FORD v BIRT

Supreme Court of NSW|1999-09-14|Before: Bryson J

New South Wales Supreme Court CITATION : FORD v BIRT [1999] NSWSC 919 CURRENT JURISDICTION : Equity FILE NUMBER(S) : 3597/97 and 1682/99 HEARING DATE(S) : 21-23/6; 29/7/99 JUDGMENT DATE : 14 September 1999

PARTIES : Margaret Caroline Ford v. Daniel Arthur Birt - Estate of the late Joan Caroline Birt JUDGMENT OF : Bryson J at 1

COUNSEL : T. H. Barrett with C.A. Webster for Plaintiff A. Relf (solicitor) with T. Clarke (solicitor) for Defendant SOLICITORS : Walker Gibbs & King for Plaintiff John Clarke & Associates for Defendant CATCHWORDS : FAMILY PROVISION - Adult daughter - testatrix made no provision for daughter aged 36 out of estate and notional estate worth $300,000 - all assets passed to son who already owned joint interest worth $120,000 in grazing property - review of family history and parties' conduct - provision of $80,000 ordered. DECISION : See para.67. Provision $80,000 out of estate and notional estate.

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

ESTATE OF THE LATE JOAN CAROLINE BIRT 3597 of 1997 & 1682 of 1999 - Margaret Caroline Ford v Daniel Arthur Birt

