Rodgers v Tasmanian Perpetual Trustees Limited

[2013] TASSC 73

[2013] TASSC 73

COURT:  SUPREME COURT OF TASMANIA

CITATION:                 Rodgers v Tasmanian Perpetual Trustees Limited [2013] TASSC 73

PARTIES:  RODGERS, Tania
  v
  TASMANIAN PERPETUAL TRUSTEES LIMITED

FILE NO:  170/2011
DELIVERED ON:  6 December 2013
DELIVERED AT:  Hobart
HEARING DATES:  15 May and 2 December 2013
JUDGMENT OF:  Holt AsJ

CATCHWORDS:

Succession – Family Provision – Criteria for determining application – Treatment of particular applicants – Children – Adult daughters.

Aust Dig Succession [1433]

REPRESENTATION:

Counsel:
             Applicant:  T J Williams
             Respondent:  D F Zeeman
Solicitors:
             Applicant:  Gunson Williams
             Respondent:  Butler McIntyre & Butler

Judgment Number:  [2013] TASSC 73
Number of paragraphs:  26

Serial No 73/2013
File No 170/2011

TANIA RODGERS v TASMANIAN PERPETUAL TRUSTEES LIMITED

REASONS FOR JUDGMENT  HOLT AsJ

6 December 2013

1. The testator, Jozsef Varga, died on 25 October 2010 aged 77 years.  He was a divorcee.  He left one child, the applicant, Tania Rodgers.  The testator left to his daughter a life interest in the entirety of his estate.  She seeks an order substituting the life interest with an absolute interest. 

1. The applicant is aged 50.  She was at the time of the testator's death, and still is, single and without children.  She was and is in poor health, unable to work and receiving a disability pension of approximately $800 per fortnight.  At the time of the testator's death she lived and continues to live in a one bedroom housing department unit at Glenorchy, paying $92 per week for rent.  At the time of death she had no assets of substance and no savings.  She suffered from and continues to suffer from chronic back, joint and neck pain, psoriasis, hypertension, asthma, anxiety, depression and stage 1 kidney disease.  Her poor health, in addition to disabling her from work, restricts her ability to perform household tasks. 

1. The testator had emigrated from Hungary to Australia in 1956.  He worked in Tasmania as a technician for Telstra and its predecessors for 33 years.  He supplemented his income by growing and selling vegetables and plants.  He lived frugally, but despite this and all his work he was unable to build substantial assets.  He would say to his friend "I am always working but don't seem to be getting anywhere".  At the time of his death the testator owned an unencumbered house at Brighton worth about $350,000.  His only other assets besides personal effects were investments having a value of about $165,000. 

1. The testator executed his will in September 2009.  The will was prepared by the respondent, Tasmanian Perpetual Trustees Limited, with the respondent named as executor.  In brief summary, the testator left to his daughter a life interest in all of his assets with the remainder to be divided equally between his two siblings, namely, his brother Miklos Varga and his sister Marianna Varga, who respectively reside in Hungary and Germany.  In the event that his siblings do not live to survive the testator's daughter the share of the siblings goes to their issue.

1. The testator's brother is currently aged 75 years.  He is married with two children. He is a disability pensioner in poor health and without assets.  The testator's sister is currently aged 68 years and married with two children.  She is in poor health.  She owns a flat with her husband which is subject to a mortgage. 

1. When giving instructions for his will the testator stated that he was concerned that his daughter would waste his estate.  He wanted to ensure both that his daughter enjoyed a better quality of life in the long term and that his family in Europe would ultimately benefit from his estate.  There was no question of not wanting to make proper provision for his daughter.  She had provided considerable assistance to her parents as a child spending much of her time, when not at school, assisting her father with his market gardening.  She had left home aged about 18, but maintained a good relationship with her father, although contact between them was often months apart.  The testator was a frequent visitor when the applicant was hospitalised for about a month after suffering injury in a motor vehicle accident in 2000.  In turn the applicant was a frequent visitor when the testator was hospitalised in the last few months of his life. 

1. The testator had kept in contact with his brother and sister in Europe.  When the testator was in the army in Hungary his brother, then aged 16, had employment and assisted the testator by giving him money from time-to-time.  The testator's sister visited him in Tasmania in 2002 and again when he was terminally ill in 2010.  She travelled to Tasmania a third time to attend the funeral.

1. By his will the testator has provided the applicant with the ability to leave her housing department unit and live in her own home, if she wishes.  She also has extra income to supplement her pension.  However, the applicant has no access to the capital and so no opportunity to acquire assets of substance, such as a replacement for her 35 year old car.  Without access to capital she does not have the security of a buffer against the vicissitudes of life.  She will not be in a position to provide an accommodation bond should she wish in later life to move into nursing home accommodation of her choice.  The extra income, of course, will help the applicant from week-to-week but may not be sufficient for the applicant to provide herself with modest luxuries such as an occasional holiday. 

1. The testator's brother and sister wish to preserve the bequests to them and instructed a solicitor in Tasmania accordingly.  The solicitor prepared affidavits on their behalf.  Thereafter, presumably to limit costs, the solicitor applied for and obtained leave not to participate at the hearing with the respondent/executor to contest the applicant's claim and seek to uphold the provisions of the will. 

1. The application has been made pursuant to s3(1) of the Testator's Family Maintenance Act 1912 which is as follows:

"If a person dies, whether testate or intestate, and in terms of his will or as a result of his intestacy any person by whom or on whose behalf application for provision out of his estate may be made under this Act is left without adequate provision for his proper maintenance and support thereafter, the Court or a judge may, in its or his discretion, on application made by or on behalf of the last-mentioned person, order that such provision as the Court or judge, having regard to all the circumstances of the case, thinks proper shall be made out of the estate of the deceased person for all or any of the persons by whom or on whose behalf such an application may be made, and may make such other order in the matter, including an order as to costs, as the Court or judge thinks fit."

