Plaintiff v Defendant

2 Since the coming into operation on 20 July 1998 of the amendments to the Act effected by the Wills Act 1997, section 91 of the Act has read, so far as relevant:

(1) Despite anything in this Act to the contrary, the Court may order that provision be made out of the estate of a deceased person for the proper maintenance and support of a person for whom the deceased had responsibility to make provision.

(3) The Court must not make an order under sub-section (1) in favour of a person unless the Court is of the opinion that the distribution of the estate of the deceased person effected by -

does not make adequate provision for the proper maintenance and support of the person.

(a) whether or not the deceased had responsibility to make provision for a person; and

(b) whether or not the distribution of the estate of the deceased person as effected by -

makes adequate provision for the proper maintenance and support of the person; and

(c) the amount of provision (if any) which the Court may order for the person; and

(d) any other matter related to an application for an order under sub-section (1) -

(e) any family or other relationship between the deceased person and the applicant, including the nature of the relationship and, where relevant, the length of the relationship;

(f) any obligations or responsibilities of the deceased person to the applicant, any other applicant and the beneficiaries of the estate;

(g) the size and nature of the estate of the deceased person and any charges and liabilities to which the estate is subject;

(h) the financial resources (including earning capacity) and the financial needs of the applicant, of any other applicant and of any beneficiary of the estate at the time of the hearing and for the foreseeable future;

(i) any physical, mental or intellectual disability of any applicant or any beneficiary of the estate;

(k) any contribution (not for adequate consideration) of the applicant to building up the estate or to the welfare of the deceased or the family of the deceased;

(l) any benefits previously given by the deceased person to any applicant or to any beneficiary;

(m) whether the applicant was being maintained by the deceased person before that person's death either wholly or partly and, where the Court considers it relevant, the extent to which and the basis upon which the deceased had assumed that responsibility;

(n) the liability of any other person to maintain the applicant;

(o) the character and conduct of the applicant or any other person;

3 The effect of section 91(4) is that the Court must make findings of the facts (if any) relevant to all of the considerations set out in paragraphs (e) to (p) of that sub-section before making findings as to any of the matters set out in paragraphs (a) to (d). I have found it convenient to insert underlined references to paragraphs (e) to (p) rather than setting out the evidence under separate headings derived from those paragraphs. Much of the evidence put before the Court by both parties was unchallenged, and I have indicated where this was not the case. Both parties sought to rely, to an extent, on material which was hearsay, or even hearsay on hearsay, and that material has not been taken into account.

4 The plaintiff is aged 56, having been born in 1948, and was the only child of his parents. His father died in 1973 and in the 1980s his mother ("Edna") became friendly with Paul James Dickason ("Paul") and married him in 1993, so that the plaintiff is Paul's stepson. Edna died in 1995, leaving the residue of her estate, amounting to some $60,000, to Paul, or if he should predecease her, to the plaintiff. In the event the plaintiff thus received nothing from his mother's estate. Paul died on 19 September 2002. Probate of his will made on 29 April 1996 ("the will") was granted to the defendant, on 17 March 2003. Paragraphs (e) and (j)

5 Paul was a retired pharmacist and had no children of his own and no siblings. The will provides for his estate to be divided among four beneficiaries. They are the defendant, who is the nephew of Paul's first wife, Janette Holden and Coral Palmer, who are nieces of Paul's first wife, and Joan Cunningham, the widow of an old friend of Paul, the will having provided for a share to go to her husband, but if he predeceased the testator, to her. It was not suggested that Paul had any obligations or responsibilities to any of the beneficiaries. Paragraph (f)

6 The amount of the estate was $600,562 less certain expenses and there have been partial distributions to the beneficiaries which have been partially recovered. Each beneficiary has received approximately $70,000. The defendant presently holds an amount of $271,235.82, and the estimated costs to each party of this proceeding are some $30,000. Certain income tax refunds are expected. Thus the amount remaining in the estate, after taking account of the tax refunds and the costs of this proceeding, can be estimated as being broadly of the order of $200,000. Paragraph (g)

7 The plaintiff deposes that his father was a builder and built the family home in Parkdale, and that he used to help his father with building that home after school and in weekends and holidays, and then after work for two years. After his father died he helped his mother with general maintenance on the house, where she continued to live. After his marriage in 1978 he kept in touch with his mother and continued to see her once a week and to help her. He moved to Yarra Glen in 1988 and still saw his mother every couple of weeks and spoke to her two or three times a week. Paragraphs (p) and (k)

8 The house in Parkdale was sold by Edna in 1993 for $182,500 and Edna and Paul purchased for $185,000 a unit in Beaumaris where they lived. The plaintiff assisted them with the move to Beaumaris, and continued to keep in touch with his mother with regular telephone calls and visits. On Edna's death Paul acquired Edna's interest in the unit by survivorship.

