Peters v Salmon

5In addition to these properties, in April 1987 the deceased bought a property known as "Flamingo" using an inheritance of $144,146.81 from his sister, Ivy Salmon (Ivy). Flamingo is adjacent to and to the south of Swansea, although the two properties are divided by a sealed road. On its southern side, Flamingo is adjacent to the Murrumbidgee River. It consists of two lots - one of 200 acres and one of 43 acres. The 200 acre lot was bought in Michael's name and the 43 acre lot was bought in Mrs Salmon's name. The accounts for the deceased show the purchase price for those two lots as loans owed by Michael and Mrs Salmon respectively to the deceased. According to the deceased's accounts, those loans were forgiven in the year ending 30 June 2006. Michael paid $5,000 from his own money towards the deposit for the purchase of Flamingo. The lot owned by Mrs Salmon is located on the northern side of Flamingo (away from the river) and looks over a lagoon. In 1987 Michael, at his mother's suggestion, moved an old and dilapidated house that was on Olivers to her lot. Michael has since improved and expanded the house and he and his family have resided there since approximately 1987. On 7 May 2013, Mrs Salmon transferred the lot to Michael in consideration for foregone wages for farm work.

The will and the estate 6By his last will made on 29 September 2009, the deceased appointed Mrs Salmon, Michael, Jan and Sue his executors. He left Mrs Salmon Swansea and Ganmurra. However, if Mrs Salmon predeceased him, he left Swansea to Michael and Ganmurra to Kerryn and Luke as tenants in common in equal shares. The deceased left Michael Flanagans and Olivers together with his livestock and farming plant and left Luke Mondowy. He left bequests of $10,000 to each of Donna and Jan and forgave a debt of $14,000 said to be owing by Kerryn. He left the residue of his estate to Mrs Salmon, although if she predeceased him, he left the residue of his estate to be divided equally between Luke, Michael, Kerryn, Donna and Jan. 7Clause 11 of the will gave the following explanation for favouring Michael: I DECLARE that if my Will shows a preference for my Son the said MICHAEL AUGUSTINE SALMON then that is in consideration of him continuing to assist me in my farming operations for many years, often for very little reward, and in general allowing me to amass the assets which I have during my lifetime AND I FURTHER DECLARE that further assistance has been given by myself and my Wife the said ESMAE FRANCES SALMON to our other children AND THAT they have benefited as close to equal as possible in monetary value in the distribution of assets owned by me during my lifetime. 8The other assets of the deceased's estate and the value of those assets for probate purposes are as follows: Bank deposits $32,097.38 Riverina Co-operative shares $1,700.00 IAG ordinary shares $1,100.00 RSL Life Care policy $1,300.00 Exco Resources NL shares $33,800.00 Farming plant and equipment $13,300.00 Livestock $84,325.00

9Since probate was granted, the estate has incurred a number of costs totalling approximately $23,000. In addition, the estate's estimated total legal costs of this proceeding are approximately $166,000, of which approximately $79,000 have been paid. The Exco Resources shares were sold for $6,400. The current value of the farming plant and equipment is said to be $0. In addition, based on an appraisal prepared by Mr Maher, Sue, one of the executors, says the properties now have the following values: Property Probate value Revised value Swansea $900,000 $800,000 Flanagans $310,000 $260,000-$270,000 Olivers $200,000 $160,000-$180,000 Mundowy $180,000 $150,000-$160,000 Ganmurra $300,000 $200,000-$220,000

The claims 10Originally this proceeding was commenced by Jan, Shane, Kerryn and Donna. The proceeding was commenced against Mrs Salmon, Michael and Sue, the three executors who did not themselves make claims. Jan, however, discontinued her claim on 29 July 2012 on the basis that she pay the defendants' costs. Shane discontinued his claim on 12 March 2013 on the basis that he and the defendants would pay their own costs of the proceeding insofar as they related to his application. Luke has played no part in the proceeding. 11Originally, the four plaintiffs sought orders that Flanagans, Olivers and Ganmurra be available to be shared among the plaintiffs after Mrs Salmon dies. Kerryn and Donna now seek orders that Ganmurra and Olivers be provided to them. If orders are made in their favour, they have offered undertakings that they will not make any application for provision out of Mrs Salmon's estate (assuming that they survive her). They have also proposed that any provision could be delayed so that Mrs Salmon retains a life estate in Ganmurra and Michael is granted a licence to farm Olivers until their mother's death. Alternatively, they suggest that their interest in respect of Ganmurra could be secured by a mortgage or charge.

