MATTER : Section 7(2)(b) of the Inheritance (Family and Dependants Provision) Act 1972 as amended

BETWEEN : GAIL BEATTIE as Executrix of the Estate of JOHN BEATTIE

Inheritance (Family & Dependants Provision) Act - Application for extension of time to bring application - Turns on own facts

Inheritance (Family and Dependants Provision) Act 1972 (WA), s 7(2)

Clayton v Aust (1993) 9 WAR 364

Grigoriou v George Nitsos (as the Executor of the Estate of Athanasois Nichos) & Ors [1999] WASCA 42

Re Salmon (Dec) [1981] Ch 167

Amos v Amos [1966] VicRp 61; [1966] VR 442

Coates v National Trustees Executor and Agency Co Ltd [1956] HCA 23; (1956) 95 CLR 494

Coffey v Bennett [1961] VicRp 41; [1961] VR 264

Luciano v Rosenblum [1985] 2 NSWLR 65

Webster v Lampard [1993] HCA 57; (1993) 177 CLR 598

White v Barron [1980] HCA 14; (1980) 144 CLR 431

Young v Kestel [2003] WASCA 190

1 MASTER SANDERSON: This is the plaintiff's application for an extension of time within which to bring proceedings under the Inheritance (Family and Dependants Provision) Act 1972 (WA) ("the Act"). Section 7(2) is in the following terms:

"No application under subsection (1) of this section shall be heard by the Court unless -

(a) the application is made within 6 months from the date on which the Administrator becomes entitled to administer the estate of the deceased in Western Australia; or

(b) the Court is satisfied that the justice of the case requires the applicant be given leave to file out of time."

2 John Beattie ("the deceased") died on 4 October 2001. Probate of his Will was granted to the plaintiff on 25 September 2002. Thus proceedings should have been issued pursuant to s 7(2)(a) of the Act on or before 25 March 2003. The application for leave then was filed some 11 months after the time limited for commencing proceedings had expired.

3 There was no dispute between the parties as to the principles applicable to a case such as this. In Clayton v Aust (1993) 9 WAR 364, Malcolm CJ by reference to the decision of Megarry VC in Re Salmon (Dec) [1981] Ch 167 laid down a number of guidelines for dealing with applications for an extension of time under the Act. These "guidelines" (as Megarry VC called them) can be summarised as follows:

1. The discretion to grant an extension of time is unfettered. No restrictions or requirements of any kind are laid down in the Act. The discretion is plainly one that is to be exercised judicially and in accordance with what is just and proper.

2. The onus is on the plaintiff to establish sufficient grounds for taking the case out of the general rule and depriving the respondents to the action of the protection offered by the statutory limitation on the time within which an action must be brought. The limitation is not a mere procedural time limit imposed by the rules of court. The applicant must make out a substantial case for it being just and proper for the court to exercise its statutory discretion to extend time.

3. The whole of the circumstances must be looked at and not least the reasons for the delay and also the promptitude with which the letter before action or otherwise was issued.

4. It is material to know whether or not negotiations commenced within the time limit. If negotiations were commenced within time and ran out while discussions were taking place, this might encourage an extension of time being granted. If negotiations were initiated after the time had expired without the time limit point being taken, this too may aid the plaintiff.

5. It is relevant to consider whether or not the estate has been distributed as at the date of the application. The fact that the beneficiary has changed his or her position consequent upon the distribution of the estate is a factor weighing against the grant of an extension of time.

6. It is relevant to consider whether a refusal to extend the time would leave the plaintiff without redress against anybody.

4 To these six criteria may be added one further matter. In considering why proceedings were not brought within time it is relevant to consider not only the conduct of the plaintiff's solicitors but of the plaintiff himself. Although it may be the case that a plaintiff would have a good cause of action against his solicitors if an extension of time was refused, if an examination of the facts shows that the failure to issue within time was not the fault of the plaintiff himself then this may be a factor in favour of a grant of leave: see Grigoriou v George Nitsos (as the Executor of the Estate of Athanasois Nichos) & Ors [1999] WASCA 42.

