Watson v Watson

[2002] NSWSC 919

CITATION:

Watson & 2 Ors v Watson [2002] NSWSC 919

CURRENT JURISDICTION:

Equity

FILE NUMBER(S):

SC 2657/2000

HEARING DATE(S):

17 September 2002

JUDGMENT DATE:

4 October 2002

PARTIES :

Michael Anthony Watson
(First Plaintiff)

Suzanne Margaret Watson
(Second Plaintiff)

Peter John Watson
(Third Plaintiff)

Christopher Robert Watson
(Defendant)

JUDGMENT OF:

Acting Master Berecry

COUNSEL :	Mr L Ellison (Plaintiffs) Mr M S Willmott (Defendant)
SOLICITORS:	Heckenberg Associates Solicitors (Plaintiffs) Eric Butler Solicitors (Defendant)
CATCHWORDS:	Family Provision Act - children of deceased enduring power of attorney - transfer of property - contrary to interest of donor - credit of executor - notional estate - whether defendant a disinterested executor - costs
LEGISLATION CITED:	Family Provisions Act 1982 - ss 7 & 22 Conveyancing Act 1991 - s 163B
CASES CITED:	The Margaret Mitchell 166 ER 1174 at 1199 Powell v Thompson [1991] NZLR 597 at 605
DECISION:	See paras 60 and 61

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

ACTING MASTER BERECRY

FRIDAY, 4 OCTOBER 2002

2657/2000 - MICHAEL ANTHONY WATSON & 2 ORS v
CHRISTOPHER ROBERT WATSON

JUDGMENT

1 MASTER: On 5 June 2000 the plaintiffs commenced proceedings, by way of summons, seeking an order under s 7 of the Family Provisions Act 1982 for provision to be made out of the estate of the deceased, the late John Brookman Watson, and a declaration that certain assets distributed to the defendants be declared notional estate.

2 The plaintiffs and defendant are the children of the deceased. The deceased made a will on 9 July 1993. The provisions in the will provide, inter alia, that the defendant and the plaintiff Suzanne Margaret Cordell nee Watson (Suzanne), be entitled to reside at the premises 105 Pennant Parade, Epping for so long as they desire. Upon the last of those persons vacating the premises, it was to be sold and divided equally amongst his four children, namely, the three plaintiffs and the defendant. The will also provided that the residue of the estate be divided equally between the four children. Probate of the estate was granted on 6 August 2001, the deceased having died 27 November 1999. The inventory of property discloses that the only assets in the estate were funds in a bank account in the sum of $44,500.00. And therefore under the terms of the will out of the residue each of the beneficiaries would receive approximately $11,000.00.

3 The deceased wife predeceased him in 1993. In that year the deceased moved into a nursing home and he remained there until he died in 1999. There is evidence given by the parties that the deceased developed dementia during the period of his stay in the nursing home. During the period 1993 to 1996 Suzanne and the defendant continued to reside in the family home at Epping. In 1996 Suzanne moved out of the family home and commenced to reside with her then boyfriend who subsequently became her husband. There is conflicting evidence concerning the reason why she vacated the premises. She asserts that there was a breakdown in the relationship between herself and the defendant. The defendant asserts that her boyfriend had been residing for sometime in the property and not making any contributions, he spoke with his sister suggesting that the boyfriend should make some contribution if he was to remain living there. Shortly thereafter both the boyfriend and the sister vacated the premises.

4 On 4 July 1993, the deceased granted an enduring power of attorney to the defendant, and subsequently on 20 July 1993 he moved to the nursing home. Subsequently in April 1996 the defendant using the power of attorney, transferred $55,000.00 from the testator’s account into his own account. On 9 October 1997 the defendant, using the power of attorney, transferred the deceased’s property to himself in consideration of $1.00. The plaintiffs have filed in these proceedings a statement of claim seeking declarations that the sum of $55,000.00 together with the Epping property are held on trust for the estate of the deceased. It is alleged in the statement of claim that the transfer of funds and the property where not to the benefit of the deceased. In his defence the defendant admits that he withdrew money from the deceased’s account but denies in the amount and that they were monies belonging to the deceased. He also asserts in his defence that the conveyance was effected with the consent of the deceased and with his full knowledge and approval. The defendant also asserts that the deceased obtained a benefit by the transfer namely, an entitlement to retain his full pension rights.

