McCullum v Permanent Trustee Lowe v Permanent Trustee Company Ltd [1999] NSWSC 1219 | Case summary

1 MASTER: There are two applications under the Family Provision Act in respect of the estate of the late John James McCullum who died on 1 July 1997 aged ninety-four years and ten months. The plaintiff in number 2042 of 1998 is the deceased's granddaughter and the plaintiff in 4973 of 1998 is the deceased's son. The deceased's two wives predeceased him. 2 Orders have been made for these actions to be heard together with the evidence in one being evidence in the other. There has also been an order by a judge that the whole of the proceedings in 2042 of 1998 be heard by a Master. This was because the claim included an estoppel claim in respect of an advance of $200,000 by the deceased to the plaintiff. It is not necessary in the upshot to determine that claim as the parties are agreed that the matter can be resolved in the Family Provision Act proceedings. If I found for the plaintiff in respect of the estoppel claim, the matter would have been taken into account as a provision for the plaintiff during the deceased's lifetime. If not, the plaintiff would have been left with a large liability which would have to have been taken into account. 3 The estate of the deceased is a large one and as at 11 November 1999 amounted to $1,585,595.48 which includes the $200,000 said to be due by the plaintiff to the deceased. 4 There are costs estimated for the defendants for a three day hearing of $76,000 and for the plaintiff, Mrs Lowe, the sum of $395,032 and for the plaintiff, Mr McCullum, the sum of $14,800. 5 The deceased's last will was made on 3 June 1997. By the will the deceased left a legacy of $50,000 to his son Ronald McCullum, the plaintiff in proceedings number 4973 of 1998 and $50,000 to a friend, Joanne Laredo. Thereafter the residue was held to be divided into two parts, one to be known as the John James and Thelma Mary McCullum Family Trust and as to the other part to be divided equally between a number of named charities. 6 Clause 5 of the will set out the classes of beneficiaries of the trust. These were essentially the son of the deceased and his children and grandchildren and the children and grandchildren of the deceased's siblings. The executor has identified some sixty potential beneficiaries so far falling within the classes of the discretionary trust. However, further working is necessary in this area. 7 The plaintiff, Mrs Lowe, is the grandchild of the deceased and is not included within the classes of the discretionary beneficiaries. 8 Clause 12 of the deceased's will provided as follows:- "I declare and confirm that I have recently loaned $200,000 to my granddaughter Deborah Kerr and I require so much of this debt as has not been repaid at the date of my death to be repaid." 9 The deceased made a number of wills and I will deal with these when giving the relevant history. The legatee, Joanne Laredo has advised the defendant that she does not wish to contest the will or receive any benefit from the estate and she has in fact written and relinquished her legacy. 10 I turn to deal with some of the history of the matter and the various wills. Mr McCullum, the plaintiff in proceedings number 4973/1999 was born to the deceased and his then wife, Doris Maude McCullum on 2 February 1923. Two years later the deceased left Mr McCullum and his mother and moved to other premises. This left the plaintiff's mother somewhat destitute and in 1936 when he was only thirteen Mr McCullum obtained a special permit to be able to work at the age of thirteen years as a process worker. By 1942 he had enlisted in the Army and he served during the War. He was discharged in 1945 and eventually after some counselling and therapy commenced employment in the coal mines at Cardiff. In 1947 he enlisted again and was trained as an electrician. He married in 1949 and has since had seven children. 11 Mrs Lowe, the plaintiff, was born in 1958 on 21 June. She is the only child of Thomas and Elaine Walker. Her parents separated in 1962 and Elaine and her daughter the plaintiff went to live with the deceased and his wife Thelma. Mrs Lowe's mother died in 1966. The plaintiff at that stage was aged eight years. In 1975 Mrs Lowe who had been living most of her childhood life with the deceased, obtained her Higher School Certificate. In 1976 or 1977 she met her first husband and moved to New Zealand. They returned to Australia in 1978, married and thereafter their first child was born. In 1979 she moved back to New Zealand. There she had her other child. 12 By the 1980s the plaintiff Mr McCullum took redundancy so that he could gain access to some lump sum payment in order to erect a granny flat for his mother who was seriously ill at that stage and he looked after and accommodated her. Also at this stage there was some contact between the deceased and Mr McCullum. He apparently was brought together by the deceased's sister and perhaps at her urging the deceased gave him a block of land in Morisset. Also in the early 1980s, 1981 or 1982, Mrs Lowe and her husband purchased a block of land at 49 Maddecks Avenue, Moorebank for $91,350. $50,000 was lent by the deceased to assist in this purchase. The balance was obtained by Mrs Lowe from the sale of her home in New Zealand. She and her husband started a trucking business at that stage. Mrs Lowe's third child Brett was born on 19 January 1983 and the fourth child, Scott, on 12 June 1985. 