Re McKenzie
[2017] VSC 792
•21 December 2017
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
TESTATORS FAMILY MAINTENANCE LIST
S CI 2016 02462
IN THE MATTER of Part IV of the Administration and Probate Act 1958
-and-
IN THE MATTER of the estate of DAVID CYRIL McKENZIE, deceased
BETWEEN:
| AILEEN MOIRA McKENZIE and FAYE ADA HARRIS | Plaintiffs |
| v | |
| DAVID GORDON McKENZIE and LYNTON HENRY McKENZIE (as executors of the will of David Cyril McKenzie, deceased) | Defendants |
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JUDGE: | McMillan J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 13, 14 June 2017 |
DATE OF JUDGMENT: | 21 December 2017 |
CASE MAY BE CITED AS: | Re McKenzie |
MEDIUM NEUTRAL CITATION: | [2017] VSC 792 |
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FAMILY PROVISION — Where testator made limited provision for widow and no provision for adult daughter — Where further provision ordered for widow on interim basis — Adequate provision for proper maintenance and support — Where widow and adult daughter dutiful and exemplary — Whether adult daughter adequately provided for during testator’s life — Administration and Probate Act 1958, ss 90, 91, 91A and 97
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Mr S T Pitt | Katz Silver Lawyers |
| For the Defendants | Mr M C McKenzie | Trevor Yong & Associates |
HER HONOUR:
Introduction
David Cyril McKenzie (‘the deceased’) died on 26 September 2015, leaving a will dated 9 September 1996. He was survived by his widow and five adult children.
The first plaintiff is the deceased’s widow and the second plaintiff is one of his adult daughters. The first and second defendants are his two adult sons and executors of his estate.
Pursuant to Part IV of the Administration and Probate Act 1958 (‘the Act’), the first plaintiff seeks further provision and the second plaintiff seeks provision from the estate of the deceased. The first plaintiff is aged 93 years and was given limited monetary provision under the deceased’s will and a right to reside in the family home until her death or remarriage. The second plaintiff is aged 54 years and no provision was made for her in the deceased’s will.
As the deceased died after 1 January 2015, the plaintiffs’ claims for further provision are governed by amendments to the Act originally contained in Part 2 of the Justice Legislation Amendment (Succession and Surrogacy) Act 2014,[1] effective from 1 January 2015.[2] Under the Act, an eligible person may make an application for a family provision order. Both plaintiffs are eligible persons under the Act.[3]
[1]Administration and Probate Act 1958, s 101.
[2]Governor of Victoria, ‘Justice Legislation Amendment (Succession and Surrogacy) Act 2014 – Proclamation of Commencement’ in Victoria, Victoria Government Gazette: Special, No S 400, 29 October 2014, 2.
[3]See paragraphs (a) and (f) of the definition of ‘eligible person’ in s 90 of the Administration and Probate Act 1958.
Probate of the deceased’s will and estate was granted to the defendants on 22 January 2016. For probate purposes, the deceased’s estate was valued at $1 708 462.06 with liabilities of $19 418.74. At trial, the estate was valued at $1 586 709.30, comprising $1 440 000 in real estate, shares valued at $13 726.00 and $132 982.80 held in trust.
The principal asset of the deceased’s estate is his real estate. The defendants provided a valuation of $260 000 as at 24 May 2017 for the family home of the deceased and first plaintiff together with an adjoining 2.508 hectares of land (‘the home block’). By contrast, the defendants’ affidavit, setting out the estate’s financial position for the trial, valued the estate’s remaining real estate on the probate valuations that were more than 18 months old at the time of the trial. The difference in the values attributed to the real estate per hectare were significantly higher for the home block compared to the other real estate. The valuation for the home block was a basic market valuation that did not identify many of the assumptions upon which it was based. It is of little assistance for valuation purposes.
The deceased’s will
The deceased’s will provided for the disposition of his estate as follows:
(a) the first plaintiff to receive his personal chattels, his motor car and the proceeds from his Colonial Mutual Life Assurance Society Limited Policy No. 1151635 (‘the CML Policy’) valued at $36 942.05;[4]
[4]The deceased’s life insurance was, after the signing of his will, split up into three separate policies. The policy which was bequeathed to the first plaintiff (No. 1151635) became Policy No. 0009511.
(b) the trustees are directed to allow the first plaintiff to reside in the house built on the home block (‘the family home’) until her death or remarriage;
(c) legacies were to be paid to his daughter, Diane, in an amount of $10 000; his daughter, Lorraine, in an amount of $20 000, his grandsons, Jason and Michael, an amount of $500 provided they attained the age of 21 and an amount of $500 to each of his great-grandchildren provided they attain the age of 21;
(d) his horses to Lynton and Lynton’s wife, Lola;[5]
[5]There were no horses, for probate purposes, listed in the inventory of assets and liabilities.
(e) a property known as ‘The Five Ways’ to his grandsons, Jason and Michael;[6]
[6]Being the land described in Certificates of Title Volume 8803 Folio 416 and Volume 8803 Folio 643. Jason is deceased, leaving Michael as sole beneficiary of The Five Ways.
