Williams and Repatriation Commission - [2002] AATA 231

DECISION AND REASONS FOR DECISION [2002] AATA 231

ADMINISTRATIVE APPEALS TRIBUNAL )

) No V2001/509

VETERANS APPEALS DIVISION           )
           Re      JEFF WILLIAMS
  Applicant
           And    REPATRIATION COMMISSION
  Respondent

DECISION

Tribunal Mr J. Handley, Senior Member

Date28 March 2002
PlaceMelbourne

Decision      The decision under review is set aside and in substitution it is decided that the applicant has not disposed of his assets without adequate consideration or at all and service pension should be restored.
  .........Sgd. Mr J. Handley................
  Senior Member
CATCHWORDS
Veterans Affairs - Service pension - brother of deceased executed a Will on 8 October 1999 and a 'wish list' at 11 October 1999 and died on 12 October 1999 - Will and 'wish list' not similar - Will only admitted to Probate - applicant gave monies he received from estate to his sons consistent with the terms of the wish list - whether any disposition of assets without valuable consideration - decision affirmed.
Veterans Entitlements Act 1986

Kintominas v Secretary, Department of Social Security 1991 103 ALR 82

REASONS FOR DECISION

28 March 2002 Mr J. Handley, Senior Member

The applicant applies to review a decision made by a delegate of the respondent on 4 April 2001. The delegate then affirmed a decision previously made on 11 September 2000 where it was decided that there had been a disposition of assets without adequate consideration, thereby affecting the rate of service pension payable.
The delegate relied on s.52E(1) of the Veterans Entitlements Act 1986, however, s.52H refers to disposal of assets by a member of a couple. To the extent that the relevant dispositions were made from a joint bank account, it is arguable that s.52H applies. In any event the language and intent of that section is virtually identical to s.52E. Nothing turns on this distinction. It is not in dispute that the respondent has authority to review ongoing entitlements to pension where assets have been disposed. Additionally, it is not in dispute that the applicable assets in this case were disposed without adequate consideration.
The issue concerns the intention of a deceased person to have the applicant administer his estate pursuant to a document written three days after a last will and testament was completed and on the day prior to the deceased's death.
The applicant appeared without representation. Mr Douglass represented the respondent. The hearing commenced in Albury on 29 January 2002 and concluded following a directions hearing on 1 March 2002. In the interim, the applicant had the opportunity to consider a number of submissions the respondent lodged shortly prior to the commencement of the hearing. The applicant also had the opportunity to review some decisions relied the respondent upon in its submissions. In the interim, the applicant was further urged to consult legal practitioners to obtain advice. These issues are referred to in these reasons.
Briefly the facts giving rise to this application may be summarised as follows-
The applicant is the brother of Norman Henry Williams who completed a Last Will and Testament on 8 October 1999. Mr Norman Williams unfortunately died on 12 October 1999. The solicitors completed his will in Albury and attended him whilst he was an in patient at a local hospital. The will records that the applicant and his brother William be appointed as executors. It provides that the Estate of the deceased shall be distributed by the sum of $30,000 being payable to another brother, Ronald Thomas Williams. The balance of the estate shall be divided equally between the two executors.
The applicant said that immediately after the will was executed, his brother William learnt of its content and apparently protested upon the basis that he was to receive what he regarded as an inadequate allocation of assets. It was submitted that Mr William Williams also made representations to the solicitors who completed the will. This is borne out in the solicitor's letter to the applicant, found at page 24 and 25 of the T-documents.
Apparently, Mr Norman Williams learnt of the protests of his brother Mr William Williams and decided to make more specific bequests on 11 October 1999. It was on that day that the deceased learnt that his death was imminent and he died the following day. The specific bequests the deceased intended were hand written by the applicant at his hospital bedside, were signed by the deceased (but not witnessed) on 11 October 1999. The handwritten document occupies three pages and is found at pages 73-75 of the T-documents. The document is entitled "Norms wishes".
The document uses a number of abbreviated or "nick" names, and in order to interpret it, the person "Billy" is the deceased's brother, William Williams and the person "Nick" is the applicant, Jeffrey Williams. The document makes specific bequests as to who should have custody and care of his dogs, who should reside in and/or occupy his home, disposition of motor boat, trailer and motor vehicles, specific arrangements as to his funeral, burial and wake, representations to the local council for naming of a local park, and disposition of other items of personal property. Specifically there is a reference in this handwritten document which reads as follows-
"you and I know and have discussed many times, look after Greg and Ben as we have discussed.
100,00 each."