9 Paul had made a new will in 1993 at the time of his marriage to Edna, in which he did not include the plaintiff among his beneficiaries. On 5 May 1995, after Edna's death, he made a will in which he left to the plaintiff a one-fifth share with the other beneficiaries who appear in the will with which I am concerned. The 1995 will was of course revoked by the will with which I am concerned. Paragraph (p)

10 The plaintiff worked with the Commonwealth Bank for 23 years, starting at the age of 17. He then went to his present position as an administrator with the Victorian Golf Association. His taxation return for the year ending 30 June 2004 showed a taxable income of $57,026, including a car allowance from his present employer and a superannuation payment from the Commonwealth Bank, after allowing for a loss of $4,680 on his cattle. He and his wife jointly own their home, which is unencumbered, and its municipal capital improved value at 1 July 2004 was $700,000. He has superannuation entitlements of $200,000 from the Commonwealth Bank and $40,000 from his present employer and a debt of $10,000. He has savings of some $30,000, of which $25,000 is earmarked for a replacement car which he needs for work. His wife does not work. He feels somewhat insecure in his employment, as the organisation is to merge with another similar organisation and he is concerned that there may be redundancies. Paragraph (h)

11 Mr Scarfo, for the defendant, submitted, and I accept, that the several beneficiaries each have sufficient to meet their needs without this inheritance. None of them apart from the defendant filed affidavits in the proceeding. Janette Holden lives in a retirement unit and has a pension. She is very ill and regrettably is unlikely to live for long. Coral Palmer jointly owns a house worth something over $700,000. She has a quarter share in a business by way of an investment, and a house which is rented out. Joan Cunningham receives a war widow's pension, and owns a house valued between $350,000 and $400,000. The defendant has a small business as a wholesale wine and spirit merchant and his wife is a school teacher. He owns his own home which is valued at approximately $800,000 and is security for a business overdraft of $90,000. Paragraph (h)

12 It was not suggested that the plaintiff or any of the beneficiaries other than Janette Holden has any relevant disability, or that Paul gave any relevant benefits to the plaintiff or maintained him at any time, or that there is any other person with a liability to maintain the plaintiff. Paragraphs (i), (l), (m) and (n) The question as to whether Paul had any obligation or responsibility to the plaintiff as a result of inheriting the whole of Edna's estate (paragraph (f)) is considered in another context at [25] and following below.

13 The plaintiff and his wife live on a property of 29 hectares at Yarra Glen, where they run a few cattle. The property belonged to the plaintiff's paternal grandfather and then to his father and paternal uncle. His father transferred his half interest to the plaintiff during his life time, and he inherited the other half share on the death of his uncle. He and his wife built a house on the property and moved there in 1988. His unchallenged evidence was that the property at Yarra Glen cannot legally be subdivided. Ms Sparke, for the plaintiff, drew my attention to the provisions of the Social Security Act 1991 (Cth) which have the effect that, should he apply for an age pension, the value of the property, apart from the house and two hectares, will be taken into account in the assessment of the value of his assets, with a consequent reduction in his pension. Paragraph (h)

14 The evidence of the defendant was that, on the death of the plaintiff's uncle, Edna wanted the Yarra Glen land to be sold and a half share of the proceeds paid to her, but the plaintiff refused. The plaintiff denied this categorically. In giving that evidence the defendant relied on an affidavit sworn by Paul in proceedings related to the estate of the plaintiff's uncle. It was suggested that that affidavit would be formally admissible as having been received as evidence in another proceeding or as evidence of the testator's state of mind, but whether or not that is the case the material in the affidavit relating to this issue, being Paul's account given after Edna's death of what he claimed to have been Edna's state of mind, can only be hearsay and as such inadmissible. In any case, in the absence of cross-examination, I could not be sufficiently satisfied of its truth to enable me to take it into account under paragraph (o) as going relevantly to the character and conduct of the plaintiff. The defendant did not claim to be speaking of his own knowledge on this matter, and I intend no criticism of him personally when I say that I am not in a position to accept his evidence on the point. Paragraph (o)

15 Further, as Ms Starke pointed out, the evidence of subsequent events did not indicate any falling out between Edna and the plaintiff. The unchallenged evidence of the plaintiff was that visits and other contact continued, that the plaintiff and his wife continued to occupy Paul's holiday house at Mount Martha while their house at Yarra Glen was being built, and three years after the dispute was supposed to have occurred the plaintiff gave his mother away at her wedding to Paul. I note also that after Edna's death Paul included the plaintiff as one of the beneficiaries in his will made in 1995, later repealed.[1]

16 The plaintiff's solicitors notified Paul, as executor of Edna's estate, on 18 April 1996 that the plaintiff claimed an interest in that estate, and as to the advice which they had given to him. However, the plaintiff did not proceed with any formal application.