13 In 1988 there was some further contact between the deceased and his son Ronald. At that stage the deceased was saying to his son Ronald that he was going to leave the whole estate to him. 14 In 1991 Mrs Lowe and her husband separated and they had a property settlement in 1992. In 1992 the plaintiff's grandmother died and left her estate to the deceased. On 1 April 1992 after the death of his wife, the deceased made a will which after payment of debts, funeral and testamentary expenses, a gift of $1 million was set aside for a trust known as Mr John James and Thelma Mary McCullum Trust. The residue of the deceased's estate was left as to $50,000 to Ronald and the balance to the plaintiff. In 1994 the plaintiff met her present de facto husband and commenced a relationship with him and commenced a business known as the DRT Haulage Pty Ltd. On 6 October 1994 the deceased makes another will leaving Mrs Lowe an annuity of $500 a week payable monthly. 15 There were then two further codicils to that will but they are not relevant for present purposes. In late 1995 the deceased asked if he could move in with the plaintiff. This in fact happened in the middle of 1996. A further will was made on 6 December 1995 and this repeated the gift of the annuity to the plaintiff Mrs Lowe. In September 1996 there was discussion of a proposal by the plaintiff Mrs Lowe and her de facto husband to move to Wagga. They asked the deceased to come with them. Following discussions the deceased offered to lend some $200,000 to contribute towards the cost of the property at Wagga. It was arranged between the plaintiff Mrs Lowe and the deceased and on this I accept the plaintiff's evidence that she was shown a will which made provision for her and arrangements were put in hand to have a loan agreement. That was prepared in October 1996. It specifically referred to the proposed provision in the will for the payment of the loan. Although the plaintiff Mrs Lowe and her de facto husband may have signed it, it appears that the deceased did not but in any event he paid over the $200,000 to the plaintiff Mrs Lowe. A slightly different version of the will was executed on 8 November 1996, the payments under the annuity were to be charged with the repayment of the loan so that 60 per cent of the monthly repayments was to be applied in reduction of the debt until the debt was repaid. 16 It was on 22 November 1996 that the next will was executed under which the plaintiff was excluded. At this time there had been a disagreement between the plaintiff Mrs Lowe and the deceased when he was in hospital. He was admitted there towards the end of November. There was then the December discussion between Mr Brown, the plaintiff Mrs Lowe and her de facto husband about the provision of a copy of the loan agreement and the discussions about the deceased's attitude. The actual purchase was settled in December 1996 when the property at Wagga was purchased for $385,000. The plaintiff Mrs Lowe and her husband did not take the offer of the deceased to take some bridging finance but borrowed money from the bank. 17 In 1996 there were again discussions between the deceased and the plaintiff Ronald McCullum in which the deceased promised the whole of his estate to his son. As I have mentioned, the deceased died on 1 July 1997 and thereafter the proceedings were commenced within time. 18 It is necessary for the plaintiff Mrs Lowe to establish that she is an eligible person. She is a granddaughter and thus needs to show that she was dependent upon the deceased. In Ball v Newey (1988) 13 NSWLR 1989 the Court of appeal first considered the question of dependency. His Honour Mr Justice Samuels at p 490 said the following:- "His Honour concluded that 'dependent' meant financially dependent, a proposition which has not been challenged in the appeal. It may be that there are other forms of dependents analogous to but distinct from financial dependents which would be capable of satisfying the requirements of s 6(1) the definition of 'eligible person'. (d)(i) In the present case, however, only financial dependents is relied on and I approach the matter on that basis. 'Dependent' in the ordinary sense of the word, means the condition of depending on something or on someone for what is needed. In determining whether that relationship exists, it is relevant to bear in mind what was said by Sankey LJ in Lee v Munro (1928) LJKB 49 at 53; 21 BWCC 401 at 408, that in 'deciding whether or not there is dependency the factors to be considered are past events and future probabilities'. While it is true that here we are concerned with financial dependents and not emotional dependents, the whole relationship between the appellant and the deceased must be examined in the light of that statement in order to exclude situations which might present the simulacrum but not the substance of dependency." 19 In Benny v Jones (1991) 23 NSWLR 559 the Court of Appeal returned to the issue in a case where the only dependency was emotional resulting from a homosexual relationship between a party and the deceased. The court rejected a submission that dependency may be based solely on the existence of dependents. 20 In Petroholis v Hunter (1991) 25 NSWLR 343 at 346 the court once again considered the meaning of dependency. At p 346 the court had the following to say:- "I would respectfully disagree with the Master in both respects. The word 'dependent' is an ordinary English word, and whether a person is or has been wholly or partly dependent upon another is a question of fact. No doubt one of the commonest forms of dependency is a financial one, in the sense that the dependence flows from the fact that accommodation, food, clothing and other necessities or amenities of life are provided by the person who owns or is otherwise entitled to the accommodation and pays for the other things. But I do not think that the word, as used in the statute or otherwise, has this very limited meaning. In ordinary parlance young children are properly and commonly said to be dependent on their mother as well as their father, regardless of where the money comes from. A contrary view, that young children are not dependent on their mother if she has no independent means, seems to me to be a misuse of the language. This accords with what Samuels