong impression which had been given to Phillip many years before.
Conversations between Phillip and Raymond after Yu Mey's incapacity
The final Phillip-Raymond conversation was in 2011. And it too took place near in the vicinity of the deceased's grave. The context of this conversation at the cemetery, indirectly evidences the plaintiff honouring his father in this respectful way for years after he had died. It is some evidence of Phillip's perception of the quality of his relationship with Kim when Kim was alive. Phillip was making these visits long before these proceedings were in contemplation.
In 2011 Yu Mey had suffered a severe stroke and was in a nursing home. She was totally incapacitated from March 2011. But after March 2011 the agent raised Phillip's rent from $230 to $260. Not surprisingly that puzzled Phillip. So he rang his brother and I accept that he had a conversation with him to the following effect:
Phillip: Mum is now incarcerated, not able to make decisions and believe that you must have mum's power of attorney, so can I have the Wiley Park apartment rent-free again as when dad was alive?
Raymond: It is still mum's property, she has left written instructions with the agent, I do not want to interfere.
Phillip: It is hard to make a buck these days. What if I can't pay this rent to you, what would you do?
Raymond: Mum will evict you like any other tenant who does not pay their rent, and if you don't like it, leave.
Phillip further says, and I accept, that in May 2011 during one of the cemetery visits, the following conversation took place in his presence between his sister, Julie, and his brother, Raymond about the Wiley Park rent:
Julie: These days, living is expensive, Phillip has a small son to look after, now that mum is not around and you are not short of money yourself, could you see fit helping your brother by not charging rent.
Raymond: I have no power to interfere, it is mum's property and she has written instructions with the agent, but I will see what I can do.
I accept Phillip's above version of this conversation. But even the defendant's version, set out below, is intriguing and does not much assist his case.
Philip: I have received another notice for rent increase; do you know about this? What are you going to do about it?
Raymond: This is mum's decision. I am simply carrying out of the instructions she gave me. You are not being singled out. The rent increases are across all units.
Julie then interceded on Phillip's behalf and said words, which I cannot now recall, but suggested a reprieve in rent. I replied, "These are mum's instructions, she was very clear. Mum is still alive and I have to respect her wishes but I need reasons to go against her wishes" Phillip did not comment further.
Even if I accept the defendant's version he said to the plaintiff in 2011 about the rent increase, "This is mum's decision. I am simply carrying out the instructions she gave me". In my view, that was not to tell the complete truth to the plaintiff.
But I accept Raymond's explanation for this conduct towards Phillip. He felt that he had an overwhelming moral obligation to carry out his mother's wishes not to disclose her business affairs to Phillip. The relationship between Yu Mey and Raymond was one of close trust. He was the son favoured with the administration of family assets through the family trust. He felt for good family reasons that he must keep all information about the family business within the confidence that his mother had bestowed on him and away from both Julie and Phillip. But, however high-minded his motivation might have been, he made a conscious decision to not tell the complete truth about the affairs of their father's estate to Phillip. The statement, "I am simply carrying out the instructions she gave me", hides the fact that, as a result of the distribution from his father's estate he, not his mother, was the one who actually had legal control over increasing the rents.
The conversation in May 2011 was the beginning of the plaintiff's suspicions about his father's will. Things did not add up to him. How it could be that his mother, Yu Mey, who was incapacitated, somehow, could be authorising these rent increases? This caused him, ultimately, to go to a solicitor to make enquiries. Those enquiries resulted in him finding out for the first time, that his father had given his estate to Wing On, a company Raymond controlled. That in turn led to the commencement of this litigation.
Assets of the Estate and Wing On
The sole beneficiary of the deceased's estate was Wing On. Wing On had been established in 1994 with Kim, Yu Mey and Raymond as beneficiaries.
The Wiley Park property had originally been purchased by Kim for $24,500. It was the only asset of his estate at Kim's death and was transferred to Win On in April 1999. As at the date of death of the deceased the Wiley Park property was estimated for probate purposes to have a value of $600,000. The liabilities of the deceased's estate (in 1998 dollars) were $34,394 plus some legal fees. Once the Wiley Park property was distributed there were no assets left in Kim's estate. As the Wiley Park property has been distributed, subject to the application of Family Provisions Act ss 27 and 28, it is capable of being designated as notional estate under Family Provision Act s 24.