5 In setting out these guidelines I do not mean to suggest that they are in any way rigid or that, to adopt the time honoured phrase, "the categories of case are closed". Rather they are guidelines to be applied in every case; but each case should be considered on its merits.

6 Before dealing with the facts of the case I should say something about the representation of the defendants. The first and second defendants have entered an appearance to the originating summons and both were represented at the hearing by counsel. The third defendant is a minor. She has been served with the papers but no appearance has been entered on her behalf. She was not represented at the hearing. This matter was drawn to the attention of Acting Master Chapman when this matter came on for hearing on 14 April 2005. As I understand the position, all parties agreed that it was not necessary at this stage of the proceedings for the third defendant to be independently represented. The learned Acting Master decided that the leave application could proceed without the third defendant being represented. While I have some concerns about that course of action it is difficult to see that material could have been put before the Court on behalf of the third defendant which would have taken the matter anywhere beyond the case put by the first and second defendants. On that basis the matter proceeded.

7 Turning then to the facts of the case, the plaintiff is the widow of the deceased and the executrix named in the Will. The plaintiff and the deceased lived in a de facto relationship from 1986 until their marriage on 22 January 2000. As a result of a property settlement on the dissolution of an earlier marriage the plaintiff became in 1986 the registered proprietor of a property at 4 Urbahns Way, Hillary ("Urbahns Way"). In 1993, during the course of the de facto relationship the plaintiff gave to the deceased a 25 per cent interest in the Urbahns Way property. This 25 per cent interest in the Urbahns Way property forms part of the estate of the deceased.

8 The plaintiff says that she was partially dependant on the deceased during her de facto relationship with him. In 1999 she retired from external part time work. She then worked exclusively in a business known as Edge Maintenance Services Pty Ltd she and the deceased had built up since 1996. She says that the deceased did the work for the clients and she managed the office including the accounts and the paperwork. From July 1997 the deceased's eldest son, the first defendant, also worked in the business doing work for clients. In late 1999 the deceased and the plaintiff purchased a residential property at 47 Harcourt Drive, Hillarys ("Harcourt Drive"). This property was purchased as an investment using a loan secured over Urbahns Way.

9 In November of 2000 the deceased was diagnosed with a brain tumour. As I have indicated above he passed away on 4 October 2001. After the deceased was diagnosed with the brain tumour he proceeded to get his affairs in order. The plaintiff and the deceased stopped working in the business of Edge Management Services Pty Ltd and in December 2000 they gave the business to the first defendant. The business was the only material asset of the company and thereafter the company was liquidated. The first defendant operated the business under the new name of Edge Systems from January 2001.

10 To assist them to put their affairs in order, the plaintiff and the deceased sought the assistance of Mr Stuart Silbert of Talbot and Olivier and Mr John Athans, an accountant of Athans and Taylor. The deceased's estate was limited. Relevantly for the purposes of this application the deceased had certain superannuation entitlements in a superannuation fund with C+Bus Superannuation. He also had a personal superannuation fund - the Beattie Super Fund. Both the plaintiff and the deceased were members of the Beattie Super Fund. The deceased's estate was the beneficiary of his proportion of the Beattie Super fund. The evidence of the plaintiff is to the effect that the money standing in this fund has been used to pay tax and accounting fees owed by the estate and that the balance will be applied to the payment of other creditors of the estate.

11 The plaintiff was the deceased's nominated beneficiary of his C+Bus superannuation policy. The plaintiff says that she had a number of discussions with the deceased about his affairs and he not only advised her that she was the nominated beneficiary under the policy but explained why she had been so nominated. Ordinarily, such evidence might well be ruled inadmissible. But counsel for the defendants raised no objection to this evidence and indeed relied upon it in part in her submissions. In essence, what was intended was that the proceeds paid out under the policy would enable the plaintiff to buy the deceased's 25 per cent share of the Urbahns Way property and the investment property which would fall into the estate. The plaintiff says that the deceased's affairs were structured in this way so as to ensure that the second defendant, the youngest son of the deceased would not receive a lump sum pursuant to the Will to enable him to feed a drug addiction. There is no reason to doubt the plaintiff's evidence on this point. However, it must be said that the logic behind the scheme was flawed. I will return to these matters later in these reasons.

