Young v Kestel
[2003] WASCA 190
•22 AUGUST 2003
YOUNG -v- KESTEL (As Executor of the Will and Estate of DOUGLAS TATE YOUNG (DEC)) [2003] WASCA 190
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2003] WASCA 190 | |
| THE FULL COURT (WA) | |||
| Case No: | FUL:11/2003 | 3 APRIL 2003 | |
| Coram: | MCLURE J EM HEENAN J | 22/08/03 | |
| 49 | Judgment Part: | 1 of 1 | |
| Result: | Appeal allowed Leave granted to file application out of time Leave to adduce further evidence refused | ||
| B | |||
| PDF Version |
| Parties: | SUZANNE OLWEN YOUNG TERENCE ROSS KESTEL (As Executor of the Will and Estate of DOUGLAS TATE YOUNG (DEC)) |
Catchwords: | Inheritance (Family and Dependants Provision) Act Appeal from refusal of extension of time for making application Claim by widow Large estate Deceased's financial affairs complex Partial distribution of estate and other assets to beneficiaries Application to adduce further evidence on appeal |
Legislation: | Inheritance (Family and Dependants Provision) Act 1972 Trustees Act 1962 |
Case References: | Amos v Amos [1966] VR 442 Australia and New Zealand Banking Group Ltd v Westpac Banking Corporation (1988) 164 CLR 662 Australian Electrical Electronics Foundry & Engineering Union Western Australia Branch & Ors v Hamersley Iron Pty Ltd (1998) 19 WAR 145 Bank of New South Wales v Murphett [1983] 1 VR 489 Brown v Holt [1961] VR 435 Circosta v Executor Trustee & Agency Co South Australia (1974) 9 SASR 439 Clayton v Aust (1993) 9 WAR 364 Coates v National Trustees Executors and Agency Co Ltd & Anor (1956) 95 CLR 494 Coffey v Bennett [1961] VR 264 David Securities Pty Ltd & Ors v Commonwealth Bank of Australia (1992) 175 CLR 353 Dousi v Colgate Palmolive Pty Ltd (1987) 9 NSWLR 374 Easterbrook v Young (1977) 136 CLR 308 Grigoriou v George Nitsos (As Executor of the Estate of Athanasois Nichos) & Ors [1999] WASCA 42 In the Estate of Gough (dec); Gough v Gough (1973) 5 SASR 559 Lipkin Gorman (a firm) v Karpnale Ltd [1991] 2 AC 548 Ministry of Health v Simpson [1921] AC 251 Paco v Paco (1989) 17 NSWLR 316 Re Claverie (dec) (1970) 2 NSWLR 380 Re Marland (dec) [1957] VR 338 Re Nassin (dec) [1984] VR 51 Re Ruttie [1970] 1 WLR 89 Re Salmon [1981] Ch 167 Sanderson v Metropolitan (Perth) Passenger Transport Trust, unreported; FCT SCt of WA; Library No 950185; 22 March 1995 Vigolo v Bostin & Anor [2002] WASCA 327 Cropley v Cropley [2002] NSWSC 349 Gregory v Hudson [1999] NSWCA 221 Luciano v Rosenblum (1985) 2 NSWLR 65 Nicholls v Zis [2001] WASC 301 Sayer v Sayer [1999] NSWCA 340 Singer v Berghouse (1994) 181 CLR 201 Wilson v Metaxas [1989] WAR 285 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA TITLE OF COURT : THE FULL COURT (WA) CITATION : YOUNG -v- KESTEL (As Executor of the Will and Estate of DOUGLAS TATE YOUNG (DEC)) [2003] WASCA 190 CORAM : MCLURE J
- EM HEENAN J
Estate of DOUGLAS TATE YOUNG (DEC)
- Appellant (Plaintiff)
AND
TERENCE ROSS KESTEL (As Executor of the Will and Estate of DOUGLAS TATE YOUNG (DEC))
Respondent (Defendant)
Catchwords:
Inheritance (Family and Dependants Provision) Act - Appeal from refusal of extension of time for making application - Claim by widow - Large estate - Deceased's financial affairs complex - Partial distribution of estate and other assets to beneficiaries - Application to adduce further evidence on appeal
(Page 2)
Legislation:
Inheritance (Family and Dependants Provision) Act 1972
Trustees Act 1962
Result:
Appeal allowed
Leave granted to file application out of time
Leave to adduce further evidence refused
Category: B
Representation:
Counsel:
Appellant (Plaintiff) : Mr L A Tsaknis
Respondent (Defendant) : Mr M H Zilko SC
Solicitors:
Appellant (Plaintiff) : Gibson Tovey & Associates
Respondent (Defendant) : Troika Legal
Case(s) referred to in judgment(s):
Amos v Amos [1966] VR 442
Australia and New Zealand Banking Group Ltd v Westpac Banking Corporation (1988) 164 CLR 662
Australian Electrical Electronics Foundry & Engineering Union Western Australia Branch & Ors v Hamersley Iron Pty Ltd (1998) 19 WAR 145
Bank of New South Wales v Murphett [1983] 1 VR 489
Brown v Holt [1961] VR 435
Circosta v Executor Trustee & Agency Co South Australia (1974) 9 SASR 439
Clayton v Aust (1993) 9 WAR 364
Coates v National Trustees Executors and Agency Co Ltd & Anor (1956) 95 CLR 494
Coffey v Bennett [1961] VR 264
(Page 3)
David Securities Pty Ltd & Ors v Commonwealth Bank of Australia (1992) 175 CLR 353
Dousi v Colgate Palmolive Pty Ltd (1987) 9 NSWLR 374
Easterbrook v Young (1977) 136 CLR 308
Grigoriou v George Nitsos (As Executor of the Estate of Athanasois Nichos) & Ors [1999] WASCA 42
In the Estate of Gough (dec); Gough v Gough (1973) 5 SASR 559
Lipkin Gorman (a firm) v Karpnale Ltd [1991] 2 AC 548
Ministry of Health v Simpson [1921] AC 251
Paco v Paco (1989) 17 NSWLR 316
Re Claverie (dec) (1970) 2 NSWLR 380
Re Marland (dec) [1957] VR 338
Re Nassin (dec) [1984] VR 51
Re Ruttie [1970] 1 WLR 89
Re Salmon [1981] Ch 167
Sanderson v Metropolitan (Perth) Passenger Transport Trust, unreported; FCT SCt of WA; Library No 950185; 22 March 1995
Vigolo v Bostin & Anor [2002] WASCA 327
Case(s) also cited:
Cropley v Cropley [2002] NSWSC 349
Gregory v Hudson [1999] NSWCA 221
Luciano v Rosenblum (1985) 2 NSWLR 65
Nicholls v Zis [2001] WASC 301
Sayer v Sayer [1999] NSWCA 340
Singer v Berghouse (1994) 181 CLR 201
Wilson v Metaxas [1989] WAR 285
(Page 4)
1 MCLURE J: I have had the advantage of reading, in draft, the reasons to be published by Heenan J. I agree with those reasons and have nothing to add.
2 EM HEENAN J: Douglas Tate Young had a successful career as a businessman principally as a car dealer but also as a property and general investor. By the time of his death in his 75th year on 29 August 2000 the net assets effectively under his control were worth something in excess of $3 million. Not all of these were held directly because his affairs were arranged so that significant portions of the assets were held by a corporate trustee under two separate settlements which had been set up in his life time. There was also a large private superannuation fund held subject to a superannuation trust deed under which his dependants were entitled to distributions at the discretion of the superannuation trustee. In addition, Mr Young had a significant personal estate in his own name. He had been married twice and by his first wife had four children all of whom were adults at the date of death. He married his second wife, the appellant in 1983. She had two children by an earlier marriage but there were no children of the second marriage. By all accounts the second marriage was happy and successful.
3 Probate of the last will of the deceased was granted to the respondent, Terence Ross Kestel, a member of the firm of accountants which had advised Mr Young in connection with all his business affairs for many years. As well as embarking on the administration of the estate of the deceased to implement the terms of the will, the respondent has also been involved in the winding up of the two family trusts and in arranging for distributions to be made from the superannuation fund.
4 On 13 June 2002, that is nearly ten and a half months after the expiration of the period for the commencement of such proceedings, the appellant widow brought an application under the Inheritance (Family and Dependants Provision) Act 1972 for leave to commence proceedings under that Act on her own behalf claiming that the disposition of the deceased's estate effected by his will did not make adequate provision from his estate for her proper maintenance, support and advancement in life. The application for the extension of time for leave to commence proceedings was opposed by the respondent and, having reserved his decision after a full hearing, Master Sanderson dismissed that application and adjourned the issue of costs.
5 The appellant now applies to this Court for leave to appeal against the decision of the Master and for the appeal to be heard and decided
(Page 5)
- concurrently. She also seeks leave to amend the proposed grounds of appeal and leave to adduce further affidavit evidence which was not before the learned Master. Leave to amend the proposed grounds of appeal was not opposed and was granted at the hearing. Leave to appeal from a decision refusing an extension of time under the Act is needed because that is an interlocutory decision – Supreme Court Act 1935, s 60(1)(f), as the application could, at least theoretically, be brought again. Such a decision involves no final adjudication of substantive rights: Dousi v Colgate Palmolive Pty Ltd (1987) 9 NSWLR 374; Sanderson v Metropolitan (Perth) Passenger Transport Trust, unreported; FCT SCt of WA; Library No 950185; 22 March 1995; Grigoriou v George Nitsos (As Executor of the Estate of Athanasois Nichos) & Ors [1999] WASCA 42. Nevertheless, it is important to recognise that this is one of that category of interlocutory decisions which, although not final in legal character, in practical effect puts the appellant out of court: see per Kirby P and Glass JA in Dousi (supra) at 379.
6 It will be necessary to examine the reasons for decision of the learned Master for refusing the extension of time sought in more detail later. For the present, however, it is enough to mention that the chief factors which the learned Master identified in his reasons for decision were:
(a) that the period of ten and a half months which has passed after the expiration of the six month period provided for bringing an application under the Act was a lengthy delay and had not been satisfactorily explained by the appellant;
(b) that the estate of the deceased had been largely, but not completely, distributed by the executor and that other beneficiaries claimed that they had altered their positions as a result of the distributions;
(c) that at best, the appellant had a weak case because the evidence disclosed, so it was thought by the learned Master, that the widow had received cash and assets from the estate of the deceased of over $1 million and that there was nothing in the evidence which could establish that such a provision from the estate was not adequate for the needs of a 63 year old woman with no dependants.
7 As will be seen, this statement that the appellant received over $1 million in assets from the estate of the deceased is erroneous on two accounts. It includes the benefit of an inter vivos gift made by the deceased to his wife some time before his death and it also includes
(Page 6)
- payments to the widow of debts due to her by one of the family trusts as well as part of a discretionary distribution under the superannuation scheme.
8 Throughout the administration of the affairs of the deceased the respondent has largely run together the winding up of the family trusts, the distributions from the superannuation fund and the distribution of the estate of the deceased as provided under his will. There may be very good reasons for this approach but it has tended to obscure the identification of the benefits payable to the appellant and to the other beneficiaries under the will which is the vital fact for evaluation by the Court in any application under s 6 of the Act. This aggregation of the benefits coming to various family members and to the beneficiaries under the will from the various entities controlled by the deceased was largely maintained in the submissions made to this Court by the respondent. There was not any separate identification or analysis of these different sources of benefit undertaken by the learned Master in his reasons for decision.