Background facts - Donna 12As I have said, Donna was born in March 1960. She was raised by her parents on Swansea, where she lived with her siblings. Like her brothers and sisters, she helped around the farm while living at home. She moved into Wagga Wagga when she was about 19 years old and, when she was there, she spent a lot of time with Ivy. She worked as a dental nurse in Wagga Wagga and also worked, from time to time, as a waitress. In about 1979 or 1980 the deceased purchased a house in Plumpton Road in Wagga Wagga and from that time Donna lived in that house, which she shared with others, who paid rent to the deceased. She continued to visit her aunt regularly. Donna gave the following evidence in relation to the purchase of the house: In about 1979 or 1980 my father rang and said "I have bought you a house down the road from Aunty Ivy, at Plumpton Road, so you can help look after her because she has lost most of her sight". I remember he paid approximately $42,000 to buy the property. As best I recall I said: "If I could afford to pay back some of it I will". As best I recall Dad said: "If money is tight for you it does not matter if you can't pay me back." My clear understanding was that the house was mine because I had agreed to look after Aunty Ivy. There was never a commitment between my father and myself to repay the price paid for my house. Donna says that she did not want to take a second job and that she would have preferred to be out with friends, but that she felt obliged to help look after her aunt and to make regular payments to go towards the purchase price of the house. 13Ivy died in about 1987. Following her death, Donna's room at the Plumpton Road house was rented out. Donna, after living in Foster for a time, eventually moved to Coffs Harbour. Rent received from the property continued to be paid to the deceased. 14Donna says that in around 1993 (she originally suggested it was 1989) the drought had placed financial strain on her parents and at about that time the deceased rang her and asked if she would agree to selling the Plumpton Road house so that he could have some cash to keep the farm running. She agreed and she says the house was sold for around $85,000. Sue gave evidence that the house had a structural problem requiring underpinning and that it was in fact sold for $73,000. Donna says that it was her expectation that the deceased would make provision for her in his will to take account of what had happened. 15I do not accept Donna's account of what happened in relation to the Plumpton Road property. There is no documentary evidence that the deceased intended the house to be a gift to Donna. The deceased's decision to buy it in his own name suggests otherwise. The arrangements made in relation to the Plumpton Road property should be contrasted with the arrangements that the deceased made in relation to Flamingo. It appears that the deceased did intend to give one of the lots making up Flamingo to Michael. In that case, he bought the property in Michael's name, although he showed the purchase price as a debt owing by Michael to him in his personal accounts. It is not clear why the deceased would not have taken the same approach had he intended the Plumpton Road property to be a gift to Donna. Donna was only 19 or 20 at the time and it is difficult to understand why the deceased would purchase a property for her at that time. Donna suggests that he did so because Donna agreed to look after Ivy. However, that seems to me to be implausible. Donna was working at the time. She was not living with her aunt. The assistance that she provided to her aunt seems no more than the assistance that it might be expected that someone would give to a relative to whom they were close (as Donna was to Ivy). Donna described the payments she made to her father as "rent". The deceased may well have taken the attitude that he would not insist that she pay rent if money was tight; and he may have contemplated giving the house to her some time in the future. For that reason, he may well have spoken to her about selling the property before doing so. I do not accept, however, that he gave the house to her before it was sold or that he was under any obligation to do so. 16After Donna left Wagga Wagga, she remained in contact with her parents and spent most holidays on the farm. During that time, she worked in various jobs. In 1997, she returned home to work in real estate. However, she left that job due to harassment and then stayed with her parents for approximately six months during which time she helped them and Michael, who was the only sibling to remain on the farm. After that six month period, she returned to Coffs Harbour. In June 1999 she went on an overseas trip with her parents and says that she and her sister Sue subsidised her parents' accommodation to make their trip more comfortable. In 2006, she contributed $1,500 to renovate her parents' bathroom. During the last 10 years of the deceased's life she used to visit the farm approximately two to three times per year. 17From 1997, Donna has worked as a sales person in real estate. In 2000 she bought a house at Moonee Beach in which to live. The purchase price was $101,000 and the deceased contributed a deposit of $10,000. 18Donna met her husband, Rodney, in 2003 and they were married in 2007. Shortly before they married, Donna and Rodney paid for Donna's parents to have a holiday at Kirra in Queensland for 10 days in total. Donna's parents also stayed with Donna and Rodney at Moonee Beach for approximately four weeks prior to and after their wedding. Rodney owned a property before their marriage at Coffs Harbour, where they have since built their home. Donna rents out her property at Moonee Beach. 19Set out below is a summary of Donna's and Rodney's assets and liabilities: Assets $ Moonee Beach property (rental property) $360,000.00 Coffs Harbour property (home) $450,000.00 Moonee Beach property (vacant block) $200,000.00 Honda Accord 1999 (Donna) $2,500.00 Holden Commodore Utility 2005 (Rodney) $4,500.00 Donna's superannuation $94,502.00 Rodney's superannuation $86,867.00 Liabilities Loans in respect of properties $526,187.00 Overdraft $24,342.00 Commonwealth Bank credit card $400.00 Virgin credit card $3,028.00 Total liabilities $553,957.00 Net assets $644,412.00

20The construction of the home at Coffs Harbour is almost complete. Donna estimates that the remaining works will cost approximately $39,560, the largest cost being retaining walls at approximately $25,000. Donna and Rodney bought the land at Moonee Beach with the intention of building units on it, which they intend to rent out. 21Rodney works for the Police force. His age is not disclosed in the evidence. However, his father was 68 in late 2012. Consequently, the likelihood is that he is no older than in his late 40s. His income for the financial year ended 30 June 2012 was approximately $97,000. Donna's income as a real estate agent has varied over time. During the past 5 years it was as follows: 2008-2009 $67,892.00 2009-2010 $63,010.00 2010-2011 $99,957.00 2011-2012 $61,550.00 2012-2013 $3,000.00

22Donna has found her job as a real estate agent increasingly stressful and, as a consequence, she has retired from that work. She is currently not working, but plans to take a position in aged care where she expects to earn approximately $45,000 to $50,000 per annum. 23Donna and Rodney also receive $1,510 per month from renting out the Moonee Beach property. 24In her affidavit evidence, Donna lists her expenses, which total $5,653 per month. They are said to be her share of expenses and include average monthly tax paid by her of $1,125. Leaving tax aside and assuming that the other expenses are shared equally, Donna's and Rodney's expenses are approximately $9,000 per month.

