Faulkner v McLeod

Background Facts 5The following facts are uncontroversial. 6The deceased died on 28 January 2010. He was then aged 87 years. 7The deceased left a Will that he made on 5 September 2006, administration of which was granted, on 3 May 2010, by the Supreme Court of New South Wales, to the Defendant. 8The deceased's Will, relevantly, provided: (a) a legacy of $5,000 to the Plaintiff; (b)a legacy of $5,000 to Cheryl Joan Wadick, another daughter of the deceased; (c)a legacy of $400 to each of the deceased's six grandchildren; (d)the rest and residue of the estate to the Defendant absolutely. 9In the Inventory of Property, a copy of which was placed inside, and attached to, the Probate document, the deceased's estate, at the date of death, was disclosed as having an estimated, or known, gross value of $724,809. Liabilities of $14,558 were disclosed. The estate was said to consist of real property at Sans Souci ($630,000), money on deposit ($85,118), and shares ($9,690). 10In an affidavit sworn by the Defendant on 19 January 2011, the value of the Sans Souci property was said to be $770,000 (although there was a dispute about this value), the monies held in bank totalled $91,712, and the value of the shares was about $9,388. There was additional cash of $95,000. Some expenses had been paid out of the estate. The gross distributable value of the estate was estimated to be about $956,712. 11At the hearing, the parties agreed that the value of the Sans Souci property was $812,500. Using the other amounts disclosed in the Defendant's affidavit, the gross distributable value of the estate was, therefore, estimated to be about $1,008,600. 12During the course of the hearing, however, an issue arose as to amounts of cash that were in the deceased's home at various times and what had happened to that cash, or at least a part of it. I shall return to that issue later. 13In calculating the value of the estate, finally available for distribution, the costs of the present proceedings should also be considered, since the Plaintiff, if successful, normally, will be entitled to an order that her costs be paid out of the estate of the deceased, whilst the Defendant, irrespective of the outcome of the proceedings, normally, will be entitled to an order that her costs be paid out of the estate. 14The Plaintiff's costs and disbursements of the proceedings, calculated on the indemnity basis, have been estimated to be in the order of $31,000 (inclusive of GST and upon the basis of a one day hearing). The costs and disbursements of the Plaintiff, including counsel's fees, calculated on the ordinary basis, are said to be $25,178. 15The Defendant's costs and disbursements of the present proceedings, including senior counsel's fees, calculated on the indemnity basis (inclusive of GST and upon the basis of a one day hearing), have been estimated to be no more than $45,000. 16Subject to any finding I make about other cash amounts that should have been included in the estate, and using the estimates of costs, the parties accept that, for the purposes of the hearing, I should determine the Plaintiff's application upon the basis that the actual net distributable estate, after the payment of such costs as are ordered to be paid out of the estate, will be about $938,000. 17The persons described as eligible persons, within the meaning of the Act, are the Plaintiff, the Defendant and Ms Wadick, who are the children of the deceased. (There is no dispute that the wife of the deceased predeceased him.) Each of those persons participated in the hearing. An affidavit sworn by Ms Wadick was filed on the morning of the hearing and she was cross-examined by Mr Ellison SC for the Defendant. It is not intended to interfere with the legacy of $5,000 to her in the deceased's Will. 18A notice appears to have been sent by the Defendant's solicitors to the Plaintiff's solicitors, for service upon each of the grandchildren of the deceased and upon Ms Wadick. (Each of the grandchildren is either a child of the Plaintiff or of Ms Wadick.) 19I accept that all but one of the grandchildren was provided with the notice and all, otherwise, have been made aware of the proceedings. I was informed that five out of the six grandchildren were present in Court. I was also informed, from the Bar Table, that none of the grandchildren wish to make any claim under the Act. In view of the fact that none is an eligible person in any event, and since it is not sought to interfere with the legacy payable to each of them, to the extent necessary, I dispense with further service of the notice upon each of them. 20Only the Plaintiff has commenced proceedings under the Act. The Statutory Scheme - The Act 21I shall discuss the statutory scheme that is relevant to the facts of the present case. 22The wording of the Act is similar to the wording of the former Act. However, it is necessary to remember the warning of Kirby P in Samsley v Barnes [1990] NSWCA 161; (1991) DFC 95-100, at 76,304: "Purposive construction of the Act There is always a danger where a reformed Act borrows heavily upon ideas which previously existed in the common law or in an earlier statute, that lawyers will approach the construction of the Act affected by the previous law. Gamer's Motor Centre (Newcastle) Pty Ltd v Natwest Wholesale Australia Pty Ltd (1985) 2 NSWLR 475, 478. That danger is but an illustration, in the