JUDGMENT 1 HIS HONOUR: Two proceedings between the same parties and relating to the same estate were heard together. Mrs Joan Carolyn Birt late of Nimmitabel, New South Wales, retired school principal died on 12 March 1997 aged 55 years. At the time of her death she was divorced; she and Mr Arthur Frederick Birt were married in 1961 and divorced on 2 June 1986 and she is survived by her only two children, Mrs Margaret Carolyn Ford the plaintiff who was born on 20 September 1962 and Mr Daniel Arthur Birt the defendant who was born on 24 August 1970. The plaintiff is often known by the nickname Marnie. On 20 November 1998 Daniel Birt obtained probate of Joan Birt's last will dated 21 November 1996. Under the provisions which took effect Daniel Birt was appointed sole executor and was given the whole of Joan Birt's estate. There were provisions in the will which might have conferred benefits on Margaret Ford if Daniel Birt had not survived Joan Birt and taken an interest under the will; in that case Margaret Ford would have received the net income of the estate for life, with provision for her children. 2 In the 1997 proceedings Margaret Ford claims provision for her maintenance and advancement in life under s.7 of the Family Provision Act 1982 out of the estate and notional estate of Joan Birt. She seeks an order designating several items of property as notional estate. The items include Joan Birt's interest as tenant-in-common in the rural property called "Hurlstone", and money in a bank account which was transferred to Daniel Birt shortly before her death. 3 In the 1999 proceedings Margaret Ford claimed that she has an equitable interest as owner of a house built in 1996 and surrounding 40 hectares of Hurlstone and alternatively a charge to secure an equitable interest. She also claims ancillary remedies. Her two claims are not cumulative on each other. The two proceedings were heard together. 4 Hurlstone is a rural property about 9 kilometres east of Nimmitabel and about 47 kilometres south-east of Cooma, with frontage to the Kybeyan Road which is tar sealed. Mr Valuer Trethewey says:- "The land is described as a mix of undulating to hilly country, steep in parts with granite base soils. Some 35 hectares joining the Kybeyan Road is gently undulating mostly cleared country, however, the land falls steeply into a gully that runs north-south through the property some 500 metres east of the road boundary. The gully obstructs access to the remainder of the land which is a mix of hilly and steep country, mostly heavily timbered with isolated pockets of clearings." Mr Trethewey also says "The land is currently used for residential purposes and light grazing which is considered to be the highest and best use." The evidence speaks of a number of rural activities which have been carried out there but Daniel Birt's principal activity there now is running about 350 sheep. The area is spoken of in evidence as 640 acres but this is not exactly correct according to dimensions stated on deposited plans. There are two freehold holdings, Lot 2 Deposited Plan 732581 which has a frontage to Kybeyan Road to the west, and by plan has 126.8 hectares excluding the road, and Lot 55 DP 7505662 to its east, containing by plan 126.8 hectares or 320 acres. There is also a small area formerly a school site referred to variously as Crown leasehold and permissive occupancy; this cannot be of significant value. Mr Trethewey's evidence including his revaluation, which I accept, establishes the value of the property at $240,000 as of 7 June 1999. It also establishes that the value of the cottage on a notional 5 ha lot would be $85,000, being $30,000 for the land and $55,000 for improvements. There has been no subdivision, and while approval would not be impossible, there would be uncertainty and difficulty in getting approval. 5 Joan Birt purchased Hurlstone in 1990 and caused the property to be transferred by the vendors Mr and Mrs Cratchley to Daniel Birt and herself as joint tenants. The consideration stated in the transfer was $209,425. The purchase money was raised by borrowing $110,000 or thereabouts from State Bank of New South Wales and the balance was contributed by Joan Birt. Daniel Birt, who was then 19 years of age and had no significant resources of his own, made no contribution to the purchase, except that he joined in the mortgage. After several years the mortgage to the State Bank was discharged with money obtained from Commonwealth Bank of Australia under a mortgage dated 30 April 1993. 6 The Commonwealth Bank mortgage in turn was discharged by Discharge dated 26 August 1996 and later registered, on payment on 19 April 1996 of $106,177.01 from the superannuation entitlement received by Joan Birt on resigning her employment. At the time of her death she was still proprietor of Hurlstone jointly with Daniel Birt; legal ownership then passed to him on her death by survivorship. However on 7 March 1995 five days before her death Joan Birt signed a series of documents prepared for her by Mr John Clarke solicitor of Cooma. Although the instructions for these documents were conveyed to Mr Clarke by Daniel Birt, Joan Birt's conduct when Mr Clarke brought the papers to her at Hurlstone for execution shows that they were fully understood by her and intended to have effect. The documents were contract for the sale by her to Daniel Birt of her interest described as "The Vendor's one-half share in the land, the improvements, all