Background facts - Kerryn 25Like Donna, Kerryn grew up on the farm. She went to boarding school for a while, but left after completing four years of high school, having completed her school certificate. She did not enjoy school, but she loved the farm and had a close relationship with the deceased. She spent a lot of time helping him around the farm during her early years. 26After leaving school, Kerryn lived at home and continued to work on the farm for several months. At one point, she asked the deceased whether she could stay on the farm and help him full time. His reply was that "that is not the done thing". Subsequently, the deceased found Kerryn a job at the local pharmacy and her sister, Jan, used to drive her to work there. 27In April 1978, Kerryn married Gavin Osmond and moved to Wagga Wagga. However, she stayed in close contact with her father. She separated from her husband in 1982. She has had a relationship with Hugh Long for 28 years. They have two children, Renee and Luke, both of whom are adults. Renee, who is now 28, has recently broken up with her partner, and in late May 2013 she moved back home. 28It is not entirely clear what Kerryn did after she met Hugh. She, Hugh and the children used to go back to the farm 2 or 3 times a year for a few days and when they were there they used to help out. In 1986, Kerryn and Hugh were living in Toowoomba, Queensland and at that time her parents visited for a week while Kerryn went to Melbourne to meet suppliers for a small home business she was starting. She says that that business was the source of her income when her children were young. In April 1994, the deceased lent Kerryn $15,000. In January 1995, Kerryn and Hugh moved to Sydney to start new jobs and while they were looking for a place to live their two children stayed on the farm. 29In 1999, the deceased and Mrs Salmon travelled through Sydney on their way to Europe with Donna and Sue and at that time Kerryn repaid $1,000 of the amount that she owed the deceased. 30Kerryn also says that from about 1980 through to 1999 she worked in various waitressing and cleaning positions. 31In 1999, Kerryn obtained a position as sales assistant at the Terrey Hills supermarket and she has worked in that position since that time. 32In 2009, Kerryn and Hugh bought a unit in Dee Why for $435,000. They paid a deposit of about $105,000. It is difficult to understand from Kerryn's evidence how that deposit was made up although it seems clear that Kerryn paid the larger share. 33Shortly before moving into the unit Hugh announced that he wished to terminate their relationship. Despite that, they both moved into the unit and continue to live there. According to Kerryn, they agreed in early 2012 to separate formally and Kerryn says that it is anticipated that Hugh will move out of the unit once financial arrangements have been negotiated. 34In an earlier affidavit, Kerryn said that she and Hugh had agreed verbally that their assets should be split 50/50. Kerryn has consulted a family law solicitor regarding the property settlement and has been advised that in her particular circumstances an even split of assets between herself and Hugh was both fair and the most likely outcome if the matter proceeded to court, although Kerryn has not received any written advice to that effect. In a more recent affidavit, Kerryn suggests that there is some doubt whether Hugh will agree to an equal division of their assets for a number of reasons, including the fact that Hugh was made redundant in 2010 and paid the money that he received on his redundancy towards the mortgage on the unit. 35Their principal assets are the unit, which is now estimated to be worth $450,000, Kerryn's superannuation of approximately $62,500 and Hugh's superannuation of approximately $138,000. Currently the mortgage over the unit is approximately $199,000. 36Assuming that agreement can be reached on an equal division of property, Kerryn would be entitled to approximately $225,000. Her hope is to buy Hugh's interest in the unit. In order to do that, she would have to take over the mortgage and pay Hugh $125,500 (assuming they can agree that the value of the unit is $450,000). 37Kerryn says that she works six days a week and approximately 70 hours a week and that her gross income is approximately $76,400. Her group certificate discloses that she earned $78,960 for the financial year ended 30 June 2012. Kerryn says that she earned the additional amount by "cashing in" long service leave, or holiday leave or by working part of her 4 weeks annual leave. 38Kerryn says that her monthly expenses (leaving aside tax) are approximately $4,700, including $1,733 per month or $400 per week in mortgage repayments. 39The defendants took issue with some aspects of Kerryn's evidence. Initially, they questioned whether Kerryn really had separated from Hugh at all. However, during the course of submissions, Mr Smallbone, who appeared for them, rightly conceded that Kerryn had separated from Hugh. She was very emotional in the witness box, often in tears. In my opinion, a considerable part of that emotion can be attributed to the difficult position she finds herself in. 40It was also suggested that Kerryn had exaggerated the difficulties of her financial position and the number of hours she works. Mr Smallbone pointed out that she had recently taken a holiday in Chile, the costs of which were in excess of $3,000. Kerryn gave evidence that she and Hugh each pay $400 per week towards the mortgage of their unit. Mr Smallbone initially suggested that the evidence indicated that Kerryn had in fact paid more than $400 per week towards the mortgage because she had said in her original affidavit (sworn in October 2012) that the mortgage was $245,000 and the evidence was that by May 2013 it had been reduced to $199,000. It is clear, however, from the bank records that the original figure of $245,000 was an error and that the true figure was $218,000. That was consistent with Kerryn's evidence that she and Hugh were each paying $400 towards the mortgage. Mr Smallbone also referred to the fact that, following the deceased's death, Kerryn sent the estate a cheque for $14,000. Kerryn explained that she "felt bad" about the estate forgiving the debt that she owed. That, however, seems implausible. A more plausible explanation is that she thought her family provision claim would be improved if she repaid the debt. In fact, the deceased's accounts suggest that the debt was forgiven in the financial year ending 2006. There was also evidence that Kerryn had lent her boss some money, although in cross-examination, Kerryn denied that it was a loan and gave an explanation of the arrangement which is difficult to follow. Whatever Kerryn's motives in sending the cheque for $14,000, it was submitted that that evidence together with evidence of her holiday and "loan" to her boss demonstrated that Kerryn's financial position was not as difficult as she has made out. It was also suggested that her income may be greater than she says and that part of it is paid to her in cash. 41It is possible that Kerryn has exaggerated the number of hours she works slightly. It is clear, however, that she works hard. She earns a reasonable income from doing so. However, there is no evidence that she has understated her income and I do not think it could be said that she has an extravagant lifestyle. Her trip to Chile was not expensive and it is understandable that she would want a holiday. It appears that Kerryn spends approximately $180 per month on vitamins and health supplements. It was put to her in cross-examination that that was an extravagance; and it may be that she could reduce her expenses somewhat. The fact remains, however, that her current income after tax is approximately $1,100 per week. On the assumption that she takes over the existing mortgage and borrows $125,500 to pay Hugh a half share of the unit, her total borrowings would be approximately $324,000. Assuming an interest rate of 6.5 percent, if she were to repay that loan over 13 years (that is, by the time she reaches the age of 70), her weekly loan repayments would be approximately $715. The only other asset she has is a modest amount of superannuation. She is 56 and there is a question whether she will be able to continue to work as hard as she does in her current job until the age of 70. 42It was also submitted that Kerryn may be entitled to more than a half interest in the assets she and Hugh own and it was suggested that she had deliberately put off reaching a settlement with Hugh until after this proceeding was determined. Again, I do not accept that submission. There is no reason to doubt her evidence that she has received legal advice that an equal division of their assets would be reasonable in the circumstances. I accept that Kerryn contributed a greater proportion of the initial purchase price. However, Hugh contributed his redundancy payment to the mortgage. Kerryn's evidence is that Hugh wants at least an equal division of the property. I accept that evidence. The amount in issue is not large and the costs of any court proceedings would be substantial. In those circumstances, an equal division of property if it can be agreed seems to be a reasonable approach. 43Kerryn cannot be criticised in waiting for the outcome of this case before reaching a settlement with Hugh. The outcome of this case will determine what Kerryn has available to her to purchase the unit. It is not unreasonable for Kerryn to want to know the position before trying to seek a final resolution with Hugh. 44The result is that, unless some provision is made for Kerryn, there seems to be little prospect that she will be able to buy the unit where she lives.

