Jurisdiction : SUPREME COURT OF WESTERN AUSTRALIA

Citation : STOKES -v- COLLINS & LEWIS [2014] WASC 182

Family Provision Act 1972 (WA) - Adequate provision for proper maintenance, support, education and advancement in life - Two stage process - Whether jurisdictional question satisfied - Relative needs of claimant as compared to named beneficiaries - Obvious need of claimant

Bondelmonte v Blanckensee [1989] WAR 305

In Re Allen (dec); Allen v Manchester [1922] NZLR 218

Maas v O'Neill [2013] WASC 379

Singer v Berghouse [1994] HCA 40; (1994) 181 CLR 201

Stokes v Collins & Lewis [2014] WASC 182

Vigolo v Bostin [2005] HCA 11; (2005) 221 CLR 191

1 MARTIN CJ: The time for commencement of this appeal should be extended, the appeal allowed, and the orders proposed by Chaney J with respect to the distribution of the testator's estate and the costs of the proceedings made, for the reasons given by Chaney J, with which I agree.

3 CHANEY J: On 27 May 2014, the Master dismissed an application by the appellant under s 6(1) of the Family Provision Act 1972 (WA) (which was formerly cited as the Inheritance (Family and Dependants Provision) Act 1972 (WA)) (Family Provision Act) in which she sought financial provision from the estate of her late mother Ethel May Lewis (the testator): Stokes v Collins & Lewis [2014] WASC 182. The Master also ordered the appellant to pay the respondents' costs up until 28 days after a Calderbank offer had been made, and thereafter to pay the respondents' costs on an indemnity basis. The Master based his decision to dismiss the application on his finding that the appellant had failed to establish that, in the circumstances of the case, adequate provision had not been made for the appellant's proper maintenance, support, education or advancement in life. That is, she had failed to satisfy what is commonly referred to as the 'jurisdictional question', which must be answered affirmatively in order to enliven the court's discretion to alter the effect of the terms of a will. The Master concluded that, had he determined the jurisdictional question in favour of the appellant, then, in the exercise of his discretion, he would have divided the estate equally between the appellant and the second respondent as to one third each, and the third respondents as to one-third.

4 On 18 July 2014, the appellant lodged an appeal notice. An extension of time for lodgement of that appeal is required. On 10 October 2014, Newnes JA referred the application for an extension of time to the hearing of the appeal.

5 For the reasons which follow, an extension of time should be granted, the appeal allowed, the Master's orders set aside, orders made varying the will so as to provide for a distribution in accordance with the division of the estate which the Master would have determined if the jurisdictional question was satisfied, and appropriate costs orders should be made.

6 These proceedings concern a very modest estate. The statement of assets and liabilities filed in the proceedings puts the net value of the estate at $221,637.05.

7 After delivery of the Master's decision on 27 May 2014, the appellant's solicitors promptly advised her that the time within which an appeal was to be instituted was 21 days. At that point there had not been a decision with respect to costs, and the Master had requested written submissions on that issue following delivery of his reasons. The parties filed submissions in accordance with that direction and, on 17 June 2014, the Master made the costs orders to which I have referred above.

8 The following day, the appellant met with her solicitors and instructed them to initiate without prejudice discussions concerning all matters arising in respect of the estate. On 10 July 2014 the appellant's solicitors advised her that the without prejudice discussions had concluded without an agreed resolution, and she then instructed her solicitors to proceed to file a notice of appeal and an application for extension of time. As noted above, the appeal notice was filed on 18 July 2014, approximately one month after the time limited for appeal.