The estate's estimated costs of these proceedings, including a two-day hearing are $112,000. The plaintiffs estimated costs are $107,000 on the indemnity basis and $100,000 on the ordinary basis.
The Wing On trust's balance sheet shows it holds substantial assets. As at 30 June 2013 it has total assets of $2,513,025.32 including buildings, recorded at cost of $2,180,465. Successive trust balance sheets over preceding years show that these buildings have not been re-valued since 2004. As well as the Wiley Park units, the trust owns other properties which make up this total buildings-asset figure: units in Auburn and Penshurst (acquired from Yu Mey in 1998), and a house in Chatswood (purchased in 2002). The trust also acquired units in Raymond's medical practice in August 1998.
The trust has total liabilities of $1,578,869, which include an unsecured loan from Raymond of $1,173,706.88 and a secured loan of $405,162.62 from the NAB. The trust has had the same approximate net equity of $934,155 since 2010. Raymond did not adduce evidence of current market values of these trust assets. But there has been considerable appreciation in the current value of the Wiley Park property (to $1.44 million to $1.5 million), since the deceased's death in 1998 (then $600,000). Some appreciation in the other properties held by the trust is likely over the period.
The trust made a net profit from trading activities in 2012 of $424,022.40, and in 2013 of $336,628.47.
Phillip's financial position
Phillip is now 65 years of age. His financial situation is not complex. He has never owned a house in Australia. He lived in Sydney during his father's life with his father's goodwill on a rent-free basis, and for many years after his father's death on the same basis. He owned a home in England between 1979 and 1992. But on his divorce from Dolores all their joint assets went to her. His second wife, Roxanne, does not work outside the home, and she and he support their eight year old son.
Phillip has ceased to pay rent for the Wiley Park unit and he is at risk of eviction. Pending the result of these proceedings there seems to be a stand-off about his paying rent or being evicted from the unit.
Phillip has health problems. He has inflammatory arthritis, with a disc bulge at C3-4, C4-5, C5-6 and some nerve encroachment at L2-3 and L5-S1. He says, and I accept, that he cannot sit down now for long periods without pain. He retired recently from Fyna Constructions, where he had worked as an accountant.
Phillip's present modest financial position has been described in his most recent affidavit. He has total assets of $22,000 and total liabilities of $10,000. Those assets consist principally of superannuation of $11,677, personal household items and effects of $4,500, motor vehicles of $10,500 and a bank account with a balance of a little over $1,000. His wife, Roxanne, has total assets of less than $2,000 and liabilities of just under $11,000.
Phillip's monthly expenditure, excluding credit card payments on items such as food, groceries, household supplies, telephone and internet, rent, storage, fuel, transport, electricity, healthcare, home insurance, medical, school fees and tuition, and entertainment, totals $5,280 per month. This is well in excess of both his income from the aged pension of $304 per week, and Roxanne's income from the Family Tax Benefit. Given his modest asset base this imbalance is unsustainable over the longer term.
Phillip says that were time to be extended for this Family Provision Act claim and were he to receive a legacy from his father's estate, he would attempt to purchase a home unit and use some of the funds to assist him in meeting his day-to-day expenses.
There was a challenge to his credit in relation to his expenditure and his earning capacity, and that of his wife. Mr Ellison SC's challenge on some of these matters was effective. For example, I am prepared to accept, having seen her cross-examined; that Roxanne is someone who probably could return to work and earn an income. And Phillip has some earning capacity. But it was not established that Phillip had more assets than he claimed.
The plaintiff demonstrated resourcefulness early in life. Using those qualities he is someone who now could turn to productive and profitable account his talents as an accountant, as Mr Ellison SC pointed out. He may well be able to work in that capacity in private practice for a few years. He has, in my view, some earning capacity. Although, it must be said, starting a business at the age of 65, when one has been employed in a profession would not be easy.