(f) a property comprising 51.5 acres, being the land described in Certificate of Title Volume 8796 Folio 467 which adjoins the home block, to the first defendant;
(g) part of the land described in Certificates of Title Volume 7859 Folio 034 and Volume 8464 Folio 395 to the second defendant;
(h) the land in Crown Grant Volume 1927 Folio 236 comprising approximately 30 acres to the second defendant, charged with a payment by him to the first plaintiff of $5 000 per annum adjusted to CPI;
(i) all remaining land, including the home block and family home where the first plaintiff resides, to the first defendant, charged with a payment by him to the first plaintiff of $5 000 per annum adjusted to CPI;
(j) the residue of the estate:
(i) is charged with the payment of the deceased’s just debts and testamentary expenses, including all moneys owed under any mortgage to be paid by the second defendant;
(ii) the executors are directed to sell the deceased’s livestock and pay the proceeds equally to his grandchildren, Sally, Leanne, Trent and Chloe, except for his grandsons, Jason and Michael, provided they attain the age of 21;
(iii) the executors are directed to expend money repairing the family graves; and
(iv) the balance of the residue is left to the first defendant absolutely.
Interim orders at the end of the trial for the first plaintiff
Prior to the trial, the defendants made an open offer to the first plaintiff that would provide her with the freehold title to the home block and an additional sum of $70 000.
The Court made interim orders in respect of the first plaintiff’s claim at the end of the trial. The orders reflected the defendants’ open offer in that they provided her with the freehold title to the home block and the additional sum of $70 000. The orders also noted the payment of the first plaintiff’s entitlement under the deceased’s will and that the first defendant had agreed to continue to allow the first plaintiff access to fresh water to the home block via the existing infrastructure that runs across land that he owns adjacent to the home block.
The evidence
The first plaintiff
The first plaintiff married the deceased in 1945. They had five children. At the date of death of the deceased, they had been married for 70 years.
The deceased was a farmer. The family farm was land that originally belonged to his parents. During her marriage to the deceased, the first plaintiff assisted in the day-to-day running of the dairy farm, including milking the cows in the morning and the evening, feeding hay to the animals, carting hay, planting and harvesting by hand stockfeed for the animals, including potatoes and maize, cooking and preparing meals for hay contractors working on the farm, assisting with calving and their subsequent rearing for sale, and other sundry tasks such as cleaning out the dairy yard. The defendants dispute the extent of the work done by the first plaintiff on the farm, particularly regarding milking, carting hay, and her involvement in cultivating stockfeed.
The first plaintiff was also responsible for the day-to-day running of the dairy farm during the early 1970s, when the deceased had to find work outside the farm due to financial difficulties caused by drought. The first plaintiff did not receive any wages or payments for her work. The first defendant disputed this as did, by inference, the second defendant. Both defendants claimed that they provided significant assistance during this period. The first plaintiff contributed to the household of the deceased by raising their five children, doing the housework, cooking meals, cleaning the home, doing the washing and ironing and hosting Christmas each year at home until the deceased’s death. The deceased gave the first plaintiff a weekly housekeeping allowance to pay for the family’s groceries and other costs. If she required any further money for household expenses, she had to ask the deceased to approve the expenditure. She did not have her own bank account and could not access any bank accounts in the deceased’s name. Her first bank account was opened when she needed a bank account to receive her part age pension. The first plaintiff also assisted in caring for her five grandchildren, including the day-to-day care of the first defendant’s two children until they were ten years old, so that the first defendant and his wife could both work.
The first plaintiff performed a significant caring role for the deceased since 1996 when he had triple bypass surgery and ongoing health issues that resulted in the gradual deterioration of his health. The deceased did not wish to be placed in a nursing home and the first plaintiff, with the help of their two daughters, cared for the deceased in the family home. This care became progressively more onerous as the deceased’s health deteriorated. In the five years prior to the deceased’s death, the deceased required 24-hour care, including bathing, dressing, feeding, assistance with monitoring his blood sugar levels, taking him to medical appointments, and assisting with his toileting.
During his lifetime, the deceased used the household assets to assist his children, including the second plaintiff and both defendants. This assistance variously took the form of property transfers, co-investments, favourable treatment in joint business arrangements, benefits to extended family and the forgiveness of debts, principally to the benefit of the defendants.
The family home is dilapidated and needs substantial repair and renovation. It has never been painted, either externally or internally, and the fittings and fixtures are in original condition. Little or nothing has been spent on maintenance since it was built in 1960 because the deceased paid the farm income back into the farm. Recent photographs of the family home, both internal and external, highlighted that dire state of disrepair, with holes in the walls and ceiling and vermin being a problem inside the house. The only heating is from a wood-fired heater. Despite her age, the first plaintiff is able to manage using the heater which requires her to keep it burning and collecting wood from the outside woodheap. With the current state of repair of the house, heating the home is difficult. The floor coverings are worn out and dangerous as the loose coverings may cause people to trip or fall over. Parts of the wooden window frames and fascia boards are rotten. The water in the outside tank is not drinkable as the inside of the tank has never been cleaned. The first plaintiff buys her drinking water and is otherwise dependant on the first defendant for her water supply from a creek situated on land owned by the first defendant. If the water supply from the home block tank were connected to her house, and the inside of the tank cleaned, the first plaintiff would no longer need to rely on the first defendant for water for the house.
The first plaintiff estimated the necessary cost of the work on the home at approximately $47,000. The work included painting the home inside and externally, replacement of the spouting, repairs to the roof, fascia boards and verandah, fencing at the property, renovation and re-modelling of the bathroom commensurate with her age and need for care, updating and renovating the kitchen, cleaning the inside of the water tank, connecting the water supply to the home and removing overgrown trees in the garden. The defendants were provided with these estimates well before the trial but objected to them at trial on the basis that they were caught by surprise. In the circumstances, the objection was disallowed. At trial, the defendants produced and relied on their own estimates for some of the work.
