[2013] VSCA 208

Fanning v Harding [2013] VCC 570, Judge Kings

ADMINISTRATION AND PROBATE - Application for an extension of time to seek provision from deceased's will under s 91 of the Administration and Probate Act 1958 - Applicant sister of the deceased - Delay in lodging s 91 application caused by error on part of applicant's solicitors - Care provided during terminal illness - Arguable case that relationship between applicant and deceased attended by special circumstances which went beyond ordinary sibling relationship - Financial needs of applicant considered - Leave to appeal granted - Appeal allowed.

No oral hearing. By consent the matter was decided having regard to the written materials filed by the parties.

1 By summons dated 11 June 2013, the applicant, Frances Louise Fanning ('Fanning'), seeks leave to appeal an order of the County Court dismissing her application for an extension of time to commence proceedings under s 91 of the Administration and Probate Act 1958 ('the Act'), for provision under the will of her deceased sister.[1] The will appointed Mr Glen Harding ('Harding'), who was the deceased's son and is the respondent to these proceedings, as executor.

2 The summons is opposed by Harding who seeks costs or alternatively indemnity costs against Fanning.

3 The parties have consented to dispensing with an oral hearing of the leave to appeal application and have also consented to dispense with an oral hearing of the appeal, if leave were to be granted. The President has provided a determination under s 11(1A) of the Supreme Court Act 1986 that, for the purposes of this proceeding, two Judges of Appeal may constitute, and may exercise all the jurisdiction and powers of, the Court of Appeal.

4 Accordingly, for the reasons that follow, we have determined the application on the papers and consider that leave to appeal ought be granted. We have also determined the appeal and have concluded that the appeal ought be allowed.

5 Fanning's sister, Lillian Yvonne Kitchingman ('the deceased'), died on 4 February 2007, at the age of 67, leaving a will dated 2 September 2005. Harding was appointed not only as the executor of the deceased's will but also as the beneficiary of the entire residue of the estate, after payment of the usual testamentary expenses and repayment of a $35,000 loan from Fanning. The deceased also had an estranged daughter, who received no benefit under the will.

6 In January 2004 Fanning sold her property near Rosebud and moved to Loch Sport, Victoria, about 300 kilometres away, in order to be closer to her sister. At that time, she loaned $35,000 to her sister to pay for repairs to the deceased's house, a fact which is not disputed. In an affidavit in support of her application before the County Court, Fanning deposed that the deceased had ongoing problems with bowel cancer and depression for the twelve years before her death, which had made it difficult for her to take care of herself. This evidence was disputed by Harding, who deposed that his mother had had polyps removed from her bowel in the mid 1980s but had never been diagnosed with bowel cancer and did not suffer from depression, although she was incredibly lonely following the death of her husband in 1997.[2] Fanning and the deceased travelled to Europe together in December 2004, a trip which was paid for entirely by Fanning. The two of them also spent time together playing lawn bowls and cards and going out.

7 In July 2005, the deceased was diagnosed with terminal pancreatic cancer. Fanning suggested that the deceased stay with her overnight. Thereafter, the deceased lived with Fanning in Fanning's home. Up until her death, Fanning cared for her sister, provided food and maintenance, paid some of the accounts on the deceased's property, and took her to her medical appointments.

8 After the deceased died her original will was lost, and probate was only obtained of her copy will after Fanning applied to the Supreme Court, under s 15 of the Act, for Harding to show cause why he should not bring the will into Court and why he should not renounce probate. That proceeding was resolved by consent orders in December 2010.

9 Probate was granted to the executor on 1 July 2011. According to the inventory of assets and liabilities filed in support of the application for a grant of probate, the net estate left by the deceased was $126,650.22. The estate comprised the property in Loch Sport valued at $160,000, as well as $1,650.22 in a bank account, less the $35,000 owed to Fanning.

