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[2011] NSWSC 796
Supreme Court of NSW
2011-08-05
White J, Angela J
Original judgment source is linked above.
Judgment 1HIS HONOUR : These proceedings concern the estate of the late Barry Chick who died on 9 December 2007 aged 77. On 5 March 2009 probate of his will was granted to the defendant, Mr Grosfeld. 2The plaintiffs in proceedings 2009/00288951 are Jennifer Brown and Ian Chick. They are children of the deceased. They seek orders under s 7 of the Family Provision Act 1982 for further provision out of the estate. 3The plaintiff in proceeding 2009/00290500 is Ms Margaret Fitzpatrick. She was the deceased's de facto partner between 1980 and 2001. Following their separation, the deceased and Ms Fitzpatrick entered into an agreement to resolve the claims one might have against the other under the Property (Relationships) Act 1984. The deceased acknowledged he was liable to make a payment of $300,000 to Ms Fitzpatrick which, if not made during his lifetime, was to be met by his providing in his will for the payment of $300,000 to her. In his will the deceased left Ms Fitzpatrick a legacy of $300,000. There was ultimately no issue that Ms Fitzpatrick was entitled only to a legacy of $300,000 and was not entitled to recover that sum as a debt against the estate. The only issue concerning her is whether, if an order for provision is made in favour of the plaintiffs, any burden of that order should be borne by her so as to reduce the legacy to which she is otherwise entitled. Ms Fitzpatrick sought an order for the payment of the legacy of $300,000 and interest at the rate applicable to legacies under the Probate and Administration Act 1898. 4Jennifer Brown and Ian Chick filed an amended summons in which they claim an additional order pursuant to s 86A of the Probate and Administration Act that the court review the amount of charges and legal costs claimed by Mr Grosfeld in his accounts and reduce any amount of charges and legal fees found to be excessive. 5When the matters were listed for hearing, that claim was also listed for hearing together with a further proceeding no. 2010/258874 in which the plaintiffs were two other children of the deceased, namely Murray Chick and Kimberley Runia. The defendant to proceeding no. 2010/258874 is Mr Grosfeld. The plaintiffs in that proceeding seek orders for the removal of Mr Grosfeld as executor and an order that he repay fees, charges and commissions paid to him out of the estate. Orders are also sought under s 86A of the Probate and Administration Act . Part of the claim in those proceedings is that Mr Grosfeld has charged the estate with excessive costs and has claimed excessive amounts for his own fees pursuant to a clause of the will that authorises him to charge his usual professional rates as an accountant for work done as executor. There are other allegations challenging the propriety of the executor's conduct. 6The challenges to the executor's charges are relevant to the claim under the Family Provision Act as they affect the quantum of the distributable estate. All three proceedings were listed for hearing together on 2 May 2011 for three days. However, on the first day of the hearing an application was made for an adjournment by counsel then appearing for Mr Grosfeld. Other counsel had long been briefed in the matters, but had been admitted to hospital on the preceding Friday and although subsequently discharged, was unable to appear for Mr Grosfeld by reason of his illness. There had not been time for other counsel to be briefed to be able to deal with all of the matters. I decided that it was not possible to proceed with the claims challenging the propriety of the executor's conduct and the allegations of over-charging as they raised detailed factual matters with which new counsel could not deal in the available time. I was also of the view that if the proceedings were adjourned to Wednesday, 4 May 2011 new counsel should be in a position to deal with the Family Provision Act claim, particularly as the executor would have the assistance of counsel retained to appear for Murray Chick and Kimberley Runia who had both sworn affidavits in opposition to that claim. 7Accordingly I adjourned proceeding no. 2010/00258874 and ordered that the claim by the plaintiffs in proceeding no. 2009/00288951 for an order under s 86A of the Probate and Administration Act be heard separately and after the balance of the Family Provision Act proceedings. Those two claims will be heard together at a future date. It follows that I must deal with the Family Provision Act claim when there remains some uncertainty as to the size of the estate. However, that uncertainty does not prevent a determination of the issues. It is often the case that there is uncertainty in relation to the value of an estate. Sometimes that uncertainty is disguised by the parties agreeing on a particular figure as the value of estate assets, even though the true value is a matter of debate.
Size of the Estate 8Probate was obtained on 5 March 2009. Mr Grosfeld then estimated that the value of the estate was $2,134,000. The assets have been subsequently realised for $2,034,446.96. The executor currently holds $1,633,265.12. The difference is substantially due to the deduction of the executor's fees and legal costs. The executor's solicitor, Ms Anthony, deposed that legal costs and disbursements incurred by the executor in connection with the hearing of all three proceedings up to the conclusion of the present hearing were estimated to be approximately $267,000. She deposed that fees charged by the defendant acting as executor to the conclusion of the hearing were estimated to be $219,750. In round terms, the current value of the estate before allowance for legal costs of parties other than the executor is approximately $1,548,000. Depending upon the outcome of the proceedings to be heard separately, that amount might be increased if the beneficiaries' claim against the executor is successful. It might be reduced if the claim is unsuccessful to the extent the executor is entitled to an indemnity from the estate for further costs that is not satisfied by a costs order against the deceased's children. It might be reduced by further executorial charges.
The deceased's family 9The deceased was survived by his four children, Ian (born 1955), Jennifer (born 1957), Murray (born 1960), and Kimberley (born 1961). Ten grandchildren are named as beneficiaries of his will. The grandchildren so named were Phillip and Barry Chick, (children of Ian), Jacquelyn and Michael Brown, (children of Jennifer), Aurora, Jasper, Phoenix and Merlin, (children of Murray), and Kate and Simon, (children of Kimberley). The youngest grandchildren were the children of Murray who, at the deceased's death, were aged between four and 11. The other grandchildren were aged 19 to 27 at his death.