The financial resources of the first plaintiff are minimal. Her current income is a pension of approximately $23 000 per annum, outweighed by her estimated expenses of approximately $28 000 per annum. Under the deceased’s will she is entitled to the proceeds of the CML Policy being $36 942.05, CPI adjusted annual payments of $5000 from each of the defendants (charged on property bequeathed to them by the deceased’s will), the deceased’s personal chattels, his motor car and a right to reside in the family home. Under the interim orders, she has received an additional $70 000 and the freehold title to the home block. She also deposed that she owned a car worth approximately $3000 and a bank account with $53 143 on deposit.
The first plaintiff continues to live in the family home in its present condition, pursuant to her right granted under the deceased’s will. The defendants did not suggest that the family home should not be repaired or renovated for her benefit now but their extensive cross-examination of the first plaintiff was directed towards the proposition that, as she had lived in the home in its current state for so long, it was unnecessary for it to be repaired or renovated to the extent of the estimated work totalling $47 000. At trial, the defendants tendered a quote for minimal work to be conducted on the house, being repair of the down pipes, guttering and front awning costed at $3542. The defendants’ position was that the first plaintiff should pay for any repairs and renovation of the family home out of her existing financial resources.
The second plaintiff
The second plaintiff has had a close and loving relationship with both her parents. During her time in the family home, the second plaintiff assisted around the house and farm including doing housework, cleaning, mowing lawns, preparing meals and occasionally assisting the deceased with light farm duties, such as checking on the animals.
After leaving home at the age of 21 years, she moved to the nearby local town and visited her parents regularly. When her parents were in their seventies, she moved closer to them and was a five minute drive away. The second plaintiff continued to assist the deceased and the first plaintiff by mowing the lawns, shopping, banking, paying bills, and taking them on holidays and outings. The first defendant disputes that the second plaintiff regularly mowed the lawns, deposing that she ‘rarely’ did so.
The deceased’s health started to fail in the mid-1990s. The second plaintiff helped him by taking time off work to accompany the deceased and the first plaintiff to Melbourne for the deceased’s several operations and regular specialist appointments, booking accommodation in Melbourne. She also assisted with caring for the deceased, such as preparing his tablets each day, assisting him with physiotherapy exercises, arranging home care and district nursing visits, and visiting daily.
The second plaintiff assisted the deceased with his finances during this period, including budgeting, applying for drought relief, his healthcare card, and a part-pension. She provided the deceased with small items designed to make his life more comfortable, including clothing, toiletries, bedding, various appliances, a heater for his room, and food for him.
At some point, the deceased appointed the second plaintiff as his financial power of attorney. She looked after his bookkeeping and tax returns, including GST and BAS returns, collected lease payments and paid the bills. The second plaintiff looked after her parents, often at her own expense, including by taking them on holidays and purchasing various necessities. In this she was assisted by her sister, and their high level of care meant the deceased would not have to move into care. The parties agree that the deceased expressed a strong wish against that ever happening.
Both defendants allege the deceased helped the second plaintiff with the purchase of a property in Yarram in 1985. The second defendant claims the deceased gave $10 000 to the second plaintiff ‘for the deposit of the purchase of her first property’. The defendants do not state the basis of these allegations. The second plaintiff denies the deceased assisted her to purchase a property in Yarram or that he assisted with the building of her home as alleged by the defendants.
In 1993, the second plaintiff was given a small block of land valued at between $15 000 and $20 000 by the deceased. The second plaintiff deposed that she ‘received no other provision from [the deceased] during his lifetime’. In his will, the deceased stated that provision had been made for the second plaintiff during her lifetime. This statement could only be directed to the gift of the block of land in 1993.
The second plaintiff works part-time at a bank and currently earns between $1550 and $1750 a fortnight before tax, depending on her hours. These amounts are consistent with her gross income, as reported in the relevant PAYG payment summary for the most recent, completed financial year. The PAYG payment summary indicates that she earned $40 397 before tax in that financial year.
Her husband works as a service manager and currently earns $3461.04 a fortnight before tax. This amounts to a gross income of $89 987 per annum. The second plaintiff has a superannuation balance of approximately $116 000 and her husband has a balance of approximately $180 000. The second plaintiff also has a share portfolio valued at approximately $48 000 and her husband has a share portfolio of approximately $16 000. The combined value of their joint and separate bank accounts is approximately $73 000. The second plaintiff has a motor vehicle worth approximately $15 000. Their household contents equal approximately $50 000.
The second plaintiff and her husband built their home on the block of land given to the first plaintiff by the deceased. The second plaintiff and her husband continue to live there. The property is now valued at approximately $300 000. They also jointly own an investment property, which is tenanted, valued at approximately $200 000. Since the purchase of the investment property, values have dropped in the area as reflected by the capital improved value of the property currently assessed at $188 000.
The second plaintiff and her husband have a mortgage of about $70 000 secured over their family home and a mortgage of about $200 000 over their investment property.
While the income of the second plaintiff is reasonable when combined with her husband, her income alone is minimal. If for any reason she is forced to sell the investment property, she is likely to suffer a financial loss.
The second plaintiff is far from wealthy and has a reasonably significant amount of debt, little superannuation and no buffer for future uncertainties, such as the loss of her husband through death or divorce, or unexpected health issues.
The first defendant
The first defendant is 70 years old and the eldest of the deceased’s five children. The plaintiffs conceded that the first defendant appears to be in financial need, although he has also received significant assistance from the deceased during the deceased’s lifetime. In 2012, the first defendant was declared bankrupt. He was discharged from bankruptcy in March 2015.
The first defendant receives a pension from Centrelink of $659.95 per fortnight, as does his wife. He has received Centrelink benefits since 2009, when his share farming arrangement with the deceased and the first plaintiff was transferred to his daughter.