10 Pursuant to s 99 of the Act, the time for making an application under Part IV of the Act expired on 1 January 2012, six months after the grant of probate. By reason of the operation of the County Court Rules,[3] the Court vacation had the effect that time expired on 10 January 2012. On 23 February 2012, Fanning filed an originating motion seeking provision under Part IV from the estate of the deceased. Fanning had lodged a caveat over the Loch Sport property on 10 June 2010, claiming an interest in the estate in fee simple on the grounds of an alleged constructive trust, but the basis for the claim was unclear and the judge below found that the subsequent claim under Part IV contradicted the allegation of a constructive trust.[4]

11 Letters from Harding's solicitors dated 2 and 9 March 2012, and another letter of 6 July 2012, put Fanning on notice that an application for an extension of time would need to be made under s 99 if a Part IV claim were to go ahead. Despite this, Fanning did not issue such an application by summons until 19 April 2013.

12 Her Honour set out the principles relating to extension of time applications. They include consideration of the length of the delay, the explanation for the delay, the merits of the applicant's case and whether there would be prejudice to the beneficiaries if an application were successful. Her Honour also noted that no extension application can be granted if there has already been a final distribution of the estate, as such an extension would be futile. There had been no final distribution in this case.

13 The overriding principle guiding the discretion to grant an extension of time must be to enable the court to do justice between the parties.[5]

14 Here, the reasons for the delay in lodging the application for an extension of time were, firstly, an administrative error on the part of Fanning's solicitors caused by a computer problem and secondly, a period of negotiations between the parties. The judge took the view that, independently of any negotiations, a competent and prudent solicitor would have issued the application for an extension of time, at the latest, after he received Harding's letter on 9 March 2012. Her Honour therefore attributed the delay to the fault of Fanning's solicitors.[6]

15 Her Honour held that the prospects of Fanning's claim being successful 'cannot be characterized as strong',[7] based on the following facts:

• The modest size of the estate. Her Honour considered that if proceedings were allowed to continue, the estate would very quickly be diminished. She adopted the words of Kaye J in Stanley v State Trustees Limited:[8]

[I]f the plaintiff's application were granted, the estate would incur additional costs, which are disproportionate to the size of the estate. The plaintiff's claim is weak. The plaintiff has not, on the materials before me, produced any sufficient basis upon which an indulgence should be granted in his favour. In those circumstances, in the exercise of my discretion, I consider that the justice of the case requires that I refuse the application by the plaintiff for an extension of time within which to bring an application under Part IV of the Administration and Probate Act.

• Harding's relationship with the deceased, and his consequently greater claim to the estate as her son.

• Fanning's financial circumstances. Her Honour described the issue of 'need' as a 'threshold issue which must be demonstrated before the Court's jurisdiction under Part IV is enlivened', and noted that Fanning (who was aged 83 at the time of the hearing of the application) had a weekly tax-free pension of about $650, plus $150,000 in savings and the entitlement to repayment of the $35,000 out of the deceased's estate. Her Honour considered that this rendered it difficult for Fanning to demonstrate need in such circumstances.[9]

• Fanning's relationship with the deceased. Her Honour recognised that a critical issue in all Part IV cases is whether the relationship gives rise to the relevant moral duty to provide maintenance and support. Ordinarily, a sibling relationship will not be sufficient to provide a basis for a successful claim under Part IV,[10] and her Honour found that, although Fanning provided love, care and support for her sick sister over a period of 18 months, the surrounding circumstances failed to give rise to the relevant moral duty required by Part IV.