JA said in Ball v Newey 13 NSWLR 48 at 491, that '"dependent" in the ordinary sense of the word, means the condition of depending on something or on someone for what is needed.' If the correct view were that the context of the statute requires a limitation of the word to 'financial or material' matters as McLelland J said in Re Fulop Deceased or to 'other forms of dependence analogous to but distinct from financial dependence' as Samuels JA suggested in Ball v Newey (at 491), then surely a mother's services to a young child satisfy the test. The child could not survive without the provision of those services' he or she needs them. To suggest that, in a money sense they are valueless, is simply wrong. If the provision of accommodation by a father for a young child, that is, having the child live in a house which he owns and lives in, can make the child partly dependent upon the father as it undoubtedly can, I am unable to see why the provision by a mother to her children, living with her, of the services essential for their wellbeing does not make them partly dependent upon her. In my opinion it does. The same considerations apply to a stepchild or his or her stepmother when the child lives with the stepmother and is looked after by her. I appreciate that a different view has been taken by others, as for example by Powell J in Dunn v Public Trustee (Powell J, 1 June 1989, unreported) but I would respectfully disagree with that view. In my opinion the plaintiff was partly dependent upon the deceased, certainly for many years of her childhood and probably until her marriage, although no doubt her dependence diminished in the latter years of this period." 21 In McKenzie v Baddeley (Court of Appeal, unreported, 3 December 1991) his Honour Mr Justice Meagher, though in the minority, further discussed dependency and described it as "financial economic or material dependency, not a mere emotional dependency". Importantly in that case the majority held that the word "partly" in the phrase "partly dependent" does not mean "substantially". 22 In Williams v Legge (Court of Appeal, 16 March 1993) the court in considering a case of a young child needing mothering pointed about that the absence of financial dependence is not conclusive. 23 In the present case, the plaintiff, Mrs Lowe, from eight years of age was cared for by her grandparents after the death of her mother. There was emotional and financial support until she left home. I am satisfied that the plaintiff, Mrs Lowe is an eligible person. 24 It is necessary under s 9(1) of the Family Provision Act that the court shall first determine whether there are factors warranting the making of the application. This expression has been dealt with by courts on a number of occasions. In Re Fulop Deceased (1987) 8 NSWLR 679 at 681 McLelland J described that expression in the following terms:- "Secondly, the sub-section appears to be premised upon a distinction between 'factors which warrant the making of the application' on the one hand, and circumstances which would justify the making of an order granting the application, on the other; otherwise the sub-section would be pointless. This means that in a particular case the court might determine that there are 'factors which warrant the making of the application' within the meaning of the sub-section, and yet go on to decide that the application should fail. Since the sub-section applies only to certain classes of applicants, it suggests that those classes of applicants need to demonstrate some basis for their claims additional to that required of other classes. The difference between the two sets of classes of applicants, in broad terms, seems to be that the classes not affected by s 9(1) (lawful and de facto spouses and children) are as such generally regarded as natural objects of testamentary recognition by a deceased (of the Wills Probate and Administration act 1898, s 61B), whereas the classes affected by s 9(1) (former spouses, and sometime dependent grandchildren or household members) are as such not generally so regarded. This suggests that the 'factors' referred to in the sub-section are factors which when added to facts which render the applicant an 'eligible person' give him or her status of a person who would be generally regarded as a natural object of testamentary recognition by a deceased. That the sub-section is directed at a plaintiff's status as applicant in some such sense as this perhaps finds some support in the statutory direction to the court, in the event that it determines the preliminary question adversely to the plaintiff, not to go on to determine the application, but 'refuse to proceed with the determination of the application'." 25 In Churton v Christian (1988) 13 NSWLR 241, the court approved this statement. Priestley JA at p 252, after setting out and approving the statement, added:- "To this I would add that although the classes affected by s 9(1) are not necessarily generally regarded as natural objects of testamentary recognition, in some cases members of those classes may, when the circumstances of their relationship with the deceased are set out, immediately be seen to be persons who would be regarded by most observers as, in their particular circumstances, natural objects of testamentary recognition." 26 These principles have been applied at first instance for many years. There has been in recent times further attention to this matter in the court of appeal in the case of Brown v Faggoter, a decision given on 13 November 1998, which is a decision of Sheller JA, Sheppard AJA and Fitzgerald AJA. The main judgment was given by Fitzgerald AJA, who seemed to suggest that an application might be warranted if the application has reasonable prospects of success. This seems to be a somewhat different and perhaps easier test than that which the Court of Appeal approved in Churton v Christian. I will consider the matter on both bases, given that there may be some flux in the state of the law in this regard. 