12 Communications with the trustee of the C+Bus superannuation policy commenced in October 2001 shortly after the death of the deceased. They continued without a final decision on pay out until 4 September 2003 nearly two years after the death of the deceased and 12 months after probate had been granted. It is to be noted that these negotiations were not between the parties in the sense that negotiations are referred to in the authorities. The negotiations took place between the trustee of the superannuation fund and the plaintiff. Nonetheless the fact of these negotiations and the length of time they occupied are in my view, relevant considerations on this application. Counsel for the defendants did not make any submission to the contrary.

13 Despite the deceased's nomination of the plaintiff as the beneficiary of the policy the trustee decided to pay only 70 per cent of the fund to her. The remaining 30 per cent was distributed equally between the first and the second defendants. This determination of the trustee was subject to an objection by the plaintiff and when the trustee decided to increase the proportion of the fund to be paid to the plaintiff. That decision was subject to an objection by the second defendant. In the result the trustee reverted to its original proposal and paid 70 per cent of the proceeds of the policy to the plaintiff.

14 The plaintiff says that as at the date of the death of the deceased his estate had assets of about $95,000 (excluding the 25 per cent interest in Urbahns Way) and liabilities of about $114,000. The Harcourt Drive property was valued at $160,000 and was subject to a mortgage for that amount. The rent on the Harcourt Drive was insufficient to meet the mortgage repayments and those payments had to be met by the plaintiff. The plaintiff also met other liabilities of the estate. As at the date of this hearing, the plaintiff says that certain assets of the estate have been liquidated including the Harcourt Drive property. That has been sold for $241,000 - the property having increased significantly in value in the last four years. The plaintiff says that as a result of her efforts and her payments and at the sale of Harcourt Drive the estate will be left with the 25 per cent interest in the Urbahns Way property and negligible debts.

15 The plaintiff says that she is not now in a position to purchase the 25 per cent interest in the Urbahns Way property held by the estate. The value of the property has appreciated from $280,000 in December of 2001 to $400,000 as at today's date. She says that, apart from other difficulties (which I will detail below) directly the superannuation payout she received is not sufficient to allow her to purchase the 25 per cent interest in Urbahns Way. In other words the deceased's original intention as discussed and approved by the plaintiff has been thwarted in part due to the delay in finalising the superannuation payout.

16 To complete the factual picture some consideration needs to be given to the terms of the Will of the deceased. Of particular relevance are cls 6 and 7 of the Will. To understand these clauses it is necessary to explain that the plaintiff was appointed the executor and trustee of the Will: see cl 3. Provision was made for an alternative trustee if the plaintiff was unwilling or unable to act. The position of the alternative trustee is irrelevant for present purposes.

17 Mark Barzel is the father of the plaintiff. He has established a family trust and the plaintiff is a discretionary beneficiary under the terms of that trust. There is evidence to the effect that she receives payment of approximately $1,000 per month from the trust. Against that background cls 6 and 7 of the Will are in the following terms:

"6. I GIVE AND DEVISE UNTO my Trustee all my interest in the property situate at 4 Urbahns Way, Hillarys aforesaid:

(a) To permit my said Wife GAIL BEATTIE to have the use occupation and enjoyment thereof for so long as she wishes to reside therein until her death she paying all rates and taxes and all other outgoings thereon and keeping the same in a good and habitable state of repair fair wear and tear and damage by fire lightning flood and tempest excepted and she keeping the same insured against fire to the satisfaction of my Trustee AND I EMPOWER my Trustee at the request of my said Wife GAIL BEATTIE to see my interest in the said residence for a consideration not less than the market value at that time as declared by two independent valuers and appointed by my Trustee and I DIRECT my Trustee to distribute my interest in the residence in accordance with Clause 7 of this my Will.

(b) Upon my said Wife vacating the said residence I DIRECT that my Trustee will in conjunction with my said Wife or should my said Wife die I DIRECT that my Alternate Trustee will in conjunction with the Trustees of the Estate of my said Wife sell the said residence and stand possessed of my interest in the net proceeds of the sale and I DIRECT if my said Wife has vacated the said residence my Trustee and if my said Wife has died my Alternate Trustee to distribute my interest in the net proceeds of the sale in accordance with Clause 7 of this my Will.