5 As children of the deceased, each of the parties are natural objects testamentary recognition. It is clear from the terms of the will that the deceased intended that ultimately his estate would be divided equally between the four children.

6 It is necessary to consider the position of each of the children to determine if provision has been made for them during the deceased’s lifetime and whether or not that provision was adequate, and if not, ought there be further provision made for them.

Michael Anthony Watson

7 Michael Anthony Watson (Michael) was born on 28 April 1958. He lived in the family home until 1983, but seems that his years with the family were unremarkable in that the family appeared to be a normal loving and caring unit. There is no evidence of any major conflict between Michael, his parents or his siblings. In the early 1980’s Michael lent his parents $4,000.00 to assist them in meeting their financial commitments. His evidence is that he would attend the family home on weekends and mow the lawn and assist with the general upkeep and maintenance of the yard and house. There is evidence that from time to time he assisted with painting the house and other household chores and tasks. The deceased has lost an arm in a motor vehicle accident and had difficulty in performing many tasks around the home. Michael’s evidence is that he assisted his father whenever he could.

8 Michael left school in 1974 and commenced working with the Rural Bank of New South Wales as a junior bank officer. He remained with the bank until February 2001.

9 In 1989 he commenced a relationship with Françoise Kumbley. This relationship continued until 1998 when they started living together, I assume in a defacto relationship. However, this relationship ended in March 2001. Since that time he has been living alone. Michael owns a unit at Harris Park. The unit has a mortgage to the Colonial State Bank, his former employer. On 9 February 2001 he was made redundant due to the merger of the Colonial State Bank and the Commonwealth Bank. Between February and the end of August 2001 he was unemployed. Between 27 August and 9 October 2001 he was employed by MBF at Castle Hill. Subsequently until 25 November 2001 he was once again unemployed. He ceased employment with AMP on 22 February 2002 and was unemployed until 1 July 2002. From that date he has been employed as a loan support officer with the Commonwealth Bank, the position is a temporary position, he annual income is currently $34,580.00 per annum.

10 Michael’s assets consist of the following:

2 Bedroom unit	$180,000.00-$190,000.00
Car–Hyundai Lantra 1998	$ 16,000.00
Superannuation (as at 27 August 2002)	$130,000.00
Shares – CBA (439 shares at $13)	$13,000.00
Money in Bank account	$ 5,400.00

11 At the hearing of the proceedings it was agreed that the unit was now valued at approximately $197,500.00. Therefore, the assets that he has that are readily available to him consist of the unit, motor vehicle, shares in CBA and money in a bank account.

12 Michael’s income for the year ended 30 June 2001, according to his tax return, was $92,000.00. However, this was explained to the following effect, that that sum consisted of his income together with a redundancy he received on leaving the State Colonial Bank. From this income he reduced his mortgage and made other payments. Currently his mortgage, which has a redraw facility, has a credit of $80,000.00. Thus he has made payments in advance of the payment program according to the mortgage. According to Michael’s affidavit of 12 September 2002 the mortgage debt currently stands at $33,600.00. However, Ex 6 which is a copy of a home loan summary statement in his name from the Commonwealth Bank, shows as at 31 December 2001 the amount outstanding as $18,388.66. He has a credit card debt of $705.00 and his weekly household living expenses and miscellaneous expenses are $529.00. It is not clear whether the $34,580.00 annual salary is gross or net. If it is a net salary it gives him a weekly net income of $665.00. If it is gross the net salary amounts to $27,664.00 per annum giving him a weekly net salary of $532.00.

13 Michael’s evidence was that his apartment requires painting and recarpeting and he needs to buy a new motor vehicle and make provision for his retirement by contributing to a superannuation policy or investment in a property. No evidence was given as to the cost of these items.

14 The first bequest makes provision for Michael only once Christopher or Suzanne vacate the premises. Suzanne has vacated the premises but Christopher continues to live in the Epping family home. However, that property at the present time does not form part of the assets of the estate. Therefore, the only provision made for Michael is a one-quarter share in the sum of approximately $44,000.00. In my view it is clear that such a provision is inadequate and there ought to be further provision made for him.