The deceased's will 10By his will made on 14 September 2007 the deceased left a legacy of $300,000 to his former de facto partner, Margaret Fitzpatrick. The will contained the following other bequests: " 5.4 I give: (a) ten per cent (10%) of my estate to my son, IAN RONALD CHICK provided that if my said son predeceases me or fails to survive me by thirty (30) days, leaving children who have attained the age of twenty five (25) years, then his share shall be divided equally amongst PHILIP CHICK and BARRY CHICK as survive me and if more than one, as tenants in common in equal shares; (b) ten per cent (10%) of my estate to my daughter, JENNIFER LYNNE BROWN provided that if my said daughter predeceases me or fails to survive me by thirty (30) days, leaving children who have attained the age of twenty five (25) years, then her share shall be divided equally amongst JACQUELYN BROWN and MICHAEL BROWN as survive me and if more than one, as tenants in common in equal shares; (c) ten per cent (10%) of my estate to my son, MURRAY JOHN CHICK provided that if my said son predeceases me or fails to survive me by thirty (30) days, leaving children who have attained the age of twenty five (25) years, his share shall be divided equally amongst AURORA CHICK, JASPER CHICK, PHOENIX CHICK and MERLIN CHICK as survive me and if more than one, as tenants in common in equal shares; and (d) ten per cent (10%) of my estate to my daughter, KIMBERLEY GAIL RUNIA provided that if my said daughter predeceases me or fails to survive me by thirty (30) days, leaving children who have attained the age of twenty five (25) years, her share shall be divided equally amongst KATE RUNIA and SIMON RUNIA as survive me and if more than one, as tenants in common in equal shares. 6. Education Fund 6.1 If any of my grandchildren survive me by thirty (30) days, my executors will set aside a fund to consist of an amount equivalent to the balance of my estate 'the Education Fund'. 6.2 My executors will hold the Education Fund on trust and: (a) may pay, apply or distribute all or part of the income of the Education Fund for the education expenses of all or any of my grandchildren as my executors in their absolute discretion may determine, without obligation to make provision for any grandchild, or to ensure equality amongst my grandchildren; and (b) may, apply or distribute all or part of the capital of the Education Fund for the education expenses of all or any of my grandchildren as my executors in their absolute discretion may determine provided that my executors ensure equality amongst my grandchildren of the capital distribution. 6.3 At the end of the term, the balance of the Education Fund remaining (if any), shall form part of the balance of my estate and be distributed in accordance with clause 7 of this Will. ... 6.5 For the purposes of Part A of this Will: a) 'children' excludes stepchildren and foster children; and b) includes: i) adopted children; and ii) children born as a result of an artificial conception procedure as defined in the Family Law Act 1975 and who are acknowledged by me or by one of my descendants as their child. c) 'education expenses' includes secondary school fees and levies, books, stationery and materials, uniforms, extra curricular activities, excursions, camps, sporting equipment and uniforms, and tertiary, technical, trade and/or professional education costs including fees, books stationery, materials, accommodation and travel expenses; d) 'grandchildren', 'grandchild', 'my grandchildren' and 'my grandchild' means such of KATE RUNIA, SIMON RUNIA, JACQUELYN BROWN, MICHAEL BROWN, AURORA CHICK, JASPER CHICK, PHOENIX CHICK, MERLIN CHICK, PHILIP CHICK and BARRY CHICK as survive me by thirty (30) days and are living during the term of the Education fund; and e) 'the term' means the period of time commencing on the date of my death, and ending on the earlier of: i) the last of the surviving grandchildren attaining the age of twenty five (25) years; or ii) at the expiration of the later of eighty (80) years from the date of my death or the maximum period permitted by law. 6.6 To the extent permitted by law, where any of my grandchildren are not presently entitled to a share of the income of the Education Fund, my executors shall be liable to pay any Australian Commonwealth tax (including, but not limited to, income tax, capital gains tax and goods and services tax) for which the Education Fund is or becomes liable. 7. Distribution of Balance of Estate 7.1 My executors shall divide the balance of my estate not already dealt with under the preceding clauses of this Will ('the remaining balance') into one or more equal parts, sections or portions, and shall hold on trust and dispose of such parts, sections or portions in accordance with the succeeding clauses of this Will. 7.2 The remaining balance shall vest equally between such of my grandchildren who survive me by thirty (30) days and attain the age of twenty five (25) years. 7.3 If the trusts of a share or shares referred to in clause 7.2 fail either because one or more of my grandchildren does not attain a vested interest in that share or those shares, or because one or more of my grandchildren fails to survive me by thirty (30) days, then from the time of that failure that share or those shares is or are added equally to the other share or shares of which have not then so failed and this provision applies both to the original shares and to shares which have increased as a result of the application of this provision." 11The adequacy of the provision made by the deceased by his will for the plaintiffs is to be assessed at the time the order is made. Subject to the contingencies referred to in paragraph [8] above, and subject also to a determination of what amount of the costs of parties other than the executor might be recoverable from the estate, the best estimate is that after paying the legacy of $300,000 to Margaret Fitzpatrick with interest of approximately $46,380, each of the deceased's children will be entitled to receive about $120,000 from the estate and that about $720,000 would be held by Mr Grosfeld on the trust for the education of the deceased's grandchildren and thereafter for the grandchildren. 12The education trust is to continue until the youngest grandchild obtains the age of 25 years. The youngest grandchild is currently seven and accordingly the trust may continue for another 18 years. In the meantime, and contrary to a proposal advanced by Mr Grosfeld in his affidavit of 20 May 2010, there is no power under the will to distribute any part of the Education Fund to the grandchildren otherwise than in payment or reimbursement of education expenses. Moreover, if any part of the capital of the Education Fund is used to pay education expenses, the executor must " ensure equality amongst my grandchildren of the capital distribution ". It is difficult to reconcile that requirement with the power earlier conferred on the executor to pay capital of the Education Fund for the education expenses of " all or any of my grandchildren ". That power contemplates that capital of the Education Fund could be distributed to some, but not all, of the named grandchildren, in which case the distribution could not be equal amongst all named grandchildren. It is arguable that distributions of capital need be equal only in respect of those grandchildren who have education expenses to be paid or reimbursed from the fund. It may be that if any grandchild has no education expenses to be paid or reimbursed, the capital of the Education Fund cannot be touched until the end of the term of the trust. It may be that capital can be distributed to grandchildren for education expenses, but that no more can be paid from capital to any grandchild than the smallest amount paid out of capital to another. A number of the grandchildren have no current education expenses to be reimbursed and disclaim any intention of incurring future expenses for education. These questions were only touched on in submissions and cannot be resolved in the suit as presently constituted. There will be significant issues to be resolved before any grandchild can be paid capital from the Education Fund.