1. The applicant, being a child of the testator, is a person specified in the legislation as eligible to bring the application. In the terms of s3(1), the discretion is not enlivened unless it is first determined that the applicant has been "left without adequate provision for (her) proper maintenance and support". The assessment is undertaken "having regard, amongst other things, to the applicant's financial position, the size and nature of the deceased's estate, the totality of the relationship between the applicant and the deceased, and the relationship between the deceased and other persons who have legitimate claims upon his or her bounty". Singer v Berghouse (1994) 181 CLR 201 at 210. The question is answered as at the date of death. White v Barron (1980) 144 CLR 431 at 437. In making the appraisal the court is to "connect the general but value-laden language of the statute to the community standards". Vigolo v Bostin (2005) 221 CLR 191 at par[25] per Gleeson CJ.

1. The jurisdictional question in the circumstances of the present case is whether, by failing to give to the applicant access to the capital of his estate, the testator has left her without adequate provision for her proper maintenance and support. 

1. Pursuant to s8A of the Act, regard may be had to the testator's reasons for not making further provision for his daughter.  The testator was concerned that if given access to capital his daughter would waste it.  He wanted to ensure that she benefited from his estate in the long term.  He wanted the capital preserved for ultimate distribution to his relatives in Europe.

1. The testator's concerns were not without some foundation.  In 2001 the applicant received a net payment of approximately $50,000 for damages for the personal injury which she had suffered in the motor vehicle accident the previous year.  She spent most of it quickly.  Her expenditure included $10,000 restoring an old motor vehicle and $5,000 for a holiday.  Within a short time she had only about $10,000 left and this sum was completely dissipated over the next two or three years.  There is also some subsequent support for the testator's opinion about his daughter's spendthrift nature in the events following his death.  The applicant has received approximately $40,000 in income from the estate within the last twelve months.  All but about $1,000 of this has been spent.  The applicant has not kept money aside to cover her taxation liability in respect of the payments.  She has not kept money aside to cover the pension adjustment which will inevitably occur as a result of the receipt of the estate income.  The applicant has been quoted $189 per month for health insurance, but has not used the extra income to take out such insurance.

1. Assuming it to be the case, but without deciding it, that the applicant is a spendthrift, this would not justify a conclusion on the jurisdictional question that the applicant has failed to demonstrate that she has been left without adequate provision. 

1. The testator did not leave a widow.  The applicant is an only child and the only person that the testator might have been obliged to provide for.  The applicant is in poor health and poor financial circumstances.  She has no access to capital, for example, to replace her 1978 motor vehicle.  She has no access to capital to pay unforeseen expenses and no capital buffer to provide her with some security against the vicissitudes of life.  In this respect the bequest to her of income only fell short of making adequate provision for her proper maintenance and support. 

1. It follows that the jurisdictional question is answered in favour of the applicant. 

1. I now turn to the question of what provision, if any, ought be made in the circumstances of the case to properly provide for the applicant. 

1. I commence with the recognition of the basic right of testators to exercise freedom of testamentary disposition.  The court is not entitled to simply re-write wills to make them accommodate an individual judge's view of how the testator should have exercised testamentary power.  The extent to which the court may interfere is limited.  All that the legislation authorises is the ordering of such provision as is proper where adequate provision has not been made. 

1. The applicant should have access to capital, but in my opinion she does not require access to the whole of the capital in order to be properly provided for.

1. The estate currently comprises $316,769.19 being the balance proceeds from the sale of the testator's Brighton home and $148,172.03 being the current value of the balance of the estate which is held on investment. 

1. The sum of approximately $316,000, being the balance proceeds from the sale of the testator's home, can be applied towards the acquisition of a house by virtue of the combined operation of the will and the Settled Land Act 1884. However, the applicant might need a little more to acquire suitable accommodation and in any event the applicant should be required to keep a home insured, unencumbered and maintained. In addition, it is common ground that a life interest does not authorise the use of capital to pay an accommodation bond should the applicant in later life wish to or need to move to nursing home accommodation. Proper provision requires adjustment to the bequest in the will to accommodate these matters.

1. The provision in the will is also inadequate in that the applicant has no capital to be used for immediate needs, unforeseen expenses or modest luxuries.  Even if the will had conferred upon the trustee a discretion to apply capital for the benefit and support of the applicant that would not be sufficient to fulfil the testator's obligation.  The trustee may not exercise the discretion and if the discretion is exercised it may be influenced by a desire to preserve the estate for the beneficiaries who take at the expiry of the life interest.  The applicant should have the ability to purchase a replacement car, to provide herself with modest luxuries such as holidays and to have the comfort and security of a capital fund to cover unexpected and unbudgeted expenses.  I consider that proper provision in this regard requires a payment to the applicant of $50,000. 

1. I consider these provisions concerning accommodation and access to capital to be sufficient and not constituting an interference with the will of the testator beyond that which is necessary for proper provision to be made for the applicant. 

1. Orders will be made having the following effect:

(1)The trustee will be empowered to apply capital, beyond the fund of $316,000, towards the purchase of a new home for the applicant with the proceeds on the sale of such a home to go back into the estate.

(2)The trustee will be empowered to apply income, in priority to payments directly to the applicant, to the payment of insurance, rates and maintenance expenses for any home purchased in substitution for the testator's Brighton home.

(3)The trustee will be required to apply capital to the payment of a nursing home accommodation bond upon the request of the applicant upon terms that the refundable balance of any such bond be paid back into the estate.

(4)The applicant will be paid a sum of $50,000 out of the estate and retain her life interest in the balance.

1. I will hear counsel as to the precise terms of the orders to be made.