The plaintiff, Tina Marie Carr, seeks a family provision order out of the estate or the notional estate of her late father, Alan Douglas Carr, who died on 9 January 2013. Tina Carr's application was made on 12 May 2014, four months outside the 12 month period for commencing proceedings that Succession Act 2006 ("the Act"), s 58(2) prescribes.
The issues contested in these proceedings were: (1) whether the Court should extend the time for bringing Tina Carr's application; (2) whether certain real estate and an interest in a superannuation fund should be designated as notional estate of the deceased; and (3), whether provision should be made for Tina Carr out of the deceased's estate, and if so, what order for provision should be made. It was conceded that, as a daughter of the deceased, Tina Carr was an eligible person under Succession Act, s 57(c). These reasons address the issues in this order.
The first and second defendants, Gordon Douglas and Nancy Pickering, are the deceased's executors. The third defendant, Margaret Carr, was the deceased's first wife. She holds the proceeds of sale of jointly held real property and the deceased's interest in his self-managed superannuation fund, both of which the plaintiff claims are notional estate against which orders may be made under Succession Act, Part 3.3.
The deceased and Margaret were divorced. After separating from Margaret, the deceased entered into a domestic relationship with Heather Gabriel, who he later married. Heather was the mother of the plaintiff, Tina Carr. She was also the mother of Adam Carr, who was not a party to these proceedings. But Heather died in 1985 when Tina was only about 5 and when Adam was only 2. Heather died, Alan reconciled to a degree with his first wife Margaret. They lived together for the rest of his life but without ever re-marrying. Margaret and the deceased had two children during their marriage, Glen and Matthew.
There was little left in the deceased's estate when these proceedings commenced. The only remaining assets of the estate, excluding some items of personal property, which seem to have been informally distributed between the parties (but not without controversy), were $53,180 in the deceased's bank account, less the cost of obtaining probate of $1,565. This left a net estate of $51,615.
The plaintiff claims that the deceased had substantial notional estate. This notional estate is comprised of two items of property: an interest as a joint tenant in real estate held under the Real Property Act, and an interest in a self-managed superannuation fund.
At the time of his death the deceased was the registered proprietor under the Real Property Act 1900, as a joint tenant with Margaret Carr, of a property in Austral, New South Wales ("the Austral property"). Shortly prior to his death and advised by his solicitor, Mr Stojanovic the deceased sought to sever this joint tenancy. He lodged for registration a Transfer Severing Joint Tenancy ("the Severance Notice"). The Severance Notice was dated 19 December 2012 and would have expired 9 days after the deceased died. The severance did not take place. The whole of the property passed to Margaret by survivorship. Margaret sold the Austral property in May 2014 for $1.2 million. After deduction of agent's commission and legal costs she received the net proceeds of the sale of $1,164,772.31.
The other claimed item of notional estate is the deceased's interest in a self-managed superannuation fund, the Coachwood Superannuation Fund. In accordance with the requirements of the regulations made under the Superannuation Industry Supervision Act 1993 (Cth) ("the SIS Act"), on 1 July 2008 the deceased made a binding nomination in favour of his estate in relation to his interest in the superannuation fund. But the nomination was only for three years (the maximum permitted under the SIS Act) and expired on 1 July 2011. The deceased appears to have overlooked renewing his nomination. A valid current nomination is required by the SIS Act in respect of all superannuation funds. Following the death of the deceased, Margaret appointed her and the deceased's son Glen as her co-director of the corporate trustee of the Coachwood Superannuation Fund, Coachwood pest Control Pty Limited ("the corporate trustee"). As co-directors Margaret and Glen caused the corporate trustee to resolve in 2013 that the assets of the superannuation fund be paid to Margaret.
The deceased's instructions to his longstanding solicitor, Mr Stojanovic and his various statements as to his testamentary intentions in the last few years of his life are a basis to infer that he was unaware that his 1 July 2008 binding nomination in favour of his estate had lapsed and that the proceeds of the superannuation fund would not necessarily be paid to his estate and pass under his will.
Tina Carr's case is that a one half interest in the sale proceeds of the Austral property ($582,386.15) and the assets of the Coachwood Superannuation Fund paid to Margaret, together with the income earned in respect of those funds, are capable of being designated as notional estate under Succession Act, Part 3.3.
The deceased made his final will on 5 December 2012. Mr Stojanovic was responsible for drafting the will. Alan Carr appointed an old friend, Gordon Leslie Douglass and his sister Nancy Pickering as his executors. After making a number of specific gifts to each of Tina, Matthew and Glen, and to his brother Ron, the deceased directed that his executors sell and convert into cash items of personal property and chattels in accordance with paragraph 5 of his will:
"5(a) I direct my executors to sell and convert into cash the following items of my personal property and chattels:-
(i) forklift, trailer, tractor, ride-on-mower, chaff cutter, cool room, car trailer
(ii) shares in any publically listed company that I hold at the date of my death;
(iii) Ford Ranger motor vehicle;
(iv) my work truck, for which Gordon Leslie Douglas has the first option to purchase.
(v) any other items of personal property of value which is to be determined at the discretion of my executors, but if such items are of nominal value, I direct my executors to donate such items to a charitable organisation as determined by my executors.
(b) I direct that the proceeds of sale of my personal property and chattels is to be held in trust by my executors and form part of the trust fund referred to in clause 8.
(c) For the purposes of the sale of my personal property and chattels, I direct that only one of my executors, namely, Gordon Leslie Douglas is appointed for such sale."
As will be explained below, the deceased's son Adam by his second wife Heather has a disability. With foresight the deceased, set up a trust for Adam in accordance with paragraph 8 of his will as follows:
"8(a) I give to my executors to hold on trust:-
(i) the proceeds of sale of my personal property and chattels as referred to in clause 5;
(ii) any money held by me at the date of my death in any bank or financial institution;
(iii) my superannuation entitlements in the Coachwood Pest Control Superannuation Fund, or any other superannuation fund.
(b) I direct my executors to make application to the NSW Trustee and Guardian to be appointed as the Financial Manager for my son Adam, who is physically handicapped and requires care, and upon such appointment, to pay the trust funds referred to in clause 8(a) to the NSW Trustee & Guardian, provided that such funds are held by the NSW Trustee and Guardian as Financial Manager for my son Adam for his daily care and financial needs, provided further that if my son Adam is cared for by any of my children, NSW Trustee & Guardian is to co-operate with such child caring for Adam from time to time, and to provide such financial assistance to such child caring for Adam as is reasonably required.
(c) I direct that upon the death of my son Adam, any funds remaining with the NSW Trustee & Guardian is to form part of the remainder of my estate."
The provision of clause 8 that would have augmented the greatest value to the clause 8 trust fund for Adam was the gift of "my superannuation entitlements" in the Coachwood Pest Control Superannuation Fund. Instead Margaret and Glen caused the corporate trustee of the Coachwood Superannuation Fund to pay these entitlements to Margaret. She took the view that she was the person best equipped to look after his financial affairs rather than having a trust separate trust set up for him.
The deceased's will assumes that he was free to dispose of his interest in the Austral property by will. Clause 6 of the will provided as follows: -
6) I give my share in my property located at 35, Tenth Avenue, Austral, to my children, Matthew, Glen and Tina, (but excluding my son Adam) as tenants in common in equal shares, on the condition that they give to my wife Margaret Carr the right to occupy the property (noting that she owns a one-half interest in such property) until the earlier of:-
a) my said wife gives notice in writing to my said children that she no longer wishes to occupy the property; or
b) my said wife remarries after my death; or
c) two years after that date of my death.