The applicant said that the reference to "100,00" was intended to be a reference to $100,000. The persons "Greg" and "Ben" are two sons of the applicant.
On 19 April 2000, the applicant received from the solicitors administering the estate the sum of $205,854.94. That sum was paid into a joint bank account held between the applicant and his wife. On 27 April 2000, the sums of $100,000 and $104,000 were respectively withdrawn. The sum of $100,000 was paid to the applicant's son Greg and the sum of $104,000 was paid to the applicant's son Ben.
The applicant said that he made these payments consistent with his brother's wishes. It is not clear why the sum of $104,000 was paid to Ben.
Mr Williams explained the delay between 19 April and 27 April being public holidays of Easter and Anzac Day and a weekend intervening.
Mr Williams said - and has consistently said in a number of letters he has written to the respondent - that the sum of $204,000 was withdrawn consistent with and in honour of his brothers dying wishes as recorded in the document entitled "Norms wishes".
The respondent argues that the monies paid to the applicant were pursuant to the Last Will and Testament of the deceased executed on 8 October 1999. It was submitted that the solicitors representing the Estate administered it according to the Will and paid monies consistent with the terms of the Will, as was the intention of the deceased when he completed it. It follows, according to the submissions, that the applicant's disposition of the sum of $204,000 was made without any or any adequate consideration. This has had the effect of diminishing the value of his assets, thereby affecting the rate of service pension payable.
The applicant, Mr Williams, submits that he did no more than honour his brothers dying wishes and made payments as his brother intended to his sons Greg and Ben. He said that allowing for the delay between 19 April and 27 April being weekends and public holidays, he virtually made the payments as soon as was practically possible. He said these monies were always intended to be paid to his children pursuant to the "wish list" which his brother completed, in anticipation of death, and to provide greater certainty and particularity in the administration of his estate.
Unfortunately, the estate solicitors failed to submit the "wish list" to the Supreme Court of NSW, when it made a probate application. This was unfortunate, because the "wish list" now has no legal status. Probate was issued only having regard to the terms of the Will.
Following the hearing in Albury, Mr Williams consulted the estate solicitors having regard to the Statements of Facts and Contentions the respondent lodged. Mr Williams consulted with solicitors largely upon my recommendation, because the contentions contained a number of legal issues concerning the status of the "wish list" and its impact and relevance to these proceedings. The solicitor subsequently wrote to the Tribunal. In a letter dated 30 January 2002 the solicitors confirmed that Mr Williams consulted them and provided them with a copy of the "wish list". The letter records (in part) "we had not previously seen the document dated 11.10.99. Had it been produced to us initially it would have been submitted to the Supreme Court of New South Wales with the probate application as a "document purporting to embody the testamentary intentions of a deceased person" in accordance with the provisions of s.18A of the Wills Probate and Administration Act 1898. We would have submitted to the probate registrar that he admit the document to probate as being in the nature of a codicil. The signature on the two documents appear to be identical".
This solicitors reference to not having observed the "wish list" previously is troubling because in a bill of costs prepared (page 100-101 T-docs) the solicitors refer to the "wish list" and claim fees for perusal of it. It appears that the solicitors at least noted the document on 14 October 1999 (3 days after death) and on 1 November 1999. This was well and truly before the probate application was made.
The solicitors wrote to Mr Williams on 14 February 2002 and advised him that in order to seek advice from an appropriately qualified barrister in Sydney, (I assume as to the merits of obtaining an amended grant of probate) the costs of the advice were estimated as between $750-1,000. The letter also records that the advice "would be unlikely to advance your cause".