Background facts - Michael and the farm 45Like Donna and Kerryn, Michael grew up on the farm. He left school in 1978 at the age of 16, having completed the school certificate. After leaving school, he applied for a job as an apprentice diesel mechanic but did not get the position. He then took a position as an apprentice jeweller, but returned to the farm to assist the deceased to plant the 1979 crop. He says that he was told by his mother at the time that "everything will be alright". He has worked on the farm since that time. During 1979 he went to TAFE in Wagga Wagga and completed a farming technology course there. He did a wool classing course at TAFE the following year. 46Michael was not paid a wage for working on the farm. He received room and board, and fuel on the farm account and occasional allocations of stock or grain in his name. In addition he says he earned limited off farm income from activities such as house moving. 47As I have said, in April 1987, the deceased bought Flamingo and gave Michael one of the lots (although the purchase price for that lot was initially shown as a loan owed by Michael). At about the same time, Mrs Salmon suggested that Michael move a house on Olivers to her lot on Flamingo, which was the most attractive part of that property, to provide a home for him. I accept Michael's evidence that the house had little worth and if it had not been moved the plan was to burn it down. A photograph of the house before it was moved supports that evidence. Michael has done a large amount of work on the house to make it into a home for him and his family. 48According to Michael, the deceased effectively retired from farming in about 1990 and since then he has carried out the main part of the farm work, with his father acting as an adviser. That evidence was supported by Mrs Salmon in her affidavit, although in cross-examination she was more equivocal. Since his father's death, Michael has farmed the properties unassisted. 49Michael married his wife, Tarna, in 1999 and they have 2 children now aged 8 and 11. Their son, Nash, is epileptic and takes medication daily. 50The farm income has not always been sufficient to support two households, particularly during the 9 year drought that ended in 2010. As a result, Michael has supplemented his income by taking on paid work elsewhere. That work has included moving houses, using his machinery for other paid labouring and machinery based tasks and driving trucks. In addition, in 1998 he established a business known as Wagga Wagga Ditch Witch Hire, which carried on a trenching business. 51Since marrying Tarna, Michael has carried on business in partnership with her. Set out below is a table showing the net profit from that business, together with Michael's and Tarna's share of taxable income from that business during the period 2000-2012: Net Profit Michael's Taxable Income Tarna's share of income 2000 $13,040.71 $1,634.00 $6,520.35 2001 $63,730.91 $31,865.00 $31,865.00 2002 $65,527.65 $32,339.00 $30,953.91 2003 $61,907.83 $30,869.00 $30,953.91 2004 $29,261.80 $14,692.00 $14,630.90 2005 $58,796.64 $29,519.00 $29,398.32 2006 $48,715.00 $24,497.00 $24,358.00 2007 $41,812.00 $21,002.00 $20,906.00 2008 $108,338.00 $54,206.00 $54,169.00 2009 $34,160.00 $17,122.00 $17,080.00 2010 $15,438.00 $7,718.00 $7,719.00 2011 $20,709.00 $10,426.00 $10,354.00 2012 $57,473.00 $28,737.00 $28,737.00

52Set out below is a table showing the gross trading profit of the farm, Michael and Tarna's share of that profit and the gross profit of the Ditch Witch business for the same period: Farm Gross profit Michael and Tarna's share of farm gross profit Ditch Witch gross profit 2000 $49,606 $8,960 $20,245 2001 $70,491 $24,928 $53,068 2002 $114,967 -$71 (loss) $81,156 2003 $84,641 $8,696 $70,288 2004 $54,457 $12,505 $31,559 2005 $91,518 $19,254 $56,865 2006 $65,699 $5,219 $109,515 2007 $49,990 $15,999 $81,369 2008 $146,203 $104,598 $67,491 2009 $58,223 $22,148 $74,757 2010 $46,806 $28,811 $39,683 2011 $44,825 $24,699 $40,747 2012 unknown $37,806 $6,181

Michael's and Tarna's share of the farm's gross profit largely came from the sale of cattle. However, in 2008, $51,471 came from the sale of water rights. The gross profits for the farm are not known for 2012 because the accounts for Mrs Salmon have not yet been completed. 53Included in the evidence were the annual accounts for Mrs Salmon, the deceased and the partnership carried on by Michael and Tarna. It is difficult to work out the net profits derived from the farm from those accounts because the accounts for the partnership carried on by Michael and Tarna do not separate out farm and other business expenses. Nonetheless, those expenses are not very substantial. Set out below is a table derived from the accounts of Mrs Salmon and the deceased showing the net profits (or losses) they earned from the farm during the period 2000 to 2011. Together with the gross profit earned by Michael and Tarna, the table provides some guide to the net income generated by the farm in those years: Net profit earned by Mrs Salmon Net profit or loss earned by the deceased Total 2000 $8,058 $14,921 $22,979 2001 $8,505 $15,383 $23,888 2002 $29,427 $39,614 $69,041 2003 $17,901 $10,979 $28,880 2004 $4,225 ($13,703) ($9,478) 2005 $8,120 $29,641 $37,761 2006 $8,378 $17,405 $25,783 2007 $3,295 ($13,680) ($10,385) 2008 ($1,138) ($3,456) ($4,594) 2009 $6,759 ($4,005) $2,754 2010 $3,605* ($29,814) ($26,209) 2011 $2,698* ($10,617) ($7,919)

