Whitington v Whitington
[2009] SASC 142
•21 May 2009
SUPREME COURT OF SOUTH AUSTRALIA
(Civil)
WHITINGTON v WHITINGTON & ANOR
[2009] SASC 142
Judgment of The Honourable Justice White
21 May 2009
SUCCESSION - FAMILY PROVISION AND MAINTENANCE - FAILURE BY TESTATOR TO MAKE SUFFICIENT PROVISION FOR APPLICANT
Plaintiff brought an application under the Inheritance (Family Provision) Act 1972 (SA) for further provision under the will of her late husband - testator intended that the plaintiff should, until her death or remarriage, have an interest in, and be able to reside in, a property in which he held a half interest - the half interest meant that the testator could not pass an entitlement to exclusive occupation - the property had to be sold in any event in order to discharge the liabilities of the estate - inadequacy of the provision in the will conceded by the defendants - question of what provision should be made for the plaintiff.
Held: Plaintiff (as executor) should be permitted to proceed with the sale of the property. Order that the plaintiff receive a specified proportion of the balance of the net proceeds of sale.
Inheritance (Family Provision) Act 1972 (SA) s7, s 8; Administration and Probate Act 1919 (SA) s 51, referred to.
Singer v Berghouse (1994) 181 CLR 201; Bowyer v Wood (2007) 99 SASR 190; Coates v National Trustees Executors and Agency Co Ltd (1956) 95 CLR 494; Hughes v National Trustees Executors and Agency Co of Australasia Ltd (1979) 143 CLR 134, applied.
Radaich v Smith (1959) 101 CLR 209; Street v Mountford [1985] 1 AC 809; Re Hoppe [1961] VR 381; Re Will of Mayer [1994] QSC 276; Stevens v McGrath [2004] QSC 138; Sciacca v Ghidella [2001] QSC 134, considered.
WHITINGTON v WHITINGTON & ANOR
[2009] SASC 142Civil
WHITE J:
This decision concerns an application under the Inheritance (Family Provision) Act 1972 (SA) (the IFP Act). The defendants accept that the will of the late Philip Henry Whitington (Philip) left the plaintiff without adequate provision for her proper maintenance, education or advancement in life. The parties could not agree however on the provision which should be made, or the form which such provision should take.
Background Circumstances
The hearing proceeded on a number of facts and documents which had been agreed by the parties. In addition, the plaintiff gave some short oral evidence. There was little of her evidence which was disputed. I am satisfied that the plaintiff’s evidence was reliable and that it is appropriate, when necessary, to act on it in the resolution of her application.
Philip died on 23 April 2001, aged 60. He and the plaintiff had married on 4 October 1997, having lived together as man and wife since January 1993. There were no children from their relationship.
Philip had been previously married. That marriage ended with a divorce on 22 September 1994. There was a property settlement at that time. The two defendants, Timothy and Edward, are the only children of Philip and his first wife.
Timothy, who was born in September 1978, is now 30 years old. Edward, who was born in April 1981, is now aged 28.
In July 1997 Philip was diagnosed as suffering from cancer of the colon. It was that cancer which caused his death.
For many years, Philip had been the Chief Executive Officer of the Wyatt Benevolent Institution. He resigned from that position in December 2000, approximately four months before his death. Thereafter, until about three weeks before his death, Philip performed consultancy work on a casual basis for the Wyatt Benevolent Institution.
Philip made his last will on 15 December 1998. Probate of that will was granted to the plaintiff as his executor on 13 February 2004.
The estate of Philip at the date of his death comprised the following assets:
(1) Interest in the property at 5 Robert Street, Glenelg South (estimated)
$300,000
(2) Money in bank $1,615.03 (3) Remainder interest in the deceased estate of E A Whitington (Philip’s father)
$22,500
(4) Shares in companies. $19,735.08 Total value of assets $343,850.11
The liabilities of Philip’s estate, including the funeral and memorial expenses, totalled $141,303.11. These included the liability of $63,824 under a mortgage to the Commonwealth Bank of Australia (CBA) in respect of the property at 5 Robert Street, Glenelg South, a bank overdraft of $16,820.79, a personal loan of $20,000 and liabilities under credit card and store accounts.
The net value of the estate as at Philip’s death was agreed to be $202,547, ie, less than the value of Philip’s interest in the Glenelg property.