9 It is therefore necessary to recount in some detail the business structures operated by the deceased and their roles in his overall estate plan.
The Family of the Deceased
10 The late Douglas Tate Young was born in Perth on 31 January 1925. He married Margaret Evelyn Campbell Harvey on 8 November 1957 and there were four children of this marriage all of whom survived the deceased and who, together with the appellant, are the five equal residuary beneficiaries under the will. The names of the children and their ages at the date of death are:
Debra Kaye Corrigan, 42 years;
Kylie Anne Cormack, 40 years;
Sharon Lesley Street, 37 years and
Dean Hayman Young, 33 years.
11 The deceased and his first wife separated on a date which is not disclosed in the evidence but which appears to have been in the mid-1970s and they were divorced in 1981. The appellant and her first husband had known the deceased from about 1962. The appellant separated from her first husband in 1975 and the two were divorced in March 1978. She had two children, a son and a daughter, from that
(Page 7)
- marriage. The appellant began going out with the deceased in 1978. The couple became engaged in August 1982 and were married on 29 November 1983. There were no children of this second marriage but it lasted, as I have previously observed, happily for nearly 17 years until the death of the deceased in August 2000. The appellant was born on 10 July 1939 and was, therefore, aged 61 years at the date of her husband's death.
12 The evidence disclosed that the deceased led an active and happy business and recreational life. He enjoyed his business and investment activities but was also an avid sailor and fisherman maintaining a large motor launch which was used for regular weekly fishing trips and visits to Rottnest and Mandurah. He and the appellant travelled widely throughout Australia and abroad. Mr Young seems to have enjoyed general good health until late 1998 when he was diagnosed as having myeloid dysplastic anaemia. Some 18 months later, in July 2000, he was diagnosed as having leukaemia and the combined effect of these conditions is noted as the cause of his death about seven weeks after the latter diagnosis.
Deceased's Business and Investments
13 The principal business of the deceased was the conduct of motor vehicle dealerships. The deceased operated a car sales business in Canning Highway East Fremantle from 1962 or earlier under the name "Young Toyota". He also established and operated a business known as "Young Suzuki" in Preston Point Road, East Fremantle, which was later sold and the proceeds re-invested in the principal business. In addition, there were investments in real property, including vacant land for potential industrial development, and in a variety of shareholdings.
14 At the time of his marriage the deceased and the appellant were living at the deceased's home at 20 Wichmann Road, Attadale. He also owned an "old shack" at Shoalwater. This was later demolished and a new home built on the site which was completed in 1991. In about 1997 the deceased sold the house at Wichmann Road, Attadale, and the couple then lived permanently in the new home at 16 Fifth Avenue, Shoalwater Bay.
15 The "Young Toyota" dealership in East Fremantle was owned and operated by a unit trust known as the "DTY Unit Trust" of which a company, Ebor Investments Pty Ltd, was the trustee. There were 199 issued units in the DTY Unit Trust. 100 units were held on behalf of the Wichmann Trust, the trustee of which was controlled by the deceased.
(Page 8)
- 99 units were held on behalf of the Ronald Family Trust of which a company, Ivywide Pty Ltd, controlled by a Mr Ian Ronald, was the trustee. Mr Ian Ronald was a close business associate of the deceased. Via the Ronald Family Trust and the Wichmann Trust which each held the only units in the DTY Unit Trust, in practical effect if not in legal form, the two men conducted the business of Young Toyota in an arrangement close to that of partners. By a Unit Holders Agreement it was provided that, on the death of the deceased, a further unit in the DTY Unit Trust would be issued to the Ronald Family Trust, thus giving equality of unit holding. There were then provisions for the Ronald Family Trust to purchase the freehold land at which the business was operating and to purchase the units in the business held by the Wichmann Trust. After the death of the deceased this is what happened and the proceeds of those sales were received, respectively, by the Wichmann Trust and the associated D T Young Family Trust which had also been controlled by the deceased.
The Wichmann Trust
16 The Wichmann Trust was established by deed of settlement dated 26 June 1979 and later varied by deed dated 21 October 1997. The original trustee was a company, Trenah Management Pty Ltd, which, by the deed of variation, was replaced as trustee by Ostere Investments Pty Ltd. Subject to powers of variation and appointment created under the deed, the trust was originally established to last until 30 June 2058 unless sooner vested. There was provision made for specified beneficiaries being the children of the deceased and his first wife, other close family members and any other person who made a minimum donation to the named beneficiaries and whom the trustee might nominate as a general beneficiary. However, by the October 1997 deed of variation, the vesting day was varied and fixed as the date of death of Douglas Young. By the same deed of variation, the identity of the beneficiaries was altered and from then on the trustee held the trust fund income solely on trust for Douglas Young to the exclusion of all beneficiaries. In the absence of any challenge to the validity or effect of the deed of settlement as so varied, the consequences, in the events which have happened, are that the Wichmann Trust vested on 29 August 2000 and all the property held by the trustee was, from that date onwards, held by the trustee on trust for the deceased and thus became part of his personal estate to be dealt with and distributed in accordance with the terms of his will.
(Page 9)
17 There are no financial accounts or statements in evidence for the Wichmann Trust prepared at the date of the vesting on the death of the deceased. However, there are annual financial accounts for the periods ending 30 June 2000 and 30 June 2001. As there are only small variations between the two sets of accounts I shall take the later set as indicating the value of the trust property held for the estate of the deceased under the terms of the Wichmann Trust following the death of Mr Young. These show that, of the total assets of $782,660, by far the single largest asset was a loan by the trustee to the D T Young Family Trust of $776,378. These assets of $782,660 were matched by current liabilities of $782,630 plus trust funds of $30. The current liabilities consisted of beneficiaries' current accounts of $511,324 and loans from various members of the family consisting of all of the five residuary beneficiaries. These debts included an amount of $34,184 owing to the appellant.
18 In the amended statement of assets and liabilities of the estate of the deceased filed by the respondent in connection with the application for probate, the assets of the deceased are listed as including:
(a) a debt owing by Ostere Investments Pty Ltd as trustee for the Wichmann Trust of $437,025;
(b) a claim against Ostere Investments Pty Ltd as trustee for the Wichmann Trust for assets vested in favour of, and held on trust for, the estate of Douglas Tate Young of $744,992.
19 The second of these sums appears to approximate the loan by the Wichmann Trust to the D T Young Family Trust first mentioned ($776,378) which, as a result of the vesting became an asset of the deceased on the day of his death.
20 In the absence of a set of consolidated accounts and without submissions from the parties, it is more difficult to identify why the debt of $437,025 owing by Ostere Investments Pty Ltd as trustee for the Wichmann Trust was also brought to account as an asset of the deceased. The explanation may well be that the deceased's current account, with the Wichmann Trust, showed that the trustee was indebted to the deceased in that very sum of $437,025 which thereby constituted a claim by the estate against the trustee for that amount and hence an asset of the estate. At first glance this would seem to reduce the net value of the assets of the Wichmann Trust which vested in the deceased upon his death by the same amount but as the debt was an asset of the estate the overall aggregate of $782,660 should still form part of the estate of the deceased. However,
(Page 10)
- this does not serve to explain why the debt of $437,025 is additionally brought to account and, in the absence of further evidence or submissions, it is not possible to reach any clear conclusion about this at present. There may well be some obvious explanation but, for reasons which will later appear, any uncertainty arising on this point will not affect the outcome of the present application or appeal.
The D T Young Family Trust
21 The D T Young Family Trust was established by a deed of settlement dated 25 June 1975 and was varied by a deed of variation dated 21 October 1997. As originally established the deed of settlement named the deceased and his first wife, Margaret Evelyn Young, as trustees, created a fund to be known as the "D T Young Family Trust" and provided that the capital was to be held for all or any one or more of the children of the deceased who should be living at the 30 June 2014 or such earlier date as the deceased may by deed or memorandum in writing appoint, together with provisions for substitutional rights of appointment by the wife of the deceased should he die without making any such determination. Under the original settlement the income of the trust fund was available to be paid at the sole discretion of Douglas Young during his lifetime to his children or for their advancement in such amounts or proportions as he may decide. Again, there were other substitutional powers for the disposition of income by his first wife in the event of the death of the deceased.
22 By the deed of variation of 21 October 1997 the vesting day was altered and became the date immediately prior to the date of death of the deceased. Again, by the deed of variation, the power of appointment was exercised to provide that, as from the date of vesting, the trustee would hold the trust fund and income solely on trust for the children of Douglas Young as tenants in common in equal shares to the exclusion of all other beneficiaries. Other variations were made by the deed of 21 October 1997 including the addition of the appellant as a member of the class of income beneficiaries entitled to distribution of the income of the trust fund, but that and the other alterations do not require further attention for the determination of the present application and appeal.
23 Again, the details of the operation of the vesting of the D T Young Family Trust were not scrutinised in the submissions on this appeal nor reviewed by the learned Master on the application for the extension of time. Nevertheless, it seems that the effect of those provisions, in the events which happened, has been that the D T Young Family Trust has
(Page 11)
- vested on the day before the death of the deceased and, from that point on, the trustee has held the trust assets on behalf of the children of the deceased as tenants in common in equal shares. In other words these trust assets are held for the four children of the deceased and do not form part of his estate. It follows that the appellant is not entitled to any part of this trust property.
24 The position is a little more complicated in that the trustee has received notice of a claim from a person claiming to be a natural son of the deceased and it is said that if this claim is accepted or established the claimant would be entitled to a one-fifth share of these trust assets. However, such an outcome would not appear to have any direct bearing on the entitlement of the appellant although it might, indirectly, produce such an effect because of the provisions of the hotchpot clause in the will. The effect of this is reviewed later in these reasons.
25 Again, there are no financial statements or accounts in evidence for the D T Young Family Trust at the date of vesting or the date of the death of the deceased in August 2000. There are, however, financial statements as at 30 June 2000 and 30 June 2001. The total value of the trust assets on hand has increased over that 12 month interval by about $417,000, while, at the same time, the liabilities have also increased by an amount of about $85,500. These changes appear to be due to a revaluation of certain land and buildings and changes (presumably as a result of advances during the period) in the beneficiaries' current accounts. For that reason I shall take the accounts of 30 June 2000 as a better indication of the value of the trust property at the date of vesting and death of the deceased.
26 The D T Young Family Trust's accounts for 30 June 2000 show total assets on hand of $1,822,138 of which $1,524,526 consisted of land and buildings or other land and $297,512 represented beneficiaries current accounts being moneys owed to the trustee, by the deceased and by the Wichmann Trust, less money owing to the appellant of $297,512. The aggregation of those figures does not produce the asset of $297,512 as shown in the balance sheet but, rather, a liability of the trust of $594,043. The explanation reconciling this entry, however, appears to be that, later in the balance sheet, there is an entry under liabilities for beneficiaries' current accounts of $891,555. If that is set off against the beneficiaries' current accounts shown as an asset $297,512 the result is a net liability of $594,043 which matches the sum of the figures disclosed in the notes to the accounts. On either approach the net assets of the D T Young Family Trust as at 30 June 2000 are recorded at $930,583 which, as a consequence of the vesting and the deed of variation, are from the vesting
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- day held on trust for the children of the deceased and do not form part of his estate.