• These amounts are based on Mrs Salmon's taxable income for the relevant years. No accounts were prepared for her in those years. 54Recently, Michael has reduced the amount of off farm income he has earned. Since July 2012, he says he has earned a total of $7,772.75 from off farm income. In his affidavit, he explains that he has been too busy looking after the farm and his mother's farming business to do substantial off farm work. In 2012, a number of the properties were damaged by flood and he says he has spent considerable time repairing fences. He closed the Wagga Wagga Ditch Witch Hire business in 2011 and received the last income from that business in 2012. The business had lost customers who had either bought their own trenching equipment or engaged companies with newer machines and, according to Michael, it was no longer viable. The business had two trenchers. Michael sold one in July 2010 for $10,500 and another in December 2011 for $27,500. 55In addition to the income I have referred to, Tarna received two amounts of Family Assistance Payments of $1,697.25 and $7,018.95 on 1 May 2012. Those moneys were used to buy materials to add a verandah to their home. 56It is not easy to get a clear picture of Michael's and Tarna's assets and liabilities from the evidence. Leaving aside the properties that were owned by the deceased, Michael's and Tarna's assets now consist of:
  • Flamingo (including the house);
  • Livestock;
  • Machinery and cars 57In his affidavit sworn on 9 July 2012, Mr Maher valued Flamingo including the improvements at $940,000 to $950,000. 58It is difficult to ascertain the value of cattle owned by Michael and Tarna; and I accept that their value fluctuates because cattle are sold from time to time and their condition and prices vary. Michael inherited the cattle owned by the deceased which were valued for probate purposes at $84,325. Mrs Salmon who carried on farming business ceased to do so following her husband's death. At that time, she sold the livestock she owned to Michael for $39,100. That price was in accordance with a valuation prepared by Elders dated 7 May 2013. The purchase price was credited against a debt said to be owed to Michael for unpaid wages. Michael and Tarna owned cattle of their own. In his affidavit sworn on 9 July 2012, Michael estimated that the value of the cattle he owned at that time was $38,700. 59Michael owns the following machinery: a 1982 Mitsubishi 8 tonne truck, a 1965 Massey tractor, 1980 Toyota bobcat, 1980 120 horsepower John Deere tractor, a Nobli 6.3 mulcher, a 1975 Ford scarifier, 1986 Toyota Landcruiser, 1996 Toyota Prado, 1992 SS Commodore, 1980 aluminium boat with a 6 horsepower outboard motor, 1980 ski boat, a 1980 Yamaha motorbike and various workshop tools including a compressor and welder. No value has been placed on those items. In addition, Michael inherited some plant from his father which was valued for probate purposes at $13,500. Michael says that it now has minimal value, although it is valuable to him because of the cost of replacing it. The likelihood is that if it has value to him someone would be prepared to pay something for it. However, I accept that its value is minimal. 60Michael and Tarna have no superannuation. 61Michael has two mortgages over the Flamingo property. According to the evidence he gave in his affidavit sworn on 9 July 2012, he owes approximately $43,000 in respect of those mortgages. He also has a $10,000 overdraft. 62Michael says that since July 2012 there has been very little rainfall and no spring rain and as a result he has been unable to produce a hay crop and most of his hay reserve was badly affected by a mouse plague during 2012. In addition, because of the poor conditions, his oat crop only yielded half a silo. 63The evidence given by Michael and on his behalf was challenged in a number of respects. 64First, it was submitted that he exaggerated his contribution to the farm. That submission had two strands. First, it was suggested that the deceased did not retire in 1990 and continued to do substantial work on the farm until about 2005. Second, it was suggested that Michael spent a substantial proportion of his time on his other businesses, particularly the Ditch Witch Hire business. Each of Donna, Kerryn and Shane gave evidence that they observed the deceased working on the farm until about 2005. Shane gave the most extensive evidence. He says that he returned home for a period of about 2 years between 2002 and 2005 and during that time he observed the deceased doing extensive work including feeding cattle, spraying weeds, checking water levels, repairing fencing and rounding up cattle. This evidence was said to be supported by photographs of the deceased taken on his 80th birthday which are said to show him castrating cattle. Shane also gaves evidence that, during the period he was at home, Michael was away much of the time working for his trenching business or doing other non-core farm activities such as going to farm clearance sales. According to Shane, the amount of time Michael spent on core farming activities was small in comparison. That evidence is said to be supported by a comparison of the income Michael earned from the farm and the income he earned from his trenching business. 65The truth of the matter probably lies somewhere between the extremes presented by the parties. It is unlikely that the deceased actually retired in 1990. The likelihood is that as he grew older he gradually did less on the farm and came to rely more heavily on Michael. Certainly, I accept the submission made by the defendants that by his 80th birthday the deceased was not castrating cattle and that the photographs relied on by the plaintiffs do not show otherwise. They simply show the deceased observing what was going on. Michael's evidence is that he tried to find lighter tasks for his father as his father got older so that he could remain involved in the running of the farm. The likelihood is that it is those activities that Donna and Kerryn observed on the occasions they visited the farm. In some years, Michael earned substantial income from other sources and it can be inferred that his other activities took up a substantial proportion of his time. However, in my opinion, little significance should be attached to that fact. Michael was the child who stayed at home to help his parents run the farm with the intention and expectation on his part that he would take over the farm on his father's death. He was undoubtedly of great assistance to his parents. The likelihood is that there came a point when the deceased and Mrs Salmon could not have continued on the farm without Michael's assistance. It seems clear that the income from the farm was not sufficient to support the deceased and Mrs Salmon and Michael's family and, leaving aside 2008, Michael himself did not earn substantial amounts from the farm while his father was alive. In those circumstances, Michael was left with little alternative but to find other sources of income. But in my opinion, the motivation behind him doing so was to enable the farm to continue, particularly during a period of extended drought. The fact that Michael engaged in that other work does not undermine the point that Michael made an essential contribution to the continued operation of the farm over an extended period of time. That fact was recognised by the deceased in his will and is consistent with the evidence given by Mrs Salmon. 