Popovski v Kenjar
[2011] NSWSC 731
•22 July 2011
Supreme Court
New South Wales
Medium Neutral Citation: Popovski v Kenjar; Hafizovic & Anor v Kenjar [2011] NSWSC 731 Hearing dates: 30 June 2011 Decision date: 22 July 2011 Jurisdiction: Equity Division Before: Hallen AsJ Decision: Order that the time for the making of Ms Hafizovic's application be extended to the date of the filing of her Summons.
Order that provision of 25 per cent of the value of the net proceeds of sale of the Liverpool unit after the payment of costs of these proceedings be provided for Ms Hafizovic out of the estate of the deceased. That provision should be borne out of residue, with the result that the Defendant will receive 30 per cent and the Plaintiff, Senada, by the Official Trustee in Bankruptcy, will receive 45 per cent of the net proceeds of sale of the Liverpool unit after the payment of costs of the proceedings.
Order that the claim of Ms Popovic be dismissed, with costs.
Order that the amended Summons, so far as it relates to the Plaintiff, Ms Bjelic, be dismissed, with costs.
Order that Ms Hafizovic's costs, calculated on the ordinary basis, and the Defendant's costs, calculated on the indemnity basis, be paid out of the estate of the deceased (i.e. out of the proceeds of sale of the Liverpool unit).
Catchwords: Two different proceedings, three claims for a family provision order made - Proceedings heard together, with evidence in one being evidence in the other - First application by child of deceased by her first marriage - Second application made by two children of deceased by different subsequent marriages - Defendant in each proceedings is executor named in the Will, a son, of the deceased by another marriage, and is brother and half blood of each of the Plaintiffs - Deceased left a Will, Probate of which was granted, to the Defendant Legislation Cited: Bankruptcy Act 1966 (Cth)
Family Provision Act 1982
Inheritance (Family and Dependants Provision) Act 1972 (WA)
NSW Succession Act 2006
Probate & Administration Act 1898
Succession Amendment (Family Provision) Act 2008
Testators Family Maintenance and Guardianship of Infants Act 1916Cases Cited: 7Steel Building Solutions Pty Ltd v Wright [2011] FCA 328
Bishop (dec'd), Re [1952] VLR 543
Bondelmonte v Blanckensee [1989] WAR 305
Bosch v Perpetual Trustee Co Ltd [1938] AC 463
Burton v Moss [2010] NSWSC 163
Campbell v Chabert-McKay [2010] NSWSC 859
Cetojevic v Cetojevic [2006] NSWSC 431
Collins v McGain [2003] NSWCA 190
Cooper v Dungan (1976) 50 ALJR 539
Daemar v Industrial Commission of New South Wales (No 2) (1990) 22 NSWLR 178; (1990) 99 ALR 789
De Winter v Johnstone (NSWCA, 23 August 1995, unreported),
Devereaux-Warnes v Hall [No 3] [2007] WASCA 235; (2007) 35 WAR 127
Diver v Neal [2009] NSWCA 54
Durham v Durham [2010] NSWSC 389
Foley v Ellis [2008] NSWCA 288
Ford v Simes [2009] NSWCA 351
Goodman v Windeyer (1980) 144 CLR 490
Gorton v Parks (1989) 17 NSWLR 1
Gosden v Dixon (1992) 107 ALR 329
Hampson v Hampson [2010] NSWCA 359
Hawkins v Prestage (1989) 1 WAR 37
Hunter v Hunter (1987) 8 NSWLR 573
John v John [2010] NSWSC 937
Kalmar v Kalmar; Estate of Kalmar [2006] NSWSC 437
Kleinig v Neal (No 2) [1981] 2 NSWLR 532
Lathwell, Gwenythe Muriel, as Executrix of the Estate of Gilbert Thorley Lathwell (Dec) v Lathwell [2008] WASCA 256
McCosker v McCosker (1957) 97 CLR 566
McGrath v Eves [2005] NSWSC 1006
McKenzie v Topp [2004] VSC 90
McLeod v Johns [1981] 1 NSWLR 347
McMaster, Re; Ex parte McMaster [1991] FCA 598; (1991) 33 FCR 70
Mayfield v Lloyd-Williams [2004] NSWSC 419
Metherell v Public Trustee in its Capacity as Executor of the Estate of the late Patricia Helen Peek [2010] WASC 205
Metherell v Public Trustee in its Capacity as Executor of the Estate of the late Patricia Helen Peek [No 2] [2011] WASC 48
Moore-McQuillan v Scott [2006] FCA 63
Palmer v Dolman; Dolman v Palmer [2005] NSWCA 361
Official Receiver in Bankruptcy v Schultz [1990] HCA 45; (1990) 170 CLR 306
Pontifical Society for the Propagation of the Faith v Scales [1962] HCA 19; (1961) 107 CLR 9
Puckridge, Deceased, In the Estate of (1978) 20 SASR 72
Samsley v Barnes [1990] NSWCA 161; (1991) DFC 95-100
Singer v Berghouse (No 2) [1994] HCA 40; (1994) 181 CLR 201
Stern v Sekers; Sekers v Sekers [2010] NSWSC 59
Stoker (Trustee), in the matter of Starr (Bankrupt) v Starr [2011] FCA 746
Taylor v Farrugia [2009] NSWSC 801
Union-Fidelity Trustee Co of Australia Ltd v Montgomery [1976] 31 NSWLR 134
Vigolo v Bostin [2005] HCA 11; (2005) 221 CLR 191
Walker v Walker (NSWSC, 17 May 1996, unreported)Category: Principal judgment Parties: Alma Popovski
(Plaintiff in proceedings 2010/132208)
Eddi Kenjar (executor of Estate of the late Asima Konic)
(Defendant in proceedings 2010/132208)
Aida Hafizovic (aka Sharon Hafizovic)
(first Plaintiff in proceedings 2010/324653)
Senada Bjelic
(second Plaintiff in proceedings 2010/324653)
Edward Kenjar
(Defendant in proceedings 2010/324653)Representation: Ms E Glover
(Plaintiff in proceedings 2010/132208)
Mr J Smith
(Defendant in proceedings 2010/132208)
Mr L Ellison SC
(Plaintiffs in proceedings 2010/324653)
Mr J Smith
(Defendant in proceedings 2010/324653)
Marsdens Law Group
(Plaintiff in proceedings 2010/132208)
Ronald S. Czinner & Co
(Defendant in proceedings 2010/132208)
Mosca & Scott
(Plaintiffs in proceedings 2010/324653)
Ronald S. Czinner & Co
(Defendant in proceedings 2010/324653)
File Number(s): 2010/132208; 2010/324653
Judgment
The Applications
HIS HONOUR: These reasons relate to two different proceedings, in which three claims for family provision orders under Chapter 3 of the NSW Succession Act 2006 ("the Act") are made. The proceedings were heard together, with the evidence in one being the evidence in the other.
The Act applies in respect of the estate of a person who died on, or after, 1 March 2009. The Act replaces the Family Provision Act 1982 ("the former Act"), which was repealed, effective from 1 March 2009. A family provision order is an order made by the court, under Chapter 3, in relation to the estate, or notional estate, of a deceased person, to provide from that estate for the maintenance, education, or advancement in life, of an eligible person.
The deceased, whose estate is the subject of the claims, is Asima Konic ("the deceased").
The first application was made in a Summons (2010/132208) filed on 27 May 2010 by Alma Popovski, a child of the deceased by her first marriage. The second application was made in a Summons (2010/324653) filed on 30 September 2010 by Aida Hafizovic and Senada Bjelic, each of whom is a child of the deceased from different subsequent marriages.
At the hearing, the Plaintiffs, Aida Hafizovic and Senada Bjelic, sought, and were granted, leave to file an amended Summons to include an order extending time for the making of the application to the date of the filing of the Summons. Whilst leave to file the amended Summons in Court was not opposed, the Defendant's counsel made it clear that the Defendant did oppose the making of that order.
The Defendant, in each of the proceedings, is Edward Kenjar (referred to as "Eddie" in the Will), the executor named in the Will, and a son, of the deceased by another marriage. He is the brother of the half blood of each of the Plaintiffs.
Without any undue familiarity, or disrespect intended, I shall refer to each of the Plaintiffs and the Defendant by her, or his, given name, in these reasons.
Background Facts
The following facts are uncontroversial.
The deceased died on 2 August 2009. She was then aged 68 years, having been born in February 1941.
The deceased was married to Ibrahim Hafizovic, in Sydney, in April 1971. A Decree Nisi of dissolution of their marriage was granted by the Family Court at Sydney and became absolute on 24 June 1977.
The deceased was next married to Josef Kenjar, in Sydney, in August 1977. A Decree Nisi of dissolution of their marriage was granted by the Family Court at Parramatta and became absolute on 26 July 1986.
In December 1986, the deceased married Enes Konic. A Decree Nisi of dissolution of their marriage was granted by the Family Court and became absolute in June 1991.
At the date of her death, the deceased was neither married, nor living in a domestic relationship. She was then living on her own.
Eddie was born in January 1968 and is currently aged 43 years.
The deceased left a Will that she made on 26 September 1994, Probate of which was granted, on 13 February 2010, by the Supreme Court of New South Wales, to Eddie.
The deceased's Will provided:
"3. I GIVE DEVISE AND BEQUEATH the sum of $1,000.00 ONLY to my daughter Alma Popovski. Alma has little contact with me and I leave the sum of $1,000.00 ONLY to her in recognition of her as my daughter and say that the majority of my estate should go to my youngest child Senada for her education and advancement in life. Eddie should have a greater share in my estate than Alma due to his continued support and comfort to my daughter Senada and myself.
4. I GIVE DEVISE AND BEQUEATH the sum of $1,000.00 ONLY to my daughter Aida Hodegiss. Aida has little contact with me and I leave the sum of $1,000.00 ONLY to her in recognition of her as my daughter and say that the majority of my estate should go to my youngest child Senada for her education and advancement in life. Eddie should have a greater share in my estate than Aida due to his continued support and comfort to my daughter Senada and myself.
5. I GIVE DEVISE AND BEQUEATH the residue of my estate both real and personal of whatsoever nature and wheresoever situate unto my said Executor and Trustee TO HOLD the sum upon the following trusts:
(a) to pay my just debts, funeral and testamentary expenses;
(b) to hold the rest and residue of my estate (hereinafter called "my residuary estate") 40% to my son, Eddie Kenjar and 60% to my daughter, Senada Kenjar."
At the time that the deceased made her Will, only Senada, who was then aged 14 years, was living with the deceased.
In the Inventory of Property, a copy of which was placed inside, and attached to, the Probate document, the deceased's estate, at the date of death, was disclosed as having an estimated, or known, gross value of about $207,000. No liabilities were disclosed. The estate was disclosed as consisting of a home unit at Liverpool ($160,000), moneys in bank ($6,000), a Note Holding in Australian Capital Reserve Limited ($6,000), furniture and whitegoods ($4,500), a car ($8,900), cash ($11,000), a tapestry ($6,000) and jewellery ($5,000).