27 Turning again to the amended statement of assets and liabilities of the deceased filed in support of the application for probate there is shown a liability by the estate of $264,846 to the trustee of the D T Young Family Trust. On the present evidence it is not possible to explain how this last figure has been reached. The balance of the current account for Mr Doug Young, as shown in the trustee's balance sheet and notes as at 30 June 2000 was $127,534 and in the balance sheet for 30 June 2001 the figure was only $1 with an entry showing drawings on account of the deceased in that year of $147,533. Presumably there is an explanation for these variations in the recorded amounts owed by the deceased to the trustee of the D T Young Family Trust but this is not obvious from any of the materials or the submissions which have been put before this Court. It is to be noted, however, that the larger the debt due by the deceased to the trustee of the D T Young Family Trust at the date of death then the smaller the value of his residuary estate and the amount distributable to the residuary beneficiaries, including the appellant. And, for the same reason, the greater by a corresponding amount, will be the shares in distribution from the assets of that trust which are payable to the children of the deceased on the winding up of the D T Young Family Trust.
28 It should also be noted that in the accounts for the D T Young Family Trust for the year ended 30 June 2000 there is an entry of an amount of $427,063 shown as drawings by the appellant but there are no drawings by her shown for the previous year. The appellant is recorded as having received "drawings" of $87,783 for the year ended 30 June 2001. This much higher figure for drawings in the 2000 year has since been found to be erroneous because it wrongly included the gift of $400,000 made by the deceased to his wife to establish her superannuation fund, which as will soon emerge, appears in the will. The result is to diminish the entitlement which the appellant had against the trustee on her current account. It is not possible to resolve the final effects of such a necessary adjustment on the hearing of this application of the appeal nor do they determine the outcome. The need for adjustment does, however, in a small degree, reveal the difficulties in comprehending the total position of the deceased's affairs on the information which has so far been made available in connection with the current proceedings.
(Page 13)
The Young Superannuation Fund Number 2
29 The Young Superannuation Fund was established by a deed of settlement which took effect from 15 June 1981. This was later amended by deeds of variation dated 30 September 1992 and 24 June 1994, by resolution dated 27 June 1996 and by a further deed of variation dated 9 May 2000. The original trustee was a company, Ebor Investments Pty Ltd, which, as previously noted, was the trustee for the DTY Unit Trust and the employer of the staff engaged by that trustee for the car dealership business. However, by the deed of variation of 9 May 2000 a new trustee, Ostere Investments Pty Ltd, was appointed. The deed, as varied, established a self-managed superannuation fund for the primary purpose of providing superannuation benefits for its members.
30 The only financial accounts for the Young Superannuation Fund No 2 which are in evidence are those for the year ended 30 June 2000. These show that the net assets of the fund available to pay benefits were then valued at $407,511 and that there was an accrued liability for the payment of benefits in that same amount which had been allocated to the members' accounts. Notes to the accounts show that vested benefits due to members at that date were $407,511 and a further members' statement annexed shows that the vested benefits due to Douglas Tate Young deceased as at 30 June 2000 were $407,510.44. It can be accepted, therefore, that, shortly before his death the deceased had a vested accrued entitlement to a distribution from the superannuation fund in the amount of $407,510.44 and it seems probable that an entitlement of approximately the same amount also existed at the date of death.
31 The identification of the person or persons to whom the superannuation benefit is payable is determined by cl 34 of the superannuation trust deed, incorporating as it does, the definition of a "dependant" in cl 3.1(13) of the deed. The material provisions of the deed are as follows:
"34.4 Person to Whom Benefit Payable
Subject to clause 34.7, the Trustee shall pay the Benefit to or for the benefit of the Nominated Dependant of the former Member or Pensioner but in the event that there is no Nominated Dependant or the Trustee considers it inappropriate to pay the Benefit to any Nominated Dependant the Trustee shall pay or apply the Benefit to or for the benefit of such one or more of the former Member's or Pensioner's Dependants in the manner, at the
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- times, and in such proportions between them, if more than one, as the Trustee may from time to time in its absolute discretion determine."
32 In this case there was no nominated dependant of the deceased as a former member of the fund. The deed also provided:
"34.5 No Dependants
If the Trustee determines that:
(1) a deceased Member is not survived by any Dependants, or
(2) if in the Trustees opinion having regard to the period of the dependency on the deceased Member and the extent of the dependency and such other matters as the Trustee considers relevant, the whole of the Benefit should not be paid to the surviving Dependants,
the death benefit hereunder (or that part not paid to the surviving Dependants) shall be paid to the Estate of the former Member, but if the Trustee is (or becomes) of the opinion that a Grant of Probate or Letters of Administration in respect of the Estate will not be made the Benefit payable hereunder shall, subject to the Requirements, be paid to one or more Dependants or other persons or be treated as a Forfeited Benefit."
"(13) 'Dependant' in relation to a Member means:
(a) the Spouse of a Member or the widow or widower of a deceased Member; or,
(b) any child of a Member including any person who, in the opinion of the Trustee, is or was actually maintained by the Member as his child; or,
(c) any other person who, in the opinion of the Trustee, was substantially financially dependent on the Member at the relevant time;"
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34 Clearly the appellant comes within the definition of a dependant of the deceased member and so is eligible to receive such payment of benefit as the superannuation trustee may, in its discretion, decide. It is not clear on the evidence whether or not any of the children of the deceased was actually maintained by the member at any relevant period or was substantially financially dependent upon the deceased. However, the possibilities appear to be that some or all of the superannuation benefit of the deceased could, at the discretion of the trustee, be paid to the appellant, or be divided between the appellant and the estate of the deceased or, conditional upon one or more of the children having been dependant upon the deceased, be allocated as between such dependant children and the appellant in such amounts or proportions as the trustee may in its discretion so decide.
Ostere Investments Pty Ltd
35 The company Ostere Investments Pty Ltd is, as has now been described, the sole trustee of each of the Wichmann Trust; the D T Young Family Trust and the Young Superannuation Fund (No 2). As appears from the accounts for the Young Superannuation Fund (No 2) and from his affidavit sworn 27 November 2002, the defendant Terence Ross Kestel, as well as being the executor of the will of the deceased is a director of Ostere Investments Pty Ltd. In accordance with what he believes to be the instructions of the deceased, and as a result of his knowledge of the deceased's business affairs since 1982 he has been engaged in the administration of the estate, and the winding up of the two trusts and the superannuation fund on a basis where he has endeavoured to ensure that whether the source of the distributions is from the estate, the D T Young Family Trust or the Young Superannuation Fund, each beneficiary will receive an equal amount on an after tax basis. The significance of this approach can only be considered after an examination of the provisions of the will of the deceased and must, therefore, be deferred at this point.
The Assets and Liabilities of the Estate of the Deceased
36 An amended statement of assets and liabilities of the estate of the deceased has been filed by the respondent in the application for probate. This shows particulars of all moveable property wherever situated and all immovable property situated in Western Australia. There is no suggestion of the existence of other assets of the deceased not included in this statement. The total value of the property of the deceased is shown as
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- being $1,910,111, and the total of all debts owing by the deceased at the date of death is $272,274 producing a net value of the estate at the date of death of $1,645,265. No entitlement to any distribution from the superannuation fund is shown among the assets of the estate.
37 It has already been noted that this statement of assets and liabilities includes, as assets, a debt owing by Ostere Investments Pty Ltd as trustee of the Wichmann Trust, and a claim against Ostere Investments Pty Ltd as trustee for assets vested in favour of the estate of the deceased in the amount of $744,992. The liabilities include a debt by the deceased to Ostere Investments Pty Ltd as trustee for the D T Young Family Trust in the amount of $264,846 - an amount which, on the evidence, cannot be satisfactorily reconciled with the statement of the deceased's beneficiaries' loan account with the trustee of that trust. In the discussion of the financial position of the Wichmann Trust it has already been pointed out that there may be some question as to whether or not the debt owing by Ostere Investments Pty Ltd of $437,025 should additionally be brought to account in view of the vesting of the whole of the property of that trust in the estate which, so it might have been expected, would have had the effect of cancelling the debt by set-off. Nevertheless, assuming the statement of assets and liabilities of the estate to have been correctly prepared it is evident that the net value of the assets of the Wichmann Trust has been included as part of the property of the estate of the deceased consequent upon the vesting.
38 It follows, therefore, that to arrive at an estimate of the aggregate value of property controlled by the deceased up to the date of his death, one should take the following entities and the net values attributed to them on the evidence already examined:-
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39 By making this aggregation, it is not suggested that such an addition can or should be conducted to use the result as a point of reference when determining the adequacy of the provision made by the deceased by his will for the appellant, or that in contemplating the exercise of any powers
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- of the court to make an order under s 6 of the Act, there could be recourse to any property other than the assets of, or derived from, the deceased's estate. However, this process of identification of all the assets of the various entities controlled by the deceased nevertheless has significance in identifying the provision which has been made for all his dependants and in identifying property, over which the deceased had a power of determination up to his death, such as his entitlement to the superannuation benefit which, not being exercised, resulted in property devolving in a manner which may be different than if it had formed part of his estate.
Inter Vivos Gift to Appellant
40 In December 1999 the deceased made a gift of $400,000 to the appellant. This was done by the deceased making a payment of $400,000 to National Australia Superannuation Pty Ltd as trustee of the National Australia Financial Management Allocated Pension Fund, so as to provide a source of capital and income benefits for the appellant. As noted, the source of these funds was the D T Young Family Trust, which resulted in the appellant's current account with the trustee originally being wrongfully debited in the amount of $427,063 in the accounts for the year ended 30 June 2000. This was later realised by the trustee and the matter corrected as appears from the affidavit of the respondent sworn 19 September 2002 at par 3(2). Clearly the benefit of that pension fund became the property of the appellant immediately upon the completion of the gift and no part of it ever formed an asset of the estate of the deceased although the learned Master referred to it as an estate asset in his reasons for decision.
The dispositions made by the will
41 It is now possible to examine the effects of the dispositions made by the deceased by his last will which is dated 16 August 2000 only thirteen days before his death. The respondent was appointed the sole executor and trustee. By cl 5 the deceased directed that all taxes and duties payable by reason of his death should be paid out of his estate without any adjustment or apportionment as though they were a testamentary expense. No submissions were made about the extent or effect of this clause but it is apparently the basis for the respondent's contention that, in arranging for the aggregate distributions not only from the estate but from the two trusts and the superannuation fund, the recipients should be placed in the position where there is equality of distribution between them having
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- regard to tax payable on those distributions thus giving rise to the need to make some additional payments to certain beneficiaries to account for the differential tax position of the several recipients. While this approach may be correct for distributions made from the net assets of the estate, it is not self-evident that the same approach should be taken in relation to distributions from the other entities. Although, of course, the trustee making distributions under the superannuation fund has a large range of discretionary powers which might, perhaps, be thought to accommodate such a consideration in relation to payments made directly to dependants of the deceased member. Where the discretionary power to distribute the superannuation benefit to the estate of the deceased is exercised then the terms of the will control further distributions. There is nothing on the evidence, however, to show that any part of the superannuation benefit has been appropriated to the estate.