The first defendant and his wife have minimal assets, comprising mainly chattels valued at approximately $10 500 and $1200 cash in the bank.
While the first defendant deposed that ‘the only direct financial assistance provided to me by my father was in the purchase of a property known as Ralph’s’, it is clear from his affidavit that he received considerable and regular financial assistance, both directly and indirectly, from the deceased during his lifetime.
The first defendant contributed to the deceased’s household during his childhood by doing chores around the farm, such as chopping wood, milking cows, assisting with the calves and general farm work. He moved around during his early adulthood but continued to assist the deceased on his farming properties when he was in the area. During this time, the first defendant sometimes lived without charge on the deceased’s property or on the second defendant’s property.
From sometime in the early to mid-1980s, the first defendant commenced share farming close by to the deceased’s property. He continued share farming until 2007. He also had a formal share farming arrangement with the deceased from 1998 to 2009.
The first defendant deposed that his wife started milking the cows for the deceased and the first plaintiff in 1993. The first plaintiff disputed this, stating that, while the first defendant’s wife did commence milking on the deceased’s property at this time, it was on a rent-free basis for the use of the deceased’s property and equipment, when the first defendant and his wife started sharing the profits of the share farming arrangement. The first defendant deposed that under his agreement with the deceased, he did not need to start paying part of the profits over until ‘we were in a position to do so’.
The first defendant deposed that during his lifetime, he continued to assist the deceased in his farming endeavours. This assistance included helping during the hay season, undertaking mechanical work on tractors and machinery, slashing ferns and weeds, clearing and cultivating land, and fencing work. He also deposed that, during the deceased’s lifetime and while the share farming arrangement with the deceased was on foot, he contributed to the upkeep and expenses of the deceased’s farm beyond that of an ordinary share farmer. This included paying for, in conjunction with his daughter, a contractor to assist in erecting extensive internal fencing in the ‘Bush Paddock’, and fencing along the ‘Eastern Boundary’ for the property known as ’30 Acres’. He also deposed that he replaced the ‘North East’ side boundary fence, at his own cost. The first plaintiff deposed that this fencing work was undertaken by the first defendant in accordance with a verbal agreement with the deceased to enable the first defendant to increase the acreage available to him to increase his milking herd, and did not result in a benefit for her or the deceased.
Other costs that the first defendant deposed to paying included the dairy licence, improving paddocks, maintaining troughs, fertilizing, installing power to the cow shed and water pump, maintaining driveway and access tracks, constructing cattle yards and creek frontage maintenance, including paying for the licence. The first plaintiff deposed that either her husband paid these costs as the full time farmer of the properties, or that other costs were appropriate for the first defendant to pay while he was undertaking farming activities on the deceased’s property rent-free.
The first defendant and his wife continue to live with their daughter on the five acres of land given to her by the deceased in 2009 and on which she built a house for herself, the first defendant and his wife. The first defendant’s daughter was given this land by the deceased following a conversation in 2006 between the first defendant and the deceased. The substance of that conversation was that at the conclusion of their share farming arrangement, the first defendant would not have anywhere to live and he could not afford to buy any property in the area. No payment was given to the deceased for the five acres. It appears that the first defendant’s daughter paid for the costs associated with the subdivision and transfer of the land.
The first plaintiff deposed that the deceased paid for the first defendant’s wedding, helped the first defendant buy a farm, contributed to subsequent mortgage payments—although the farm was ultimately unsuccessful and had to be sold—and bought the first defendant several motor vehicles. The first defendant disputes this and says that he contributed to the purchase price of the property known as ‘Ralph’s’, that the deceased only bought him one motor vehicle, and that the sale proceeds from ‘Ralph’s’ was used to pay for a ute that, while garaged at the homestead, was for the general use of the family.
The first defendant deposed that he and his family assisted the plaintiffs and his other siblings in caring for the deceased when he became ill and during his operations, including driving to Melbourne, and being in contact with the plaintiffs and his other sisters by telephone when they could not travel to Melbourne. He deposed that they ‘did whatever they could to assist for our parents as they aged’. This is disputed by the second plaintiff who deposed that the defendants ‘rarely helped’ with caring during the deceased’s hospital stays in Melbourne or in the final years of the deceased’s life when he required ongoing care.
The second defendant
The second defendant is aged 67 years old and is financially comfortable, having been quite successful in his farming ventures. In total, the second defendant and his wife have net assets of approximately $2.16 million. The second defendant and his wife own real estate valued at approximately $2.18 million, plant and machinery of $140 000, livestock of $240 000 and shares and cash valued at $226 000, with liabilities totalling $626 000.
As with his other siblings and particularly the first defendant, the second defendant assisted with farming duties on the deceased’s farm during his childhood and into adulthood. The second defendant also entered into joint arrangements with the deceased including cattle and sheep raising, harvesting and general maintenance of the deceased’s property. The second defendant’s wife also worked on the family farm.
The deceased assisted the second defendant with purchasing a property that the second defendant still owns and farms. The extent of the deceased’s assistance is disputed, with the second defendant claiming it was a small contribution to the purchase price of the property.
The second defendant disputes the proposition put forward by the plaintiffs that he rarely assisted in caring for the deceased when he was ill and during his operations. By way of example of the assistance provided, the second defendant deposed that his family cared for the deceased when the second plaintiff took the first plaintiff on holidays, responded to late night calls for assistance from the deceased and would regularly check in on the deceased at home.