Mr Ellison SC mounted other challenges to aspects of Phillip's family expenditure. These were put as credit issues. But there was also the suggestion the plaintiff had more assets hidden elsewhere and which had not been disclosed. The general thrust of this evidence did not damage the plaintiff's case, for the following reasons. Five subjects took prominence: one was about the plaintiff's ABN; one was about an AMEX card; yet another was about some Telstra shares; a fourth was about a property at Terrigal; and the last was about some life insurance policies.
The plaintiff was said to have given misleading evidence about his ABN number. Yes, when first cross-examined about this subject, the plaintiff gave evidence that he had not had an ABN number for ten years. It turned out on closer examination that he had applied for one within the last ten years and had held an ABN until as recently as five years ago. But it seems to be accepted that he has not had one for five years. I do not regard the off the cuff statement the plaintiff first made about his ABN as particularly damaging to his credit. But the plaintiff could acquire an ABN and has some earning capacity.
The attack on Phillip's credit about his AMEX card did not do any damage. All it showed is that, as a parent, he has quarantined the payment of some charges for his son's internet use onto that AMEX card.
Phillip has some Telstra shares. But they are so small in number that they tend to corroborate the general modesty of Phillip's financial position.
Phillip had expressed in evidence a view that he would like to have a house at Terrigal, because his son lives there. This was said to show a cavalier sense of entitlement on Phillip 's part. It more shows a capacity to dream rather than a sense of entitlement.
Finally, there is the issue of the life policies. Phillip was cross-examined at some length about his credit cards and bank statements, which show his making payments on a number of insurance policies. These policies were produced under notices to produce but were not tendered. I accept the plaintiff's account that these are only life insurance policies and policies that respond to his total and permanent disablement. None of them are much use to him now, and will not advance him in his current situation in life.
Extension of time and notional estate considerations
In this part of these reasons I will deal together with: (1) the question of whether the plaintiff has shown "sufficient cause" for not making his application within the prescribed time justifying extension of time for the application under Family Provision Act s 16(3)(b); and (2) the question of whether "special circumstances" justify the designation of any property as notional estate under Family Provision Act s 28(5)(d) after time has been extended under s16. These issues will be dealt with together because they involve overlapping considerations.
Phillip's application for an extension of time for his application is governed by Family Provision Act s 16, which provides:
16 Time for application for provision
(1) In this section, "prescribed period" in respect of an application in relation to a deceased person, means:
(a) where the Court has, in an order made under section 17, specified a period in relation to the application-that period, or
(b) in any other case-the period of 18 months after the death of the deceased person.
(2) An order under section 7 shall not be made unless the application for the order is made within the prescribed period in respect of that application or within such further period as the Court may, having regard to all the circumstances of the case but subject to subsection (3), by order, allow.
(3) The Court may not make an order under subsection (2) allowing an application in relation to a deceased person to be made after the end of the prescribed period unless:
(a) the parties to the proceedings concerned have consented to the application being made after the end of that period, or
(b) sufficient cause is shown for the application not having been made within that period.
(4) The Court may make an order under subsection (2) with respect to an application in relation to a deceased person whether or not:
(a) the prescribed period in respect of the application in relation to the deceased person has expired,
(b) the application for the order under that subsection was made before that period expired, or
(c) the application in relation to the deceased person has been made.
(5) Notwithstanding subsections (2) and (3), where administration has been granted in respect of a person whose date of death is so uncertain as to make it impossible to apply subsections (2) and (3) with respect to an application in relation to the person, the Court may, whether or not the application in relation to the person has been made, by order, allow the application in relation to the person to be made within such period as it thinks reasonable and such an order has effect according to its tenor.
And in relation to Phillip's application to designate property as notional estate after an out of time application, Family Provision Act s 28 provides:
28 Designation of property as notional estate-powers and restrictions
(1) On an application in relation to a deceased person for an order for provision in favour of an eligible person, the Court shall not make an order designating property as notional estate of the deceased person unless the deceased person left no estate or unless it is satisfied:
(a) that the estate of the deceased person is insufficient to allow the making of provision that, in its opinion, should be made, or
(b) that, by reason of the existence of other eligible persons or the existence of special circumstances, provision should not be made wholly out of the estate.
