Applicable Principles
208Statutory provisions. The relevant statutory provisions of the Family Provision Act engaged by the plaintiffs' application are set out below. Each plaintiff qualifies as an "eligible person" entitled to make a claim against the estate of the testator under Family Provision Act s 6 .
209The statutory provisions that give the Court its jurisdiction and guide the exercise of the Court's discretion are relevantly the following.
"7 Provision out of estate or notional estate of deceased person
Subject to section 9, on an application in relation to a deceased person in respect of whom administration has been granted, being an application made by or on behalf of a person in whose favour an order for provision out of the estate or notional estate of the deceased person has not previously been made, if the Court is satisfied that the person is an eligible person, it may order that such provision be made out of the estate or notional estate, or both, of the deceased person as, in the opinion of the Court, ought, having regard to the circumstances at the time the order is made, to be made for the maintenance, education or advancement in life of the eligible person.
9 Provisions affecting Court's powers under secs 7 and 8
(1) Where an application is made for an order under section 7 by an eligible person who is such a person by reason only of paragraph (c) or (d) of the definition of eligible person in section 6 (1), the Court shall first determine whether, in its opinion, having regard to all the circumstances of the case (whether past or present), there are factors which warrant the making of the application and shall refuse to proceed with the determination of the application and to make the order unless it is satisfied that there are those factors.
(2) The Court shall not make an order under section 7 or 8 in favour of an eligible person out of the estate or notional estate of a deceased person unless it is satisfied that:
(a) the provision (if any) made in favour of the eligible person by the deceased person either during the person's lifetime or out of the person's estate, or
(b) in the case of an order under section 8:
(i) if no provision was made in favour of the eligible person by the deceased person, the provision made in favour of the eligible person under this Act out of the estate or notional estate, or both, of the deceased person, or
(ii) the provision made in favour of the eligible person by the deceased person either during the person's lifetime or out of the person's estate as well as the provision made in favour of the eligible person under this Act out of the estate or notional estate, or both, of the deceased person,
is, at the time the Court is determining whether or not to make such an order, inadequate for the proper maintenance, education and advancement in life of the eligible person.
(3) In determining what provision (if any) ought to be made in favour of an eligible person out of the estate or notional estate of a deceased person, the Court may take into consideration:
(a) any contribution made by the eligible person, whether of a financial nature or not and whether by way of providing services of any kind or in any other manner, being a contribution directly or indirectly to:
(i) the acquisition, conservation or improvement of property of the deceased person, or
(ii) the welfare of the deceased person, including a contribution as a homemaker,
(b) the character and conduct of the eligible person before and after the death of the deceased person,
(c) circumstances existing before and after the death of the deceased person, and
(d) any other matter which it considers relevant in the circumstances."
210The present case raises questions under both Family Provision Act s 9 and s 7. If a finding were to be made that some order for provision should be made to either plaintiff then Family Provision Act s 11 gives a broad range of remedial choices to the Court.
211General law. The legal principles that apply to the jurisdiction that the Court is called on to exercise in this case are not controversial. They have been succinctly summarised by Brereton J in a recent decision of Taylor v Farrugia [2009] NSWSC 801 where his Honour said:
"[9] Applications such as these under the (NSW) Family Provision Act 1982 for provision out of the estate of a deceased person, have been described by the High Court of Australia in Singer v Berghouse (No 2) (1994) 181 CLR 201 as involving a two stage approach. The first requires the determination of the jurisdictional fact whether the applicant has been left without adequate provision for his or her proper maintenance, education and advancement in life, and the second - which arises only if the first is resolved affirmatively - involves the discretionary assessment of what provision ought to be made out of the estate for the applicant. However, as the High Court explained, similar considerations inform both stages of the process:
The determination of the first stage in the two stage process calls for an assessment of whether the provision (if any) made was inadequate for what, in all the circumstances, was the proper level of maintenance, et cetera, 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.