fixtures and inclusions …" for $120,000, a Memorandum of Transfer dated 7 March 1997 acknowledging receipt of consideration of $120,000 and transferring her interest to Daniel Birt, and two acknowledgments or letters of the same date, one from Joan Birt to Mr Clarke's firm saying "I advise that all moneys payable with respect to this transfer have been received" and the other from Joan Birt to Daniel Birt saying "I hereby forgive any moneys that may be owed by you to me". The substance of these events was that on 7 March 1997 Joan Birt made a donation of her equitable interest in the property to Daniel Birt; the donation was effective in equity because he was in a position to have the transfer registered, and Mr Clarke proceeded in his interest to register it, although registration took place after Joan Birt had died. 7 At the time of her death Joan Birt owned an interest in the partnership business which conducted rural operations on Hurlstone, and in the plant, stock and equipment thereof. Joan Birt was entitled to 75% of the income of the partnership and Daniel Birt to 25%; presumably interests in the partnership assets were in the same proportion. However the partnership accounts in evidence show that she had an entitlement as against the partnership to capital worth far more than the assets of the partnership actually were worth, so that on winding-up partnership affairs at the time of her death all assets would have gone to her. All assets of hers including her interest in the partnership passed to Daniel Birt under her will. His own nominal interest in partnership assets was of no value. 8 Joan Birt and her then husband Arthur Birt lived in Cabramatta in Margaret Ford's early childhood. Joan Birt set up and conducted a pre-school, then obtained formal qualifications as a teacher and did relief teaching work. They made several moves; they lived in Menai, then in 1979 to 1981 in Nowra where they conducted a boat-hire business, then in Woronora. About 1985 Joan Birt moved to Goulburn where she had a teaching position. About this time she bought a house property with about 30 acres near Goulburn; it seems likely that she used some proceeds of the home at Woronora which she received under a matrimonial property settlement for this purchase. About 1989 Joan Birt moved to Cooma and taught at Monaro High School; she sold the Goulburn the property at about this time. Later she became principal of Delegate Primary School, and while working there she returned to Hurlstone at week-ends. She resigned from the Department of School Education on 1 April 1996 and received $20,667.57 for long service and recreation leave. She also received $260,941.49 for superannuation entitlements. She may later have done some casual teaching. 9 On 12 April 1996 the Superannuation payment of $260,941.49 was deposited into a partnership bank account no. 720160570-82; kept by Joan Birt and Daniel Birt at the State Bank the previous balance was $13,707. Evidence does not show how the long service and leave payment of $20,667.57 was applied or whether it contributed to that previous balance. A few days later the partnership bank account was drawn against for $106,177.10 to pay out the mortgage to the Commonwealth Bank. This operated as a benefaction to the defendant as he was a party to the mortgage and a joint owner of the land. 10 In 1996 Joan Birt also received distributions in the estate of her late mother, and these were also deposited into the same partnership bank account: $57,500 on 21 June 1996; $66,000 on 9 October 1996; $1,264.45 on 4 December 1996. 11 After deducting the amount repaid on the mortgage the moneys which came to hand for Joan Birt in these ways from 12 April 1996 to the end of the year amounted to $300,196.50. 12 The disposition of the amounts received by the testatrix is explained, in part but not fully, by a table of payments in Exhibit G, which was prepared on behalf of the defendant while these proceedings were pending. These show many payments which are readily acceptable as connected with the operation of Hurlstone and rural enterprises there, payments for vehicles and equipment and payments for building materials and services relating to constructing the cottage. (The payments identified as relating to construction total $32,610.39). Several large payments relate to attempts to establish ostrich farming on Hurlstone, which has been a business failure. Expenses directly related to ostrich farming are: June 4, 1996 Bank transfer $40,000 June 13, 1996 Cheque to Australian Ostrich Association $ 5,000 January 31, 1997 Purchase of 19 ostriches $13,537.50 13 The $40,000 was transferred to a bank account of the testatrix at Colonial State Bank, Account No. 720107534-00 described as "Hurlstone Ostrich Facility Account". Further dealings with moneys in that account are not explained and the amount held in the account at the testatrix' death was $1,175.79. I accept that the amounts referred to were in fact expended in connection with the ostrich venture and are not now represented by any asset of significant value. A cash withdrawal of $20,000 on 8 August 1996 from the partnership bank account is unexplained. No basis exists for a finding of how the testatrix disposed of this sum, and there is no basis for finding that either the plaintiff or the defendant got the benefit of it. 14 In the inventory of property filed with the probate application Daniel Birt showed property at the following values.