9 Having regard to the size of the estate, and the potential for legal costs to become disproportionate to the amount in issue, it was not unreasonable for the appellant to await first the outcome of the Master's decision in respect of costs, and then the outcome of the without prejudice negotiations, no doubt designed to avoid the costs of an appeal, before instituting her appeal. Although the decision to await those matters was made with knowledge of the time limit, the proportionality of the cost of an appeal to the amount to be gained by a successful appeal was undoubtedly affected by the outcome of the costs decision. Similarly, an attempt to negotiate matters related to the estate before embarking on an appeal was a proportionate response having regard to the size of the estate. Having regard to those matters and to the merits of the appeal, which are dealt with below, it is in the interests of justice that an extension of time to lodge an appeal notice be granted.

10 The testator died at the age of 88. Her estate essentially comprised a residential unit in Bunbury. She was survived by five adult children, none of whom were dependent upon her as at the date of her death. Those children are Vicki Dean (the appellant), Judith Stokes, Ray Lewis, Beverly Collins and Kerry Lewis. Kerry Lewis is married to Ave Lewis.

11 The testator left half of her estate to Kerry and Ave Lewis (the third respondents), and half to Beverley Collins, the second respondent. By her will the testator made no provision for her son Ray Lewis, her daughter Judith Stokes or the appellant, Vicki Dean. The application under the Family Provision Act was initially commenced by Judith Stokes and Vicki Dean. Judith Stokes did not pursue the matter to a final hearing. Ray Lewis made no claim to a share of the estate.

12 The will referred to the failure to make provision for three of the testator's children, declaring that the beneficiaries had devoted considerable time in helping the deceased in recent years.

13 After identifying the relationships of the parties and the terms of the will, the Master noted that the estate was small and, after taking into account various liabilities, concluded that it was unlikely that the estate would have a net value much over $200,000. He then identified the respective financial positions of Vicki Dean, Beverley Collins and Kerry Lewis in the following terms:

Vicki is 60 years of age. She is unmarried and not in a relationship. She is employed part-time as an aged care worker at the Peter Arney Aged Care Facility in Salter Point. She works 39 hours per fortnight. She supplements her income by having live-in student lodgers and by working weekend shifts. She has a degenerative lower back condition and osteoarthritis of a knee which will require surgery. Because of these problems she has reduced her working hours.

Vicki owns a parcel of land at 29 Isaac Moore Drive, Moore Park Beach, Queensland. She estimates its value at $149,000. That asset was received by her as part of a settlement of matrimonial proceedings with her ex-husband. She has bank savings of $20,000, a modest vehicle and superannuation of $30,000. All of these details are taken from two affidavits sworn by her and which were marked exhibits 4 and 5.

Beverley is 63 years of age. She has been married since 1969. Her main asset is an interest in a house she shares with her husband. She values that asset at $200,000. (It is not entirely clear from the evidence whether that is the value of her half interest or the total value of the property. For present purposes I will assume it is the value of her half interest.) She says she has a mortgage of $125,000 and income of $28,000 per year. This income is derived from a small business she runs with her husband. She does not have any superannuation entitlement.

Kerry is 68 years of age. He has a residential property he shares with his wife which he values at $300,000. He has superannuation of $81,213.40. He has an income of $20,800 per annum. This is derived from a small business he runs with his wife [6] - [9].

14 The Master noted that cross-examination had revealed that the financial position of each of the parties was slightly better than the affidavit material had suggested, but nevertheless concluded that each of the parties is of 'modest circumstances', and that 'the competing needs of each is obvious'.

15 The Master then referred to the principles relating to applications under the Family Provision Act which were summarised by Pritchard J in Maas v O'Neill [2013] WASC 379. There her Honour identified the two stage process involved. That process requires the Court first to determine the 'jurisdictional question' as to whether adequate provision was made for an applicant's proper maintenance, support, education or advancement in life, and then, if that question is satisfied, to exercise the discretion as to what award should be made to ensure adequate provision for proper maintenance, support, education or advancement.

16 Having set out the approach to be taken, the Master continued:

In my view Vicki has not satisfied the jurisdictional question. Her needs are no greater than the beneficiaries under the Will. There is no particular aspect of her circumstances which compels a decision the Will must be amended in her favour. Nor is there anything to suggest that she has a particular moral claim as that term is so often used in various judgments. In my view there is no reason why the Will should be disturbed [15].