42 By cl 6 and 7 of the will the deceased forgave, released and discharged any debts owed to him at the date of death by the trustee of the Wichmann Trust, or by the trustee of the D T Young Family Trust whether by way of principal or interest, other than any debt arising from the vesting of that trust by reason of his death. Nevertheless, and as already described, the amended statement of assets and liabilities of the estate of the deceased includes, as one of the assets, a debt of $437,025 owing to the deceased by Ostere Investments Pty Ltd as trustee for the Wichmann Trust. Previously, and for other reasons, I have already questioned the correctness of including this debt among the assets of the estate. As it has been expressly forgiven by the will, its inclusion among the assets of the estate does not seem to be justified. Yet the effect of removing that liability from the balance sheet of the Wichmann Trust would seem to be to increase the net assets of that trust by an equivalent amount so that the additional $437,025 would become an accretion to the assets of the Wichmann Trust then held beneficially for the estate. The result is that the net value of the estate remains unaltered by the cancellation of the debt.
43 However, the position is somewhat different in relation to the D T Young Family Trust. As previously explained, the notes to the financial accounts as at 30 June 2000 for that trust show that the deceased was due $127,534 as a liability under the beneficiaries' current accounts. By 30 June 2001 the position had changed and the liability of the trust to the estate of the deceased on the same beneficiary loan account was then only $1. In the estate statement of assets and liabilities, however, there is shown, not a debt due to the estate, but instead a debt by the estate to the trustee of D T Young Family Trust in the amount of $264,846. If there
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- was, indeed, a debt due by the trustee of the D T Young Family Trust to the deceased which was forgiven on his death by the terms of the will, the effect of the will is, therefore, to distribute the asset comprised by that debt to the beneficiaries of the D T Family Trust, that is to the children of the deceased and, that forgiveness, is a disposition of the estate of the deceased made by a will which may be regarded by the Court in any eventual determination made under s 6 of the Act which the appellant is attempting to bring. On the other hand, if the position is that the estate is indebted to the trustee of the D T Young Family Trust in the amount of $264,846 as included in the statement of assets and liabilities of the estate then the basis for that is not apparent from the financial accounts or from other evidence which has so far been disclosed in these proceedings. This may not turn out to be of any great moment but it is a pointer to the difficulty which any person, such as the appellant or her advisers, faces in attempting to assimilate and evaluate her entitlement under the will against the background of the larger dispositions made by the sophisticated plan established on behalf of the deceased for all the property which he controlled.
44 The will then makes a series of specific legacies to various charitable organisations and to other people totalling $165,000, plus a bequest of his pleasure boat "Razzamataz" worth $8,000 to one of his friends. So the pecuniary legacies and the specific bequest of the boat account for $173,000 in assets of the estate. Perhaps, it should also be noticed that two of the pecuniary legacies, each of $50,000, were made to the adult children of the appellant by her first marriage.
45 By his will the deceased also specifically devised his interest in the house and land at 16 Fifth Avenue, Shoalwater Bay to the appellant. This was the home where they had both been living for part of each week since 1991 and which became their permanent home after the house at Wichmann Road, Attadale was sold in 1997. The deceased was registered as the sole proprietor of an estate in fee simple in this land, free of encumbrances, at the date of his death. In the statement of assets and liabilities of the estate the value of this property is shown at $435,000. There is evidence from the respondent that the current market value of that property is now believed to be $500,000 or more and that such a figure should be treated as its value when coming to consider whether or not an arguable case is shown by the appellant for relief under the Act. This submission must be rejected because the authorities are clear that the "jurisdictional question" whether or not the deceased has by his will made adequate provision for the proper maintenance and support of an eligible applicant, is to be answered by addressing the situation which existed at
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- the date of death. If the jurisdictional question is answered in a way which shows that there is inadequate provision made for the applicant then, but only then, may the Court have regard to the current value of properties when considering what relief should be granted.
46 Then by cl 8(12) of the will the deceased deals with his residuary estate. This is given to the applicant, his widow, and his four children, Debra Kay Corrigan, Kylie Anne Cormack, Sharon Leslie Street and Dean Hayman Young as tenants in common in equal shares. Importantly, however, these residuary gifts are subject to hotchpot clauses as follows:
"(f) Prior to any distribution of My Residuary Estate being effected in accordance with this clause 8(12), for the purposes of this clause My Residuary Estate is deemed to include an additional amount of $400,000, which amount of $400,000 is deemed to have been distributed from My Residuary Estate to MY SPOUSE. I have included this clause 8(12)(f) in my will because during 1999 and with the concurrence of MY SPOUSE I gifted $400,000 to National Australia Superannuation Pty Ltd as trustee of the National Australia Financial Management Allocated Pension fund for the benefit of MY SPOUSE, which amount I would otherwise have retained and given to MY SPOUSE under this my will. Notwithstanding that the $400,000 was paid for the benefit of MY SPOUSE during my lifetime, I wish to ensure the other persons referred to in this clause 8(12) receive from me a similar amount, albeit after my death; and
(g) if any of the persons referred to in this clause 8(12) receive any direct or indirect benefit from, under or in relation to THE WICHMANN TRUST, THE D T YOUNG FAMILY TRUST or the YOUNG SUPERANNUATION FUND NO 2, including the repayment of a loan owing to that person, then the value of that benefit is deemed for the purpose of dividing My Residuary Estate in accordance with this clause 8(12), as having formed part of My Residuary Estate and having been distributed from My Residuary Estate to that person."
47 The effect of these provisions is notionally to enlarge the residuary estate of the deceased by adding to the net value of the assets of the
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- deceased, after meeting all the pecuniary legacies, specific bequests and the devise of the Shoalwater Bay house and deducting the costs of administration including liability for taxes and duties payable by reason of the death of the deceased, the following amounts:-
(a) the gift of $400,000 made to the widow in 1999 for the superannuation allocated pension
(b) the amounts distributable to the four children of the deceased derived from the net assets of the D T Young Family Trust - namely $930,583
(c) the amounts distributable to any one or more of the appellant and the four children of the deceased representing the deceased's member's benefit under the Young Superannuation Fund (No 2) - namely $407,510.44
(d) the total repayment of any debts due to the appellant or to any of the children of the deceased, by the trustee, of the Wichmann Trust, the D T Young Family Trust and the Young Superannuation Fund No 2.
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- the above amount of $2,767,930 will be a minimum figure because any debts due by the two trusts and by the superannuation fund to any of the residuary beneficiaries will also be brought to account and into hotchpot and so will increase that figure further. There does not appear to be any clear evidence of the actual debts due by the two trusts, or by the superannuation fund to the beneficiaries at the date of death although there is some evidence of such debts which has already been mentioned.
50 Consequently the notional value of the enlarged residuary estate will probably be to some extent greater than $2,767,930 but the present evidence does not permit a precise calculation to be made.
51 Consequently, the amount distributable to each of the four children who are residuary beneficiaries will be one-fifth of $2,767,930 (that is $553,586) plus the ascertained additional component, minus the sum of distributions of benefits and debts repaid received by each such beneficiary via the D T Young Family Trust and the Young Superannuation Fund No 2. The same will apply in the case of the appellant with the deduction of $400,000 for the 1999 allocated pension gift.
52 Because of the absence of clear evidence as to the amounts of the debts, if any, payable to the four children and the widow from either of the two trusts or from the superannuation fund it is necessary, from this point, to recognise approximations in the following calculations which ignore the effect of the hotchpot aggregation of those debts into the notional residuary estate.
53 Taking the appellant's position, her entitlement would appear to be approximately $153,586 ($2,767,930 ÷ 5 = $553,586 - $400,000 = $153,586). But this figure could be increased or decreased by the further operation of the following processes:
(a) decreased, by bringing into the pool, debts repaid to the appellant and crediting the appellant with one-fifth only of the enlarged sum and deducting the actual debt repayment received -
(b) increased, by bringing into the pool and then deducting from each of the children's entitlements the full amounts which each received on distribution from the D T Young Family Trust, and
(c) increased, by bringing into the pool the full value of debts repaid to the four children while debiting each of the four
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- children with the full amount of the debt repayment actually received.
54 Without a detailed set of calculations showing how the residuary estate is so enlarged and what the shares of the residuary beneficiaries in distribution become after treating the payments to them other than from the estate as de facto distributions, it is not readily possible to tell what the entitlements of the individual residuary beneficiaries will be.
55 A table produced by the respondent, being Annexure SOY1 to the affidavit of the appellant sworn 7 November 2002, although relied on to an extent by the respondent at the hearing of the application and the appeal, is not an adequate matrix of the necessary calculations. This is because it includes payments made before the death of the deceased which are not caught by the hotchpot clause (such as dividends) and taxation payments. Nor does it bring to account debts repaid by the various entities to any of the residuary beneficiaries. Furthermore, that table shows the aggregate total of distributions and assets available for distribution as $3,465,011 ($2,921,431 + $543,580) without showing any reconciliation of that figure with the mode of calculation of the expanded notional residuary estate as determined in accordance with the provisions of the will. On those figures of the respondent, however, the appellant's entitlement would appear to be something in the order of $293,000 ($3,466,011 ÷ 5 - $400,000). In the absence of the necessary evidence and calculations carried out in accordance with the methodology directed by the will, it is simply not possible to reach a reliable estimate of the likely distribution to the appellant from the residuary estate of the deceased. The most that can be said is that it appears to be somewhere in the range of $153,000 to $293,000, without taking into account the expenses of the administration.
56 Accordingly, it is at last possible to attempt some definition of the benefits derived by the appellant under the will of the deceased. They are:
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57 It must also be acknowledged that the benefit which the appellant may derive from the distribution of all the entities controlled by the deceased may well be somewhat larger. More than one-fifth of the deceased's member's benefit under the superannuation fund may be paid to her and she may receive payment of debts due to her by the trustee of either the Wichmann Trust or the D T Young Family Trust. These are non-testamentary benefits which cannot be categorised as distributions effected by the will of the deceased within the meaning of that clause in s 6 of the Act. However, the existence of such additional funds, forming part of the property of the appellant, would be relevant in determining whether or not there had been a failure by the deceased to make proper provision for his widow by his will. That would also result in further adjustment to the share of the residuary estate payable to the appellant because of the operation of the hotchpot clause.
Appellant's Means
58 In her affidavits sworn 9 July 2002 and 7 November 2002 the appellant provides some information about her principal assets. From this it emerges that the appellant has $290,809.61 left in the National Australia Superannuation Fund produced by the gift from the deceased. Her income is $2,866.00 per month but this may decrease because of withdrawals from the superannuation fund. Substantial expenses were incurred by her in attending a nephew's wedding in London and in repairs and refurbishment to the house at Shoalwater Bay. Her asset position appears to be:
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59 The appellant intends to continue to live at Shoalwater Bay and, therefore, while there may be reason to expect that the value of that property may appreciate over time, the capital represented by that asset will not be available to produce income. The appellant is not employed
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- and has not worked for many years. It seems unlikely that she would readily obtain employment and there does not appear to be any reason to suggest that she should be expected to seek it in her circumstances. She will therefore be reliant upon income which can be earned from the capital which she has available for investment. On the above figures this is somewhere in the vicinity of $443,000 to $583,000. While this is by no means inconsiderable her circumstances and prospects need to be considered in the light of the standard of living which she enjoyed while the deceased was alive and his capacity to make adequate provision for her from his estate by his will.