The funeral expenses were $5,000. Aida paid these but has been reimbursed out of the estate. There has been a distribution of $1,000 to Eddie and $2,000 to Senada. A sum of $1,100 has been used "to pay certain household bills". Two tapestries are held by Eddie, by Senada and by Aida. The value of the 6 tapestries has not been disclosed. Aida retains a few personal possessions of the deceased.
Some legal fees have been paid to the Defendant's solicitors ($6,190) and $900).
Eddie remains living in the Liverpool unit. He does not pay any rent or occupation fee to the estate, but has paid some of the water rates, council rates and strata levies. The parties agree that the rent that could have been received from renting the Liverpool property was between $260 and $300 per week. That amount of rent is estimated as being applicable between about September 2009 and the present time, or more correctly, until the unit is sold.
At the hearing, the parties agreed that the only actual estate is the Liverpool unit with an agreed value of $210,000. The Defendant's solicitor has estimated that solicitor's costs and disbursements for sale of the Liverpool unit will be $2,000 plus GST, that the selling agent will charge commission calculated at 2.2 per cent of the sale price, and about $6,000 for advertising. Accordingly, the net proceeds of sale of the Liverpool unit are likely to be no more than $200,000.
There was a dispute as to the other chattels in the deceased's estate. However, at the hearing it was agreed that none of these are, currently, of significant value. I was requested to ignore the value of each for the purposes of determining the gross value of the estate.
The parties conducted the case upon the basis that the gross value of the deceased's estate was $200,000 and that the only asset of the actual estate was the net proceeds of sale of the Liverpool unit (which it is clear will have to be sold).
(A car that formed part of the estate passed to the Plaintiff, Senada. She stated that she sold it for about $3,500. I was requested to note that it was a benefit she had already received, with the amount paid to her, from the estate.)
The legacy of $1,000 payable to Aida has been paid. However, the legacy to Alma has not been paid. There was no reason advanced why this legacy had not been paid. In my view, subject to the result of the proceedings and any adverse costs order, she should receive the legacy, together with interest calculated at the rate prescribed by s 84A(3) of the Probate & Administration Act 1898, from the date 12 months after the date of the deceased's death, until it is paid.
In calculating the value of the estate, finally available for distribution, the costs of the present proceedings should be considered, since each of the Plaintiffs, if successful, normally, will be entitled to an order that her costs be paid out of the estate of the deceased, whilst the Defendant, irrespective of the outcome of the proceedings, normally, will be entitled to an order that his costs be paid out of the estate.
The costs and disbursements, including counsels' fees, calculated on the ordinary basis (inclusive of GST and upon the basis of a one day hearing), of the Plaintiff, Alma, were estimated to be $22,000.
The costs, calculated on the ordinary basis (inclusive of GST and upon the basis of a one day hearing), of the Plaintiffs, Aida and Senada, who have commenced their claims together, were estimated to be $21,500. The fees of senior counsel, who appeared in this matter, were said to be "capped" at $15,000. The costs and disbursements of their proceedings, calculated on the ordinary basis (inclusive of GST and upon the basis of a one day hearing), thus, are estimated to be about $36,500.
There is no reason for senior counsel to have been briefed in this matter. The estate is tiny and the issues raised are not particularly difficult. Whatever the result of the proceedings, the fees of senior counsel should not be allowed on an assessment of the Plaintiffs' costs and disbursements. Any counsel's fees of the Plaintiffs, or either of them, ordered by the court to be paid out of the estate, should be assessed upon the basis of a reasonable fee payable to junior counsel.
The costs and disbursements, calculated on the ordinary basis (inclusive of GST and upon the basis of a one day hearing), of the Defendant were estimated to be between about $32,000 and $35,400. However, there was some dispute whether this estimate included other costs that should not form part of the costs of the proceedings.
It can be seen that if the costs and disbursements of all parties are ordered by the court to be paid out of the estate, the value of the estate available for distribution will be no more than about $110,000. It could be slightly more but even if it is, the value remains small.
The persons described as eligible persons, within the meaning of the Act, are each of the Plaintiffs, and the Defendant. Each of them has filed at least one affidavit in the proceedings. The Defendant has made no claim under the Act but submits that his share of the estate should not bear the burden of provision, if any, made for each of the Plaintiffs.
There is no dispute that Senada was made the subject of a sequestration order on 18 July 2007 after presenting a Debtor's Petition. The Official Trustee was appointed the trustee of the bankrupt estate.
Senada was automatically discharged from bankruptcy on 19 July 2010.
The Notification of Bankruptcy issued by the Official Trustee referred to a Statement of Affairs filed on 18 July 2007. However, that document does not form part of Senada's evidence on the application. The Notification also reveals that no dividend was likely; that she was not required to make any contribution; and that further reports were unlikely to be made by the Official Trustee.
Senada gave oral evidence that the balance of a debt of $176,000 that she was unable to pay, and which led to her bankruptcy, was to Westpac Banking Corporation and that there were no other creditors.
The legal representatives of the Official Trustee, as late as the day before the hearing, informed Eddie's solicitors, that:
"... we advise our client will not be participating in either of the proceedings and shall continue to rely upon your client as the executor to uphold the terms of the will. In making this decision our client has taken into account:
2.1 The relatively small quantum of the deceased estate;
2.2 The impact legal fees of the current parties to the litigation are likely to have on the funds that will ultimately be available for distribution once the proceedings are finalised.
2.3 Our client wishes to maximise the return to the bankrupt estate and is of the view the most cost effective way of achieving that outcome is to refrain from becoming a party to the proceedings."
Alma and Senada first gave instructions to their solicitor on or about 3 August 2009. Senada, apparently, believed that the deceased had made another will after the will probate of which was granted.
The solicitor instructed by Alma and Senada made numerous enquiries to ascertain whether there was such a will, but these enquiries did not reveal any other will. (An earlier will was, however, located.)
The solicitor who was instructed provided no explanation why the Summons was not filed within the prescribed period even if the enquiries for another will were continuing. He did not say that he did not know of the time limit within which a claim under the Act should be made, or that he did not advise each of Aida and/or Senada of her rights to make a claim under the Act, or the time limit within which the proceedings ought to have been commenced.
The solicitor had, however, filed a Probate caveat.
The solicitor, who swore an affidavit that was read in the proceedings, was not cross-examined.
The Statutory Scheme - The Act
I shall discuss the statutory scheme that is relevant to the facts of the present case. Although I have set out some of what I state hereunder in other cases, it is useful to re-state it, principally for the benefit of the litigants in this case.
The wording of the Act is similar to the wording of the former Act. However, it is necessary to remember the warning of Kirby P in Samsley v Barnes [1990] NSWCA 161; (1991) DFC 95-100, at 76,304:
"Purposive construction of the Act
There is always a danger where a reformed Act borrows heavily upon ideas which previously existed in the common law or in an earlier statute, that lawyers will approach the construction of the Act affected by the previous law. Gamer's Motor Centre (Newcastle) Pty Ltd v Natwest Wholesale Australia Pty Ltd (1985) 2 NSWLR 475, 478. That danger is but an illustration, in the specialised activity of law, of a universal phenomenon of psychology long established in relation to human perception generally. We tend to perceive what we expect. We expect that with which we are familiar.
There is a particular danger in the case of the Family Provision Act in construing its terms by reference to the law which developed around the Testators' Family Maintenance and Guardianship of Infants Act 1916 . That Act was passed in earlier times to govern the entitlements of a testator's family, as narrowly defined. The definition by s 3(1) of that Act confined applications to those made by "the widow, husband or children of such persons". There was no mention in it of former spouses. Doubtless this was because, for the early part of this century, divorce was relatively infrequent and then based upon concepts of matrimonial fault which would make interference in the testamentary disposition of the deceased unlikely. When enacted, the statute was a radical interference in the power of testamentary disposition. That was a significant power over private property, the disturbance of which was regarded as highly exceptional."
Whilst the relevant amendments made by the Act are not as significant to those made by the former Act, it remains necessary to bear his Honour's warning in mind in construing the statutory framework. In doing so, a construction that promotes the purpose, or object, of the Act is to be preferred to a construction that would not promote that purpose or object. In my view, the principles applied by the courts to the former Act continue to apply, except to the extent that the Act otherwise requires.
The former Act was repealed by s 5 of the Succession Amendment (Family Provision) Act 2008. A new Chapter 3 was added to the Act, which dealt with the topic of family provision from deceased estates. The long title of the Act describes that new Chapter as one to ensure that adequate provision is made for the members of the family of a deceased person, and certain other persons, from the estate of the deceased person. Importantly, this should not be taken to mean that the Act confers upon those persons, a statutory entitlement to receive a certain portion of a deceased person's estate. Nor does it impose any limitation on the deceased person's power of disposition by his, or her, will. It is only if the statutory conditions are satisfied, that the court is empowered, under the Act, to alter a deceased person's disposition to produce a result that is consistent with the purpose of the Act. Even then, the court's power to do so is discretionary.
An application for a family provision order may be made in respect of the estate of a deceased person. In s 3 of the Act, "deceased person" is defined as including "any person in respect of whose estate administration has been granted". Section 55 of the Act sets out the circumstances in which "administration is granted in respect of the estate of a deceased person". In this case, administration has been granted.
The key provision is s 59 of the Act. The court must be satisfied, first, that the applicant is an eligible person within the meaning of s 57(1). There are six categories of persons by, or on whose behalf, an application may be made. One category is "a child of the deceased" (s 57(1)(c)).
Then, if eligibility is established, the court must determine whether adequate provision for the proper maintenance, education and advancement in life of the applicant has not been made by the will of the deceased, or by the operation of the intestacy rules in relation to the estate of the deceased, or both (s 59(1)(c)). It is only if the court is satisfied of the inadequacy of provision, that consideration is given to whether to make a family provision order (s 59(2)). It may take into consideration, then, the matters referred to in s 60(2) of the Act. In this way, the court carries out a two-stage process.
Other than by reference to the provision made in the Will of the deceased, or by the operation of the intestacy rules in relation to the estate of the deceased, or both, s 59(1)(c) leaves undefined the norm by which the court must determine whether the provision, if any, is inadequate for the applicant's proper maintenance, education and advancement in life. The question would appear to be answered by an evaluation that takes the court to the provision actually made in the deceased's Will, or on intestacy, or both, on the one hand, and to the requirement for maintenance, education and advancement in life of the applicant on the other. No criteria are prescribed in the Act as to the circumstances that do, or do not, constitute inadequate provision for the proper maintenance, education and advancement in life of the applicant.
It was said in the Court of Appeal (per Basten JA) in Foley v Ellis [2008] NSWCA 288 at [3], that the state of satisfaction "depends upon a multi-faceted evaluative judgment".