Mr Stojanovic had arranged for the Severance Notice to be signed and lodged within a few days of the will. He and the deceased assumed that the deceased would survive until the Severance Notice became effective. But he did not. The joint tenancy remained unsevered and the Austral property passed by operation of law to Margaret.
The deceased had divided the residue of his estate equally between Matthew, Glen and Tina as tenants-in-common in clause 9 of the will.
These proceedings were heard over four days. The main hearing was on 18 and 19 June 2015. But it was necessary to have Adam independently advised before the conclusion of the proceedings and Glen's evidence was not able to be finished on 19 June. So the proceedings continued on 18 August and 21 September after which judgment was reserved.
Mr GJ Smith of counsel appeared for the plaintiff, Ms Carr. Mr S O'Brien of counsel appeared for the third defendant, Margaret Carr. The estate did not appear.
Many of the witnesses from the Carr family referred to one another in the proceedings by their first names. Without intending any disrespect to any witness or party the Court will do the same for convenience.
At the conclusion of the proceedings there was a concern as to whether all persons who may be eligible to make a claim against the estate had been served with notice of the plaintiff's claim in accordance with the Succession Act and Supreme Court Rules Part 77, Rule 3. In the end evidence satisfactory evidence was provided to the Court that all potentially eligible persons had been served with notice of the claim.
Before addressing the three main questions raised for decision in these proceedings it is useful to record the Court's assessment of the witnesses who gave evidence and to make some findings about their involvement in the course of some of the disputed events.
[2]
Credit findings about parties and witnesses
Six witnesses gave evidence in the proceedings, the plaintiff Tina Carr, Gordon Leslie Douglass, Steven Stojanovic, Margaret Carr and Glen Carr.
Tina Carr was an excellent witness. She gave a reliable account of her relationship with the deceased and her interaction with other family members, both before and after her father's death. The plaintiff is a safety officer at her local council and is also a corporal in the army reserve, acting in the role of a combat medical officer. She was able to add consistent detail to her account of events when questioned and was able to answer challenges to her evidence with explanations that were credible, internally consistent, and designed to convey the truth to the Court.
Her credit was strongly challenged, particularly in relation to whether she was first advised in February 2013 that she would not receive anything substantial under the estate and may need to get her own advice about possibly making a claim against the estate. But she adhered firmly and credibly to her version, which I fully accept.
Mr Stojanovic was a reasonable witness whose evidence could be generally relied upon. But his view of the effect of the Severance Notice was unsound. He seemed to take the view that notwithstanding the deceased's death, before the Severance Notice became legally effective it would still be possible for the deceased's will to be given effect by identifying the deceased's half share in the Austral property as part of his estate. The Supreme Court's Probate Office rightly challenged this view. No one contended in these proceedings that his view was right. He ultimately abandoned it, putting in an amended application for probate. He claimed to be supported by counsel's advice. There was no binding agreement for valuable consideration made between the deceased, Margaret and Tina to cover what would happen in the event of his death before the Severance Notice became legally effective. As soon as he died, as a joint tenant Margaret acquired both a legal and beneficial entitlement to the Austral property. In placing a half interest in the Austral property in the estate for probate purposes he seemed to be acting against Margaret's interests without apparently consulting her.
The will Mr Stojanovic drew for the deceased did not encompass by alternative gifts the possibility that the deceased might die before the Severance Notice was effective. But the options here for the deceased in late 2012 were legally really quite limited. The deceased was trying to preserve his other major asset, the self-managed superannuation fund, for Adam. And the attitude to Tina that Margaret displayed in the witness box meant that she was never going to agree with the deceased to sever the joint tenancy so Tina could benefit under the will. Indeed she says, and I accept, how deeply hurt she was when she received the Severance Notice just before Christmas 2012. Mr Stojanovic seems to have expected that the deceased would live longer than he did. But it is still puzzling why someone like Mr Stojanovic did not remind the deceased at the time of making his last will in December 2012 to renew his SIS Act nomination of his interest in the superannuation fund for the benefit of his estate.
Mr Douglass was the deceased's old friend. They had been friends for a very long time. The deceased entrusted him with what became the difficult task of being executor. Mr Douglass was a good choice. He was well aware of tensions between the deceased and Margaret Carr and the tensions between Margaret Carr and Tina Carr. He was prepared to take on the task as being executor, but he sensibly stipulated, and the deceased agreed, that another family member close to the deceased should also became executor. The deceased selected his sister Nancy Pickering to be co-executor.
Mr Douglass was a generally reliable witness. He was cautious about things he did not remember. He was always trying to tell the truth. But his recollection of a meeting in Mr Stojanovic's office in February 2013 was not as good as some of the other participants in that meeting. His career background was as a plumber; he had no legal training. He gave a candid account of frustrations in dealing with Mr Stojanovic after the deceased's death. Some frustration was indeed justified. Mr Stojanovic did not give clear information to Mr Douglass to assist estate administration. Whether Mr Stojanovic felt a degree of responsibility for failing to have the joint tenancy severed before the deceased died or not is uncertain. But Mr Stojanovic did keep assuring Mr Douglass that the deceased's wishes towards Tina, Glen, Matthew and Adam would be able to be fulfilled, when reality pointed the other way. The severance notice had not become effective before the deceased's death. .
Mr Douglass struck the Court as a man of trusting nature who was prepared to accept Mr Stojanovic's professional advice. He continued to accept Mr Stojanovic's advice, even as it became increasingly unlikely that the will would be able to be given effect, so that any part of the Austral property would be available for Tina through the estate. But as the estate's administration went on for months after the deceased's death, Mr Douglass' trust in Mr Stojanovic's explanations ultimately diminished, as did the quality of Mr Douglass' relationship with Tina Carr. Tension understandably built up between them. Tina Carr felt she was not getting clear answers from Mr Douglass. She was right: Mr Douglass' communications with her were as confused as the advice he was getting from Mr Stojanovic. To a considerable degree that was not Mr Douglass' fault. It was very clear from Mr Douglass' demeanour and evidence that he was passionately committed to ensuring that the deceased's wishes, reflected in his will, were carried out. It was evident to the Court that he had a sense of personal failure in not having been able to achieve what the deceased wished. But in reality he was powerless to do so. His evidence was candid, sincere and mostly reliable.
Margaret Carr was a difficult witness. She had her own view of the world and was constantly vigilant to press it upon her questioner and on the Court under cross-examination whenever she could. She had to be reminded by the Court to wait until questions were finished before she answered them. She had a tendency to answer the question she thought she was being asked rather than the one asked. At times she showed complete incapacity to attend to questions. The whole of her evidence appeared to be distorted by her unassailable self-belief that she was acting and had always acted in the matters relevant to these proceedings in the best interests of the other family members, who depended on her, such as Adam.
Margaret Carr presented herself as a person unsophisticated in matters financial. But she was not without a well-developed sense of her own financial best interests. The speed with which she dealt with the Coachwood Superannuation Fund entitlements and the Austral property after the deceased's death, are more consistent with someone, who, if not sophisticated in finance, was nevertheless able to access and use reasonably sophisticated financial help. She was able to ensure: within twelve months of the deceased's death to see that that her son Glen was appointed the co-director of the corporate trustee of the Coachwood Superannuation Fund; and that a resolution was passed by its corporate trustee to pay the balance of that fund to her and no-one else.
Margaret Carr plainly and openly displayed her dislike of Tina Carr. She disapproved of Tina Carr's relationship with her partner David Garth. She felt resentful that the deceased favoured his daughter in relation to domestic rules at home and that she, Margaret, had little or no authority over Tina. Margaret had a solution to what she perceived as Tina's defiance of her authority. In my view she made life so unpleasant for Tina that Tina decided to move out of the house.