specialised activity of law, of a universal phenomenon of psychology long established in relation to human perception generally. We tend to perceive what we expect. We expect that with which we are familiar. There is a particular danger in the case of the Family Provision Act in construing its terms by reference to the law which developed around the Testators' Family Maintenance and Guardianship of Infants Act 1916 . That Act was passed in earlier times to govern the entitlements of a testator's family, as narrowly defined. The definition by s 3(1) of that Act confined applications to those made by "the widow, husband or children of such persons". There was no mention in it of former spouses. Doubtless this was because, for the early part of this century, divorce was relatively infrequent and then based upon concepts of matrimonial fault which would make interference in the testamentary disposition of the deceased unlikely. When enacted, the statute was a radical interference in the power of testamentary disposition. That was a significant power over private property, the disturbance of which was regarded as highly exceptional." 23Whilst the relevant amendments made by the Act are not as significant to those made by the former Act, it remains necessary to bear his Honour's warning in mind in construing the statutory framework. In doing so, a construction that promotes the purpose, or object, of the Act is to be preferred to a construction that would not promote that purpose or object. In my view, the principles applied by the courts to the former Act continue to apply, except to the extent that the Act otherwise requires. 24The former Act was repealed by s 5 of the Succession Amendment (Family Provision) Act 2008. A new Chapter 3 was added to the Act, which dealt with the topic of family provision from deceased estates. The long title of the Act describes that new Chapter as one to ensure that adequate provision is made for the members of the family of a deceased person, and certain other persons, from the estate of the deceased person. Importantly, this should not be taken to mean that the Act confers upon those persons, a statutory entitlement to receive a certain portion of a deceased person's estate. Nor does it impose any limitation on the deceased's power of disposition by his, or her, will. It is only if the statutory conditions are satisfied, that the court is empowered, under the Act, to alter a testator's disposition to produce a result that is consistent with the purpose of the Act. Even then, the court's power to do so is discretionary. 25The key provision is s 59 of the Act. The court must consider, first, whether the applicant is an eligible person within the meaning of s 57 (s 59(1)(a)). There are six categories of persons by, or on whose behalf, an application may be made. In the case of an applicant who falls within s 57(1)(d), (e) or (f), the court must next consider whether the court is satisfied that there are factors which warrant the making of the application (s 59(1)(b)). Then, if those considerations are satisfied, the court must determine whether adequate provision for the proper maintenance, education and advancement in life of the applicant has not been made by the will of the deceased, or by the operation of the intestacy rules in relation to the estate of the deceased, or both (s 59(1)(c)). It is only if it is satisfied of the inadequacy of provision, that the court considers whether to make a family provision order (s 59(2)). It may take into consideration, then, the matters referred to in s 60(2) of the Act. In this way, the court carries out a two-stage process. 26Other than by reference to the provision made in the will of the deceased, or by the operation of the intestacy rules in relation to the estate of the deceased, or both, s 59(1)(c) leaves undefined the norm by which the court must determine whether the provision, if any, is inadequate for the applicant's proper maintenance, education and advancement in life. The question would appear to be answered by an evaluation that takes the court to the provision actually made in the deceased's Will, or on intestacy, or both, on the one hand, and to the requirement for maintenance, education and advancement in life of the applicant on the other. No criteria are prescribed in the Act as to the circumstances that do, or do not, constitute inadequate provision for the proper maintenance, education and advancement in life of the applicant. 27It was said in the court of Appeal (per Basten JA) in Foley v Ellis [2008] NSWCA 288 at [3], that the state of satisfaction "depends upon a multi-faceted evaluative judgment". 28Importantly, there no longer appears to be any sanction to consider, in s 59(1)(c) of the Act, the provision made by the deceased during his, or her, lifetime for the applicant (see, s 9(2) of the former Act). 29Under both s 59(1)(c) and s 59(2) of the Act, the time at which the court gives its consideration to the question is the time when the court is considering the application. 30"Provision" is not defined by the Act, but it was noted in Diver v Neal [2009] NSWCA 54 at [34], that the term "covers the many forms of support and assistance which one individual can give to another. That support and assistance will vary over the course of the person's lifetime". 