Importantly, there no longer appears to be any sanction to consider, in s 59(1)(c) of the Act, the provision made by the deceased during his, or her, lifetime for the applicant (see, s 9(2) of the former Act).
Under both s 59(1)(c) and s 59(2) of the Act, the time at which the court gives its consideration to the question is the time when the court is considering the application.
"Provision" is not defined by the Act, but it was noted in Diver v Neal [2009] NSWCA 54 at [34], that the term "covers the many forms of support and assistance which one individual can give to another. That support and assistance will vary over the course of the person's lifetime".
Neither are the words 'maintenance' and 'advancement in life' defined. However, in Vigolo v Bostin [2005] HCA 11; (2005) 221 CLR 191, Callinan and Heydon JJ, at [115], said, of the words 'maintenance', 'support' and 'advancement':
"'Maintenance' may imply a continuity of a pre-existing state of affairs, or provision over and above a mere sufficiency of means upon which to live. 'Support' similarly may imply provision beyond bare need. The use of the two terms serves to amplify the powers conferred upon the court. And, furthermore, provision to secure or promote 'advancement' would ordinarily be provision beyond the necessities of life. It is not difficult to conceive of a case in which it appears that sufficient provision for support and maintenance has been made, but that in the circumstances, say, of a promise or an expectation reasonably held, further provision would be proper to enable a potential beneficiary to improve his or her prospects in life, or to undertake further education."
In In the Estate of Puckridge, Deceased (1978) 20 SASR 72, at 77, King CJ said:
"The words 'advancement in life' have a wide meaning and application and there is nothing to confine the operation of the provision to an earlier period of life in the members of the family: Blore v Lang (1960) 104 CLR 124, per Dixon CJ at 128."
In Mayfield v Lloyd-Williams [2004] NSWSC 419, White J noted:
"In the context of the Act the expression "advancement in life" is not confined to an advancement of an applicant in his or her younger years. It is phrase of wide import. ( McCosker v McCosker (1957) 97 CLR 566 at 575) The phrase "advancement in life" has expanded the concept used in the Victorian legislation which was considered in Re Buckland permitting provision to be made for the "maintenance and support" of an eligible applicant. However Adam J emphasised that in a large estate a more extravagant allowance for contingencies could be made than would be permissible in a small estate and still fall within the conception of maintenance and support."
The word 'adequate' connotes something different from the word 'proper'. 'Adequate' is concerned with the quantum, whereas 'proper' prescribes the standard, of the maintenance education and advancement in life: Devereaux-Warnes v Hall [No 3] [2007] WASCA 235; (2007) 35 WAR 127 at [72] and at [77] per Buss JA.
Each of the words were considered by Lord Romer in delivering the advice of the Privy Council in Bosch v Perpetual Trustee Co Ltd [1938] AC 463, at 476:
"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."
Dixon CJ and Williams J, in McCosker v McCosker (1957) 97 CLR 566 at 571, after citing Bosch v Perpetual Trustee Co Ltd , went on to say, of the word 'proper', that:
"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 or advancement if life must be considered in the light of 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."
In Goodman v Windeyer (1980) 144 CLR 490, Gibbs J said at 502:
"[T]he words 'adequate' and 'proper' are always relative. There are no fixed standards, and the court is left to form opinions upon the basis of its own general knowledge and experience of current social conditions and standards."
In Vigolo v Bostin at [114], Callinan and Heydon JJ said:
"[T]he use of the word "proper"...implies something beyond mere dollars and cents. Its use, it seems to us, invites consideration of all the relevant surrounding circumstances and would entitle a court to have regard to a promise of a kind which was made here...The use of the word "proper" means that attention may be given, in deciding whether adequate provision has been made, to such matters as what use to be called the "station in life" of the parties and the expectations to which that has given rise, in other words, reciprocal claims and duties based upon how the parties lived and might reasonably expect to have lived in the future."
The first stage of the process provided for by s 59(1)(c) has been described as "the jurisdictional question": Singer v Berghouse (No 2) [1994] HCA 40; (1994) 181 CLR 201 at 208-209. At this stage, the court will consider whether it can make an order for provision for the maintenance, education and advancement in life of a particular applicant.
Whether the applicant has a 'need' is a relevant factor at the first stage of the enquiry. It is an element in determining whether 'adequate' provision has been made for the 'proper' maintenance education and advancement in life of the applicant in all of the circumstances: Collins v McGain [2003] NSWCA 190 [42] (Tobias JA, with whom Beazley and Hodgson JJA agreed).
Tobias JA said:
"42. There can be no question that, at least as part of the first stage of the process, the question of whether the eligible person has a relevant need of maintenance etc is a proper enquiry. This is so as the proper level of maintenance etc appropriate for an eligible person in all the circumstances clearly calls for a consideration of his or her needs. However, the question of needs must not be too narrowly focused. It must, in my view, take into account, depending upon the particular circumstances of the case, present and future needs including the need to guard against unforeseen contingencies.
...
47. As I have observed, the issue of need is not confined to whether or not an eligible person has, at the date of hearing, a then need for financial assistance with respect to his maintenance etc. It is a broader concept. This is so because the question of needs must be addressed in the context of the statutory requirement of what is "proper maintenance etc" of the eligible person. It is the cause of that context that, in the present case, the "proper maintenance etc" of the appellant required consideration to guard against the contingency to which I have referred."
In Devereaux-Warnes v Hall [No 3] at [81]-[85], Buss JA said, in respect of the first stage of the process:
"The term 'need' has been used to refer to the claimant's inability to satisfy his or her financial requirements from his or her own resources. See Singer per Gaudron J at 227.
'Need' has also been used in the context of a value judgment or conclusion, namely, that the claimant is 'in need' of maintenance, etc, because inadequate provision has been made for his or her proper maintenance, etc. See Gorton v Parks (1989) 17 NSWLR 1 per Bryson J at 10-11.
The determination of whether the disposition of the deceased's estate was not such as to make adequate provision for the proper maintenance, etc, of the claimant will always, as a practical matter, involve an evaluation of the provision, if any, made for the claimant on the one hand, and the claimant's 'needs' that cannot be met from his or her own resources on the other. See Hunter per Kirby P at 575.
Although the existence or absence of 'needs' which the claimant cannot meet from his or her own resources will always be highly relevant and, often, decisive, the statutory formulation, and therefore the issue in every case, is whether the disposition of the deceased's estate was not such as to make adequate provision for his or her proper maintenance, etc. See Singer per Gaudron J at 227. Compare Gorton per Bryson J at 6-11; Collicoat v McMillan [1999] 3 VR 803 per Ormiston J at 816 [38], 820 [47]."
In the event that the court is satisfied that the power to make an order is enlivened (i.e. it is satisfied that the applicant is an eligible person, and, where necessary, that factors warranting have been satisfied, and that adequate provision for the proper maintenance, education or advancement in life of the person has not been made), then, the court determines whether it should make an order, and if so, the nature of any such order, having regard to the facts known to the court at the time the order is made.
The second stage of the process arises under s 59(2) and s 60(1)(b). Mason CJ, Deane and McHugh JJ, in Singer v Berghouse , at 211, affirmed that the decision made at the second stage involves an exercise of discretion in the accepted sense. The fact that the court has a discretion means that it may refuse to make an order even though the jurisdictional question has been answered in the applicant's favour.
Section 60 of the Act, at least in part, is new. It provides:
"(1) The court may have regard to the matters set out in subsection (2) for the purpose of determining:
(a) whether the person in whose favour the order is sought to be made (the "applicant") is an eligible person, and
(b) whether to make a family provision order and the nature of any such order.
(2) The following matters may be considered by the court:
(a) any family or other relationship between the applicant and the deceased person, including the nature and duration of the relationship,
(b) the nature and extent of any obligations or responsibilities owed by the deceased person to the applicant, to any other person in respect of whom an application has been made for a family provision order or to any beneficiary of the deceased person's estate,
(c) the nature and extent of the deceased person's estate (including any property that is, or could be, designated as notional estate of the deceased person) and of any liabilities or charges to which the estate is subject, as in existence when the application is being considered,
(d) the financial resources (including earning capacity) and financial needs, both present and future, of the applicant, of any other person in respect of whom an application has been made for a family provision order or of any beneficiary of the deceased person's estate,
(e) if the applicant is cohabiting with another person-the financial circumstances of the other person,
(f) any physical, intellectual or mental disability of the applicant, any other person in respect of whom an application has been made for a family provision order or any beneficiary of the deceased person's estate that is in existence when the application is being considered or that may reasonably be anticipated,
(g) the age of the applicant when the application is being considered,
(h) any contribution (whether financial or otherwise) by the applicant to the acquisition, conservation and improvement of the estate of the deceased person or to the welfare of the deceased person or the deceased person's family, whether made before or after the deceased person's death, for which adequate consideration (not including any pension or other benefit) was not received, by the applicant,
(i) any provision made for the applicant by the deceased person, either during the deceased person's lifetime or made from the deceased person's estate,
(j) any evidence of the testamentary intentions of the deceased person, including evidence of statements made by the deceased person,
(k) whether the applicant was being maintained, either wholly or partly, by the deceased person before the deceased person's death and, if the court considers it relevant, the extent to which and the basis on which the deceased person did so,
(l) whether any other person is liable to support the applicant,
(m) the character and conduct of the applicant before and after the date of the death of the deceased person,
(n) the conduct of any other person before and after the date of the death of the deceased person,
(o) any relevant Aboriginal or Torres Strait Islander customary law,
(p) any other matter the court considers relevant, including matters in existence at the time of the deceased person's death or at the time the application is being considered."
It can be seen that s 60(2) enumerates 15 specific matters which the court may take into account, together with "any other matter the court considers relevant", for the purposes of determining eligibility, whether to make a family provision order , and, if so, the nature of any such order. There is no mandatory command to take into account any of the matters enumerated. None of the matters differentiate in their application between classes of eligible person or types of relationship. Similarly, there is no distinction based on gender. There is no hierarchy of matters identified.
Considering each of the relevant matters does not prescribe a particular result, and whilst there is likely to be a substantial overlap in the matters that the court may take into account when determining the answers to what is posed in s 60(1), those matters are not identical. For example, when considering eligibility under sub-s (1)(a), many of the matters in sub-s (2) will be largely, if not wholly, irrelevant.
Furthermore, consideration of some of the matters in s 60(2) not only permits, but requires, a comparison to be made between the respective positions of the applicant and of other eligible persons as well as of the beneficiaries named in the deceased's will, whilst others do not. Importantly, also, many of the matters in sub-s (2), of themselves, are incapable of providing an answer to the questions posed in s 60(1).
Leaving aside the question of eligibility, the matters referred to in s 60(2) may be considered on "the discretionary question", namely whether to make an order and the nature of that order. Importantly, under s 60(2), attention is drawn to matters that may have existed at the deceased's death, or subsequently.