The Court approached Margaret Carr's account of events about Tina Carr cautiously, especially about anything that bore upon her financial self-interest. Her credit was successfully challenged in a number of places concerning finances. In her affidavit of 28 November 2014 she set out her financial circumstances. But she then failed to disclose that she held bank funds in excess of $500,000 or that she did earn interest on those funds. She later revealed the other funds just before trial. She also said in the same affidavit that her expenditure exceeded her income by $331 per month. But in her cross-examination she agreed that her income was well in excess of the expenditure disclosed in her affidavit. At no stage did she disclose in her affidavits any income on her bank accounts that total $1.27 million which she agreed in cross examination was of the order of $3,400 per month with an interest rate of over 3%..
But Margaret Carr made an undoubted personal commitment and effort to look after Adam Carr and help manage his disability for many years, even though she is not his mother. I accept that she regarded Adam Carr as her de facto son. She has raised him from the age of 2, after Heather's death. This involved very considerable personal sacrifice on Margaret's part. But there were tensions at times between Margaret Carr and Tina Carr about Adam's welfare. At times Margaret Carr has been less willing to have Adam continue to live with her. And there can in my view be no doubting the regular and committed care that Margaret gave to the deceased when he was going through his cancer treatment in the last two years of his life and that she and the deceased had a lengthy relationship upon their reconciliation after Heather's death.
Glen Carr was a puzzling witness. He had some understanding of his mother's financial affairs and those of the estate and he had a reasonable grasp of relevant financial detail. But at times he displayed volatile disagreement with aspects of the plaintiff's case. His account of matters concerning the plaintiff was occasionally distorted either by his dislike of her, or of her motivations in bringing these proceedings.
Glen seemed convinced that Gordon Douglass could never tell the truth. But his view of Mr Douglass was simply prejudiced and wrong. Once Glen's views had been formed they were hard to change. He was not the kind of person who could see the point of view of others or change his mind based on new evidence.
Glen gave unsatisfactory evidence about why he caused the whole of the Coachwood Superannuation Fund entitlements to be paid to his mother. He showed not the slightest indication of having understood of the nature of the duties of the Fund's corporate trustee. Nor did he give a satisfactory account of the exercise of his duties as a director of the fund's corporate trustee having exercised its duties in accordance with the trust deed. There was no evidence for example that he considered or weighed any of the possible objects of the corporate trustee's distribution discretion before resolving with Margaret to distribute the deceased's interest in the fund to Margaret.
Ms Dinkha, the solicitor for Tina, gave evidence too. Her evidence became especially relevant after the plaintiff was cross-examined to suggest that she had been well aware since February 2013 of the deceased's failed attempt to effect the severance of his joint tenancy over the Austral property and that she needed to get legal advice. On the plaintiff's application to extend time to bring these proceedings, Margaret's contention against Tina was that Tina had done nothing to get legal advice and to commence proceedings since February 2013, so time should not be extended. But Ms Dinka gave compelling and reliable evidence about a file note that she took during her first conference with Tina, which demonstrated that Ms Dinkha did not get information about the severance of the joint tenancy from Tina but had to telephone Mr Stojanovic to get that information and that Tina did not know what the estate was worth and was still just waiting for and expecting her share of the distribution from the estate. I accept all of Ms Dinkha's evidence.
Adam did not give evidence. He was independently advised by a solicitor, Mr Poole, who was called in after the Court expressed concern about Adam's lack of advice. Mr Poole assessed him as having legal capacity. But Mr Poole nevertheless expressed concerns that Adam was being influenced by his mother, Margaret in not seeking to claim himself against his father's estate. Similar concerns were borne out in the evidence. But it was clear based on Mr Poole's statements that Adam did not need a tutor and did not wish to bring a claim against the estate.
[3]
Issue 1: Should Time to Bring the Application be Extended?
The plaintiff's application is four months out of time. It should be made within 12 months of the deceased's death: Succession Act s 58 (2). She applies The deceased died on 9 January 2013. The proceedings were commenced on 12 May 2014. Probate was granted on 29 April 2014. The grant of probate was in the hands of Mr Stojanovic. It seems to have taken considerably longer than the normal period for such a grant, because of requisitions from the probate Registry about why he had included a half interest in the Austral property as an estate asset.
There was a strong contest about delay in bringing the application. Margaret contended that time should not be extended. Tina contends that she has shown "sufficient cause" to extend time under Succession Act s 58 (2).
The time limit imposed under Succession Act s58(2) is not merely procedural but is substantive and an application to extend cannot be taken lightly: Vanderloo v Milne [2014] NSWSC 1932 at [62] and Verzar v Verzar [2012] NSWSC 1380 at [98].
In my view Tina has shown sufficient cause to extend time. The Court will extend time up to and including 14 May 2014 for the following reasons.
Firstly, the delay is not great. And the four months delay that occurred should be seen in the context of the considerable delays in the grant of probate. The proceedings were commenced only two weeks after probate was granted. Whilst it is true as s 58 (1) provides, that an application for a family provision order may be made whether or not administration of the estate has been granted, the reality is that applying before a grant of probate means that an application needs to be made under Succession Act section 91 for a grant of administration for the purposes of the conduct of the proceedings. Such an application can be included in the summons for family provision. But it is a complication which adds costs. In this case it is quite understandable for a solicitor who expects probate to be granted imminently to wait for a short period of a few weeks that does not greatly add to the overall delay, to allow the grant to take place. This in my view in this case would account for about one month of the delay.
Secondly, the delays are also explained in part by Tina's altruistic motives. During the period of delay she was trying to persuade Adam to make a claim as well and to organise a tutor for him. Because of his disability and his distance from her that was difficult to do. She could have simply looked after herself first but she chose not to. This explains about another month of the delay. Tina consulted Ms Dinkha on 7 February 2014. Mr Stojanovic, the solicitor acting for the estate, wrote to Ms Dinkha on 14 February 2014 explaining that the deceased had not successfully attempted to sever the joint tenancy. Ms Dinkha told Tina between about 17 and 21 February that she would not receive her share of the Austral property under the will. Tina met with counsel on 6 March 2014, who also advised that Adam may have viable claim. Tina took Adam to see Ms Dinkha on 10 March. But thereafter when Adam returned to Queensland he proved difficult to contact. Eventually in late April Tina instructed Ms Dinkha to commence proceedings. Her interest in having Adam's possible claim brought to the fore in the proceedings was not theoretical. The fact that Adam had not brought an application for family provision and the fact that he might need a tutor or some assistance to bring one, sufficiently concerned the Court that the Court raised during the hearing whether not Adam could be independently legally advised in the course of the proceedings. He ultimately was and Mr Poole appeared for him.
Thirdly there is no identifiable prejudice occasioned by the delay. On 1 May 2014 Margaret sold the Austral property, which had passed to her by survivorship. With the proceeds she purchased another property in Upper Coomera, in Queensland so that she could be near Adam, Glen and Matthew and her grandchildren. But she still has substantial amounts of cash from the sale of the Austral property in hand as well as the cash she received distribution from the superannuation fund. She has not given evidence that any particular transactions occurred in the four-month period between 9 January 2014 and 14 May 2014 that would not have occurred if she been aware of the of Tina's application. She has not said for example it she would not have sold the Austral property.
Fourthly, I accept Tina's evidence that she was unaware that she was not going to obtain a distribution from her father's estate until approximately the time that she came to see Ms Dinkha, the solicitor who acted commenced these proceedings for her. I accept the substance of Ms Dinkha's evidence that she was one who informed Tina of this for the first time and of her rights against the estate. Moreover, I accept Tina's evidence that she did not get any independent legal advice at any time before seeing Ms Dinkha about making a claim against the estate and was unaware of her rights before she came to see Ms Dinkha.