Applicable principles and legislation
Pursuant to s 91(2) of the Act, the Court must not make a family provision order under s 91(1) of the Act unless it is satisfied that:
(a) an applicant is an eligible person;
(b) in the case of certain types of ‘eligible persons’, that the person was wholly or partly dependant on the deceased for proper maintenance and support;
(c) at the time of death, the deceased had a moral duty to provide for the eligible person’s proper maintenance and support; and
(d) the distribution of the deceased’s estate fails to make adequate provision for the proper maintenance and support of the eligible person.
In making a family provision order, s 91A(1) provides that the Court must have regard to:
(a) the deceased’s will, if any; and
(b) any evidence of the deceased’s reasons for making the dispositions in the will; and
(c) any other evidence of the deceased’s intentions in relation to providing for an eligible person.
The concept of a testator’s moral duty remains the focus for family provision cases notwithstanding the recent amendments to the Act. While s 91A(1) of the Act mandates that the Court must take into account what a testator provided in his or her will and whether he or she gave any reasons or made his or her intentions known in relation to the provision made for an eligible person, it has always been the case that courts have taken into account the terms of any expressions of the deceased in admissible form.[7] An express legislative requirement that the Court take such expressions into account, when determining an application, does not mean that such evidence, whether by will or in another form, suddenly takes on some higher status.[8] The weight to be attached to such statements will depend on the specific circumstances of the particular case.
[7]Hughes v National Trustees Executors and Agency Co of Australasia Ltd (1979) 143 CLR 134, 149–50, 152 (Gibbs J).
[8]Brimelow v Alampi (2016) 50 VR 219, 223 [15].
In making a family provision order, s 91A(2) of the Act provides that the Court may take into account:
(a) the nature of the relationship between the deceased and the eligible person, including, if relevant, the length of the relationship;
(b) any obligations or responsibilities of the deceased to the eligible person, any other eligible persons, and the estate’s beneficiaries;
(c) the size and nature of the estate;
(d) the current—taken as at the time of the hearing—and foreseeable future financial resources, including earning capacity and financial needs, of the eligible person, any other eligible persons and any beneficiary;
(e) any physical, mental or intellectual disability of any eligible person or any beneficiary;
(f) the age of the eligible person;
(g) any contribution of the eligible person, otherwise than for adequate consideration, to building up the estate or to the welfare of the deceased or the deceased’s family;
(h) any previous benefits to the eligible person or any beneficiary;
(i) whether the eligible person was being wholly or partly maintained by the deceased, and if so, the extent and basis of such maintenance;
(j) the liability of any other person to maintain the eligible person;
(k) the character and conduct of the eligible person or any other person;
(l) the effect that a family provision order would have on the amounts received from the deceased’s estate by other beneficiaries; and
(m) any other matter the Court considers relevant.
Pursuant to s 91(4)(a) and (b) of the Act, in determining the quantum of any provision, the Court must take into account the degree to which, at the time of death, the deceased had a moral duty to provide for an applicant, and the degree to which the distribution of the estate fails to make adequate provision for the proper maintenance and support of an applicant.
In relation to adult children, pursuant to s 91(4)(c) of the Act, the Court must also take into account the degree to which the eligible person is not capable, by reasonable means, of providing adequately for his or her own proper maintenance and support. This provision is intended to limit claims by an adult child who is not suffering financial hardship. However, the financial need of an adult applicant still needs to be considered in the context of proper maintenance and support.
In relation to all claims, pursuant to s 91(5)(a) of the Act, the amount of provision must not provide for an amount greater than is necessary for an applicant’s proper maintenance and support.
Section 91(1) of the Act does not contain the word ‘adequate’ before the words ‘provision … for the proper maintenance and support of an eligible person’, however, the word ‘adequate’ is included in ss 91(2)(d) and 91(4)(b) as a factor in determining the quantum of any provision. These words have developed a legal meaning over many years. Where a word used in statute has an established legal meaning, the Court assumes that Parliament intended that word to be used with that meaning, unless the context indicates otherwise.[9] There is no indication of a contrary intention in respect of s 91(4)(c) of the Act, so the words ‘adequate provision’ and ‘proper maintenance and support’ must be construed in accordance with their legal meaning.
[9]See, eg, Davies v Western Australia (1904) 2 CLR 29, 42–3 (Griffiths CJ); Yorke v Lucas (1985) 158 CLR 661, 668 (Mason ACJ, Wilson, Deane and Dawson JJ); Palgo Holdings Pty Ltd v Gowans (2005) 221 CLR 249.
Generally, ‘proper maintenance and support’ means provision from the estate not simply to alleviate poverty, but also to take into account the vicissitudes of life, whereas ‘adequate’ requires that any provision be sufficient for an applicant’s proper maintenance.[10] What constitutes adequate provision for the proper maintenance and support of an applicant involves a consideration of the mandatory and discretionary matters under the Act, having regard to the meaning of these terms as developed in the jurisprudence of the family provision jurisdiction.[11] This also involves a consideration of the nature, extent and character of the estate and the other demands upon it, and also what the testator regarded as superior claims or preferred dispositions. In determining these questions, a balance must be drawn between the established claims of named beneficiaries, the needs of an applicant, the size of the estate, and the benefits provided to an applicant and others with legitimate claims upon the testator. The court’s function is not to ensure a fair distribution of the testator’s estate or to achieve equality amongst various claimants. It goes no further than making adequate provision for the proper maintenance and support of an applicant.[12]
[10]In essence, this concept is founded on the reasoning of Stout CJ in Allardice v Allardice (1909) 29 NZLR 959 and has been applied in family provision cases time and time again. See also Bosch v Perpetual Trustee Co Ltd [1938] AC 463, 476 (Lord Romer).
[11]See, eg, Singer v Berghouse (1994) 181 CLR 201.