27 It is clear that the plaintiff, Mrs Lowe, was raised by the deceased as a daughter. In letters and cards to her he described himself as her father. There was a relationship in this way from very early in the plaintiff's life. There was assistance to the plaintiff, Mrs Lowe from the deceased during his lifetime in the way that a father would help a daughter. He provided for her. In the circumstances I am satisfied on the traditional basis that she has established factors warranting. Given the findings which I will make in respect of the circumstances of the loan of $200,000, I am also satisfied that she has prospects of success in the application. 28 In applications under the Family Provision Act the High Court has recently in Singer v Berghouse (1994) 181 CLR 201 set out the two stage approach that a court must take. At p 209 it said the following:- "The first question is, was the provision (if any) made for the applicant 'inadequate for (his or her) proper maintenance, education and advancement in life'? The difference between 'adequate' and 'proper' and the interrelationship which exists between 'adequate provision' and 'proper maintenance' etc were explained in Bosch v Perpetual Trustee Co Limited . The determination of the first stage in the two-stage process calls for an assessment of whether the provision (if any) made was inadequate or what, in all the circumstances, was the proper level of maintenance etc appropriate for the applicant having regard, amongst other things, to the applicant's financial position, the size and nature of the deceased's estate, the totality of the relationship between the applicant and the deceased, and the relationship between the deceased and other persons who have legitimate claims upon his or her bounty. The determination of the second stage, should it arise, involves similar considerations. Indeed, in the first stage of the process, the court may need to arrive at an assessment of what is the proper level of maintenance and what is adequate provision, in which event, if it becomes necessary to embark upon the second stage of the process, that assessment will largely determine the order which should be made in favour of the applicant. In saying that, we are mindful that there may be some circumstances in which a court could refuse to make an order notwithstanding that the applicant is found to have been left without adequate provision for proper maintenance. Take, for example, a case like Ellis v Leeder where there were no assets from which an order could reasonably be made and making an order could disturb the testator's arrangements to pay creditors." 29 I turn to the situation of the plaintiff, Mrs Lowe. She is living in a de facto relationship. She has four children and one grandchild. Three of these children and one grandchild are dependent upon her. Her daughter who has the grandchild is aged nineteen. She has two sons in Year 11 and Year 9 and they require support. So far as assets are concerned, she and her husband have a 380 hectare farm in Wagga. It was purchased for $385,000. They have stock and some personal effects amounting to about $90,000, a total of some $475,000. They have a mortgage to the bank of $150,000 and personal loans of some $5,000. Previously they had as I have indicated in the history a trucking business. That however has ceased and all that is left of it is two trailers worth $6,000. There is no income from that business. On the income side the plaintiff does receive $542 a month child maintenance from her ex-husband. She gets child endowment. She receives no other fixed income apart from the farming income. Due to the bankruptcy of his employer her husband is out of work. He is not well as he suffers from ulcers and diabetes. He has had a number of heart attacks. She is receiving income from the farm and she estimates that her income for the 30 June 1999 will be as follows, farm income $37,636.81, maintenance $6,437, family allowance $564, a total of $44,637.81. Her expenses on an annual basis including the repayment of the loan are $53,390.39. She is losing money and is not likely to receive help from her de facto husband except in relation to the physical work about the farm. Her difficulties are compounded as she still has to support and educate her children. 30 It is necessary to consider her relationship with the deceased. It seems to me on the evidence that there was a good relationship as a daughter. One sees that after the death of his wife in 1992 the plaintiff stepped in in assisting the deceased and making more contact and looking after him. There was the occasion in the middle of 1996 when they took the deceased into their house. They even made arrangements to rearrange the persons in the house so that this could happen. In September 1996 there was the discussion to which I have referred in which the deceased said that he would lend the $200,000 on the basis that it could be paid out of the inheritance which she was to receive under the will. In October 1996 the loan agreement was executed. By the end of November that year the deceased was becoming extremely weak. He was moved to hospital and it was while he was in hospital that there was the disagreement between Joanne Laredo, a friend of the deceased for some years, and the husband of the plaintiff, Mrs Lowe. Thereafter the deceased demanded to have a copy of the land contract. He contacted lawyers and made threats that the matter was going to be reported to the Fraud Squad. This caused an unfortunate breakdown between the plaintiff Mrs Lowe and the deceased, she obviously being very upset at the deceased's attitude. 