Put against this evidence are two communications said to have been made to Tina in February-March 2013 to suggest she go and get legal advice. In my view neither communication occurred.
In an affidavit sworn only just before trial Glen gave evidence that Tina was well aware from February-March 2013 that she would not be benefiting under the will from the estate. He says that in a telephone conversation she said to him "I have learnt that the property and superannuation will not be divided as per dad's will. I'm worried that Mum's solicitor might get his way". Glen says that he replied to her "The Lands Department has given a ruling that the property now belongs to mum and the super as well. It is nothing to do with mum's solicitor". He says that Tina then asked him "Where does that leave me?" And he replied to her "You and Adam should get independent legal advice, free from the influence of Gordon Douglass and dad's solicitor."
But he abandoned his statement about a ruling that "the property now belongs to my mum and the super as well". By March 2013 it can be accepted that it was clear that the Austral property was going to pass to Margaret. But there had been no ruling, final advice or decision about what was to happen to the deceased's interest in the superannuation fund by then. When being cross-examined he changed his evidence to downgrade the firmness of what he said to "it looks like the super is as well". In my view his evidence on this conversation was very uncertain and I do not accept it. But the Court accepts Tina's evidence that she had no such conversation. It is unlikely in my view that if this conversation had taken place that Tina would have done nothing about it. She was proactive in seeking out Ms Dinka after delay in the estate's administration. I see no reason to believe she would not have sought advice earlier had she had suspicions that the estate was not being administered in accordance with her understanding that there would be distribution to her.
The other communication with Tina is said to have occurred at a meeting at Mr Stojanovic's office in February 2013 at which Tina, Adam, Mr Stojanovic and Mr Douglass were present. Mr Stojanovic (or possibly Mr Douglass) is said to have communicated to Tina at this meeting that there were problems with severing the joint tenancy and that she should go and get her own independent legal advice. There was confusing evidence as to whether in fact one or two meetings took place but the better view is that there was only one at which the above persons were present.
Tina denied that this was said to her. I accept her denial. I accept that by this time Mr Stojanovic was aware that there were problems with the severance of the joint tenancy as LPI had notified him. But even his own evidence was equivocal, despite a file note indicating that the issue may have been discussed. At one point he said he was pretty sure he did not mention this issue to Tina. His evidence was not very reliable on this topic. Tina's evidence is to be preferred. It is more probable objectively that he would discuss problems with estate administration with the executor, Mr Douglass rather than with one or two of the beneficiaries. And it is unlikely that he would have been definite with one of the beneficiaries that there were problems that had led to the point that she would need to get independent advice, whilst he was still dealing with the Probate office in attempting to have the deceased's interest in the Austral property administered within the estate for probate purposes. And as with the other conversation with Glen, I find it quite improbable, having seen Tina in the witness box, that she would not have reacted quickly to this information had it been communicated to her. Her version is also supported by Ms Dinka's evidence. If the issue was mentioned at all, in my view it was only mentioned to Tina in my view in a way that did not raise any concerns or alarm and certainly did not suggest that she needed to go get independent legal advice.
Tina Carr was also strongly challenged as to whether she was really out of touch and unable to communicate with Mr Stojanovic or any other solicitor whilst she was on deployment with the Army Reserve in Northern Australia between July and December 2013, the second half of the year her father died.
But she explained and I accept that she was undertaking border patrol work in northern Australia on Operation Resolute and was on a patrol boat for long periods of time with the Navy and only back in Darwin for short periods of time. She said that when she was at sea she did not have access to a telephone or the internet and as army personnel on a Navy ship she was disadvantaged in having access to communication facilities. For a period of time she was stationed on a small island between Darwin and Christmas Island. I accept her account that she was unable to communicate with lawyers back in Sydney during the second half of the year after her father died. But in the end this issue does not matter greatly because the Court has found that she was not warned of her rights or of the fact that she might not receive anything under the estate before she was deployed to northern Australia.
The Court will order time to be extended.
[4]
Issue 2: Should Any Notional Estate be Designated?
Tina claims that should the Court consider the making of an order for provision in her favour, it should designate the deceased's interests in the Austral property and the self-managed superannuation fund as notional estate under Succession Act, Part 3.3: and see generally Kastrounis v Foundouradakis [2012] NSWSC 264. Margaret resists this claim on several grounds. She submits that neither of those interests qualify as notional estate under Succession Act, Part 3.3, and that this is not case in which in the Court's discretion such an order should be made.
Succession Act Part 3.3. Notional estate orders may be made where as a result of certain property transactions, property is not included in the estate of a deceased person, or where property has been distributed from the estate of the deceased person. The Court is empowered in limited circumstances to make an order designating property not included in the estate, or which has been distributed from the estate, as "notional estate" for the purposes of making a family provision order under Succession Act, Part 3.2 in respect of the estate of the deceased person: see Succession Act s 80(1).
Notional estate orders cover a wide variety of circumstances. It is not necessary to set out in these reasons all the legislation as it might apply to all those other circumstances. But in broad canvas the structure of decision-making in Succession Act Part 3.3 is as follows. First, the Court must be able to identify a "relevant property transaction", something which means either "a transaction or a circumstance affecting property" as described in Succession Act, ss 75 or 76: see Succession Act s 74. Secondly, a notional estate order may only be made for the purposes of making a family provision order under Succession Act, Part 3.2, and the estate must otherwise be insufficient for the making of the family provision order or any order as to costs: Succession Act, ss78 and 88. Thirdly, the Court may on the making of an application for a family provision order "make a notional estate order designating property specified in the order as notional estate of the deceased person", only if the deceased entered into the relevant property transaction before his or her death and the transaction is one to which Succession Act, s 80 applies, a provision which contains qualifications relevant to this case, including as to the time at which the transaction in question takes effect. Apart from Succession Act, s 80, notional estate orders may be made in other circumstances covered by Succession Act, ss 81 and 82, neither of which are applicable here. Fourthly, the relevant property transaction must result in disadvantage to the estate or in a failure to benefit the estate of a specified kind: Succession Act, s 83. Finally, the legislation commands the Court not to make a notional estate order unless it has considered a number of overarching restrictions and protections: see Succession Act, ss 87 and 89.
Each of these five steps is engaged here. So the relevant legislation is set out below in more detail. It follows the structure of the summary above. Steps two and four are not controversial in this case.
First, Succession Act, s 75 allows that entry into a "relevant property transaction" may arise from both actions and omissions to act, in circumstances where full valuable consideration is not given. Succession Act, s 75 provides:
"75 Transactions that are relevant property transactions
(1) A person enters into a relevant property transaction if the person does, directly or indirectly, or does not do, any act that (immediately or at some later time) results in property being:
(a) held by another person (whether or not as trustee), or
(b) subject to a trust,
and full valuable consideration is not given to the person for doing or not doing the act.
(2) The fact that a person has entered into a relevant property transaction affecting property does not prevent the person from being taken to have entered into another relevant property transaction if the person subsequently does, or does not do, an act affecting the same property the subject of the first transaction.
(3) The making of a will by a person, or the omission of a person to make a will, does not constitute an act or omission for the purposes of subsection (1), except in so far as it constitutes a failure to exercise a power of appointment or disposition in relation to property that is not in the person's estate."
Succession Act, s 76 provides what the heading to the section describes as "Examples of relevant property transactions". This is a correct description. Although s 76(1) says that the "circumstances set out in subsection (2)…constitute the basis of a relevant property transaction for the purposes of section 75" [emphasis added], s 76(3) makes clear that a "relevant property transaction" is not limited to subsection (2) circumstances. Many of the s 76(2) circumstances are of marginal relevance to the present case. But Succession Act, s 76 provides:
"76 Examples of relevant property transactions
(1) The circumstances set out in subsection (2), subject to full valuable consideration not being given, constitute the basis of a relevant property transaction for the purposes of section 75.