16 Her Honour also considered that, although the delay in bringing the originating motion was short, the delay in bringing the application for an extension of time, although not the fault of Fanning, had been substantial, and the application for an extension had been brought only after the issuing of a strike out application. Her Honour considered that, as she put it, 'taking the best possible view of the plaintiff's [Fanning's] evidence, I am not satisfied that the plaintiff has an arguable case'.[11]

17 Fanning seeks leave to appeal, under s 74(2D) of the County Court Act 1958, from the decision of the County Court refusing her application for an extension of time. As the orders below were interlocutory, it is thus necessary for her to demonstrate that (1) the decision below was wrong, or attended with sufficient doubt to warrant a grant of leave; and (2) substantial injustice would be done if the decision below was to stand.[12]

18 In his written submissions, Harding argued that the decision below was without error, and therefore not attended by sufficient doubt to justify a grant of leave. He also submitted that there would be no substantial injustice in denying leave as the substantive proceeding under Part IV of the Act is 'hopeless and doomed to fail'.[13]

19 The proposed notice of appeal identifies three grounds of appeal:

1. That the judge below erred in finding that Fanning did not have an arguable case for provision under s 91 of the Act;

2. That her Honour therefore failed to take into account a relevant consideration, namely, that Fanning had an arguable case;

3. That her Honour took into account an irrelevant consideration, being the future costs of litigation.

20 Further complaints regarding her Honour's reasoning but not given as formal grounds of the proposed notice of appeal include:

• That the delay in filing the claim and application for extension of time were the fault of Fanning's solicitors, for which she should not be burdened;

• That the present circumstances are sufficiently unusual to put this case outside of the usual rule that a sibling relationship is insufficient to establish a responsibility to make provision for a person;

• That her Honour erred in her conclusions as to the financial needs of Fanning;

• That her Honour was wrong to conclude that Stanley's case applied.

21 Harding submits that the first proposed ground of appeal represents an attempt to re-agitate findings of fact, despite being described as an error of law. Harding submits that the finding was open to her Honour on the evidence before her. He makes the same point in relation to the second ground, observing that her Honour cannot be said to have failed to account for a matter which she did not find to exist. Further, it is submitted that her Honour could still have refused the application in the presence of an arguable case, provided it was nevertheless weak.

22 It is clear that the principal factors that provided the basis of her Honour's conclusion were: (1) the merits of the application under Part IV; and (2) the modesty of the estate and the extent to which the legal costs might erode its value. It is these matters of substance that must be seriously addressed regardless of whether the grounds identified in the proposed Notice of Appeal amount to in effect a re-assertion that the applicant's case was an arguable one.

23 With respect to the explanation for the delay, there is well-established authority for the proposition that litigants should not be burdened by delay caused by their legal representatives: Jackamarra v Krakouer.[14] In our view, Fanning should not have been so burdened.

24 Turning, then, to the merits of the application for an extension of time, Fanning relies on what she alleged was 24-hour care which the deceased required, and which Fanning provided, over an 18 month period before her death. Harding disputed that the deceased was dependent upon Fanning at least until about April 2006. In our view, this form of care must also be considered in the context of the illness from which the deceased suffered. The deceased had been diagnosed with pancreatic cancer in July 2005 and was looked after by Fanning until February 2007. Providing 24-hour care to a person suffering from such a debilitating illness must have required considerable fortitude. For Fanning to watch the visible disintegration of her sister over that time, in Fanning's own home, while engaged in what must have been very intimate and personal care of her, in our view takes the relationship outside that of ordinary siblings. The contribution made by Fanning to the deceased's welfare[15] at perhaps the most vulnerable time[16] of her sister's life supports an arguable case that the relationship was a special one which went beyond the existence of a good and close relationship between siblings.[17]