31Neither are the words 'maintenance' and 'advancement in life' defined. However, in Vigolo v Bostin [2005] HCA 11; (2005) 221 CLR 191, Callinan and Heydon JJ, at [115], said, of the words 'maintenance', 'support' and 'advancement': "'Maintenance' may imply a continuity of a pre-existing state of affairs, or provision over and above a mere sufficiency of means upon which to live. 'Support' similarly may imply provision beyond bare need. The use of the two terms serves to amplify the powers conferred upon the court. And, furthermore, provision to secure or promote 'advancement' would ordinarily be provision beyond the necessities of life. It is not difficult to conceive of a case in which it appears that sufficient provision for support and maintenance has been made, but that in the circumstances, say, of a promise or an expectation reasonably held, further provision would be proper to enable a potential beneficiary to improve his or her prospects in life, or to undertake further education." 32In In the Estate of Puckridge, Deceased (1978) 20 SASR 72, at 77 King CJ said: "The words 'advancement in life' have a wide meaning and application and there is nothing to confine the operation of the provision to an earlier period of life in the members of the family: Blore v Lang (1960) 104 CLR 124, per Dixon CJ at 128." 33In Mayfield v Lloyd-Williams [2004] NSWSC 419, White J 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." 34The word 'adequate' connotes something different from the word 'proper'. 'Adequate' is concerned with the quantum, whereas 'proper' prescribes the standard, of the maintenance education and advancement in life: Devereaux-Warnes v Hall (No 3) [2007] WASCA 235; (2007) 35 WAR 127 at [72] and at [77] per Buss JA. 35Each of the words were considered by Lord Romer in delivering the advice of the Privy Council in Bosch v Perpetual Trustee Co Ltd [1938] AC 463, at 476: "The use of the word 'proper' in this connection is of considerable importance. It connotes something different from the word 'adequate'. A small sum may be sufficient for the 'adequate' maintenance of a child, for instance, but, having regard to the child's station in life and the fortune of his father, it may be wholly insufficient for his 'proper' maintenance. So, too, a sum may be quite insufficient for the 'adequate' maintenance of a child and yet may be sufficient for his maintenance on a scale that is 'proper' in all the circumstances." 36Dixon CJ and Williams J, in McCosker v McCosker (1957) 97 CLR 566 at 571, 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." 37In Goodman v Windeyer (1980) 144 CLR 490, Gibbs J said at 502: "[T]he words 'adequate' and 'proper' are always relative. There are no fixed standards, and the court is left to form opinions upon the basis of its own general knowledge and experience of current social conditions and standards." 38In Vigolo v Bostin at [114], 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." 39The first stage of the process provided for by s 59(1)(c) has been described as "the jurisdictional question": Singer v Berghouse (No 2) [1994] HCA 40; (1994) 181 CLR 201 at 208-209. At this stage, the court will consider whether it can make an order for provision for the maintenance, education and advancement in life of a particular applicant. 40Whether the applicant has a 'need' is a relevant factor at the first stage of the enquiry. It is an element in determining whether 'adequate' provision has been made for the 'proper' maintenance education and advancement in life of the applicant in all of the circumstances: Collins v McGain [2003] NSWCA 190 [42] (Tobias JA, with whom Beazley and Hodgson JJA agreed). 41Tobias JA said: "42. There can be no question that, at least as part of the first stage of the process, the question of whether the eligible person has a relevant need of maintenance etc is a proper enquiry. This is so as the proper level of maintenance etc appropriate for an eligible person in all the circumstances clearly calls for a consideration of his or her needs. However, the question of needs must not be too narrowly focused. It must, in my view, take into account, depending upon the particular circumstances of the case, present and future needs including the need to guard against unforeseen contingencies. ... 47. As I have observed, the issue of need is not confined to whether or not an eligible person has, at the date of hearing, a then need for financial assistance with respect to his maintenance etc. It is a broader concept. This is so because the question of needs must be addressed in the context of the statutory requirement of what is "proper maintenance etc" of the eligible person. It is the cause of that context that, in the present case, the "proper maintenance etc" of the appellant required consideration to guard against the contingency to which I have referred." 42In Devereaux-Warnes v Hall (No 3) at [81]-[85], Buss JA said, in respect of the first stage of the process: "The term 'need' has been used to refer to the claimant's inability to satisfy his or her financial requirements from his or her own resources. See Singer per Gaudron J at 227. 