15 It would seem to me that it would be proper to make provision for Michael in respect of maintenance of the unit and some money to enable him to purchase a motor vehicle or be available should his current employment cease. In respect of provision to enable him to buy an investment property or to contribute towards superannuation, it seems to me that the estate should not be burdened with an additional provision for either of those two items. Michael is already the recipient of superannuation to the extent of $130,500.00. This is a sum which will grow other the next 16 years.

Suzanne Margaret Cordell

16 Suzanne Margaret Cordell (Suzanne) was born on 16 September 1966. She is the youngest child of the deceased. She lived in the family home until April 1996. At that time she vacated the premises because, according to her, there was friction between herself and the defendant.

17 Suzanne enjoyed a close relationship with her parents, and continued to live in the home after the deceased went to live in a nursing home.

18 Suzanne lives with her husband and child in a home which was purchased in 1996.

19 Suzanne and her husband have the following assets:

House at Guildford	$265,000.00
Car	$ 7,000.00
AMP Shares (value not know)
AMP Superannuation	$ 28,000.00
Monies deposit – St George Bank	$ 7,000.00

20 Suzanne’s husband also has a superannuation entitlement however; there are no details of his entitlement. Ex 1, which is a statement from St George Bank which shows that as at 21 November 2001, the loan account for Suzanne and her husband had a balance of $87,834.26. In cross examination she conceded that that amount would be something less than $87,000.00.

21 Suzanne’s husband earns an annual income of $53,000.00. They also receive a government family allowance in the amount of $3,562.00 per annum. The liabilities that she and her husband have are as follows:

Monthly mortgage repayment	$ 800.00
Grace Bros - outstanding balance	$ 200.00
Visa Card – outstanding balance	$2,000.00

22 Excluding monthly expenses associated with the van and her husband’s superannuation, petrol and vehicle registration, the expenses are $398.00 per week. Their weekly income based on $53,000.00 per annum is $1,019.00. However, it is unclear whether that income is gross or net. Assuming that that figure is the gross income then the average weekly net income would be $815.00.

23 The plaintiff would like additional provisions made out of the deceased’s estate to enable her to reduce the mortgage, repay a loan to her father-in-law (of which there is no evidence) and reduced the balance of her credit card. She would also like to set up a trust for their child. Her evidence also is that she and her husband would like to relocate to another part of Sydney and provide a fund for their children’s education. The plaintiff also has a desire to travel overseas so that they can meet her husband’s family.

24 The benefit that Suzanne was to receive under her father’s estate, in addition to one-quarter share in the residue, was the right to reside in the family home. Suzanne vacated the family home in 1996 therefore she does not receive any benefit in respect of that property. In any event, the defendant transferred the property into his name.

Peter John Watson

25 Peter John Watson (Peter) was born on 30 May 1955. As with his brother and sister he led an unremarkable life whilst a part of the family unit. There is no evidence of any conflict between Peter and his parents and there is no evidence that they had anything other than a good relationship. Peter remained in the family home until 1983 when he married.

26 Peter and his wife live with their three children in a four bedroom home in West Ryde. The youngest child is still attending primary school. The older children are in high school. After leaving school in 1973 Peter obtained employment with the Commonwealth Bank. For the past six years he has worked with Westpac. He current annual salary is $35,000.00. In 1999 his wife returned to the workforce working one to two days per week during the school holidays. For the financial year ended 30 June 2001, his wife’s taxable income was $3,872.00.

27 Their assets consist of the West Ryde home valued at $400,00.00, a motor vehicle valued at $17,000.00, a deposit with Westpac Bank of $1,600.00, a Westpac superannuation (roll-over) fund of $263,000.00 and Westpac superannuation of $18,000.00. Peter’s debts consist of a Westpac loan account of $57,889.41, MasterCard $2,900.00. The family’s weekly expenses are $559.00. The combined taxable income for the family is $38,872.00. The family therefore receives a net income of approximately $31,000.00. The weekly net income therefore is approximately $598.00.

28 Peter seeks additional provision out of the deceased’s estate to enable him to pay out his existing loan and MasterCard to carry out maintenance of the family home, to purchase new electrical goods and to establish a fund for his children’s education.

29 There is no evidence that during the deceased’s lifetime he made any financial provision for Peter. Of course Peter, as with his siblings, received support from his parents by provision of accommodation and education during their school years. Peter’s entitlement under the will is a one-quarter share in the estate. Currently that provision gives Peter approximately $11,000.00. Although there was no evidence adduced by Peter concerning the costs of maintenance to his property or the orthodontic work for the children, nevertheless I am of the view that the provision that has been made for Peter is inadequate. Therefore, I am of the view that some additional provision should be made for Peter out of estate of the deceased.

