Ross v Gordon
[2021] ACTSC 41
SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
| Case Title: | Ross v Gordon |
| Citation: | [2021] ACTSC 41 |
| Hearing Date(s): | 20 April 2020; 22 April 2020; 29 July 2020 |
| Decision Date: | 24 March 2021 |
| Before: | Loukas-Karlsson J |
| Decision: | See [210] |
Catchwords: | TRUSTS AND ESTATES – statutory interpretation – Cheques Act 1986 (Cth) – Whether liability created through operation of Cheques Act – whether liability greater than assets in estate – whether assets available for distribution in accordance with will – claim for equitable tort of devastavit – claim for fraud on the power – claim for breach of fiduciary duty |
| FAMILY PROVISION AND MAINTENANCE – Claim under the Family Provision Act 1969 (ACT) – Whether adequate provision | |
| for the proper maintenance, education, or advancement in life of | |
| the plaintiff made under the will – no order for further provision made – claim dismissed | |
| Legislation Cited: | Administration and Probate Act 1929 (ACT) pt 4.2; s 41C Bankruptcy Act 1966 (Cth) s 108 Cheques Act 1986 (Cth) ss 10, 17, 35, 36, 50, 53, 58, 59, 60, 69, 70, 72, 74 Civil Law (Wrongs) Act 2002 (ACT) s 15 Domestic Relationships Act 1993 (ACT) Evidence Act 2011 (ACT) s 131 Family Law Act 1975 (Cth) Family Provision Act 1969 (ACT) ss 7, 8, 22 Succession Act 2006 (NSW) pt 3.3 |
| Cases Cited: | Austin v Austin (1906) 3 CLR 516 Australian Conservation Services v Liladel Holdings [2017] ACTSC 162; 12 ACTLR 124 Australian Prudential Regulation Authority v Kelaher [2019] FCA 1521; 138 ACSR 459 Barns v Barns [2003] HCA 9; 214 CLR 169 Bovaird v Trustee of the Bankrupt Estate of Frost [2010] FCA 1159; 118 ALD 263 Brunoro v Brunoro (No 3) [2016] ACTSC 189 Chan v Zacharia (1984) 154 CLR 178 Commissioner of Stamp Duties (Queensland) v Livingston [1965] AC 694 Crossman v Riedel [2004] ACTSC 127 Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (1998) 28 ACSR 688 Forster v Jododex Australia Pty Ltd (1972) 127 CLR 421 |
| Frost v Bovaird [2014] FCAFC 20; 223 FCR 275 | |
| Government Employees Superannuation Board v Martin (1997) 19 WAR 224 Johnson v Trotter [2006] NSWSC 67 Jones v AMP Perpetual Trustee Company NZ Ltd (1994) 1 NZLR 690 Jones v Dunkel (1959) 101 CLR 298 Kearns v Hill (1990) 21 NSWLR 107 Keech v Sandford (1726) Sel Cas T Ch 61; 25 ER 223 Kulczycki v Public Trustee [2013] ACTSC 230 | |
| Lancedale Holdings Pty Ltd v Heath Group Australasia Pty Ltd | |
| [1999] NSWCA 460; 33 ACSR 247 MacGregor v MacGregor [2003] WASC 169 Mayfair Trading Co Pty Ltd v Dreyer (1958) 100 CLR 428 Mercanti v Mercanti [2016] WASCA 206; 50 WAR 495 Mitchell v McLear [2020] VSC 25 Midgley v Midgley [1893] 3 Ch 282 Muschinski v Dodds (1984) 160 CLR 583 | |
| National Trustees and Executors and Agency Company of | |
| Australasia Ltd v Dwyer (1940) 63 CLR 1 Nocton v Lord Ashburton [1914] AC 932 Norman v Federal Commissioner for Taxation (1962) 109 CLR 9 | |
| O’Halloran v R T Thomas & Family Pty Ltd (1998) 45 NSWLR 262 | |
| Re Blow [1914] 1 Ch 233 Re Burton (1994) 126 ALR 557 Re Dion Investments Pty Ltd [2014] NSWCA 367; 87 NSWLR 753 Re Lovett (1876) 3 Ch D 198 Re Marsden (1884) 26 Ch D 783 Re Permanent Trustee Australia Ltd (1997) 137 FLR 190 Re Rownson (1883) 29 Ch D 358 Re Stevens [1898] 1 Ch 162 Talent v Talent [2020] ACTSC 240 Valverde v Inch [2018] NSWSC 366 Vatcher v Paull [1915] AC 372 Vigolo v Bostin [2005] HCA 11; 221 CLR 191 Warman International Ltd v Dwyer (1995) 182 CLR 544 Wong v Burt [2005] 1 NZLR 91 Youyang Pty Ltd v Minter Ellison Morris Fletcher [2003] HCA 15; 212 CLR 484 | |
| Parties: | James Young Ross (Plaintiff) Donna Maree Gordon (First Defendant) |
| Donna Maree Gordon as Trustee of the Olga Hart Trust (Second Defendant) | |
| Donna Maree Gordon as Executor of the Estate of Olga Hart (Third Defendant) | |
| Representation: | Counsel |
| T Crispin (Plaintiff) W Sharwood (Defendant) | |
| Solicitors | |
| Ray Swift Moutrage & Associates (Plaintiff) | |
| Sharman Robertson (Defendant) | |
| File Number(s): | SC 80 of 2019 |
| LOUKAS-KARLSSON J | |
| Introduction |
1. Mr James Young Ross (the plaintiff) brings a claim against Ms Donna Maree Gordon (the defendant) on three bases. First, in her own right; second, in her capacity as trustee of the Olga Hart Trust (the Trust), and third, in her capacity as Executor of the estate of her late mother, Olga Hart (the deceased).
Relief Sought
2. The plaintiff seeks declaratory relief and an order for provision pursuant to s 8 of the Family Provision Act 1969 (ACT) (Family Provision Act). In the alternative, the plaintiff seeks damages for the tort of devastavit, and relief in equity.
Chronology
3. Many of the relevant dates in this matter were disputed as between the plaintiff and the defendant. A chronology, with relevant disputed dates and facts noted, follows:
4. The deceased and the plaintiff entered into a romantic relationship in the mid-1980s.
5. The plaintiff asserts that he and the deceased began to cohabitate ‘in or around 1985’ and continued to do so until ‘around 2004’. The defendants assert that cohabitation
began ‘in or around 1987’, until ‘in or around 2003’. Not much turns on this dispute in
dates.
6. The plaintiff asserts that following their separation he and the deceased remained in a close relationship of mutual emotional and financial support. The defendants deny that a close emotional and financial relationship continued to exist following the separation.
7. Following their cessation of cohabitation, neither the deceased, nor the defendant sought a property settlement pursuant to the Domestic Relationships Act 1993 (ACT), the Family Law Act 1975 (Cth), or by informal arrangement.
8. The deceased made wills in 1996, 2009, 2015, 2016, and 2017. The plaintiff asserts that each of these wills provided for the plaintiff in similar terms, being that the plaintiff
was to receive a percentage of the value of the deceased’s residential property upon
her death, and that the plaintiff was named as an executor. The defendants assert that the 2009 will and those executed thereafter were not in similar terms to the 1996 will.
The defendants assert that the share of the deceased’s residential property
bequeathed to the plaintiff was reduced to a one-third share. The defendants claim that the plaintiff was named as an executor of the 2017 will, in conjunction with the first defendant, and similarly in a further will made on 5 June 2018.
9. In December 2017, the deceased suffered a heart attack. In February 2018, the deceased was diagnosed with stage four lung cancer.
10. On 28 August 2018, the deceased met with Mr Dwyer, solicitor. The deceased was
“lucid, and consistent in relating her wishes”. Mr Dwyer was not cross-examined on his
affidavit (T108.43-45).
11. Mr Dwyer advised the deceased that a “no contest” clause in her will would be
unenforceable. Mr Dwyer advised that the deceased would have to dispose of all her property inter vivos, that is, during her lifetime if she wanted to ensure there was no Family Provision Act challenge.
12. Mr Dwyer advised in general terms that the deceased could burden her estate with liability so there was no net value upon her death. This would require the deceased to rely on the defendant (in her capacity as trustee) to pay the $200,000.00 which the deceased wanted to go to the plaintiff, provided he did not contest the will.
13. The deceased was advised in relation to an express trust inter vivos with the deceased
as trustee for the defendant and her family and the writing of cheques to “exhaust” her
estate.
14. On 29 August 2018, the deceased established the Olga Hart Trust by deed. The deceased was the settlor, appointor, and trustee. On or soon after 29 August 2018, the deceased drew two cheques (the Cheques) in favour of the Olga Hart Trust. The sum of these cheques came to $1,200,000.00. One cheque was in the sum of $500,000.00, and the other in the sum of $700,000.00. Clause 10 of the Trust operated so that upon death the defendant succeeded her mother as trustee.
15. On 5 September 2018 the deceased prepared her final will, naming the defendant as the sole executor (the Will). The plaintiff was not made aware of the existence of this will until after the death of the deceased. It is a term of this final will that the plaintiff receive a cash sum of $200,000.00 but not otherwise inherit property from the
deceased’s estate.
16. On 30 September 2018 the deceased passed away. On or around 30 September 2018 the defendant became the trustee of the Trust.
17. On 18 October 2018 the plaintiff filed a caveat against probate in respect of the Estate of Olga Hart (the Estate).
18. On 25 October, the plaintiff received a letter informing him that the Estate had insufficient assets to pay the Cheques issued by the deceased testator to the Trust, and that therefore the gifts and bequests in the Will would not be satisfied. The plaintiff was further informed that the defendant would pay to the plaintiff the bequest in the Will if he agreed to abandon any rights against the Estate by 14 November 2018.
19. The plaintiff commenced these proceedings on 26 February 2019. Sealed copies of the Originating Claim and Statement of Claim were served on the defendants on 7 March 2019.
20. On 25 March 2019, the first defendant was granted probate as the executor of the Estate in relation to the Will.
21. In late April 2019, the third defendant presented the Cheques at a financial institution. The Cheques were dishonoured on 26 April 2019.
Issues for determination
The plaintiff’s case is put in the alternative. The issues for determination are as follows:
1) Does the Estate, at law, have sufficient assets to make the bequests provided for in the Will?
2) If the answer to Question 1 is “No”, has the defendant, by presenting the
Cheques:
i. Laid waste to the estate giving rise to liability for devastavit?;
ii. Committed a fraud on the power? or;
iii. Breached her fiduciary duty?
3) If the answer to any part of Question 2 is “Yes”, what is the appropriate
remedy?