[10] Because the considerations relevant to both stages overlap in this way, consideration of an application under the Family Provision Act does not always divide neatly into the two questions, as Callinan J and Heydon JJ pointed out in Vigolo v Bostin [2005] HCA 11 ; (2005) 221 CLR 191, 192. Nonetheless, in an application under the Act, the court must consider, first, whether the plaintiff is an eligible person; secondly, whether the plaintiff has been left with inadequate provision for his or her proper maintenance, education and advancement in life; and thirdly, if so, what (if any) provision or further provision ought to be made out of the estate for those purposes. The relevant principles and considerations were summarised by McClelland CJ in Eq, in Re Fulop (dec'd) (1987) 8 NSWLR 679 at 679:
In making these determinations, the following principles apply: First, the Court should not interfere with the dispositions in the will except to the extent necessary to make adequate provision for the plaintiff's proper maintenance, education and advancement in life. Secondly, the expression "proper" in this context connotes a standard appropriate to all the circumstances in the case, and thirdly, the Court may take into consideration any matter (whether existing or occurring before or after the death of the deceased which it considers relevant in the circumstances, including (a) the nature and quality of the relationship between the plaintiff and the deceased, (b) the character and conduct of the plaintiff, (c) the nature and extent of the plaintiff's present and reasonably anticipated future needs, (d) the size and nature of the estate of the deceased, (e) the nature and relative strength of the claims to testamentary recognition by the deceased of those taking benefits under the will of the deceased, and (f) any contribution, financial or otherwise, direct or indirect, by the plaintiff to the property or welfare of the deceased.
[11] It is important also to bear in mind the principle articulated by Young J, as his Honour then was, in Stewart v McDougall (New South Wales Supreme Court, Young J, 19 November 1987, unreported), in explaining that the court's role is limited to making adequate provision for an eligible person's proper maintenance and advancement:
It is important to state what the Family Provisions Act permits a Court to do and what it does not permit a Court to do. The Act recognises that Australians have freedom to leave their property by their will as they wish with one exception. The exception is that a person must fulfil any moral duty to make proper and adequate provision for those whom the community would expect such provision to be made before they can leave money as they wish. Thus, in these cases, one does not ask if the will is fair, one does not ask if the testatrix divided her property equal, one does not as a judge ask how would I have made a will had I been the testatrix. What must be asked is did the testatrix fail in her moral duty to those who have a claim on her. Even if the Court comes to the view that the question should be answered in the affirmative, the Court still does not remake the will, but only alters it to the extent adequate provision is made for the eligible person in respect of whom the testatrix failed in her moral duty."
212It is now necessary to apply these principles. Chris Neil made his own judgment about the changes that time made to his relationship with Julie. He made his 2001 will contemporaneously with the pre-nuptial agreement, which restrained neither him nor Julie from changing their wills. When he made his final 2003 will 18 months later he markedly increased the benefit conferred on Julie. In addition to the Cronulla apartment she received under the 2001 will she received the Sandlix shares, and her husband's cars and jewellery and personal effects. But in my view the provision that he so made for her was inadequate.
213The estate submits tat the plaintiffs claim should be dismissed on several grounds and that the plaintiff does not have a need for more than what it is submitted is an additional $8 million in capital above the resources that she brought into the marriage. I do not agree with this submission for several reasons.
214It is said that the marriage was a short one. But as I have already found it involved an intensity of difficult experiences that would not be found in much longer marriages. Also the parties had a close personal relationship of an additional approximately three years. All together the shortness of the relationship is not a factor that should be counted against the plaintiff.
215It is said that Julie Neil has not contributed to the acquisition, conservation or improvement of any of the estates' assets. Other than for a short period as homemaker during and before their marriage this is not a factor that weighs in Julie Neil's favour.
216It is said that Julie Neil is comparatively youthful and in good health. Julie Neil has both these qualities. Her good health will be important to Charli's future upbringing. At 41 Julie Neil has reached middle age. She still is comparatively young. But her comparative youth in her case brings with its disadvantages of business inexperience. She struck me in the witness box as somewhat unworldly, and someone who still has much to learn. Her youth is not an unquantified advantage.
217It is said that Julie Neil intends to return to the workforce. Whilst this is true, her actual earning capacity is unknown. All her earnings history before her marriage were in the gym and personal training area, a field that it is to be expected she is less likely to be able to pursue at her present age or older. Apart from this her actual work history is quite narrow and at a very junior level. She expressed an interest in learning more about real estate investment and management but her actual abilities in this filed are untested. I do not count any significant capacity to earn income as a significant resource for her.