31 The deceased's affairs were then put in the hands of the Perpetual Trustee Company and Mrs Lowe and her husband cooperated in giving them control. As I have mentioned, they settled in Wagga in December 1996 and moved down there for the start of the new year. It is clear that by the time the deceased came to live with the plaintiff in mid 1996 he had become very demanding. This is not surprising of course given his age. He was ninety-four and going on ninety-five at the time. He was used to having dinner at 5.30 or six and demanded that this occur at 6pm. Given the plaintiff's activities with her children, it was not always possible. It seems clear that the deceased expected his own way and as I say, this may not be surprising. 32 I am satisfied on the evidence that the plaintiff's family tried to please him and assist with things like his personal hygiene and meeting his wishes to the extent that they could. 33 There is, however, in this period the unfortunate situation of statements made by the deceased to others in which he denigrates the plaintiff and her intentions. In general, I am not prepared to accept these statements and there are a number of reasons. The first of these is that it became perfectly obvious that at this time the deceased was in the process of falling out with all his close friends and family. He fell out with his sister. He fell out with Joanne Laredo who had been someone he met through his sister who had a platonic friendship with him and assisted him for some years. He fell out with Mr Hosie, a person with whom he had dealings. 34 Obviously the problems that the plaintiff had were not confined to her. Also in the evidence the witnesses spoke about the growing confusion that the deceased was exhibiting at this time. Fortunately there is also in evidence Ex C, careful file notes taken by Mr Brown of his discussions with the deceased at this time and also discussions with the plaintiff Mrs Lowe and her de facto husband. The discussions with the deceased clearly show that the deceased was inaccurate in what he was saying, was having problems recollecting accurately what had happened in the past. The discussions between the plaintiff and her husband and the solicitor were quite consistent with the evidence that has been put before me today. In my view it is one of these unfortunate things which arise because of the old age of the testator and is not uncommon. I can see no reason why the plaintiff, Mrs Lowe's claim should be reduced. In some ways she should be commended for the assistance she gave to the deceased. 35 There are of course benefits that Mrs Lowe received through the lifetime of the deceased. There is the loan of $50,000 to purchase the house in 1981. That however had to be repaid and was in the course of repayment. Her marriage broke down in 1991 and it was the deceased who provided $25,000 to buy out the husband. He also forgave her the sum probably in the order of $25,000 in what was outstanding under the mortgage. 36 In August 1992 $50,000 was advanced through a Mr Shaw to the plaintiff, Mrs Lowe, that she used to purchase the trailer for her haulage business and make other provisions for her family. Just before the deceased moved in during the middle of 1996 with Mrs Lowe he wrote off his car in a car accident and $17,000 from the insurance payout was used as to $5,000 to pay to her husband on the basis that her husband would upgrade his car and then be able to run the deceased around and the balance was used to buy a car for the plaintiff's daughter Kirsty. 37 I turn now to the situation of the plaintiff, Mr McCullum. He is seventy-six years of age and married with no dependants. He has an extensive family of seven children, eleven grandchildren and one great-grandchild. His wife is very dependent upon him. She has had two strokes and is paralysed in the right hand side and has restricted mobility. He himself has heart problems and emphysema and gets breathless if he has to climb any steps. It clearly is appropriate that he live somewhere where he has a level house and a level area. As far as his finances are concerned, he and his wife have a property at 21 Capris Close, Belmont. His valuer valued it at $155,000 to $160,000 and the defendant's valuer valued it at $160,000 to $165,000. Given the absence of cross-examination of the valuers on this aspect it is not inappropriate to form a final view as to the value of the house only to note that it is likely to at least be in the order of $160,000. He has a car worth $12,000 and joint bank accounts at $28,000. His income from a Service pension and from other investments is $29,176 and his expenditure is $26,366 per annum. 38 So far as his relationship with the deceased is concerned, I have noted some of the matters already. Clearly he was abandoned at two years of age by the deceased. His father certainly avoided maintaining his mother. His father, the deceased, worked under assumed names in order that he could not be chased for maintenance and surprisingly even though he did this, the deceased did have some contact with the plaintiff during his early formative years. He would see him on the way home from school. Be that as it may, no money was forthcoming and at age thirteen Ronald McCullum was out in the workforce working as a child to support his mother. He would hunt round the garbage tips and garages to find brass and copper and sell it. This money was given to his mother to meet their living expenses. 