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[2016] VSC 59
Supreme Court of Victoria
2016-02-26
Cameron J
Original judgment source is linked above.
TESTATOR'S FAMILY MAINTENANCE - Application by adult stepson for further provision - Whether deceased's responsibility to adult stepson discharged - Further provision ordered - Extent of provision - Administration and Probate Act 1958, s 91.
TESTATOR'S FAMILY MAINTENANCE - Application by underage disabled step grandchild for further provision - Whether deceased had responsibility to provide for underage step grandchild - Where deceased contemplated setting up a trust for step grandchild - Where trust was not established - Further provision denied.
1 John Niel Black was a dairy farmer. He died in an accident on his farm on 4 November 2012. Throughout the proceedings, Mr Black was referred to as 'Niel' and, without any disrespect to him or his family, I propose to refer to him in that fashion in this judgment.
2 Niel married his first wife, Josie, in 1981. Josie had been married before she married Niel. Josie had three sons from that first marriage. Josie died and Niel married again.
3 Carl Gerard Hunt ('Carl') is Josie's youngest son, so he was Niel's stepson.
4 Madilyn Jayne Hunt ('Madilyn') is Carl's daughter, so Niel's step granddaughter.
5 Niel married his first wife, Josie, in 1981, when he was aged 43 years. It was his first marriage. Josie had three sons from her first marriage, Martin Simon Hunt ('Simon'), Marcus Michael Hunt ('Marcus') and Carl. Josie died on 11 September 2009, after a battle with cancer.
6 In 2011, Niel married his second wife, Eve Black ('Eve'), for whom it has been conceded that adequate provision has been made in Niel's will. Niel and Eve did not have any children and Eve makes no claim on the estate.
7 Carl and Madilyn (by her litigation guardian) are plaintiffs in the two proceedings before this Court.
8 Probate over Niel's will (which was dated 25 February 2011) was granted by this Court on 23 July 2013. Probate was granted to Niel's second wife, Eve, his accountant, Anthony Davis, and his stepson, Simon, (who was Niel's first wife's son and the brother of Carl). It was common ground that the estate has a value of $17 million.
9 I will expand on the factual matters to which the Court ought have regard later in this judgment.
11 In the first proceeding, Madilyn (by her litigation guardian - and mother - Kathryn Jayne Hunt) is the plaintiff. As said, Madilyn is Josie's granddaughter, Carl's daughter and Niel's step granddaughter.
12 The second proceeding has as plaintiff, Carl. As said, Carl is Josie's son and Niel's stepson by his first marriage to Josie.
13 Both these applications are for further provision from Niel's will, pursuant to s 91 of the Administration and Probate Act 1958 ('the Act'). The Act is required to be applied as it stood at the time that probate was granted in respect of Niel's will, that is, on 23 July 2013. In general terms, the effect of Niel's will was as follows:
(1) the home and surrounding land to his second wife, Eve Black, together with superannuation fund benefits;
(2) 1% of Niel's estate to Carl's brothers (Niel's two older stepsons and Josie's two eldest sons), Marcus and Simon;
(4) 0.5% of his estate to each of his step grandchildren (which, for present purposes, includes Madilyn); and
(5) the balance of Niel's estate to the Geoffrey Gardiner Dairy Foundation ('the Gardiner Foundation'). The Gardiner Foundation was created by the Victorian Dairy Act 2000 to invest in certain projects that impact on the Victorian dairy industry and for the wider community, including management and business training for dairy farmers.
14 On 17 October 2015, Marcus and Simon settled their proceedings seeking further provision from Niel's estate. In addition to the 1% of the estate left to each of them under Niel's will, Marcus settled for $550,000 and Simon settled for $1,200,000 (inclusive of their costs). Although I have noted these settlements, I have had no regard to them for the purpose of this judgment. Carl and Madilyn's claims ought properly be independently assessed on their merits.
15 The issues for determination can be briefly stated:
(1) were either of the plaintiffs persons for whom Niel had a responsibility to make adequate provision for their proper maintenance and support;
(2) if so, whether the distribution provided for the plaintiffs under Niel's will made adequate provision for their proper maintenance and support; and
16 One need not travel further than the decision of McMillan J in Flocas v Carlson for the enunciation of the general principles to be applied in a case such as this.[1] In that case, her Honour outlined the three issues that the Court is required to determine in applications of this nature having regard to the provisions of s 91(4)(e)-(p) of the Act.
(a) Did the deceased, at the date of her death, have a responsibility to make provision for the proper maintenance and support of the plaintiffs?
(b) If so, did the deceased, in the distribution of her estate effected by her will, make adequate provision for the proper maintenance and support of the plaintiffs?
(c) If not, what is the amount of provision (if any) that the Court should order?
The factors the Court is required to consider under Part IV
(e) Any family or other relationship between the deceased person and the applicant, including the nature of the relationship and, where relevant, the length of the relationship
...
(f) Any obligations or responsibilities of the deceased's person to the applicant, any other applicant and the beneficiaries of the estate
...
(g) The size and nature of the estate of the deceased person and any charges and liabilities to which the estate is subject
...
(h) The financial resources (including earning capacity) and the financial needs of the applicant, of any other applicant and of any beneficiary of the estate at the time of the hearing and for the foreseeable future
...