Chick Manufacturing Co 13Jennifer Brown and Ian Chick gave evidence of a hard upbringing. Their mother, the deceased's first wife, died in 1965. The family was then living in New Guinea. They returned to Australia in about September 1965. The deceased remarried in December 1967. Jennifer and Ian testified to harsh treatment at the hands of their stepmother which the deceased ignored. 14After the deceased sold his business interests in New Guinea, he, in conjunction with his brother, established a company called Chick Manufacturing Co Pty Limited ("Chick Manufacturing Co"). So far as the evidence discloses Chick Manufacturing Co manufactured and sold lights or light fittings. By the 1970s it had annual sales of approximately $1.75 million. 15Ian Chick, the oldest of the four children, left school in 1971 when he was about 16. All of the children helped in the business on Saturday mornings. Jennifer deposed that the deceased told them that " it will be all yours one day ". By this she understood him to mean that all four children would inherit the business. 16Jennifer joined the business in the early to mid 1970s. According to Jennifer, she left school after year 9. She unsuccessfully attended business college and then took a hairdressing apprenticeship in 1973. She only continued as a hairdresser for about six months. She deposed that the deceased asked her then to stay home and look after the family and keep house, for which she was paid. Jennifer attributes her poor performance at school to demands made on her by her stepmother. A good deal of evidence was given in general terms about Ian and Jennifer's childhood and difficulties they faced with their stepmother, much of which was disputed by Murray, such that it is not possible at this distance to form an assessment of where the truth lies. 17Jennifer deposed that Ian started work for Chick Manufacturing Co in 1974 and that she commenced work there in about 1975. They both worked full-time. They deposed that although they worked long hours of overtime, they were only paid for five days a week. They were told that money was being provided for them by way of superannuation and that the superannuation would be in lieu of unpaid overtime. I accept this evidence. It is consistent with the description of the deceased given by the general manager of Chick Manufacturing Co, Mr Peter Bach. He deposed that Ian and Jennifer were paid the award wage and that he would constantly overhear the deceased telling them that they were overpaid. He also recalled the deceased promising to make both Ian and Jennifer shareholders in the company, but telling Mr Bach that they would only get C class shares and he would determine what their worth would be. Mr Bach deposed that the promise of shares was made to offset the lower wages that were being paid. No shares were issued. Both children worked diligently in the business. 18According to the company search for Chick Manufacturing Co, Jennifer was appointed as company secretary on 10 January 1967, but this cannot be correct as she was then only 9. She did become the company secretary. Jennifer produced some records relating to the Chick Manufacturing Co Superannuation Fund. Minutes of meetings of trustees of the Fund held on 29 June 1979, 30 June 1980 and 30 June 1982 record contributions having been made to the Fund by the company on behalf of both Ian Chick and Jennifer Brown. It appears that the Fund was wound up on or about 30 June 1987. A statement of realisation of assets did not disclose any assets having been realised and allocated for the benefit of Jennifer. A sum of $38,061.04 was allocated to Ian Chick. $9,535 was apparently paid to an AMP Society Roll-Over Fund and $28,526.04 was allocated as " retirement benefit ". I accept Jennifer Brown's evidence that she has not received any superannuation and is not aware of any superannuation account for her benefit derived from superannuation payments apparently paid for her benefit by Chick Manufacturing Co. 19Ian Chick deposed that he understands that his superannuation from many years ago between 1973 and 1987 is currently invested along with his father's superannuation from that time. He deposes that he has not received any payment regarding that superannuation fund. He also had a little over $7,000 in superannuation with an industry superannuation fund as at 30 June 2008. There was no clear evidence as to what inquiries, if any, Ian Chick made to locate a superannuation account held for him since 1987. It is not known what sum is apparently held for him by the AMP Society. 20In about 1978 the deceased decided to realise the business of Chick Manufacturing Co. This was done by embarking on a year-long sale of the company's products to retail customers. That process was highly successful. Ian and Jennifer gave evidence, which I accept, that for this period they worked extremely long hours and often seven days a week, although they were not paid overtime. At the conclusion of the sale the deceased had raised sufficient moneys to purchase a waterfront property in Abbotsford, an investment unit in Fairfield, a yacht and two luxury motor vehicles. He retired in about 1979 at the age of 49. For their efforts during this period, Jennifer Brown received a new fridge and Ian Chick was given a second-hand motor vehicle. 21Jennifer married her first husband in 1976. They were divorced in about 1981. Ian Chick married in 1977. At some time in the late 1970s the deceased's wife, Gwen, left him. They divorced in around 1981. In about 1980 or 1981 the deceased commenced a de facto relationship with Margaret Fitzpatrick.
Jennifer Brown's businesses 22Following the winding-up of the business of Chick Manufacturing Co, Jennifer Brown and Ian Chick established new businesses that ultimately failed. Initially Jennifer, with her father, established a retail lighting shop at Liverpool. She deposed that she understood that she had a 50 per cent share in the business and elsewhere deposed to having been " in partnership " with her father at the Liverpool retail store. There was no evidence about the success or outcome of that business or of any benefit Jennifer may have derived from it. She deposed that by around 1983 she set up her own business in lighting and represented several lighting companies working on commission. She also opened a small lighting shop in Merrylands in partnership with her mother-in-law. (She had married her present husband, Greg Brown, shortly after her divorce.) In about 1988 her husband commenced a business of assembling cane furniture and also fabricating component parts for a lighting business conducted by Ian Chick called Hermosa Lighting. However, their business collapsed in about 1990 and they were required to sell their home in Campbelltown to discharge their business debts. 23Jennifer and her husband then established a kitchen manufacturing business. They have operated that business since the early 1990s, save for a period of five or six years between 1999 and 2004 and 2005. During that time she and her husband concentrated on educating their children at home. They were then in receipt of social security benefits. 24The kitchen manufacturing business is carried on from a property in Paxton owned by Jennifer Brown and her husband. The business barely breaks even.