218It is said that Julie Neil will be relieved of expenditure if the Court orders further provision for Charli. This is correct but much of the provision for Charli is for her longer-term needs and the provision will be held in trust for Charli by Julie's brother under the orders the Court proposes. There will be some relief of expenditure here to Julie but the important capital needs of a new house in time, for example, will not be much altered by the provision of Charli.
219The pre-nuptial agreement is also said to be a factor warranting dismissal of Charli's claim. But my findings about the circumstances of this agreement, set out in issue 3 above, mean that this matter is not a factor weighing in favour of dismissal of Julie Neil's claim.
220Finally the estate relies upon the generous provision under the 2003 will. But I have already found that Julie Neil's proper needs for maintenance are greater than what was provided for her under the will. It is this last factor that requires closer analysis.
221Under the will the estate submits that Julie receives the assets set out in Section 6. The figure of $4,226,509 for the valuation of Sandlix set out there is the principal variable. If Julie were to continue to run Sandlix as an investment operating company the tax would not need to be paid on its winding up and its value is agreed at $6,042,706. Thus the estate submits that she receives approximately $8 million in addition to her own resources being $2 million for the Cronulla apartment, $6,042,706 in Sandlix. The other assets are of lesser value. She has access to funds in the Westpac savings account of $230,000 and her superannuation. If she wishes to wind up Sandlix then the net benefit to Julie from the estate is more of the order of $6 million, plus her benefit in the Peakhurst property.
222A central issue in determining whether adequate provision has been made for Julie Neil is the quality of the earnings from the properties in Sandlix. Julie has indicated a desire to retain the properties in Sandlix rather than to liquidate them, so she can enjoy the dividend stream from them and pay herself a salary as a director. But the two properties at Gartmore Avenue and de Witt Streets Bankstown are vacant land and unlikely to generate any income in the short term. They are only likely to generate income if developed. Without undertaking the risk of borrowing, there is no evidence that Sandlix has sufficient internal resources to fund the development of these two properties. It can reasonably be assumed that without a further injection of capital into Sandlix that these two properties will remain vacant and undeveloped. To generate any income from these properties they would probably have to be sold.
223The income from the other properties is also quite uncertain. The warehouse/offices at Penshurst Street, Beverley Hills valued at $1,250,000 is currently vacant and could be rented for $88,000, but only if repairs are undertaken. The other factory/warehouse at Depot Road, Mortdale valued at $2,200,000 is rented and generating an annual income of $203,316. But the major tenant of the property is not on a long lease and there is a significant risk that it will vacate the property.
224In my opinion this combination of capital and income in these properties is the opposite of what a widow in Julie Neil's circumstances needs. They give her what appears to be not insignificant capital but a wholly unstable income. Her own needs for the immediate and medium term future are likely to be for a stable and ample income of a kind to cover her outgoings. This could not be realistically achieved for her without selling these properties and investing the proceeds in a stable financial institution. This could theoretically be done without liquidating Sandlix. At the time of trial term deposit yields for 180 days varies between 4.35% and 6.1%. If the proceeds of these, properties were approximately Sandlix,$4,000,000, assuming an average interest rate of 5%, the fund could generate approximately $200,000 per annum before tax. This may be enough to pay the salary she had in mind but does not even on top of her existing income provide much for the contingencies of life and her expectations of a comfortable future way of life.
225Furthermore the evidence is that the Penshurst property, which by these reasons has been found to be beneficially owned by Sandlix, not by Chris Neil, was vacant from November 2008 to October 2009. It was then rented at $4,000 per month for four months. It requires renovations of approximately $30,000 to secure a tenant. Its annual outgoings include council rates of $3,6000 per annum, land tax of $9,962.67 and water rates of $800. It is not a reliable source of income for Julie Neil. The better course may be to liquidate it and its realization value is the figure of $407,025.
226Julie Neil's proper need for maintenance should, in light of my findings above about individual items of future expenditure, be discounted on average on the agreed experts figures to approximately 60% of the agreed $14.9 million, or $8.94 million on the 2% tables. It would slightly less on the 3% tables.
227In my view the Sandlix properties are likely to have to be liquidated because of their poor returns and they will be valued at the lower rate to Julie of approximately $4 million. That is not adequate for her proper needs. In my view the provision contended for by the plaintiff of 65% of the Flat Glass asets is an appropriate provision for her.