(i) Any physical, mental or intellectual disability of any applicant or any beneficiary of the estate
...
(j) The age of the applicant
...
(k) Any contribution (not for adequate consideration) of the applicant to building up the estate or to the welfare of the deceased or the family of the deceased
...
(l) Any benefits previously given by the deceased person to any applicant or to any beneficiary
...
(m) Whether the applicant was being maintained by the deceased person before that person's death, either wholly or partly, and, where the court considers it relevant, the extent to which and the basis upon which the deceased had assumed that responsibility
...
(n) The liability of any other person to maintain the applicant
...
(o) The character and conduct of the applicant or any other person
...
(p) Any other matter the Court considers relevant
a wide discretion to look beyond the specific statutory matters which are set out in the immediately preceding sub-paragraphs for the purpose of determining if the jurisdictional requirement has been satisfied and, where relevant, bringing into consideration the testator's moral obligation to the claimant. [2]
18 Niel was passionate about the dairy industry and its future and was very committed to it. He had a particular interest in supporting the dairy industry and young dairy farmers. He received a dairy industry award in recognition of his 50 years of service to the industry.
19 When Niel married Josie in 1981, her two elder boys, Simon and Marcus, were either working or studying at university. Carl, however, was only aged 12 and remained in Josie's care, moving with his mother to live at Niel's farming property known as Mount Noorat. The property was a substantial property and had been in Niel's family for generations.
20 Niel financially supported Carl's educational expenses at Geelong Grammar, the school that Niel himself had attended. In the normal course, that would suggest a level of affection and commitment on Niel's behalf to both Josie and Carl. Carl was a boarder at the school, returning to Mount Noorat on school holidays.
21 Carl enjoyed his time with Niel and his mother at Mount Noorat. He felt a sense of belonging. He also felt compelled towards Niel's company at social functions and they equally enjoyed that interaction.
22 I accept that Niel played an important role in Carl's life, both in a paternal and pastoral sense. Such would be a natural reaction, in my view, from a young and maturing boy to a kind provider and the husband of his mother.
23 Having made those general observations, I also have regard to examples of the support provided to Carl by Niel, as follows:
(1) Although not a biological relationship, Carl at least considered that he had a very close relationship with Niel. This is supported by the evidence of Simon and Marcus;
(2) Niel did contribute financially to Carl and his family during his lifetime. By way of example, Niel funded Carl's engagement party and wedding, paid the deposit for his house at Hall's Gap, and assisted with his mortgage expenses. There were modest gifts for Christmas and birthdays, and for special occasions. Niel gave Carl 100 BHP shares for his 21st Birthday;
(3) The relationship between Carl and Niel was longstanding, although it is not entirely clear how that relationship was sustained following the death of Josie and Niel's subsequent marriage to Eve;
(4) Niel paid the secondary school fees of Carl's eldest daughter, Chelsea;
(5) At times, Carl and Kathryn lived in premises on Niel's land.
24 Carl is 46 years old. He was born on 26 February 1969.
25 He is married to Kathryn and they have two children, Chelsea and Madilyn.
26 In his early years, Carl lived with his biological parents, Josie and Michael Hunt. Carl does not recall terribly much of that family relationship. Subsequently, Carl had no contact with his biological father for some time, but subsequently certain issues have been resolved and they now maintain contact several times a year.
27 Carl has had a chequered health history. In particular:
(i) In July 1996, Carl was diagnosed with a degenerative disc in his lower back, resulting in him not being able to work;
(ii) In August 1996, Carl was diagnosed with clinical depression;
(iii) In November 1996, Carl had a breakdown, described as an acute dissociative state-psychotic episode and was hospitalised in Terang for one week. Subsequently, he was transferred to an acute psychiatric ward in Warrnambool. Following that stay, he also had a second stay in a psychiatric ward at a later date which has not been particularised;
(iii) In March 1997, Carl was diagnosed with chronic fatigue syndrome;
(iv) In 2000, Carl was diagnosed with bipolar mood disorder;
(v) In general, Carl had periods of hospitalisation as a result of a range of conditions, including depression, anxiety, bipolar mood disorder and respite care during times when he felt unsafe. It is said that these conditions and symptoms will be ongoing;
(vi) In 2003, Carl lost a kidney to cancer and suffers ongoing health issues as a result;
(vii) Carl suffers from myofascial pain disorder and has fatty liver disease, which predisposes him to a range of serious conditions such as cirrhosis, type two diabetes and cardiovascular disease;
(viii) Carl is receiving treatment from a dietician to address issues of concern raised by his medical advisors as to his weight and risk of diabetes;
(ix) In July 2012, Carl had surgery on his right elbow which has required ongoing physiotherapy and associated therapies;
(x) In January 2013, Carl developed an unexplained injury to the foot and describes himself as 'lame' as a result. This condition also requires ongoing treatment, including a podiatrist, occupational therapies and pain management medication. However, it is said that this injury has almost healed;
(xi) In the middle of 2013, Carl's depression became severe and he sought further medical help, resulting in the establishment of a plan for him to see a psychologist;
(xii) In August 2013, Carl suffered from a viral infection, which resulted in a relapse of his chronic fatigue syndrome, stress, anxiety and exacerbated depression and pain; and
(xiii) Carl was unemployed from 1996 to 2012 and from 2015 onwards due to these various conditions and chronic health issues.