Furniture and jewellery $ 1,000.00 Colonial State Bank account no. 720107534-00 $ 1,175.79 Taxation Credits $23,865.11 1985 Mitsubishi Cordia $ 2,000.00 Total: $28,040.90

He also showed the interest in the farming partnership without attributing a value to it. He incurred legal costs of $962 for the probate application. 15 The financial statements of the partnership business for the financial period ending on the date of Joan Birt's death in Exhibit F show the total partnership equity and the net assets at $94,843.08. Interests in the partnership equity were shown as Joan Birt $408,315.83 and Daniel Birt ($312,472.75) negative, producing a balance equal to the net assets. The probabilities are that on depositing money in the partnership bank accounts Joan Birt became entitled to a corresponding credit in the partnership capital account which Daniel Birt was in no position to pay out. In my view the interest in the partnership assets which passed to Daniel Birt under the will should be valued at $94,843.08. 16 The partnership balance sheet as at 12 March 1997 did not include any cash at bank. On 10 March 1997 there was a balance in the partnership bank account of $87,501.98 but on that day it was transferred to an account no. 720108414-81 conducted by the defendant solely, also with the Colonial State Bank. 17 I find that assets which passed to Daniel Birt in the last five days of Joan Birt's life or under her will are valued as follows:

Assets in Probate Inventory $ 28,040.90 Partnership assets $ 94,843.08 Gift of joint interest in Hurlstone $120,000.00 Cash from partnership account $ 87,501.98 total $330,385.96 18 The legal costs of $962 relating to probate application are the only debt or testamentary expense referred to in evidence. I asked the parties to show by evidence what costs have been incurred in the proceedings. The evidence of Mr Wall solicitor for the plaintiff estimated the plaintiff's total costs of the proceedings on a solicitor and client basis at approximately $113,525.55. He estimated the party and party costs would be about 80 to 90% of that sum, and taking median amount I treat that as $96496.71. He estimated that about $15,000 of the party and party costs would be attributable to the 1999 proceedings and to interlocutory proceedings relating to a caveat. The estimate of costs given on affidavit by the defendant's solicitor, Mr Clarke, was $66,000 to the completion of the proceedings. 19 I regard both these estimates as astonishingly large and I cannot understand how sums of that order can have been spent on a controversy like this. Expenditures of those kinds appear to me to be quite disproportionate to the importance which success or failure could have to either party, or to any legal work the need for which is at this point apparent to me. I have not yet decided what orders for costs should be made, by which party costs will be payable or whether they will be payable out of the estate and the notional estate. I can do no more in addressing the plaintiff's claim than to have regard to the probability that large sums of costs will be payable out of the estate. 20 When Joan Birt died Daniel Birt already owned another interest in Hurlstone derived from earlier benefactions, and that joint interest should be valued at $120,000. Hurlstone was then unincumbered. As a single man 27 years of age without dependants and already for some years engaged in farming activity on Hurlstone he was left in a relatively strong financial position. He is now 29 years of age, unmarried and without dependents. The form of the assets has been changed somewhat as he has purchased some stock and equipment and no longer has significant funds in cash. As well as grazing sheep on Hurlstone he has other ventures including sharefarming cattle on one neighbour's property and a lease of small area of another neighbour's property, and he makes some seasonal earnings as a security guard. He is still in a relatively strong financial position, which very largely arises from benefactions made to him by Joan Birt, although his position has been contributed to by his own work in the partnership and otherwise. 21 The plaintiff's life has been rather unsettled. About 1978 when the plaintiff was 16 she left her parents' then home at Menai. A few months earlier she had damaged the family car. After living separately from her parents for 8 or 9 months she returned to their home which they then established in Nowra. She helped her parents in their boat hire business there. Towards the end of 1979 she started to live with Terrence Patrick Ford, whom she married in February 1980. They lived in a caravan at the boat hire business in Nowra, and later in a rented home unit in Nowra. Their daughter Cheryl Anne Ford was born on 28 January 1981. After that Margaret Ford her husband and daughter lived in many places; they lived in Queensland for about three months in 1981, then returned to Nowra where they lived in a caravan park. Later they lived in Goulburn, and in Queensland for about six months. They stayed for a short time in her parents' home in Woronora. They rented a house in Sylvania. From about 1982 onwards they lived in Nowra for several years; then about 1987 when Joan Birt was established in her property at Goulburn, they went to live in Garathy Street Goulburn. About 1987 Margaret Ford had major surgery for a liver tumour and was unwell for many months. They began to move again, and settled in Jervis Bay for several years. In September 1991 they moved to Hurlstone at Joan Birt's invitation; then they rented a house near Nimmitabel and operated a roadhouse at Nimmitabel. At one time in the early 1990's they owned a property at Mungar Queensland; after the sale of that property and meeting various obligations, including making a payment to Mr A.H. Birt, they had around $38,000 to $40,000. This was used to buy land in Nimmitabel, to buy a car, and a lot of it was used in the roadhouse; Margaret Ford said "… it just got eaten up in the roadhouse." They purchased two blocks of unimproved town land in Nimmitabel for $6,000. The road house business failed. In 1995 they went to live in Pambula where Terrence Ford operated a second-hand goods shop. It is unlikely that Mr and Mrs Ford ever had any greater amount of capital than they had after selling the house in Mungar. 22 Terrence Ford has had many employments and occupations. At times he has made good earnings, but his changes of employment have been frequent. When the hearing began he was in good employment as Sales Manager at Martyn Ford Cooma, where he commenced work about May or June 1998. However he lost his employment on 2 July 1999 after a dispute with one of the proprietors. Before obtaining that employment he had received Disability Pension for several years from about 1995; it seems probable that he will again depend on the Disability Pension. He is able to make some casual earnings as a musician. 23 Margaret Ford has also had many employments. At the time of the hearing she was working part-time in a bakery in Nimmitabel; her earnings varied very greatly according to the availability of work. She said that the gross earnings varied between $140 per week and $500 per week. Their daughter who is now 18 has left their household. 