25 With respect to the question of the financial needs of Fanning, the needs of an applicant under Part IV is a relevant and important consideration and provides a threshold issue for the establishment of a claim.[18] Her Honour noted that Fanning has a tax-free pension of $650 per week, $150,000 in the bank and an entitlement to $35,000 from the deceased's estate. Her rent is $160 per week. As mentioned above, her Honour concluded that it was difficult to see how Fanning could demonstrate need in such circumstances. With great respect to her Honour, we disagree. Fanning is aged 83 and lives in rented premises, having given up the home she owned to be closer to her sister. She has only a modest sum of money in the bank. She has a number of health concerns. She is asthmatic and diabetic. She has had her thyroid removed and has constant bowel problems, and her gallbladder is diseased. Because of her response to an anaesthetic, she cannot have further anaesthetics, which means her gallbladder cannot be removed. She requires a walker for mobility purposes. While ultimately it will be a matter for Fanning to prove her financial needs to the court hearing the Part IV application, it seems to us that it is at least arguable that, at her age, it is most likely her health will deteriorate further, most especially as she is unable to undergo any surgery, and may well require regular, if not constant, nursing and personal care (not unlike the character of which she provided voluntarily to her sister) for which she may require financial resources greater than she has at present. It is at least arguable that, as with anyone at age 83 who has significant health concerns and limited mobility, at some stage she may need modified 'disabled' bathroom facilities and, given that she is currently renting, this may foreseeably involve either the purchase of a unit or a move to an aged care home with all the expenditure that that may bring. In this context, it is to be remembered that the application made before her Honour was an application for an extension of time to bring a Part IV application and not the final determination of the merits.

26 Finally, we consider that Stanley's case is distinguishable because we do not consider that Fanning's case is weak or so lacking in force that it would be wrong, in the exercise of our discretion, to permit the application under Part IV to proceed because it will diminish the estate and thereby prejudice the beneficiary. Had the application been brought within time the costs consequences to the estate would have been the same and we do not consider that Fanning should now be precluded from having her application determined judicially because some legal costs will be incurred in so doing.

27 Taking all of these considerations into account, we consider that the Niemann test is satisfied for a grant of leave to appeal. We also consider that it was not open for her Honour to conclude that Fanning's application under Part IV would be less than arguable. We would allow the appeal.[19] An extension of time should be granted and the matter remitted to the County Court for the trial of the application under Part IV of the Act before a different judge.

28 We consider that the costs of the application before the County Court and the costs of the proceeding in this Court should be reserved for determination at the completion of the Part IV proceeding, or further order.

29 We note that the parties have taken the sensible course of agreeing to have the application for leave to appeal from her Honour, and the appeal, heard and determined on the papers and we commend them for doing so. We would encourage them to take a similarly cost-conscious approach to the hearing of the application under Part IV.

30 We consider that the following orders should be made:

(1) the application for leave to appeal from the orders of Her Honour Judge Kings given on 28 May 2013 is granted;

(2) the appeal from the orders of Her Honour Judge Kings given on 28 May 2013 is allowed;

(3) the orders made by Her Honour Judge Kings on 28 May 2013 be set aside;

(4) the applicant be granted an extension of time up to and including 23 February 2012, pursuant to s 99 of the Administration and Probate Act 1958, to bring an application under Part IV of the Administration and Probate Act, seeking provision for her proper maintenance and support from the estate of her late sister, Lillian Yvonne Kitchingman;

(5) the application under Part IV of the Administration and Probate Act be remitted to the County Court to be heard and determined by a judge other than the judge who refused the extension of time;

[1] Fanning v Harding [2013] VCC 570 ('Reasons').

[2] Affidavit of Glen Douglas Harding, 24 April 2013 [7].

[3] County Court Civil Procedure Rules 2008 r 3.04.

[5] Komba v National Australia Bank [2010] VSCA 232 [29].

[8] [2012] VSC 24 [38] ('Stanley's Case').

[10] Re Will and Estate of Marotte (decd) [2011] VSC 324.

[12] Niemann v Electronic Industries Ltd [1978] VicRp 44; [1978] VR 431, 433.

[13] Respondent's Submissions, 8 July 2013 [2].

[14] (1998) 195 CLR 516, 543.

[16] See Nicholson v Knaggs [2009] VSC 64 [23]-[24].

[17] See Re Will and Estate of Marotte (dec'd) [2011] VSC 324.

[18] Section 91(4)(h) of the Act; MacEwan Shaw v Shaw [2003] VSC 318; (2003) 11 VR 95 [50].

[19] House v The King [1936] HCA 40; (1936) 55 CLR 499, 505.