[12]See, eg, In re Hodgson (1955) VLR 481; Blair v Blair (2004) 10 VR 69; Delaney v Jones [2008] NSWSC 229 (11 March 2008).
In determining the amount of further provision to be made, the court must not allow an amount that is greater than is necessary for an applicant’s proper maintenance and support. The nature and content of what is adequate provision is a flexible concept, adapted to conform to acceptable community standards, and involves a broad evaluative judgment not constrained by preconceptions and predispositions.[13]
[13]See, eg, Camernik v Reholc [2012] NSWSC 1537 (13 December 2012) [154] (Hallen J); Slack v Rogan (2013) 85 NSWLR 253, 284 [125]–[126] (White J), interpreting the similar legislative regime in New South Wales under s 59 of the Succession Act 2006 (NSW).
Other relevant constraints or limiting factors may be that further provision should be made only if, and to the extent that, it is necessary to alter the will to make adequate provision for an applicant’s proper maintenance and support,[14] or that any further provision must be limited by balancing the needs of an applicant against the proper claims that a testator recognised needed to be satisfied out of his or her testamentary bounty.
[14]Grey v Harrison [1997] 2 VR 359, 366 (Callaway JA, with whom Tadgell and Charles JJA agreed).
The assessment as to whether the testator failed to make adequate provision for an applicant’s maintenance and support is determined by reference to matters that were known, ought to have been known, or were reasonably foreseeable to the deceased at the time of his or her death.[15] The assessment as to what provision the court should make is determined at the date of the trial, taking into account the plaintiff’s circumstances at that time.[16]
[15]Coates v National Trustees Executors & Agency Co Ltd (1956) 95 CLR 494, 507–8 (Dixon CJ).
[16]See, eg, Blore v Lang (1960) 104 CLR 124, 130 (Dixon CJ); Prosser v Twiss [1970] VR 225, 232 (Lush J); Slack v Rogan (2013) 85 NSWLR 253, 285 [127] (White J).
Consideration
Factors that must be taken into account in making a family provision order: s 91A(1) of the Act
At trial, the defendants informed the Court that if any further provision was made for the first plaintiff, and any provision was made for the second plaintiff, they would provide this from their entitlements under the deceased’s will. This means that any family provision order made in favour of the plaintiffs will not have an adverse effect on the other beneficiaries of the estate of the deceased.
Under the deceased’s will as valued by the defendants, their entitlements are as follows:
(a) the first defendant would receive real property and cash valued at approximately $1.025 million comprising the property know as Lot 1 in Certificate of Title Volume 8796 Folio 467 adjoining the homestead property which totals 51.5 acres and all remaining real property including ‘The Homestead’ which comprises the balance of the land in Certificates of Title Volume 7859 Folio 034, Volume 8464 Folios 395, 396, 397, Crown Grants Volume 3904 Folio 667 and Volume 4026 Folio 009 valued at approximately $860 000 on the probate estimated values and all remaining cash in the estate, at trial being $165 000; and
(b) the second defendant would receive real property and cash valued at approximately $265 000, being Certificates of Title Volume 7859 Folio 034 and Volume 8464 Folio 395 and Allotment 60A in Crown Grant Volume 1927 Folio 236.
The second defendant claims that the deceased ‘provided what he has believed was adequate to [the first plaintiff] after his discussion with [the first plaintiff] regarding his Will’. He has not provided any particulars or foundation of the alleged discussion and the first plaintiff does not agree with his statement.
The first defendant claimed that the deceased wished ‘the land continue in the family’, and that the deceased’s ‘strong and fervent wish’ was that ‘his farming land be passed down to the next generation down our family’. He did not elaborate on the foundation for this belief. Similarly, the second defendant claims that the provisions in the will are ‘in line with arrangements in favouring families such as our own’. Other than asserting his belief, he provides no other foundation for this statement as it relates to the deceased’s testamentary intentions. In her testimony at trial, the second plaintiff conceded it was likely that the deceased had spoken of his intention to ‘keep the farm in the family name as the son or that’.
In relation to the second plaintiff, the deceased’s will states that ‘no provision has been made’ for her, as he ‘provided for her during [his] lifetime’. As stated, this can only be a reference to the deceased’s gift of the small block of land to the second plaintiff in 1993 valued at between $15 000 and $20 000. The second defendant claims that the value of this land at $20 000 ‘represents an equal share of what [the deceased] determined to leave to the girls who were not actively involved in working on the land’. On this point, the first defendant states: ‘I believe that [the deceased] was satisfied with this gift and noted in his will that he considered that this was adequate provision for [the second plaintiff] having regard to the size of the estate and his wish for the farming land to remain in the family’. Neither defendant provided any foundation for his statement, belief or claim regarding the deceased’s ‘wish’ concerning the disposition of the land. Other than the statement concerning the second plaintiff, the deceased’s will does not provide any further reasons for the dispositions made in his will.
Factors that may be taken into account in making a family provision order: s 91A(2) of the Act
Many of the discretionary factors that may be taken into account in making a family provision order under s 91A(2) of the Act have been set out above and need not be repeated in this section. The remaining discretionary factors are now set out.
(a) the nature of the relationship, including the length of the relationship, if relevant
The evidence of the deceased’s relationship with the plaintiffs has been set out above.
(b) any obligations or responsibilities of the deceased to the eligible person, any other eligible person and the beneficiaries
The deceased has a widow and five children. The first plaintiff has been given limited provision under the deceased’s will and four of the children are beneficiaries under his will. No provision has been made for one of the children. The deceased had obligations to his widow and five children.
(c) the size and nature of the estate
The evidence of the size and nature of the estate has been set out above.