28 Due to Carl's health condition, he is eligible for a disability support pension, on which he has been dependent for approximately 17 years, and is currently receiving approximately $13,000 per annum. He has made withdrawals from his superannuation fund under the financial hardship rules and, on his evidence, he is unlikely to gain substantial employment for the rest of his life due to issues of both his health and the paucity of his educational qualifications.
29 Dr Alister Robson of Hopkins Medical Centre in Warrnambool, Carl's usual treating doctor, gave evidence as to Carl's condition which I found troubling. I accept that Dr Robson has fully discharged his professional responsibilities, but, equally, his evidence about Carl's condition was limited and focused on Carl's anxiety, brought about by Niel's death and this litigation. It was noted in the medical records of Carl produced by Dr Robson that Carl had experienced increased anxiety after Niel died which, in Dr Robson's opinion, could have caused the deterioration of his chronic pain in his left foot. In treating those conditions, Carl was encouraged to have a gradual exercise program alongside with other medical treatment and was referred to a psychologist for further treatment. Dr Robson also noted that Carl had resigned from his previous job as a school crossing supervisor as a result of his anxiety associated with the safety concerns of the crossing where he was working. His work capacity in long term is reduced due to his medical conditions.
30 Evidence was also given by Ms Michelle French, who is an occupational therapist with 30 years' experience in the field. She has produced an Occupational Therapy Report for Carl in which his conditions were assessed. Recommendations were made in relation to additional aids and equipment, therapy and maintenance to assist Carl in his daily life.
31 In response to Carl's medical problems, Ms French suggested that Carl should receive five hours a day of assistance to help him plan the day, prepare for his meals and perform other domestic duties. The rationale behind offering this higher level of assistance to Carl, who was otherwise ambulant, was to conserve his energy and to enable him to do the activities that were meaningful and motivating for him. The assistance program was to free up the time for him to attend necessary therapy programs and steadily improve his independence. It was submitted, and I accept, that Ms French's report, on very limited access to Carl, relies mainly on Carl's own account of his health issues. Accordingly, it is difficult to give full weight to this evidence.
32 Dr Mary Wyatt is an occupational physician and was requested by the defendant's solicitors to perform an independent medical assessment of Carl for the purpose of his proceeding. In her report, Dr Wyatt confirmed that Carl had had a series of health problems as outlined in the report of Ms French. Dr Wyatt accepted that Carl's long term health problems would impact on his ability to engage in full time work. However, Dr Wyatt disagreed with the recommendations set out in Ms French's report regarding the aids and equipment and maintenance that were said to be necessary for Carl. In Dr Wyatt's opinion, equipment, such as a motorised scooter and a lift and recline chair, would remove the need for incidental exercise for Carl. Dr Wyatt was of the opinion that Carl was capable of performing daily duties, such as doing chores, and incidental exercise would benefit his conditions.
33 Madilyn is disabled and her ongoing care and maintenance will require substantial resources. She suffers from Koolen de Vries Syndrome which is a rare genetic disorder. The common characteristics of the syndrome include developmental delay, intellectual disability and weak muscle tone. This syndrome has severely impacted on Madilyn, and affects her mobility, balance, vision, hearing, communication and other sensory functions.
34 Madilyn has limited cognitive ability and will face limited life opportunities, including a limited capacity to work. Notwithstanding these challenges, Madilyn has, on the evidence, a normal life expectancy. In terms of social and life skills, Madilyn will require ongoing practical support throughout her life.
35 Kathryn's evidence was that it was Niel and Josie's wish to provide for Madilyn so as to reduce the burden on Carl and Kathryn. She said that Niel and Josie followed Madilyn's progress closely, reading her school and therapists' reports.
36 Kathryn did not give any concrete examples of acts of Niel which I would consider went beyond what community standards would expect of a loving and caring step grandfather.
Relevant factors to be considered under the Act
37 I will now deal with the relevant matters that the Court is required to consider in applications of this nature and will set out each of these matters separately in respect of Carl and Madilyn.
Any family or other relationship between the deceased person and the applicant, including the nature of the relationship and, where relevant, the length of the relationship
38 Carl and Niel had a longstanding relationship. Their relationship commenced, at least in a meaningful sense, when Carl was 12 years old when he moved to Mount Noorat prior to going to board at Geelong Grammar. Carl regarded Niel as a father figure. Niel provided for Carl in by funding his education at Geelong Grammar, providing funds for his engagement and wedding, giving him shares for his 21st birthday and giving him gifts at other times.
39 In my view, Niel demonstrated an intention to assist Carl in getting on with his life and Niel did what would be expected of him, by community standards, to assist and encourage a son (albeit being not his son) of his wife. Niel had the means to do so, and he did. I have little doubt that Niel wanted to see Carl succeed and flourish, and did what he thought was appropriate to bring about that situation.
40 Niel was a hardworking, serious and passionate dairy farmer. He was a genuine person, with no antisocial habits, he did not drink or smoke.