24 So far as can be seen from evidence, until the last year of her life Joan Birt's most significant asset was her mortgaged interest in Hurlstone; her asset position arose very largely from her earnings in her teaching career, there is no other discernible source except that she may have received proceeds of the former matrimonial home in a property settlement, and she had little opportunity to make benefactions until she received her Superannuation entitlement and distributions from her mother's estate. 25 It would be understandable that a parent might not think highly of or give approval to the careers of Margaret Ford and her husband. They have a long history of rootlessness, with many moves and several financial failures; Terence Ford had been bankrupt three times, and Margaret Ford twice, more recently through her involvement in the roadhouse. There are many worse ways to disappoint a parent than by having several business failures. Their marriage has been a constant to their lives for almost 20 years and their daughter is now adult. Margaret Ford suffered a severe reverse in her health some years ago, and Terrence Ford is in a state of health where when he does not have employment it has been accepted that he is entitled to a Disability Pension. It is a fact of Margaret Ford's life that she was never given any advancement or means of establishing herself in life by either parent; from the course her life has taken it would not have been easy to help her. She did not have any education or training which has equipped her for a career. At her age and stage in life this is at least as much her responsibility as it could be thought of as her parents' responsibility, but it is a fact of her existence that she has not had training or establishment in life and now has no security of any kind, either in the form of home ownership, stable employment or reliable dependence on earnings of a male provider. The contrast between her situation in terms of assets and means of maintaining herself and that of Daniel Birt is very marked, particularly as Daniel Birt's position arises largely, almost entirely from benefactions. The benefactions given to him point out that in the terms on which this family has lived it is appropriate that there be some establishment in life, and give some indication of an appropriate scale. The history of repeated business failures and the lack of success of Margaret Ford and her husband in establishing themselves in life are a restraining factor on the generosity of any benefaction. 26 There is nothing in evidence which I regard as a reliable basis for a finding what were Joan Birt's reasons for the shape which her benefactions took. It seems likely, from some inconclusive discussion, and from the protective nature of the provisions in the will which did not take effect, that she felt strong concerns about the financial responsibility of Margaret Ford and her husband and the use to which any benefactions may be put. Signs of these concerns are reflected in two documents in Joan Birt's handwriting which are in evidence and express uncompleted projects for providing Margaret Ford with housing. 27 In evidence a great deal of attention was given to events from about June 1996 onwards and to communications among the parties relating to the construction of a new cottage on Hurlstone. Margaret Ford and her husband have occupied the workman's cottage from its completion late in December 1996 until the present, and the claim in the 1999 proceedings relates to an interest in it. Although these subjects have some significance, in retrospect the attention given to them appears to have been excessive. 28 Margaret Ford appears to have maintained a good relationship appropriate for a daughter with her mother throughout her life and notwithstanding what must have been strains and difficulty arising from her unsettled life, many moves and financial vicissitudes. In evidence which I accept Margaret Ford speaks of assistance she gave to her parents including her mother at various times throughout her adult life, including assistance in the boat hire business at Nowra, and later, particularly in rural work and housework at Hurlstone. The burden has never been great, but it was appropriate for her to undertake it. She should not be treated as a person who has neglected her mother or disregarded the relationship. 29 In a conversation in January 1996, when Margaret Ford and her husband lived in Pambula where they ran a second-hand goods store, Joan Birt showed awareness of the plaintiff's needy condition. In June or July 1996 Joan Birt told Margaret Ford that she had received money from her own mother's estate and discussed giving her money so that she could have a home of her own. There were further discussions when Margaret Ford and her husband visited Hurlstone and there were discussions within the family about various possible ways of providing housing. Joan Birt suggested building a house on Hurlstone. 30 After this discussion Daniel Birt obtained some kit home plans. There was a further discussion about August 1996 about the possibility of subdividing part of Hurlstone, and various locations were considered and discussed. In evidence there are several plans illustrating locations that were considered, and also evidence of Joan Birt's having pointed out a location. All these passages of evidence are inconclusive to identify any particular piece of land in any way which would establish its size or boundaries. I accept on the basis of the plaintiff's evidence that Joan Birt pointed out the location of the house site on one occasion by pointing to the land she had in mind and speaking of its boundaries and on at least one other occasion by referring to a topographical map which is not in evidence, and that she referred to the area as 100 acres. However there is no evidence from which any particular area of 100 acres which was the subject of her intention can be identified, and is not clear that she ever did fully and clearly identify boundaries in any expression of her intention. 31 There was discussion about arranging a building application and arranging for electricity supply (which affected the location of the house). In evidence there is an application to Cooma Monaro Council for approval for construction of the cottage, referring to building approval, development approval, installation of septic tank and insulation of a solid fuel heater; this application is part of Exhibit 6 which also contains the Town Planner's report. The application was made in the sole name of Joan Birt as owner and signed by her only on 19 August 1996. It was approved by delegation on 30 September 1996 and a building permit was issued to her dated 2 October 1996 Exhibit 6. An application to instal a septic tank Exhibit 9 dated 19 August 1996 was also made and signed by Joan Birt solely as owner. These applications do not deal with development consent for subdivision or with approval of subdivision plans, and no application made to Council ever related to a proposed subdivision. 