4) If the answer to any of Question 2 is “Yes” and an appropriate remedy is
available, does the Will make adequate provision for the property
maintenance, advancement, and education of the plaintiff?
23. The defendants contend the following, put in the alternative:
1) The Cheques, indorsed[1] by the deceased on 29 August 2018, were held by the deceased in her capacity as trustee of the Trust. The Cheques were each a chose in action, and therefore property (or value) capable of being held on trust prior to the death of the deceased. As such, prior to her death the deceased placed all of her assets in the Trust under the control of the trustee, and the terms of the Trust deed. Therefore, the defendants contend that immediately prior to her death the deceased had no assets, and on her death the Estate had no positive value.
[1] ‘Indorse’ is the term used in the Cheques Act.2) Alternatively, the defendants contend that the trustee has established a
claim under the Cheques Act. The defendants’ claim pursues a different
path through the Cheques Act than that contended for by the plaintiff, and is said by the defendants to achieve the same result as their first proposition, that is, the Estate having no positive value.
Evidence
Evidence of Mr Ross
24. The plaintiff gave evidence by way of four affidavits affirmed on 11 November 2018, 15 February 2019, 26 August 2019, and 17 April 2020. The plaintiff also gave oral evidence at the hearing of this matter. What follows is a short summary of his evidence.
25. The plaintiff gave evidence that he and the deceased had begun their cohabitation in 1987. They travelled together as a couple overseas in 1998. He stated that they had known each other for five years prior to their cohabitation. They formally, but amicably
separated in ‘late 2003’ (T15.12-15). At that time the plaintiff was not in employment
but described his occupation as a subcontract bricklayer.
26. The plaintiff stated that he and the deceased continued to have life plans which involved taking care of each other in their old age. He states that there were a number of wills made by the deceased prior to the current Will, which included him as a beneficiary and joint executor with the defendant. Annexed to his affidavit of 11 November 2018 were two prior wills from 1996 and 1997 naming the plaintiff as a joint executor.
27. Between 2004 and 2018, the plaintiff and the deceased lived separately, however he described constant contact, with the plaintiff assisting with household duties which the deceased was unable to do herself. The plaintiff also described assisting with cleaning,
renovations, and other work around the deceased’s property in Chapman. The plaintiff
agreed that the deceased would pay and reimburse him for his work and expenses in relation to these works, although not at a rate consistent with what he would charge a client (T18.25-30).
28. The deceased was diagnosed with lung cancer in February 2018 following a heart attack in 2017. The plaintiff moved into the Chapman property soon afterwards to assist with her care, with household duties, and accompanying her to hospital visits.
29. The plaintiff has not been in employment for “five or six years”. He states that he is
barely able to get by on a pension, with his budget and savings depleting quickly due to his utilities and daily living expenses. In cross-examination the plaintiff agreed that he regularly consumes alcohol, and did so with the deceased, although he stated that he did not encourage her to do so (T21-22). The plaintiff stated that he had brought alcohol into the hospital while the deceased was there and had consumed some while he was there. He recalled the deceased having a fall at the hospital, and also that a gentleman at the hospital had spoken to the deceased about alcohol while he was present (T33-34).
30. The plaintiff states that he is unlikely to find full-time employment and has no other family members upon which he can rely. He currently lives at his Queanbeyan property, which he inherited from his mother.
31. The plaintiff described his surprise and disappointment to learn that the deceased had changed her financial affairs during her final years. He was also surprised to learn that the defendant had been assisting the deceased with organising these new arrangements. In cross-examination, the plaintiff agreed that he had listened to the
audio recordings of the deceased’s discussions with the solicitor who drafted the Will,
and her explanations to that solicitor as to why she had changed the nature of the
legacy to him (T35).32. The plaintiff agreed that the deceased had provided him with $40,000 before her death, and that this money remained in a Commonwealth bank account in his name. He gave extensive evidence about the nature of his finances, and spending habits in recent years.
33. In cross-examination the plaintiff denied ever having stated to the defendant that he was intending to sue her for more than the amount that had been left to him in the
deceased’s Will. He denied ever directing pejorative language toward the defendant
(37-38). He did accept that after being played an audio recording of the deceased asking him to accept her decision in relation to the Will he had stated to the defendant
“That doesn’t mean jack shit to me” and “I’m happy to get nothing. We’re going through
the court system” (T48.1-10).
Evidence of Mr McCormack
34. Mr McCormack gave evidence by way of affidavit affirmed 12 March 2020 and gave evidence at the hearing of this matter.
35. Mr McCormack is the neighbour of the plaintiff at his property in Queanbeyan. He states that the plaintiff returned to the property in 2003 to live with his mother, whose health
was declining. He states that following the death of the plaintiff’s mother, he observed
the deceased visiting the plaintiff, and spoke with her during her visits. He states that he learnt during these conversations that the deceased had been assisting the plaintiff following the death of his mother.
36. Mr McCormack recalled the defendant arriving at the plaintiff’s Queanbeyan property
in late October 2018 carrying a large white bag. He overheard that the plaintiff had
been locked out of the Chapman residence. Mr McCormack described the defendant’s
manner as ‘abrupt and loud’. He stated that he had been surprised when he learned
that the deceased had a daughter, but he was aware that the deceased had a nephew.
37. In cross-examination, Mr McCormack described meeting the plaintiff and the deceased
in April 2016, noting that the plaintiff had to remind the deceased that his mother’s
name had been Nancy. He stated that he had observed the plaintiff and the deceased on a number of occasions, behaving as though they were a married couple, that is, he observed them walking arm-in-arm (T55.40-45). The plaintiff informed Mr McCormack in February 2018 that the deceased had been diagnosed with cancer, and that he was intending to care for her until her death. He states that he had no doubt that they were a couple. He stated that he had thought that the deceased had been living at the Queanbeyan property due to how often he would see her there.
Evidence of Ms Makev
38. Ms Makev gave evidence by way of affidavit affirmed on 13 March 2020 and gave evidence at the hearing of this matter.
39. Ms Makev has known the plaintiff and the deceased for approximately 15 years. She believes met the deceased in 1997 and that they became personal friends after she commenced a traineeship at the Department of Defence where they both were employed. She met the plaintiff through her friendship with the deceased, and while aware that they had separated and were not cohabiting from 2003 onwards, described
her understanding of their relationship as “not only partners, but best friends”. Ms
Makev maintained regular telephone contact with the deceased, and noted that the plaintiff had often been present at the Chapman property when those conversations occurred. Ms Makev stated that the plaintiff had expressed a desire to become the
deceased’s sole carer following her cancer diagnosis.
40. In cross-examination, Ms Makev recalled that she would speak regularly with the
deceased on the telephone, and that the plaintiff was often present at the deceased’s home when those conversations occurred. Ms Makev’s impression of the relationship
between the deceased and the plaintiff following their separation was that ‘they still got
along very well’.
Evidence of Ms Gordon
41. The defendant gave evidence by way of affidavit affirmed 27 September 2019. Annexed to that affidavit are copies of the following documents:
1) A copy of the Probate of the will of the late Olga Hart naming the defendant as executor.
2) A copy of the inventory of the property of the estate of Olga Hart.
3) An updated inventory including interest and dividends earned and bank charges incurred.
4) A copy of the deed declaring the Olga Hart Trust executed on 29 August 2018.
5) A copy of an affidavit affirmed by the defendant on 4 December 2018, including an audio recording referred to at [18] of that affidavit.
6) Copies of three cheques signed by Olga Hart on 29 August 2018 directing the Commonwealth Bank to pay out of her personal account held by that
Bank to the “Olga Hart Trustee Olga Hart Trust” three amounts: $500.00,
$500,000.00, and $700,000.00.
7) Copies of two notices received from the Commonwealth Bank notifying the defendant that the Cheques had been dishonoured, following her attempt to deposit those cheques in her capacity as trustee of the Olga Hart Trust on 26 April 2019.
8) A copy of the appraisal of the deceased’s largest asset, her former
residence in Chapman valuing the property in the range of $800,000.00 -
$900,000.00.9) A copy of a document signed by the deceased on 31 August 1990 stating that she would not make any claim to any possession or property owned by the plaintiff in the event of the dissolution of their de facto relationship.
10) Two file notes made by the deceased on 29 August 2018, describing her relationship with the plaintiff.
11) A valuation of the plaintiff’s Queanbeyan property, found on the internet,
estimating its value at between $450,000.00 - $500,000.00.
42. The defendant gave further evidence at trial on 22 April 2020.
43. The defendant agreed that there had been some conflict in her relationship with the deceased, with a significant example of this conflict being a four to five-month period in early 2017 in which they did not speak. This conflict was broadly centred around the
defendant’s relationship with her father, the defendant’s children, and the deceased’s
smoking.
44. The defendant recalled that the deceased and the plaintiff separated and ceased their romantic relationship in 2003, however they still maintained contact. The plaintiff would
occasionally visit the defendant’s home with the deceased, and was present at times
when the deceased was looking after the defendant’s children.45. The defendant further recalled that the during 2005 and 2012 the deceased dated three different gentlemen, George, Nick, and Zoran, for periods of time, but never cohabited.
Following the deceased’s cancer diagnosis in 2017, the defendant recalled issues
arising between herself and the plaintiff in relation to the deceased’s alcohol
consumption (T78-79), the deceased’s personal property (T80-81), and her finances
(T82-83). The defendant reported a difficult relationship with the plaintiff during this
time, stating that the plaintiff had been annoyed by the deceased’s decision to grant
the defendant an enduring power of attorney, rather than a joint power of attorney
including the plaintiff (T77.23-30).47. The defendant also recalled periods of conflict between the deceased and the plaintiff
in 2018 after the plaintiff had moved into the deceased’s home for the purpose of
providing care. The defendant stated that the plaintiff would often speak discourteously
towards her and other guests when they would visit (T86.10-42).48. In cross-examination, the defendant agreed that she had had difficulties with all of the
men that had come into the deceased’s life following her separation with the
defendant’s father (T97.1-5). The defendant stated that she had not become aware of
the deceased’s decision to establish the Trust, or fully appreciate the deceased’s
motives until she had met with her own legal counsel and became aware of the contents
of the contents of the affidavit prepared by the deceased’s solicitor, Mr Dwyer (T103.25- 35). This was also the first time that she became aware of ‘no contest’ clauses and the
purposes for which the Trust had been established by the deceased (T109.30-42).