(2) On an application in relation to a deceased person, the Court shall not make an order designating as notional estate of a deceased person property in excess of that necessary to allow the making of provision that, in its opinion, should be made.
(3) The exercise by the Court of its power under section 23, 24 or 25 to make an order designating as notional estate of a deceased person property held by, or on trust for, a person does not limit or restrict any further exercise by the Court of that power.
(4) Where, as a result of a prescribed transaction or a distribution made from the estate of a deceased person, property becomes held by a person as a trustee only, the Court shall not make an order under section 23, 24 or 25 by reason of the prescribed transaction or distribution in respect of any property (other than the trust property) held by, or on trust for, the person.
(5) On an application in relation to a deceased person, being an application:
(a) made pursuant to an order under section 16 allowing the application to be made, or
(b) for an order under section 8 for additional provision,
the Court shall not make an order designating property as notional estate of the deceased person by reason of a prescribed transaction or a distribution unless it is satisfied:
(c) that:
(i) the property was the subject of the prescribed transaction or distribution,
(ii) the person by whom it is held holds the property as a result of the prescribed transaction or distribution as trustee only, and
(iii) the property is not vested in interest in any beneficiary under the trust, or
(d) that there are other special circumstances (including, in the case of an application made as referred to in paragraph (a), the incapacity, during any relevant period, of the person by or on whose behalf the application is made) which justify the making of an order so designating the property.
Principles governing application of Family Provision Act s 16 were helpfully summarised by Young J in Bearns v Bearns-Hayes (unreported 6 May 1997):
The English cases up to that point were considered and summarised by Megarry VC in Re Salmon [1981] Ch 167 at 175- 176 where his Lordship sets out the six guidelines to English Courts dealing with this sort of problem. In essence the six principles are, (1) that the Court has an unfettered discretion; (2) that the onus is always on the plaintiff; (3) it is most relevant to look at how promptly the application was made after the claimant became aware of her rights and what were the background circumstances; (4) it is usually relevant as to whether there were any negotiations before the formal summons was filed; (5) it is relevant to consider whether the estate has been distributed; and, (6) would a refusal to extend the time leave the claimant without redress against anybody, such as her legal advisers?
I considered these six principles in Massie v Laundy 7 February 1986. I there commented that the "Salmon six", if I can call them that, were stricter than the local requirements and were probably a result of the history of the legislation in England. I said in that case:
"What then does 'sufficient cause' mean within s16(3) of the Family Provision Act? ... one looks at the same factors as were dealt with in cases under the old Act, which include the following:
(a) Is the reason for making a late claim sufficient?
(b) Would the beneficiaries under the will be unacceptably prejudiced if the time were extended?
(c) Has there been any unconscionable conduct on either side, which would enter into the equation?"
Another helpful summary of the applicable principles is set out in Ward J's (as her Honour then was) decision in John v John [2010] NSWSC 937 at [37] - [51]. Her Honour set out the following factors as relevant: (1) the lateness of the claim; (2) the explanations for the delay; (3) whether the beneficiaries under the will would be unacceptably prejudiced if time were extended; (4) whether there has been any unconscionable conduct on either side; (5) the strength of the claim.
Change of heart. Mr Ellison argued on the extension of time application that this case is similar to Zirkler v McKinnon [2002] NSWSC 285, where Macready AsJ made the following comments about the importance of assessing whether the applicant has merely had a change of heart and decided to bring an application out of time. Zirklerv McKinnon indicates (at [31]) that the Court's consideration of a "change of heart" can be important in deciding whether or not to grant an extension of time for application under Family Provision Act s 16(3):
In this case one of the reasons was the change of heart on the part of the tutor of the plaintiffs. It particularly applies to the period from December 1998 to September 1999. There are a number of cases where a change of heart has not been held to be a sufficient reason. In Re Lauer (1984) VR 180 it was held that the mere fact that the applicant's financial position had deteriorated cannot of itself be a ground for granting an extension of time under the Act nor could the mere fact that the value of the estate had been inflated beyond what might have been expected at the date of the testator's death be such a ground.