Ian Chick's business and employment 25As indicated above, after the closure of the business of Chick Manufacturing Co and the establishment of a retail shop at Liverpool, Ian Chick started a company called Hermosa Lighting. In about 1991 that business failed. Ian Chick deposed that an internal accountant embezzled company funds. Ian and his wife lost their house as a result of the company's failure. At this time, Ian Chick moved into his father's empty factory (presumably a factory of Chick Manufacturing Co) to make it habitable. He paid rent, carried out repairs and renovations. 26In November 1995 Ian Chick was seriously injured in a car accident. He received an insurance payout, but it did not cover all of the costs incurred. Following the accident, he lost all his business and assets. He was divorced in 1995. 27From sometime in 1996 to 2000 Ian Chick worked for a business called Elaine's World of Lights. He worked there except for the times in which he was undergoing physiotherapy or otherwise recovering from the ongoing effects of the accident. By the end of 1999 or 2000 he was working 40 hours per week. The work involved assembling light components imported from Italy into saleable items. At the end of that period Ian Chick had not accumulated any assets. He was in a de facto relationship and had a daughter to his de facto partner to whom he pays maintenance. 28Ian Chick met his current partner, Robyn Peck, in December 1999. Between 2000 and 2002 he was employed by a company called Retail Link. His role was to supervise the provision of cleaning services to shopping centres. He resigned in 2002 following disagreement with management. The work did not involve physical labour. Between 2002 and 2005 Ian Chick worked intermittently for a company called Strategic Sales, again in the role of supervising the provision of cleaning services. 29From May 2000 Ian Chick has worked as a contractor for a company called Quantum Technik Pty Limited. He is a 50 per cent shareholder of that company. So far as I could ascertain from his evidence, that company is either in the business of providing cleaning services, or acting as a consultant to others in the cleaning industry to assist with problems as they might arise. 30In his affidavit of 7 August 2009 Ian Chick deposed that he is heavily involved in a not for profit organisation called Toastmasters and has put in at least 40 hours per week into Toastmasters' administration. He deposed that he also did some casual labouring work and that some weeks he might not work at all, but in other weeks might work for about 15 to 20 hours. Whether he could do work depended on his back and other health conditions.
Relationship with deceased 31Part of the basis for Jennifer's claim on the estate is that as a child, according to her, she was deprived of educational opportunities in order to look after the household consisting of her father and stepmother, her siblings and her step-siblings. She deposed: " 48 On many occasions Gwen [her stepmother] would pack her bags and move out of home, I would always take on the responsibility to clean, cook, shop, wash and iron. I organised Murray and Kimberley to school, cut their lunches and in general, kept the house. I was only in Year 5 the first time she moved out of the family home in around 1968. 49 My attendance at school was very poor. Gwen would often make me stay home from school to wash curtains, clean the oven, clean light fittings and wash all the blankets or whatever else she could find for me to do. 50 One of my duties each day was to complete the washing prior to going to school. That was for nine people. This was my job from the age of 11 until I started work at the age of 16. I would have to start the first load of washing by 6am, otherwise I would miss the school bus. If I did not finish the washing by then, I would be made to stay home from school. 51 Then in the afternoon I did all the shopping. I had little time to do any homework. My education suffered tremendously. 52 When Gwen left home, my dad asked me 'Please discontinue your hairdressing apprenticeship and stay home and keep for the family'. I did so and was unable to advance in life on a personal level, in order to look after the family. Murray and Kimberley were still attending school at this time. " 32Jennifer was not cross-examined on this evidence except that it was put to her that the problems she described that she had growing up after her father remarried were problems that applied as much to the other three children in the family as to her (T26). She accepted that that was so, although none of the other children gave evidence of their education being disrupted by being compelled to perform excessive household chores. 33Murray Chick responded to the above evidence as follows: "7. Paragraphs 48 and 49 of Jennie's Affidavit is [sic] inaccurate. I remember Gwen packing her bags on a few occasions, less than once every few years. I remember her being gone for a week or two at a time. When this happened, we all chipped in and carried the extra work load. Jennie did not raise us and I do not recall her being forced to stay home from school. Paragraph 49 of Jennie's Affidavit says that her attendance at school was 'poor'. This is true. I recall her wagging school with Linda Higgins numerous times in high school. We all did chores around the house, but that was before and after school. We were never kept home from school to do them. With seven children in the house there was much to be done and all the children contributed." 34Jennifer denied that she wagged school with Linda Higgins and gave a detailed account of missing school on one occasion after " experiencing a morning of hell at home during which Murray had been flogged by Gwen ". 35As with other childhood descriptions, it is simply not possible to say from the affidavits where the truth of these assertions lies. The deceased's second wife, Gwen, is not available to give her version of events. Jennifer's account appears to be highly coloured. But both Jennifer and Murray Chick appeared to be honest witnesses. Murray Chick made an error in an affidavit in stating his and his wife's joint income, but that does not materially affect his credibility. Jennifer Brown admitted to lying to the Commonwealth Bank in connection with obtaining of a loan. I did not consider that that affected the reliability of her evidence as to her current financial position. However, I consider that Jennifer Brown's recollection of events of her childhood is not wholly reliable. I do not think that she has a greater claim to provision out of the estate because of her claim that she was deprived of proper educational opportunities in her youth or because the deceased stood by and let her (and the other children) be abused by their stepmother. 36Both Jennifer Brown and Ian Chick worked in the deceased's business as explained above. 37Both Jennifer Brown and Ian Chick maintained regular contact with their father. From 2005 Jennifer started to take her father to appointments with his doctors. In July 2006 at her father's request, Jennifer moved to Sydney to stay with him and supervise his recovery from what I infer was a psychiatric disturbance. She stayed for about five months for about 70 per cent of the week on average. 38In February 2007 the deceased apparently had a lung biopsy which revealed cancer. Jennifer deposed that she had taken her father to all doctors' appointments following his lung biopsy in February 2007 for the commencement of chemotherapy until the end of May 2007. Kimberley Runia corroborates Jennifer's evidence to the effect that Jennifer was bearing the burden of their father's care. She deposed that in February 2007 Jennifer complained that she was the only sibling that was giving her time to their father. Kimberley deposed that in April 2007 she flew to Sydney to take their father to his chemotherapy sessions. She was then resident in Queensland. Murray Chick deposed that Jennifer took the deceased to chemotherapy sessions in February and March, Kimberley in April and May, and that between June and September, Kimberley and he alternated in doing so. The deceased died on 9 December 2007. 39Ian Chick did not give evidence of any special care being provided for his father. It does appear, however, that Jennifer was attentive to his care. 40In about April 2007 the deceased accused Jennifer of having made unauthorised purchases on his credit card. She denied this. The matter was only faintly raised at the hearing. I accept Jennifer's denial. There is nothing in her conduct to the deceased that would tend to reduce the assessment of what provision for her proper maintenance and advancement in life would be adequate. There is no indication in the deceased's will that he considered that Jennifer had behaved improperly towards him. He left her the same proportion of his estate as he left to his other children.