49. The defendant agreed in cross-examination that the deceased had not expressed any distrust of the plaintiff until 2018, following her cancer diagnosis (T112.28-36). The defendant recalled having a frank conversation with the deceased following her diagnosis, in which the deceased raised her desire to change her will, and the appointment of an executor of a new will was discussed (T113.1-25). The defendant
also described the events following the deceased’s death on 30 September 2018,
including correspondence being sent to the plaintiff, requiring him to vacate the
deceased’s property where he had remained living following her death, and the playing
of a recording made by the deceased to the plaintiff in which the deceased requested that the plaintiff accept $200,000.00 and refrain from challenging the will (T126.4-39; 130.4-40).
Carers ACT Subpoena Material
50. Tendered through the plaintiff and forming Exhibit 1 were a number of records of counselling notes pertaining to the deceased. They briefly describe her relationships
with the plaintiff, the defendant, and the deceased’s nephew. I note that the plaintiff is
referred to as “her ex-de facto” in the documents under the dates 1 February 2018 and
23 February 2018. In the Carer Registration Form completed by the deceased on 20
July 2017, the deceased describes her relationship to the plaintiff as “Ex-de facto”. The
Carer Registration Form completed by the plaintiff on 2 March 2018 describes his
relationship to the deceased as “Family Friend”.
Evidence of Mr Dwyer
51. Mr Dwyer gave evidence by way of affidavit sworn on 8 October 2019 (the Dwyer
Affidavit) and was not required for cross-examination at trial. Mr Dwyer’s evidence was
that he had been introduced to the deceased by the defendant on the afternoon of 28 August 2018. The defendant had arranged for this appointment to occur on her
mother’s behalf, for the purpose of a will interview. Mr Dwyer had informed Ms Gordon
that an assessment of the deceased’s capacity would be necessary, and that she could
not be present while the interview with the deceased was conducted.
52. Mr Dwyer deposed that despite his expectation that it may be difficult to ascertain the
wishes of a person with a brain tumour, the deceased had been “perfectly lucid and
consistent in relating her wishes as to whom she wanted to leave her property.” He
stated that the deceased had been able to recount “pretty much anything” in her life
that she had been asked about, and that any initial doubts about her testamentary
capacity had been dispelled within five minutes of speaking with her.53. The deceased had brought with her a draft will, which Mr Dwyer advised was unsatisfactory. In particular, it appeared to make provisions which were unenforceable
in Australian law. The deceased stated that she wished to include a ‘no contest’ clause
in her will due to her concern that the plaintiff might want to claim more than she wished to give him. Mr Dwyer advised that such provisions were unenforceable, and that the deceased would have to dispose of all of her property inter vivos if she wanted to be very sure that there was to be no challenge for family provision.
54. Mr Dwyer explained to the deceased, in general terms, that she could burden her estate with liabilities so that it would have no net value upon her death, but that this would
require the deceased to rely upon the defendant’s honour to pay the $200,000.00 which
the deceased wanted to go to the defendant, provided that he did not contest the will. After establishing that the deceased did believe that the defendant was an honourable person who could be trusted to carry out her wishes, Mr Dwyer explained that, if she wished, the deceased could establish an inter vivos trust with herself as trustee for the defendant and her family. The deceased would write cheques to herself as trustee of sufficient value to exhaust her estate when the cheques were presented for payment. Mr Dwyer then prepared a declaration of trust for the deceased which she executed and for which she wrote out three cheques to establish and fund the trust.
55. Mr Dwyer later prepared a formal will for the deceased and sent the draft to her. On 5 September 2019 the deceased came to see Mr Dwyer again, and executed that new will.
56. Mr Dwyer recorded part of the interview, in four parts, with the deceased’s knowledge
and permission. A copy of these recordings was transferred to a memory stick and
exhibited to the affidavit. The affidavit states as follows:During the interview, with [the deceased’s] permission, I recorded some parts of it, about a
half in total, with a new iPhone app which I had used a little bit before. I knew I could not email large files to my server, so I did not try to record everything. However, what I recorded is, I believe, consistent with what I have recalled about. A copy of four recordings has been
transferred sequentially to a memory stick which is exhibited hereto and marked “TMD 1”.
Recordings
57. There is a transcript of what is said on the audio recordings exhibited to the Affidavit of Mr Dwyer. This transcript is used for reference as set out below. Relevantly:
•
The deceased did not consider the plaintiff to be a current partner/spouse: “… he was telling the nurses at the hospital ‘cause they said, “Is he your husband?” and
I said “No”’; [2]
[2] Page 3 (0.7) to page 4 (0.7); page 7 (0.8); page 14 (0.1); page 25 (0.5).
• The deceased did not want the plaintiff to be able to challenge her wishes: “I don’t want him to contest anymore”[3]; “a clause in about if he wants to contest it
[3] Page 5 (0.4) and (0.8); page 14 (0.6).that it comes out of his $200,000.00”;[4]
[4] Page 22 (0.4).
• The deceased wanted to ensure that most of her estate would go to the defendant and the defendant’s children but with $100,000.00 to go to her nephew.[5] • The deceased spoke of a change of character in the plaintiff and a change in her [5] Page 6 (0.3) and (0.4).
relationship with him. Relevantly stating: “We used to get on really well until I became sick”;[6] “I felt sorry for him”;[7] “Since he’s come back on the scene I’ve
[6] Page 6 (0.3) and (0.4).
[7] Page 9 (0.1).
never seen anyone change so much”;[8] “Now he’s sneaking up to the door to listen”;[9] “We can’t even have a conversation without him, ‘cause the monitors
[8] Page 10 (0.1).
[9] Page 10 (0.2).
there and turned it off inside my bedroom. And when he comes back in he turns
it back on. So he can listen to what we’re talking about. Oh it’s horrible.”;[10] “He’s never been like that”;[11] “And so I know he’s lying. He never used to lie at all”;[12] “I
[10] Page 10 (0.3).
[11] Page 11 (0.1).
[12] Page 12 (0.6).
told him a few times ‘Jim I can’t handle this. The way you are treating Donna,
Evan’ and it’s just that, it’s not sinking in”;[13] “And the more he’s there the worse
[13] Page 12 (0.8).
he is. Last night… Since my illness he’s just gone overboard”;[14] “Yeah for some
[14] Page 13 (0.1).
reason, because he’s changed so much I think he’s gone to get some legal advice or something”;[15] “And he hasn’t even thanked me for leaving him money or giving
[15] Page 27 (0.5).
him things”.[16]
[16] Page 27 (0.9).
• The deceased expressed concern that the plaintiff was not contributing: “’Cause he … and when he stated being greedy, taking things and me paying for all the bills… He doesn’t contribute to any of that”;[17] “I told him at one stage it was going
[17] Page 14 (0.7).
to be $300,000.00 and then when I noticed he was being greedy and taking the
money for food, for everything he didn’t use his card or I would be repaying his visa card or transferring money. Then I thought ‘No’ and he hasn’t even offered.
So I thought ‘well I’ll take $100,000.00. Donna buys me food every day. He’s only
taken me once out”.[18]
[18] Page 15 (0.4).
• Expressed great appreciation for her daughter and expressed upset about the plaintiff’s behaviour: “I’ve never had a daughter… or seen a daughter give me
showers, massage me ever morning, look after me so much, take me out. Without her I wouldn’t be motivated. I reckon I would have been dead”;[19] Was upset by the plaintiff’s behaviour;[20] Welcomed the advice from her solicitor, Mr Dwyer,
[19] Page 17 (0.6).
[20] Page 10 (0.3 – 0.9); page 18 (0.1 – 0.2).
about avoiding a claim against her estate.[21]
[21] Page 25 (0.8) to page 26 (0.9).
Submissions
Submissions of the Plaintiff
Credibility of the plaintiff
58. It was submitted that the plaintiff gave clear and consistent answers in cross- examination, and had made admissions with respect to his alcohol consumption despite clear discomfort and embarrassment. It was submitted that the plaintiff had denied using harsh language towards the defendant on some occasions, and had admitted doing so on others. It was submitted that these admissions demonstrated an honest attempt to assist the Court.
It was submitted that the plaintiff’s characterisation of his relationship with the deceased
had been corroborated by the evidence of Mr McCormack and Ms Makev, both of whom were submitted to be reliable and with no personal stake in the outcome of the proceedings.
Credibility of Ms Gordon
60. It was submitted that the defendant had conceded that she hated the plaintiff from the beginning of the commencement of his relationship with the deceased, that she saw him as an interloper, and that the deceased was aware of this lack of respect for the plaintiff.
61. The plaintiff did not call Mr Dwyer, the deceased’s solicitor, for cross-examination. The
plaintiff did not dispute his account of events as set out in his affidavit.
Submissions of the defendants
Credit
62. The defendants submitted that this was not a case in which the result turns on the credit of a witness, aside from its role in considering the factors under s 8(3) of the Family Provision Act. It was submitted that the plaintiff was prepared to exaggerate his financial situation in an attempt to make himself appear more in need. It was submitted that this was demonstrated by differences between his affidavit of 26 August 2019 at
[17] – [23] and his oral evidence at (T28.17-30; T30.43). It was submitted that his
disavowal of responsibility for this should be rejected (DWS [26]-[27]).
63. It was submitted that there was no doubt that the plaintiff had been zealous in his pursuit
of the deceased’s money both prior to, and following, her death and must be aware of the details of his own financial situation. It was submitted that the plaintiff’s desire to
succeed in this litigation influenced his misstatement of the nature of his relationship with the deceased following their separation. It was submitted that the recording of the
deceased’s conversation with her solicitor demonstrated that their relationship was no
more than one of friendship, which was also demonstrated by the file note of 29 August
2018 which included “Over the last several years [the plaintiff] and I have had a
friendship, mainly by phone. This friendship was one of checking in on each other.”
It was submitted that the deceased’s evidence was consistent with the defendant’s
evidence in every aspect, and particularly in relation to the relationship between the plaintiff and the deceased. It was submitted that the unchallenged evidence of the solicitor for the deceased was also clear on the nature of the relationship as described to him by the deceased.
65. It was submitted that the evidence of Mr McCormack did not provide any insight into the nature of the relationship between the plaintiff and the deceased, and the evidence of Ms Makev similarly added nothing of relevance.
66. With respect to the evidence of the deceased having relationships following her separation from the plaintiff in 2003, it was submitted that there was no reason not to believe what the defendant had said about those relationships, and that the plaintiff had accepted the possibility of those relationships.
It was submitted that the evidence of the plaintiff’s poor behaviour toward the defendant
was not objected to, and nor was any evidence led in reply, and as such should be
accepted as true.
Conclusion on relevance of credibility
68. I am of the view that in so far as this case concerns declaratory relief, it is not a case that turns on the credit of witnesses. Credit is relevant to the case concerning the Family Provision Act. I make findings in relation to disputed facts as discussed from
[69] – [96]. At this juncture I interpolate to note that insofar as credit is relevant, I accept
the submissions of the defendants as the submissions accord with my view of the
evidence.