But I do not accept that this is a change of heart case like Zirkler v McKinnon. In my view, the objective circumstances are, as my earlier findings show, that the plaintiff did make enquiries about his father's estate and the defendant deflected him from further pursuing that enquiry. He did not simply change his mind.
Change of plaintiff's case after Kim's death. The defendant has pointed the Court to Durham v Durham (2011) 80 NSWLR 335; [2011] NSWCA 62 which deals with the onus of proof and the relevant considerations upon an application for extension. The general principle which the Court of Appeal highlighted was that a Court should be reluctant to grant an extension of time which may have the effect of improving the applicant's position in comparison with that which he or she would have presented, had the application proceeded in a timely way. In my view, that cannot be said of this case. The plaintiff originally had a strong case. In Durham v Durham (2011) 80 NSWLR 335; [2011] NSWCA 62 Tobias JA stated at [39]:
Finally, a particular weakness in the appellant's submission that he would have been in a stronger position had he made his application within the prescribed period is that although there was evidence as to the financial position of his siblings at the time of the hearing, there was no such evidence as at the time of the testator's death or within 18 months thereof. The onus lay upon the appellant to demonstrate lack of prejudice due to his delay in instituting proceedings and that required him to elicit evidence of the comparative financial position and needs of those competing for the testator's property at the relevant time. Each of his siblings filed affidavit evidence but none were cross-examined to ascertain their financial position or other needs at the time of the expiry of the prescribed period. In these circumstances, it is impossible for the appellant to assert that he had a stronger case in 1989 than in 2009.
This is not a case where it could be said that the plaintiff's prospects of success have improved over time. On the evidence advanced, in my view, the plaintiff would have had a strong case had he brought it within time. The strength of his case then was grounded differently than the strength of the case presented now. But it was nevertheless a strongly persuasive case at that time. I mention the following prominent factors in this consideration.
In 1998 the plaintiff's application was in competition with the family trust Raymond controlled. Yu Mey was then in her own home, which was not part of the estate. She was a discretionary beneficiary under the family trust and could benefit from that source. Even then in 1998, the family trust had substantial real estate the benefit of which she could enjoy at Raymond's discretion. But the evidence is clear Raymond had close regard to her interests and welfare. It seems unlikely she would have been in competition with any application Phillip made in 1998. He had recently remarried and was, as his evidence shows, then in need of capital. He had been back in Australia only about five years and would have needed assets to set up a new household or to start his own business. He had by then been dependant upon his father for accommodation for five years. He had just been through a divorce; giving whatever assets he had to his first wife. This in my view is not a case where it can be said that the plaintiff's case is better now than it would have been in 1998 - 1999.
Prejudice to Raymond. Raymond gave the following evidence in relation to the prejudice which an extension of time for Phillip's application would cause him:
I take advice from my accountant as to the cashflow requirements and need of the Family Trust, and the amount of money, which might be held in the Family Trust bank account from time to time. I have loaned to the Family Trust money on advice from the accountant, to assist it to fund its requirements, and as part of an overall financial position for the Family Trust and myself. If I did not loan significant monies to the Family Trust, then it would not have been able to operate to acquire assets or hold assets to the extend that it has, and it s financial position and performance would be less than has occurred. Any substantial variations made to the loan balance are calculated and advices by my accountant from time to time. I would not have loaned money to the Family Trust and I would not have placed property interests, my medical practice ownership or my income in the Family Trust if I knew the Plaintiff might be able to bring a claim and obtain assets from the Family Trust.
The defendant was asked some questions about this evidence. He was using the trust as something of a shelter from the liabilities associated with his medical practice. He says that, had he been aware that notional estate claims were going to be made upon distributions from the deceased's estate he would not have placed property interests in that trust.