Section 9(3) considerations

30 I have already mentioned that the family was unremarkable in that it appears to have been a lovely and caring family. All the children appeared to have been treated equally and there is no evidence that any of the children were in conflict with their parents or caused their parents concern because of their conduct. Each of the three plaintiffs contributed to the welfare of the deceased in different ways.

31 Michael’s evidence is that after their mother’s death he remained in contact with the deceased during the six years that he resided in the nursing home. His evidence is that on average every weekend, and occasionally during the week when work permitted, he would contact his father. There is also evidence that in the 1980’s Michael lent his parents money. There is no evidence that there was ever a repayment of that loan. He also gives evidence of assisting around the property and when his mother and father found household chores and task difficult he would assist them. None of Michael’s evidence is contradicted by the defendant.

32 Suzanne remained in the house until after the deceased moved to a nursing home. Her evidence is that in the latter part of her mother’s life when her health deteriorated, she looked after her mother. She also asserts that prior to the deceased going into the nursing home, she cooked all of his meals, washed his clothes and attended to his personal needs. She assisted him with shaving, cutting his hair, and his personal hygiene requirements, including and assisting him to dress. During 1993 to 1996 she would visit the deceased in the nursing home on an average of four times per week. Generally twice during the week in the evening and then twice on the weekends. After she married she moved away from the area. Although located in another part of Sydney, because of work commitments and distance and nursing home hours, she was unable to visit her father during the week as regularly as she had done prior to 1996. Nevertheless, her evidence is that she would attend the nursing home at times when the deceased was unwell. She also assisted the deceased in relation to his appointments with doctors and specialists. She did not hold a driving licence at the time, she would arrange and pay for taxis to take her parents to these appointments. Often she would attend with the either of the parents. She also gave evidence that she would purchase items of clothing out of her own funds for her parents.

33 The defendant does not contradict Suzanne’s evidence in relation to these matters. He acknowledges that she assisted both parents, and in fact during the last years of their mother’s life he acknowledges that because of the care and attention she was giving to her mother she appeared to be under a great deal of stress. At its highest he asserts that they shared the work load of the care of both parents.

35 Peter’s evidence is similar to that of Michael’s. After he moved away from home he would visit his parents generally for a couple of hours on Saturdays. His evidence is that these occasions were primarily social occasions on which he would have a cup of tea and talk about family matters with his parents. If they required help to do a task which was beyond their capacity he would do it for them. He gives evidence of the type of tasks that he would do. They included changing light bulbs, home maintenance and lifting heavy objects. His evidence is that his parents had a close and loving relationship with their grandchildren.

36 The defendant’s evidence is that Peter and the deceased were not close. He admits that the deceased was fond of Peter’s children, but rarely saw them. His evidence is that he only saw Peter visit his parents about once a month, and that his parents never told him of any other times that Peter may have visited.

37 There is no evidence of Peter visiting the deceased during his years in the nursing home. On balance it would appear that Peter saw his parents less frequently than his siblings. However, Peter and his family appeared to have had a busy life because of the activities of their children. However, in my view it could not be said that there is anything in Peter’s conduct which would not entitle him to some provision out of his deceased’s estate.

The defendant

38 The defendant is the third son of the deceased. He was born on 25 December 1963. He attended school until Year 12 and obtained his Higher School Certificate. Initially he worked as a clerk for MLC, he also worked part-time at Coles at Lindfield. In 1985 he attended Sydney TAFE and did a six months full time course completing a commercial pilot’s licence. He has been involved in the aviation industry since 1986 either as a commercial pilot or as a flying instructor. He has worked in Western Australia as well as in Sydney. Except when employment took the defendant away from Sydney he always resided in the family home. He is still currently employed in the aviation industry, however, annexed to his affidavit of 25 February 2002 is a medical report from a consultant cardiologist Dr V Mano Mohan. The report deals with treatment for hypertension. It would appear that the defendant suffers from high blood pressure. Also annexed to that affidavit is a document entitled “Designated Aviation Medical Examiner’s Handbook”. The handbook covers, inter alia, blood pressure. I set out the relevant clause.