60 Obviously, the deceased contemplated that the residuary dispositions which he made by will, including the hotchpot clause to bring to account other benefits derived by the residuary beneficiaries from other entities upon his death, would achieve, approximately, equal distribution of the net assets of the extended notional residuary estate among his widow and four children. Equality of distribution of a substantial residuary estate, as so extended, may not appear to constitute a failure to make provision for the widow, but the effect of the disposition needs to be considered in the overall context particularly where the widow has little in the way of other means and no, or no significant, earning capacity.
The Decision to Refuse an Extension of Time
61 The learned Master noted that the applicant had not obtained any legal advice in relation to her late husband's estate until 18 August 2001, nearly seven months after the grant of probate, and that by then the six month time limit for making an application under the Act had already expired. The train of correspondence between the appellant's solicitors and the executor's solicitors then commenced but it was not until 5 November 2001 that the appellant's solicitors informed the respondent that they were advising their client in relation to a possible claim under the Act. Further correspondence then followed in which the respondent made reference to s 20(5) of the Act to the effect that he could act to make distributions notwithstanding notice of an intended application under the Act if twelve months were to pass from the date when he became entitled to administer the estate of the deceased without an application being been made to the court. That twelve month time limit was due to expire on 24 January 2002.
62 Subsection 20(1) of the Act provides that no action shall lie against an administrator by reason of his distribution of any part of the estate properly made without notice of any application or intended application
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- under the Act for provision from the estate. Subsection 20(5) deals with the position where an administrator is on notice of an intended claim but where the claimant fails to bring or delays in bringing the foreshadowed claim. It provides:
"20(5) Notice to an Administrator of an intended application shall lapse and shall be incapable of being renewed, and the Administrator may act as if he had not received the notice, if, before the expiration of three months after the date when he first received notice of the intention to make the application or before the sooner expiration of twelve months from the date on which the Administrator became entitled to administer the estate of the deceased in Western Australia, the Administrator does not receive notice that the application has been made to the Court, but nothing in this subsection shall prevent the subsequent making of the application."
Faced with notice given by the respondent under s 20(5) and if concerned about an imminent distribtution it would have been open to the appellant to apply to this Court for an injunction to prevent the respondent making a distribution, or a further distribution, of the residuary estate pending her claim: Paco v Paco (1989) 17 NSWLR 316, (noted in (1990) 64 ALJ at 439) and In the Estate of Gough (dec); Gough v Gough (1973) 5 SASR 559. For reasons explained later below, such a step may perhaps be even more appropriate in a situation where there is a proposed distribution of the estate by the administrator after the time for an application for relief under the Act has expired - see Trustees Act (1962) s 65(5)(a). However, no application for such an injunction was ever made.
63 A meeting was held between the appellant and her solicitors and the respondent and his solicitors in March 2002 but, notwithstanding that meeting and associated negotiations, no proceedings were commenced. The executor then proposed making a final significant distribution from the estate on 31 May 2002 and notified the appellant of his intention to do so. Still no proceedings were commenced. The executor proceeded to make distributions to the children of the deceased, as he was entitled to do, although a request had been made by the appellant's solicitors that, in the circumstances, the distribution should not be made.
64 In the event distributions were made to the four children of the deceased on 31 May 2002 from the D T Young Family Trust and from the superannuation fund of $154,020 each for three of the children, and $109,020 for the fourth. No distribution was then made to the appellant although it had been proposed that a distribution of $154,020 would be
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- made to her. According to a table prepared by the respondent these payments took the distributions of the four children, including dividends received before death and amounts paid to equalise the taxation effects, to $586,286 for each of them. But it is not possible, on the evidence, to identify what part of these aggregate distributions came from the estate rather than from the other entities. The same table prepared by the respondent shows that, after those distributions, the respondent still had $697,600 of assets on hand from which further distributions might be made. However, while the table suggests that most of the assets of the estate had been distributed and the monies then still held came from the D T Young Family Trust, the superannuation fund and the Wichmann Trust, it is again not possible to identify what estate funds had been used for the distributions previously made or whether the estate had any claim for reimbursement from one or both of the other funds.
65 The learned Master was understandably critical of the failure of the appellant to institute an application for an extension of time until the present proceedings were commenced on 13 June 2002 and concluded that there had been a failure by the appellant to give an adequate explanation for this delay. In the view of the Master this included a failure to give an adequate explanation of why she had not acted before approaching solicitors for advice in August 2001. Not only was the learned Master influenced by the extent of the delay and what he took to be an inadequate explanation for it, but the distributions made from the overall funds, including estate funds, were such that the Master concluded that the other four residuary beneficiaries, having received the distributions, had changed their position in consequence of them and that the prospect of them being put in jeopardy of having to repay some of the distributions to meet any claim which the appellant might establish was another factor which weighed against an extension of time. Having examined the evidence the learned Master described the position as follows:
"It must be acknowledged that this is not a case where the beneficiaries, ignorant of the prospect of a claim under the Act, have organised their affairs in such a way the position cannot be wound back. Assuming the executor was in constant contact with the residuary beneficiaries (and there is no reason to think otherwise), from August 2001 they must have been aware of at least the prospect of an application to extend time and the possibility of a claim being made. But it is difficult to suggest that any of the beneficiaries have acted unreasonably. Now, if leave is granted, they face the prospect of having to re-arrange
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- their affairs. In my view this is another factor which runs counter to the grant of an extension to the plaintiff."
66 The learned Master also emphasised the need for a party making a claim under the Act to establish that, at the date of the death of the deceased, she was left without adequate provision for her proper maintenance, support education or advancement in life. Having then observed, mistakenly as the re-examination of the evidence conducted so far now reveals, that the appellant had received cash and assets from the estate of the deceased of over $1,000,000 taking into account the $400,000 given to her before the deceased's death, the learned Master observed:
"But what can be said about her position is this. She is a long way short of destitute. She has an unencumbered property and significant cash assets. This is not a case where a wife of many years standing has been left without means and where she faces penury. To that extent there is no over-arching compelling reason why leave should be granted."
67 And then finally:
"Put simply, she has delayed too long and has lost her opportunity. The beneficiaries have received the distribution under the will of the deceased, they have altered their position and they should be allowed to get on with their lives. The time limit in the Act is substantive and in this case there is no good reason why the children of the deceased should not have the benefit of that time limit."
Significance of Partial Distribution of Estate – Recipients' Change of Position
68 The power to order that such provision as the court thinks fit for an eligible applicant should be made out of the estate of the deceased under s 6 of the Act is, in express terms, limited to making provision "out of the estate" so that if the estate has, in whole or in part, been distributed to the beneficiaries or to persons entitled on an intestacy then the distributions no longer form part of the estate: Brown v Holt [1961] VR 435 at 443. It has been decided in Easterbrook v Young (1977) 136 CLR 308 that estate assets are not to be regarded as having been distributed in this sense where they continue to be held by the deceased's personal representative, who after completing the administration of the estate, holds the property on
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- trust for persons entitled under the will or for distribution on an intestacy. In that case, speaking of provisions of the Testators Family Maintenance and Guardianship of Infants Act (1916) (NSW) Barwick CJ, Mason and Murphy JJ said, at 318:
"In our opinion, the expression 'out of the estate of the testator' refers to the assets which the testator might at his death dispose and which have come or could come to the hands of the personal representative by reason of the grant of probate or letters of administration. When an application is made in time, it is out of these assets that provision may be made by an order operating as a codicil made by the deceased in his lifetime, even if, at the time the order is made, those assets have been distributed to the intended beneficiaries. In such a case the limitation appearing in s 5(2A) is not operative. Section 11 denies operative effect to the distribution. But, of course, by reason of its terms, it is otherwise, and quite understandably so, when an extension of time is sought under that section. In that case, only a complete removal of the whole of the assets of the deceased from the hands or name of the personal representative will prevent the court extending the time for making an application for an order of maintenance. An order made in consequence of an extension of time shall not disturb an actual distribution made before the extension of time was applied for."
"(8) Where a trustee has made a distribution of any assets forming part of the estate of a deceased person or subject to a trust, relief (whether under this section or in equity or otherwise) against any person other than the trustee or in respect of any interest of any such person in any assets so distributed and in any money or property into which they have been converted, shall be denied, wholly or in part, if
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- the person from whom relief is sought received the assets or interest in good faith and has so altered his position in reliance on his having an indefeasible interest in the assets or interest, that, in the opinion of the Court, having regard to all possible implications in respect of the trustee and other persons, it is inequitable to grant relief or to grant relief in full."
70 Subject to its terms, s 65 of the Trustees Act empowers the court to make an order that a person to whom assets have been distributed by a trustee do pay to the applicant a sum not exceeding the value of those assets and this power expressly extends to an application under the Inheritance Act – s 65(2)(a) and s 8.
71 It must be recognized that the full extent of the defence of change of position provided by s 65(8) of the Trustees Act, where access to the remedy of tracing or following assets of an estate which have been distributed is available, does not appear to be the subject of authoritative judicial analysis at this date. However, the statutory enactment of such a defence plainly is designed to overcome an earlier view that there was, in equity, no general defence against a change of position by a party who had received the proceeds of a trust fund - Ministry of Health v Simpson [1921] AC 251 at 76. Now, however, the existence of such a defence, at least in some circumstances, has been recognised in Lipkin Gorman (a firm) v Karpnale Ltd [1991] 2 AC 548 and, more significantly, in Australia in David Securities Pty Ltd & Ors v Commonwealth Bank of Australia (1992) 175 CLR 353 where it was held that in appropriate circumstances the change of position defence will be effective - see also Australia and New Zealand Banking Group Ltd v Westpac Banking Corporation (1988) 164 CLR 662 and Bank of New South Wales v Murphett [1983] 1 VR 489.
72 In view of the statutory imperative that any order which might be made under the power available under s 65 of the Trustees Act should not be inequitable as regards assets already distributed (s 9 Inheritance Act and subsection 65(8) Trustees Act) it is difficult to envisage that an order which might eventually be made under the Act, would have an unfair or inequitable result upon any of the beneficiaries who had received such a distribution. That is the very consequence which the legislation intends to prevent and, as it is an outcome which is prohibited by statute, it cannot be presumed as a potential result.