But the remarkable thing about this evidence, which was not further elaborated upon by the defendant, is that there is a substantial net equity in the trust after netting off all mortgage liabilities. Raymond has not said that any particular transaction of a specific amount depleting or encumbering trust assets would not have occurred if Phillip's claim had been made earlier. And although he says that he would not have put his medical practice into the trust had he been aware of Phillip's claim, the non-practice real estate in the trust well covers Phillip's claim. And as the order for provision sought in this case ($350,000 to $450,000) makes clear, the trust has not so burdened itself with liabilities that it would have to restructure its affairs to satisfy an order for provision of this size. It has a net equity of $934,000. Trust assets have not been revalued for many years. The Wiley Park units, which are part of the trust, are now worth between $1.44 and $1.5 million. The earlier analysis of the trust suggests that this statement of the trust's net equity may be conservative.
Other factors. Mr Ellison SC points out that the plaintiff's claim is brought about 12 years out of time. But Raymond misleading Phillip about the disposition of the deceased's estate, by diverting him from obtaining information which was likely to lead to Phillip initiating a claim, explains why nothing happened for most of that 12-year period. And the plaintiff's claim for provision was and is a strong one.
I am satisfied in the circumstances that Phillip has demonstrated sufficient cause within Family Provision Act s 16(3) for not having brought his application within time.
I agree with the observations of White J in Campbell v Chabert-McKay [2010] NSWSC 859 that I can consider matters relevant to the decisions to extend time under Family Provision Act 1982, s 16 also under Family Provision Act 1982, s 28(5)(d). The former are not excluded when the Court considers the latter. That is how I approach the matter. Although, I may say, even if s 16 considerations were excluded when applying s 28, in my view, there would not be much difference in this case. I am satisfied that there are "other special circumstances" under Family Provision Act 1982 s 28(5)(d) justifying the Court making an order designating the Wiley Park units as notional estate of the deceased.
Having also taken into account the factors in Family Provision Act s 27, I am satisfied that an order should be made designating the Wiley Park units as notional estate.
Principles applicable to Family Provision Act applications
The remaining questions are: whether an order for provision should be made out of the deceased estate; and if so, in what amount should such an order be made.
Family Provision Act ss 7 and 9 provide:
7 Provision out of estate or notional estate of deceased person
Subject to section 9, on an application in relation to a deceased person in respect of whom administration has been granted, being an application made by or on behalf of a person in whose favour an order for provision out of the estate or notional estate of the deceased person has not previously been made, if the Court is satisfied that the person is an eligible person, it may order that such provision be made out of the estate or notional estate, or both, of the deceased person as, in the opinion of the Court, ought, having regard to the circumstances at the time the order is made, to be made for the maintenance, education or advancement in life of the eligible person.
9 Provisions affecting Court's powers under secs 7 and 8
(1) Where an application is made for an order under section 7 by an eligible person who is such a person by reason only of paragraph (c) or (d) of the definition of "eligible person" in section 6 (1), the Court shall first determine whether, in its opinion, having regard to all the circumstances of the case (whether past or present), there are factors which warrant the making of the application and shall refuse to proceed with the determination of the application and to make the order unless it is satisfied that there are those factors.
(2) The Court shall not make an order under section 7 or 8 in favour of an eligible person out of the estate or notional estate of a deceased person unless it is satisfied that:
(a) the provision (if any) made in favour of the eligible person by the deceased person either during the person's lifetime or out of the person's estate, or
(b) in the case of an order under section 8:
(i) if no provision was made in favour of the eligible person by the deceased person, the provision made in favour of the eligible person under this Act out of the estate or notional estate, or both, of the deceased person, or
(ii) the provision made in favour of the eligible person by the deceased person either during the person's lifetime or out of the person's estate as well as the provision made in favour of the eligible person under this Act out of the estate or notional estate, or both, of the deceased person,
is, at the time the Court is determining whether or not to make such an order, inadequate for the proper maintenance, education and advancement in life of the eligible person.
(3) In determining what provision (if any) ought to be made in favour of an eligible person out of the estate or notional estate of a deceased person, the Court may take into consideration:
(a) any contribution made by the eligible person, whether of a financial nature or not and whether by way of providing services of any kind or in any other manner, being a contribution directly or indirectly to:
(i) the acquisition, conservation or improvement of property of the deceased person, or
(ii) the welfare of the deceased person, including a contribution as a homemaker,
(b) the character and conduct of the eligible person before and after the death of the deceased person,
(c) circumstances existing before and after the death of the deceased person, and
(d) any other matter which it considers relevant in the circumstances.