This does not mean, however, that some of the matters referred to in s 60(2) will be irrelevant to the jurisdictional question to be determined at the first stage. I am comforted in reaching this conclusion by the following comments made in Singer v Berghouse (at 209-210):
"... 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 etc 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 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."
And by the comments of Callinan and Heydon JJ in Vigolo v Bostin (at 230-231):
"We do not therefore think that the questions which the court has to answer in assessing a claim under the Act necessarily always divide neatly into two. Adequacy of the provision that has been made is not to be decided in a vacuum, or by looking simply to the question whether the applicant has enough upon which to survive or live comfortably. Adequacy or otherwise will depend upon all of the relevant circumstances, which include any promise which the testator made to the applicant, the circumstances in which it was made, and, as here, changes in the arrangements between the parties after it was made. These matters however will never be conclusive. The age, capacities, means, and competing claims, of all the potential beneficiaries must be taken into account and weighed with all of the other relevant factors."
Section 61 of the Act permits the court to disregard the interests of any other person by, or in respect of whom, an application for a family provision order may be made (other than a beneficiary of the deceased person's estate), but who has not made an application. However, the court may disregard any such interests only if:
(a) notice of the application, and of the court's power to disregard the interests, is served on the person concerned, in the manner and form prescribed by the regulations or rules of court; or
(b) the court determines that service of any such notice is unnecessary, unreasonable or impracticable in the circumstances of the case.
Section 65(1) of the Act requires the family provision order to specify:
(a) the person or persons for whom provision is to be made;
(b) the amount and nature of the provision; and
(c) the manner in which the provision is to be provided and the part or parts of the estate out of which it is to be provided; and
(d) any conditions, restrictions or limitations imposed by the court.
The order for provision out of the estate of a deceased person may require the provision to be made in a variety of ways, including a lump sum, periodic sum, or "in any other manner which the court thinks fit" (s 65(2) of the Act). If the provision is made by payment of an amount of money, the order may specify whether interest is payable on the whole, or any part, of the amount payable for the period, and, if so, the period during which interest is payable and the rate of interest (s 65(3) of the Act).
The order may be made, relevantly, in this case, in relation to the estate of the deceased. As the deceased died leaving a Will, her estate includes all property that would, on a grant of probate of the Will, vest in the executor of the Will (s 63 of the Act).
Any family provision order under the Act will take effect, unless the court otherwise orders, as if the provision was made in a codicil to the will of the deceased, or in the case of intestacy, as in a will of the deceased (s 72(1) of the Act). This provision is important in this case, and I shall return to it later.
Section 66 of the Act sets out the consequential and ancillary orders that may be made.
The Court, also, may, at the time of distribution of an estate that is insufficient to give effect to a family provision order, make such orders concerning the abatement, or adjustment, of distributions from the estate, as between the person in whose favour the family provision order is made and the other beneficiaries of the estate as it considers to be just and equitable among the persons affected (s 72(2) of the Act).
Extension of Time
Section 58(2) of the Act provides that an application for a family provision order must be made not later than 12 months after the date of the death of the deceased person, unless the Court otherwise orders on sufficient cause being shown.
The decision of the court to extend time is a discretionary decision. Other than "sufficient cause being shown", there are no statutory criteria that must be taken into account. There are no rigid rules in regard to the exercise of the discretion. Ultimately, where a broad discretion is conferred to grant leave to commence proceedings after the expiry of a prescribed period for commencing proceedings, the general question that has to be asked is what is fair and just or what does the justice of the case require?
Apart from the reason(s) for the lateness of the claim, the factors to which the court usually looks, include whether beneficiaries under the Will would be unacceptably prejudiced if time were to be extended; whether there has been any unconscionable conduct by either side; and, finally what is the strength of the claim made by the party seeking an extension of time: see, for example, John v John [2010] NSWSC 937 at [37]-[51] per Ward J; Campbell v Chabert-McKay [2010] NSWSC 859 at [45]-[47] per White J; Durham v Durham [2010] NSWSC 389 at [15] per Ball J; Taylor v Farrugia [2009] NSWSC 801 at [14] per Brereton J; Burton v Moss [2010] NSWSC 163 at [31] ff, per Macready As J, in which the relevant earlier cases are referred to.
Ultimately, what the applicant must establish is a sufficient explanation or excuse to justify the granting of an extension of time. The onus lies on her, or him, to establish sufficient cause and, thus, to provide the reason(s) for not commencing within time, to demonstrate a lack of prejudice due to the delay in instituting proceedings, and any unconscionable conduct by the defendant or other beneficiaries. It will be for the court to determine the strength of the applicant's claim.
Where a solicitor has been retained during the period prescribed by the Act, and the claim has not been commenced within the prescribed period, the question that arises is whether the solicitor's failure in not filing the claim provides sufficient reason to extend the time.
White J in Kalmar v Kalmar; Estate of Kalmar [2006] NSWSC 437 said:
"18 The defendant submitted, by reference to the judgment of Sir Robert Megarry VC in Re Salmon (deceased) [1981] Ch 167, that no extension should be given because the plaintiff has a remedy against her solicitor for not advising that the proceedings be brought in time.
19 Counsel for the defendant also referred to a passage in JK De Groot & BW Nickel, Family Provision in Australia, 2 ed at 167 where the authors, referring to the decision of Young J in Charles v Charles (unreported, 15 March 1998) BC880291 say:
"... in a more recent New South Wales case it was held that an extension ought not to be granted where an application comes to a solicitor before the limitation period expires and the solicitor does not file a summons within time."
20 Re Salmon is not authority for the proposition that an extension will not be given if an applicant would have a cause of action in negligence against his or her solicitor if the claim is barred by s 16.
21 In that case, Sir Robert Megarry took into account, as one of a number of relevant factors, whether a refusal to extend time would leave the applicant without redress against anybody (at 176). In that case, an extension of time was refused, but there were a number of other relevant factors, including that the estate had been largely distributed. In that case, there was no question of the executor having placed obstacles in the applicant's path.
22 Insofar as the question of alternative redress is relevant, it is not at all clear that the plaintiff would succeed in an action against her solicitor to recover as damages the amount of provision which she would otherwise be awarded had the claim been commenced in time. Without knowing the contents of the will, the solicitor would not know what action the plaintiff should take, even assuming the solicitor knew what estate had been left. It might be an action to enforce the trusts of the will. It might be an action to apply for an order under the Act. The testator might have given a persuasive explanation in his will for whatever bequests he made. It would have been open to the plaintiff to obtain an order for the production of the will under s 150 of the Wills Probate & Administration Act , but it does not lie in the defendant's mouth to complain that no step was taken under that section when he refused to provide a copy of the will to the deceased's widow.
23 In Charles v Charles , Young J, as his Honour then was, said (at BC8802891 at 7):
"I have said on more than one occasion that if an application under this Act comes to a solicitor before the limitation period expires and the solicitor does not lodge an application in time, then that in itself does not provide sufficient cause for the Court extending the time. It does not matter that the solicitor has been diverted from her task by counsel sitting on a brief for too long, or a Court losing a file, or her children all coming down with chicken pox at the same time, there must be something more than mere incompetence or inattention by a solicitor before time can be extended under this Act".
24 His Honour's statement that inattention or incompetence by a solicitor is an insufficient ground to warrant an order extending time does not mean that an application for extension must be refused if the limitation period expired through the fault of the solicitor. Contrary to the impression conveyed in the passage quoted from De Groot and Nickel, Family Provision in Australia, it was not held in Charles v Charles that the extension ought not to be granted in that case. In fact, an extension of time was granted as notice of intention to apply had been given before the limitation period expired and the beneficiaries were not prejudiced by an extension.
25 For these reasons I will make the order for the extension of time for commencing the proceedings as sought in para 2 of the summons."
In Cetojevic v Cetojevic [2006] NSWSC 431, Campbell J (as his Honour then was) explained that the prejudice to which the section looks is any prejudice occasioned by the delay in lodging the claim.
In De Winter v Johnstone (NSWCA, 23 August 1995, unreported), Sheller JA held that the concept of "unconscionable conduct" referred to above was "directed towards a deliberate holding off [in bringing proceedings] designed to lull the beneficiaries into a false sense of security". Cole JA, whilst not expressing a concluded view, said that it must be doubted whether a change of mind (because of some change in the financial and material circumstances of the Plaintiff which has occurred after the expiry of the limitation period) constitutes unconscionable conduct.
As to the strength of the claim, in De Winter v Johnstone , Powell JA considered that as an application for extension of time was invariably dealt with at the time of the application for substantive relief, no extension of time ought to be granted unless it was established that the applicant seeking an extension of time would, in the event of the extension being granted, be entitled to an order for substantive relief. By contrast, Sheller JA considered that it was only necessary for the applicant to show that the application was not bound to fail.
Other General Principles
In addition to the above matters, there are some general principles that are relevant to the facts of this case. Whilst most of these principles were given in the context of the previous legislation, they are equally apt in a claim such as this one.
Bryson J noted in Gorton v Parks (1989) 17 NSWLR 1, at 6, in relation to the former Act, that it is not appropriate, to endeavour to achieve a 'fair' disposition of the deceased's estate. It is not part of the court's role to achieve some kind of equity between the various claimants. The court's role is not to reward an applicant, or to distribute the deceased's estate according to notions of fairness or equity. Rather, the court's role is of a specific type and goes no further than the making of 'adequate' provision in all the circumstances for the 'proper' maintenance, education and advancement in life of an applicant.
In Cooper v Dungan (1976) 50 ALJR 539, Stephen J, at 542, reminded the court to be vigilant in guarding "against a natural tendency to reform the deceased's will according to what it regards as a proper total distribution of the estate rather than to restrict itself to its proper function of ensuring that adequate provision has been made for the proper maintenance and support of an applicant".
The court's discretion is not untrammelled, or to be exercised according to idiosyncratic notions of what is thought to be fair, or in such a way as to transgress, unnecessarily, upon the deceased's freedom of testation ( Pontifical Society for the Propagation of the Faith v Scales [1962] HCA 19; (1961) 107 CLR 9, per Dixon CJ at 19); McKenzie v Topp [2004] VSC 90 at [63]. Freedom of testamentary disposition remains a prominent feature of the Australian legal system.
Yet, in considering the question, the nature and content of what is adequate provision for the proper maintenance, education and advancement in life, is not fixed or static. Rather, it is a flexible concept, the measure of which should be adapted to conform with what is considered to be right and proper according to contemporary accepted community standards: The Pontifical Society for the Propagation of the Faith v Scales at 19; Walker v Walker ( NSWSC, 17 May 1996, unreported); Vigolo v Bostin at [11]; Stern v Sekers; Sekers v Sekers [2010] NSWSC 59.