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73 More importantly, there is express provision in the Act that resort to s 65 of the Trustees Act for the purpose of recovering distributions made to beneficiaries is not possible in cases where an extension of time to commence proceedings under the Inheritance Act has been granted except in particular circumstances and then only with special leave of the court. The excepted circumstances and the basis upon which the court considering an application for special leave under s 65(5) of the Trustees Act should act, are not the subject of any previous authority in this State and the statutory provisions are unique to Western Australia. They were not addressed in argument on this appeal and were not considered by the learned Master. Accordingly, it is not appropriate to attempt any definitive exposition of the effect of s 65(5) in this decision beyond identifying it as being of direct relevance and potential application in suggesting that distributions made to these residuary beneficiaries could not be recovered in this case if leave were granted to the appellant to bring her desired application for further provision under the Act out of time. As the learned Master identified the prospect of the four children residuary beneficiaries having to re-arrange their affairs in the light of the distributions made, in the event that an extension of time to apply was granted to the appellant, without addressing either s 9 of the Act or the question of the effect of s 65 of the Trustees Act, I consider that this reveals a significant omission in the exercise of his discretion on this occasion. Resort to distributed assets of the estate may not be possible in the circumstances of this case, and therefore it could not be regarded as an unequivocal reason to reject the application for an extension of time.
74 Subsection 65(5)(a) of the Trustees Act provides that subject to subsection (6) and other exceptions an order relating to assets which have been distributed by a personal representative to a beneficiary under the will or estate of the deceased, may not be made under s 65 unless the application under the Inheritance (Family and Dependants Provision) Act 1972 was made within the time permitted by that Act. The exception provided by subsection 65(6) relates to distributions of assets forming part of the estate of the deceased person when that distribution was not known to the applicant at the time the application was made and if certain other conditions apply. It is unnecessary to examine the full implications of subs 65(5) and (6) of the Trustees Act at this stage of the proceedings. It is enough to recognise that those provisions may give a complete defence to any claim by the appellant in this current litigation for the recovery of assets or their proceeds which have been distributed to the beneficiaries because the appellant's application for relief under the Act was not made within the time permitted by that Act (Trustees Act s 65(5)(a)).
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75 This contrast between the power of the court in another jurisdiction to resort to distributed assets of the estate of the deceased in the case of an application made within the statutory time limit, as opposed to an inability to resort to assets properly distributed after the expiration of the time for instituting an application, even where time is later extended, was recognised in Easterbrook v Young (supra) at 316 in the following passages:
"Thus, by the very terms of the Act, [the NSW 1916 Act] if an application is made in due time, the court may make provision out of any asset which came to the hands of the personal representative from the deceased through his death and the grant of probate or letters of administration. It is, in our opinion, to the totality of those assets that the Act refers in authorizing the court to make provision out of the estate of the deceased. As we have emphasized, to give to the court's order the effect of a codicil operating as on the death of the deceased, underlines the fact that the provision of a beneficial interest under the will is no bar to the court's power to make provision for maintenance if needs be out of what is theirs or, but for the order, would be the beneficial property of a beneficiary under the will. Section 11 (3) underlines the policy, which has the result that an actual distribution does not place the asset beyond the reach of the court's power to order maintenance."
76 And further,
"… Because the application is out of time a final distribution, which clearly means a complete distribution, will prevent the extension of time: and thus the power to make an order. But if the distribution has only been partial, time may be extended: however, in contrast to the situation of an application made within time, the partial distribution which has taken place will not be disturbed by an order for maintenance made on an application made in the extended time."
77 The learned Master, in his reasons, referred to correspondence between the solicitors for the respondent and the appellant's solicitors. In a letter dated 13 November 2001 the respondent relied on the provisions of s 20(5) of the Inheritance (Family and Dependants Provisions) Act (1972) as authorising him to make a further distribution of the assets of the estate of the deceased after 24 January 2002, unless before then he was notified that an application under the Act for relief had been made to
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- the court. As noted earlier in these reasons that is the effect of that legislation notwithstanding that the executor was there on notice of an intended application for relief by the appellant. The learned Master regarded this as material in revealing both the extent and the significance of the delay in applying to the court for an extension of time rather than as an assertion of an immunity by the respondent as executor or trustee to any claim which might be made against him personally because of distributions when the respondent was aware of a potential application by the widow. Accordingly, this can be discussed later as part of the evaluation of the significance of the delay which actually occurred.
Application for an Extension of Time – Principles
78 It is to the statute that one must turn to determine the criteria applicable on an application for an extension of the time to make an application under the Act. Subsection 6(2) provides as follows:
"6(2) No application under subsection (1) of this section shall be heard by the court unless -
(a) the application is made within 6 months from the date on which the Administrator becomes entitled to administer the estate of the deceased in Western Australia; or
(b) the court is satisfied that the justice of the case requires that the applicant be given leave to file out of time.
(3) A motion for leave to file out of time may be made at any time notwithstanding that the period specified in paragraph (a) of subsection (2) of this section has expired."
79 It has been established that the statutory time limit is a substantive provision laid down by the Act itself and is not merely a procedural time limit so that the burden on the applicant for an extension of time is to make out a substantial case that it is just and proper for the court to exercise its statutory discretion to extend time; Re Salmon [1981] Ch 167 at 175 and Clayton v Aust (1993) 9 WAR 364 at 366. The discretion is unfettered. There are no restrictions or requirements of any kind laid down by the Act but the onus lies on the applicant to establish sufficient grounds for taking the case out of the general rule and depriving those
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- who are protected by it of its benefits: Re Ruttie [1970] 1 WLR 89 at 93. While it is necessary for the court to be satisfied that the applicant has an arguable case it is not part of the function of the court on an application for the extension of time, once an arguable case has been revealed, to evaluate the strength or weakness of that case. The whole of the circumstances of the delay must be looked at including the promptitude with which the claimant gave warning to the defendants of the proposed application. However, there is no limit to the length of the extension which a court may grant in appropriate circumstances and, in what are no doubt exceptional cases, an extension of 14 years was granted in Easterbrook v Young (1977) 136 CLR 308; an extension of 16 years in Re Claverie (dec) (1970) 2 NSWLR 380 and an extension of 18 years was granted in the Estate of Barry (dec); Circosta v Executor Trustee & Agency Co South Australia (1974) 9 SASR 439.
80 Extensions of time have been granted where the applicant was unaware of the right to apply; Coates v National Trustees Executors and Agency Co Ltd & Anor (1956) 95 CLR 494 at 505; where the applicant was aware of her rights but could not afford to pursue them; Coffey v Bennett [1961] VR 264; where the applicant was unaware of the true size of the deceased's estate; Re Nassin (dec) [1984] VR 51 at 56 and 57; where the applicant was unaware or under a misapprehension of the extent of her own interests under the deceased's will Re Marland (dec) [1957] VR 338 at 340; where bona fide negotiations to settle the claim for provision had extended beyond the time limit; Amos v Amos [1966] VR 442 or where negotiations were commenced after the time limit and where the defendant had not then taken the point that time had expired; Re Salmon [1981] Ch 167 at 175.
Approaches by the Widow to the Executor
81 In two of the affidavits which she filed in support of her application for an extension of time, the appellant addressed the question of when and why she first sought legal advice. In par 52 of her affidavit sworn 11 July 2002, the appellant deposed that she first consulted her solicitors on 18 August 2001 because she was concerned about what she had received, and was also going to receive, from her deceased husband's will. She said that shortly before seeing her solicitors the respondent had told her verbally that she could expect a further $75,000 approximately from her late husband's estate which she thought was very low. She said that at that stage she had only had the house at Shoalwater Bay transferred into her name and that her solicitors then wrote to the respondent to establish
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- what the assets of the estate were and what stage the administration of the estate had reached. Later, in her affidavit of 7 November 2002 (par 7) the appellant said that she first consulted her solicitors because the respondent had advised her shortly beforehand by telephone that he then hoped soon to make a final payment to her in administration of the deceased's estate which he expected to be between $50,000 and $100,000 most probably $70,000. She says that she was very surprised and concerned to hear that because, on her rough calculations based on her knowledge of the will and the assets which the deceased had, she was expecting at least another $250,000. She says that at that time she has not received any financial information at all from the respondent concerning her husband's assets nor the assets of the trusts or superannuation fund. As noted above, her approach to solicitors on 18 August 2001 was after six months from the grant of probate had already elapsed. The learned Master, in his reasons, observed pointedly that the appellant had failed to provide any explanation about why she did not take steps to obtain legal advice or why she had done nothing to initiate a claim until August 2001. The significance of those questions can be evaluated by examining the correspondence which was later exchanged.
82 The chain of correspondence commences on 27 August 2001 by a letter from the solicitors for the appellant to the respondent in person which says that they have been asked to advise her in relation to the estate of her late husband; enquires about the stage which the administration of the estate had then reached; and requests a copy of the statement of assets and liabilities. That letter also sought information about the Wichmann Trust, the D T Young Family Trust and the Young Superannuation Fund No 2 and requested copies of the trust deeds and of the profit and loss accounts and balance sheets for the 1999/2000 and 2000/2001 tax years. There was no immediate reply and the solicitors for the appellant wrote again to the respondent on 24 September 2001. The respondent then replied by letter 27 September 2001 to the appellant's solicitors. In this letter the respondent advised that:
"I am currently finalising the sale of the remaining assets of the estate (Port Kennedy property and shares in the superannuation fund) and calculating the final tax liability. Once this has been finalised I will confirm the tax status of any distributions received and distribute the balance of the estate."
83 The respondent enclosed the deeds of settlement and the deeds of variation for the three trusts and financial statements for each trust for the year ended 30 June 2002 and for the Wichmann Trust and D T Young
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- Family Trust for the year ended 30 June 2001. An accompanying cash flow statement showed receipts to 30 June 2000 in the amount of $2,084,076.55; payments of various expenses totalling $40,573.37; the payment of $150,000.00 for the specific legacies left by the will; and "distributions" to the residuary beneficiaries totalling $1,340,000.00 of which $25,000.00 was said to have been paid to the appellant. After making provision for various other costs and expenses the statement showed that the closing bank balance at 31 July 2001 was $1,044,788.79. A conspicuous feature of this cash flow statement, and indeed subsequent similar statements, is that it shows all the assets and liabilities of the estate, the two trusts and the superannuation fund on a pooled or consolidated basis without differentiating between them. Accordingly, it is not possible to tell directly whether the distributions of $1.34 million said to have been made to the residuary beneficiaries were made entirely from estate assets or from assets of other entities or from a combination of both. The analysis of the financial position of the various entities which it has been possible to undertake so far in these reasons, suggests that it is unlikely that the distributions were entirely from estate funds.
84 The solicitors for the appellant replied by letter of 5 November 2001 pointing out that they were still waiting for a copy of the statement of assets and liabilities lodged in support of the application for a grant of probate. A series of specific enquiries was then directed to certain features of the accounts which had been provided and the appellant's solicitors also wrote:
"We would also mention that we are advising our client in relation to a potential claim under the Inheritance Act against the estate."
85 Consequently the respondent was, from then on, under express notice that the possibility of a claim under the Inheritance Act was being considered. This express intimation was in addition to the implications which arose from the earlier correspondence.
86 Then by letter of 13 November 2001 the respondent forwarded to the solicitors a copy of the statement of assets and liabilities filed in support of the application for probate. He addressed the detailed enquiries made by the solicitors for the appellant about certain aspects of the accounts and then wrote:
"I note your comments that you are advising your client in relation to a potential claim under the Inheritance (Family and
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- Dependants Provision) Act 1972. I had anticipated making a further partial distribution at the end of November 2001 to the 5 residual will beneficiaries. However, in view of your comments regarding a potential claim against the estate, I will need to take legal advice as to any future distributions."