17 The Master then added 'for the sake of completeness', that had he determined the jurisdictional question in favour of the appellant, then, in the exercise of his discretion, he would have divided the estate equally between Vicki Dean and Beverley Collins as to one-third each, and the remaining one-third to Kerry and Ave Lewis jointly. He added, '[t]o my mind there is no other way in which the matter could be fairly resolved'.

19 The first asserts that the Master made an error of law in determining that the appellant had not satisfied the jurisdictional question because she had not established that her needs were greater than those of the beneficiaries under the deceased's will.

20 The second ground asserts that the Master made an error of fact by determining that the appellant's needs were no greater than those of the beneficiaries under the will.

21 The third ground asserts, in effect, that the failure to find the jurisdictional question satisfied was, having regard to the error of fact asserted in ground 2, so unjust as to amount to a failure to properly exercise the discretion reposed in the court.

22 Ground 4 challenges the orders for costs made by the Master.

23 Section 6(1) of the Family Provision Act provides:

(1) If any person (in this Act called the deceased) dies, then, if the Court is of the opinion that the disposition of the deceased's estate effected by his will, or the law relating to intestacy, or the combination of his will and that law, is not such as to make adequate provision from his estate for the proper maintenance, support, education or advancement in life of any of the persons mentioned in section 7 as being persons by whom or on whose behalf application may be made under this Act, the Court may, at its discretion, on application made by or on behalf of any such person, order that such provision as the Court thinks fit is made out of the estate of the deceased for that purpose.

24 As the passage from Maas v O'Neill cited by the Master notes, in assessing claims under s 6 of the Family Provision Act the court is required to undertake a two-stage process: see Bondelmonte v Blanckensee [1989] WAR 305, 307 (Malcolm CJ); Vigolo v Bostin [2005] HCA 11; (2005) 221 CLR 191, 212 - 213 [56] (Gummow & Hayne JJ); Singer v Berghouse [1994] HCA 40; (1994) 181 CLR 201, 208 - 209 (Mason CJ, Deane & McHugh JJ). The first stage requires the court to determine whether the applicant has been left without adequate provision for his or her proper maintenance, support, education or advancement in life. If the court resolves that issue affirmatively, its discretion to make an order under s 6 of the Family Provision Act is enlivened. The first stage of the 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, support, education or advancement 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: Singer v Berghouse (209 - 210).

25 In this case, no provision was made in the deceased's estate for the maintenance, support or advancement in life of the appellant. There was no suggestion of any disentitling conduct on the appellant's behalf. As the Master correctly noted, nothing in the legislation requires a different approach when dealing with a small estate: see In Re Allen (dec); Allen v Manchester [1922] NZLR 218, 221 (Salmond J).

26 As I have noted, the Master found that each of Vicki Dean, Beverley Collins and Kerry Lewis had financial needs which were 'obvious'. However, he concluded that the appellant had not satisfied the jurisdictional question because her needs were no greater than the beneficiaries named under the will, and no particular aspect of her circumstances compelled a decision to amend the will in her favour. In reaching that conclusion, the Master asked himself the wrong question or applied the wrong test. It is not necessary, in order to satisfy the jurisdictional question, that an applicant demonstrate that her or his needs are greater than the named beneficiaries under the will. The appellant established at trial that her financial position was such that her need for assistance was 'obvious' and that, as the Master found, she was a loving daughter who visited her mother as and when she could. The will made no provision for her. It thus failed to make adequate provision for her maintenance, support or advancement in life. The Master should have found that the jurisdictional question was answered in the appellant's favour.

27 In determining the jurisdictional question on the basis of a failure to demonstrate a greater need than the beneficiaries under the will, the Master was in error. Ground 1 of the appeal should be upheld.