In relation to a claim by an adult child, the following principles are, in my view, also relevant:
(a) The relationship between parent and child changes when the child leaves home. However, a child does not cease to be a natural recipient of parental ties, affection or support, as the bonds of childhood are relaxed.
(b) It is impossible to describe in terms of universal application, the moral obligation, or community expectation, of a parent in respect of an adult child. It can be said that, ordinarily, the community expects parents to raise, and educate, their children to the very best of their ability while they remain children; probably to assist them with a tertiary education, where that is feasible; where funds allow, to provide them with a start in life - such as a deposit on a home, although it might well take a different form. The community does not expect a parent, in ordinary circumstances, to provide an unencumbered house, or to set their children up in a position where they can acquire a house unencumbered, although in a particular case, where assets permit and the relationship between the parties is such as to justify it, there might be such an obligation: McGrath v Eves [2005] NSWSC 1006; Taylor v Farrugia .
(c) Generally, also, the community does not expect a parent to look after his, or her, child for the rest of the child's life and into retirement, especially when there is someone else, such a spouse, who has a prime obligation to do so. Plainly, if an adult child remains a dependent of a parent, the community usually expects the parent to make provision to fulfil that ongoing dependency after death. But where a child, even an adult child, falls on hard times and where there are assets available, then the community may expect a parent to provide a buffer against contingencies; and where a child has been unable to accumulate superannuation or make other provision for their retirement, something to assist in retirement where otherwise they would be left destitute: Taylor v Farrugia .
(d) There is no the need for an adult child to show some special need or some special claim: McCosker v McCosker ; Kleinig v Neal (No 2) [1981] 2 NSWLR 532; Bondelmonte v Blanckensee [1989] WAR 305; and Hawkins v Prestage (1989) 1 WAR 37 per Nicholson J at 45.
Estrangement of Applicant and the Deceased
On the topic of the relationship between an applicant and the deceased, Campbell JA (with whom Giles JA and Handley AJA agreed) recently noted, in Hampson v Hampson [2010] NSWCA 359:
"[80] The requirement to have regard to the totality of the relationship can in many cases be satisfied by considering the overall quality of the relationship assessed in an overall and fairly broad-brush way, not minutely. Consideration of the detail of the relationship is ordinarily not called for except where there is an unusual factor that bears on the quality of the relationship, such as hostility, estrangement, conduct on the part of the applicant that is hurtful to the deceased or of which the deceased seriously disapproves, or conduct on the part of the applicant that is significantly beneficial to the deceased and significantly detrimental to the applicant, such as when a daughter gives up her prospects of a career to care for an aging parent. Neither entitlement to an award, nor its quantum, accrues good deed by good deed. Indeed, it is a worrying feature of many Family Provision Act cases that the evidence goes into minutiae that are bitterly fought over, often at a cost that the parties cannot afford, and are ultimately of little or no help to the judge."
Because in this case there is a factor raised by the deceased in the Will that bears on the quality of the relationship, being that Alma and Aida were said to have had little contact with the deceased, it is necessary to set out some other general principles which should be remembered:
(a) The word 'estrangement' does not, in fact, describe only the conduct of either party. It is merely the condition that results from the attitudes, or conduct, of one, or both, of the parties. Whether the moral claim of the Plaintiff on the deceased is totally extinguished, or merely reduced, and the extent of any reduction, depends on all the circumstances of the case ( Gwenythe Muriel Lathwell, as Executrix of the Estate of Gilbert Thorley Lathwell (Dec) v Lathwell [2008] WASCA 256 at [33]).
(b) The nature of the estrangement and the underlying reason for it is relevant to an application under the Act: Palmer v Dolman; Dolman v Palmer [2005] NSWCA 361 at [88]-[94]; Foley v Ellis .
(c) There is no rule that irrespective of a Plaintiff's need, the size of the estate, and the existence or absence of other claims on the estate, the Plaintiff is not entitled to "ample" provision if he, or she, has been estranged from the deceased. The very general directions in the Act require close attention to the facts of individual cases.
(d) The court should accept that the deceased, in certain circumstances, is entitled to make no provision for a child, particularly in the case of one "who treats their parents callously, by withholding, without proper justification, their support and love from them in their declining years. Even more so where that callousness is compounded by hostility": Ford v Simes [2009] NSWCA 351 at [71] per Bergin CJ in Eq, with whom Tobias JA and Handley AJA agreed.
(e) As was recognised by the Court of Appeal of New South Wales in Hunter v Hunter (1987) 8 NSWLR 573 at 574 per Kirby P (with whom Hope and Priestley JJA agreed):
"If cases of this kind were determined by the yardstick of prudent and intelligent conduct on the part of family members, the appeal would have to be dismissed. If they were determined by the criterion of the admiration, affection and love of the testator for members of his family, it would also have to be dismissed. Such are not the criteria of the Act. The statute represents a limited disturbance of the right of testamentary disposition. It establishes a privilege for a small class of the immediate family of a testator (the spouse or children) to seek the exercise of a discretionary judgment by the Court for provision to be made out of the estate different from that provided by the testator's will."
In this case, I shall deal with the conduct of Alma and Aida later in these reasons and the relationship between each and the deceased that resulted.
Bankruptcy of Applicant
Section 5 of the Bankruptcy Act 1966 (Cth) defines "property" to mean "real or personal property of every description, whether situate in Australia or elsewhere, and includes any estate, interest or profit, whether present or future, vested or contingent, arising out of or incident to any such real or personal property".
Section 58 of the Bankruptcy Act relevantly provides that:
"Vesting of property upon bankruptcy--general rule
(1) Subject to this Act, where a debtor becomes a bankrupt:
(a) the property of the bankrupt, not being after-acquired property, vests forthwith in the Official Trustee or, if, at the time when the debtor becomes a bankrupt, a registered trustee becomes the trustee of the estate of the bankrupt by virtue of section 156A, in that registered trustee; and
(b) after-acquired property of the bankrupt vests, as soon as it is acquired by, or devolves on, the bankrupt, in the Official Trustee or, if a registered trustee is the trustee of the estate of the bankrupt, in that registered trustee.
...
(6) In this section, after-acquired property , in relation to a bankrupt, means property that is acquired by, or devolves on, the bankrupt on or after the date of the bankruptcy, being property that is divisible amongst the creditors of the bankrupt.
..."
Section 116 of the Bankruptcy Act relevantly provides:
"Property divisible among creditors [see Table B]
(1) Subject to this Act:
(a) all property that belonged to, or was vested in, a bankrupt at the commencement of the bankruptcy, or has been acquired or is acquired by him or her, or has devolved or devolves on him or her, after the commencement of the bankruptcy and before his or her discharge; and
(b) the capacity to exercise, and to take proceedings for exercising all such powers in, over or in respect of property as might have been exercised by the bankrupt for his or her own benefit at the commencement of the bankruptcy or at any time after the commencement of the bankruptcy and before his or her discharge; and
...
is property divisible amongst the creditors of the bankrupt. "
Section 149 of the Bankruptcy Act relevantly provides:
"Automatic discharge
(1) Subject to section 149A, a bankrupt is, by force of this subsection, discharged from bankruptcy in accordance with this section.
(2) If:
...
the bankrupt is discharged at the end of the period of 3 years from:
(c) the date on which the bankrupt filed his or her statement of affairs;
..."
Section 152 of the Bankruptcy Act provides:
"A discharged bankrupt must, even though discharged, give such assistance as the trustee reasonably requires in the realization and distribution of such of his or her property as is vested in the trustee."
Section 153 of the Bankruptcy Act relevantly provides:
"Effect of discharge
(1) Subject to this section, where a bankrupt is discharged from a bankruptcy, the discharge operates to release him or her from all debts (including secured debts) provable in the bankruptcy, whether or not, in the case of a secured debt, the secured creditor has surrendered his or her security for the benefit of creditors generally. "
Even though s 153(1) has the effect of releasing the bankrupt from liability for all provable debts, the rights of creditors with provable debts do not totally cease when the bankrupt obtains discharge from bankruptcy. Even then, such creditors retain the right conferred on them by the Bankruptcy Act to receive dividends from any property that has vested in the trustee in bankruptcy and which remains vested in him, her or it, at the time of the bankrupt's discharge from bankruptcy.
McLelland J (as his Honour then was), in Gosden v Dixon (1992) 107 ALR 329 at 331, put the matter this way:
"In general terms, where a person becomes a bankrupt, property that belonged to him at the commencement of the bankruptcy or is acquired by him before his discharge vests in the relevant trustee and constitutes property which is available to be realised and divided among the bankrupt's creditors. That, I think, is the effect of ss 58(1) and 116 of the Bankruptcy Act . A discharge from the bankruptcy releases the bankrupt from his debts and enables him to retain property which he subsequently acquires free of any claim by the trustee. That, I think, is the effect of ss 153 and 116 of the Act. However, a discharge does not cause to be revested in the bankrupt any property which has vested in the trustee prior to the discharge from bankruptcy. In regard to such property the trustee is still bound to collect and realise it, and to distribute the proceeds among the creditors, notwithstanding the discharge. These propositions are clearly established by several decisions including Pegler v Dale (1975) 6 ALR 62; [1975] 1 NSWLR 265; Re Balhorn; Ex parte Balhorn and Official Trustee (1981) 39 ALR 223; Daemer v Industrial Commission (1990) 22 NSWLR 178; 99 ALR 789. In the words of Lockhart J in Re Balhorn at 226:
The trustee of a bankrupt's estate is still bound to collect, realise and distribute such of the bankrupt's property as was vested before discharge in the trustee."
It is also useful to remember the purposes sought to be achieved by the Bankruptcy Act . Hill J in Re McMaster; Ex parte McMaster [1991] FCA 598; (1991) 33 FCR 70 at 72-73, summarised these purposes as follows:
"The modern bankruptcy law serves three purposes. The first is to ensure that the assets of the bankrupt are distributed rateably among creditors. The second, which is interrelated with the first, is to ensure that one creditor does not obtain an undue advantage over other creditors. The third is to bring about the discharge of the debtor from future liability for his existing debts, so that the debtor may start afresh ..."
See, more recently, Moore-McQuillan v Scott [2006] FCA 63 at [14], [2006] FCA 63; 149 FCR 486 at 490 per Mansfield J; 7Steel Building Solutions Pty Ltd v Wright [2011] FCA 328 at [7] per Flick J; Stoker (Trustee), in the matter of Starr (Bankrupt) v Starr [2011] FCA 746 at [15] per Jacobson J.
In this case, Senada was made bankrupt before, and remained a bankrupt at, the date of the deceased's death, with the result that the whole of her entitlement under the deceased's Will passed to her trustee in bankruptcy. This "vesting" was a transfer, by automatic operation of the Bankruptcy Act , to the trustee in bankruptcy of title to all the "property", as defined, of the bankrupt.