87 The respondent then referred to, and quoted, subsection 20(5) of the Act and pointed out that the twelve month period identified in that section would expire on 24 January 2002.
88 The solicitors for the appellant replied to the respondent by letter of 26 November 2001. After raising certain other questions about details of the estate the solicitors wrote:
"--- you should be aware that leave to bring an application under the Inheritance Act out of time, can and frequently is, granted by the Supreme Court and it would be a brave executor who proceeded to distribute the assets in the knowledge of an impending claim. Our client hopes that such action is not necessary but is unable to make a final decision without being in complete possession of the full facts in relation to the estate and the trusts. Your assistance in this regard to date is appreciated by our client but as you would no doubt understand the way in which the late Mr Young has structured his financial affairs is by no means uncomplicated."
89 In my view this is a plain intimation that serious attention is being given to the possibility of a claim under the Act, that the widow hoped to be able to avoid such a course but was unable to make an informed decision without further information about the value of the estate and of the various trust funds. There does not seem to be any scope to suggest that this was an unreasonable position or that further information would not be needed for the widow to reach a decision on an issue of such importance.
90 At this point the solicitors for the respondent took over the correspondence on his behalf. By letter dated 4 December 2001 the respondent's solicitors wrote providing the information in response to the particular questions which had been raised by the appellant's solicitors and disclosed a complicating factor: a potential claim against the assets of the D T Young Family Trust by a third person, the actual details of which need not presently be recorded. The letter went on to advise that an estimate of the final distribution due to the appellant would be in the range
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- of $200,000 to $275,000. The significance of this estimate, which appears to have been repeated at the meeting held between the representatives of the parties on 12 March 2002, will be considered later. In this same letter the solicitors for the respondent explained that the reference by the executor to s 20(5) of the Act in his letter of 13 November 2001 was to ensure that the appellant was aware of the need to act expeditiously. This letter concludes by saying:
"Notwithstanding the above, please be assured that Mr Kestel wishes to ensure that the distribution of the Estate of the Deceased and the various trusts is undertaken in a timely and orderly manner according to law. Could you please therefore advise whether your client requires any further information to enable her to make a final decision in relation to her potential claim under the Inheritance (Family and Dependants Provision) Act 1972. If it would be of assistance, Mr Kestel and I are happy to meet with you to discuss any matter you may wish to raise."
"I therefore look forward to shortly receiving your advice as to whether your client intends, or does not, intend to make an application under the Inheritance (Family and Dependants Provision) Act 1972."
92 After the holiday period the solicitors for the appellant responded by letter of 25 January 2002 explaining that counsel had been involved in a lengthy trial and requesting further time. This was followed by a letter of
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- 21 February 2002 from the appellant's solicitors requesting a meeting between the parties and their solicitors as had been offered by the respondent's solicitors in their letter of 4 December 2001.
93 A meeting between the parties and their solicitors was held on 12 March 2002. At that meeting the appellant was informed that it was estimated that she would then be entitled to a further distribution from the estate of the deceased, the D T Young Family Trust and the Young Superannuation Fund No 2 of approximately $250,000. In a later letter from the respondent's solicitors (7 May 2002) the respondent explained that such a payment would not be made from the D T Young Family Trust but, rather, would be paid from the Young Superannuation Fund No 2 – by implication, therefore, not from the estate of the deceased.
94 Before any further distributions were made, there were two events of particular significance namely:
a. on 5 April 2002 the solicitors for the respondent wrote pointing out that over three weeks had elapsed since the meeting between the parties held on 12 March 2002 and requesting some indication of when the appellant would decide whether or not to bring an application under the Act. The letter also pointed out that the 12 month time limit referred to in subsection 20(5) of the Act had, by then, expired and so conveyed the implication that the respondent was at liberty to make further distributions;
b. by letter from the appellant's solicitors to the respondent's solicitors dated 10 April 2002 it was said that the appellant has reached the view that the distribution to her as provided for in the will of the deceased is not such as to make proper provision for her within the meaning of the Act. This letter asserted that the amount of any distribution to the widow from the trusts would be a major consideration as to whether an application under the Inheritance Act should be brought and consequently full accounts of the D T Young Family Trust were requested.
95 From a later document, a consolidated cash flow statement for all the entities, including the estate, for the period 30 August 2000 to 31 March 2002 (2AB337) it appeared that, by 31 March 2002 the distributions to the five residuary beneficiaries had reached the sum of $1,514,517, so implying that between 1 August 2001 and 31 March 2002 there had been further distributions among the residuary beneficiaries totalling $174,517.
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- It is not disclosed when those further distributions were made nor, because of the pooling or aggregation of all the funds, is it possible on the evidence before the Court to tell whether they were from estate assets, or from the assets of the trust or superannuation funds or from a combination of two or more of those sources.
96 In the letter of 7 May 2002 the solicitors for the respondent also advised that the executor intended making further significant distributions to the various beneficiaries after 21 days from that date and that such distributions would be made on the basis that the appellant did not intend to take any proceedings under the Act. This was followed by a letter of 24 May 2002 from the respondent himself which also proffered a draft deed of indemnity for the respondent to execute. As the deed of indemnity was never executed by the appellant it is not necessary to examine it but it appears to contemplate contingencies more far reaching than the consequences of the proposed distribution. The two letters of 7 and 24 May 2002 were followed by correspondence from the appellant's solicitors dated 30 and 31 May requesting that the proposed distribution be cancelled or deferred but that request was refused and the appellant's solicitors were so notified by facsimile transmission from the respondent's solicitors on 30 May 2002.
97 Then, on 31 May 2002 the solicitors for the respondent provided details of the distributions which had been made by the respondent on the morning of 31 May 2002. These were to the four children of the deceased, that is four of the five residuary beneficiaries, and totalled $541,080 of which $501,000 was distributed from the D T Young Family Trust and $40,080 distributed from the Young Superannuation Fund No 2. There was no distribution to the appellant nor any distribution from the estate of the deceased.
98 By his solicitors the respondent also enquired whether his distribution (as proposed at the meeting of 12 March 2002) of $200,000 to the appellant, from the Young Superannuation Fund No 2, should be forwarded to her or should be retained by the respondent. Several features of this development are significant namely:
a. the absence of any distribution from the estate of the deceased left the position, regarding any potential prejudice to the residuary beneficiaries which might arise from a late application for relief under the Act by the appellant, unchanged;
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- b. the distributions to the four children from the D T Young Family Trust were not directly material, as the appellant had no entitlement to distribution from that fund, but they were indirectly material because of the hotchpot provisions in the will. However, that significance could not be determined on reading the correspondence without information being supplied about how the hotchpot provisions actually affected all the pooled funds in the light of events at that stage;
c. no explanation was offered about the basis upon which the superannuation trustee proposed a distribution of $200,000 from that fund to the appellant nor, for that matter, how an aggregate of $40,080 was paid to the adult children of the deceased out of the superannuation fund.
99 These distributions prompted a protest from the solicitors for the appellant, by a letter of 5 June 2002, questioning the distributions from the Young Superannuation Fund No 2 and submitting that the appellant was solely entitled to distribution from that fund. In a separate letter of the same date the solicitors for the appellant raised a number of queries about the deed of indemnity which had been proffered for her execution but it is unnecessary to examine those concerns.
100 Later, after the current proceedings had been commenced, a further meeting was held between the solicitors for the parties, counsel and the parties themselves on 7 August 2002. At that meeting the respondent's solicitors provided the appellant with a statement of all the payments made to "the beneficiaries" up to and including 31 May 2002. This also confirms that $541,080 had been paid to the four children on 31 May 2002 from the D T Young Family Trust and from the Superannuation Fund but it also includes reference to a proposed distribution of $154,020 to the appellant. Obviously, this is significantly less than the earlier $200,000 proposed distribution from the superannuation fund referred to in the letter from the respondent's solicitors of 31 May 2002, or the proposed aggregate distribution from the superannuation fund of approximated $250,000 referred to in their letter of 7 May 2002.
101 It emerged from a letter from the appellant's solicitors to the respondent's solicitors, dated 16 August 2002, that a payment of $154,020 was made to the appellant after May 2002 made up as follows:-
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102 These payments raise further questions namely:
a. why was $94,704, or indeed any amount, being paid to the appellant from the D T Young Family Trust when she was not an eligible beneficiary under that trust?
b. why was only $59,316 being distributed to the appellant from the Young Superannuation Fund No 2 when previous advice from the respondent suggested that she would be entitled to $200,000 to $250,000 from that fund?
- This shows that there has been no additional distribution from the estate of the deceased to the appellant by the payment of this $154,020. To the extent that this payment has been included in the learned Master's reference to the plaintiff having received cash and assets from the estate of the deceased of over $1,000,000 that reference is also mistaken for this reason, in addition to the erroneous inclusion in that reference of the inter vivos gift of $400,000 made by the deceased to set up the allocated pension fund.
103 There is also in evidence, correspondence between the solicitors for the parties, exchanged after August 2002 but, as proceedings had by then been commenced it is unnecessary to examine that.
104 With respect to the learned Master there are a number of important features which emerge from all this correspondence. Significantly, the financial information being provided by the respondent constantly referred to the pooled or consolidated funds coming not only from the estate of the deceased but from the D T Young Family Trust, the Wichmann Trust and the Young Superannuation Fund No 2. For this reason it is not possible to tell, on the evidence disclosed, what distributions were made from estate funds as opposed to distributions from pooled funds nor, importantly, is it possible to verify how the hotchpot provisions in the will affected non-testamentary benefits which had actually been made, through the payment of debts from non-testamentary sources to the residuary beneficiaries or otherwise.
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- Secondly, the major distributions apparently made by the executor since May 2001 were all from non-estate sources and aggregated at least $695,100. As such, no question of prejudice to the four children of the deceased, arising from distribution of funds from the estate during that period could therefore have arisen. Thirdly, the correspondence contemplated that the respondent was ready to deal with and was expecting an application by the appellant under the Act as recently as late May 2002 notwithstanding the expiration of the time limit on 25 July 2001. This, therefore, seems to have been a case where "negotiations commenced after the time limit might also aid the applicant, at any rate if the defendants have not taken the point that time has expired" – Re Salmon [1991] Ch 167 at 175 and Clayton v Aust (1993) 9 WAR 364 at 367.
105 Finally, it appears that neither the appellant nor her advisors at any time before the commencement of the proceedings, and perhaps not even now, have ever received adequate details of the actual entitlement of the widow, or of the entitlements of the other residuary beneficiaries under the will, or for that matter the proposed distributions to them from non-testamentary sources, namely: the D T Young Family Trust and the Young Superannuation Fund No 2. In those circumstances it is not difficult to understand why the appellant and her solicitors were seeking more information. Nor is it surprising that they were reluctant to commence litigation which may produce far reaching consequences for the relationships within the family, without securing a full account of the overall financial consequences of the death of the deceased in a manner in which the benefit payable under the will to the several beneficiaries could be assessed in its full setting.