28 All parties to the appeal accepted that, if the appeal were to succeed on ground 1, then the Master's provisional assessment as to the division of the estate should stand. In those circumstances, it is unnecessary to consider ground 2 which asserts that the Master made an error of fact in determining the relative needs of the appellant and the respondents, or ground 3 which is predicated on ground 2 being established.

29 Ground 4 of the appeal challenges the orders made by the Master with respect to costs. Since the foundation for those orders was the decision to dismiss the application, it follows that they should be set aside. At the hearing of the appeal the parties were ordered to, and subsequently did, file written submissions in relation to costs in the event that the appeal was successful.

30 On 24 July 2013, the respondents made a Calderbank offer through their solicitors by which they offered the appellant $20,000 inclusive of costs in full and final settlement of her claim. The appellant rejected that offer by a letter from her solicitors dated 31 July 2013. The appellant then made a counter-offer to the effect that she receive 30% of the residuary estate and that each party bear their own costs of the proceedings. The appellant will receive 33% of the residuary estate as a result of her success on appeal, thereby achieving a more favourable outcome than that which she offered to accept on 31 July 2013.

31 The substantive dispute in these proceedings was between the appellant and the nominated beneficiaries of the estate.

32 The appellant's primary submission on costs is that she should receive from the second and third respondents all of her costs of the proceedings at first instance and the costs of the appeal. That is so notwithstanding that in the appellant's case, filed prior to the hearing of the appeal, she sought an order that the cost of all parties of the first instance proceedings be paid out of the estate of the deceased, and the respondents pay the appellant's costs of the appeal. The respondents submit that, in the event that the appeal is successful, those orders should be made.

33 It is not apparent from the materials before the court precisely when the appellant first quantified her claim. The case which the appellant ran at trial was directed to the proposition that she should receive approximately $100,000, or almost half of the estate. It is clear, however, that, as at 31 July 2013, the appellant indicated a preparedness to accept 30% of the estate in satisfaction of her claim. In my view, the respondents should not have to bear the appellant's costs of the proceedings prior to the time at which they could have been expected to accept the appellant's offer to resolve her claim in this way - namely, 28 days after the offer was made. However, the appellant has succeeded in recovering an amount greater than she offered to accept in July 2013, and should recover from the second and third respondents her costs thereafter.

34 In relation to the question of whether the appellant's costs should be borne by the estate or by the beneficiaries named in the will, it is now the general policy of the court to order that the costs of proceedings under the Family Provision Act be borne by the beneficiaries or claimants who were unsuccessful in the proceedings. The reasons for that policy are exemplified by this case. First, an order that the costs be paid out of the estate would, in effect, have the consequence that the successful appellant would be bearing one-third of her own costs. Second, the substantive parties to the dispute which was litigated were the appellant and the named beneficiaries. As the named beneficiaries were unsuccessful in their opposition to the appellant's claim, there is no reason why the usual practice as to costs should not apply, with the consequence that they should be ordered to pay the appellant's costs.

35 For these reasons, the appropriate order is that the second and third respondents should pay the appellant's costs of the proceedings at first instance from 28 August 2013, and they should pay the appellant's costs of the appeal, such costs to be taxed if not agreed. The parties should bear their own costs of the proceedings at first instance up to 28 August 2013.

36 There should be orders that the time for lodgement of the appeal notice be extended to 18 July 2014, the appeal be allowed and the will of the deceased varied so as to provide that the residue of the estate be divided as to one third each for the appellant and Beverley Collins, and one third to Kerry and Ave Lewis jointly. The executors should be ordered to produce the grant of Probate (with the will annexed) of Ethel May Lewis to the probate registry of the court in order for a certified copy of the orders made in the appeal to be included in the grant of Probate. The second and third respondents should be ordered to pay the appellant's costs of the proceedings before the Master as from 28 August 2013 and the appellant's costs of the appeal, to be taxed if not agreed. The parties should bear their own costs of the proceedings at first instance up to 28 August 2013.