'Need' has also been used in the context of a value judgment or conclusion, namely, that the claimant is 'in need' of maintenance, etc, because inadequate provision has been made for his or her proper maintenance, etc. See Gorton v Parks (1989) 17 NSWLR 1 per Bryson J at 10-11. The determination of whether the disposition of the deceased's estate was not such as to make adequate provision for the proper maintenance, etc, of the claimant will always, as a practical matter, involve an evaluation of the provision, if any, made for the claimant on the one hand, and the claimant's 'needs' that cannot be met from his or her own resources on the other. See Hunter per Kirby P at 575. Although the existence or absence of 'needs' which the claimant cannot meet from his or her own resources will always be highly relevant and, often, decisive, the statutory formulation, and therefore the issue in every case, is whether the disposition of the deceased's estate was not such as to make adequate provision for his or her proper maintenance, etc. See Singer per Gaudron J at 227. Compare Gorton per Bryson J at 6-11; Collicoat v McMillan [1999] 3 VR 803 per Ormiston J at 816 [38], 820 [47]." 43In the event that the court is satisfied that the power to make an order is enlivened (i.e. it is satisfied that the Plaintiff is an eligible person, and, where necessary, that factors warranting have been satisfied, and that adequate provision for the proper maintenance, education or advancement in life of the person has not been made), then, the court determines whether it should make an order, and if so, the nature of any such order, having regard to the facts known to the court at the time the order is made. 44The second stage of the process arises under s 59(2) and s 60(1)(b). Mason CJ, Deane and McHugh JJ, in Singer v Berghouse , at 211, affirmed that the decision made at the second stage involves an exercise of discretion in the accepted sense. The fact that the court has a discretion means that it may refuse to make an order even though the jurisdictional question has been answered in the applicant's favour. 45Section 60 of the Act, at least in part, is new. It provides: "(1) The court may have regard to the matters set out in subsection (2) for the purpose of determining: (a) whether the person in whose favour the order is sought to be made (the "applicant") is an eligible person , and (b) whether to make a family provision order and the nature of any such order. (2) The following matters may be considered by the court : (a) any family or other relationship between the applicant and the deceased person , including the nature and duration of the relationship, (b) the nature and extent of any obligations or responsibilities owed by the deceased person to the applicant , to any other person in respect of whom an application has been made for a family provision order or to any beneficiary of the deceased person 's estate, (c) the nature and extent of the deceased person 's estate (including any property that is, or could be, designated as notional estate of the deceased person ) and of any liabilities or charges to which the estate is subject, as in existence when the application is being considered, (d) the financial resources (including earning capacity) and financial needs, both present and future, of the applicant , of any other person in respect of whom an application has been made for a family provision order or of any beneficiary of the deceased person 's estate, (e) if the applicant is cohabiting with another person-the financial circumstances of the other person, (f) any physical, intellectual or mental disability of the applicant , any other person in respect of whom an application has been made for a family provision order or any beneficiary of the deceased person 's estate that is in existence when the application is being considered or that may reasonably be anticipated, (g) the age of the applicant when the application is being considered, (h) any contribution (whether financial or otherwise) by the applicant to the acquisition, conservation and improvement of the estate of the deceased person or to the welfare of the deceased person or the deceased person 's family, whether made before or after the deceased person 's death, for which adequate consideration (not including any pension or other benefit) was not received, by the applicant , (i) any provision made for the applicant by the deceased person , either during the deceased person 's lifetime or made from the deceased person 's estate, (j) any evidence of the testamentary intentions of the deceased person , including evidence of statements made by the deceased person , (k) whether the applicant was being maintained, either wholly or partly, by the deceased person before the deceased person 's death and, if the court considers it relevant, the extent to which and the basis on which the deceased person did so, (l) whether any other person is liable to support the applicant , (m) the character and conduct of the applicant before and after the date of the death of the deceased person , (n) the conduct of any other person before and after the date of the death of the deceased person , (o) any relevant Aboriginal or Torres Strait Islander customary law, (p) any other matter the court considers relevant, including matters in existence at the time of the deceased person 's death or at the time the application is being considered." 46It can be seen that s 60(2) enumerates 15 specific matters which the court may take into account, together with "any other matter the court considers relevant", for the purposes of determining eligibility, whether to make a family provision order , and, if so, the nature of any such order. There is no mandatory command to take into account any of the matters enumerated. None of the matters differentiate in their application between classes of eligible person. Similarly, there is no distinction based on gender. 