32 About August or September 1996 Margaret Ford and her husband sold the second-hand goods business, that is to say they sold the stock to a person who obtained a lease for the same premises from their landlord, terminated their house lease at Pambula and on 26 September 1996 moved to Hurlstone, where they at first lived in a caravan. From October 1996 onwards construction of the new house proceeded. Construction was carried out on the basis that Joan Birt was an owner-builder. Terrence Ford did much of the labour, and specialist contractors were brought in for skilled building work. Daniel Birt also contributed some labour towards preparing the site, a relatively small part of the work. Materials and contractors were paid for largely by Joan Birt by payments out of the partnership bank account, which then contained relatively large sums arising from her deposits. She indicated that $30,000 would be available for this purpose but in fact $32,610.39 was paid out of this account for materials and contractors. In addition Margaret Ford and her husband paid other sums which they estimate at $7,000 or $8,000 for building materials. Joan Birt also gave them a Woodland fire worth $800 which was installed in the house and Daniel Birt gave them a front door worth $240 which was also installed in the house. The house was habitable although not completed late in December 1996 and Margaret Ford and her husband moved in. 33 The defendant erected an electric fence around the building during the building operations. I am satisfied that this was done to keep stock away from the building materials. In no way was it an indication of an agreed boundary. 34 On 26 September 1996, the day the Fords moved to Hurlstone, the testatrix fell ill, and was taken to hospital by ambulance. Her condition was diagnosed as cancer and developed rapidly so that she survived for less than six months. During that time she spent some periods in hospitals, and in the last months of her life she was very restricted, largely bedridden and in need of much care, including nursing care. The plaintiff contributed appropriately to her care, as did the defendant. 35 From late October 1996 Margaret Ford was employed part time on Hurlstone by the partnership, and was credited with wages of $96 per fortnight. This was not paid to her in cash, and part of it was later appropriated by Joan Birt to pay $1400 for plumbing work completed on the new house after occupation. The employment was not nominal and Margaret Ford in fact did part time work on Hurlstone, both farm work and assistance to Joan Birt in the house. 36 The plaintiff's 1999 proceedings bring forward for determination a contention that arrangements between Margaret Ford and Joan Birt have already conferred on Margaret Ford an equitable interest in the new house and surrounding land. 37 The defendant's solicitor contended and conducted his case on the basis that arrangements between Joan Birt and Margaret Ford had created a life tenancy, and made an open offer under which the defendant made available to the plaintiff a somewhat more ample position see t.11, 29 and 37; to the effect that the defendant would transfer the house and the surrounding 5 acres later amended to 5 hectares,freehold to the plaintiff, on conditions that, although the defendant was to pay the cost of the subdivision, Margaret Ford was to repay it on any sale (and the costs were to be secured by a mortgage) and that the plaintiff was to securely fence the boundary. Another condition was that a right of way 20 metres wide was to be created, presumably to give access to Kybeyan Road. Generally the defendant's position was to the effect that as the plaintiff already had an entitlement to a life estate under the arrangement she had made with Joan Birt it was not appropriate that any further provision should be made for her. 38 It is in my view clear that no arrangements between Joan Birt and Margaret Ford created a life estate or any other legal or equitable interest of Margaret Ford in any part of Hurlstone. Of course no subdivision plan was prepared, approved by the Municipal Council or registered as a deposited plan, and no memorandum of transfer of any interest was ever prepared or registered. There is no signed writing creating or evidencing the creation of any equitable interest in the land and conforming with s.23C or subs.54A(1) of the Conveyancing Act 1919. There is no document which could arguably be a writing, note or memorandum signed by either party for the purpose of those provisions. Two different forms of a document headed "Agreement" and written out in the handwriting of Joan Birt are in evidence. Neither of these is dated or signed. The two forms are similar but not identical. The first one produced by the defendant is annexure A to his affidavit of 3 April 1998 and is wholly in Joan Birt's handwriting except for a short note written by Mr John Clarke, solicitor. It is the defendant's evidence that Joan Birt gave this document to his solicitor Mr John Clarke at his office and stated "We have made an agreement with Marnie "(meaning the plaintiff)" and we want you to put this into a legal agreement". He says that this happened on the occasion on 21 November 1996 when Joan Birt signed her will. Apart from the statement attributed to Joan Birt that an agreement had been made with the plaintiff there is no evidence which would associate the plaintiff with this document in any way. Nor is there any evidence explaining why, if instructions were given to make the document into a legal agreement, nothing further happened. At another part of the case it seemed to be suggested that agreement was reached about mid-December (but I do not accept that contention either.) I do not regard the defendant's evidence about the statement made by Joan Birt to Mr Clarke as reliable but if that statement were accepted it may suggest that in Joan Birt's view the agreement was not yet a legal agreement; the words attributed to her are equivocal. 39 Another version of this document is Exhibit 7; most of Exhibit 7 is also in Joan Birt's handwriting but there are extensive pencil notes written on it by the plaintiff. The notes written by the plaintiff show from their terms that she considered the expressions in Exhibit 7 closely and did not accept many of them. On a whole view of Exhibit 7 it does not bear out that there was an agreement, however informal, in accordance with its terms and demonstrates from the nature of the plaintiff's notes that there was not. 40 Evidence did not establish clearly when these two versions were written by Joan Birt or when Margaret Ford wrote on them. On behalf of the defendant it was suggested that these things happened during or in relation to the visit by the Fords to Hurlstone on 17, 18 and 19 August 1996 but I do not regard that as having been established. 