“2.2.2 The Cardiovascular Standard (Schedule 1 to the Civil Aviation Regulations)
…
The systolic and diastolic blood pressure of an application must be within normal limits but drugs approved by the Director of Aviation Medicine may be used to maintain the blood pressure within normal limits. …”
“2.2.5 Hypertension
Uncontrolled hypertension is disqualifying. …”

39 Therefore, whilst the defendant is currently employed as a flying instructor the probability of remaining the aviation industry as a flyer is very much dependant of the ability to control his hypertension. It therefore must be considered that there is a possibility that he may not be able to continue flying until retirement. That is a factor that needs to be considered when determining whether or not any further provision should be made for the plaintiffs out of the deceased’s estate.

40 The defendant has never married and does not have any children and therefore he is not responsible for any dependants. His income as at August 2001 was $50,000.00 per annum (Ex D). In his affidavit of 21 November 2001 he states that his net salary is $36,400.00 giving him $700.00 per week net. The plaintiff’s assets besides the family home at Epping are as follows:

Motor Vehicle	$25,000.00
Bank Account	$20,000.00
Personal effects	$ 5,000.00
Employee Retiree Plan Benefit	$16,039.46

41 The only debt he has is a Commonwealth MasterCard debt of $200.00. His living expenses are $480.00. Therefore, the current position of the defendant is that he is in full time employment although there may be some prospect in the future that because of medical grounds he will not be able to fly, and therefore he may have to change employment. Secondly, he resides in the family home which is unencumbered. He has an income which gives him approximately $200.00 each week over and above his weekly expenses. The only debt he has is a MasterCard debt of $200.00. The defendant does not appear to be a person who is in need.

42 Of course the defendant was a part of the same family as the three plaintiffs, and as I have already indicated the family life appeared to be unremarkable, in that it was a normal loving and caring family home. The defendant was a part of that group. He appears to have got on with his brothers and sister and his parents. His evidence is that whilst he was in Western Australia he returned home in 1991 to assist in the care of his mother. In 1992 he again returned to Sydney to resume assisting his sister with the care of his parents. His evidence is that when he resigned from his employment in Western Australia his salary dropped by about $20,000.00 per annum. He says that he shared much of the caring with his sister in respect of both his mother and father. However, he does not given any evidence of how frequently he visited his father in the nursing home. I assume because of the power of attorney, which was granted in his favour, that there was regular contact with the deceased. However, in my view, the main carer for the deceased with Suzanne.

43 On 4 July 1993 the deceased granted the defendant enduring power of attorney. In April 1996 the defendant, using the power of attorney, withdrew $55,000.00 from the deceased’s account. On 9 October 1997 the defendant executed a deed of conveyance of the family home whereby the property was transferred to him for consideration of $1.00. The defendant signed the transfer on behalf of the deceased pursuant to the enduring power of attorney. There is no evidence before me concerning the mental capacity of the deceased during his years in the nursing home. Therefore, it is open for me to find that the deceased had the requisite capacity to grant the enduring power of attorney.

44 During the deceased’s lifetime he made financial provision for the defendant. There is evidence given by Suzanne as well as by the defendant concerning financial provision made by the deceased. The defendant’s evidence is that the deceased paid $5,000.00 towards the costs of his flying lessons. Suzanne’s evidence is that she remembers a conversation with her father, in the early 1980’s, in which the deceased informed her that he had given the defendant about $10,000.00 towards his flying expenses. Therefore, it would appear that the defendant was the only child of the deceased that received any financial provision during the deceased’s lifetime.

Credit of the defendant

45 I did not find the defendant do be a completely frank witness. He failed to disclose his superannuation retirement plan in his affidavit. In cross examination he conceded that he had not lodged a tax return since 1998. However, in obtaining that concession from the defendant it took counsel a number of attempts to elicit from the defendant that it was his responsibility to lodge tax returns. He attempted to shift responsibly of lodgement of the tax return to his accountant. His evidence in respect of the $55,000.00 was not supported by any material and was not convincing. His evidence was that this was a sum of money that had been lent to his parents in the 1990’s. There was no explanation given as to why the money was lent to his parents, what where the terms of the loan and when was it repayable? There was no evidence that he attempted to recover the money from his parents at any time prior to the death of the deceased. He used is power under the power of attorney to transfer $55,000.00 from the deceased’s bank account. It would lead one to believe that if he had an entitlement to the money he would have been more open and transparent about that matter.