41 There is little evidence, if any, that Carl shared Niel's passion for dairy farming or for the future of that industry. I am not convinced that there is any evidence to suggest that Niel shared Carl's interest in fishing, boating or in the type of activity that encouraged Carl to purchase a motorbike.
42 Marcus, Simon and Carl considered that they had a special relationship with Niel and that he took a particular interest in them. It was said by them that Niel referred to the three boys as his 'sons', rather than his 'stepsons'. Marcus and Simon said that Niel took a particular interest in the development of Carl, suggesting at times as to how he may approach things.
43 There was affidavit evidence from Stephen Thomas Hampson and Glenda Faye Hampson about Carl's level of participation with farm activity. The Hampsons worked on the Mount Noorat property and, in particular, assisted Niel and Josie in completing the large mud brick homestead that was constructed on the property in the 1980s. Their evidence was to the effect that Carl spent a considerable period of time with them and their family, being bored with the company of Niel and Josie.
44 This evidence needs to be reconciled with Carl's own account of his relationship with Niel as well as the accounts of Marcus, Simon and Kathryn. There was a conflict of evidence between the Hampsons and Carl as to his contribution to the property at Mount Noorat, in particular, the Hampsons' evidence about Carl's contribution to the rendering of the mud brick house was contested by Carl. It is not necessary for me to resolve this conflict for the purposes of this judgment.
45 In my view, Niel's relationship with Carl was one of kindness but, given his financial situation, not one of excessive generosity bearing in mind what I perceive as prevailing community standards.
46 Niel knew Madilyn all of her life. Madilyn was aged 9 years when Niel died. He knew of her situation and the difficulties that she encountered. He clearly expressed concerns for her welfare going forward. To that end, he actively explored opportunities for her ongoing assistance. He did not provide for her in any substantial way financially during his or her lifetime. This is to be contrasted with his accommodation for, and payment of her sister's, Chelsea's, school fees. On the evidence, this difference was explained by reference to the fact that Madilyn had access to other sources of funding for her care during that period, given her condition.
47 In my view, the relationship between Niel and Madilyn was one of a caring step or quasi grandparent to a step grandchild. Clearly, Niel was concerned and involved himself in some of the difficult issues in Madilyn's life and he appreciated that, for someone like Madilyn, sustaining herself and becoming self-sufficient and independent would be of some considerable challenge.
Any obligations or responsibilities of the deceased person to the applicant, any other applicant and the beneficiaries of the estate
48 The question in relation to this matter centres on Niel's obligations or responsibilities to both Carl and Madilyn. I will deal with each of them in turn.
49 The issue of some difficulty which confronts the Court is whether acts of kindness, largesse, perceived or familial obligation, create an ongoing obligation or responsibility for that person.
50 This is the question that the Court needs to balance with the concept of testamentary freedom.
51 The evidence of Carl's brothers is to the effect of a close and loving relationship between Niel and Carl and, as I have said, one of fatherly and pastoral care. Niel certainly provided assistance to Carl in a variety of ways.
52 This suggests the assumption of an obligation or responsibility towards Carl on the part of Niel during his lifetime. This, in my view, has been reflected in the terms of Niel's will where he distinguished between his two elder stepsons, Marcus and Simon, and Carl himself, giving Carl 3% of the estate compared to his brothers' 1% each. This is a deliberate and considered decision, the distinction between the brothers demonstrating, perhaps, Niel's perception of the respective relationships that he had with his three stepsons.
53 Niel took a close interest in Madilyn and her welfare.
The size and nature of the estate of the deceased person and any charges and liabilities to which the estate is subject
The financial resources (including earning capacity) and the financial needs of the applicant, or any other applicant and of any beneficiary of the estate at the time of the hearing and for the foreseeable future
55 Carl's earning capacity is extremely limited. He is presently unemployed and, given his health issues, his future prospects for employment are uncertain.
56 He will receive 3% of Niel's estate under the existing provisions in Niel's will. That equates to approximately $540,000, on the evidence.
57 Carl is currently receiving a disability support pension of $13,000 annually from the Government, a subsidy on which he has been dependant for 17 years.
58 Kathryn has an annual income of $22,000 from her part-time work as an administrative coordinator.
59 The family's current annual liabilities are about $48,000. This amount include the repayment of the mortgage on the Property conceded by counsel of about $54,000, food expenses, payments of household expenses and medical needs.
60 Madilyn is 12 years old and it is unlikely that she will ever be capable of maintaining full-time employment. She will receive 0.5% of Niel's estate under the existing provisions in Niel's will. That equates to approximately $85,000.
61 Due to Madilyn's disability, Kathryn is entitled to a career payment of about $9,000 yearly to take care of Madilyn. In addition, Madilyn, before reaching the age of 18, will continue to receive an annual 'Making a difference' package of $3,200 from the Department of Human Services
Any physical, mental or intellectual disability of any applicant or any beneficiary of the estate
62 I have outlined the physical challenges and issues that Carl faces in the future.
63 Given her condition, Madilyn faces serious physical, mental and intellectual challenges going forward through her life.
64 It is accepted that her behavioural and cognitive abilities suggest that she may never be able to achieve full financial independence as a functioning adult and that she will require support during her life.