Jennifer Brown's financial position 41Jennifer Brown and her husband conduct a business of manufacturing and installing kitchens. That business is carried on under the names of Cessnock Kitchen Specialists and Premier Joinery. In partnership with their son, they also operate a business under the name Heritage Hand Paints. The businesses barely break even. In the years ended 30 June 2009 and 30 June 2010 the kitchen manufacturing and installation business earned a profit of $19,395 and $12,106 respectively. The combined taxable income of Jennifer and her husband for the year ended 30 June 2010 was less than $6,500. In the previous year their combined taxable income was less than $20,000. 42In an application made to the Commonwealth Bank of Australia for a $250,000 loan to refinance existing debts, Jennifer Brown and her husband stated that their combined income for the year ended 30 June 2008 was $51,884. Presumably the bank required no corroboration of this information. However, their true combined income for the year ended 30 June 2008 was $20,190. I accept that the statements in their tax returns disclosed the true position and not the position asserted to the bank. Jennifer Brown said that the statements in the loan applications were false and were made because they were desperate for the loan. I accept that evidence. 43The principal asset of Jennifer Brown and her husband is their house in Paxton. She valued the house at $380,000. In 2008 the Commonwealth Bank valued it at $395,000 when considering an application for refinance. Other assets (including assets used in the business) had a value estimated by Jennifer Brown of approximately $115,000. She had no superannuation or investments or cash at bank, except for a few thousand dollars in two business accounts. 44The liabilities of the business as at 30 June 2010 (including the liability under the refinanced loan to the Commonwealth Bank of Australia) was $450,628. This included $251,489 as the amount owed to the Commonwealth Bank. As at 21 April 2011 that debt had increased to $259,111.84 and was in arrears to the extent of $9,111.84. The net cash balance with the Commonwealth Bank was a debit of over $17,000. 45Jennifer Brown and her husband had outstanding debts to the Australian Taxation Office in excess of $40,000. They were liable to the Council under a judgment for outstanding council rates. The amount due as at 31 May 2010 was $3,323.39. Jennifer Brown had been served with a bankruptcy notice in respect of a judgment debt for $5,703.45. Also, on 14 April 2011, Cessnock City Council commenced proceedings against Jennifer Brown and her husband claiming $2,459.73 in unpaid land rates and charges. 46Jennifer Brown also owed $86,353 to her mother-in-law as at 30 June 2010. Her mother-in-law has provided her and her husband with funds from time to time to help them pay debts and had provided a loan of $30,000 to purchase a work vehicle. 47Jennifer Brown and her husband are under extreme financial pressure. They cannot pay their debts except by borrowing from Jennifer Brown's mother-in-law, by receiving a distribution from the estate, or by selling their house. Even if the house were sold, it is unlikely that the proceeds of sale would be sufficient to discharge their debts. 48The Paxton property is in need of renovation. Quotations for the renovations have been obtained. They come to between $50,000 to $60,000. Jennifer Brown has no savings to provide a buffer for adverse contingencies. She has no private health insurance.
Ian Chick's financial position 49In his affidavit of 7 August 2009 Ian Chick deposed: " I personally do not own any assets apart from the clothes that I wear and a 23 year old watch. My partner Robyn has lived in her house for 30 years. The house still has a mortgage over it. Robyn has a superfund liability which is the property next door that requires substantial renovating before it can be inhabited. The superfund has no asset as the property is worth $80,000 less than the mortgage value. ... The house that we live in requires an estimated $72,000 to fix the structure and replace a kitchen floor that has dropped because peering has collapsed, the deck out the back cannot be walked on as the flooring has rotted, the stairs have collapsed. The house is a fibro 3 bedroom home located on the Cumberland Highway at Merrylands and was built through the early 1950s ." 50Ian Chick also referred to having superannuation of $7,001.94 as at 30 June 2008. As referred to above, he appears also to be entitled to other superannuation from the time of his employment with Chick Manufacturing Co Pty Limited, but the whereabouts and amount of that superannuation has not been ascertained. 51In a later affidavit of 21 April 2011, Ian Chick also referred to the fact that he is the holder of one of two issued shares in two companies, namely, Quantum Technik Pty Ltd and Quantum Maximus Pty Ltd. Quantum Maximus Pty Ltd is said to be the trustee of a unit trust known as the Quantum Technik Unit Trust. It is Quantum Maximus Pty Ltd that purchased the property at Betts Road, Merrylands adjacent to the house in which he and Robyn Peck live. He gave no evidence as to who are the beneficiaries of the Quantum Technik Unit Trust. 52The only financial statements provided for Quantum Technik Pty Limited were for the year ended 30 June 2007. The company's accountant advised Mr Chick's solicitor that there was " no way " he could finalise the financial statements for that company prior to the court hearing. There was no explanation as to why financial statements for that company had not been prepared for the years ended 30 June 2008, 30 June 2009 and 30 June 2010. The financial statements of Quantum Technik Pty Ltd for 30 June 2007 disclosed that it had net assets of $40,860. The company's business was the provision of cleaning services. Its balance sheet recorded that at 30 June 2007 it had total assets of $105,642 consisting of cash and receivables of $78,040 and property, plant and equipment of $27,602. The balance sheet stated that it had liabilities of $64,782. Of this, the principal liability was described as " Loans - Directors " of $52,737. The director of Quantum Technik Pty Limited is Ian Chick's de facto partner, Robyn Peck. 53It is not right to say that Ian Chick owns no assets except his clothes, his watch and a small amount of superannuation. The value of his share in Quantum Technik Pty Ltd is unknown. As at 30 June 2007 its value on a net asset basis was $20,430. There was no evidence as to the results of further trading of that company since 30 June 2007, or its current assets and liabilities. 54The tax returns for Ian Chick for the years ended 30 June 2006, 30 June 2007 and 30 June 2008 recorded his having taxable income in those years of $15,000, $10,000 and $15,000 respectively. His accountant stated that he expected Ian Chick's income to be approximately of $10,000 to $15,000 in the financial years ended 30 June 2009 and 30 June 2010. His partner has had a taxable income of between about $42,000 and $47,000 up to 30 June 2009. 