(2) The circumstances are as follows:
(a) if a person is entitled to exercise a power to appoint, or dispose of, property that is not in the person's estate and does not exercise that power before ceasing (because of death or the occurrence of any other event) to be entitled to do so, with the result that the property becomes held by another person (whether or not as trustee) or subject to a trust or another person (immediately or at some later time) becomes, or continues to be, entitled to exercise the power,
(b) if a person holds an interest in property as a joint tenant and the person does not sever that interest before ceasing (because of death or the occurrence of any other event) to be entitled to do so, with the result that, on the person's death, the property becomes, by operation of the right of survivorship, held by another person (whether or not as trustee) or subject to a trust,
(c) if a person holds an interest in property in which another interest is held by another person (whether or not as trustee) or is subject to a trust, and the person is entitled to exercise a power to extinguish the other interest in the property and the power is not exercised before the person ceases (because of death or the occurrence of any other event) to be so entitled with the result that the other interest in the property continues to be so held or subject to the trust,
(d) if a person is entitled, in relation to a life assurance policy on the person's life under which money is payable on the person's death or if some other event occurs to a person other than the legal representative of the person's estate, to exercise a power:
(i) to substitute a person or a trust for the person to whom, or trust subject to which, money is payable under the policy, or
(ii) to surrender or otherwise deal with the policy,
and the person does not exercise that power before ceasing (because of death or the occurrence of any other event) to be entitled to do so,
(e) if a person who is a member of, or a participant in, a body (corporate or unincorporate), association, scheme, fund or plan, dies and property (immediately or at some later time) becomes held by another person (whether or not as trustee) or subject to a trust because of the person's membership or participation and the person's death or the occurrence of any other event,
(f) if a person enters into a contract disposing of property out of the person's estate, whether or not the disposition is to take effect before, on or after the person's death or under the person's will or otherwise.
(3) Nothing in this section prevents any other act or omission from constituting the basis of a relevant property transaction for the purposes of section 75.
(4) For the purposes of this Chapter, in the circumstances described in subsection (2) (b), a person is not given full or any valuable consideration for not severing an interest in property held as a joint tenant merely because, by not severing that interest, the person retains, until his or her death, the benefit of the right of survivorship in respect of that property."
Secondly, Succession Act, s 78 requires that a notional estate order may only be made for the purposes of making a family provision order under Succession Act, Part 3.2 or for the purposes of an order for the costs of proceedings. And Succession Act, s 88 prohibits the making of a notional estate order "unless the deceased's estate is insufficient for the making of the family provision order, or any order as to costs" that should otherwise be made. It is not in contest in these proceedings that but for the making of a notional estate order there would be nothing available in the deceased's estate to satisfy a family provision order. So the requirements of Succession Act, ss 78 and 88 are met in this case.
Thirdly, Succession Act, s 80 limits the range of transactions that may qualify as "relevant property transactions" and provides:
"80 Notional estate order may be made where estate affected by relevant property transaction
(1) The Court may, on application by an applicant for a family provision order or on its own motion, make a notional estate order designating property specified in the order as notional estate of a deceased person if the Court is satisfied that the deceased person entered into a relevant property transaction before his or her death and that the transaction is a transaction to which this section applies.
(2) This section applies to the following relevant property transactions:
(a) a transaction that took effect within 3 years before the date of the death of the deceased person and was entered into with the intention, wholly or partly, of denying or limiting provision being made out of the estate of the deceased person for the maintenance, education or advancement in life of any person who is entitled to apply for a family provision order,
(b) a transaction that took effect within one year before the date of the death of the deceased person and was entered into when the deceased person had a moral obligation to make adequate provision, by will or otherwise, for the proper maintenance, education or advancement in life of any person who is entitled to apply for a family provision order which was substantially greater than any moral obligation of the deceased person to enter into the transaction,
(c) a transaction that took effect or is to take effect on or after the deceased person's death.
(3) Property may be designated as notional estate by a notional estate order under this section if it is property that is held by, or on trust for:
(a) a person by whom property became held (whether or not as trustee) as the result of a relevant property transaction, or
(b) the object of a trust for which property became held on trust as the result of a relevant property transaction, whether or not the property was the subject of the relevant property transaction."
Each of the relevant property transactions described in subparagraphs (2)(a),(b) and (c) is potentially relevant here. The time of taking effect of a relevant property transaction for the purpose of calculating the times in s 80(2) is defined by Succession Act, s 77. It provides:
"77 When relevant property transactions take effect
(1) For the purposes of this Chapter, a relevant property transaction is taken to have effect when the property concerned becomes held by another person or subject to a trust or as otherwise provided by this section.
(2) A relevant property transaction consisting of circumstances described in section 76 (2) (a), (c) or (d) is taken to have been entered into immediately before, and to take effect on, the person's death or the occurrence of the other event resulting in the person no longer being entitled to exercise the relevant power.
(3) A relevant property transaction consisting of circumstances described in section 76 (2) (b) or (e) is taken to have been entered into immediately before, and to take effect on, the person's death or the occurrence of the other event referred to in those paragraphs.
(4) A relevant property transaction that involves any kind of contract for which valuable consideration, though not full valuable consideration, is given for the person to enter into the transaction is taken to be entered into and take effect when the contract is entered into."
Fourthly, Succession Act, s 83 provides that a relevant property transaction must either disadvantage or fail to advantage the estate in identifiable ways. The provisions of s 83 are reproduced below:
"83 Disadvantage and other matters required before order can be made
(1) The Court must not, merely because a relevant property transaction has been entered into, make an order under section 80, 81 or 82 unless the Court is satisfied that the relevant property transaction or the holding of property resulting from the relevant property transaction:
(a) directly or indirectly disadvantaged the estate of the principal party to the transaction or a person entitled to apply for a family provision order from the estate or, if the deceased person was not the principal party to the transaction, the deceased person (whether before, on or after death), or
(b) involved the exercise by the principal party to the transaction or any other person (whether alone or jointly or severally with any other person) of a right, a discretion or a power of appointment, disposition, nomination or direction that, if not exercised, could have resulted in a benefit to the estate of the principal party to the transaction or a person entitled to apply for a family provision order from the estate or, if the deceased person was not the principal party to the transaction, the deceased person (whether before, on or after death), or
(c) involved the exercise by the principal party to the transaction or any other person (whether alone or jointly or severally with any other person) of a right, a discretion or a power of appointment, disposition, nomination or direction that could, when the relevant property transaction was entered into or at a later time, have been exercised so as to result in a benefit to the estate of the principal party to the transaction or a person entitled to apply for a family provision order from the estate or, if the deceased person was not the principal party to the transaction, the deceased person (whether before, on or after death), or
(d) involved an omission to exercise a right, a discretion or a power of appointment, disposition, nomination or direction that could, when the relevant property transaction was entered into or at a later time, have been exercised by the principal party to the transaction or any other person (whether alone or jointly or severally with any other person) so as to result in a benefit to the estate of the principal party to the transaction or a person entitled to apply for a family provision order from the estate or, if the deceased person was not the principal party to the transaction, the deceased person (whether before, on or after death).
(2) In this section:
"principal party to the transaction", in relation to a relevant property transaction, means the person who, under section 75 or 76, enters into the relevant property transaction."
There was little contest between the parties about whether this requirement had been satisfied in this case.