Findings and Disputed Facts
69. The plaintiff submitted that, having taken into account the credibility of the witnesses, the Court could make the following findings.
70. That the plaintiff and the deceased met in 1985 and soon entered into a long-term romantic relationship. They began to cohabitate in 1987.
71. At this time the defendant was a teenager, who objected to the cohabitation and moved
out of her mother’s home. That the plaintiff and the deceased enjoyed some stability in
their relationship, however the defendant did not approve of the relationship, and saw
the plaintiff as an interloper who was in the way of her parents reconciling [DWS 26].72. In response, the defendants submitted that the relationship between the plaintiff and the defendant has no relevance to the claim. It was further submitted that it was unclear why the plaintiff had chosen to donate so much time and attention to personal criticism of the defendant. I accept this submission as it accords with my view.
73. That in 2003 or 2004, the relationship between the plaintiff and the deceased came under considerable strain, due in part to initial success, but ultimate failure of administrative proceedings brought by the deceased against Comcare. That in 2004 the plaintiff and the deceased ceased to cohabitate.
74. In response the defendants submitted that there was no evidence that the Comcare litigation had anything to do with the relationship between the plaintiff and the deceased. It was submitted that the plaintiff had agreed in his evidence that the relationship had ended in 2003 (T7). I accept on the evidence that the relationship ended in 2003. I further accept that there was no evidence of relevance concerning the Comcare issue.
75. That the deceased had not have a romantic relationship with anyone named Zoran or Nick between meeting the plaintiff in 1985 and her passing away in 2018, and that the
deceased may have had an ‘affectionate relationship’ with someone named George.
The plaintiff noted that none of the men had been called to give evidence and their absence was unexplained.
76. In response the defendants submitted that there was no reason to reject the
defendant’s evidence about the male friends of the deceased after 2003, and “the
Plaintiff accepts the possibility in any event”. In my view, to determine the issues in this
case there is no need to delve into the precise nature of the relationship between the
deceased and Zoran, Nick, or George.77. That after resuming regular contact in around 2006, the plaintiff and the deceased enjoyed a close and mutually supportive relationship, which exhibited traits more in line
with a continuing de facto relationship, and very significant figures in each other’s lives.
78. In response the defendants submitted that there was no evidence to support the contention that there was a continuing de facto relationship. It was submitted that this suggestion had been rejected by the deceased in all of her six wills after 2003, where
she had described the plaintiff as “my ex de facto” (Ex. 8), in the recording, and in her
current Will in which she describes the plaintiff as “former de facto”. It was submitted
that the plaintiff’s own evidence did not go so high as to support the description of a
continuing de facto relationship. I am not satisfied on the balance of probabilities that there was a continuing de facto relationship after resuming contact in 2006. In my view,
the evidence is consistent with the defendants’ submissions set out above that the
plaintiff was an “ex-de facto”.
That in 2010 the plaintiff carried out renovation work at the deceased’s Chapman
residence, including brickwork, replacing tiles, painting, and landscaping. In response, the defendants submitted that the plaintiff was always paid for work which was undertaken for the deceased, and was reimbursed for the expenses. I accept this submission and so find.
80. That throughout their relationship the deceased issued multiple wills, with the plaintiff being a significant beneficiary in each of those wills. In response, the defendants accepted that the plaintiff had been included as a beneficiary, but never as an executor (with the exception of the May 2017 will). It was submitted that the current Will had been made when the deceased viewed the plaintiff in a different light, and when she had to confront her mortality and consider her moral testamentary obligations. I accept the submission of the defendant, as it accords with my view of the evidence.
That the deceased’s relationship with the defendant remained difficult, and there was
a tension between the two over the deceased’s response to the death of the
defendant’s father, and that the defendant had restricted the deceased’s access to her
grandchildren. That on 24 December the deceased suffered a heart attack, the plaintiff
called an ambulance, and promptly informed the defendant of her mother’s condition,
being the beginning of the decline in her health. The defendants did not submit against
any of these particular findings in response. On the evidence, I make these findings.82. That in February 2018 the deceased was diagnosed with stage 4 lung cancer and her health declined significantly. The plaintiff and the deceased then began to cohabitate so that he could care for her. That the deceased expressed concern to Ms Murphy of Carers ACT about what would happen to the plaintiff when she was gone.
83. In response, the defendants submitted that there was no cohabitation except in a technical sense, and certainly not in the sense of a relationship. I am not satisfied on the balance of probabilities that there was a cohabitation for the purpose of a de facto relationship.
84. That over the following months, the deceased was diagnosed with secondary brain cancer and then suffered a stroke, and both the plaintiff and the defendant cared for the deceased as she declined. The defendants did not submit against any of these findings in response. On the evidence I make these findings.
85. That the defendant made numerous allegations of poor conduct by the plaintiff in the
deceased’s final months which were unsupported by any evidence beyond her
assertion, and were first disclosed only in the defendants’ case, despite having put on
five affidavits. It was submitted that given the deep and enduring hostility of the defendant towards the plaintiff, that her assertion alone is not a sufficient basis to infer that the allegations are true.
86. In response, the defendants submitted that the affidavits referenced were in relation to other issues in other litigation, in which the plaintiff failed. It was submitted that the allegations of poor conduct are in some instances discussed by the deceased in the recordings. I accept this submission as it accords with my view of the evidence and I so find.
87. That the deceased became mistrustful of the plaintiff towards the end of her life. It was submitted that it was possible this was influenced as a direct result of her advancing disease, but it was acknowledged that there was no evidence to this effect. It was
submitted that it may have been “the stressful and tragic nature of was transpiring”,
noting that the plaintiff and the deceased had separated while the deceased was undergoing the Comcare litigation. It was submitted that there was no evidence to
establish any improper conduct by the plaintiff which would justify the deceased’s
concern.
88. In response the defendants submitted that there was evidence of Mr Dwyer stating how
lucid the deceased was (Dwyer Affidavit p 7), and the deceased’s General Practitioner observing that the deceased was “competent to make financial and health issue
decisions” (Annexure F to Dwyer Affidavit). It was submitted that the audio recordings
of the deceased corroborated this evidence. It was submitted that any link to the prior Comcare litigation was spurious. I agree. I accept that the deceased was lucid on the
basis of the evidence of Mr Dwyer and the deceased’s General Practitioner (Annexure
F to Dwyer Affidavit). The audio recordings in my view corroborate this evidence.
89. That during the time the deceased was hospitalised, the defendant was involved in the
electronic transfer of funds held in the plaintiff’s bank account, the transfers totalling
the sum of $351,308.17. The exact amount of the transfer was disputed (T35-36). It
was submitted that the defendant accepts that she did not have the plaintiff’s
authorisation to access the account.
In response the defendants submitted that this submission was “grossly misleading”
given the plaintiff’s evidence that he had seen the fund transfer happen, had allowed it
to happen, and that his only complaint had been that he did not get advance notice of when it would happen (T24-25). I accept the submissions of the defendant as the submissions accord with my view of the evidence.
91. It is accepted, and I find, that in August 2018, the defendant assisted the deceased in obtaining the assistance of Mr Dwyer, a solicitor in private practice, and on his advice the deceased took the following steps:
1) Established the Olga Hart Trust on 29 August 2018;
2) That same day, signed three cheques, totalling $1,200,500.00 from herself to the Olga Hart Trust;
3) Executed a new will on 5 September 2018;
4) Told the defendant that if the plaintiff challenged the will, then he should receive nothing.
92. I note that the deceased passed away soon after on 30 September 2018.
93. That on 3 October 2018, the plaintiff received correspondence from Dwyer Lawyers requiring the plaintiff to vacate the Chapman property by 4pm on 12 October 2018. It was submitted that invoking lawyers to remove the plaintiff from the property was an
unnecessary and callous act reflecting the defendant’s animosity towards the plaintiff.
I am not satisfied on the balance of probabilities that this act reflected animosity.
In response the defendants submitted that the plaintiff’s presence at the estate property
was inappropriate, that he owned a house in Queanbeyan and that his presence at the
house “was for no good reasons other than to position himself for an avaricious attack
on the estate” (DWS [39(k)]. I am not satisfied on the balance of probabilities that the
plaintiff’s presence was only to position himself for a claim on the Estate.
95. That on 18 October 2018, the plaintiff filed a caveat in respect of the Estate, and on 25 October 2018, the legal representatives for the plaintiff received a letter asserting that the Estate had insufficient assets to pay cheques issued by the deceased to the Olga Hart Trust, and would therefore not be making the gifts and bequests in the Will (Annexures G and H, Ross Affidavit, 13.11.18 SC 519 of 2018). It was submitted that the defendant made an ultimatum to the plaintiff that she would pay him the bequest from her own funds if he agreed to abandon any rights against the Estate by 14
November 2018 (T127-128). It was submitted that the plaintiff had not “challenged the Will” by 14 November 2018 and as such the ultimatum was not in accordance with the
deceased’s instructions.
96. In response the defendants submitted that it was understating what was done on 18
October 2018 to say the caveat was filed “in respect of the estate”. It was submitted
that the caveat was a direct challenge to the defendant’s right as executor to apply for
probate and as such was a challenge to the Will. It was submitted that the caveat was
ultimately removed, and the plaintiff ordered to pay the defendant’s costs. It was
submitted that the deceased had asked the plaintiff to respect her wishes through an inter vivos recording played following her death and before the lodging of the caveat. In my view there has been a challenge to the Will.
The Cheques Act
Plaintiff’s submissions
On the submission that the Cheques do not create a chose in action
97. The plaintiff submitted that the defendant’s belief, as executor, that the Cheques create
a debt is due to a misunderstanding of the statutory estoppel imposed by the Cheques Act under s 74. I interpolate here to note that the defendants did not submit that s 74 was relevant.
98. It was submitted by the plaintiff that s 74 of the Cheques Act creates a statutory estoppel, restraining an indorser of a cheque from denying that the cheque is payable. It was submitted that this estoppel is only for the benefit of what the legislation
describes as a “holder in due course”, a term defined by s 50(1)(b) of the Act, being
that the holder must have taken the cheque in good faith, for value, and without notice of any dishonour or any defect in title of the person who transferred the cheque to the
holder. I interpolate here to note that ‘holder in due course’ is defined by s 50(1)(a) and
(b).