55The property adjoining the residence of Ian Chick and Robyn Peck was purchased for $280,000. Although Ian Chick deposed that the property was purchased by Robyn Peck, it was in fact purchased by Quantum Maximus Pty Ltd. Ian Chick deposed that it was purchased with a loan of $265,000 taken out by Robyn Peck. In fact the loan was with Quantum Maximus Pty Ltd and the amount borrowed was $278,944 (3/468). The loan was taken out in 2009 and by 30 December 2010 the debt had been reduced to $265,168. Robyn Peck has funded the mortgage payments. It was proposed that the property would be renovated and let. That has not eventuated because Ian Chick and Robyn Peck have not had enough money to carry out the renovations. Ian Chick says that his income has dried up. The property remains unoccupied and is not rentable until repairs are carried out. The cost of repairs were estimated to be $96,500. 56There is no evidence of Robyn Peck's other assets and liabilities. 57The property in which Ian Chick lives with his de facto partner is owned by her. It is in need of repair. There are white ants in the foundation, which is rotting. The cost of repair is estimated to be $108,000. There is no evidence of its value. 58Ian Chick continues to have a number of medical issues. He has no health insurance. He says he cannot afford it. His only substantial asset is his share in Quantum Technik Pty Ltd, the value of which is unknown, and superannuation entitlements. It is not established that he holds any units in the Quantum Technik Unit Trust, but in any event, the net value of the assets of that trust would be small and possibly non-existent if the trustee is liable to Robyn Peck for the moneys she has paid to reduce the mortgage debt. For so long as he remains in his de facto relationship with Robyn Peck, Ian Chick can be expected to benefit from her financial support. Her full financial position was not disclosed. Moneys spent to renovate their residence would be of benefit to Ian Chick as well as to Robyn Peck. So far as disclosed, moneys spent to improve the value of the asset of the adjoining property would not be of direct financial benefit to Ian Chick, although he may indirectly benefit from an increase in the value of the assets of the trust. 59Possibly as a result of his involvement with Toastmasters, Ian Chick is articulate and has skills that could make him eminently employable. It was put to him in cross-examination that he has deliberately not sought employment. I accept his denial. I accept that due to his age and his injuries it is very difficult for him to find employment.
Position of other beneficiaries 60It is necessary to consider the financial position of other beneficiaries who could be prejudiced by an order for provision in favour of the plaintiffs and their relationship with the deceased. 61Margaret Fitzpatrick is a pensioner. She occupies a unit under licence in a retirement village. She has about $170,000 in a bank account or superannuation. Her income from her pensions and interest is about $27,600 per annum. Her current expenses are higher than this figure. She has a legitimate expectation of receiving the whole of the legacy of $300,000 as provided for under the agreement that settled her claim under the Property (Relationships) Act against the deceased. 62Kimberley Runia is a part-owner of a house in Pomona, Queensland. The property is estimated to have a current value of about $400,000. It is subject to a mortgage of less than $180,000. Kimberley Runia is only able to meet the mortgage payments with the assistance of her children. The property is in need of substantial renovation. She shares the property with her daughter and her daughter's family. She has significant health problems. She is currently a student and receives government support. She has not made a claim for further provision from the estate. 63Murray Chick is the most financially secure of the four children. He is a mortgage broker by occupation. He and his wife own a property in Castle Hill as tenants in common. It was valued at approximately $900,000. They own an investment property in Flagstone Creek valued at about $360,000. Murray Chick valued the rest of his assets at approximately $276,000. He and his wife have a mortgage of approximately $747,000. The Castle Hill property is held as to a 99 per cent share by Claudia Chick and as to a one per cent share by Murray Chick. The reasons for this arrangement were not disclosed. They are both liable for the loan secured on the property. Murray Chick actively trades in shares. He had recently taken his family for a seven-week holiday to Chile. 64The grandchildren who would primarily benefit from the Education Fund would be the children of Murray and Claudia Chick. Two of those children are in high school. Two are in primary school. The two elder children are both in a gifted and talented strand at their high school. Murray and Claudia Chick would be keen to enrol their children in non-government schools if financial resources were available to them to do so. It is likely that the two elder children will pursue university studies and Murray and Claudia Chick also expect that the two younger children will pursue tertiary studies in due course. 65Jennifer Brown's daughter, Jacquelyn Brown, is one of the named grandchildren who are beneficiaries of the estate. She completed a Bachelor of Music degree and has an outstanding HECS debt that was $12,870 as at 18 November 2009. She had also paid fees of $11,450 to a business college and paid $2,390 to her singing teacher between 1 July 2008 and 22 April 2010. These expenses are potentially reimbursable out of the Education Fund, depending upon the exercise of discretion by the trustee. The deceased travelled from time to time to attend concerts at which Jacquelyn Brown performed. It is clear that her singing gave him considerable pleasure. He was also proud of her academic achievements. 66Michael Brown, the son of Jennifer Brown, advised the executor that he had no intention of doing any more courses to further his education. 67Kate Runia, the daughter of Kimberley Runia, has a HECS debt of approximately $30,000. She is studying at the Queensland University of Technology. 68Phillip Chick advised the executor that he " was not really interested in further education ". The executor was unable to speak to Barry Chick or Simon Runia. 69As the Education Fund can only be applied in payment of education expenses, and given the requirement that any distributions of capital of the Education Fund be made to the beneficiaries equally, it is unlikely that capital of the fund will be substantially diminished during the period of the trust. Prima facie the persons who are most likely to stand to benefit if the executor exercises his discretion to make distributions of income to pay educational expenses are the children of Murray and Claudia Chick, Jacquelyn Brown and Kate Runia. With the possible exception of Jacquelyn Brown, there is no evidence that any of the grandchildren had such a relationship with the deceased during his lifetime as to give them a particular claim to his testamentary bounty. The moral claim of Jacquelyn Brown is vastly exceeded by the moral claims of the deceased's children. She does not object to provision being made for her mother and for Ian Chick.