46 His evidence was not convincing in relation to the $29,000.00 which was withdrawn from the account but subsequently repaid to the account. His evidence was that the reason for withdrawing the money was to assist the deceased in relation to benefits he was entitled to under the social security legislation. Suzanne gave conflicting evidence to the defendant’s evidence concerning the reason for resigning from his position in Western Australia. In the circumstances, I prefer Suzanne’s version of the events. In cross examination the defendant was taken to a conversation he had with a solicitor by the name of Mr Miller on 3 February 2000. He conceded that he told Mr Miller that the house was transferred into his name for social security reasons, and that it remained part of the estate and that he would transfer it back subject to the estate paying his stamp duty and legal expenses. However, the defendant has done nothing in respect of those intentions.

47 I do not find the defendant to be a credible witness or an honest person.

The enduring power of attorney

48 Pursuant to the grant of the enduring power of attorney, the defendant had vested in him the powers given to an attorney pursuant to s 163B of the Conveyancing Act 1919. The granting of the power of attorney places the defendant in a fiduciary duty in relation to the deceased, and he is required to accord priority to the interests of the deceased where there is a conflict between the interests of the two.

49 The use of the power of attorney by the donee contrary of the known wishes and directions of a donor is a breach of trust – see The Margaret Mitchell 166 ER 1174 at 1199. In Powell v Thompson [1991] 1 NZLR 597 at 605 per Thomas J his Honour said:

“The powers of attorney are specifically directed at the management of the principal’s affairs: it is not open to attorneys to either obtain an advantage for themselves or to act in a way which is contrary to the interests of their principles.”

50 The will dated 9 July 1993, and subsequently admitted to probate, expresses two testamentary intentions. Firstly, that Suzanne and the defendant or the survivor has the right to occupy the family property on certain conditions. Upon the last of those two vacating the property, the property was to be sold and the net proceeds of sale divided between his children, namely the parties to these proceedings. Secondly, the residue of his estate was to be divided equally between his four children. Five days before the deceased executed this will, he granted an enduring power of attorney to the defendant. It is clear therefore, that any exercise by the defendant of his authority under the power of attorney was to be done in a manner which was not inconsistent with the known intentions of the deceased as expressed in the will or contrary to the interests of the deceased. The events that took place in 1996 and 1997, namely with the withdrawal of $55,000.00 from the deceased’s bank account and the conveyance of the family home to the defendant, are act which, prima facie, are inconsistent with the interests of the deceased. There has been no evidence put on by the defendant to establish that his father made a conscience decision that he wished to vary his intention as expressed in his will of 9 July 1993. Indeed, the defendant has not put on any evidence which establishes that the deceased was aware that the defendant transferred the monies from the bank account and conveyed the family home to himself. It is clear that by taking the action that he did, the defendant ignored the fact that there was a conflict of interest between the deceased and himself and that those actions amounted to an abuse of his position as attorney. It is clear that by those very actions, that the defendant has made a profit from the transactions. By those actions he has defeated the testamentary intention of his father.

51 In the alternative, the defendant’s evidence was that the Epping property was transferred to him to assist the deceased to maximise his social security benefit. His evidence was that he intended to reconvey the Epping property to this estate and would seek reimbursement for stamp duty and legal fees associated with the reconveyance. However, nearly three years have past since the deceased’s death and the defendant has not reconveyed the property. If I accept the defendant’s evidence of the purpose for the transfer then it would follow that he holds the Epping property on trust for the estate.

52 In my opinion it follows that upon transfer of the property to himself by use of the power of attorney, that property was held by the defendant on trust for the deceased. The intention of the deceased was to create bequests and legacies which had the potential to benefit all of his children. In my view the deceased quite clearly did not intend by the terms of his will to benefit the defendant to the extent of the benefit that he took pursuant to the use of the power of attorney in transferring the family property to himself. It also follows that the monies transferred from the deceased’s account in the sum of $55,000.00 are monies which he holds on trust for the estate.