At the date of his death, Philip and his mother Gweneth were the owners of the Glenelg property as tenants in common in equal shares. I was told that the property at Glenelg had been bought by the defendants’ great grandfather in 1899 and that it has been owned in the Whitington family ever since. The residence at the Glenelg property is a large bluestone Victorian villa built in the 1880s and listed on the South Australian Heritage Register. Because of its age and proximity to the beach, the residence requires continual maintenance.
Gweneth died on 4 July 2006, some five years after Philip. Gweneth, who was born in August 1909, was just on 97 years of age at the time of her death.
The plaintiff lived with Philip at the Glenelg property from the time that they commenced cohabitating in 1993. After Philip’s death, the plaintiff continued to reside in the Glenelg property with the express knowledge and consent of Gweneth until her death and thereafter with the knowledge and consent of Gweneth’s executor (but without the approval of Timothy and Edward). The plaintiff has not paid any rent in respect of her occupation of the house.
At the date of his death, Philip had four superannuation policies with a combined value of $101,561.59. The proceeds of those superannuation policies were paid to the plaintiff in her personal capacity. The plaintiff used $95,530.50 to discharge liabilities of the estate. In addition, the plaintiff has contributed from her own resources a further $8,255.26 in order to discharge liabilities of the estate. The plaintiff credits the estate the sum of $8,395.77 for store account purchases she wishes to retain.
The proceeds from the sale of Philip’s shares amounted to $23,181.65. The plaintiff, in her capacity as executor, applied $20,000 of that sum to discharge a personal loan of Philip and applied the balance towards payment of the costs associated with the grant of probate.
The remainder interest of Philip’s estate in the deceased estate of his father did not vest until the death of Gweneth. The estate received $25,703.83. The plaintiff applied that sum in part payment of the legal costs which she had incurred in administering the estate.
In February 2006, Timothy paid the sum of $25,000 to the CBA in full settlement of its claim under Philip’s overdraft facility, and thereby became a creditor of Philip’s estate.
On 11 July 2008, the estate of Gweneth paid the sum of $16,552.57 to the CBA together with lodgement fees of $112 in order to discharge the balance of the CBA mortgage. It too became a creditor of Philip’s estate.
The parties agreed that the liabilities of Philip’s estate at 1 January 2009 were as follows:
(1) Liability to the plaintiff in respect of the monies paid by her to discharge the estate’s liabilities $95,389.99
(2) Liability to Timothy in respect of the monies paid by him to discharge the CBA overdraft $25,000.00
(3) Liability to Gweneth’s estate in respect of the monies paid to discharge the CBA mortgage $16,664.57
TOTAL $137,054.56
In addition, the estate has a liability for legal costs to which reference will be made later.
As noted earlier, Gweneth died on 4 July 2006. Probate of her estate was granted to Jennifer Bailey on 26 April 2007. Gweneth left her residuary estate to Timothy and Edward upon their attaining the age of 30 years. As Timothy has now reached that age, his interest in Gweneth’s estate has vested in him. Edward’s interest will not vest in him until he turns 30 in April 2011.
On the face of the pleadings, it seemed that there were a large number of issues which would require determination by the Court. Timothy and Edward contended that Philip’s superannuation policies formed part of the assets of the estate. They alleged, in the alternative, that the plaintiff had made material misrepresentations to them, resulting in them foregoing the chance to have some or all of the superannuation monies paid to them. Timothy and Edward disputed the plaintiff’s entitlement to sell the estate’s interest in the Glenelg property in order to realise monies which could be used to pay the estate’s debts. They alleged several breaches by the plaintiff of her fiduciary duties as an executor and sought her removal as executor. Timothy and Edward contended that cl 3 of Philip’s will, to which reference will be made shortly, was not effective in passing to the plaintiff a life interest in Philip’s one half share in the Glenelg property and contended, in the alternative, that if it did, it was the plaintiff personally, and not the estate, who was liable to discharge the CBA mortgage. In addition each of Timothy and Edward made their own application under the IFP Act.
On 16 April 2004, Timothy lodged a caveat on the estate’s title to the Glenelg property, so as to prevent the plaintiff selling it. An order for the removal of the caveat was made on 8 February 2006, but on 12 April 2006 a Judge of this Court stayed execution of that order pending the hearing and determination of the claims of Timothy and Edward.