65 Madilyn, despite these challenges and difficulties, has a normal life expectancy.
Any contribution (not for adequate consideration) of the applicant to building up the estate or to the welfare of the deceased or the family of the deceased
68 There have been no financial contributions by Carl to the building up of Niel's estate. However, it is submitted by Carl that he did contribute to Niel and Josie during their lives in various ways. Carl claims that he assisted in the construction of the mud brick house, particularly the rendering. However, as I have said, this has been disputed by evidence given by the Hampsons.
69 Carl points to contributions by him and his wife, Kathryn, at the time of Josie's illness. These included preparing meals, attending medical appointments and the like. Carl also submits that he assisted Niel in driving him to appointments when Niel was not in a condition to drive.
70 It is not clear on the evidence as to the extent of these contributions but, in my view, they are part of usual assistance that would be expected to be provided by family in circumstances such as Josie's illness and Niel's ill-health from time to time.
71 Madilyn, as would be expected, given her age and medical condition, made no contribution to building the estate of Niel or to his welfare.
Any benefits previously given by the deceased person to any applicant or to any beneficiary
72 I have outlined some of the benefits given by Niel to Carl. That involved paying for Carl's education at Geelong Grammar, meeting expenses for his engagement and wedding, gifting him 100 BHP shares for his 21st birthday, making contribution towards the purchase of a house at Halls Gap, paying for Carl's eldest daughter's school fees, paying for Fun 4 Kids, giving him complementary tickets to the Noorat Show and providing gifts of between $100 and $200 at Christmas and birthdays.
73 Niel also paid $20,000 stamp duty on Carl's current home at Warrnambool.
74 There was no evidence that Niel gave any particular benefit to Madilyn during her lifetime, apart from gifts at birthdays and Christmas.
75 Although Niel paid for Chelsea's school fees for secondary school, he did not do the same for Madilyn. As I have said, I accept that there were separate sources of funding for Madilyn's education, given her special needs and therefore Niel's assistance in this regard was not required. Accordingly, this fact has not been determinative in my judgment.
Whether the applicant was being maintained by the deceased person before that person's death either wholly or partly and, where the Court considers it relevant, the extent to which and the basis upon which the deceased had assumed that responsibility
76 Apart from the matters referred to above, there was no evidence that Carl was being maintained on an ongoing basis by Niel prior to Niel's death.
77 Madilyn was not being maintained by Niel prior to his death.
The liability of any other person to maintain the applicant
78 Carl is married to Kathryn. As stated above, Kathryn works part-time as an administrative coordinator and earns approximately $22,000 a year.
79 Carl and Kathryn are liable to maintain Madilyn. As said above, there is no suggestion that Madilyn will not continue to receive ongoing payments (possibly in a different form) from the government for her disability.
The character and conduct of the applicant or any other person
80 I do not consider that there are any factors that ought to trouble the Court in relation to Carl's character and conduct.
81 Having said that, I do note that Carl's reluctance to embrace fully his exercise and treatment program which would, no doubt, improve his physical wellbeing. According to the evidence, his failure to embrace this regime may reduce his prospects of being self-sufficient and being able to be in a position to provide for his family. Carl, of his own volition, has ceased counselling.
82 There are no relevant factors in relation to Madilyn's character or conduct.
83 Niel's accountant, Mr Anthony Davis, deposed that, in early 2011, Niel was aware at that time that he needed to update his will in light of his impending second marriage to Eve following Josie's death. Mr Davis deposed that Niel informed him 'that he had given the matter of his will a great deal of thought and that he would attend to it with his solicitor'. In early 2011, Niel met with his solicitor, Mr Bacchetti, in relation to his will.
84 Niel's character and personality was, considering all the evidence in this matter, one of a determined, considered, kind, generous and hardworking individual who took a great deal of interest in the people around him. There is no evidence to suggest that Niel was other than a serious, determined, attentive and driven individual of high moral and ethical standards and good habits. In my view, these tendencies show that he had a considered approach to matters such as the disposition of his assets in his will.
85 These observations about Niel's character need to be considered in the context of his moral responsibility, if there be such, and his right to testamentary freedom.
86 Niel and Josie had a desire to see Madilyn financially independent. Kathryn gave evidence that Josie and Niel's wish was that accommodation and support be given to Madilyn so that she could lead an independent life. Further, that Niel was fond of Madilyn, attending her school on occasion, and generally taking a close interest in her welfare, reading her school and therapists' reports.
87 To that end, Niel did explore avenues to bring about the establishment of a special disability or protective trust. However, Niel had concerns that any such trust would interfere with any government funded benefits to which Madilyn may be entitled. Although Niel met lawyers and documents were prepared (a protective trust deed was prepared on 23 March 2011), nothing was finalised prior to his death some 20 months later, on 4 November 2012.
88 However, it is beyond doubt that plans for the establishment of the trust were extremely well advanced at least in March 2011. Those plans may indeed eventually have been realised had Niel not passed away unexpectedly.
89 In my view, I consider that Niel's plans to establish a protective trust were akin to an act of generosity towards Madilyn, and not obligation in the moral or legal sense.
90 Madilyn never lived with Niel and, on the evidence, he was not a father figure to her. She lived with her parents and they adopted the traditional role and responsibilities towards her that that relationship suggests.