Notional estate

53 Section 22 of the Family Provision Act 1982 provides as follows:

(1) A person shall be deemed to enter into a prescribed transaction if:

(a) on or after the appointed day the person does, directly or indirectly, or omits to do, any act, as a result of which:

(i) property becomes held by another person (whether or not as trustee), or
(ii) property becomes subject to a trust, whether or not the property becomes in either case so held immediately, and

(b) full valuable consideration in money or money's worth for the firstmentioned person's doing, or omitting to do, that act is not given.”

54 In the present proceedings the transfer of the property by the defendant to himself in consideration of $1.00 is clearly a transaction for which there was not full valuable consideration in money or moneys worth. The transfer of the property took place within three years before the death of the deceased. However, there is no evidence which establishes that the deceased was aware of the transfer or intended to avoid any claim brought under the Act. In absence of the requisite intention by the deceased the requirements of s 23 have not been made out.

55 The Epping property, together with the $55,000.00, are held on trust by the defendant for the estate. Therefore, they are assets of the estate.

Provision

56 The provision that Michael seeks out of the estate is for a fund which will assist him in respect of his mortgage repayment, maintenance on the unit, provision for a new care, and provision for additional superannuation or investment. In my view additional provision should be made out of the estate in respect of maintenance on the property, mortgage repayments and a fund to enable him to either purchase a new car or towards a fund should his current employment be terminated. In my view provision should be made for Michael out of the estate in lieu of the provisions for him by payment of a lump of $95,000.00 in lieu of the provision made for him under the will of the deceased.

57 In respect of Suzanne, she seeks additional provision out of the deceased’s estate to discharge the current mortgage, to be provided with a fund which would enable her to move into another part of Sydney and to provide funds for a holiday to England, and possible education expenses for the children post secondary school. It seems to me that the estate should not provide a fund which would enable the family to have a holiday in England to meet her husband’s family. That in my view is not a need. So far as the further education of the children, it seems to me that that is speculative. There has been no evidence put before me which would establish that the children will go onto university. Suzanne has had to deplete part of her unpreserved superannuation fund to enable her to bring these proceedings. In my view any costs that are not recoverable from the estate should form part of any additional provision that she is entitled to. Therefore, in lieu of the provision made for Suzanne in the deceased’s will, I order that she received by way of lump sum payment the sum of $125,000.00.

58 In respect of Peter, his requirements are similar to those of Suzanne. He has a mortgage and a MasterCard debt which are in excess of $50,000.00. There is evidence of work to be performed around the house, but no evidence as to the cost of that work. Orthodontic work is required for his children. In my view an order should be made that in lieu of the provisions made in the will of the deceased, Peter receive payment by way of lump sum of $105,000.00.

59 Each of the plaintiffs are to receive their costs out of the estate on a party/party basis. In respect of the defendant, the normal provision is that the executor is entitled to receive his or her costs out of the estate on the indemnity basis. However, in my view the executor was not a disinterested party seeking to uphold the will. He was there primarily to protect his own position. The estate, at the time these proceedings were commenced, consisted of cash in approximately the sum of $44,000.00. The defendant has transferred to himself, by use of the power of attorney, the family home for consideration of $1.00 and $55,000.00 in the deceased’s bank account. It could not be said in all the circumstances that the defendant in these proceedings was a disinterested executor. He has failed in respect of declaration of trust. Therefore, in my view, the defendant should bear his own costs. That is that his costs will not be paid out of the estate.

60 The court declares that:

(1) The defendant holds the sum of $55,000.00 with interest in trust for the estate of the deceased.

(2) The defendant holds the whole of the land comprised in Lot C DP161335 known as 105 Pennant Parade, Epping on trust for the estate of the deceased.

61 The court orders that:

(3) The defendant reconvey to the estate the sum of $55,000.00 with interest and the whole of the land comprised in Lot C DP161335 known as 105 Pennant Parade, Epping to the estate of the deceased.

(4) In lieu of the provision made in the will of the late John Brookman Watson, deceased, Michael Anthony Watson receive the sum of $95,000.00.

(5) In lieu of the provision made in the will of the late John Brookman Watson, deceased, Suzanne Margaret Cordell received the sum of $125,000.00.

(6) In lieu of the provision made in the will of the late John Brookman Watson, deceased, Peter John Watson received the sum of $105,000.00.

(7) The defendant pay the plaintiffs’ costs.

(8) There be no order as to the defendant’s costs to the extent that he bears his own costs personally.
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Last Modified: 10/08/2002