99. It was submitted that s 36 of the Cheques Act creates a rebuttable presumption that a
cheque was received for value. “Value” is defined in the dictionary of the Act as
“Valuable consideration as defined by section 35”. Section 35 defines valuable
consideration as consisting of either consideration capable of supporting a contract, or
an antecedent debt or liability. I interpolate here to note that the defendants’ submission
is that s 36 is only relevant to an overall analysis which relies on s 74. The plaintiff
therefore attributes to the defendant a reliance on s 74 that the defendant eschews.100. It was submitted that the Trust had given no valuable consideration to the deceased to the standard required by s 35 of the Cheques Act. It was submitted that for this reason
the defendant was not a “holder in due course” for the purposes of the Cheques Act
and as such could not take advantage of the statutory estoppel is s 74 of the Act. It was submitted that a consequence of this is that the question of whether the deceased owed a debt to the Trust becomes a question of fact. It was submitted that as the Trust had not provided any goods, services, or promises, to the deceased, or entered any contractual relationships, the Cheques did not create a debt to the Trust, nor were they created to satisfy a pre-existing liability. It was submitted therefore, that the dishonour of the Cheques did not create a chose in action by the Trust against the Estate.
101. As a consequence, the plaintiff submitted that the Estate owes no liability to the Trust and accordingly the full assets of the Estate are available for distribution.
On the submission that the Cheques do create a chose in action
102. It was submitted that if the Court determines that the Cheques do create a chose in action in favour of the Trust against the Estate, the next question which must be
answered is ‘at what time did that chose in action accrue?’ The plaintiff submitted that
the answer is found in s 58 of the Cheques Act, which states:
58 Drawer and indorsers of cheque not liable unless cheque presented
Subject to section 59, a person who is the drawer or an indorser of a cheque is
not liable on the cheque unless the cheque is duly presented for payment.
103. It was submitted that due to the application of s 58, a drawer or indorser of a cheque is not liable unless and until the cheque is presented. As such it was submitted that liability was only established on 26 April 2019, when the defendant (acting for the Estate) deposited the Cheques with the Bank. It was submitted that the Estate was under no obligation to do so. It was submitted that the deposit of the Cheques would not have satisfied a liability, but created one. Contrary to this, the defendant submitted that s 58 is subject to s 59 and in this case presentment is dispensed with, as the drawer of the Cheques meets s 59(b)(i)(A) and (B).
On the Tort of Devastavit
104. The plaintiff referred to Frost v Bovaird [2014] FCAFC 20; 223 FCR 275 (Frost v Bovaird), Re Blow [1914] 1 Ch 233 at 240, and National Trustees and Executors and Agency Company of Australasia Ltd v Dwyer (1940) 63 CLR 1 at 18 for the principle that an executor who squanders or misapplies the assets of an estate is personally liable to the wronged party in tort. It was submitted that an executor is liable in
devastavit not only for loss occasioned by direct abuse of the estate’s assets, but also
for waste occasioned by negligence or wrong administration (citing Re Stevens [1898]
1 Ch 162 at 176).105. The plaintiff submitted that the standard of care expected of an executor varies, and that all executors must, at least, act to the standard of the ordinary prudent business person: Austin v Austin (1906) 3 CLR 516 at 525, Government Employees Superannuation Board v Martin (1997) 19 WAR 224 at 273, Australian Prudential Regulation Authority v Kelaher [2019] FCA 1521; 138 ACSR 459 at [30]-[31].
106. The plaintiff submitted that an executor who pays what they ought not pay is guilty of devastavit: Re Lovett (1876) 3 Ch D 198 at 203, Midgley v Midgley [1893] 3 Ch 282 at 304. An executor should not fulfil an unenforceable contract disadvantageous to the estate, but must protect the estate from demands which by law cannot be enforced against it. In Re Rownson (1883) 29 Ch D 358 at 361-3 Cotton and Bowen LJJ stated:
It is difficult to see how an executor or administrator can retain a debt on which if vested in
another person no action could be maintained… It is clearly his duty not to waste an estate
not his own, which he is administering for the benefit of others, in satisfying demands that
are equally untenable in law and in equity.107. It was submitted that the plaintiff’s earlier analysis of the Cheques Act demonstrates
that as of 25 April 2019 the Estate did not owe an enforceable debt to the Trust. It was submitted that to make such a payment was either unsuccessful, or incurred a liability against the Estate that ought not have been incurred.
108. It was submitted that if the payment was unsuccessful (by operation of the Cheques Act), no issue of devastavit arises, as the purported liability created by the Cheques Act would have no effect, and the Estate would be both free and obliged to make the distribution in accordance with the Will.
109. Alternatively, it was submitted that if there is a finding that the act of depositing the
Cheques gave rise to an enforceable liability, then the third defendant’s doing so laid
waste to the Estate. It was submitted that this would leave her answerable to the beneficiaries of the Estate, including the plaintiff, for damages. It was submitted that these damages are not quantified merely as the bequest that would now be unable to be satisfied, but for any further provision which would have been ordered under the Family Provision Act, if not for the act of devastavit.
On the doctrine of fraud on the power
110. The plaintiff submitted that a fraud on the power is perpetrated when an appointee behaves in a way which is ultra vires to the terms of the instrument of their appointment: Vatcher v Paull [1915] AC 372, Re Burton (1994) 126 ALR 557, Wong v Burt [2005] 1 NZLR 91.
111. The plaintiff submitted that an executor of an estate is also a trustee of the estate’s
assets. The most important duty of a trustee being to adhere to the terms of the trust: Youyang Pty Ltd v Minter Ellison Morris Fletcher [2003] HCA 15; 212 CLR 484 at [32]- [33]. A trustee is not at liberty to depart from the express terms of the instrument of their appointment. In Re Dion Investments Pty Ltd [2014] NSWCA 367; 87 NSWLR 753 at [94] Barret JA (Beazley P and Gleeson JA agreeing) stated:
Variation of the terms of a trust (including by way of conferral of some new power on the trustee) is not something within the ordinary and natural province of a trustee. It is not something that it is "expedient" that a trustee should do; nor, fundamentally, is it something that is done "in the management or administration of" trust property. A trustee's function is to take the trusts as it finds them and to administer them as they stand. The trustee is not concerned to question the terms of the trust or seek to improve them. I venture to say that, even where the trust instrument itself gives the trustee a power of variation, exercise of that power is not something that occurs "in the management or administration of" trust property. It occurs in order that the scheme of fiduciary administration of the property may somehow be reshaped.
112. The plaintiff submitted that the fact that a provision in a trust deed contains infelicities is not a sufficient reason to construe it other than in accordance with its ordinary and natural meaning: Mercanti v Mercanti [2016] WASCA 206; 50 WAR 495 at [95], Lancedale Holdings Pty Ltd v Heath Group Australasia Pty Ltd [1999] NSWCA 460; 33 ACSR 247 at [44], Kearns v Hill (1990) 21 NSWLR 107 at 109.
113. The plaintiff submitted that a fraud on the power does not require criminal behaviour or subjective dishonesty. In Australian Conservation Services v Liladel Holdings [2017] ACTSC 162; 12 ACTLR 124 at [14] Mossop J stated:
Fraud on a power is an equitable doctrine which limits the power conferred on a person by an instrument: see Young, Croft, Smith On Equity at [8.880]; Hancock v Rinehart [2015]
NSWSC 646; 106 ACSR 207 at [57]–[61]. It may limit the power of both fiduciaries and non-
fiduciaries. For the purposes of the doctrine, fraud does not necessarily connote that which would be termed fraud at common law. Rather it encompasses the idea that the power has been exercised for a purpose or with an intention beyond the scope of, or not justified by, the instrument creating the power.
114. The plaintiff submitted that to determine whether the doctrine is applicable, the key question is whether an act or acts taken by an appointee under a power, have been made in a way contrary to the terms of that power. If so, then the Court can grant equitable relief to correct the fraud on the power.
On the liability for fraud on the power
115. It was submitted by the plaintiff that despite the defendants’ denial in their Amended
Defence dated 6 August 2019 at [33], the third defendant is an appointee (executor) under a power (the Will). The plaintiff submitted that as executor of the Estate, the third
defendant is also trustee of the Estate’s assets. Accordingly, the plaintiff submitted that
the defendant owes a duty to the beneficiaries under the Will as both the executor and
trustee.116. The plaintiff submitted that the powers and duties of an executor are imposed by a combination of law and the terms of the will, which involves gathering in the estate, protecting its assets, discharging its liabilities, and then distributing the estate in accordance with the will. The plaintiff submitted that an executor is not at liberty to distribute the estate in a manner inconsistent with the will, nor to take action inconsistent with the discharge of their obligations.
117. The plaintiff submitted that by purporting to deposit the Cheques in her role as executor, the defendant strayed outside the bounds of authority granted to her under the Will, and by doing so occasioned a benefit to herself. This was submitted to be inconsistent with the real purpose and object of the grant of probate and the will on which is established. The plaintiff submitted that this amount to a fraud on the power, and seeks equitable compensation for any loss, or for a constructive trust to be imposed over any debt or action created by the Cheques (citing Chan v Zacharia (1984) 154 CLR 178).
118. The plaintiff submitted that the validity of the Will is not in question, and is predicated upon the presence of funds adequate to satisfy the specified bequests. It is submitted that the terms of the Will constitute both the most recent in time instructions from the
deceased, and also include the terms of the third defendant’s power as executor. The
plaintiff notes that the defendants have admitted that the Will was prepared after the establishment of the Trust and the issuance of the Cheques (Amended Defence 6 August 2019 at [32]).
119. The plaintiff submitted that on 25 March 2019, the defendant was granted probate of the Will, and appointed executor, with all of the powers and responsibilities that this entailed. It is submitted that from this moment her actions as executor were restricted by the terms of the Will, but on 26 April 2019 the defendant deposited the Cheques, which were subsequently dishonoured. It is submitted that it was not open to the defendant to take action beyond the scope of, or not justified by, the terms of the Will. It is submitted that there is no scope for an executor to disregard the express instructions in the terms of the will in order to give effect to an informal arrangement outside of the will.
120. The plaintiff submitted that as executor there is a duty to meet the liabilities of the estate prior to making distribution, but that this does not mean that the executor is free to incur additional liabilities for the purpose of defeating the bequests specified in the will.
121. The plaintiff submitted that if the deposit of the Cheques successfully created an enforceable chose in action against the Estate in favour of the Trust, the act of depositing the Cheques constituted a fraud on the power by the defendant, that she would be liable, and that equitable relief would be warranted.
On fiduciary duty
122. The plaintiff further alleges a breach of the third defendant’s fiduciary duty to the Estate:
Re Permanent Trustee Australia Ltd (1997) 137 FLR 190, Jones v AMP Perpetual
Trustee Company NZ Ltd (1994) 1 NZLR 690.123. Fiduciary duties prohibit a person owing those duties from acting inconsistently with the interests of the person to whom the duties are owed, and include duties to avoid conflicts of interest, and to refrain from profiting from their position. A fiduciary can breach their duties despite acting in good faith: Warman International Ltd v Dwyer (1995) 182 CLR 544 at 557; Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (1998) 28 ACSR 688 at 721. Liability is strict and does not require any intentional wrongdoing.