7. I GIVE DEVISE AND BEQUEATH the rest and residue of both my real and personal estate of whatsoever nature or kind and wheresoever situate UNTO my Trustee UPON TRUST (subject to the power of postponement and directions hereinafter contained) to sell call in and convert into money the same or such part thereof as shall not consist of money and to stand possessed of the moneys produced by such sale calling in and conversion and of such part of my personal estate as shall consist of money and my Trustee shall at her discretion invest the said moneys and I empower my Trustee from time to time at such discretion as aforesaid to vary such investment and to stand possessed of the said trust moneys and investments for the time being representing the same Upon Trust to pay the net annual income arising therefrom Unto my said Wife, GAIL BEATTIE during her lifetime or until the death of MARK BARZEL of Apartment 21A, 52 Liege Street, Woodland in the said State, Company Director AND upon the death of my said Wife or upon the death of the said MARK BARZEL whichever shall first occur I DIRECT AND DECLARE that my Trustee will pay:

(a) One half share thereof UNTO my said Son PAUL RONALD BEATTIE absolutely PROVIDED THAT if my said Son PAUL RONALD BEATTIE shall have died during my lifetime or during the lifetime of my said Wife leaving a child or children surviving him who shall attain the age of Twenty Five (25) years then the last mentioned child or children shall take (if more than one equally between them) the share which his her or their Father would have taken under this my Will if my said Son PAUL RONALD BEATTIE had survived me and my said Wife and attained a vested interest;

(b) One quarter share thereof UNTO my Granddaughter TIFFANY FRANCES BEATTIE when my said Granddaughter shall attain the age of Twenty Five (25) years absolutely;

(c) the remaining one quarter share thereof UNTO my Trustee hereinbefore named UPON TRUST and my Trustee shall at her discretion invest the said moneys and I EMPOWER my Trustee from time to time at such discretion as aforesaid to vary such investments and to stand possessed of the said trust moneys and investments for the time being representing the same until the death of my said Wife or the death of the said MARK BARZEL whichever shall first occur when:

(i) PROVIDED THAT my said Son DALE BRADLEY BEATTIE can submit medical proof UNTO my Trustee that he has been free of any addiction to drugs for a term of not less than Five (5) years I DIRECT my Trustee to pay UNTO my said Son the nett annual income arising therefrom during his lifetime and upon the death of my said Son I DIRECT AND DECLARE that my Trustee shall stand possessed of the balance of my residuary estate as to both capital and income in Trust for my said Granddaughter TIFFANY FRANCES BEATTIE when my said Granddaughter shall attain the age of Twenty Five (25) years absolutely;

PROVIDED FURTHER THAT if my said Son can submit medical proof UNTO my Trustee that he is free of any addition to drugs however has not been free of any addiction to drugs for a term of less than Five (5) years;

(ii) I DIRECT my Trustee to retain the bequest and interest accrued until the death of my said Wife or the death of the said MARK BARZEL whichever shall first occur and PROVIDED my said Son can submit medical proof UNTO my Trustee that he has been free of any addiction to drugs for a term of not less than Five (5) years I DIRECT my Trustee to pay UNTO my said Son the nett income that has accrued from the date of death of my said Wife or the date of death of the said MARK BARZEL whichever shall first occur until the sixth anniversary of my death and thereafter I DIRECT my Trustee to pay UNTO my said Son the nett annual income arising therefrom during his lifetime and upon the death of my said Son I DIRECT AND DECLARE that my Trustee shall stand possessed of the balance of my residuary estate as to both capital and income in Trust for my said Granddaughter TIFFANY FRANCES BEATTIE when my said Granddaughter shall attain the age of Twenty Five (25) years absolutely;

PROVIDED FURTHER THAT if my said Son is unable to comply with the conditions embodied in Clause 7(ii) by the sixth anniversary of my death I DIRECT AND DECLARE that my Trustee shall stand possessed of the balance of my residuary estate as to both capital and income in Trust for my said Granddaughter TIFFANY FRANCES BEATTIE when my said Granddaughter shall attain the age of Twenty Five (25) years absolutely.