On the morning of the first day of the trial, Timothy and Edward abandoned a large number of their claims and conceded other claims of the plaintiff. During the course of the trial, further concessions were made. In the end result, the only issue requiring the Court’s determination is the plaintiff’s application for provision under the IFP Act. As noted at the commencement of these reasons, Timothy and Edward acknowledged that Philip’s will left the plaintiff without adequate provision for her proper maintenance, education or advancement in life.
Philip’s Will
The principal bequest made by Philip’s will of 15 December 1998 was as follows:
3.I GIVE to my Trustees my estate and interest in my residence at 5 Robert Street Glenelg 5045 being the whole of the land comprised in Certificate of Title Register Book Volume 4324 Folio 629 together with my interest in any furniture and other household and domestic effects therein UPON TRUST:
3.1 to permit my wife [the plaintiff] to have the use enjoyment and occupation thereof during her lifetime or until she remarries.
3.2 my wife is to be responsible for keeping the residence insured against damage by fire storm tempest and earthquake to the full value thereof and for keeping the residence in good tenantable repair and condition (fair wear and tear and damage by fire lightning flood tempest earthquake and other act beyond her control excepted). She is also o be responsible for discharging all rates taxes charges assessments and other outgoings in respect of the residence.
3.3 On the death of my wife or in the event that she remarries, whichever first occurs, I DIRECT my Trustees;—
3.3.1to stand possessed of my estate and interest in my residence UPON TRUST for my son [Timothy] provided he is alive at my death and attains the age of twenty five (25) years;
3.3.2to stand possessed of my interest in any furniture and other household and domestic effects situated in the residence UPON TRUST for my son [Edward] provided he is alive at my death and attain the age of twenty five (25) years.
It can be seen that by this bequest, Philip intended to provide accommodation for the plaintiff during her lifetime, or until her remarriage. On her death or remarriage, his interest in the property was to pass to Timothy. In this way, the Glenelg property was to be kept within the Whitington family. There is a problem with the efficacy of that bequest to which reference will be made shortly.
Philip made a specific bequest to the plaintiff of his Gould bird prints. He also made a bequest of that part of his estate which did not comprise the Glenelg property or the Gould bird prints to the plaintiff, provided that she survived him for at least one calendar month. If she did not survive him for at least one month, the residuary estate was to pass to Edward.
Section 7 of the IFP Act
Section 7(1) of the IFP Act provides:
(1) Where—
(a) a person has died domiciled in the State or owning real or personal property in the State; and
(b) by reason of his testamentary dispositions or the operation of the laws of intestacy or both, a person entitled to claim the benefit of this Act is left without adequate provision for his proper maintenance, education or advancement in life,
the Court may in its discretion, upon application by or on behalf of a person so entitled, order that such provision as the Court thinks fit be made out of the estate of the deceased person for the maintenance, education or advancement of the person so entitled.
A number of matters concerning the application of s 7(1) in the plaintiff’s circumstances were not disputed. Timothy and Edward accepted that Philip was domiciled in South Australia and that the plaintiff was “a person entitled to claim the benefit of this Act”; they agreed that the plaintiff should have an extension of the time fixed by s 8(1) within which to make her application for provision under s 7; and they did not contend that the plaintiff had engaged in any disentitling conduct of the kind to which s 7(3) refers.
In relation to the similar, but not identical, counterpart to s 7(1) in New South Wales, Mason CJ, Deane and McHugh JJ said in Singer v Berghouse[1] that the provision required the Court to carry out a two-stage process. The first stage is the determination of whether the plaintiff has been left without adequate provision for her proper maintenance, education or advancement in life. If the Court is satisfied that inadequate provision has been made, the second stage requires it to decide what provision ought to be made.[2]
[1] (1994) 181 CLR 201.
[2] Ibid.
The first stage involves the determination of an issue of fact,[3] and requires the Court to make an assessment of whether the provision made was inadequate:
for what, in all the circumstances, was the proper level of maintenance etc appropriate for the applicant having regard, amongst other things, to the applicant’s financial position, the size and nature of the deceased’s estate, the totality of the relationship between the applicant and the deceased, and the relationship between the deceased and other persons who have legitimate claims upon his or her bounty.[4]
The second stage involves an exercise of discretion[5] although the factors relevant to the exercise of the discretion are similar to those relevant to the first stage.[6]
[3] Ibid at 210.
[4] Ibid.