124. A trustee owes a fiduciary duty to the beneficiaries of the trust, as does the executor or administrator to an estate: Keech v Sandford (1726) Sel Cas T Ch 61; 25 ER 223, Re Marsden (1884) 26 Ch D 783 at 790; Mitchell v McLear [2020] VSC 25 at [13]; Valverde v Inch [2018] NSWSC 366 at [89]. A will that nominates an executor as a beneficiary does not remove the fiduciary duty to refrain from profit: Johnson v Trotter [2006] NSWSC 67 at [23].
125. The plaintiff submitted that the defendant’s denial that as an executor and trustee, she
owes a fiduciary duty to the plaintiff (Amended Defence 6 August 2019 [28]), is untenable. It was submitted that as trustee of the assets of the Estate, the third defendant owes a fiduciary duty to all of the beneficiaries under the Will, including the plaintiff.
126. The plaintiff submitted that as executor of the Estate, and as trustee of the Trust, the defendant has an irreconcilable conflict of interest. It is submitted that if the transfer of funds from the Estate to the Trust is successfully carried out, the Trust receives a benefit, along with potentially the defendant herself. It is submitted that doing this would harm the Estate. It is submitted that if the defendant does not proceed with the transfer, she guards the Estate, but harms the Trust. It is submitted that the defendant is in precisely the position that her fiduciary duties require her to avoid.
127. The plaintiff submitted that it would be difficult for the Court to make a finding that the defendant has acted in good faith, given that the express purpose of the actions that were taken were to circumvent the Family Provision Act, and deny the plaintiff the ability to meaningfully exercise his rights.
128. It is submitted that if the deposit of the Cheques successfully created an enforceable chose in action against the Estate in favour of the Trust, that deposition was in breach
of the third defendant’s fiduciary duty to the plaintiff, and as such equitable relief would
be warranted.
Plaintiff’s final submissions
129. The plaintiff submitted that the defendant’s assertion that this litigation has been brought about “by the plaintiff’s greed” is simply wrong. It is submitted that the litigation
has “been brought about by an extraordinary scheme to escape the reach of the Family
Provision Act, and in doing so to deprive the estate even of its ability to honour the
Will”.
130. The plaintiff submitted that the filing of a caveat could not be described as being an immediate challenge to the Will. It is submitted that a caveat is an interim measure that does not take the place of substantive proceedings, and was lodged at a time when a highly confusing scheme had been revealed to the plaintiff, and in general terms. The plaintiff submitted he sought preliminary discovery so he could determine his position, before making a decision as to whether the Will should be challenged.
131. It was submitted further that evidence of any offers, or lack thereof, are rendered inadmissible by virtue of s 131 of the Evidence Act 2011 (ACT), and as such paragraph
[24(c)] of the defendants’ submissions should be discarded. I therefore disregard that
particular aspect of the defendants’ submissions.
132. In response to the defendants’ submission that the plaintiff had been prepared to
exaggerate his financial situation in an attempt to appear in greater financial need, counsel submitted that the plaintiff did not convey himself as particularly on top of his finances, and was quick to make concessions.
133. The plaintiff submitted that the evidence of Ms Makev and Mr McCormack should not be dismissed, given that they were able to make assessments of the relationship
between the deceased and the plaintiff, “rather than rely on [the deceased’s] assertions
as to the nature of that relationship”.
134. The plaintiff submitted that the “unexplained failure” to call as witnesses the men who
had been asserted to have been part of the deceased’s life after 2003, gives rise to the
inference that their evidence would not have assisted the defendants’ case, referring
to the rule in Jones v Dunkel (1959) 101 CLR 298 at 320. I interpolate here to note that at [76] I have addressed this issue, finding that there is no relevant forensic requirement, in my view, to delve into the precise nature of these relationships to determine the issues in this case.
135. The plaintiff maintained his submissions in relation to the characterisation of the
defendant’s evidence, the asserted effect of the stress involved in the deceased’s
litigation history on her attitude toward the plaintiff, the plaintiff’s presence at the deceased’s property and the characterisation of the caveat as a ‘challenge’ to the Will.
Consideration
Does the Estate have sufficient assets to make the bequests provided for in the Will?
136. The plaintiff has not challenged the creation of the Trust. After the cheque for $500 was used as a deposit to establish a bank account in the name of the Trust, the deceased held the two larger cheques in her capacity as trustee of the Trust.
137. In my view the Cheques were each a chose in action and property capable of being held on trust prior to the deceased’s death. Relevantly, in Norman v Federal
Commissioner for Taxation (1962) 109 CLR 9 at 26, Windeyer J stated:
The distinction between a chose in action, which is an existing legal right, and a mere
expectancy or possibility of a future right is of cardinal importance… It does not, in my view,
depend on whether or not there is a debt presently recoverable by action because presently due and payable. A legal right to be paid money at a future date is, I consider, a present
chose in action…
138. In my view, the Cheques were capable of being held in trust prior to the deceased’s
death and were so held.
139. Further, it is relevant to consider the Cheques Act. When the Cheques were presented for payment, they were dishonoured by the Bank: ss 10, 69 Cheques Act.
140. Sections 10, 35, 36, 69, and 70 of the Cheques Act provide:
10 Cheque defined
(1) A cheque is an unconditional order in writing that: (a) is addressed by a person to another person, being a financial
institution; and
(b) is signed by the person giving it; and
(c) requires the financial institution to pay on demand a sum certain inmoney.
Note: In this Act, financial institution has a restricted meaning—see the definition in subsection 3(1). (2) An instrument that does not comply with subsection (1), or that orders any act to be done in addition to the payment of money, is not a cheque.
35 Valuable consideration defined
(1) Valuable consideration for a cheque may be constituted by:
(a) any consideration sufficient to support a simple contract; or
(b) an antecedent debt or liability.
(2) An antecedent debt or liability may constitute valuable consideration for a
cheque whether or not the cheque is post-dated.
36 Presumption of value
The drawer and each indorser of a cheque shall, unless the contrary is proved,
be presumed to have received value for the cheque.
69 Dishonour defined
A cheque is dishonoured if the cheque is duly presented for payment and payment is refused by the drawee institution, being a refusal that is communicated by the drawee institution to the holder or the person who
presented the cheque on the holder’s behalf.
Note: A cheque may be taken to be dishonoured in certain circumstances (see
section 70A).
70 Drawer and indorsers of cheque liable whether or not given notice of dishonour
A person who is the drawer or an indorser of a cheque that has been dishonoured is liable on the cheque whether or not the person is given notice by any person of the dishonour.
141. Section 71 of the Cheques Act, which is subject to ss 17(1), 59 and 60(1), provides:
71 Liability of drawer
Subject to subsection 17(1), section 59 and subsection 60(1), the drawer of a
cheque, by drawing the cheque, undertakes:
(a) that, on due presentment for payment, the cheque will be paid
according to its tenor as drawn; and
(b) that:
(i) if the cheque is dishonoured when duly presented for payment; or
(ii) if presentment of the cheque for payment is dispensed with by virtue of paragraph 59(a) or (aa) and the cheque is unpaid after its date has arrived;
the drawer will compensate the holder or an indorser who is compelled to pay the cheque.
142. Sections 58, 59, 60(1), and 74 provide:
58 Drawer and indorsers of cheque not liable unless cheque presented
Subject to section 59, a person who is the drawer or an indorser of a cheque is not liable on the cheque unless the cheque is duly presented for payment.
59 When presentment dispensed with
Presentment of a cheque for payment is dispensed with:
(a) where the cheque cannot, with the exercise of reasonable diligence,
be duly presented; or
(aa) if the drawee institution has become a failed financial institution within
the meaning of subsection 70A(2); or
(b) as regards the drawer, in the following cases, namely:
(i) where:
(A) the drawee institution is not, as between the drawer and itself, under an obligation to pay the cheque; and
(B) the drawer had no reason to believe, at the time of the issue of the cheque, that the cheque would be paid if duly presented;
(ii) where the drawer has, expressly or by implication, waived the right to
presentment; or
(c) as regards an indorser, where the indorser has, expressly or by
implication, waived the right to presentment.
60 Effect of failure to present within reasonable time
(1) Where: (a) a cheque is not duly presented for payment within a reasonable time
after its issue;
(b) the drawee institution becomes insolvent after the issue of the cheque;
(c) the drawer is, by reason of the insolvency of the drawee institution, unable to obtain payment from the drawee institution of the whole or a part of funds maintained with the drawee institution to meet the cheque; and
(d) the drawer assigns to the holder the drawer’s rights against the drawee
institution in respect of those funds or that part of those funds, as the case
may be;
the drawer is not liable on the cheque to the extent of those funds or that part
of those funds, as the case may be.
74 Estoppels against indorser
(1) An indorser of a cheque, by indorsing the cheque, is estopped:
(a) from denying to a holder in due course the genuineness and regularity, in all respects, of the drawer’s signature and all previous
indorsements; and
(b) from denying to the indorsee to whom the indorser indorsed the cheque or a subsequent indorsee or to a holder who is not an indorsee:
(i) that the cheque was, at the time when the indorser indorsed
it, a valid and undischarged cheque; and
(ii) that the indorser had, at that time, a good title to the cheque.
(2) The reference in paragraph (1)(a) to a holder in due course includes a reference to a person who, but for a signature being written or placed on the cheque without the authority of the person whose signature it purports to be, would be a holder in due course.
143. Section 59 deals with the circumstances when presentation of a cheque is dispensed with. These are the exceptions to s 58 that the drawer of a cheque is not liable on the cheque unless it is presented for payment. If any of the circumstances described in s 59 applied it would mean that the drawer was liable under s 71 even though the cheque had not been presented. In this case, presentment of the Cheques was strictly unnecessary for the deceased as drawer to be liable, because s 59 did apply, specifically sub-s 59(b)(i)(A) and (B). The Bank was under no obligation to pay the Cheques, and the deceased had no reason to believe at the time that the cheques would be paid if presented, as she had insufficient funds in her account.
144. In my view, on the basis of the relevant provisions of the Cheques Act the deceased was liable to the Trust in the sum of $1,200,000.00 when the Cheques were drawn and the deceased took possession of the Cheques as trustee.