PROVIDED FURTHER THAT I DECLARE that during the term my said Wife is entitled to the net annual income of the Trust Estate my Trustee may in my Trustee's discretion apply from time to time all or any part of the corpus of the Trust Estate for or towards the maintenance of my said Wife and I DECLARE that I consider distribution of the whole or any part of the corpus of my Trust Estate should only be effected in the case of a dire emergency."

18 Clause 6 of the Will gives the plaintiff a life interest in the 25 per cent of the Urbahns Way property which forms part of the deceased's estate. Clause 6(a) empowers her to sell that interest if she decides to do so. But nowhere in the Will is the plaintiff empowered to purchase that 25 per cent interest in Urbahns Way. If she wished to do so she would need to obtain leave of the court. That is a rather curious position particularly in light of what the plaintiff says about the reasons why the Will was structured in the way it is.

19 Even more curious is cl 6(b). That clause anticipates the Urbahns Way property being sold if the plaintiff vacates the residence. But the Will could not force such a sale. The plaintiff owns 75 per cent of Urbahns Way and the estate is not in a position to force a sale under the provisions of the Property Law Act or otherwise. So the plaintiff could move out of Urbahns Way, rent it out, take up residence elsewhere and despite the terms of cl 6(b) of the Will and the estate could not force the sale of the property. It is difficult to see what effect cl 6(b) of the Will might have even upon the death of the plaintiff.

20 It is also worthy of note that cl 7 gives to the plaintiff a life interest in the proceeds of the sale of the estate's 25 per cent interest in Urbahns Way upon the sale of that property. Whether or not the plaintiff could use the money realised upon the sale to invest in another property is I think an open question. It is not appropriate that I should venture any opinion on this point in the context of this application. Suffice it to say that the position appears to be arguable.

21 The first question to be considered is the reason for the delay in bringing the application. The plaintiff's position can be summarised in this way. She says that she was not in a position to commence proceedings until there was a final determination by the superannuation trustee as to the percentage of the superannuation payout she was to receive. So on the plaintiff's case it was September 2003 before she was in a position to make a proper determination of her position. Furthermore, the plaintiff says that she was not aware of the time limit under the Act. She deals with this matter rather briefly in two paragraphs of her affidavit sworn 13 February 2004. These two paragraphs are in the following terms:

"40. I am told that the time within which I had to apply under Inheritance Act [sic] for the will to be varied to make adequate provision for my maintenance and advancement in life expired on 25 March 2003, being the date 6 months after the grant of probate.

41. At that time, I was not aware of the time limit to make application. Further, while I was aware that [the deceased] had made little provision for me by his Will, I was not aware that the events that have conspired to cause me such hardship would occur."

22 It is difficult to understand why the plaintiff was not more fulsome in her explanation as to the advice she received in relation to the Act. She does not say that she was unaware of the existence of the Act nor does she say whether or not she received advice that she might have a claim under the Act even prior to the final determination by the trustee of the superannuation fund as to the percentage of the fund she would receive. It is clear from a reading of the evidence that the plaintiff continued to take advice from the solicitors who drafted the deceased's Will in relation to the superannuation payout and presumably other aspects of the administration of the estate. The plaintiff has changed solicitors and she says that it was in January 2005 that she received advice that she might make an application under the Act: see par 45 of the plaintiff's affidavit.

23 On behalf of the defendants it was submitted that the plaintiff's explanation for the delay in bringing the application is unsatisfactory. Counsel pointed out that the plaintiff discussed succession planning with an experienced solicitor and an accountant. Furthermore, counsel pointed to the fact that the plaintiff has said nothing about the advice that she received - in other words there was not a full and frank disclosure of what advice was given, whether the advice was to the effect that proceedings should be issued and if that was the advice, why it was not followed. Counsel submitted that as the onus was on the plaintiff and as the limitation is substantive and not procedural, it was said the plaintiff has not done enough to adequately explain the delay.