Finally, both parties advanced submissions about the general policy considerations that restrict the Court in making notional estate orders. The considerations of principal relevance are provided for in Succession Act, s 87, as follows:
"87 General matters that must be considered by Court
The Court must not make a notional estate order unless it has considered the following:
(a) the importance of not interfering with reasonable expectations in relation to property,
(b) the substantial justice and merits involved in making or refusing to make the order,
(c) any other matter it considers relevant in the circumstances."
Margaret submits that if the present circumstances would otherwise qualify for the making of a notional estate order that once the Court takes into account the mandatory considerations in Succession Act s 87, it should decline to make the orders Tina seeks.
Tina responds to each stage of Margaret's notional estate argument and Margaret in turn proffers a rejoinder to Tina's arguments. It is convenient to deal with these contentions together.
[5]
Analysis of the Notional Estate Issue
In this section the Court considers Tina's notional estate argument and evaluates Margaret's response under each of the steps set out above, formulated as questions below.
1. Is there a "relevant property transaction" to found a notional estate claim?
2. Is a notional estate order required to make an order for family provision?
3. Is any posited relevant property transaction one to which s 80 applies?
4. Did any posited relevant property transaction disadvantage the estate or fail to benefit the estate in a specified way?
5. Do any of the restrictions or protections in s 87 prevent the making of a notional estate order?
6. What is the effect of s90?
Relevant property transaction. The failure of the deceased to sever the joint tenancy was a relevant property transaction. Indeed it is one of the examples provided for in section 76 (2) (b). But so is the deceased's failure to renew a binding nomination in relation to the superannuation fund in favour of his estate. The deceased received no valuable consideration for not doing that act.
Is a notional estate order needed? In answer to Issue 3 below the court indicates that it proposes to make an order for provision out of the estate of the deceased in the plaintiff's favour. That order for the provision is in the sum of $275,000 plus costs. There is only approximately $50,000 in the estate. A notional estate order is needed to satisfy the order made in the plaintiff's favour.
Does Section 80 apply? In my view section 80(2)(c) applies to one of these relevant property transactions The interest in the Austral property passes by survivorship to Margaret and thus takes effect on the deceased death. But that is not the moment at which any transaction involving the corporate trustee of the superannuation fund takes effect. The failure to renew the SIS Act nomination occurs on 1 July 2011 within 3 years of the deceased's death. But s 80(2) (a) does not apply as the deceased on the evidence appears merely to have overlooked renewing the SIS Act nomination. He did not intend to limit provision being matter out of his estate under the Succession Act by failing to renew the SIS Act nomination. He seems to have assumed in fact that it was still in place when he made his will.
Did any relevant property transaction fail to benefit the estate or disadvantage the estate? Both these relevant property transactions directly disadvantaged the deceased's estate. They respectively denied the estate the value and benefit of the deceased heart interest in the Austral property and the deceased interest in superannuation fund.
Do any Section 87 restrictions apply? Margaret raises section 87 considerations. But in my view none of them prevent the Court designating the Austral property as notional estate. And the deceased's interest in the superannuation fund already otherwise fails to qualify as notional estate.
The law with respect to section 87 has recently been restated by the Court of Appeal. The Court must consider the reasonable expectations of the defendant whose property is sought to be designated as notional estate, those of the deceased and also those of the plaintiff, the claimant for family provision relief: Phillips v James [2014] NSWCA 4.
Margaret submits that she has made substantial financial and non-financial contributions at the Austral property in raising their own and the deceased's children, tending to Adam Carr special needs and contributing to the upkeep of that property. Without detailing her evidence I accept that she has put very substantial work into and made contributions to this property over all the years of their relationship. I accept that she assisted the deceased in his business by providing her labour which contributed to the profitability of the business and freed up capital and income so that they as a couple could invest in the Austral property.
This does not mean that she is entitled to the whole of the property. During the marriage the deceased was entitled to sever the joint tenancy as he indeed proposed and to deal with his half of the property in his own way within his well. That indeed is what he thought he was free to do. The deceased's expectations also have to be taken into account and in this case they were clear: he wanted her Tina to have a one third share of his interest in the Austral property. They were also communicated to the plaintiff who shared those expectations.
Section 90 considerations. The will with another time application such as the present it is necessary for the court to consider whether there are special circumstances justify the making of a notional estate order. In my view there clearly are this case because of the deceased's obvious misconception that the will would operate in circumstances where the joint tenancy had been severed. It is only because of that misconception that Tina did not obtain a substantial benefit under the will anyway.
For the reasons given, the Court will make a notional estate order over the deceased's interest in the Austral property.
At this point some brief consideration of Adam's interests is appropriate. He was independently advised in the course of the proceedings by Mr Poole, to whom he gave clear instructions not to make a claim for family provision under the Succession Act. He submits that Adam has been denied the benefit of certain chattels that the deceased directed in his will to be sold and that Adam would probably not have benefit of the deceased bank accounts after these proceedings. He recorded that the deceased superannuation entitlement as at 30 June 2013 was $565,393.99 and that Margaret signed a cheque in own favour to pay the deceased's fund to herself for $673,878.80.
Margaret submits that in the absence of a family provision act application it is difficult to make any orders in Adam's favour. Despite Mr Poole's powerful submissions I agree with Margaret's submissions on this aspect. As Adam is not bringing any proceedings it is not appropriate in substance to reverse the distribution to Margaret from the superannuation fund by now trying to use Succession Act section 66 orders.
[6]
Issue 3: Should an Order for Provision be made?
The plaintiff claims she has been left without adequate provision from the deceased's estate and notional estate for her maintenance, education and advancement in life. In my view she has.
[7]
Applicable Principles - "Eligible Person" Succession Act, s 57
The applicable legal principles are not in contest. For an order for provision to be made under Succession Act, s 59 in favour of an applicant, the Court must be satisfied that the applicant is an "eligible person" within Succession Act, s 57. As a child of the deceased, the plaintiff is an "eligible person": Succession Act, s 57(1)(c).
[8]
Applicable principles - Adequate Provision
The final question in this section relates to whether an order for provision should be made in the plaintiff's favour. The test of whether provision should be made in any case is set out in Succession Act s 59(1)(c):-
"(1) The Court may, on application under Division 1, make a family provision order in relation to the estate of a deceased person, if the Court is satisfied that:
…
(c) at the time when the Court is considering the application, adequate provision for the proper maintenance, education or advancement in life of the person in whose favour the order is to be made has not been made by the will of the deceased person, or by the operation of the intestacy rules in relation to the estate of the deceased person, or both."
There are many judicial statements summarising the operation of what is said to be a two-step provision. For example in Singer v Berghouse (No. 2) (1994) 181 CLR 201 at 209, the High Court of Australia said of the test under the previous legislation:-
"The first question is, was the provision (if any) made for the applicant "inadequate for [his or her] proper maintenance, education and advancement in life"? The difference between "adequate" and "proper" and the interrelationship which exists between "adequate provision" and "proper maintenance" etc. were explained in Bosch v Perpetual Trustee Co8. The determination of the first stage in the twostage process calls for an assessment of whether the provision (if any) made was inadequate for what, in all the circumstances, was the proper level of maintenance etc. appropriate for the applicant having regard, amongst other things, to the applicant's financial position, the size and nature of the deceased's estate, the totality of the relationship between the applicant and the deceased, and the relationship between the deceased and other persons who have legitimate claims upon his or her bounty.
The determination of the second stage, should it arise, involves similar considerations. Indeed, in the first stage of the process, the court may need to arrive at an assessment of what is the proper level of maintenance and what is adequate provision, in which event, if it becomes necessary to embark upon the second stage of the process, that assessment will largely determine the order which should be made in favour of the applicant. In saying that, we are mindful that there may be some circumstances in which a court could refuse to make an order notwithstanding that the applicant is found to have been left without adequate provision for proper maintenance. Take, for example, a case like Ellis v Leeder9, where there were no assets from which an order could reasonably be made and making an order could disturb the testator's arrangements to pay creditors."