39 Things continued in this fashion for some time and in 1942 Mr McCullum, the plaintiff, enlisted and was due to go overseas. His father suggested that he would get him a posting in Victoria Barracks but that was rejected by the plaintiff and he served overseas in New Guinea and various other areas in the South Pacific. Little contact seems to have been had between the deceased and his son thereafter. The plaintiff, Mr McCullum, continued in the way I have indicated, eventually getting a position with BHP as an electrician and working hard until he took redundancy in order to look after his mother. At this stage there was this contact, no doubt generated by the deceased's sister who was highly critical of the deceased for having never made any provision or had anything to do with his son Ronald McCullum. He gave him a block of land at Morisset valued at that stage at $12,500 and ultimately he sold it in 1985 for $51,800. There were the two discussions when promises were made by the deceased towards the end of his life, no doubt probably at that stage regretting the fact that he had effectively cut off his son by his actions. The time within which he could help his son had long since passed although there was not a lot of contact, given the history of what the deceased did, and I am not being critical of the lack of contact in the adult years of the plaintiff Mr McCullum and his father. 40 It is necessary also to consider others who might have a claim on the bounty of the deceased. There is the trust to which I have referred. There is Mr McCullum who is the beneficiary and there are his children and grandchildren and the deceased's siblings and children and grandchildren. There is not a skerrick of evidence how any of these people played a part in the deceased's life. There is not a skerrick of evidence of their financial situation. Presumably they do not wish to have that placed before the court for the court to take into account. 41 The other half of his estate goes to charity. They are of course worthwhile charities, however there is not a single piece of evidence of assistance to the deceased by any of those charities although he spoke of wanting to benefit some charities, there is no other suggestion of contact or relationship with the deceased. 42 The first question is whether the plaintiff, Mrs Lowe has been left without adequate and proper provision for her maintenance, education and advancement in life. The first and most obvious way arises from the circumstances of the advance of $200,000. It is perfectly clear on the evidence that the plaintiff would not have considered the purchase and the change of lifestyle if the funds would have had to be repaid other than out of her inheritance promised by the deceased. The terms of the agreement the plaintiff was asked to sign makes that quite clear. The deceased's change of position makes the plaintiff's situation untenable. She will be forced to sell the family home and relocate elsewhere, probably in rented accommodation. 43 In the circumstances there is a genuine need for assistance in this area. Other needs arise out of the state of the property and the operations upon it. The house which is old has had to be altered to accommodate the family. A further $8,000 is needed to complete these renovations. In addition, she wishes to erect a new shearing shed for $45,000. The old one certainly appears to be in a poor state of repair. The farm machinery and cattle yard come to $14,500, a new car is asked for at $25,000 and it is suggested that a new tractor should be bought for $20,000. The absence of all these items suggests that the venture has been embarked upon without proper thought and there is no explanation as to why all these items are needed. For example a new shearing shed where there are only sixty sheep on the property seems excessive. The problem is compounded when one looks at the debt position and the excess of expenditure over income. The operation of the farm is clearly a marginal one. The plaintiff suggests a legacy of some $450,000 and the $200,000 would be in forgiveness of the loan. The defendant suggests that anything over forgiveness of the loan would be inappropriate. To accede to the plaintiff's wishes would place her in a comfortable position with a debt-free farm which has with it all the necessary machinery and a new shearing shed. 44 The question is whether in the circumstances of the case including the benefits received in the past, that this is appropriate. In Shearer v The Public Trustee and Hawke v The Public Trustee, Young J on 23 March 1998 had this to say:- "The community's attitude is not to be judged by a feeling as to whether it is morally wrong for a person to leave property otherwise than to her spouse or children. One must really look at the obligations to provide for persons who have some dependants. Where the applicant is a spouse it is nowadays usually thought that to leave a spouse with a mere right of residence is insufficient provision. However, that is not the case with children, and as far as I am aware it has never been said by any court that it is an obligation that the community expects that a mother will leave her child in a position where the child has a house of his or her own." 45 However the important thing is that apart from Mr McCullum's claims there are no claims on the bounty of the deceased by others and it is a large estate. The question of what is an appropriate provision in respect of a large estate is dealt with by Young J in Anasson v Phillips, 4 March 1988, where he said the following:- "...with a very large estate...there is a great temptation on a court to be over-generous with other people's money. This is especially so when the court can see that plaintiffs have been very hardly done by at the hands of a domineering testatrix. However, the case should not be approached in this way as the application has to be determined in accordance with the legal principles. These principles include the fact that in Australia there is freedom of a person to leave her property in whatever way she wishes, to love whom she wishes, to hate whom she wishes and there is only when there has been a failure to comply with a moral duty to those who in the community's eyes she should have made proper provision for, that anyone can legally complain about another person's will. Even then, the court has no power to rewrite the will, but can only adjust things, in substitution for the testatrix, in such a way as to fulfil her moral duty. If the estate is a large one, the court has a slightly different approach. The basic principles are the same, that is, the will can only be affected to the extent that it is necessary to discharge the moral duty by making adequate provision for the plaintiffs, but where there is a large estate, competition between claimant and claimant, and claimant and beneficiary under the will is much reduced or eliminated. Further, there may be a more liberal assessment of the moral duty owed, to be reflected in what is proper provision for the plaintiffs. In particular, the lifestyle that has been enjoyed by the plaintiffs, because they have been associated with a wealthy testatrix is a relevant factor. These principles all, I think, flow from cases such as Re Buckland [1966] VR 404, especially at p 412." 