91 The responsibility of the testator was expressed by Lord Romer in Bosch v Perpetual Trustee Co Ltd:
Their Lordships agree that in every case the Court must place itself in the position of the testator and consider what he ought to have done in all the circumstances of the case, treating the testator for that purpose as a wise and just, rather than a fond and foolish, husband or father. This no doubt is what the learned judge meant by a just, but not a loving, husband or father.[3]
92 In Collicoat v McMillian, Ormiston J further explained that the duty rested on a testator is not only to make adequate provision to beneficiaries, but also with respect to accepted community standards:
In my opinion the expression "moral claim" has always been treated as a convenient shorthand expression referring to the right correlative to the duty imposed on testators to make adequate provision for the proper maintenance and support of persons within the class specified. That 'moral obligation', as described in Re Allen and many later cases, reflects a duty resting on a testator to make not merely adequate or sufficient financial provision for members of his or her family in the specified class but also the obligation to measure that adequacy or sufficiency by reference to what is right and proper according to accepted community standards.[4]
93 In Smith v Jones, McMillan J endorsed the proposition of Callaway JA in Grey v Harrison that the Court must balance the competing values at stake, namely, the freedom of one to dispose with his or her own property and the moral responsibility imposed on a testator.[5]
94 The principles to be applied in relation to claims made against relatively large estates were articulated by Adam J in Re Buckland,[6] and were subsequently affirmed and applied by Gillard J in Re Buckland (No 2).[7] In Borebor v Keane,[8] Hargrave J summarised referring to the decision of Adam J in Re Buckland as follows:[9]
(1) A generous, and not 'niggardly' approach is justified.
(2) The amount of provision should not be limited by the standard of maintenance provided by the deceased or by the standard of living to which the claimant has been accustomed.
(3) A generous approach does not, however, justify the Court in ordering more than is needed for the claimant's 'proper maintenance and support'; as those words 'place a ceiling upon what the Court may properly do'.
(4) The Court may be justified in making provision for contingencies that would be disregarded in smaller estates or if there were relevant competing claims.[10]
95 In Smith v Jones, McMillan J stated that the onus of proof lies with the plaintiff to justify, on the balance of probabilities, the responsibility of the deceased to the plaintiff and the extent of the provision claimed.[11]
96 In Smith v Jones, McMillan J found that the Court must consider the responsibility of the deceased to the applicant, having regard to the factors set out in ss 91(4)(e)-(p) of the Act.[12] Her Honour then referred to the general principles articulated by Hallen J in Walsh v Walsh on the issue of claims made by adult children.[13]
97 In Walsh v Walsh, Hallen J said that there is no universal application of moral obligation or community expectation of a parent to an adult child.[14] The relationship between parent and child changes when the child leaves home, despite the fact that 'parental ties, affection or support [from parents]' continue.[15]
98 However, his Honour noted that where an adult child suffers from hard times, the community standard may be such that parents are expected to provide further support to the child using the available assets.[16] The particular circumstances of the adult child, such as the lack of ability to meet demands, particularly due to ill health, or other ordinary vicissitudes of life, are also a relevant consideration.[17] Further, there could be an increase in provision from the estate of the deceased if the applicant has no or limited earning capacity.[18]
99 In relation to claims made by grandchildren, McMillan J identified the general rule in Smith v Jones,[19] which is that, 'the bare fact of the relationship between a grandparent and her grandchildren does not of itself create an obligation to make provision for that grandchild, as that responsibility rests on the child's parents'.[20] However, this must be read in the context of each case and grandchildren can neither be ruled in nor ruled out until all of the facts are examined.
100 In MacEwan Shaw v Shaw,[21] Dodds-Streeton J considered the relevant case law on grandchildren and identified the following principles:
(i) the moral obligation to provide for a grandchild rests on the child's parents, not their grandparents;
(ii) the mere fact of a family relationship between the grandparent and grandchild does not of itself establish a responsibility to provide for the grandchild;
(iii) significant generosity such as contributions to the education of the grandchild, does not convert the grandparental relationship into one of obligation to the recipients;
(iv) the fact that the grandchild resided with both or one of his or her parents is a most significant factor. If the parent provides shelter, accommodation and clothing then the court is unlikely to find that the deceased grandparent assumed a responsibility to provide for the grandchild in his or her will;
(v) if the deceased's grandparent is survived by his or her spouse, then the spouse's claim to the estate is normally paramount over any claim by a grandchild;
(vi) if the grandchild has lost his or her parent or parents at an early age and the grandparent assumes the role of a surrogate parent, this is taken into account when considering whether or not the grandchild will be adequately provided for; and
(vii) if one or both of the parents of the grandchild have predeceased the grandparent then this may be a relevant factor in support of a claim made by the grandchild. [22]
101 Her Honour also said that 'the fact that the child's parents are of modest means, while the estate could satisfy the claim without significant adverse impact on the chosen beneficiary, will not, without more, found a grandparental responsibility to provide maintenance and support'.[23]
Did Niel have a moral responsibility to Madilyn?
102 The Court is confronted, in this case, with a very difficult and vexed decision. Madilyn clearly requires substantial support which comes at a considerable cost, not just in the short term, but for the rest of her life. The existing provision for Madilyn under Niel's will is in the order of $85,000.