(d) the current and future financial resources, earning capacity and financial needs of the eligible person and any beneficiary
The evidence of these factors has been set out above.
(e) any physical, mental or intellectual disability of any eligible person or any beneficiary
There are no mental or physical health issues with the plaintiffs. The first plaintiff presented at trial as a much younger person than her age of 93 years, both physically and mentally.
There are no known mental or physical health issues with the other beneficiaries under the deceased’s will.
(f) the age of the eligible person
The first plaintiff is aged 93 years. The second plaintiff is aged 54 years.
(g) any contributions of the eligible person, otherwise than for adequate consideration, to building up the estate or to the welfare of the deceased or the deceased’s family
The first plaintiff’s contribution to building up the estate of the deceased and her contribution to his welfare and their family is unquestionably significant. The first plaintiff was and remains a loving mother and grandmother, having dedicated her adult life to her husband and her family.
The second plaintiff contributed significantly to the deceased’s welfare and contributed in the usual manner with her work for the deceased and has made significant contributions towards the first plaintiff in assisting her with the care of the deceased. She has been a loving and dedicated daughter to the deceased and continues to be so with her mother.
(h) any previous benefits to the eligible person or any beneficiary
Significant benefits have been given to the defendants as set out above. The second plaintiff received a relatively small benefit as set out above.
(i) whether the eligible person was being wholly or partly maintained by the deceased, and if so, the extent and basis of such maintenance
The first plaintiff was being wholly maintained by the deceased. The second plaintiff was not being maintained by the deceased.
(j) the liability of any other person to maintain the eligible person
The defendants have an obligation to pay $10 000 per annum adjusted for CPI to the first plaintiff annually in September of each year. The second plaintiff is married and her husband has certain obligations to maintain her.
(k) the character and conduct of the eligible person or any other person
There is no evidence that reflects adversely on the character and conduct of the plaintiffs.
(l) the effect that a family provision order would have on the amounts received from the deceased’s estate by other beneficiaries
Any provision for the plaintiffs is to be made from the entitlements of the defendants under the deceased’s will.
(m) any other relevant matter
There are no other relevant matters.
The first plaintiff
As the spouse of the deceased at the time of his death, the first plaintiff is an eligible person under the Act and is entitled to make an application for a family provision order, satisfying s 91(2)(a) of the Act.
The defendants accept that, at the time of his death, the deceased had a moral duty to provide for the first plaintiff’s proper maintenance and support. As stated, the defendants subsequently offered the freehold of the home block to the first plaintiff but the issue of an appropriate amount to award as the fund for her immediate needs and future contingencies remained unresolved at trial. The final issue to be determined, which is disputed by the defendants, is what further provision by way of a ‘nest egg’ should be made for the first plaintiff’s proper maintenance and support.
At trial, the defendants calculated a fund that included money in the first plaintiff’s bank account of $53 143, moneys due to her under the will, being the insurance amount of around $37 000 and the first annual CPI adjusted payment of $10 000, and the further agreed payment of $70 000, maintaining that such funds were sufficient for the first plaintiff given, as bluntly put by them, her life expectancy.
The duty of a testator, expressed as a broad general rule, is to provide a widow with the security of an appropriate home in which to live, a secure income and a fund to meet unforeseen contingencies, with an entitlement to independence, self-respect and autonomy.[17] As with all general rules, each proceeding ultimately rests upon the statutory inquiry of the facts and circumstances and involves a consideration of the station in life of the applicant, the age, sex, health and financial resources of the applicant, the size and nature of the estate, the totality of the relationship between the applicant and the testator, and the relationship between the testator and other persons who have legitimate claims upon his or her bounty.
[17]Thompson v Thompson [2015] VSC 706 (11 December 2015) [63]. See also Downing v Downing [2003] VSC 28 (24 February 2003) [44] (Osborn J); Montague v Montague [2002] NSWSC 328 (22 April 2002) [62]–[65] (Austin J); Smith v Barker [2005] NSWSC 14 (2 February 2005) (McLaughlin M); Moore v Moore [2005] VSC 95 (8 April 2005); Abrego v Simpson [2008] NSWSC 215 (13 March 2008) (Windeyer J).
The deceased had the primary moral responsibility to provide for the first plaintiff. The provision of a right of residence in the family home, subject to remarriage or death, his personal chattels of minimal value, the amount of $36 942.05 from the insurance policy and an annual payment of $10 000 (CPI adjusted) to be paid by the defendants is wholly inadequate to provide for her proper maintenance and support.
The first plaintiff was financially dependent upon the deceased for the entirety of her married life, some 70 years. She has been a dutiful and exemplary wife and mother. She supported the deceased’s focus on farming the land and led an extremely frugal lifestyle. She raised the five children and assisted with the upbringing of her grandchildren. She is a person of excellent and strong character and has conducted herself with fortitude in the distressing circumstances of this proceeding.
The oral evidence and the photographs of the first plaintiff’s home reveal it as dilapidated and in need of urgent repair. Many people nowadays would demolish it and start again. The first plaintiff does not want to do this as it is her home and she wants to stay living there for a long as possible. As well as the repairs, the home needs to be modified and updated to cater for her safety and her health. The estimate of $47 000 for the repairs seems optimistic given the significant amount of work required to make the home habitable according to modern standards. The home and its surrounds have received negligible maintenance since it was constructed in the 1960s. As well as the repairs to restore the existing structure to a minimum standard, substantial modifications are required to assist the first plaintiff as she becomes less mobile. The first plaintiff’s desire to remain in her home for as long as possible can be achieved with the assistance of her daughters.