66Second, it was submitted that Michael can continue to earn income from other sources and consequently he can continue to enjoy the life he leads without relying solely or even predominantly on income earned from the farm. I do not accept that submission. I accept Michael's evidence concerning the circumstances in which the business carried on by Ditch Witch Hire came to an end. I also accept that as Michael gets older it is going to become more difficult for him to find alternative employment and that, without any other assistance, he is going to have to devote most of his attention to running the farm. In my opinion, his capacity both to run the farm and earn other income is limited. 67Third, the plaintiffs took issue with evidence given by Michael that he needs all the properties to operate the farm successfully. The plaintiffs submitted that the evidence indicated that the profit earned from Olivers and Ganmurra was approximately $6,000 per annum and that consequently if those two properties were sold that would not have a major impact on the farm's viability. That figure was calculated by taking the average costs of the two properties as being $12,000. Michael gave evidence that the average number of head of cattle that can be held on each property is 15. The average price of those cattle per head is $600. On that basis, the gross profit that can be earned from each property is $600 multiplied by 15 - that is, $9,000, making a total of $18,000. Deducting expenses of $12,000 produces a net profit of $6,000. 68In my opinion, however, the plaintiffs' calculations involve an over simplification. 69Michael presently farms 1414.6 acres. With the removal of Olivers, Ganmurra and Mundowy (which was left to Luke), Michael would farm 968.3 acres, or 68.45 per cent of the farm existing at the time of the deceased's death. Michael gave evidence that he expects to reach an arrangement with Luke to enable him to continue to farm Mundowy, allowing him access to an additional 126.3 acres. On that basis, and assuming that Olivers and Ganmurra were sold, he would be able to farm 77.38 per cent of the farm as it existed at the deceased's death. There is no evidence concerning the cost of any agreement between Michael and Luke concerning Mundowy. 70The farm is a marginal operation. Mrs Salmon gave evidence that she and her husband did not make a lot of money and that part of the attraction of farming were lifestyle considerations. That evidence is supported by the tables set out above, although those figures may be unrepresentatively low due to the drought between 2001 and 2010. A reduction of 25 percent in the size of what appears to be a marginal farm could be critical to its continued viability. 71Perhaps more significantly, Michael gave evidence, which I accept, that the farm is operated as an integrated whole and it is not possible by the simple arithmetic employed by the plaintiffs to appreciate the effect on it if two of the properties were sold. For example, Michael gave evidence concerning the movement of cattle between the properties. On Olivers, Ganmurra and Mundowy, the carrying capacity in a good year is 20 cows with calves. The calves can be sold at nine months of age. Alternatively the calves can be removed from one of those properties at nine months and then grown out at Swansea before being sold at 12 months, realising approximately $300 more per head than if sold at 9 months. Given the movement of stock from Olivers, Ganmurra and Mundowy to Swansea, the loss of Olivers and Ganmurra would impact on the stocking of Swansea. On Swansea Michael presently runs, typically, 40 weaners but only 20 to 30 cows. Some of those weaners must come from properties other than Swansea. Presumably, some spend their first nine months on one of Olivers, Ganmurra or Mundowy. 72Michael also gave evidence that farming the properties involves a balance between running cattle on pasture and growing feed to hand feed those cattle when pasture is insufficient. This enables Michael to react to good and bad years, the difference between good and bad years being the quality and amount of pasture available. During bad years the carrying capacity of the farm is reduced by up to a third because more feed needs to be grown for the cattle. In good years feed must still be grown for the cattle as they must still be hand fed leading into winter. Approximately one fifth to a quarter of the farm is used for that purpose. Additionally Michael produces hay on the property. In good years he attempts to build up a store of hay so that cattle can be kept, instead of being sold, during drought. Feed which is grown on one property may be used to hand feed cattle on another. For example as stock cannot be kept on Mondowy in dry times, without hand feeding them, the fodder used for that hand feeding is grown on Swansea. Equally Olivers is sometimes used for feed production. It can be inferred that, if Michael did not have access to Olivers and Ganmurra his capacity to grow feed for cattle on other properties would reduce, causing overall cattle numbers on those properties to fall. 73Droughts and floods also complicate the farm's operation. Three properties are close to the Murrumbidgee River: Ganmurra, Flamingo and Mundowy. When these properties are flood affected Michael is able to move cattle onto Flanagans, Swansea and Olivers. I accept the defendants' submission that having this range of properties allows cattle to be moved when necessary whilst maintaining feed crops. Similarly, in times of drought, the farm is more reliant on the properties close to the river, including Ganmurra. 74Fourth, the plaintiffs took issue with the recent valuation evidence concerning the properties that make up the farm. That evidence was given by Mr Maher. He justified the decease in value of the properties on the basis that the market has slipped, the properties near the river had been damaged by flood and the other properties were "getting tired". 75However, the evidence given by Mr Maher was not satisfactory. He gave the following evidence concerning the market: Q. But in order to come up with the figures here, what did you rely upon? A. What I saw on markets. Q. And what did you see are you able to give the detail of what you saw in the markets? A. The market slipped. Cattle market slipped. Property markets slipped. Q. Are you able to give any of the detail of how they slipped? A. No. Mr Maher suggested that there had been considerable flood damage to the fences on the properties next to the river. However, the evidence given by Michael is that he has spent considerable time repairing damaged fences and it is difficult to see how that damage could have a lasting effect on the value of the properties. Mr Maher could not give a satisfactory explanation of what changes had occurred to the properties since the valuation for probate purposes to justify the conclusion that they were "getting tired". In those circumstances, I am not prepared to accept that the properties have decreased in value since the time probate was granted.