Principles 70Sections 7 and 9 of the Family Provision Act provide as follows: " 7 Provision out of estate or notional estate of deceased person Subject to section 9, on an application in relation to a deceased person in respect of whom administration has been granted, being an application made by or on behalf of a person in whose favour an order for provision out of the estate or notional estate of the deceased person has not previously been made, if the Court is satisfied that the person is an eligible person, it may order that such provision be made out of the estate or notional estate, or both, of the deceased person as, in the opinion of the Court, ought, having regard to the circumstances at the time the order is made, to be made for the maintenance, education or advancement in life of the eligible person. ... 9 Provisions affecting Court's powers under secs 7 and 8 (1) Where an application is made for an order under section 7 by an eligible person who is such a person by reason only of paragraph (c) or (d) of the definition of eligible person in section 6 (1), the Court shall first determine whether, in its opinion, having regard to all the circumstances of the case (whether past or present), there are factors which warrant the making of the application and shall refuse to proceed with the determination of the application and to make the order unless it is satisfied that there are those factors. (2) The Court shall not make an order under section 7 or 8 in favour of an eligible person out of the estate or notional estate of a deceased person unless it is satisfied that: (a) the provision (if any) made in favour of the eligible person by the deceased person either during the person's lifetime or out of the person's estate, or (b) in the case of an order under section 8: (i) if no provision was made in favour of the eligible person by the deceased person, the provision made in favour of the eligible person under this Act out of the estate or notional estate, or both, of the deceased person, or (ii) the provision made in favour of the eligible person by the deceased person either during the person's lifetime or out of the person's estate as well as the provision made in favour of the eligible person under this Act out of the estate or notional estate, or both, of the deceased person, is, at the time the Court is determining whether or not to make such an order, inadequate for the proper maintenance, education and advancement in life of the eligible person. (3) In determining what provision (if any) ought to be made in favour of an eligible person out of the estate or notional estate of a deceased person, the Court may take into consideration: (a) any contribution made by the eligible person, whether of a financial nature or not and whether by way of providing services of any kind or in any other manner, being a contribution directly or indirectly to: (i) the acquisition, conservation or improvement of property of the deceased person, or (ii) the welfare of the deceased person, including a contribution as a homemaker, (b) the character and conduct of the eligible person before and after the death of the deceased person, (c) circumstances existing before and after the death of the deceased person, and (d) any other matter which it considers relevant in the circumstances. (4) Nothing in subsection (3) (a) limits the generality of subsection (3) (b), (c) and (d) and the Court may consider a contribution of the same nature as that referred to in subsection (3) (a) or of a different nature in so far as it considers it relevant under subsection (3) (b), (c) or (d). (5) Subject to the foregoing provisions of this section, the Court may make an interim order for provision under section 7 in favour of an eligible person before it has fully considered the application for that provision where it is of the opinion that no less provision than that proposed to be made by the interim order would be made in favour of the eligible person after full consideration of the application. (6) Where, on an application made in relation to a deceased person, the Court has made an interim order as referred to in subsection (5), it shall, in due course, proceed to make a final determination of the application, which determination shall confirm, revoke or alter the order so made. " 71The Act prescribes a two-stage process for dealing with applications for provision. The court may not make any order for provision in favour of an eligible applicant unless it is satisfied that the provision, if any, made in favour of the applicant by the deceased person either during his lifetime or out of his estate is, at the time the court is determining whether or not to make such an order, inadequate for the proper maintenance, education and advancement in life of the applicant (s 9(2)). If the court is satisfied that the provision, if any, so made for the applicant is inadequate for his or her proper maintenance, education and advancement in life, it has a discretion under s 7 to order such provision out of the estate or notional estate of the deceased person as, in its opinion, having regard to the circumstances at the time the order is made, ought to be made for the maintenance, education or advancement in life of the applicant. In determining what provision would constitute " proper " maintenance and advancement in life for Jennifer Brown and Ian Chick, regard is to be had to their financial position, the size and nature of the estate, their relationship with the deceased, and the relationship between the deceased and other persons having legitimate claims upon his bounty. The determination of the second stage involves similar considerations ( Singer v Berghouse [1993] HCA 35; (1994) 181 CLR 201 at 209-210). 72The executor accepted that the plaintiffs had established financial need. However, the executor did not accept that the plaintiffs had established that the provision made for them by the deceased was inadequate for their proper maintenance and advancement in life when regard was had to all of the relevant circumstances. 73Mr Grosfeld deposed that: " To my knowledge the late Barry Ian Chick was a man of the future. He based his decision making on the future. He had a lot of time for the youth of today as they are the adults of the future. For the same reasons he was interested in the education of the youth of today. ... I was present at the meeting during September 2007 with him and his solicitor, Mr Dennis Hall. Barry then explained that he particularly wanted all of his grandchildren to benefit from his estate for their education. He was satisfied that by leaving a reasonable and equitable amount directly to his four children and by giving the balance of his estate to his grandchildren he would be looking after all his adult children by looking after their off spring [sic]." 74The deceased's assessment that the provisions of his will provided a reasonable and equitable distribution to his children must be taken into account. A testator is often well placed to assess the merits of the claims of potential beneficiaries to the estate, having a knowledge of the capacities and conduct of the potential claimants that cannot be accurately established in litigation after the deceased's death. However, the assessment of whether the plaintiffs have been left without adequate provision for their proper maintenance and advancement in life must be made by the court and is to be made on the basis of the facts as they exist at the time of the order. 75A significant change from the circumstances which existed when the will was made is the depletion of the estate by fees and costs. According to the inventory of property prepared by the executor, the deceased's assets as at the date of death had an estimated value of $2.14 million. In the ordinary course of administration one would expect a beneficiary of a ten per cent share of that estate to receive about $170,000 after payment of administration expenses and the legacy of $300,000. However, that sum has been substantially reduced by the costs and fees and remuneration of the executor (subject to possible moderation). That is without taking into account costs incurred by other parties. 76But in any event, I do not consider that a ten per cent share of the residuary estate was adequate provision for the proper maintenance and advancement in life of either Jennifer Brown or Ian Chick. It does not appear that the deceased made any substantial provision for them during his lifetime. Their claims on his testamentary bounty were strong and far outweighed the claims of his grandchildren. They are both in a highly precarious financial position. Both have minimal income. Ian Chick in particular suffers from poor health. 77The claims of Jennifer Brown and Ian Chick are not diminished by the fact that neither Murray Chick nor Kimberley Runia have made claims under the Family Provision Act . It is not an objection to the plaintiffs' claims that the deceased made no greater provision for them. 78Adequate provision for Jennifer Brown's proper maintenance and advancement in life is a provision that would discharge the pressing debts of her business and her debt to her mother-in-law, and reduce the secured debt to the Commonwealth Bank to a serviceable level. It should also provide a sum as a contingency for the vicissitudes of life. 79Ian Chick has no assets of any value apart from a modest amount of superannuation and his share in Quantum Technik Pty Ltd. 80Adequate provision for Ian Chick would provide a sum as a contingency for the vicissitudes of life recognising that he does not own the house in which he is living with his de facto partner, the possibility of that relationship terminating, his health problems arising from his injuries in 1995, and the difficulty that he has in earning an income.