41 The plaintiff's evidence would show that she made her notes on Exhibit 7 on a day which appears to have been about mid December, when Mr Benesch was at Hurlstone. I do not accept the defendant's evidence that, in what appears to be the outcome of the preparation of Exhibit 7, the testatrix gave the plaintiff an explanation to the effect that the plaintiff had an agreement providing for a Life Estate, that the testatrix read out the Will and explained that the testatrix had left everything to Daniel Birt and that the life tenancy was created to ensure that the plaintiff had a permanent roof over her head, and that the testatrix said that the reason for that was to make sure that Terrence Ford did not get hold of the property. In my finding, the testatrix' expressions of her intentions reflected in Exhibit 7 did not ever reach the stage of an arrangement or established position, even to the limited degree of clarity which its terms could support. 42 The defendant under cross-examination was in great difficulties in explaining how it was that when he first came to give evidence in his affidavit of 3 April 1998 he did not produce or refer to the version which is now Exhibit 7. His evidence was to the effect that he found the document now Exhibit 7 in the house after his mother's death, and took it to his solicitor's office about August 1997, but that he had forgotten it and it was overlooked when he made his affidavit in April 1998 and was only found again much later. Although he was markedly unimpressive as a witness and there is a basis on which it could be inferred that he had attempted to suppress Exhibit 7 I do not regard that as a correct view of the facts; the probabilities favour a finding that his account of finding the document, giving it to his solicitor, overlooking it and its later being adverted to again is correct. However the document in the state it is in with the plaintiff's notes, and the end result of those notes which show unsettled positions on a number of different points establishes that there was no agreement in the terms which Joan Birt wrote in Exhibit 7. 43 Although Exhibit 7 is difficult to follow it does not appear to me that it states that Margaret Ford was to have a life tenancy or any freehold interest. It shows that the testatrix considered providing the plaintiff with housing, and that she was aware of her need in that respect, but even if Exhibit 7 had been put into effect it would not meet the plaintiff's need for housing by providing any clear right to have it. 44 The testatrix's will, which she executed at Mr Clarke's office in Cooma on 21 November 1996 after her hospitalisation and diagnosis, provides in a very limited way for the plaintiff to have income but only if the provision for the defendant did not take effect. The will does not record or, it seems to me, recognise even by implication that the plaintiff already had any entitlement to any interest in Hurlstone. 45 Exhibit 7 refers internally to an attached plan, but no plan is attached to it. No evidence shows that there ever was an attached plan, or what the plan showed. For this reason, if there were no other reason, it would not be possible to give effect to Ex. 7. 46 The plaintiff distinctly denied that the basis on which she moved to Hurlstone and moved into the house was an arrangement made by Joan Birt under which the plaintiff would get a life Estate in the cottage. The plaintiff gave an account of dealings in which Joan Birt at times held out to the plaintiff that she would have a home and land and that Joan Birt would contribute $30,000 as the cost of building it, but there was never anything which could be thought of as an agreement which was enforceable, even under the doctrine of part performance, because there was never any real definition of the parcel of land which was affected or any finality in the discussion; the discussions proceeded inconclusively and very late in her life Joan Birt told Margaret Ford to the effect that she had left matters in Daniel Birt's hands. I accept that this inconclusive narration represents substantially what happened, and I find that no rights to the cottage and no interest in any land has been conferred on the plaintiff. It is not established that the plaintiff has any claim supported by proprietary estoppel. 47 In my finding it was contemplated by the testatrix that the plaintiff would be given some right or some basis on which to expect the cottage would be her own, but what those rights were to be was never expressed on any clear basis and never established by any arrangement between them. Exhibit 7 bears on its face the signs that agreement did not emerge. Until very late in her life the testatrix continued to think of conferring some right on Margaret Ford but did not ever do so, and towards the end of her life told Margaret Ford to the effect that she had left the matter to Daniel Birt to attend to. This was a strange state in which to leave her affairs, as a person of education with access to a lawyer. 48 The plaintiff gave evidence to the effect that she was not aware during her mother's lifetime that Daniel Birt was a joint owner of Hurlstone. This was challenged with vigour, on the basis that the plaintiff had access to papers, rate notices and other documents, which if she had adverted to their implications would have shown that Daniel Birt was a co-owner. Exhibit 7 seems to suggest in places that he was a co-owner, although its indications are not uniform. On some significant occasions, including applications to Council, Joan Birt acted as if she were the sole owner. While Margaret Ford could well have found out the true position if she had thought fit to investigate it, I see no reason why she should have done that, or why she should have carefully considered the implications for ownership of papers which came to her attention when, for example, she was writing up books for the testatrix, or which otherwise she could have seen. While I accept that the plaintiff did not know until after the testatrix' death that Daniel Birt was a co-owner, I do not regard the subject as of any importance for the outcome of the proceedings. 49 When the plaintiff and her husband left Pambula they had $4,000 or $5,000 cash. The plaintiff now appears to have no assets of substantial value. She and her husband jointly own two town lots at Nimmitabel, but the highest value suggested for those lots was $10,000; that figure was not established by evidence. As they had already acquired the lots before their latest bankruptcy there is a risk that the lots may be claimed by the trustee of that bankruptcy. It would be imprudent for the Fords to develop those lots. Their most substantial asset now appears to be a new Ford Falcon car bought by Terrence Ford. They also have a hire purchased truck in half shares. 50 The position put by Daniel Birt in his evidence was to the effect that it was left to him what he should do for the plaintiff with respect of occupation of Hurlstone. This is illustrated by the following passage in his cross-examination: (t. 147 Line 21 to end of p.147) "Q. You told Marnie, didn't you, that she was not cut out of the will, that your mother just never told her what she wanted you to do? A. What I was to do, that's correct.