Whether the two-step test operated with the same full vigour in the current legislation has been recently discussed in the Court of Appeal: Evans v Levy [2011] NSWCA 125. But such considerations are not an issue in this case, which is a clear one on the question of whether or not adequate provision has been made for Bradley and Scott, once they have been shown to be eligible persons.
Other authorities explain in greater detail the meaning of the words in the legislation "adequate", "proper", and "advancement in life". Some of these authorities have been conveniently collected in the decision of Hallen AsJ in Drury v Smith [2012] NSWSC 1067 at [153], [154], [155], [158] and [160], which relevantly provides:-
"[153] Master Macready (as his Honour then was) in Stiles v Joseph (NSWSC, 16 December 1996, unreported) said, at 14-16:
"Apart from the High Court's statement that the words 'advancement in life' have a wide meaning and application ... there is little (if any) case law on the meaning of 'advancement' in the context of family provision applications. Zelling J in In The Estate of Wardle (1979) 22 SASR 139 at 144, had the same problem. However, commonly in decisions in which the Applicant's 'advancement in life' has been in issue, the Court has looked only at the material or financial situation of the Applicant, and there is nothing to suggest that provision for the Applicant's 'advancement in life' means anything more than material or financial advancement. For example, in Kleinig v Neal (No 2) [1981] 2 NSWLR 532, Holland J, discusses the financial assistance which an applicant may need for his or her maintenance and advancement in life in the following terms:- If the court is to make a judgment as to what a wise and just testator ought to have done in all the circumstances of the case, it could not be right to ignore that the particular testator was a wealthy man in considering what he ought to have done for his widow or children in making provision for their maintenance, education or advancement in life. There are different levels of need for such things. In the case of maintenance and advancement in life they can range from bare subsistence up to anything short of sheer luxury. A desire to improve one's standard of living or a desire to fulfil one's ambition for a career or to make the fullest use of one's skills and abilities in a trade or business, if hindered or frustrated by the lack of financial means required for the fulfilment of such desire or ambition, presents a need for such assistance and it would seem to me that it is open to a court to say, in the case of a wealthy spouse or parent who could have but has failed to provide such financial assistance, that ... [the deceased] has failed to make adequate provision for the proper maintenance and advancement in life of the spouse or children who had such need. (at 541)
In Pilkington v Inland Revenue Commissioners [1964] AC 612, Viscount Radcliffe defined 'advancement', in the context of a trustee's powers, as 'any use of ... money which will improve the material situation of the beneficiary' (at 635), and this definition was cited with approval by Pennycuick J in Re Clore's Settlement Trust; Sainer v Clore [1966] 2 All ER 272 at 274...
In Certoma, The Law of Succession In New South Wales (2nd Ed) at 208, it is said:
'Although 'maintenance' does not mean mere subsistence, in the context of the New South Wales Act, it probably does not extend to substantial capital investments such as the purchase of a business, an income-producing property or a home for the Applicant because these forms of provision are more likely to be within the power of the Court under 'advancement in life'. Maintenance is rather concerned with the discharge of the recurrent costs of daily living and not generally with substantial capital benefit.'
The Queensland Law Reform Commission, in its Working Paper on Uniform Succession Laws: Family Provision (Working Paper 47, 1995) ... notes ... that:
'Whereas support, maintenance and education are words traditionally associated with the expenditure of income, advancement has been associated with the expenditure of capital, such as setting a person up in business or upon marriage.'"
[154] In Mayfield v Lloyd-Williams [2004] NSWSC 419, White J at [114] noted:
"In the context of the Act the expression "advancement in life" is not confined to an advancement of an applicant in his or her younger years. It is phrase of wide import. (McCosker v McCosker (1957) 97 CLR 566 at 575) The phrase "advancement in life" has expanded the concept used in the Victorian legislation which was considered in Re Buckland permitting provision to be made for the "maintenance and support" of an eligible applicant. However Adam J emphasised that in a large estate a more extravagant allowance for contingencies could be made than would be permissible in a small estate and still fall within the conception of maintenance and support."
[155] In Bartlett v Coomber [2008] NSWCA 100, at [50], Mason P said:
"The concept of advancement in life goes beyond the need for education and maintenance. In a proper case it will extend to a capital payment designed to set a person up in business or upon marriage (McCosker v McCosker (1957) 97 CLR 566 at 575; Stiles v Joseph, (NSW Supreme Court, Macready M, 16 December 1996); Mayfield v Lloyd-Williams [2004] NSWSC 419)."
…
[158] Dixon CJ and Williams J, in McCosker v McCosker (1957) 97 CLR 566 at 571-572, after citing Bosch v Perpetual Trustee Co Ltd, went on to say, of the word 'proper', that:
"It means "proper" in all the circumstances of the case, so that the question whether a widow or child of a testator has been left without adequate provision for his or her proper maintenance, education or advancement if life must be considered in the light of the competing claims upon the bounty of the testator and their relative urgency, the standard of living his family enjoyed in his lifetime, in the case of a child his or her need of education or of assistance in some chosen occupation and the testator's ability to meet such claims having regard to the size of his fortune. If the court considers that there has been a breach by a testator of his duty as a wise and just husband or father to make adequate provision for the proper maintenance education or advancement in life of the applicant, having regard to all these circumstances, the court has jurisdiction to remedy the breach and for that purpose to modify the testator's testamentary dispositions to the necessary extent."
…
[160] In Vigolo v Bostin [2005] 221 CLR 191, at 228, Callinan and Heydon JJ said:
"[T]he use of the word "proper" ... implies something beyond mere dollars and cents. Its use, it seems to us, invites consideration of all the relevant surrounding circumstances and would entitle a court to have regard to a promise of a kind which was made here...The use of the word "proper" means that attention may be given, in deciding whether adequate provision has been made, to such matters as what use to be called the "station in life" of the parties and the expectations to which that has given rise, in other words, reciprocal claims and duties based upon how the parties lived and might reasonably expect to have lived in the future.""
The Court must now decide what, if any, is appropriate provision in this case.
[9]
Tina's relationship with the deceased and other matters
I accept Tina's evidence of the good quality of her relationship with the deceased. Apart from what she says, there is some objective evidence in the will that the deceased felt sentimental attachment to the fact that Tina had chosen a career in the Army reserve after he too had served in the defence force. He gave her in the will his slouch Hat and service medals (clause 4(a)).
But in an affidavit of May 2015, filed shortly before the proceedings commenced, Margaret gave detailed evidence about the deceased's medical care in the last few years of his life. I accept her evidence that she was quite closely involved in his care as he battled with cancer in this period. But she alleged that Tina was estranged from the deceased and did not visit him in hospital except for the last eight or nine days of his life. Whilst I do accept her evidence about the closeness of her own care of the deceased, I do not accept her evidence about Tina's estrangement in this period. There was too much antipathy on Margaret's part against Tina for her to be a witness that the Court could rely upon on such an issue.
The Court has no doubt about the depth of Tina's feelings about her father and her closeness to him. On a number of occasions when giving evidence she became visibly upset when asked questions about him. This is hardly the reaction of someone who was estranged from and not caring about her father. This is another reason why I do not accept Margaret's late account of Tina's alleged estrangement from her father in the last two years of his life and of her alleged failure to go and see him in hospital.