46 In my view this is a case where there is a large estate and it is possible to be more generous. There should be provision for the forgiveness of the $200,000 plus a further sum. Removing the money from the bank will enable the farm as it presently is to be viable. Accordingly, given all the circumstances what I propose to do is provide for a legacy for the plaintiff consisting of the forgiveness of the loan of $200,000 and secondly a further $175,000. 47 I turn to how it is said that the plaintiff Mr McCullum was left without adequate and proper provision for his maintenance, education and advancement in life. He receives $50,000 and is within the class of beneficiaries in cl 5 of the will. There is in this case no memorandum of wishes as to how the discretionary trust is to be exercised. Even if it were, such inclusion is still of no benefit to the plaintiff. In Gregory v Hudson No 2 Young J in September 1997 referred to this aspect of the matter in these terms:- "Mr Brown QC puts that the authorities clearly show that a provision in a will that trustees might pay additional moneys out of the estate for the benefit of the applicant is not a proper provision. He cites Re Brown [1972] VR 36. In that case, after citing some decisions from New Zealand and Canada, together with the note of Re WTN C McLelland, CJ in Eq (1959) noted 33 ALJ 240 Norris AJ said at 39, 'It is true to say that in most of the cases the fact that a discretion to increase a benefit existed was not regarded as rendering adequate a provision which otherwise was inadequate. I think, nevertheless, it is consistent with the authorities to say that such a discretion is not to be excluded from consideration in determining whether or not adequate provision has been made, and that it may in an appropriate case render adequate a provision otherwise inadequate.' He then cites Re Allen [1922] NZLR 218. Dickey on Family Provision after Death (LBC Sydney 1992) says at p 121, 'There is some authority for the proposition that where a person is in need of provision but the quantum of provision made for him or her from a deceased's estate is wholly dependent upon the discretion of trustees, this provision is not adequate. In all probability, however, this is not an inflexible rule. In all probability the question of whether provision of this kind is adequate depends upon the particular facts and circumstances of the case.' Mr Hallen submits that I should take into account the discretionary nature of the benefits which have been provided under the discretionary trust. Mr Hallen got close to submitting that the benefits under the discretionary trust were fairly secure, but no doubt realises that this could not be so in view of the law as decided in Hartigan's case . I consider, with respect, that Professor Dickey's comment is close to the mark. Ordinarily, a benefit provided under a discretionary trust is a fairly illusory benefit because it can be terminated without reason and there is little likelihood of the discretionary beneficiary being able to force the trustee to pay her a benefit. Hartigan's case shows that even if there is a memorandum of wishes, there is no obligation on the trustee to take that into account. Furthermore, even though the trustees say that they intend to follow the wishes, they are not bound to do so, and indeed, circumstances may change in such a way that they feel it is not proper to continue to follow the memoranda of wishes and carry out the spirit of what the deceased intended. On the other hand, the present trustees are men of great capacity and integrity, and there is no reason to doubt at all their sincere statement that, at least for the present, they intend to carry out the deceased's wishes. I would consider that I am entitled to take the view that for the next five years, the widow will be receiving the benefits under the discretionary trust as if they were benefits under a trust which could be enforced. However, beyond that period, the matter must be one of speculation. The trustees may change, the investments of the trustees might fail, there may be serious problems with one of the other beneficiaries, or new trustees may be appointed who take a set against the widow and reduce her benefits. It seems to me that where a wealthy man, with an estate of at least 11 million dollars, leaves the bulk of the benefits to his widow under a discretionary trust over which she has no control, he has not made proper provision for his widow. The community would expect that the widow of such a man would at least have a home in her own name and some capital to which she could resort whenever she felt like it." 48 In the circumstances I will proceed on the basis that all he can be sure of receiving is the $50,000 under the will. The need which is advanced by Mr Ronald McCullum in his situation is simply one for an advancement in life. He lives at Belmont which is some distance from where his daughters live in the Hamilton area. He would like to move to Hamilton so that he could be close to them and receive assistance from them, given the medical condition of both his wife and himself. Obviously he needs a level place to live in. The problem that arises by advancing this need is that the area that Mr McCullum has chosen to move to is one of the better areas of Newcastle. It is a suburb which on the valuation evidence before me today is one of the top four suburbs in Newcastle. It is apparently an area which was subdivided some time ago and the majority of the houses are ones which have Federation style homes and they are ones which are of a size which are probably greater than what one finds at Belmont where the plaintiff presently lives. They have ten foot ceilings and because of the nature of the land values, the cost to move to there is somewhat substantial compared to the Belmont area which is more on the outskirts of Newcastle. 