[5] Ibid at 211.
[6] Ibid at 210.
In Bowyer v Wood,[7] Debelle J, in the judgment of the Full Court, addressed the meaning of the words “adequate” and “proper” in s 7(1). It is not necessary to repeat in detail the matters of principle identified by Debelle J. They were not in issue at the hearing. It is sufficient to note that the words “adequate” and “proper” involve notions which are relative. They must be applied in a relative sense to all the circumstances of the case and there are no fixed standards. The word “proper” connotes an ethical position as to what allowance should be made, but it does not empower the Court to rewrite the deceased’s will in accordance with its own ideas of justice and fairness. Instead, the use of the word “proper” is intended to require the adequacy of the provision which has been made to be determined by reference to all the relevant circumstances including the size of the estate.[8] What may be considered to be an adequate provision for the proper maintenance of an applicant will vary according to all the relevant circumstances. The needs of an applicant are not to be considered in a vacuum.
[7] [2007] SASC 327; (2007) 99 SASR 190.
[8] Ibid at [41]; 202.
The adequacy of the provision made for the plaintiff is to be assessed as at the date of Philip’s death.[9] However, the Court is entitled to have regard to the events which have occurred since his death insofar as they indicate what, as at the date of death, may have been expected to occur. It is only if the events occurring since death could not have been reasonably foreseen as at the date of death that they should be ignored.[10]
[9] Coates v National Trustees Executors and Agency Co Ltd (1956) 95 CLR 494 at 508.
[10] Ibid.
In Hughes v National Trustees Executors and Agency Co of Australasia Ltd,[11] Gibbs J said that the adequacy of the provision made in the will depended:
on all the circumstances – that is, on all the facts that existed at the date of the death of the testator, whether the testator knew of them or not, and all the eventualities that might at that date reasonably have been foreseen by a testator who knew the facts.[12]
[11] (1979) 143 CLR 134.
[12] Ibid at 148.
The Plaintiff’s Circumstances
The plaintiff was born in February 1950 and is presently 59 years of age. On leaving school, her initial employment was in a bank but later she attended the University of Adelaide, graduating with a Bachelor of Arts Degree in 1981. The plaintiff then took up work as a tutor of secondary school students, initially at the Adelaide Children’s Hospital, later at Prince Alfred College and later still through private tutoring arrangements. While at the University of Adelaide, the plaintiff developed a condition of retrobulbar neuritis which has left her with some blind spots in her vision. In 1991 the plaintiff obtained a Masters Degree in Special Education.
The plaintiff continued to work as an educational tutor throughout her relationship with Philip. The number of hours she worked varied but, until the last six months of Philip’s life, was approximately 30 hours a week during school term periods. Her income was of the order of $17,000 per annum before tax.
As previously noted, Philip was, until shortly before his death, employed as the Chief Executive Officer of the Wyatt Benevolent Institution. His gross income was $76,607 in 1995. That increased to $111,740 by 2000. Philip paid all the expenses of the couple during their relationship, except amounts due under credit cards, store accounts, private health insurance and food.
During their relationship the plaintiff paid all credit cards, store accounts, private health insurance and food. She deposited the balance, if any, of her weekly income in the account of Philip from which the CBA mortgage payments were paid.
In order to fund the property settlement with his first wife in 1992, and to refinance existing debt, Philip borrowed $120,000 from CBA (secured with Gweneth’s consent by a mortgage over the Glenelg property). By the time of his death, the liability under that mortgage had reduced to $63,824.
In January 1997 Philip borrowed $20,000 from the plaintiff’s mother. That money was used to effect improvements and maintenance to the Glenelg property. After Philip’s death the plaintiff paid interest to her mother on that loan at the rate of 10 per cent per annum until her mother’s death in May 2003. As noted earlier, the plaintiff, in her capacity as executor of Philip’s estate, repaid that loan on 16 June 2004.
In September 1998, Philip took out an overdraft with the CBA with a credit limit of $30,000.
As noted earlier, Philip was diagnosed with cancer of the colon in July 1997. Three weeks later, he underwent surgery. From about October 2000, Philip’s health deteriorated rapidly and he was unable to care for himself. The plaintiff nursed and cared for Philip at the Glenelg property on a full-time basis from October 2000 until he was admitted to St Andrew’s Hospital approximately two weeks before his death on 23 April 2001. As a consequence, the plaintiff’s income for the year 2000-2001 was reduced to approximately $5,000.