Q. And you were to determine when it was right to tell Marnie what was to be her share of the will? A. No, I was to tell her what I was to do for her. Q. So, you are saying to his Honour that it was left to you to determine what should be done for Marnie? A. It was left to me what I should do for Marnie. Q. And you were only willing to do anything for Marnie provided she earned your trust? A. I had actually already done that for Marnie, but she doesn't know about it. Q. What have done for Marnie that she does not know about it? A. I entered Marnie to my will. Q. So, your idea for providing for Marnie is that she will inherit in the event that you die? A. Her life estate would be maintained even if I die. Q. That is the provision that you consider is appropriate for her? A. Yes. Q. And you have, have you not, told Marnie that her home is never in danger provided she has your trust? A. That's correct. Q. And conversely, if she doesn't have your trust, her home is in danger, that's right, isn't it? A. Not precisely." 51 When I have regard to the resources available for Joan Birt to dispose of in the last months of her life, the claims of the defendant and the provision which she made to him, and when I consider whether provision ought to be made for the plaintiff, it was not in my opinion appropriate for Joan Birt to direct all her benefactions to Daniel Birt, and in doing so she did not make adequate provision for the proper maintenance and advancement in life of the plaintiff. In my judgment the provision which ought to be made for the plaintiff by the order of the court is a provision which will provide the plaintiff with a modest fund which will contribute substantially, not necessarily entirely to her need to obtain housing in or near Nimmitabel. 52 The nature of the defendant's claim and needs require that the provision made for the plaintiff should be modest; the defendant cannot engage in farming and grazing unless he has an endowment worth several hundred thousand dollars, and the direction which his life has taken thus far means that he is very much limited to that career. His claims and those of the plaintiff are such that he should take substantially the greater part but not all of the assets available. Although it might be feasible to obtain a town planning and subdivision decision which would enable some part of Hurlstone including the cottage to be subdivided so as to be given to the plaintiff, I do not think that this is the appropriate form for provision to take. Hurlstone is not by any possibility a large or prosperous holding; light grazing is as the valuer's evidence shows the highest and best use which can be made of it, and any reduction in its size would be unfortunate. There is a history of conflict between the parties which would be continued and possibly even made worse if they were to continue to occupy neighbouring houses on a rural property 9 km from town after the decision in these proceedings, which were conducted with forceful advocacy and with indications of profoundly hostile feelings. It would be very unfortunate if these parties lived in close proximity in the future. 53 The history of the plaintiff's economic life to date, and of her husband's life, incline me towards moderation in the provision to be ordered. They have no real success in accumulating capital in 20 years of endeavour, he has been bankrupt three times and she twice. There is some degree of hazard in committing family funds to her prosperity, and the amount so put at risk should be carefully restricted. 54 I see the possibility that the plaintiff may not use the amount ordered to be paid to her well; for example, it might get swallowed up in some further business venture of her husband's. I cannot prevent her from making inappropriate use of a provision, but the possibility that she might do that does not destroy her claim to have provision which she can use towards providing for her housing need. The provision will be hers, and will not belong to her husband. She now has considerable experience of life, much of it adverse, including experience of the struggle to obtain secure long-term housing, and it appears to me to be reasonable to hope for a good outcome. In my view I have dealt appropriately with the possibility that the provision might be misused by awarding no more than a moderate amount. 55 I turn to address s.7 of the Family Provision Act 1982. The plaintiff is an eligible person. She is a child of the testatrix. No previous order for provision out of the Estate has yet been made. In my opinion provision ought, having regard to the circumstances at the present time, be made for her maintenance and advancement in life, the basis of the opinion being the facts determined in these reasons. In my opinion the amount of the provision is as set out in my orders. 56 I turn to subs.9(2). No provision was made in favour of the plaintiff by the testatrix during her lifetime or out of her Estate. 57 In terms of subs.9(3) I take into consideration contributions made by the plaintiff by providing services for the welfare of the testatrix, to which I have referred in this judgment. I also take into consideration the character and conduct of the plaintiff. The defendant's solicitor contended that her conduct disentitled her to provision. In my opinion the plaintiff's character and conduct are not factors adverse to her claim. There is nothing in her character which is of any real adverse significance on the question of what provision ought to be made for her out of the Estate and Notional Estate in the context of the lives and personal histories of the family members. The unsettled lives, many moves from place to place, history of failed projects and bankruptcies and failure to accumulate assets do not appear to me to be blemishes of the plaintiff's character and conduct in relation to her mother. 58 It is not appropriate to exclude people who have not made an economic success of life from testamentary benefactions and, on the contrary, needs associated with a person's capacity and life circumstances support a claim for provision, within prudent limits so that no undue proportion of the family resources is put to further hazard. In her personal relationship with her mother the plaintiff appears to me to have behaved properly, and to have enjoyed a good and non-conflictual relationship with her mother in which she gave her mother assistance, including assistance in business affairs and conduct of the household and personal care when ill. The plaintiff was repeatedly in need of assistance herself. The plaintiff had family responsibilities to other people, her husband and her daughter, which also claimed her attention. 59 By contrast Daniel Birt showed close loyalty to his mother, obtained appropriate training for a farming career, pursued other studies, and obtained employment from time to time, but when Joan Birt embarked herself and him on the Hurlstone project, he gave it all appropriate attention, formed a household with his mother, gave his time to rural work on Hurlstone and provided much of the labour there. His claims for provision out of her Estate and Notional Estate are strong and the testatrix recognised them. In my judgment it is appropriate that the provision for him should be much greater than the provision for the plaintiff, but his claims are not so strong as to exclude the plaintiff's claims altogether. I have taken into consideration the matters set out in subs.9(3) as appears in these reasons. 60 The only other person referred to in evidence who may be an eligible person is the testatrix' former husband, who has not made a claim, and his interests are to be disregarded. See subs.20(1). 61 I turn to the provisions which relate to Notional Estate. In my finding the testatrix entered into two prescribed transactions within the meaning of s.22. One was the disposition of her beneficial and legal joint interest in Hurlstone to Daniel Birt. This disposition was effected by a series of events; the contract by which she purported to sell her interest to Daniel Birt, the Memorandum of Transfer recording a consideration of $120,000, and the pre-concerted acknowledgments which established that payment of $120,000 was not in fact to take place. This disposition was in substance a gift; in my view it was effective in Equity and was perfected by the change of legal ownership which took place by survivorship on her death, and further confirmed with the transfer of registered proprietorship which took soon afterwards. The disposition is a prescribed transaction within subs.22(1) and also within paragraph 22(3)(b). No valuable consideration was given for it. The payment to Daniel Birt of $87,501.98 out of the partnership bank account was also a prescribed transaction within subs.22(1) and no valuable consideration was given for it. 62 Upon these facts the Court has power under s.23 to make an order designating as Notional Estate of the testatrix any property held by Daniel Birt. 63 In terms of s.26, each of the dispositions disadvantaged the Estate of the testatrix. 64 I turn to s.27. I have considered the matters referred to in subs. 27(1). The defendant has long had reasonable expectations of becoming the owner of Hurlstone, but in my view the importance of his expectations is outweighed by the need to make modest provision for the plaintiff and by consideration of the other benefits which have passed to Daniel Birt and have either been expended or are now in his hands in a form less traceable than his ownership of Hurlstone. In my view the designation of Hurlstone as Notional Estate accords with the substantial justice and merits involved. I have had regard to the matters referred to in subs. 27(2), as appears from these reasons. 65 I turn to s.28. The assets in the Estate have not been maintained in a separate and identifiable form but have been incorporated and used in the defendant's affairs, as he has been entitled to do. No money is now readily available. The assets which actually form part of the Estate of the testatrix are not now in a form in which they are sufficient to meet the provision now ordered. 66 I have not yet considered the costs of the proceedings and will deal with them separately when the parties have had an opportunity to consider these reasons and bring forward any special matters requiring consideration in relation to costs. 67 Orders:

Order pursuant to s.7 of the Family Provision Act 1992 that provision be made for the plaintiff out of the estate and also out of the notional estate of the testatrix by paying to the plaintiff the sum of $80,000.

Order pursuant to s.23 of the Family Provision Act 1992 that the freehold property known as Hurlstone being Lot 2 Deposited Plan 732581 and Lot 5 Deposited Plan 7505662 be designated as notional property of the testatrix.

Order pursuant to subs.15(1) of the Family Provision Act 1982 for the purpose of securing the due performance of order 1 that the property known as Hurlstone referred to in Order 2 be charge with the payment to the plaintiff of the provision under Order 1 and also with any interest and costs to the payment of which the plaintiff may become entitled in relation to the estate of the testatrix.

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Judgment (14 paragraphs)

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