Mr Williams - having regard to the frequency and content of his correspondence forwarded to the respondent - is very upset. He is obviously concerned that the service pension payable to himself and his wife is considerably reduced. This is a consequence of the interpretation the respondent made as to the payment of $204,000 to his two sons. Mr Williams is also very upset - and this appears to be the most dominant cause for his upset - that the respondent has failed to recognise or honour the express written wishes of his brother as recorded in the list made on 11 October 1999. Mr Williams submitted that had the respondent recognised that list, it would accept that there has not been a disposition of assets without consideration, but rather, there has been a trust like relationship. This relationship is established where the trustee (in this case the applicant) has complied with the wishes the deceased person expressed and has paid monies to the beneficiaries as the deceased nominated. In those circumstances, it is put that the applicant did not dispose of the assets because he has never been the legal proprietor of those funds.
The respondent concedes that the deceased did complete a properly executed Will, which was submitted for a grant of probate. The Commission also concedes that the deceased did complete a list of his testamentary intentions and that the applicant complied with that list of wishes by making payment of monies to his two sons. The respondent, however, notes that the list of wishes is inconsistent with the Will over which probate was granted when the estate was distributed.
It follows therefore - according to the respondent's submissions - that the property of the deceased estate was distributed to the applicant consistent with the Will and as a result he obtained legal title. In receiving the monies from the estate, Mr Williams became the beneficiary of his brother's will and Mr Williams' payment to his sons amounted to a distribution of his assets, as opposed to the assets of the estate. It followed therefore, that the applicant's sons were not beneficiaries of the estate and the applicant has diminished the value of his own assets due to the payments that he made to his sons.
Additionally, the respondent submitted that the Tribunal cannot assume the role of the New South Wales Probate Court and make a decision as to whether the "wish list" has any legal status. To do so would in effect import a different status to the monies paid to the applicant's sons. I agree with this submission in the absence of other evidence - particularly the evidence of other beneficiaries. Because of the apparent unpleasantness between the beneficiaries of the will, any admission of the "wish list" to probate might enliven that unpleasantness. Indeed, it may be that a grant of probate having already been made, the court may be loath to disturb it by reason of a list of wishes that is apparently and obviously inconsistent with the terms of the will.
In Kintominas v Secretary, Department of Social Security 1991 103 ALR 82 the Tribunal - and later the Federal Court - considered an applicant pensioner's disposition of assets under the Social Security Act where it was established that her son had an equity in the assets "disposed". In that application, the appellant's son had - in anticipation of ultimately becoming the legal owner of the asset - expended a considerable amount of money over the asset (a home). The Court recognised the beneficiary's equity in the property to the extent that the applicant had no continuing legal interest in it. As such there had not been a disposition of assets by the applicant. Additionally, the court decided that it would recognise the equity of the son and protect his interests. In reaching these conclusions, the court acknowledged that the applicant had made a promise to her son and that he had acted on that promise. The Court concluded that it would be unconscionable not to have recognised the equity of the applicant's son in the property.
The present application does not involve the factual scenario approaching that of Kintominas. There is no evidence of any promise the deceased made to the applicant's sons, nor is there any evidence they acted on such a promise to their detriment, or at all (refer Kintomas at p.91). The failure to carry out a promise, if such existed, is not of itself actionable.
On the basis of the many letters the applicant wrote to the respondent, (as found in the T-documents) it is suggested that an injustice has occurred being (i) a failure by the respondent to recognise the deceased's wishes and (ii) the interference with service pension.
The applicant has honoured his brother's wishes. He made payments to his sons as the "wish list" intended. The legal title (ownership) of those monies immediately before payment is in issue and is hopefully explained as follows-