Background facts - Mrs Salmon 76Mrs Salmon was married to the deceased for 61 years. She is now 87 years old. She is frail and her health is declining. She continues to live at Swansea, which has been her home since she was married. She is assisted by Sue, who stays with her, and Michael and his wife. Until recently, she had been wholly dependant on the farm for her income. Recently, as I have said, she sold Michael her cattle and transferred her lot of Flamingo to him. She has also applied for the aged pension, although at the time of the hearing that application had not yet been accepted. In addition, Mrs Salmon has signed a transfer of Swansea to Michael. Apart from the aged pension, Mrs Salmon will have no other income. 77In addition to the property that Mrs Salmon received under the deceased's will, she received $72,000 on his death from a life insurance policy she had taken out over his life.

Relevant legal principles 78Section 59 of the Act relevantly provides: (1) The Court may, on application under Division 1, make a family provision order in relation to the estate of a deceased person, if the Court is satisfied that: (a) the person in whose favour the order is to be made is an eligible person, and (b) ... , and (c) at the time when the Court is considering the application, adequate provision for the proper maintenance, education or advancement in life of the person in whose favour the order is to be made has not been made by the will of the deceased person, or by the operation of the intestacy rules in relation to the estate of the deceased person, or both. (2) The Court may make such order for provision out of the estate of the deceased person as the Court thinks ought to be made for the maintenance, education or advancement in life of the eligible person, having regard to the facts known to the Court at the time the order is made. 79Section 60 provides: (1) The Court may have regard to the matters set out in subsection (2) for the purpose of determining: (a) whether the person in whose favour the order is sought to be made (the applicant) is an eligible person, and (b) whether to make a family provision order and the nature of any such order. (2) The following matters may be considered by the Court: (a) any family or other relationship between the applicant and the deceased person, including the nature and duration of the relationship, (b) the nature and extent of any obligations or responsibilities owed by the deceased person to the applicant, to any other person in respect of whom an application has been made for a family provision order or to any beneficiary of the deceased person's estate, (c) the nature and extent of the deceased person's estate (including any property that is, or could be, designated as notional estate of the deceased person) and of any liabilities or charges to which the estate is subject, as in existence when the application is being considered, (d) the financial resources (including earning capacity) and financial needs, both present and future, of the applicant, of any other person in respect of whom an application has been made for a family provision order or of any beneficiary of the deceased person's estate, (e) if the applicant is cohabiting with another person -the financial circumstances of the other person, (f) any physical, intellectual or mental disability of the applicant, any other person in respect of whom an application has been made for a family provision order or any beneficiary of the deceased person's estate that is in existence when the application is being considered or that may reasonably be anticipated, (g) the age of the applicant when the application is being considered, (h) any contribution (whether financial or otherwise) by the applicant to the acquisition, conservation and improvement of the estate of the deceased person or to the welfare of the deceased person or the deceased person's family, whether made before or after the deceased person's death, for which adequate consideration (not including any pension or other benefit) was not received, by the applicant, (i) any provision made for the applicant by the deceased person, either during the deceased person's lifetime or made from the deceased person's estate, (j) any evidence of the testamentary intentions of the deceased person, including evidence of statements made by the deceased person, (k) whether the applicant was being maintained, either wholly or partly, by the deceased person before the deceased person's death and, if the Court considers it relevant, the extent to which and the basis on which the deceased person did so, (l) whether any other person is liable to support the applicant, (m) the character and conduct of the applicant before and after the date of the death of the deceased person, (n) the conduct of any other person before and after the date of the death of the deceased person, (o) any relevant Aboriginal or Torres Strait Islander customary law, (p) any other matter the Court considers relevant, including matters in existence at the time of the deceased person's death or at the time the application is being considered. 80As I have pointed out previously (see Donaldson v Lawless [2013] NSWSC 861), as a result of the Court of Appeal's decision in Andrew v Andrew [2012] NSWCA 308; (2012) 81 NSWLR 656, there is now a question whether in applying s 59 the court should follow the two stage process adopted by the High Court in Singer v Berghouse [1994] HCA 40; (1994) 181 CLR 201 at 208-9 and Vigolo v Bostin [2005] HCA 11; (2005) 221 CLR 191 at [5] per Gleeson CJ; at [56] per Gummow and Hayne JJ; and at [112] per Callinan and Heydon JJ in relation to the analogous provisions of the Family Provision Act 1982 (NSW), the predecessor of Chapter 3 of the Act. The first stage involved the court determining whether it could make an order for provision for the maintenance, education or advancement in life of a particular applicant. If the court was so satisfied, the second stage involved a determination of what provision, if any, should be made. The issue has most recently been discussed in detail by Hallen J in Harrisson v Skinner [2013] NSWSC 736 at [62]-[79]. His Honour concluded that it was appropriate to continue to apply a two-stage process. There is much to be said for that conclusion. However, whatever the position, as I pointed out in my judgment in Oldereid v Chan [2013] NSWSC 434 at [53] it seems clear from the terms of s 59 that the court must ask itself the question whether it is satisfied that "adequate provision for the proper maintenance, education or advancement in life of the person in whose favour the order is to be made has not been made". If it is so satisfied, it must consider whether to make an order and, if so, the terms of that order. In undertaking each of those steps, it may have regard to the matters set out in s 60. Both parties accepted that I should apply that approach in this case. 81In Oldereid v Chan [2013] NSWSC 434 at [55]-[57] I identified three other principles that were relevant to that case which are equally relevant to the present one and which I should restate: 55 First, there are no special rules that apply to adult children: McCosker v McCosker (1957) 97 CLR 566; Kleinig v Neal (No 2) [1981] NSWLR 532; for discussion see Goldsmith v Goldsmith [2012] NSWSC 1486 at [96] per Hallen J. The considerations that determine whether an order should be made in favour of an adult child may well be different from those applying to one who has not reached adulthood. But if that is so it is because the factors which are relevant to the determination of whether and, if so, what order should be made will change in significance as the child develops and the relationship between parent and child alters with the passage of time. 56 Second, the purpose of an order is not to achieve a fair distribution of the deceased's assets: Gorton v Parks (1989) 17 NSWLR 1 at 6 per Bryson J; Cooper v Dungan (1976) 50 ALJR 539 at 542 per Stephen J. The purpose of an order is to make adequate provision for the applicant's proper maintenance, education or advancement in life where the deceased has failed to do so. 57 Third, "adequate" and "proper" are relative terms. As Gibbs J said in Goodman v Windeyer (1980) 144 CLR 490 at 502: "[T]he words 'adequate' and 'proper' are always relative. There are no fixed standards, and the court is left to form opinions upon the basis of its own general knowledge and experience of current social conditions and standards. Similarly, in Vigolo v Bostin [2005] HCA 11; (2005) 221 CLR 191 at 228, Callinan and Heydon JJ said: [T]he use of the word "proper" ... implies something beyond mere dollars and cents. Its use, it seems to us, invites consideration of all the relevant surrounding circumstances and would entitle a court to have regard to a promise of a kind which was made here...The use of the word "proper" means that attention may be given, in deciding whether adequate provision has been made, to such matters as what used to be called the "station in life" of the parties and the expectations to which that has given rise, in other words, reciprocal claims and duties based upon how the parties lived and might reasonably expect to have lived in the future.