24 In my view there is no proper explanation for the delay in making this application. I have reached that conclusion largely for the reasons articulated by counsel for the defendants. I accept that the plaintiff was not aware of the time limit under the Act. There is no evidence to the contrary and there is no reason to doubt what she says. But she has been advised throughout and it is difficult to imagine that the issue of the Act was not raised. If it was raised, what advice was given? If it was not raised, then what steps did the plaintiff take to ascertain precisely what her rights were with respect to the estate? None of that is explained. In weighing this application in the balance the inadequate explanation for the delay is a factor which is against the grant of an extension of time.

25 A number of the other matters referred to in the guidelines can be dealt with quite quickly. There were no negotiations between the parties before or after the expiration of the time limit which are relevant. As I have mentioned above, there were negotiations between the plaintiff and the superannuation trustees but that is a different matter. There is no question of the estate having been distributed. Really the only asset in the estate is the 25 per cent interest it has in the Urbahns Way property and the plaintiff is presently residing in that property. Nor is it the case that any beneficiary has changed his or her position in reliance upon a distribution. That then leads to the question of whether the claimant has an arguable case.

26 It was the defendants' position that the plaintiff's case was not arguable. Apart from anything else, it was submitted that the position that the plaintiff found herself in at the date of the death of the deceased was precisely as she expected. She had been involved in discussions with the deceased, his solicitor and his accountant. In fact, in her affidavit she says after these discussions and as at the date of the signing of the Will she "was satisfied that [the deceased] had made adequate provision for me": see par 23 of the plaintiff's affidavit of 13 February 2004. It is true that she conditions that statement by saying it was based upon an assumption that she would receive the full proceeds of the superannuation payout. But as counsel for the defendants demonstrated even a simply analysis of the funds available from the superannuation payout set against the cost of acquiring the estate's interest in both properties meant that there was never likely to be enough in the estate to satisfy the plaintiff's needs. Yet she expressed herself satisfied with the arrangement. That it was said was sufficient to establish that the plaintiff did not have an arguable case.

27 In my view the plaintiff does have an arguable case. It is not appropriate that I consider the merits of this case - that is to be done at a full hearing if leave is given. But the plaintiff's position is clearly arguable. She is faced with a Will which if not unworkable certainly has about it internal inconsistencies which will make it difficult to give effect to its terms. It may be (and I express no concluded view on this question) that the terms of the Will itself and the inherent difficulties that it creates are sufficient to conclude that the Will does not make adequate provision for the plaintiff. But even leaving that to one side it seems to me that it is arguable that the disposition of the 25 per cent interest in Urbahns Way is such as to not adequately provide for the plaintiff. In my view, the fact that the plaintiff has an arguable case weighs in favour of leave being granted.

28 In the end then, the exercise of my discretion comes down to balancing the plaintiff's failure to adequately explain the delay against the fact that she has an arguable case. In my view, it is the latter factor which carries the day. I am satisfied that the justice of this case requires that leave be granted. In my view, the effects of the delay are not such as to warrant leave being refused. I therefore propose to extend time to make an application under the Act.

29 There is one final point that should be mentioned for the sake of completeness. During the course of her submissions counsel for the defendants submitted that given there was only one illiquid asset in the estate, to grant leave to the plaintiff would be to impose an unreasonable costs burden on the parties when really the only compelling argument in the plaintiff's favour on any substantive hearing is that the provisions of the Will were unworkable. Counsel submitted a far better course would be to refuse leave and have the plaintiff seek directions as to the proper construction of the Will under the rights provided by the Trustees Act 1962 (WA). I am by no means sure that directions made by a Judge under the Trustees Act would solve the problems inherent in the deceased's Will. But even if that were the case and directions could be given which made the Will workable the respective entitlements of the parties could not be affected by such a decision. Under the Act it is the entitlement of the parties pursuant to the Will which can be altered. That is what the plaintiff seeks - an alteration to her entitlement under the Will. She does not by this application seek to interpret the Will. While I fully understand the reason for counsel's submissions, in my view, the Trustees Act does not provide and could never provide an answer to what the plaintiff says are her difficulties under the Will.

30 I will hear the parties as to the precise form of orders and as to costs.