Moreover Margaret could not have been with the deceased all the time in the last few years of his life. She was hardly in a position to deny that Tina had regular contact with her father in this period. Given a state of their relationship it is hardly likely that Tina would have chosen to visit the deceased when Margaret was there. And Tina's account that the quality of her relationship with the father persisted right up until his death is, corroborated by witnesses such as Mr Douglas.
But it is also corroborated by two witnesses who were not cross-examined, Mr Dennis Whitfield and Mr Paul Gabriel, whose evidence I accept. They were both close to the deceased for different reasons. Mr Whitfield had been a friend of the deceased for over 30 years. He and the deceased would see one another three or four times a week and their relationship was sufficiently close that the deceased would share confidences with him. He says and I accept "Tina visited her father regularly in hospital and I would see her with him". He recalled that on the deceased's last admission to hospital "I observed Tina nursing Alan, keeping him comfortable and staying with him." And Mr Whitfield recalled the deceased recognising his relationship with Tina in words "I got to make sure I make a will so that Adam is looked after and Tina gets her share." I infer from this that the deceased was concerned that if he did not specifically provide for Tina in his will that she might miss out and that he wanted to ensure that she was provided for. This does not reflect any concern on the deceased's part about the quality of Tina's relationship with him.
Paul Gabriel was the deceased's stepson. He was born to Heather before she met the deceased. He says that he had a closer relationship with the deceased than he did with his own father. Paul Gabriel was a close observer of tensions between Tina and Margaret. He points out that Tina bears a strong resemblance to Heather, their late mother, and that Margaret has said to him (about Tina) words to the effect "I can't stand her" and has called her offensive names in his presence on a number of occasions. The deceased confided in him about his relationship with Margaret "things are not good between us". The deceased did share some of his testamentary intentions with Paul Gabriel. He made clear to him that he wanted his superannuation to go to Adam but that "the house is going to be split between Margaret and the kids" I infer from such statements and from clause 6 of the will itself that the deceased assumed that he would be in a position to devise his interest in the Austral property to, among others, Tina. And that he wanted to do so and he saw no reason to give Tina any less than his other children.
As to other issues, much of Margaret's evidence about her contributions to the relationship with the deceased and her care for Adam can be accepted and are accepted by the Court. She does not have to justify what she received under the will, or by operation of law.
But also accept Tina's account of her early life with the deceased. To the extent that Tina's evidence conflicts with Margaret's about events in the household and the quality of early relationships in the household, I prefer Tina's evidence. But such issues are not decisive in this case. It is Tina's financial circumstances show that she is in need of capital and provision out of the deceased's estate.
[10]
Tina Carr's Financial Circumstances
I accept that Tina's current financial circumstances is as follows:
Assets Amount
Home - Endeavour Street, Ruse $530,000.00
Subaru Forrester $15,000.00
Bank Account $10,210.00
Furniture and Electrical $10,000.00
Superannuation - Local Government $72,898.00
Superannuation - Military Super $16,874.00
Personal Effects $8,000.00
Total assets: $662,982.00
Liabilities
Mortgage $271,753.00
University HECS debt $11,157.00
Credit Card debt $8,541.00
Total liabilities $291,451.00
NET ASSETS $371,531.00
[11]
Tina gave evidence that her gross monthly income is approximately $2,794.00. This includes a sickness benefit from Centrelink paid fortnightly in the sum of $534.20. Her estimated monthly expenses are summarised as follows:
Item Amount
Mortgage repayments $1,620.00
Household maintenance $220.00
House and Contents Insurance $134.00
Food $500.00
Utilities $566.00
Motor vehicles $1,148.00
Medical $205.00
Education $120.00
Discretionary spending $806.00
TOTAL $5,319.00
[12]
Margaret Carr's Financial Circumstances
Margaret's current financial circumstances were` originally stated in her affidavit evidence as follows:
Assets Amount
Home - Prairie Avenue, Upper Coomera $530,000.00
House and Contents $25,000.00
Adapted Car $30,000.00
Investments - comprising surplus from Austral Property and Superannuation Death Benefit after relocation costs, legal costs, furniture purchases and house adaptations $670,000.00
Superannuation $370,000.00
Total assets: $1,625,000.00
Liabilities
Total liabilities: $0.00
NET ASSETS $1,625,000.00
[13]
Margaret gave evidence that her gross monthly income is $3,600. Her estimated monthly expenses are summarised as follows:
Item Amount
Household maintenance $370.00
House and Content Insurance $120.00
Food $1,500.00
Utilities $465.00
Motor vehicles $426.00
Special Needs for Adam $200.00
Discretionary spending $850.00
TOTAL $3,931.00
[14]
But Margaret later amended her summary of assets and liabilities to indicate that she had total assets of $2,231,353 and liabilities of a little over $3000.
[15]
Costs
The pre-trial estimates indicate that the plaintiff, Tina's costs on the ordinary basis are in the amount of $45,200.00 and on the indemnity basis are in the amount of $54,240.00. Whereas the defendant, Margaret's costs on the ordinary basis are in the amount of $32,000 and on the indemnity basis in the amount of $40,000.
[16]
Consideration
Tina submitted that sufficient provision should be made to enable her to discharge the mortgage debt secured over her home, to pay off her current HECS debt, her credit card debt and to provide a fund for contingencies, all of which would sum to an amount of approximately $350,000. She submits is an asset minimum award that she should be entitled to one sixth of the net proceeds of the Austral property which would be approximately $194,000 to assist her in reducing her mortgage debt and reducing the current deficit she suffers between income and expenditure.
In my view it would be too much to make an award in the plaintiff's favour, which when taken together with costs, would amount to about $400,000. That would represent a very substantial portion of the deceased's half interest in the Austral property. It was clear that the deceased wanted to benefit his other children as well through this property.
Margaret submits that no order should be made in the plaintiff's favour or in the alternative, an order far less than the one she now seeks.
But there is much force in the plaintiff's submission that she should receive a sum that will give her real underlying financial security. In my view that would be a sum that would pay off her mortgage. She otherwise has a good income and her other debts can be managed over time. Accordingly I decided that a legacy should be awarded in the plaintiff's favour in the sum of $275,000.
It is unclear exactly what order is wanted in relation to the third defendant's costs upon this outcome. Moreover, the Court assumes that the estate has not incurred any costs because the proceedings are being defended by the third defendant. For that reason no special costs order is probably required with respect to the estate. But if this is wrong, liberty to apply will be granted.
[17]
Orders
For the reasons given the Court orders, as follows:
1. Extend time under Succession Act s58(2) up to and including 14 May 2014 to allow the plaintiff to bring these proceedings for provision out of the deceased's estate;
2. Pursuant Succession Act Chapter 3.2 designate the deceased's joint interest (and the proceeds of sale thereof) in the Austral property as notional estate of the deceased for the purposes of making orders under Succession Act Chapter 3.
3. The Court orders that the plaintiff, Tina Carr, be granted a legacy of $275,000 out of the estate and the notional estate of the deceased.
4. Order that the plaintiff's costs of these proceedings paid out of the estate and the notional estate of the deceased.
5. Order that if the issue of the third defendant's costs cannot be resolved but the parties are at liberty to relist the matter to argue about her costs by contacting my associate.
6. Exhibits may be returned.
7. Grant liberty to apply in relation to the implementation and if necessary the further formulation of these orders.
[18]
Amendments
10 August 2016 - catchwords - changed "decease's" to "deceased's"
paragraph [17] - changed "to have an independently" to "to have Adam independently"
paragraph [19] - changed "the car family" to "the Carr family"
paragraph [34] - deleted "as is explained later in these reasons"
paragraph [97] - changed "and the provision out of the US a deceased estate" to "and provision out of the deceased's estate"
16 August 2016 - corrected decision date in coversheet
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 16 August 2016