Costs of parties other than the executor 81Ms Fitzpatrick deposed that she had incurred costs of $31,862 up to 6 January 2011. 82The solicitor for Jennifer Brown and Ian Chick deposed that their costs up to the conclusion of the hearing were estimated to be $300,000 inclusive of GST. Not all of these costs related to the Family Provision Act claim. About 25 per cent of those costs ($75,000) were incurred in relation to the claim yet to be determined to moderate the executor's fees and charges. It is not known whether any or all of those costs will be recoverable. About 15 per cent of these costs ($45,000) related to a challenge brought by the plaintiffs to the grant of probate which they discontinued. Whilst I assume that the plaintiffs have a liability for that sum, I do not think that that liability should be taken into account in determining an appropriate amount of provision. The liability was incurred because of their decision to institute proceedings to challenge the testamentary capacity of the deceased which they decided not to pursue. I do not see why any other beneficiary should indirectly bear the burden of that decision. 83The plaintiffs' solicitor estimated that approximately 60 per cent of the total figure was attributable to the Family Provision Act claims, that is, the sum of about $180,000. 84Murray Chick and Kimberley Runia have also incurred costs of their claim against the executor. In addition, their legal representatives have prepared affidavits that were read in the executor's case and their counsel appeared in the executor's case. This was necessary because of the necessary adjournment. The plaintiffs were cross-examined by counsel retained by Murray Chick and Kimberley Runia. No figure was put on the additional costs incurred by Kimberley Runia and Murray Chick relating to the Family Provision Act claim. 85I cannot take the costs relating to the Family Provision Act claim or Ms Fitzpatrick's claim into account in any precise way in determining the appropriate order for provision. The sums involved are very large. The affidavit evidence on both sides descended into detailed disputes of fact that were out of all proportion to the issues in dispute. I am not yet in a position to determine who should bear the responsibility for the excessive costs of litigation. I can make no assumption as to how the costs will ultimately be borne and whether they should be paid out of the estate. It would be surprising if offers of compromise or other settlement offers have not been exchanged. These could well dictate what would be appropriate costs orders. Any such offers could also be relevant to any decision as to whether the burden of costs orders to be paid from the estate should be borne by a particular beneficiary or class of beneficiaries.
Form of order for provision 86Counsel for the plaintiffs submitted that the plaintiffs should receive legacies in lieu of the provision made for them in the will. That would give them a certain outcome and they would not be faced with the uncertainties attending to the outstanding claim against the executor. However, I do not consider that the plaintiffs should be in a better position than other beneficiaries in that respect. All of the beneficiaries, except Ms Fitzpatrick, share in the residuary estate. Prima facie the costs are to be paid out of the estate. If the estate continues to incur executorial costs and charges, the costs and charges will be paid out of residue. This might be affected by particular costs orders. 87I consider that the order for provision to be made under s 7 of the Family Provision Act should be by way of additional legacies leaving the gift of ten per cent of residue untouched.
Provision for Jennifer Brown 88Jennifer Brown has pressing judgment debts of approximately $9,027, debts payable to the Australian Taxation Office of $41,319 and debts payable to Cessnock City Council of $2,460. She owes a debt of $86,380 as at 30 June 2010 to her mother-in-law for funding her and her husband's expenses that they could not afford. She had an overdraft of $20,972. Provision of about $160,000 would be required to clear those debts. In addition, adequate provision for her maintenance and advancement in life requires a sum to reduce the secured debt to the Commonwealth Bank by $90,000 and to provide $75,000 for contingencies. These sums total approximately $325,000. 89Counsel submitted that provision by way of a legacy in the order of $350,000 to $400,000 would be adequate for her proper maintenance and advancement in life. That assessment is only a little on the high side. For the reasons given I do not consider that provision should be by way of a legacy in lieu of her entitlement under the will. Rather, an order for provision of $200,000 should be made in addition to her entitlement under clause 5.4(b) of ten per cent of the residuary estate.
Provision for Ian Chick 90Ian Chick does not have debts. Nor does he have any substantial assets, except for his share in Quantum Technik Pty Ltd. He has a small amount of superannuation. The absence of evidence as to the current financial position of that company makes it difficult properly to assess his financial needs. The financial position of the company was not explored in cross-examination. However, the onus was on Ian Chick to establish its position. His affidavits ignored his shareholding in the company. There was no evidence that he held the share on trust for another. It was not suggested that he should be deprived of any order for provision because of the absence of financial information about the company. It is clear that through his solicitor, Ian Chick sought up to date financial statements from the company's accountant, but they were not available. My impression from Ian Chick's description of the work he did for the company was that the company's business was sporadic. 91The plaintiffs' counsel sought the same provision for both plaintiffs. That is understandable, but I do not think it is warranted. Ian Chick has the support of a de facto partner whose financial position was only imperfectly revealed. The financial position of Quantum Technik Pty Ltd was not properly established. He has a different earning potential from Jennifer Brown. He did not provide the deceased with the same level of support. 92The assessment of adequate provision to provide a contingency against the vicissitudes of life is necessarily impressionistic. For a person of Ian Chick's age (55) with little superannuation or other buffer who still experiences the effects of a traumatic motor vehicle accident from 1995, I think the required contingency is substantial if it is to be adequate for his proper maintenance and advancement in life. His entitlement to ten per cent of the residuary estate is manifestly insufficient. In my view, a further legacy of $150,000 is required. 93It is clear that the burden of each legacy should be borne by the Education Fund. The value of that fund will be reduced by $350,000. There will remain a fund of in excess of $300,000 (subject to the contingencies referred to previously) available to pay education expenses of the grandchildren and available for distribution to the grandchildren in due course. 94For these reasons in proceedings 2009/00288951 I make the following orders:
[1993] HCA 35
(1994) 181 CLR 201