the estate solicitors obtained a grant of probate of the deceased's will.
a grant of probate is evidence of the validity of the will
probate permits executors to distribute estate property in accordance with the terms of the will.
legal title or ownership of property distributed by the executors becomes the legal property of the beneficiaries
money is property
the applicant as a beneficiary of the will received monies pursuant to the will after probate was granted.
the applicant's sons did not receive monies from the estate because they were not beneficiaries under the will.
the sons received monies from the applicant at a time when he had legal title to the monies.
the applicant disposed of his property to his sons. Property of the estate was not disposed to the sons.

The distinction between property of the applicant and the estate may be difficult to comprehend, particularly when the money the sons received had its origin in the estate. Nonetheless, because the will - and not the "wish list" - was submitted to probate, the solicitors were obliged to distribute estate funds pursuant to the terms of it. The question remains unanswered as to why the solicitors did not submit the "wish list" when they applied for a grant of probate, when the list reflected the testator's wishes. Had probate been granted reflecting those intended dispositions this dispute would not have arisen.
The respondent submitted that equitable principles could not assist the applicant. In fact, it was submitted that there was "no recognised class of equitable interest" on the part of the applicant's sons to the estate of the deceased.
But the sons are not parties to this dispute, nor is the estate. The real issue it seems to me, is whether there is any equity which permits the applicant and his wife to retain their service pensions unaffected by the imposition of the deeming/gifting provisions of the Veterans Entitlements Act 1986.
I am satisfied that equity will relieve the applicant because I am satisfied that a constructive trust exists. The deceased obviously intended, as his "wish list" evidences, that the applicant's sons' benefit. The respondent concedes the wish list is a manifestation of the deceased's intended manner of distributing his estate, albeit considerably different to his will. The list was prepared after the will was executed and the respondent also conceded the applicant's sons were aware of the promise the deceased made to them. It was submitted, however, that they did not alter their conduct in anticipation of receiving money, nor did they suffer any detriment.
My concern and focus is on the applicant. Because I am satisfied that equity can intervene to protect him through the vehicle of a constructive trust, I am satisfied the monies paid to the sons were by the intention and mechanism of the trust. That is to say the deceased was the settler, who appointed the applicant as trustee to pay monies to his sons, being the beneficiaries.
The existence of a trust is apparent by the language of the list of wishes or at least is capable of being inferred or implied. At the time the list of wishes was created, I am satisfied that the money (which was eventually paid to the sons) was intended to be trust property and the deceased therefore divested himself of those monies.
The applicant honoured his obligation as trustee and paid the monies, although in law they were paid to him as the legal beneficiary under the will. But I am satisfied by his conduct, his letters, and the period of time the monies remained in the applicants bank account, that the applicant did not ever regard the monies intended for his sons as his. No question can therefore emerge to portray those monies as assets of the applicant. He therefore has not made any disposition in contravention of s.52E or H.
Detriment to beneficiaries (necessitating the invocation of equitable estoppel) is not a critical feature of a constructive trust. It appears that a constructive trust will be established to preserve the beneficiaries' interests and ensure their rights were satisfied if, through some unconscionable act on part of the legal owner/trustee, the beneficiaries would suffer. The applicant's sons in the present case had not suffered detriment but it would have been open for them to also establish a constructive trust to preserve their beneficial interest under it, if there had been default by their father as trustee.
In reaching these conclusions I have been mindful of and influenced by the decision of Drummond J in Kidner v Secretary, Department of Social Security 1993 31 ALD 63; a decision of a Full Federal Court in Secretary, Department of Social Security v Agnew 2000 FCA 59; "Principles of law and Trusts" Ford and Lee; "Law of Trusts in Australia (6th Edition) Jacobs".
To find other than the above, would allow an injustice to pass uncorrected, impose considerable financial hardship upon the applicant and his wife and be contrary to the beneficial nature of the Veterans Entitlements Act 1986.

In the circumstances, the decision under review should be set aside.
I certify that the 39 preceding paragraphs are a true copy of the reasons for the decision herein of Mr J. Handley, Senior Member.
Signed:         ..Ms C. Irons......................
  Secretary
Date/s of Hearing  22 August 2001 & 29 January 2002
Date of Decision  28 March 2002
Counsel for the Applicant        self represented
Solicitor for the Applicant
Counsel for the Respondent    Mr R. Douglass
Solicitor for the Respondent