103 Had Niel survived, Madilyn may or may not have been provided for by Niel by way of a protective trust or otherwise. Kathryn said that Niel did not progress the establishment of the trust and 'was always slow at getting things done as he liked to think things out'. Kathryn considered that Josie and Niel's wish was that accommodation and support be given to Madilyn so that she could lead an independent life. It was clear that Niel understood and was concerned about the ongoing financial needs of Madilyn and her wellbeing in the future. As Kathryn recalled, on a number of occasions, Niel said that he would like to ensure that Madilyn be financially independent and able to choose the lifestyle that she preferred, as well as removing the financial burden on Carl and Kathryn.
104 Kathryn acknowledged that Niel had provided enormous financial support to her family and it would be 'impossible to put in paper what Niel has done for us'.
105 Nevertheless, any plans for Madilyn's future and the establishment of a trust did not come to fruition in Niel's lifetime. Niel's view was that he did not want any trust or financial accommodation for Madilyn to displace any Centrelink payments to which Madilyn was entitled. This appears to be one reason why the establishment of the trust, albeit extremely well advanced, was not ultimately finalised. Had Niel wished to pursue this plan, he had more than sufficient time to do so yet he chose not to do anything to finalise it.
106 There are sources of funding for Madilyn's care and maintenance which, at least in some measure, meet her needs. Madilyn will remain eligible for funding from the Program for Students with Disabilities through her school years and, upon reaching adulthood, is likely to be qualified for funding under the Futures for Young Adults scheme. Kathryn is currently receiving a carer payment of $9,000 per annum for taking care of Madilyn. In addition, Madilyn receives $3,200 a year under the 'Making a Difference' package from the Department of Human Services, which subsidises her expenses relating to her disability.
107 It is not the function of this Court to re-write Niel's will, impose upon his testamentary freedom or complete arrangements that he did not attend to during his lifetime, even if he was thinking about such arrangements for some considerable time. Absent a responsibility of Niel towards Madilyn, there is no basis upon which the Court should disturb the terms of Niel's will insofar as Madilyn is concerned.
108 In my view, a proposed act of generosity towards a step grandchild that never eventuated does not translate into a moral responsibility of a step grandfather towards a step grandchild, absent other factors. Had Madilyn resided with Niel, had Niel effectively, in a moral and practical sense, been Madilyn's father, the Court may have come to a different conclusion. On the evidence, no such conclusion is justified.
84 Accordingly, I find that Niel did not have any responsibility or obligation to provide for Madilyn and her proceeding for further provision from Niel's estate is dismissed.
109 Niel was, in effect, Carl's father from the time that Carl was 12 years old. Niel considered that Carl held a special position in his life. He recognised the special position that Carl held for him in his will evidenced by the fact that he left 3% of his estate to Carl, a percentage that was substantially above the 1% that he left to Marcus and Simon.
110 In my view, Niel did have a moral responsibility to make adequate provision for the proper maintenance and support of Carl.
Was the distribution for Carl in Niel's will adequate and proper support for Carl?
111 Under the provisions of Niel's will, Carl receives an amount (on the evidence of the defendant) in the order of $540,000 (being 3% of the estate). My decision does not turn upon a precise quantification of this amount.
112 The evidence of Carl's financial position was substantial. In broad terms, it can be summarised as follows.
113 The family (excluding benefits to which Madilyn is entitled) has an annual income of approximately $50,000.
114 Carl and his family have so far inherited a not insignificant sum from both Josie and Niel. Carl previously received one third of Josie's estate of about $180,000. Niel bequeathed 3% of the estate or about $540,000 to Carl and 0.5% of the estate or about $85,000 to each of Carl's daughters.
115 Kathryn deposes that her family annual expenses total about $48,000, which includes the repayment of home loan, utility bills, food and medical needs, but does not include the expenses for special needs for Carl, given his state of health.
116 The Court cannot dismiss the prospect that, in the future, Kathryn's income earning capacity will increase and Carl will return to paid employment.
117 The future ongoing expenses that Carl will face as assessed and estimated by Michelle French are substantial, both for himself and his family. The evidence was that the amount Carl requires may be in the order of $2.348 to $2.985 million. This range was estimated by Corey Plover, an actuary who provided an expert report in relation to Carl's future needs for his living, family and medical expenses. Mr Plover's estimates were based on the expenditure required to meet the needs of Carl as identified in Ms French's report.
118 The report of Ms French is comprehensive and details extensive needs of Carl. These needs include, amongst many others according to Ms French, a motorised scooter, heat sacks, long handled aids, home and garden maintenance and therapy needs. Ms French recommended new medical equipment and personal support for Carl, at a cost of $103,849.85 annually, in addition to Carl's present medical expenditure. However, it is not clear on the evidence whether Carl would be eligible for rebates from the government for the additional amount required through the number of schemes available and identified in Ms French's report.
119 Nonetheless, I have concluded earlier in the judgment that the level of support recommended was excessive, taking into account the countervailing evidence from Dr Wyatt. Were the reports of Ms French and Mr Plover to be accepted by the Court, it would equally need to be accepted that Niel effectively had a moral responsibility to fully fund (akin to an indemnification) Carl for the rest of his life, taking into account his medical condition.