Should further provision be made for Donna and Kerryn? 82It is not in dispute that both Donna and Kerryn are eligible persons. 83It is clear from what I have said that this is a case where both Mrs Salmon and Michael have strong competing claims on the deceased's estate and the question whether Donna and Kerryn have been left without adequate provision for their proper maintenance or advancement in life must be considered in that light. 84Before considering those claims, it is desirable to say something about the position of Mrs Salmon and Michael. 85In their earlier affidavits, Donna and Kerryn suggested that Mrs Salmon's position could be accommodated by giving her a life estate in Ganmurra. In final submissions, without resiling from that position, they questioned whether her position needed to be accommodated given that she has ceased to carry on farming activities and has transferred many of her assets to Michael. The fact that Mrs Salmon has transferred many of her assets to Michael, including property that she inherited under the will, is plainly relevant. However, I do not think that it alters the position fundamentally. It was clearly appropriate for the deceased to put Mrs Salmon in a position where she could continue to live in the family home for as long as she wanted and where she had sufficient resources to permit that to happen. It was also clearly appropriate for the deceased to leave Mrs Salmon with sufficient assets so that, if it became necessary for her to leave the family home, she had adequate resources to find alternative appropriate accommodation and to support herself in that accommodation. She has chosen to secure those outcomes by transferring her assets to Michael in the expectation that he will look after her. Having regard to their relationship and the many years over which Michael has assisted his parents, that may well have been the appropriate thing to do. However, the fact that Mrs Salmon chose to secure her future in that way does not seem to me to alter the fact that it was proper for the deceased to make the provision he did for his wife. The fact that Mrs Salmon has transferred, or proposes to transfer, to Michael her assets is relevant to Michael's own position. 86As to Michael, he has devoted a large part of his life to the farm, often for little reward. During that time, he has provided invaluable assistance to his parents and the deceased in particular. That assistance has enabled them to continue to enjoy the lifestyle they desired. No doubt his position arises from choices he made. However, the position he is in is that his future livelihood depends heavily on income from the farm. Recent history suggests that that will be a struggle, which will be exacerbated if any of the properties which form part of it have to be sold. It is true that the properties are valuable assets which could be sold and Michael and his family could live off the proceeds of sale. However, that would be inconsistent with the deceased's wishes and was clearly not the basis on which Michael has worked on the farm for so many years. 87Considered against that background, I am not satisfied that Donna has been left without adequate provision for her proper maintenance and advancement in life. I accept that Donna had a good relationship with the deceased and that she was a dutiful daughter. In her early years, she like all her siblings assisted her parents in running the farm. However, she went on to establish her own life. She and her husband own a house in which they live. They own two other properties, one of which they propose to develop as an investment and the other of which they currently rent out. They have a substantial amount of debt and, since Donna has ceased working, the interest burden associated with that debt is considerable. However, Donna intends to return to the workforce and, having regard to the job she seeks, there is no reason to think that she will have difficulty doing so. She has suffered considerable stress recently which has been associated with her previous employment as a real estate agent and is likely to have been exacerbated by this litigation. But now that she has left her job as a real estate agent and with the end of this litigation, it is to be expected that her level of stress will reduce substantially. She has had surgery to remove a cyst in an ovary and has been diagnosed with endometriosis, which may require surgery. However, there is no suggestion that she or her husband suffer from injuries or illness which are likely to prevent them from working until normal retirement age. That is likely to be more than 10 years away. Donna and her husband have developed a plan for their retirement and there is no reason to think that they will not be able to save sufficient money over the rest of their working lives to ensure that they enjoy a comfortable if modest retirement. 88It was submitted on behalf on Donna that inadequate provision had been made for her because the amount that was left to her ($10,000) represented less than one percent of the estate and that she had a need for funds to cover her drop in expected income, to cover the costs of completing her and her husband's home and replace her old car. It was also submitted that she had a proper claim for advancement in life to reduce the mortgages over the properties so as to be able to retire more readily without having to work long hours. 89There is no question that the legacy left to Donna was very small and does not fairly reflect the good relations she had with her father. However, as I have said, the question is not whether the provision made for her is fair. The question is whether it was adequate in a context where the deceased faced strong competing claims on his bounty. In my opinion, the other matters Donna points to do not establish that she was left without adequate provision for her proper maintenance and advancement in life. The fact remains that she and Rodney are in a position where they live in there own home and can be expected to make reasonable provision for their retirement without any assistance from the deceased. In those circumstances, I do not think it could be said that the provision made for Donna was inadequate. 90The position of Kerryn is different. Like Donna, she had a good relationship with the deceased and, like Donna, she assisted her parents on the farm when she was young. If it had been up to her, she would have occupied Michael's position. The only provision made for her in the will is the forgiveness of a debt of $14,000 she owed the deceased - which, on the evidence, had already been forgiven. Kerryn now finds herself in a position where she is separated from her partner of 28 years, she has few assets of her own and faces a difficult future. In my opinion, in those circumstances, the provision that was made for her was inadequate. 91That leaves the question of what provision, if any, would be appropriate. In my opinion, an appropriate provision would be a sufficient sum of money to enable her to buy out Hugh's interest in the unit and to reduce the mortgage to a level where she could expect to repay it by the time she reaches the age of 65. That would leave her in a position where she owned the unit and had a modest amount of superannuation and any pension to which she was entitled in her retirement. On that basis, in my opinion, an appropriate provision would be the sum of $200,000. That would leave Kerryn with a mortgage of approximately $124,000. Assuming an interest rate of 6.5 percent and assuming that Kerryn continued to make weekly repayments of $400 that would permit her to repay the mortgage in approximately 8 years. In my opinion, it would be appropriate for that provision to come out of Michael's share of the estate. 92An order for provision in those terms may mean that Michael will have to sell one of the properties that comprise the farm and that in turn may undermine the farm's viability as a whole. However, it is not obvious that Michael could not raise the funds necessary to pay Kerryn the $200,000 without selling one of the properties. Nor is it obvious that the farm will be unviable if one of the properties has to be sold. It is worth bearing in mind that, under the terms of the deceased's will, if Mrs Salmon had predeceased the deceased, Ganmurra would have been left to Kerryn and Luke. In any event, the deceased's desire to preserve the farm for Michael's benefit and Michael's concern that the farm will not be viable unless it consists of all of the properties that comprised it at the time of the deceased's death cannot be determinative. For the reasons I have given, the provision made for Kerryn was inadequate. The effect of the order I have proposed gives Michael reasonable prospects of remaining on the farm in the long term. But if that is not possible, he will have adequate assets on which he can live. As I have said, the preservation of the farm cannot be a determinative consideration.

Orders 93The first plaintiff's claim should be dismissed. 94It would be appropriate to give the second plaintiff and the defendants an opportunity to bring in short minutes of order to give effect to this judgment insofar as it concerns the second plaintiff. I have in mind that some time should be allowed for Michael to determine how best to satisfy the order. After that time, interest should run on the $200,000 at the rate prescribed by s 84A(3) of the Probate and Administration Act 1898 (NSW) on unpaid legacies. If the parties can reach agreement on the terms of the order, I will make it in chambers. If not, the matter should be relisted on a date to be fixed with my Associate for further argument on the precise terms of the order. An order for provision in Kerryn's favour is on condition that Kerryn undertakes not to make any claim under the Act against the estate of Mrs Salmon. 95If the parties can reach agreement in relation to costs, I will make orders in chambers to reflect that agreement. If not, I stand the matter over until a date to be fixed with my Associate for any argument in relation to costs.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 19 July 2013