49 The valuation evidence has been given both by the plaintiffs and the defendants and in this regard I want to record the court's appreciation for the assistance which both the defendant and the defendant's legal advisers have given to the court in a very short time to enable this issue to be dealt with. They have acted most properly. 50 The evidence tendered on behalf of the plaintiff firstly consisted of Ex EE which is of some comparables prepared for both Bar Beach, The Junction and Hamilton East and Merewether. Unfortunately the detail of the properties is not sufficient for that to be of any use to the court in assessing. Further evidence was given today by Mr Flook of Colin Chapman Real Estate, and he advised that if one were to purchase a quality three to four bedroom cavity brick home in good condition in the Hamilton South area you would need to pay between $400,000 and $480,000. The other evidence given by Mr Dupont on the defendant's behalf was a little bit more enlightening. He did not treat the area as one composite area. Clearly there are different parts of Hamilton South and on the edges of it there are areas where the type of accommodation is more like the style of accommodation that is available in Belmont. Exhibit 4 shows a series of photographs of comparables. They show a number of houses in this area on the edge ranging from $210,000 up to $270,000. The type of construction is not different but very very similar to the type of house in Belmont in which the plaintiff presently lives. If he were to make the change it would seem to me that he would need at least $300,000 to do that. He has a house worth $160,000 and he would need another $140,000 without touching his savings of $28,000. 51 The question put by the defendant is whether or not it would be appropriate for a Crisp order to have been made. In particular in dealing with this question one always comes across the statement which is quite appropriate in some circumstances in White v Barron (1979-1980) 144 CLR 431 at 444 where the court said:- "A capital provision should only be awarded to a (plaintiff) when it appears that this is the fairest means of securing (his) proper maintenance. However, the provision of a large capital sum for a (plaintiff) who is not young, may, in the event of (his) early death, result in a substantial benefit to (his) relatives, contrary to the wishes of the testator, when a benefit of another kind would have afforded an adequate safeguard to (him) personally, without leaving (him) in a position in which (he) could benefit (his) relatives from the proceeds of the legacy." 52 Those comments might well be apposite in many cases, but in the present case of course one has an estate where the concerns of the property passing to someone other than other relatives of the deceased does not occur. It is property passing to charities and to relatives who on the evidence have had no contact with the deceased. In these circumstances, particularly given the size of the estate, I do not see why the court should not allow Mr McCullum to have a sum which would allow him to own a home in the area he wants to move to and still retain his present savings. There will be some cost of course involved and accordingly I think that the appropriate legacy that the plaintiff should receive would be $150,000, that is an increase of $100,000. Accordingly one has to come to how the burden of this provision should be borne. 53 The 50,000 given to the plaintiff Mr McCullum is borne by the estate before its apportionment of the shares. In these circumstances, given that Mr McCullum is a beneficiary under the trust I think it is most appropriate that the other $100,000 - that the burden of that $100,000 be borne by the half share passing to the McCullum Trust. 54 So far as the legacies to the plaintiffs are concerned I think they should be borne by the estate generally prior to its division into residue. 55 Accordingly the orders I make are that the plaintiff Deborah Ruth Lowe receive a legacy out of the estate of (a) forgiveness of the debt of $200,000 due by her to the deceased and (b) provision of the sum of $175,000. 56 I order that there be provision, in lieu of the provision in favour of the plaintiff Ronald James McCullum, a legacy of $150,000, the burden of $50,000 falling upon the estate before division and the burden of $100,000 to be borne by that share of the residual estate that is held for the John James and Thelma May McCullum Family Trust. 57 I order that the plaintiffs' cost on a party and party basis and the defendant's costs upon an indemnity basis be paid out of the estate of the deceased. 58 I order that the interest on the legacies be paid at the rate provided for in the Wills Probate and Administration Act if not paid within twenty-eight days of today's date, interest to run from that date. The exhibits can be returned.

McCullum v Permanent Trustee Lowe v Permanent Trustee Company Ltd

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Judgment (8 paragraphs)

Cases Cited (7)

Cited By (6)