120 I do not consider that Niel's moral responsibility to Carl reaches this far. Making adequate provision for a person to whom a testator has a moral responsibility does not equate to an indemnity for all future expenses or guaranteed income protection for the rest of that person's life.
121 Carl submitted that his parental responsibilities to Madilyn should be taken into account in any further provision made to him. There is no doubt that the financial hurdles that Carl faces for himself and his family are substantial. However, it is the responsibility of Carl and Kathryn to provide for the needs of Madilyn.
122 In my view, the provision in Niel's will for Carl has not provided for his adequate maintenance and support.
123 There was comprehensive evidence as to Carl's financial needs going forward. Whilst this has greatly assisted in the consideration of what amount Carl ought be awarded, the Court's determination in these matters is not a scientific exercise - it is discretionary and this has not been contested by the parties. It was urged upon me by the defendant that the Court ought adopt a broad brush approach. I propose, balancing all the matters and factors to which I have referred, to do just that.
124 I have had regard to the evidence of Carl's potential earnings and have noted the projected earnings of Kathryn. Both of those income sources are modest given, if it is to be accepted at face value, the expenses that Carl will be required to fund. However, it must be noted that Carl, Kathryn and Madilyn are all recipients of government support through various pension and support schemes which will be of some assistance to them.
125 On the evidence, Carl's needs are substantial. They range from costs of medication, medical aids and equipment, domestic assistance (such as home and garden maintenance and modifications to the home to accommodate his needs) and medical treatments such as physiotherapy and other medical and allied health professional assistance.
126 Whilst the size of Niel's estate is not determinative, it is a factor to which I have had regard.
127 Weighing all these factors, in my opinion, the appropriate sum that ought be awarded to Carl is $1.2 million. This sum is in addition to the 3% of Niel's estate bequeathed to Car under Niel's will. In my view, this figure achieves a balance between Carl's needs and Niel's right to testamentary freedom.
128 In summary, I have reached this conclusion for the following reasons:
(2) Carl's needs are substantial, given his state of health;
(3) Carl's future income earning capacity is limited and Kathryn's income is modest in comparison to their projected needs, however an increase in future income earning capacity of Kathryn and Carl cannot be dismissed;
(4) the estate is large and there is no competing need. Whilst I have had regard to this factor, it has not been determinative in my decision; and
(5) an additional amount of $1.2 million will provide Carl with sufficient capital to discharge debt, secure an income going forward, pay for substantial medical expenses, home maintenance and other needs to support himself, and provide a 'nest egg' for the exigencies of life.
129 It would be an arid exercise to attempt to 'match' this amount with the numerous and various needs and expenses identified by Carl and the expert evidence led before the Court. It is for Carl, not for the Court, to determine how funds are most beneficially deployed. However, given all the evidence, I consider that this amount strikes an appropriate balance.
130 I will hear the parties on the question of costs and the appropriate form of orders.
[1] [2015] VSC 221, [270]-[287].
[3] [1938] AC 463, 478-479. This passage was cited with approval in, for instance, Grey v Harrison [1997] 2 VR 359, 364-5 (Callaway JA); Collicoat v McMillan [1999] 3 VR 803, 815-19 (Ormiston J).
[4] [1999] 3 VR 803, 818. See also Blair v Blair [2004] VSCA 149; (2004) 10 VR 69, 77-80 (Chernov JA); Forsyth v Sinclair [2010] VSCA 147 (22 June 2010) [61] (Neave JA); Lee v Hearn [2005] VSCA 127; (2005) 11 VR 270, 273-4 (Callaway JA).
[5] [2015] VSC 398, [129]-[130] citing Grey v Harrison [1997] 2 VR 359, 366 (Callaway JA).
[7] [1967] VicRp 1; [1967] VR 3, 3.
[8] [2013] VSC 35 [68].
[11] [2015] VSC 398 [133] citing Coates v National Trustees Executors & Agency Co Ltd [1956] HCA 23; (1956) 95 CLR 494, 507-8 (Dixon CJ); Blore v Lang [1960] HCA 73; (1960) 104 CLR 124, 130 (Dixon CJ); Prosser v Twiss [1970] VicRp 29; [1970] VR 225, 232 (Lush J); Slack v Rogan [2013] NSWSC 522 (10 May 2013), [127] (White J).
[12] Ibid [136] citing Allan v Allan [2001] VSC 242 (25 July 2001), [67] (McDonald J).
[13] Ibid citing Walsh v Walsh [2013] NSWSC 1065.
[14] Walsh v Walsh [2013] NSWSC 1065 [121] (Hallen J).
[17] MacGregor v MacGregor [2003] WASC 169 (28 August 2003) [179]-[182]; Crossman v Riedel [2004] ACTSC 127 [49]. Marks v Marks [2003] WASCA 297 [43].
[18] Christie v Manera [2006] WASC 287; Butcher v Craig [2009] WASC 164 [17].
Hunt
Black & Ors [2016] VSC 59
(2004) 10 VR 69
(2005) 11 VR 270
(1956) 95 CLR 494
(1960) 104 CLR 124
(2003) 11 VR 95