145. The plaintiff’s prayer for relief seeks a declaration that the Cheques issued by the
deceased to the Trust have not created a debt. It is important to note at this juncture that the defendants do not assert the creation of a debt, as such. In this context, the
relevant issue is the question of liability on the cheque. I accept the defendants’
submission that s 74 of the Cheques Act is not operative in this case. At base this is
because the concept of “holder in due course” is not relevant. At the most basic level
of analysis this is because the Cheques were crossed and marked ‘not negotiable’.
146. In relation to the plaintiff’s submission that s 36 of the Cheques Act “requires valuable
consideration”, and that “the holder” was not a “holder in due course” the following is
relevant.
147. Section 35 defines “valuable consideration”. Section 10 defines the prerequisites for
something to be a cheque and the existence of valuable consideration is not one of
those prerequisites.148. The trustee in this case is not a holder in due course. As stated above, the Cheques
are crossed “not negotiable” (see subsections 50(1)(a)(iii) and 53(1)(b)):
50 Holder in due course defined
(1) The holder of a cheque is a holder in due course if:
(a) the cheque was transferred by negotiation to the holder and, at the time when the holder took the cheque, the cheque:
…
(iii) did not bear a crossing of the kind referred to in paragraph 53(1)(b)
53 Crossing and crossed cheque defined
(1) Where a cheque clearly bears across the front of the cheque the addition of:
…
(b)
2 parallel transverse lines with the words not negotiable between, or substantially between, the lines;
the addition is a crossing of the cheque, and the cheque is a crossed cheque.
…
149. Sections 70 and 71 of the Cheques Act deal with liability on the Cheques and the liability of the drawer, as discussed above.
150. In my view, the arrangement between the trustee and the deceased is that the Cheques
would be held by the trustee during the deceased’s lifetime with the intention that the
deceased’s assets would never form part of her estate.
151. It is therefore relevant at this juncture to consider the position in an estate where liabilities exceed assets.
152. Section 41C(2) of the Administration and Probate Act 1929 (ACT) (Administration and Probate Act) provides:
41C Administration of assets … (2) If the estate of a deceased person is insufficient for the payment in full of all the expenses, debts and liabilities payable from the estate, the person’s real and personal property must, subject to the Bankruptcy Act 1966 (Cwlth),
be administered in accordance with the rules set out in schedule 4, part 4.2.
153. The rules set out in schedule 4, pt 4.2 of the Administration and Probate Act are as follows:
Part 4.2 Rules about payment of debts and liabilities if estate insolvent
1 The funeral, testamentary and administration expenses have priority. 2 Subject to rule 1, the same rules must prevail and must be observed about the respective rights of secured and unsecured creditors and as to the valuation of annuities and future and contingent liabilities, respectively, and about the priorities of debts and liabilities that are in force at the death of the deceased person under the law of bankruptcy in relation to the assets of persons adjudged bankrupt.
3 In the application of those rules, the date of the death of the deceased person must be substituted for the date of the sequestration order.
154. Relevant to r 2 in pt 4.2, s 108 of the Bankruptcy Act 1966 (Cth) provides:
108 Debts proved to rank equally except as otherwise provided
Except as otherwise provided by this Act, all debts proved in a bankruptcy rank equally and, if the proceeds of the property of the bankrupt are insufficient to meet them in full, they shall be paid proportionately.
Note: The rules under this Subdivision for payments of debts can be affected by proceeds of crime orders and applications for proceeds of crime orders: see Subdivision B.
155. Where, as in this case, the assets of the Estate are insufficient for the payment in full
of all the expenses, debts, and liabilities payable from the Estate, the trustee’s rights
against the Estate are necessarily limited to the available assets, after the payment of
funeral, testamentary and administration expenses.156. The third defendant must pay funeral, testamentary and administration expenses from available assets, but because the Estate is liable to the Trust for an amount ($1,200,000.00) exceeding the gross value of the Estate ($874,256.00), the net value of the Estate is nil. The Trust is entitled to so much of $874,256.00 as is left after the deduction of funeral, testamentary and administration expenses.
157. A named beneficiary is not a creditor of an estate. The beneficiary has a right to have the Estate administered, but has no interest in a particular asset: Commissioner of Stamp Duties (Queensland) v Livingston [1965] AC 694. The third defendant owes duties to preserve the Estate, uphold the Will, and owes a fiduciary duty to the beneficiaries.
158. The existence of an executor’s duty to preserve the estate, the existence of a duty to
uphold the will, and the existence of a duty to beneficiaries does not entail that an executor must ignore claims against the estate or ignore the laws relating to the legal and beneficial ownership of property. There is no denial of fiduciary duty. There has not been a breach of good faith by the third defendant.
159. Further, the plaintiff asserts that the executor has engaged in fraud on the power. The
plaintiff asserts that an executor of an estate is also a trustee of the estate’s assets.
The roles, however, are different.
160. The plaintiff has not identified the power that is alleged to be relevant. The relevant conduct is asserted to be the deposit of the Cheques.
161. The second defendant was trustee of the Trust. Clearly, the deceased desired that her assets be kept out of the Estate and preserved in the Trust for the benefit of the named beneficiaries.
162. It is relevant to note cl 9 of the Will which provides:
In addition to any power conferred by law my executors may also exercise any power conferred upon a trustee by my will and with the benefit of the same protections against responsibility for loss. My executors may exercise a discretion or power notwithstanding that one or more of them may be personally interested in the outcome of the exercise of that discretion or power and, in particular without limiting the generality of the foregoing, my executrix may continue to act as executrix notwithstanding that she may be a creditor of my estate whether in her own right or in her capacity as a trustee of a trust.
163. It follows, the second defendant’s actions were as a result of her obligations to the
beneficiaries of the Trust and therefore as trustee.
164. Finally, I must deal with the submissions in relation to devastavit. Devastavit is a
mismanagement of the estate of a deceased person by their legal representatives “in
squandering and misapplying the assets, contrary to the duty imposed on them” for
which they shall answer out of their own pockets as far as they had, or might have had, assets of the deceased. It is necessary that the legal representative has engaged in “wilful default”: Frost v Bovaird; Bovaird v Trustee of the Bankrupt Estate of Frost [2010]
FCA 1159; 118 ALD 263.
165. The plaintiff relies upon the contention that there was no enforceable debt owed by the deceased to the Trust. I interpolate here to note that the role of the third defendant was not as an executor in the attempt to deposit the Cheques, but rather as trustee.
166. In New South Wales, there is legislation concerning notional estate. The concept of notional estate allows, in an appropriate circumstance, a statutory restoration to the estate of assets: see pt 3.3 Succession Act 2006 (NSW). In contrast, in the ACT a testator may deal with assets inter vivos, that is while alive, without there being recourse to the statutory concept of notional estate: see Barns v Barns [2003] HCA 9; 214 CLR 169 (Barns v Barns). The Family Provision Act in the ACT does not provide for the concept of a notional estate. This was the case, as for example, in South Australia as referred to by the High Court in Barns v Barns at [113].
Conclusion
167. The Court had the advantage through the approach of the deceased’s legal representative, to have a clear recording of the deceased’s meeting with her solicitor.
The deceased had independent legal advice and made her own choices as to how to arrange her affairs during her lifetime.
168. Barns v Barns involved an attempt to avoid the operation of the Family Provision Act. In that context, the High Court stated the following in relation to dispositions inter vivos, that is, by a deceased during her lifetime, at [141]:
On the other hand, statutory provisions for the benefit of classes of descendants should not themselves be too readily subvertible by steps patently intended to achieve that purpose. As to that however, both the Full Court and the first and second respondents make the response that it is for legislatures, as they have done in other places, to enact specific provisions
to counter attempts, inter vivos, to defeat statutory entitlements to gain access, or
further access to a deceased's property. Other relevant considerations are that testators do sometimes make wayward or perverse dispositions by will without regard to their moral and familial obligations, and that it is unseemly, to say the least, that those having legitimate claims should be denied them for no good reason and possibly become a charge on the State.
(Emphasis added)
169. In Barns v Barns the High Court held that the effect of the Family Provision Act can be avoided by a disposition inter vivos so that the deceased died with no estate. The High Court further held that this is inherent in the scheme of the legislation.
170. I accept the defendants’ submission that the liabilities exceed the assets in the Estate
of the deceased. Therefore, in my view no provision can be made in accordance with the Will, or the Family Provision Act. In my view, the analysis of the law and the facts of this case as set out above leads inexorably to that result.
171. If this matter proceeds to appeal it is important that I also deal with, on a contingent basis, the Family Provision Act question in this case.
Family Provision Claim
172. The Family Provision Act relevantly provides:
7 Eligibility
(1) Subject to this section, each of the following persons is entitled to make application to the Supreme Court for provision out of the estate of a deceased person:
(a) a partner of the deceased person;
(b) a person (other than a partner of the deceased person) who was in a domestic relationship with the deceased person for 2 or more years continuously at any time;
8 Family provision orders
(1) On application by a person entitled, under section 7, to apply for provision out of the estate of a deceased person, the Supreme Court may order that the provision as that court thinks fit be made for the applicant out of the estate.
(2) The Supreme Court shall only make an order under subsection (1) if satisfied, in consideration of the criteria set out in subsection (3), that as at the date of the order, adequate provision for the proper maintenance, education or
advancement in life of the applicant is not available—
(a) under the will of the deceased; or
(b) if the deceased died intestate—under the law applicable to that
intestacy; or
(c) under that will and that law combined.
(3) The criteria for the Supreme Court’s decision under subsection (2) in relation
to the deceased and the applicant are as follows:
(a) the character and conduct of the applicant;
(b) the nature and duration of the relationship between the applicant and
the deceased;(c) any financial and non-financial contributions made directly or indirectly by or on behalf of either or both the applicant and the deceased to the acquisition, conservation or improvement of any of the property or financial resources of either or both persons;
(d) any contributions (including any in the capacity of homemaker or parent) by either the applicant or the deceased to the welfare of the other, or of any child of either person;
(e) the income, property and financial resources of the applicant and the
deceased;
(f) the physical and mental capacity of the applicant, and the deceased
(during his or her life), for appropriate gainful employment;
(g) the financial needs and obligations of the applicant and the deceased
(during the life of the deceased);
(h) the responsibilities of either the applicant or the deceased (during his
or her life) to support any other person;(i) the terms of any order made under the Domestic Relationships Act 1994, section 15 with respect to the property of the applicant or the deceased;
(j) any payments made to either the applicant or the deceased by the other, under an order of the court or otherwise, in respect of the maintenance of the other person or any child of the other person;
(k) any other matter the court considers relevant.
(4) The Supreme Court may regard an application for provision out of the estate of a deceased person by a single person as an application made on behalf of all the persons entitled to make applications for provision out of the estate of the deceased person.