(4) Nothing in subsection (3) (a) limits the generality of subsection (3) (b), (c) and (d) and the Court may consider a contribution of the same nature as that referred to in subsection (3) (a) or of a different nature in so far as it considers it relevant under subsection (3) (b), (c) or (d).
(5) Subject to the foregoing provisions of this section, the Court may make an interim order for provision under section 7 in favour of an eligible person before it has fully considered the application for that provision where it is of the opinion that no less provision than that proposed to be made by the interim order would be made in favour of the eligible person after full consideration of the application.
(6) Where, on an application made in relation to a deceased person, the Court has made an interim order as referred to in subsection (5), it shall, in due course, proceed to make a final determination of the application, which determination shall confirm, revoke or alter the order so made.
The legal principles that apply to the jurisdiction the Court is called on to exercise are not controversial. The High Court has laid them down in Singer v Berghouse (No 2) (1994) 181 CLR 201 and in Vigolo v Bostin [2005] HCA 11; (2005) 221 CLR 191. These principles have been succinctly stated in Brereton J's helpful judgment in Taylor v Farrugia [2009] NSWSC 801 at [9], [10] and [11], as follows:
[9] Applications such as these under the (NSW) Family Provision Act 1982 for provision out of the estate of a deceased person, have been described by the High Court of Australia in Singer v Berghouse (No 2) (1994) 181 CLR 201 as involving a two stage approach. The first requires the determination of the jurisdictional fact whether the applicant has been left without adequate provision for his or her proper maintenance, education and advancement in life, and the second - which arises only if the first is resolved affirmatively - involves the discretionary assessment of what provision ought to be made out of the estate for the applicant. However, as the High Court explained, similar considerations inform both stages of the process:
The determination of the first stage in the two stage process calls for an assessment of whether the provision (if any) made was inadequate for what, in all the circumstances, was the proper level of maintenance, et cetera, appropriate for the applicant having regard, amongst other things, to the applicant's financial position, the size and nature of the deceased's estate, the totality of the relationship between the applicant and the deceased, and the relationship between the deceased and other persons who have legitimate claims upon his or her bounty. The determination of the second stage, should it arise, involves similar considerations. Indeed, in the first stage of the process, the Court may need to arrive at an assessment of what is the proper level of maintenance and what is adequate provision, in which event, if it becomes necessary to embark upon the second stage of the process, that assessment will largely determine the order which should be made in favour of the applicant.
[10] Because the considerations relevant to both stages overlap in this way, consideration of an application under the Family Provision Act does not always divide neatly into the two questions, as Callinan J and Heydon JJ pointed out in Vigolo v Bostin [2005] HCA 11 ; (2005) 221 CLR 191, 192. Nonetheless, in an application under the Act, the court must consider, first, whether the plaintiff is an eligible person; secondly, whether the plaintiff has been left with inadequate provision for his or her proper maintenance, education and advancement in life; and thirdly, if so, what (if any) provision or further provision ought to be made out of the estate for those purposes. The relevant principles and considerations were summarised by McClelland CJ in Eq, in Re Fulop (dec'd) (1987) 8 NSWLR 679 at 679:
In making these determinations, the following principles apply: First, the Court should not interfere with the dispositions in the will except to the extent necessary to make adequate provision for the plaintiff's proper maintenance, education and advancement in life. Secondly, the expression "proper" in this context connotes a standard appropriate to all the circumstances in the case, and thirdly, the Court may take into consideration any matter (whether existing or occurring before or after the death of the deceased which it considers relevant in the circumstances, including (a) the nature and quality of the relationship between the plaintiff and the deceased, (b) the character and conduct of the plaintiff, (c) the nature and extent of the plaintiff's present and reasonably anticipated future needs, (d) the size and nature of the estate of the deceased, (e) the nature and relative strength of the claims to testamentary recognition by the deceased of those taking benefits under the will of the deceased, and (f) any contribution, financial or otherwise, direct or indirect, by the plaintiff to the property or welfare of the deceased.