Her rights in distribution remained vested in her trustee in bankruptcy, notwithstanding her subsequent discharge after the death of the deceased. Her discharge did not transfer, or revest, the title to any part of the bankrupt estate in her, because that remained vested in her trustee in bankruptcy notwithstanding her discharge: Official Receiver in Bankruptcy v Schultz [1990] HCA 45; (1990) 170 CLR 306; Daemar v Industrial Commission of New South Wales (No 2 ) (1990) 22 NSWLR 178; (1990) 99 ALR 789, Gosden v Dixon and Metherell v Public Trustee in its Capacity as Executor of the Estate of the late Patricia Helen Peek [2010] WASC 205 at [4].
In this case, Mr Ellison SC, on behalf of Senada submits:
"5.15 Prima facie, Senada's 60% entitlement is adequate provision, so far as quantum is concerned. However, because she was bankrupt at her mother's date of death, she would receive none of that entitlement. There is more to "adequate and proper" provision than mere quantum.
5.16 In Taylor v Farrugia [2009] NSWSC 801, Brereton J said:
"62 Provision for eligible persons may be inadequate or improper in form as well as, or as distinct from, in quantum. Thus, provision which is dependant upon the exercise of a discretion by the trustee of a discretionary trust will, often, though not invariably, be inadequate or improper [ Re WTN (NSWSC, Unreported, 3/7/59, McLelland CJ in Eq; referred to in [1959] 33 ALJ 240; Gregory v Hudson (No 2) (New South Wales Supreme Court, Young J, 18 September 1997, unreported. Thus although it may not be so in every case, I think it can be said that provision which can only be accessed through protracted litigation against a recalcitrant executor in a remote part of the works at prohibitive expense is practically no provision at all, and is therefore not proper provision. At least that will be so where there are available more readily accessible assets."
5.17 What vests in the trustee (ITSA) is the right of the beneficiary to have the deceased's estate properly administered - see Commissioner of Stamp Duties (Qld) v Livingston (1964) 112 CLR 12, [1965] AC 695 and Official Trustee in Bankruptcy v Schultz (1990) 170 CLR 306.
5.18 Senada submits that by making provision for her, which provision goes immediately to her creditors, the deceased made provision which is not "proper and adequate" and therefore, Senada passes the "jurisdictional test".
5.19 Senada submits that she can receive provision by way of an entitlement under the Will of her mother which only vests after the bankruptcy is discharged and consequently, that provision can be retained by Senada.
5.20 In McLeod v Johns [1981] 1 NSWLR 347, Kearney J held an order pursuant to Section 3 of the TFM Act conferred a propriety benefit thereunder only from the time of the making of the order and that although the TFM legislation, Section 4(1), state that any provision operated as a codicil, the benefit of the Court order did not create the provision "after acquired property" so as to make it available for trustees.
5.21 In Metherill v Public Trustee as Executor of Patricia Peak [2010] WASC 205, Justice Heenan said:
"These authorities establish that in the present case, where property of a bankrupt remains vested in the trustee in bankruptcy, notwithstanding a later discharge from bankruptcy, it is possible for court proceedings, including proceedings under the Inheritance (Family and Dependants Provision) Act to continue and for orders to be made, the effect of which will modify the rights and distribution under the Will and in the bankruptcy."
In Metherell v Public Trustee in its Capacity as Executor of the Estate of the late Patricia Helen Peek , the four children of the deceased made a claim for provision out of the estate of their mother under s 7(1)(c) of the Inheritance (Family and Dependants Provision) Act 1972 (WA). The deceased had made a will in which she had left the whole of her estate to her former husband who had been made bankrupt, before the death of the deceased. He was, after the deceased's death, discharged from that bankruptcy under the three-year discharge regime.
At the hearing of the claims by the children, there was evidence that the trustee in bankruptcy made no claim on his own behalf, or on behalf of any of the creditors of the former husband's bankrupt estate to the bankrupt's rights in distribution under the will of the deceased. It appeared that the trustee in bankruptcy made no claims of any kind in relation to the rights of the former bankrupt to distribution under the deceased's will.
His Honour determined:
"6 The difficulty about pursuing that course is that the appearances are that the Official Trustee in Bankruptcy does not fully recognise this or, alternatively, does not desire to contest these proceedings, because it has been assumed that Mr Dennis Howard Peek does not wish to make any claim to distribution under his former wife's will. Unless his interest in distribution under Mrs Patricia Helen Peek's will were to be reassigned from the Official Trustee in Bankruptcy to Mr Dennis Howard Peek, any expressions of view or submissions by Mr Dennis Howard Peek do not count for consideration because, at present, he has no personal rights in distribution.
7 If, however, the entitlement in distribution were to be reassigned by the Official Trustee in Bankruptcy to Mr Dennis Howard Peek, Mr Dennis Howard Peek could then be substituted or added as defendant and his lack of opposition to the applications by the plaintiffs would allow proceedings to be pursued with better prospects of success, or even, possibly, by consent in favour of the plaintiffs.
8 It seems, therefore, that in view of the situation which has developed, this hearing should be adjourned to allow the plaintiffs to take steps to encourage Mr Dennis Howard Peek to seek a reassignment of his rights to distribution from his wife's estate to him by the Official Trustee in Bankruptcy and, if that occurs, for him to be joined as an additional defendant or in place of the second defendant in these proceedings. If and when that occurs, then the proceedings can be brought on for final determination. Should it be the case that Mr Dennis Howard Peek has no opposition to the relief claimed by the plaintiffs, then the proceedings could be dealt with by consent so much more quickly and cheaply.
9 If the Official Trustee in Bankruptcy is not prepared to assign the interests in distribution to the former bankrupt, then the proceedings will need to continue with the Official Trustee in Bankruptcy as the sole residuary beneficiary. In that case, more consideration may need to be given by the Official Trustee in Bankruptcy as to whether or not it wishes to be represented and oppose the application and, if so, for whose benefit. I make no observations as to whether or not it should take that course, but those are matters for resolution in what are some unfinished procedures in the bankruptcy."
His Honour adjourned the hearing so that the attitude of the trustee in bankruptcy could be determined.
It can be immediately observed that the facts in Metherell are distinguishable.
Mr Ellison SC did not refer to Metherell v Public Trustee in its Capacity as Executor of the Estate of the late Patricia Helen Peek [No 2] [2011] WASC 48, subsequently decided when the matter was brought back for final hearing before E M Heenan J, who then wrote:
"3 Previously, the Official Trustee in Bankruptcy evincing no interest in asserting his claim to the interest of Mr Peek in distribution under his former wife's will, and Mr Peek himself making no efforts to seek a transfer or revesting in himself of any part of the bankrupt estate, the plaintiffs asserted that the will of their late mother failed to make any or any adequate provision from her estate for their proper maintenance, support, education or advancement in life ( Inheritance (Family and Dependants Provision) Act 1972 (WA) s 6(1)) and being eligible applicants (s 7(1)(c)), sought orders making provision for them out of her estate. In the circumstances, and in the absence of any apparent opposition, they sought orders that the whole of their mother's estate, after the payment of all just debts, funeral and testamentary expenses, should be distributed by the Public Trustee equally between them.
4 For the reasons set out in my earlier decision ([2010] WASC 205), I decided that this should not be ordered unless and until the interests of the trustee in bankruptcy of Mr Dennis Howard Peek had been properly identified, considered and dealt with. In my earlier reasons I canvassed the possibilities that where property of the bankrupt remained vested in the trustee in bankruptcy, notwithstanding a later discharge from bankruptcy, it is possible for proceedings under this Act to continue and for orders to be made, the effect of which would modify the rights to distribution under the will and in the bankruptcy and diminish or remove any entitlement which the bankrupt trustee might have to the distribution. Another possibility was that the trustee in bankruptcy might be prepared to reassign the interests of the bankrupt to the bankrupt himself, either absolutely, partially or on conditions whereupon the former bankrupt, Mr Peek, could consent to such orders being made in the proceedings as might affect his entitlement under the will. A third possibility was that the trustee in bankruptcy may, without any reassignment of the interest of the former bankrupt, Mr Peek , be prepared to consent to an order or orders making provision for some or all of the estate to be distributed to the plaintiffs. In June 2010 the proceedings were, accordingly, adjourned for these possibilities to be investigated and, if thought advisable, pursued.
5 Now the application has been relisted for final hearing. There is new evidence in an affidavit from Mr Brett Richard Geoffrey Harrison sworn 7 February 2011 that on 1 September 2010 he was appointed as the trustee of the estate of the bankrupt, Dennis Howard Peek, in place of the Official Trustee. A copy of the certificate of his appointment in this respect was annexed. Mr Harrison has continued to be the trustee of the former bankrupt since 1 September 2010 and remains trustee of the estate of the former bankrupt, his appointment not having been revoked or terminated.
6 In these circumstances, the plaintiffs applied for an order that Mr Harrison should be joined and substituted as second defendant for the Official Trustee in Bankruptcy who was formerly the trustee in bankruptcy of Mr Dennis Howard Peek. All parties, including counsel for Mr Harrison, support that application and, accordingly, I made an order removing the Official Trustee in Bankruptcy as second defendant. I appointed Mr Harrison in his capacity as trustee in bankruptcy of the estate of the former bankrupt as second defendant in his place, and directed that service of that order and any further process should be dispensed with, Mr Harrison having received prior notice of all process in this matter and appearing by counsel and consenting to this course.
7 Next, it appeared from Mr Harrison's affidavit that he had reached agreement with the plaintiffs and with the Public Trustee that, save as for an amount of $10,000 which was accepted as being due payment for Mr Harrison's fees and legal costs associated with his role as trustee in bankruptcy of the deceased's former husband and in attending to these proceedings, no other claim would be made on behalf of the bankrupt estate to any of the entitlements in distribution of the estate of the bankrupt under the will of the deceased. In other words, apart from this claim for $10,000 for professional fees, costs and disbursements, the trustee of the estate of the former bankrupt made no claim to further distribution from the estate of the deceased, nor did he otherwise oppose the claims being made by the plaintiffs under the Inheritance Act .
8 In these circumstances, being satisfied that the disposition of the deceased's estate effected by her will was not such as to make adequate provision from her estate for the proper maintenance, support, education or advancement in life of any of the four plaintiffs, I was satisfied that orders should be made under the Act directing provision for each of them out of their late mother's estate."
I shall deal with the submissions made on behalf of Senada later in these reasons.
Credibility of the Witnesses
I am satisfied that there were not many relevant facts seriously in dispute between the parties.
Whilst there was some criticism made of Alma regarding disclosure of her financial and material circumstances, and in respect of Aida, for not disclosing the fact that her de facto partner of 7 years had a claim for workers compensation, it was not suggested that Senada, or Eddie, gave oral evidence that I should not accept.