Since Philip’s death the plaintiff has continued to work as an educational tutor. In general her earnings have been of the order of $25,000 per annum before tax. She has no other income.
The parties agreed that the plaintiff’s annual expenditure including amounts spent by way of maintenance and repairs has been of the order of $25,000. For the first three or four years after Philip’s death the plaintiff was able to pay out of her own funds the costs of keeping the Glenelg property in good tenantable repair and condition. The defendants acknowledged that she can no longer afford to do so.
The plaintiff did inherit $56,000 from her own mother’s estate. She used some of that money to repay a previous car loan, some for legal expenses associated with the present litigation and the balance in the course of her ordinary living.
In January 2009, using a deposit borrowed from her brother, the plaintiff bought a new car. The repayments on the loan taken out for that purpose are $331 per month.
Apart from some furniture, some pictures and the Gould prints bequested to her by Philip, the plaintiff has no other assets of significance.
As noted earlier, since the death of Philip the plaintiff has lived (with the consent of Gweneth and later of Gweneth’s executor) in the Glenelg property without having to pay any rent.
The Circumstances of Timothy and Edward
Timothy is 30 years old, and married with one son. He and his family live in rented accommodation. Timothy has attained a Bachelor of Commerce Degree and is employed as a data base manager. He owns no real property. Under Philip’s will he stands to inherit Philip’s half interest on the Glenelg property on the death or remarriage of the plaintiff. Under Gweneth’s will, Timothy has received half of her interest in the Glenelg property, ie, the equivalent of a quarter interest in the property as a whole. That interest vested in Timothy on his 30th birthday in September 2008.
Edward is now 28 years old and is employed as a restaurant manager. He lives alone in rented accommodation and does not own any real property. Under Philip’s will he stands to inherit the furniture and other household and domestic effects in the Glenelg property on the death or remarriage of the plaintiff. Under Gweneth’s will, Edward will receive one half of her interest in the Glenelg property upon his attaining the age of 30 years in April 2011.
The Application of Stage 1
In my opinion, the ultimate concession of Timothy and Edward that Philip had not made proper provision for the plaintiff in his will was appropriately made.
Although Philip intended to provide a place of residence for the plaintiff during her lifetime or until her remarriage, the bequest in cl 3 of the will had two shortcomings. First, the estate’s liabilities well exceeded its liquid assets. This means that the plaintiff can discharge the liabilities only by selling the estate’s interest in the Glenelg property.
Secondly, the fact that Philip owned only one half of the Glenelg property meant that he could not pass to the plaintiff a right to exclusive possession or occupation of it. In order to have the “use, enjoyment and occupation” of the house after Philip’s death, the plaintiff required the agreement of the owner of the other half. Philip may have had a justified expectation that Gweneth would continue to provide her consent, but Gweneth was 91 years old at the time of his death. She could not reasonably have been expected to survive for many years and, in particular, not for the period of the plaintiff’s life expectancy. On Gweneth’s death, the plaintiff’s continued occupation of the property was subject to the consent of Gweneth’s executor and, in turn, on the separate consents of Timothy and Edward after their interests vested on each attaining 30 years of age.
There was some debate at the hearing about the nature of the interest in the Glenelg property, if any, which cl 3 of the will may have passed to the plaintiff. By their Statement of Claim, Timothy and Edward sought a declaration that the life estate which cl 3.1 purported to grant was void or, at least, ineffective. At the hearing they made an alternative submission to the effect that if cl 3 was effective to pass some interest, it could be no more than a personal right to reside in the property provided that the plaintiff could first secure the consent of the co-owner. Counsel referred to Radaich v Smith,[13] Street v Mountford,[14] Re Hoppe,[15] Re Will of Mayer,[16] Stevens v McGrath,[17] and Sciacca v Ghidella.[18] However, ultimately Timothy and Edward did not press the submission that cl 3 was void or, alternatively, ineffective to pass any interest at all. They recognised that acceptance of that proposition might have the consequence of impairing Timothy’s claim to an interest in the property. They also accepted that a bequest of a conditional right of residence did not amount to adequate provision for the plaintiff.
[13] (1959) 101 CLR 209 at 221-2.
[14] [1985] 1 AC 809 at 818, 822, 824.
[15] [1961] VR 381 at 387-8.