[11] It is important also to bear in mind the principle articulated by Young J, as his Honour then was, in Stewart v McDougall (New South Wales Supreme Court, Young J, 19 November 1987, unreported) , in explaining that the court's role is limited to making adequate provision for an eligible person's proper maintenance and advancement:
It is important to state what the Family Provisions Act permits a Court to do and what it does not permit a Court to do. The Act recognises that Australians have freedom to leave their property by their will as they wish with one exception. The exception is that a person must fulfil any moral duty to make proper and adequate provision for those whom the community would expect such provision to be made before they can leave money as they wish. Thus, in these cases, one does not ask if the will is fair, one does not ask if the testatrix divided her property equal, one does not as a judge ask how would I have made a will had I been the testatrix. What must be asked is did the testatrix fail in her moral duty to those who have a claim on her. Even if the Court comes to the view that the question should be answered in the affirmative, the Court still does not remake the will, but only alters it to the extent adequate provision is made for the eligible person in respect of whom the testatrix failed in her moral duty.
Before the Succession Act, the Court dealt, as those authorities say, with a two stage process. I now address those two stages.
Application of the principles
Was adequate provision made under the will for the plaintiff's proper maintenance, education and advancement in life? The plaintiff received nothing under the will of the deceased. His financial needs for capital at this stage of his life were clear. They more resembled the needs of a younger person because of Phillip's remarriage in 1999. He needs some domestic financial security for his young family, even if he is to try and make use of his residual earning capacity at this late stage of his life. Thus, in my view, on the first stage of the test adequate provision was not made for Phillip.
And I assume from the lack of evidence on the subject that Raymond has no special claim other than his relationship with Kim and has adequate resources on which to live: Anderson v Teboneras [1990] VR 527 at 535, per Ormiston J.
What is proper provision? I now look at the matter as at the time of hearing. The plaintiff is still, despite his various medical conditions, to be described as an able-bodied adult son of the deceased, in accordance with the language used in the cases. But he is 65 and has reached retirement age, has a dependant wife and dependant son and is on the age pension of $304 a week, but his assets are very modest.
I adopt with respect the observations of White J in Mayfield v Lloyd-Williams [2004] NSWSC 419 at [109] - [110], where his Honour said that there is no rule to the effect that proper provision for an adult and presently able-bodied child does not extend to providing him or her with a house or the money to buy one.
In this particular case, there is a strong resonance between the plaintiff's case and the deceased's conduct towards the plaintiff, which assists the Court to mould an appropriate order. The deceased provided rent-free domestic accommodation for the plaintiff throughout the plaintiff's life after his return to Australia. The deceased insisted on that arrangement continuing throughout the deceased's lifetime. It was one thing the deceased recognised by this conduct that the plaintiff needed.
The plaintiff has adduced up to date oral evidence about the nature of the order for provision. He seeks the purchase of a property to live in. In light of the plaintiff's financial circumstances and what I have found about the relationship between the plaintiff and the deceased, such an order for provision is appropriate. The plaintiff has identified two suitable properties for him to purchase in the Punchbowl and Roselands area: one, is an apartment in Punchbowl which can be purchased for $450,000; another is in Roselands which can be purchased for $379,000.
I have given some thought to what the appropriate provision should be in this situation. This is not a case where in addition to the purchase of a property that a substantial sum to cover contingencies should be given. Phillip's household has income earning potential. And owning his own house will eliminate Phillip's rental outgoings which are 20% of his monthly expenditure.
I have reached the view that a proper figure to award by way of legacy out of notional estate to enable Phillip to purchase a property for him and his family is somewhere between those two figures. I have decided to make an order for provision. After designating the Wiley Park units as notional estate, I would make an order for provision by way of a legacy in the sum of $400,000 to the plaintiff.
I direct the parties to bring in short minutes of order to give effect to these reasons.
Decision last updated: 03 September 2013
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