106 These considerations also leave it unclear what moneys, if any, are left in the estate account, or at least what moneys should be left in the estate account. There is evidence from the respondent that most of the estate has already been distributed and that (according to the cash flow statement provided to the appellant in August 2002) there was only $600 left in the estate bank account. However, in the light of the use of the pooled funds for a variety of distributions that situation appears to require verification.
107 It is, of course, accepted that time to bring an application for relief under the Act should not be extended in a case where the estate has been fully or principally distributed, and where it is not possible for the court to make an order affecting the distributed assets or their recipients; Brown v Holt [1961] VR 435 per Pape J at 437 - 438. However, in the present
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- case the evidence does not satisfy me that, on a proper separation of the funds controlled by the respondent, it is the case that there are no significant assets of the estate left undistributed for the reasons previously explained.
108 One conspicuous absence from the evidence is any distribution statement for the appellant, or for the other residuary beneficiaries, showing the composition of the net assets of the estate and the distribution of those particular funds among the beneficiaries. In the absence of that evidence it is difficult to identify just what has become of the net balance of the estate distributable to the residuary beneficiaries. On the estimates based on financial statements examined previously the residuary estate appears to have comprised $1.029 million before adjustments required by the hotchpot clause.
109 In these circumstances it is not possible to identify the distribution to which the appellant, or any of the other residuary beneficiaries, is entitled to receive from the estate of the deceased. It is also not possible to identify what benefits have been received, either by way of distribution or by the testamentary forgiveness of debts due by the appellant or the other residuary beneficiaries. Nor can one ascertain what debts have been repaid to the appellant or to any of the four children of the deceased from other sources consequent upon the death – these being the D T Young Family Trust, the Young Superannuation Fund No 2 or the Wichmann Trust. Perhaps the information is available but it has not been assembled and put in evidence in these proceedings nor, has it been supplied to the appellant or to her solicitors in any way which allows identification of the distributions from the several sources and a comparison of the distributions made by the deceased to the residuary beneficiaries under his will with his net estate or with the distribution of the other funds from the larger pool of assets which he controlled during his lifetime.
110 This lack of information, or at least the lack of presentation of information in a manner which allows evaluations and comparisons to be made in a manner which addresses the criteria set out in s 6 of the Act has meant that neither the appellant nor her advisers have received, in my respectful opinion, the information necessary to make a responsible decision about whether or not to institute proceedings under this legislation. While there has certainly been delay by the appellant in instituting proceedings it is evident that, from the time when her solicitors were first engaged in August 2001 they were seeking, on her behalf, financial information which was needed in order to give the consideration and provide the advice that was necessary. While it is also true that the
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- respondent and his solicitors responded to the various requests for information by providing copies of the deeds of settlement, deeds of variation, financial accounts and cash flow statements, no sets of financial accounts for any of the entities prepared at the date of death were provided. The cash flow statements and tabulations of distribution which were provided were all prepared on a pooled or consolidated basis. On the evidence before this Court, there was never any statement provided showing the assets of the deceased's estate available for distribution or any proposed plan of distribution taking into account the effect of the hotchpot provisions in the will, still less showing the calculations which were necessary to give effect to that clause.
111 The commencement of proceedings by the appellant in the present circumstances was almost certainly bound to cause friction within the family of the deceased and carried a large risk of producing resentment or hostility towards her by the children of the deceased in circumstances where there had evidently been cordial relationships for many years. The natural inhibitions upon a widow taking a step which might produce such an effect should not be overlooked and, in my view, this provides a telling reason why a person in the position of the appellant would be reluctant to initiate proceedings unless and until she received legal advice which satisfied her that it was a reasonable and justifiable step to take having regard to all of the circumstances. In the present case it is evident that the solicitors for the appellant were adopting this responsible attitude and, while they had long forecast the possibility of commencing proceedings under the Act they had signified that they and their client were reluctant to take such a course until they had obtained a sufficient understanding of all the deceased's financial affairs and the impact of the distributions from the other sources as well as the entitlement which she had under the estate.
112 It also seems that there was considerable uncertainty, even with the respondent, about the amount to which the respondent was entitled even from the entire pool of funds which was to be distributed. At the meeting of 12 March 2002 the appellant and her advisers were informed that further distribution to her from the "pool" of about $250,000 could be expected. At the time of the distributions made by the respondent on 31 May 2002 the amount of the proposed distribution to her was $200,000. In the cash flow statement of August 2002 the proposed distribution was shown as $154,020 yet, nowhere in the evidence, is there any explanation of how these various amounts or their components were calculated nor how they varied so significantly over a five month period. In such circumstances I do not regard it as any indication of a disinclination to bring proceedings, if it was once thought that they were
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- warranted, that the solicitors for the appellant continued to seek further information.
Application to Adduce Further Evidence
113 As previously noted the appellant has sought leave to adduce, on the hearing of this application and this appeal, if leave be granted, further evidence by affidavit which was not before the learned Master. The proposed evidence comprises:
- the affidavit of the appellant sworn 29 January 2003
- the affidavit of the appellant sworn 27 March 2003.
- The respondent objects to the admission of such further evidence but submits that, if that evidence were to be admitted, he should be permitted to adduce further evidence addressing these new materials and has filed and proffered his affidavit sworn 2 April 2003 on a provisional basis and has applied for that evidence to be admitted in the event that the appellant succeeds in obtaining leave to introduce her new evidence.
114 The evidence which the appellant desires to adduce relates principally to her explanations of why she did not initiate proceedings or seek legal advice before 18 August 2001, an issue thought to be significant in the light of the adverse comments about that omission by the learned Master in his reasons for decision. It is clear that the Court has power to allow further evidence to be adduced at the hearing of an appeal from an interlocutory decision by leave, as opposed to special leave, pursuant to RSC O 63 r 10(1). Leave to adduce such evidence was granted by the Full Court in Grigoriou v George Nitsos (as Executor of the Estate of Athanasios Nikos) [1999] WASCA 42 – see [19-20] and [28]. The principles applying on an application for leave to adduce further evidence were examined by the Full Court in Australian Electrical Electronics Foundry & Engineering Union Western Australia Branch & Ors v Hamersley Iron Pty Ltd (1998) 19 WAR 145 especially at 160, 162-163. In that case the application to adduce further evidence was refused. The court held that the leave requirement meant that the appellant must demonstrate that there was a real possibility that the further evidence would have produced a different result if it had been admitted in the proceedings at first instance and, having regard to the length of the hearing and the quantity of evidence originally adduced, that further evidence would not have been available at the original hearing by the exercise of reasonable diligence. In my opinion the present application fails the second limb of this test as it was always open to the appellant to
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- adduce evidence of the reasons for her failure to seek legal advice or initiate proceedings before she did and in particular before August 2001.
115 For that reason I would refuse the appellant's application for leave to adduce further evidence and, consequently, refuse the provisional application by the respondent to adduce further evidence in response. In my opinion this result should follow, not only from the application of the established principles, but because the appellant did in fact adduce evidence on the general question of her reasons for delaying the commencement of proceedings until July 2002, although very little of this went to address the period of the delay up to August 2001.
116 Nevertheless, sufficient appears from all the evidence adduced before the learned Master to show that the appellant was waiting to receive some clear indication of the distributions which she could expect to receive from the estate of the deceased and from other sources consequent upon his death and that the respondent was not in a position to give any such clear indication even by September 2001 when he first wrote to the appellant's solicitors and indicated that that was his current position. Further, there is no evidence of any statement of assets or liabilities, or financial statements of the estate or any of the associated entities being provided to the appellant before then. In these circumstances I consider that there is sufficient evidence for the Court to identify the factors which were causing the appellant to delay resorting to legal advice or commencing proceedings upon the evidence which was adduced at the hearing. In view of the desirability of ensuring that there is, as far as possible, an end to reconsideration of contentious applications before the Court, even if they are interlocutory in character, I do not consider that the appellant should be permitted to supplement her evidence on these issues by the introduction of materials which were not before the Master.
117 In the present case it is not possible to say whether the appellant has a strong case for relief on an application under s 6 of the Act if time were to be extended, nor is it possible to say that she has a weak case because the full financial circumstances of the estate, the distributions from the estate, and the benefits coming to the appellant and the other residuary beneficiaries from non-testamentary sources cannot be adequately identified. However, it does seem that she has an arguable case, in that from a net estate of approximately $1.645 million she was given the family home in which she and the deceased had lived and which was then valued at $435,000 in circumstances where it was expected that she would continue to live there and would be obliged to keep up the maintenance
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and expenses associated with the home. She had received an inter vivos gift from her husband in December 1999 of $400,000 which had been used to purchase an allocated pension for her and the remaining value of this asset at the time of her application was about $290,000. In addition she had received advance distributions by the respondent of $30,000 in about December 2000, (although whether these payments came from the estate of the deceased or other sources is not apparent) and a further non-testamentary distribution from D T Young Family Trust and the Young Superannuation Fund (No 2) of $154,020 in August 2002, after proceedings had been commenced. Whether there has been adequate provision from the estate of the deceased for her proper maintenance, support education or advancement in life having regard to the standard of living which she and the deceased enjoyed and taking into account all the circumstances – Vigolo v Bostin & Anor [2002] WASCA 327 - remains an open question.
118 Once it appears that the appellant has an arguable case for relief under the Act it is inappropriate, on an application for an extension of time, to embark on an evaluation of the strength or weakness of that case, Clayton v Aust (1993) 9 WAR 364. If the circumstances of the delay are explained and fall into one or more of the categories where it has been recognised that it is just to grant an extension of time, as they do in this case, then the justice of the case may require that the applicant be given leave to file out of time. In the present case the learned Master was mistaken in his conclusion on the facts that the appellant had received more than $1 million from the estate of the deceased. There was no examination of the evidence to identify the net assets of the estate of the deceased, as opposed to the pool of assets from all sources including non-testamentary dispositions which were being managed by the respondent in his various capacities as executor, and director of the family trustee company Ostere Investments Pty Ltd. This focus on the pooled or consolidated assets and distributions from the aggregate funds was, no doubt, a product of the mode of administration being undertaken by the respondent but, at least in this case, it has tended to obscure rather than reveal, the essential focus on the disposition of the deceased's estate affected by his will.
119 Further, one of the factors identified by the learned Master as telling against the grant of an extension of time was the impact which any eventual order for relief might have on assets from the estate already distributed to the other four residuary beneficiaries. However, this approach overlooks the fact that the provisions of s 9 of the Act directs that an order made is not to be inequitable in relation to distributed assets
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and that s 65(5) of the Trustees Act may deny any court resort to the remedy of following distributed assets in a case under the Inheritance (Family and Dependants Provision) Act where the application has been commenced out of time but pursuant to leave granted by a court under s 7 of the Act.
120 It follows that there have been errors which have affected the exercise of the discretion to extend time in the decision under appeal and therefore require this Court to determine the application. In my opinion the justice of the case requires that an extension of time be granted on this occasion. I propose that leave to appeal should be granted, that the application by the appellant to adduce further evidence should be refused but that the appeal should be allowed and the appellant given leave to bring an application for relief under the Inheritance (Family and Dependants Provision) Act out of time on the application that she instituted on 13 June 2002.
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