47Considering each of the relevant matters does not prescribe a particular result, and whilst there is likely to be a substantial overlap in the matters that the court may take into account when determining the answers to what is posed in s 60(1), those matters are not identical. For example, when considering eligibility under sub-s (1)(a), many of the matters in ss (2) will be largely, if not wholly, irrelevant. 48Furthermore, consideration of some of the matters in s 60(2) not only permits, but requires, a comparison to be made between the respective positions of the applicant and of other eligible persons as well as of the beneficiaries named in the deceased's will, whilst others do not. Importantly, also, many of the matters in ss (2), of themselves, are incapable of providing an answer to the questions posed in s 60(1). 49Leaving aside the question of eligibility, the matters referred to in s 60(2) may be considered on "the discretionary question", namely whether to make an order and the nature of that order. Importantly, under s 60(2), attention is drawn to matters that may have existed at the deceased's death, or subsequently. 50This does not mean, however, that some of the matters referred to in s 60(2) will not be relevant to the jurisdictional question to be determined at the first stage. I am comforted in reaching this conclusion by the following comments made in Singer v Berghouse (at 209-210): "... The determination of the first stage in the two-stage 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 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." 51And by the comments of Callinan and Heydon JJ in Vigolo v Bostin (at 230-231): "We do not therefore think that the questions which the court has to answer in assessing a claim under the Act necessarily always divide neatly into two. Adequacy of the provision that has been made is not to be decided in a vacuum, or by looking simply to the question whether the applicant has enough upon which to survive or live comfortably. Adequacy or otherwise will depend upon all of the relevant circumstances, which include any promise which the testator made to the applicant, the circumstances in which it was made, and, as here, changes in the arrangements between the parties after it was made. These matters however will never be conclusive. The age, capacities, means, and competing claims, of all the potential beneficiaries must be taken into account and weighed with all of the other relevant factors." 52Section 61 of the Act permits the court to disregard the interests of any other person by, or in respect of whom, an application for a family provision order may be made (other than a beneficiary of the deceased person's estate), but who has not made an application. However, the court may disregard any such interests only if: i.notice of the application, and of the court's power to disregard the interests, is served on the person concerned, in the manner and form prescribed by the regulations or rules of court, or ii.the court determines that service of any such notice is unnecessary, unreasonable or impracticable in the circumstances of the case. 53Section 65(1) of the Act requires the family provision order to specify: i.the person or persons for whom provision is to be made; and ii.the amount and nature of the provision; and iii.the manner in which the provision is to be provided and the part or parts of the estate out of which it is to be provided; and iv.any conditions, restrictions or limitations imposed by the court. 54The order for provision out of the estate of a deceased person may require the provision to be made in a variety of ways, including a lump sum, periodic sum, or "in any other manner which the court thinks fit" (s 65(2) of the Act). If the provision is made by payment of an amount of money, the order may specify whether interest is payable on the whole, or any part, of the amount payable for the period, and, if so, the period during which interest is payable and the rate of interest (s 65(3) of the Act). 55The order may be made, relevantly, in this case, in relation to the estate of the deceased. As the deceased died leaving a Will, his estate includes all property that would, on a grant of probate of the Will, vest in the executor of the Will (s 63 of the Act). 56Any family provision order under the Act will take effect, unless the court otherwise orders, as if the provision was made in a codicil to the will of the deceased, or in the case of intestacy, as in a will of the deceased (s 72(1) of the Act). 57Section 66 of the Act sets out the consequential and ancillary orders that may be made. 58The court, also, may, at the time of distribution of an estate that is insufficient to give effect to a family provision order, make such orders concerning the abatement, or adjustment, of distributions from the estate, as between the person in whose favour the family provision order is made and the other beneficiaries of the estate as it considers to be just and equitable among the persons affected (s 72(2) of the Act).

At a glance

Court

Decision date

Before

Source

Judgment (7 paragraphs)

Parties

Cases Cited (29)