[16] [1994] QSC 276.
[17] [2004] QSC 138.
[18] [2001] QSC 134.
I am satisfied that Philip did not, despite his intention to do so, make proper provision for the plaintiff. It may be that Philip had an expectation, at the time that he made his will, that he would survive Gweneth. Perhaps he had an expectation that her half interest in the Glenelg property would pass to him under her will so that he would be able to bequeath to the plaintiff an unconditional and exclusive right of occupation. But whatever Philip’s thinking may have been in 1998 when he made his will, it was probable in 2001 that his death would occur before his mother’s. In these circumstances, his will failed to make proper provision for the plaintiff.
The Application of Stage 2
The plaintiff submitted that proper provision should be made by permitting her, as the executor, to sell the estate’s half interest in the Glenelg property. She then proposed that, after the costs of sale had been paid, the sum of $95,389.99 should be paid to her in repayment of the amounts which she had (in effect) lent to the estate in order to discharge its liabilities; the sum of $25,000 be paid to Timothy in repayment of the amount which he had (in effect) lent to the estate in order to discharge the CBA overdraft; and the sum of $16,664.57 be paid to the estate of Gweneth in repayment of the amount which it had (in effect) lent to the estate in order to discharge wholly the CBA mortgage. In addition, the costs (presently disputed) to which the plaintiff and the defendants are entitled will need to be deducted.
The plaintiff then proposed that, as executor, she be authorised to apply the balance of the net proceeds of sale in or towards the purchase or acquisition of a new residence for herself as life tenant, with Timothy having the remainder interest. As an alternative to the purchase of a new residence, the plaintiff proposed that she be held to have a life interest in the balance of the net proceeds of sale with the effect that she would be entitled to receive the proceeds of investment of those monies during her lifetime or until her remarriage. Again, under this proposal Timothy would have the remainder interest in the net proceeds.
Put more shortly, the plaintiff proposed the sale of the estate’s interest in the Glenelg property; the discharge of the estate’s liabilities from the proceeds of sale; and investment of the proceeds in an alternative property so as to provide accommodation for her during her lifetime or until her remarriage or, alternatively, investment of the proceeds with the return on the investment being available for her use and enjoyment during her lifetime or until her remarriage. On each of these alternatives Timothy was to have the remainder interest in the alternative property, or in the investment fund, as the case may be. The plaintiff did not seek an order for partition and sale in these proceedings.
Timothy and Edward proposed instead that the Court should first make an order identifying the value of the respective interests of the plaintiff and Timothy in the estate’s interest in the Glenelg property. This should be done on the basis that the will had been effective to convey a life interest to the plaintiff. They proposed that the Court make an order charging the estate with that interest, with the effect that the plaintiff would be able to enforce her interest, by a partition and sale if necessary. Timothy and Edward proposed, however, that the plaintiff’s ability to take enforcement action should be postponed while they take action seeking an early vesting of Edward’s interest in the property arising under Gweneth’s will. As I understand it, they then propose a sale of the whole property with the net proceeds of the estate’s half interest being disbursed to discharge the estate’s liabilities. The balance should then be apportioned between the plaintiff and Timothy in a way which reflects the value of their present respective interests in the estate’s interest in the Glenelg property. As I understand it, Timothy and Edward (or perhaps both) contemplate being able to purchase the plaintiff’s interest or, alternatively, the entire interest not already vested in Timothy.
It is common ground that the estate’s interest in the Glenelg property must be sold. The plaintiff is unable to discharge the estate’s liabilities unless that occurs. Section 51 of the Administration and Probate Act 1919 (SA) authorises the plaintiff, in her capacity as executor, to sell the estate’s interest in the Glenelg property in order to pay the estate’s debts.
The dispute between the parties relates to what should be done with the net proceeds in order to make proper provision for the plaintiff.
The alternatives proposed by the plaintiff have a number of disadvantages. The purchase of an alternative property would continue to bind the interests of the plaintiff and Timothy together for many years. There was good reason for this to occur given Philip’s intention to provide accommodation for the plaintiff while, at the same time, preserving the Glenelg property within the Whitington family. Now that that is no longer a viable option, the relationship between the plaintiff and Timothy, as evidenced in the conduct of these proceedings, suggests that it may be desirable to provide for the plaintiff in a way which will permit the plaintiff and Timothy to go their separate ways.