I consider that there was some justification for the criticism of Alma. Her failure to annex a copy of all of the relevant pages of a document, only the first of which pages had been annexed, did cause me some disquiet. Similarly, I consider that I was not made aware of all of the income that she receives. Her answers in this regard were a little unconvincing. I was, however, satisfied that she was not in a domestic relationship with the co-owner of one of her properties, even though the property was held by them as joint tenants.
Although there was criticism, also, of Aida, I am satisfied that her omission was not intentional. It appears to have been assumed that it was not relevant. In any event, I am not sure that the disclosure of a claim, without details of its potential value (which appears to be unknown) would be of great assistance. Additionally, it was not her, but her de facto partner, who had suffered the shoulder injury, that gives rise to the claim for damages.
Her earlier omission concerning his income was corrected in a subsequent affidavit.
Additional Facts
I next set out the additional facts that I am satisfied are either not in dispute, or that have been established by the evidence. I do so by reference to s 60 of the Act and by a consideration of the matters relevant to all claims at the same time, as this will permit the application of the statutory criteria to be weighed comparatively in relation to the claims. Where necessary, I shall also consider the competing claim of Eddie as one of the primary beneficiaries named in the deceased's Will.
(a) any family, or other, relationship between the applicant and the deceased person, including the nature and duration of the relationship
Alma is a daughter of the deceased. Between the age of 2 years and 7 years, her grandmother in Bosnia raised her. She subsequently came to Australia and lived with the deceased. She admits that "there was no real bonding" with the deceased.
She left the home of the deceased prior to the birth of Senada, although precisely when is not known. (Since she commenced working as a primary school teacher in 1981, it may have been at about this time.) She describes their relationship as "uneasy".
Aida is a daughter of the deceased. She left the home of the deceased prior to the birth of Senada, although precisely when is not known. She acknowledges that there was a period, between late 1993/1994 for about 2 years when she and the deceased did not speak. However, before and thereafter, their relationship was close and loving.
Senada is a daughter of the deceased. She lived with the deceased until July 1999, when she was married. Even then, she and her husband lived close by and she would see the deceased nearly every day.
(b) the nature and extent of any obligations or responsibilities owed by the deceased person to the applicant, to any other person in respect of whom an application has been made for a family provision order or to any beneficiary of the deceased person's estate
Disregarding any obligation, or responsibility, arising as a result of their relationship as parent and child, the deceased did not have any legal, or financial, obligation to any of the Plaintiffs, or to Eddie, imposed upon her by statute or common law. It is likely that each Plaintiff and Eddie had been financially independent, for many years, prior to the deceased's death.
(c) the nature and extent of the deceased person's estate (including any property that is, or could be, designated as notional estate of the deceased person) and of any liabilities or charges to which the estate is subject, as in existence when the application is being considered
I have dealt with this earlier in this judgment.
(d) the financial resources (including earning capacity) and financial needs, both present and future, of the applicant, of any other person in respect of whom an application has been made for a family provision order or of any beneficiary of the deceased person's estate
Alma's current financial and material circumstances are:
Assets:
(a)
Lurnea Property:
$ 310,000
(b)
Eagle Vale Property:
$ 300,000
(c)
Campbelltown Property (half share):
$ 184,000
(d)
Raby Property (half share):
$ 140,000
(e)
Liverpool Property:
$ 300,000
(f)
Superannuation:
$ 107,673
Total:
$1,341,673
(She does not include her car as an asset.)
Liabilities
(a)
NAB Loan:
$ 772,500
(b)
ANZ Loan (half share of Liverpool Property):
$ 215,000
(c)
Australian Taxation Office:
$ 23,439
(d)
Credit Card:
$ 18,000
(e)
Car loan:
$ 32,129
Total:
$1,062,068
She stated that she earns $2,184 per fortnight, including the Workers Compensation allowance. However, this does not include rental income. (I am doubtful that her estimate of fortnightly income is accurate since she stated that her income from the Department of Education is $1,564 per week. It may be that the total fortnightly income is $3,689.)
She states her needs as follows:
(a) Her net assets are said to be $172,932. Her monthly expenses are said to well exceed her monthly income. In order to meet her expenses she draws upon her ANZ loan. She has no other means to pay her debts or meet any future expenses. If she is unable to work due to her back condition, she will not be able to meet her monthly expenses.
(b) She says she needs cash to pay the Australian Taxation Office $23,439 for the capital gains tax incurred from the sale of the Raby Property which she had to sell in February 2010 to pay out her ex-partner's business debt.
(c) She says she needs $33,000 to pay out her car loan with the Teachers Credit Union and an $18,000 credit card debt. She also needs $20,000 to the ANZ Bank which is extra money she borrowed on the Campbelltown property to see her through her "financial hardship situation".
One of her properties is currently for sale.
Aida's current financial and material circumstances are:
Assets:
(a)
Furniture owned with partner (est):
$ 3,000
(b)
Superannuation:
$30,003
(c)
Partner's Superannuation:
$ 4,892
(d)
Bank Account (est):
$ 2
Monthly (Joint) Outgoings:
(a)
Home and contents insurance:
$ 50
(b)
Rent:
$1,080
(c)
Food:
$ 800
(d)
Clothes:
$ 200
(e)
Travel (to shop and attend appointments):
$ 120
(f)
Electricity:
$ 200
(g)
Mobile and home phones and Foxtel:
$ 350
(h)
Cigarettes:
$ 600
(i)
Credit card:
$ 70
In the financial year ending 30 June 2010, her annual gross salary and wage income was $43,984. The tax payable was $6,859, plus the Medicare levy of $650, less the low income offset of $815, resulting in a net income of $37,290. She ceased work in November 2010. She receives a carer's pension of $561 per fortnight, whilst her de facto partner receives an income of $890 per fortnight.
She has debts totalling about $3,690.
She states, in relation to her needs that "[I]n the future I would like to buy a home for my partner and I (sic)".
Senada and her family are currently living overseas with her brother in law. She is not paying rent, or other living expenses. They have a current return air ticket that will enable them to return to Australia in December 2011. (It was her brother-in-law who purchased the return air ticket that enabled her to attend the hearing.)
Senada's current financial and material circumstances are:
Jointly owned assets:
(a)
Furniture (approx):
$5,000
Senada's assets:
(a)
Bank accounts ($2,800 in sons' bank accounts):
$3,600
(b)
Superannuation (approx):
$6,000
Husband's assets:
(a)
Bank account:
$ 10
(b)
Superannuation:
$1,791
Liabilities
(a)
Credit card debt:
$4,014
When she was last working, Senada earned a gross monthly salary of about $4,395. She stated that her monthly expenditure totals $4,400. She anticipates incurring similar monthly expenditure on her return. Her only source of income is $400 per fortnight from Centrelink.
She states that she would like to purchase a home and invest a capital sum to provide for her children's education. She says that she needs "a capital sum to help with life".
Eddie states that he is currently unemployed (since May 27, 2011). He anticipates that he will have to obtain unemployment benefits. His assets consist of furniture and white goods ($10,000), and superannuation ($28,000). He owes some child support. As stated, he lives in the Liverpool unit. His son, who has recently finished school, stays with him from time to time. Occasionally, Eddie's girlfriend stays overnight, but she does not live with him. She has her own accommodation. He pays water rates, council rates and strata levies on the Liverpool unit.
(e) if the applicant is cohabiting with another person - the financial circumstances of the other person
Alma lives by herself. She says, and I accept, that she is not living in any de facto relationship, although she has a social relationship with the co-owner of one of her properties. Her sons visit her once a week.
Aida lives with her partner of 7 years. His only asset is superannuation of $4,892 plus the common law claim for damages to which I have earlier referred. His taxable income for the financial year ending 30 June 2010 was $24,617. The tax paid ($1,442) and Medicare levy ($369) totalled $1,811.
Senada lives with her husband and two children, aged 10 years and 7 years. Her husband is unemployed. They all live with his brother overseas, although they intend to return to Australia later in the year. Her brother-in-law, who she regards as wealthy, is supporting the family at the present time. There is no evidence regarding the financial and material circumstances of Senada's brother-in-law.
(f) any physical, intellectual or mental disability of the applicant, any other person in respect of whom an application has been made for a family provision order or any beneficiary of the deceased person's estate that is in existence when the application is being considered or that may reasonably be anticipated
Alma's health is good except for a major back complaint. She had a back operation for sciatica in February 2010, but her symptoms have returned. An MRI of her cervical spine performed in August 2010 reveals a minimal degree of posterior bulging at C4/5 and a congenital partial fusion at T1/2. There is also posterior and lateral bulging of a disc causing slight narrowing of the canal and a degree of encroachment into the neural foramina. At T12/L1, there is a left paracentral bulge with an associated annular tear.
Otherwise, she refers to no other physical, intellectual or mental disabilities.
Aida does not give any evidence of any physical, intellectual or mental disabilities.
Senada does not give any evidence of any physical, intellectual or mental disabilities. She describes her health as "good".
Eddie does not give any evidence of any physical, intellectual or mental disabilities.
(g) the age of the applicant when the application is being considered
Alma was born in December 1958 and is currently aged 52 years.
Aida was born in September 1962 and is currently aged 48 years.
Senada was born in July 1980 and is currently aged 31 years.
(h) any contribution (whether financial or otherwise) by the applicant to the acquisition, conservation and improvement of the estate of the deceased person or to the welfare of the deceased person or the deceased person's family, whether made before or after the deceased person's death, for which adequate consideration (not including any pension or other benefit) was not received, by the applicant
None of the Plaintiffs gives any evidence of any financial, or other, contribution to the acquisition, conservation and improvement of the estate of the deceased. However, Senada gives evidence that her husband, who is a handyman, did provide assistance to the deceased whenever she required it.
Senada also gives evidence of assisting the deceased when she required assistance and, of course, of providing for her welfare by including her as part of her family's outings. Aida says that on one occasion, when the deceased was unwell, she stayed with Aida for a few days.
Eddie, however, gives evidence of assisting the deceased financially by providing her with $100 per week to defray the costs of bringing up Senada on her own and for other expenses. He says he provided financial assistance between about 1990 and 2002. (He provided assistance even before he left home in 1990.)
There is evidence of Senada's, Aida's and Eddie's contribution to the welfare of the deceased. I am satisfied that each did contribute, in her, or his, own way, to the deceased's welfare. There is no suggestion that Alma contributed to the welfare of the deceased in the last years of her life. I infer that at other times, when they were in contact, that Alma did what she could in this regard, bearing in mind the general nature of their relationship.
(i) any provision made for the applicant by the deceased person, either during the deceased person's lifetime or made from the deceased person's estate
None of the Plaintiffs gives evidence of any provision made for her during the lifetime of the deceased.
(j) any evidence of the testamentary intentions of the deceased person, including evidence of statements made by the deceased person
The only evidence of the deceased's testamentary intentions is in her Will. There are some statements attributed to the deceased about wishing to make another will, but what she proposed to provide for is not clear.