22 Relevance of testator’s reasons
(1) The Supreme Court shall, in determining an application for an order under
section 8 or 9A, have regard to the testator’s reasons, so far as they are
ascertainable, for making the dispositions made by will or for not making provision or further provision, as the case may be, for a person who is entitled to make an application under this Act.
(2) The Supreme Court may receive in evidence a statement signed by the testator and purporting to bear the date when it was signed and to set out reasons for making or not making provision or further provision by the will of the testator for a person as evidence of those reasons.
(3) If a statement of a kind referred to in subsection (2) is received in evidence, the Supreme Court shall, in determining what weight (if any) ought to be attached to the statement, have regard to all the circumstances from which any inference may reasonably be drawn about the accuracy of the matters referred to in the statement.
Family Provision Claim (Plaintiff – eligibility and adequacy of provision – submissions)
173. The plaintiff correctly submitted that it is well established that the determination of a claim for family provision is a two-stage process. The first stage requires the Court to determine whether the plaintiff is an eligible person to seek provision, and whether they have been left with adequate provision. If the first stage is satisfied, the second is to determine what further provision the Court, in its discretion, considers appropriate.
174. The plaintiff submitted that he is an eligible person to make a claim pursuant to s 7(1)(a) of the Family Provision Act, being a partner of the deceased. Alternatively, it is submitted that he is an eligible person under s 7(1)(b), having been in a domestic relationship with the deceased for two or more years continuously at any time.
175. It is submitted that the key question is whether adequate provision is made under the
Will for the plaintiff’s proper maintenance, education, or advancement in life: s 8(2)
Family Provision Act according to the criteria contained in s 8(3).
176. The plaintiff submitted that it is not necessary for a plaintiff seeking provision to establish that they are destitute, or to be ascertained by determining the requirements of basic necessity or sustenance. The plaintiff submitted that the need is to be determined relative to the station in life of the plaintiff and the testator, to the size of the estate, and to any competing claims. It is submitted that whether provision is adequate is to be determined at the date of the making of the order, in accordance with s 8(2).
177. In relation to s 8(2)(a)-(b), the plaintiff submitted that the evidence shows that he was devoted to the deceased and remained so for decades. It was submitted that their relationship underwent a transformation in 2004, but aside from a relatively short time after that, the plaintiff remained committed to a supportive and loving relationship with the deceased from 1985 until her decline in health and subsequent death in 2018. The plaintiff emphasised his assistance in caring for the deceased.
178. In relation to s 8(2)(c)-(d) the plaintiff again emphasised the care provided to the deceased, and submitted that the he had carried out labour for the maintenance and
improvement of the deceased’s Chapman residence “and the limited compensation he
received for such”.179. In relation to s 8(2)(e) the plaintiff submitted that he survives on Centrelink benefits, his expenses exceed his income, and owns a modest property in Queanbeyan with an estimated value of $400,000.00. He submitted that as of 26 August 2019, the plaintiff had approximately $55,000.00 in savings, however $27,757.35 of that amount was paid to the defendant by way of legal costs of his unsuccessful prior litigation. It is submitted that the plaintiff owns a small number of shares, a car of negligible value, and in light of his age, qualifications, and the present COVID-19 restrictions, his capacity to obtain fulltime work is negligible.
180. In relation to s 8(2)(f) the plaintiff submitted that the evidence in relation to his
employment establishes that the deceased’s income and earning capacity significantly
exceeded that of the plaintiff.
181. In relation to s 8(2)(g) the plaintiff submitted that neither the plaintiff nor the deceased incurred many significant unexpected expenses in the course of their relationship. The plaintiff remains in relatively good health and does not anticipate any significant future medical expenses. The plaintiff submitted that his lifestyle, though modest, is not financially sustainable, and again emphasised his recent legal fees, and potential future legal fees in these proceedings.
182. In relation to s 8(2)(h) the plaintiff submitted that the deceased had considered herself obliged to provide some financial support for her nephew, and that the bequest directed to her nephew would be unlikely to be impacted by any further provision for the plaintiff. It was submitted that the defendant is a practicing accountant and has declined to provide any information with respect to her financial position, and as such the plaintiff
submitted it “can be safely inferred that she does not require financial assistance from
[the deceased’s] estate”.183. In relation to s 8(2)(i) the plaintiff submitted that there has been no order made under the Domestic Relationships Act 1994 (ACT), the deceased and the plaintiff having signed documents early in their relationship purporting to waive their entitlements to pursue a property settlement against the other.
184. In relation to s 8(2)(k) the plaintiff submitted that the Court should have regard to the
deceased’s concern that the plaintiff would find himself alone after he died, without
emotional support from family.
185. The plaintiff submitted that when each of the factors above are taken into account, the Will did not make adequate provision for his proper maintenance, education, and advancement in life.
The plaintiff’s claim for provision
186. The inventory of property of the Estate identifies gross assets valued at $874,256.00 (Annexure B to the Gordon Affidavit 27 September 2019). The plaintiff submitted that this does not taken into account the $351,308.00 transferred to the defendant shortly before the deceased passed away, and the superannuation death benefit of around $60,000.00 also paid to the defendant.
187. The plaintiff submitted that, but for the Cheques, the liabilities of the Estate are valued at $7,323.00, leaving the Estate with $866,933.00 before accounting for legal fees.
188. The plaintiff submitted that he does not seek to deprive the nephew of the deceased of his specific gifts of $100,000.00 and the other items and the vehicle left to the
defendant’s children, reducing the remaining sum from what provision could be made
to $741,933.00.
189. The plaintiff submitted that an appropriate award for further provision would be $250,000.00, cumulative with the bequest of $200,000.00 for a total of $450,000.00 plus costs. It was submitted that this award would give the plaintiff financial security, and assist him through the years preceding his eligibility for the pension where employment is unlikely.
190. It was submitted that, had the deceased passed away intestate and the plaintiff been taken to be her partner for the purposes of the Administration and Probate Act, the plaintiff would have received a total of $482,997.26, and had the sum of $351,308.00 transferred to the defendant been included in the Estate that figure would have increased to $658,651.26.
Consideration
191. The Court’s broad discretion is exercised by reference to the words of the statute.
Accordingly, the Court assesses what is ‘adequate’ for a claimant’s ‘proper maintenance, education, and advancement’ in the particular circumstances of the case:
see Talent v Talent [2020] ACTSC 240 at [31].
192. As stated in Vigolo v Bostin [2005] HCA 11; 221 CLR 191 per Callinan and Heydon JJ at [122]:
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
… The age, capacities, means, and competing claims, of all of the potential
beneficiaries must be taken into account and weighed with all of the other relevant
factors.
(Emphasis added)193. I have considered s 8(3) of the Family Provision Act, the relevant statutory factors and the evidence in this case. In my view, no further order for provision is appropriate. I have come to this conclusion taking into account the following matters.
194. The plaintiff was an ex-de facto. The de facto relationship ended approximately 14 years before the death of the deceased, when the plaintiff was approximately 48 years of age.
195. The plaintiff is unemployed. He has, on the evidence, made a choice. The plaintiff’s evidence was “I didn’t chase work in the sense that I didn’t want to work for an employer”: (T7.46-ff). The plaintiff is independent, owns his own home, and will soon
qualify for an age pension.
196. The evidence demonstrates that the deceased supported the plaintiff financially, during the de facto relationship.
197. On the evidence, the plaintiff caused upset to the deceased in the time before her death, revealing his character and causing the deceased to reassess how she wished to distribute her assets.
198. The plaintiff was not the deceased’s partner at the time of her death. Others do have
moral claims, including close family, being a daughter, grandchildren, and a nephew.
The wealth of the deceased’s daughter is not an issued for comparison with the plaintiff,
as she like her children and the deceased’s nephew, are the natural objects of the
deceased’s testamentary intention.
199. There is no evidence that the plaintiff provided financial support for the deceased. There is no evidence that the plaintiff assisted the deceased in the creation of her wealth.
200. There was no ongoing relevant fact following separation in 2003 between the deceased and the plaintiff except for friendship, and there was not, for example, a child of the relationship requiring support.
201. Finally, it could not be asserted that the deceased had a moral obligation of any great significance to the plaintiff. The deceased clearly felt sorry for the plaintiff, as the recording discloses. The bequest could be said to be more than generous in all the circumstances of this case.
202. I accept that the fact that the plaintiff is older does not provide a barrier to him obtaining an order for provision. The lack of reserves to meet demands, particularly of ill-health, which become more likely with the advancing years can be a factor in determining whether or not adequate provision has been made: Kulczycki v Public Trustee [2013] ACTSC 230; MacGregor v MacGregor [2003] WASC 169; Crossman v Riedel [2004] ACTSC 127 at [49]; Brunoro v Brunoro (No 3) [2016] ACTSC 189 at [252].
Conclusion
203. I am not satisfied that adequate provision for the proper maintenance, education or
advancement in life of the plaintiff is not available under the deceased’s will. As a
consequence, the plaintiff’s family provision claim must fail.
Orders sought
204. In relation to the first order sought, in my view, the declaration should not be made.
205. In relation to the constructive trust, a constructive trust may accommodate situations in which a court of equity determines that a person who has title to property should hold it for the benefit of another as a result of applying some legal or equitable principle aimed at preventing unconscionable enjoyment of the property: Muschinski v Dodds (1984) 160 CLR 583. I am not satisfied that a constructive trust should be imposed on
“any debt, action or funds owing”. In my view, the deceased’s intention is clear, as
discussed above, and defeats any suggestion of such a claim.
206. Equitable compensation may be available to a party who suffers a loss when there has
been a breach of fiduciary duty: Nocton v Lord Ashburton [1914] AC 932; O’Halloran v
R T Thomas & Family Pty Ltd (1998) 45 NSWLR 262 at 272. In my view, as discussed above, there has been no breach of fiduciary duty.
207. In relation to an order for equitable compensation, there is no basis, in my view, for such an order.
208. In summary, the plaintiff’s claims for declaratory relief, damages for the tort of
devastavit, relief in equity, and further provision pursuant to s 8 of the Family Provision
Act all fail.
209. The plaintiff should pay the costs of the proceedings.
Orders
210. The orders of the court are:
1) Judgment be entered in favour of the first defendant on the plaintiff’s claims.
2) Judgment be entered in favour of the second defendant on the plaintiff’s
claims.
3) Judgment be entered in favour of the third defendant on the plaintiff’s
claims.
4) Plaintiff to pay the defendants’ costs.
I certify that the preceding two hundred and ten [210] numbered paragraphs are a true copy of the Reasons for Judgment of her Honour Justice Loukas-Karlsson.
Associate:
Date:
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