If an alternative property for the plaintiff’s use was purchased, there may, in any event, arise issues as to the plaintiff’s ability to continue in occupation. For example, if her health deteriorates or some other material change in circumstances occurs, the alternative property may cease to be appropriate.
Further again, it is likely that there would be some issues about the plaintiff’s ability to maintain an alternative property in an appropriate way. Although the maintenance costs of a replacement property are likely to be less than those required at the Glenelg property, the difficulty which the plaintiff experienced in attending to the maintenance of the Glenelg property is likely to be repeated, at least to some extent, in relation to a replacement property.
The investment of the net proceeds in a fund in which the plaintiff would have a life interest also has its shortcomings. Depending upon the form of investment chosen, the prospects of capital accretion in the fund over the remaining years of the plaintiff’s life, or until her remarriage, appears slim. It is more likely that there would be a reduction in the real value of the fund by the time it vested in Timothy. In that way, Timothy’s position is likely to be impaired compared with the position contemplated by Philip. Although there is no guarantee that real estate does over time increase in value or at least maintain its present value, ordinary experience indicates that, over the long term, real estate does increase in value. The investment of the monies in a fund would deny Timothy that prospect.
Further, because of Timothy’s interest, it is likely that the net proceeds would have to be invested conservatively so as to protect the capital sum as far as possible. That is likely to affect the investment return. There is a real concern, in my opinion, that the return on an investment of the net proceeds would, after payment of tax, be insufficient to finance appropriate accommodation for the plaintiff in any event.
The provision of a sum of money to the plaintiff for her own use would provide her with greater flexibility to make an investment in a way which is most appropriate to her needs. It is the plaintiff, and not the Court, who is in the best position to assess her needs, and to determine the kind of investment which would be most beneficial to her adequate maintenance.
For these reasons, I consider each of the alternatives proposed by the plaintiff to be inappropriate.
In my opinion, some apportionment of the net proceeds is appropriate. Such an apportionment, taken together with the proceeds of the superannuation monies, should be sufficient to enable the plaintiff to obtain at least modest accommodation. It would also reflect Philip’s intention that the plaintiff was not to have his interest in the Glenelg property absolutely for her own benefit. Philip also intended to provide a real benefit to Timothy.
The parties provided an opinion from an actuary, Mr Crump, dated 24 February 2009. On the assumption that the plaintiff had a life interest in the estate’s share of the Glenelg property, Mr Crump considered the value of that interest to be 60.8 per cent of the value of the estate’s interest. I consider it to be appropriate to proceed on the basis of that assessed value.
Accordingly, in my opinion, proper provision should be made for the plaintiff by removing the impediments to the sale of the estate’s interest in the property. After payment of the net costs of sale, and discharge of the estate’s liabilities to the plaintiff ($95,389.99), Timothy ($25,000) and Gweneth’s estate ($16,664.57) the balance should be paid into Court to be held pending the determination of the issues concerning legal costs which should be paid by the estate. The parties are in disagreement about those costs. I will have to hear from the parties separately about the costs because it was inappropriate for the Court to hear the submissions (and evidence) about the costs issues until the substantive matters have been resolved.
Once the costs for which the estate is liable have been paid, the remaining balance is to be divided so that 60.8 per cent is paid as a lump sum to the plaintiff, and 39.2 per cent to Timothy.
The parties did not address any submissions to the “furniture and other household and domestic effects” referred to in cl 3.3.2 of Philip’s will. I will hear from the parties separately regarding those items.
Conclusion
For the reasons given, I direct that provision be made for the maintenance of the plaintiff by permitting her to proceed with the sale of the estate’s interest in the Glenelg property; and by directing that she be entitled to 60.8 per cent of the balance of the net proceeds of the sale. The remaining 39.2 per cent is to be paid to Timothy. The balance of the net proceeds is to comprise the amount realised on sale, less the costs of sale and less the payment of the estate’s liabilities, including the liability for legal costs which is yet to be determined by the Court. After the payment of the costs of sale and the discharge of the estate’s liabilities referred to in these reasons, the remaining sale proceeds are to be paid into Court to be held pending the determination of the issues relating to the estate’s liability for costs. I will also hear from the parties concerning the furniture, household and domestic effects. The parties are to bring in minutes of orders to give effect to the orders made by the Court, which minutes are to take account of the orders made on 8 February and 12 April 2006.
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