(k) whether the applicant was being maintained, either wholly or partly, by the deceased person before the deceased person's death and, if the Court considers it relevant, the extent to which and the basis on which the deceased person did so
The deceased was not maintaining any of the Plaintiffs at the time of her death.
(l) whether any other person is liable to support the applicant
No other person is liable to support any of the Plaintiffs. However, whilst at the present time, Senada's brother-in-law is supporting Senada and her family, he is not legally liable to do so.
(m) the character and conduct of the applicant before and after the date of the death of the deceased person
It was the Plaintiff, Alma, whose conduct towards the deceased was criticised. It was suggested that she had virtually no contact with the deceased for about 20 years prior to the deceased's death.
Alma's evidence was that there was some contact ("on and off") between 1988 until Senada's wedding in 1999, but, thereafter, the only occasion when they shared a meal was in 2001. She accepted that she had never sent the deceased a birthday, or mother's day, card, although on one mother's day, before 1999, she had left flowers for the deceased at her front door, which flowers had not been acknowledged.
Alma says that it was because of her relationship with her ex-partner that her relationship with the deceased suffered. (The deceased asserted that she had previously had romantic liaisons with Alma's ex-partner.) She says that it was the deceased's decision not to have contact with her and that she was saddened by the lack of contact. She says that she made enquiries of her siblings regarding the deceased's well being.
There was no criticism of the conduct of Aida despite the two-year period when she did not have contact with her. (That lack of contact was because Aida supported Alma in relation to Alma's father who was then visiting Australia.)
The deceased, herself, described the conduct of Senada in her Will. She was, of course, one of her two principal chosen beneficiaries.
(n) the conduct of any other person before and after the date of the death of the deceased person
The deceased, herself, described the conduct of Eddie in her Will. He was, of course, one of her two principal chosen beneficiaries.
(o) any relevant Aboriginal or Torres Strait Islander customary law
This is irrelevant.
(p) any other matter the Court considers relevant, including matters in existence at the time of the deceased person's death or at the time the application is being considered.
The only matter of some relevance is the benefit that Eddie has received from living in the Liverpool unit since shortly after the death of the deceased. This is a relevant consideration bearing in mind the submission made on his behalf that his share of the estate should not bear the burden of the provision made for any of the Plaintiffs.
Determination
Eligibility
There is no dispute that as a child of the deceased, each of the Plaintiffs is an eligible person under s 57(1)(c) of the Act. As such, she does not have to establish factors warranting the making of his application.
Extension of Time
The Summons filed by Alma and Senada was filed about 8 weeks outside the prescribed period.
The only explanation provided by each of Alma and Senada, by her solicitor, for not commencing proceedings within time, relates to the time that it took to carry out investigations to find another later will of the deceased. It was accepted that these enquiries proved fruitless.
By the time their Summons was filed, the Plaintiff, Alma had commenced her proceedings, which proceedings had not advanced very far. Presumably, the notice of her proceedings would have had to be given to other eligible persons, including the other two Plaintiffs. As an eligible person, each was entitled to such notice.
There is no evidence of any prejudice that Eddie would suffer if the time for making the claims was extended. Nor is there any evidence of any unconscionable conduct on the part of any party.
To the extent that it is relevant, I shall return to the merits of each claim shortly.
Determination
It is the size of this estate that is critical in this case. On any view, it is small, whether or not one deducts costs or part of the costs.
In the case of Alma, I am of the view that she does not satisfy the jurisdictional threshold. Viewed only by reference to the amount provided for her in the Will, one might, initially, consider that inadequate provision had been made. However, that is not the only matter that one must consider at the first stage. I must also have regard, amongst other things, to her financial position, the size and nature of the deceased's estate, the totality of the relationship between her and the deceased, and the relationship between the deceased and other persons who have legitimate claims upon her bounty.
Alma has security of accommodation, several investment properties, superannuation, and a reasonable income. Her assets, after payment of her expenses, have a value similar to the value of the gross distributable estate. The estate is small and, overall, her relationship with the deceased was not very close. In my view, the claim of the other Plaintiffs, and of Eddie, appears to me to be much stronger than hers.
Accordingly, in my view, she has not satisfied me that inadequate provision for her proper maintenance, education, and advancement in life, was made by the deceased.
Even if I were wrong in coming to this conclusion, I would not make an order as a matter of discretion. Similar considerations, as well as those others, to which I have referred under s 60(2), lead to this conclusion.
It follows that Alma's claim must be dismissed.
In relation to Senada, I am of the view that the provision of 60 per cent of the estate is adequate and proper provision in all the circumstances of the case, and accordingly, she too, fails at the first stage. Subject to the submissions made by Mr Ellison SC to which I have referred, the quantum of provision was accepted to be such.
I do not accept the submission made by Mr Ellison SC that, by making provision for her, which provision passes, by operation of law, to her trustee in bankruptcy, for the benefit of her creditors, the deceased failed to make provision that is "adequate and proper". The adequacy and propriety of provision is not determined by the circumstance of the applicant that results in it being paid not to her, but to her trustee in bankruptcy for the benefit of her creditors.
This is not the same as the case of a bankrupt, or financially disadvantaged applicant, who does not receive any provision, and who seeks what would be considered to be adequate provision for his, or her, proper maintenance and advancement in life out of the estate, with the result that he, or she, will use it to pay off creditors.
In this regard, I note what was said by Basten JA in Diver v Neal , albeit in a different context at [69]:
"A financial benefit in circumstances where an applicant's business interests require an injection of capital may be of great assistance in permitting advancement in life. The fact that the benefit goes to paying off creditors, thereby saving the loss of an asset or reducing ongoing liabilities does not diminish the benefit to the applicant."
Allsop P, concurred, saying at [1] that:
"One could envisage a particular predicament of an eligible person whereby it would be relevant to consider that any order in his or her favour would diminish the estate to meet the claims of others to no appreciable (financial or social) benefit to him or her in his or her debt-ridden condition. That is not to say, however, that relief from indebtedness may not be of significant benefit to an eligible person. A small bequest to someone with considerable debts may make the difference (as Mr Micawber said) between happiness and misery."
In my view, Senada's obligations will effectively be discharged by the payment of the balance of the provision made for her by the deceased's Will. This will be of some benefit to her since she may be able to receive an acknowledgement from her trustee in bankruptcy that she has met her responsibilities to her creditors to the best of her ability.
Senada does not satisfy the jurisdictional stage, which calls for an assessment of whether the provision made was inadequate for what, in all the circumstances, was the proper level of maintenance etc appropriate for her.
Even if I were wrong in coming to this conclusion, I would not make an order as a matter of discretion. I accept the proposition that the person to whom a benefit flows following the making of an order under the Act receives that benefit as the result of the creation of rights pursuant to the making of the order and not by way of variation to any pre-existing rights which that person may have possessed pursuant to the will: Re Bishop [1952] VLR 543, at 546-547, 3552; Union-Fidelity Trustee Co of Australia Ltd v Montgomery [1976] 31 NSWLR 134, at 141; McLeod v Johns [1981] 1 NSWLR 347, at 349.
In McLeod v Johns , the plaintiff had been bankrupt at the date of the death of the testator and had been discharged from that bankruptcy before the date of hearing. There was a suggestion made in the course of that case that the effect of the equivalent provision to s 72(1) of the Act (being s 4 of the Testators Family Maintenance and Guardianship of Infants Act 1916) might have resulted in the Official Trustee of the bankrupt applicant in that case becoming entitled to any order for provision made in the applicant's favour, with the consequence that he would not have received the benefit of the order for provision, but that his creditors would have received such benefit.
Kearney J rejected that suggestion and said:
"Notwithstanding the retroactive operation given to such an order, no provision thereby made could be said to have in fact been acquired by or to have devolved upon the plaintiff before his discharge from bankruptcy. Once the date of such discharge has passed the interest of the official receiver is extinguished in relation to property to which the plaintiff may subsequently become entitled. The fact that by the terms upon which the plaintiff becomes subsequently so entitled, the property is to be treated as if received at a date prior to his discharge is irrelevant to, and quite ineffective to revive, any rights in the official receiver. This is because property not actually in existence as an entitlement of a bankrupt until after his discharge is beyond the reach of the official receiver."
However, what Senada seeks is that the benefit conferred upon her under the deceased's Will be displaced by the right derived from an order now made under the Act.
Where provision under the Will of a deceased person has been made for the applicant, and where, by operation of law, it passes to the applicant's trustee in bankruptcy, for the benefit of her creditors, the court should set its face against adopting a course that would have the effect of defeating, or at the very least being inconsistent with, that operation.
Furthermore, whilst the effect of a discharge from bankruptcy is to release the bankrupt from all debts provable in the bankruptcy (s 153), the trustee remains trustee of the former bankrupt's property, which property remains available for realisation and distribution among the creditors. The discharge does not release the bankrupt from the obligation to give all due assistance to the trustee of her estate; indeed, s 152 expressly provides that a discharged bankrupt shall, notwithstanding his, or her, discharge, shall give such assistance as the trustee reasonably requires in the realisation and distribution of such of his, or her, property as is vested in the trustee.
To make an order under the Act, in lieu of the provision made in the Will of the deceased, following the applicant's discharge from bankruptcy, would result in defeating the provisions of the Bankruptcy Act to which I have referred .
Accordingly, Senada's claim, also, must be dismissed. In light of my conclusion, there is no point extending the time for the making of Senada's claim.
In relation to Aida, the provision made of $1,000, in my view, is neither adequate nor proper. She has virtually no assets and little likelihood of amassing any property. Even if her de facto partner were to receive a lump sum by way of damages, those damages are his, not hers. Furthermore, it was a short period only during which her relationship was strained. Both before and afterwards, she appeared to have had a reasonably close and loving relationship with the deceased.
Because I am satisfied that an order should be made in Aida's favour, because the delay in bringing the proceedings was not substantial, because proceedings had then been commenced by Alma, and because there is no prejudice to Eddie or Senada, I order that the time for the making of her application be extended to the date of the filing of her Summons.
Whilst the reasons provided for not commencing proceedings within time are not very convincing, the proceedings commenced by Alma, in any event, had to be determined.
In my view, provision of 25 per cent of the value of the net proceeds of sale of the Liverpool unit, after the costs of the proceedings are deducted, referred to hereunder, should be provided for Aida, with the result that from the remaining 75 per cent, Eddie will receive 30 per cent and Senada, by the trustee in bankruptcy, will receive 45 per cent of the balance.
I order that Alma's Summons be dismissed with costs.
I order that the amended Summons, so far as it relates to Senada, also be dismissed with costs.
I order that Aida's costs, calculated on the ordinary basis, taking into account what has been written previously regarding senior counsel's fees, and Eddie's costs, calculated on the indemnity basis, be paid out of the proceeds of sale of the Liverpool unit.
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Decision last updated: 25 July 2011
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