The age of the first plaintiff raises the prospect that, at some point, she may need to move into supported accommodation. Should she transition to some form of supported accommodation, the estimated costs range from $400 000 to $500 000 as provided in brochures from local residential care providers. The amounts required for accommodation bonds for supported accommodation will cost substantially more than what the defendants claim to be the value of the home block. While a sale of the home block would assist with that transition, it may not be enough and, given its rural location and style of home, it may take some time and may not occur at all.
The interim provision provided to the first plaintiff is not adequate for her proper maintenance and support. It provides her with a secure home and a small nest egg for the future. That nest egg is not adequate considering her future contingencies. In her circumstances, it is important that she has her financial independence and sufficient means to provide for her future. This should be provided by further provision to increase her nest egg for future contingencies. In addition to the further provision provided by the interim orders, the first plaintiff should be provided with a further amount of $180 000 so that the total of her nest egg amounts to $250 000. This amount is to be provided by way of a pecuniary legacy to the first plaintiff. This amount provides her with a secure fund for her living and support, her future contingencies and her financial independence and means that she will no longer be bound to rely on the defendants.
The second plaintiff
As an adult child of the deceased, the second plaintiff is an eligible person under the Act and is entitled to make an application for a family provision order, having satisfied s 91(2)(a) of the Act.
The issue to be determined is whether the distribution of the deceased’s estate fails to make adequate provision for the proper maintenance and support of the second plaintiff. In determining what provision should be made in this respect, the Court must have regard to the mandatory matters set out in ss 91A(1) and 91(4)(c) and may have regard to the discretionary factors set out in 91A(2) of the Act.
Generally, the community would expect that a testator would provide for his or her adult child but it would not expect a parent to look after an adult child for the rest of that child’s life and into retirement, especially when there is a spouse who has the primary obligation to do so.[18] The determination of an appropriate amount of provision to be made for the second plaintiff includes consideration of the second plaintiff’s financial resources, her conduct, the responsibility of any other person to maintain her, any benefits previously provided to her by the deceased and any contribution by the second plaintiff towards the welfare of the deceased.
[18]Walsh v Walsh [2013] NSWSC 1065 (12 August 2013) [121] (Hallen J), cited with approval in Smith v Jones [2015] VSC 398 (14 August 2015) [136].
The second plaintiff has been a loving, dutiful and exemplary daughter to the deceased and provided valuable assistance to him for many years. She has received financial assistance of around $15 000 to $20 000 from him during his lifetime. This financial assistance is limited when compared to the financial and other assistance given by the deceased to the defendants, in particular the first defendant, over the years. Little weight should be given to the expressed beliefs of the defendants that imply the farming land should pass only to the male members of the family. While such a sentiment may hold sway in their minds, it is unmeritorious for the purposes of assessing adequate provision for the second plaintiff’s proper maintenance and support.
The second plaintiff is not wealthy and has a significant amount of mortgage and other debt, little superannuation and no buffer for her future demands and the uncertainties in life, such as ill health or the death or incapacity of her husband. Her husband is also not wealthy. At present, a sale of her investment property would not extinguish the debt on that property. At her age, the second plaintiff does not have the capability by reasonable means of providing adequately for her future maintenance and support.
The deceased had a moral duty to provide for the second plaintiff’s proper maintenance and support. The deceased did not provide her with any provision under his will. The statements as to his reasons for excluding her from any provision are difficult given the second plaintiff’s assistance to him during his lifetime. The amount of provision that would provide for her proper maintenance and support is a pecuniary legacy of $150 000. This would enable her to either pay off some of the mortgage debt on the investment property or invest the amount and receive an income from it. This amount of provision would assist in securing the second plaintiff’s financial future.
Conclusion and orders
Any further provision to be made for the first plaintiff and any provision to be made for the second plaintiff is to come from the defendants’ entitlements under the deceased’s will and include the real estate devised to them. As most of the invested funds of the estate have now been used for the interim payment to the first plaintiff, provision for the payment of the pecuniary legacies to the plaintiffs must be raised from the defendants’ entitlements to the real estate under the deceased’s will. For the purposes of securing the provision of the payment of the pecuniary legacies to the plaintiffs, the real estate devised to the defendants must be charged on those properties.
Accordingly, subject to the interim orders made on 16 June 2017 having been complied with by the defendants, the following orders will be made:
(a) Pursuant to s 91(1) of the Administration and Probate Act 1958, in addition to the further provision made by the orders on 16 June 2017, further provision be made for the first plaintiff out of the estate of the deceased by payment to her of a further pecuniary legacy of $180 000.
(b) Pursuant to s 91(1) of the Administration and Probate Act 1958, provision be made for the second plaintiff out of the estate of the deceased by payment to her of a pecuniary legacy of $150 000.
(c) Pursuant to s 97(2) of the Administration and Probate Act 1958, the burden of the payments of the sums of $180 000, pursuant to paragraph 1 of this order, and $150 000, pursuant to paragraph 2 of this order, be charged on the following estate properties devised to the defendants under the deceased’s will:
(v) Lot 1 in Certificate of Title Volume 8796 Folio 467, the balance of the land in Certificates of Title Volume 7859 Folio 034, Volume 8464 Folios 395, 396, and 397, Crown Grants Volume 3904 Folio 667 and Volume 4026 Folio 009, devised to the first defendant; and
(vi) Certificates of Title Volume 7859 Folio 034 and Volume 8464 Folio 395 and Allotment 60A in Crown Grant Volume 1927 Folio 236, devised to the second defendant.
I will hear the parties as to the final form of the orders, including costs. If the parties are unable to agree, short written submissions may be forwarded to the Court by 9 February 2018.
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