17 The plaintiff and Paul had a falling out in 1995 over matters which it is not necessary to consider in detail, to do with the administration of the estate of the plaintiff's maternal uncle. In cross-examination the plaintiff initially denied, but then accepted, that he had brought proceedings to challenge the grant of probate. He said that the estate of his uncle had been left to the St Arnaud Nursing Home and he had not challenged that. However, it was pointed out to him that if he had been successful in that proceeding, in which he challenged his uncle's testamentary capacity at the time of making of the will, the estate would have come to him on an intestacy. He said that he had not sought that result, but had been concerned that the executor had obtained documents by deception, and he did not wish funds to be removed from the estate. Mr Scarfo relied on this episode as going to the plaintiff's credit, and therefore being relevant to the validity of his evidence on other issues. However, my impression was that he was confused rather than deceptive. Paragraph (o)

18 In Grey v Harrison[2] the Court of Appeal was concerned with a claim arising under the Act as it stood prior to the amendments to the Act effected by the Wills Act 1997. Callaway JA, with whom Tadgell and Charles JJA agreed, adopted[3] the test stated by Salmond J in Re Allen; Allen v Manchester in the following words,[4] and approved on many occasions:

The Act is . . . designed to enforce the moral obligation of a testator to use his testamentary powers for the purpose of making proper and adequate provision after his death for the support of his wife and children, having regard to his means, to the means and deserts of the several claimants, and to the relative urgency of the various moral claims upon his bounty. The provision which the Court may properly make in default of testamentary provision is that which a just and wise father would have thought it his moral duty to make in the interests of his widow and children had he been fully aware of all the relevant circumstances.

. . . it is one of the freedoms that shape our society, and an important human right, that a person should be free to dispose of his or her property as he or she thinks fit. Rights and freedoms must of course be exercised and enjoyed conformably with the rights and freedoms of others, but there is no equity, as it were, to interfere with a testator's dispositions unless he or she has abused that right. To do so is to assume a power to take property from the intended object of the testator's bounty and give it to someone else. In conferring a discretion in the wide terms found in s. 91, the legislature intended it to be exercised in a principled way. A breach of moral duty is the justification for curial intervention and simultaneously limits its legitimate extent. So much may be derived from the concept of "proper" maintenance and support but also, and more fundamentally, from those considerations.

Those passages are equally applicable to the legislation in its present form,[6] which extends the Court's discretion from the power conferred in the earlier legislation to make orders for the provision for the proper maintenance and support of a widow, widower or child to the power to make such orders in respect of "a person for whom the deceased had responsibility to make provision" (section 91(1)).

20 Thus the legislation now has the effect that in the case of a claim on the estate of a deceased person who died on or after 20 July 1998, the Court must first consider, as a jurisdictional question, whether the claimant is a person for whom the deceased had responsibility to make provision ("the first question"), before turning to the question as to whether the distribution of the estate effected by the will of the deceased made adequate provision for the proper maintenance and support of that person ("the second question").[7] It is only after determining these two questions that the court is able to consider the amount of provision (if any) it may order for the plaintiff.

21 The second question has received much judicial examination over the years, some of which is inevitably relevant to the consideration of what is now the first question. Mason CJ and Deane and McHugh JJ in their joint judgment in Singer v Berghouse[8] said:

the correct view is that [the second question] is strictly one of fact, notwithstanding that it involves the exercise of value judgments. The evaluative character of the decision stems from the fact that the court must determine whether the applicant has been left without adequate provision for his or her proper maintenance, education and advancement in life.

That passage seems to me to be equally relevant to the first question, the evaluative character of which stems from the need to determine whether the deceased had responsibility to make provision for the applicant.

22 It is clear from the authorities on legislation similar to the provisions of the Act as they stood prior to 20 July 1998 that the second question falls to be answered as at the date of death of the testator. Dixon CJ said in Blore v Lang[9] :

Now the first question which s. 3 (1) of the Testator's Family Maintenance and Guardianship of Infants, Act 1916-1954 sets for the court is whether the testator disposed of his property, either wholly or partly by will in such a manner that his daughter, the respondent, was left without adequate provision for her proper maintenance education or advancement in life. It is upon the fulfilment of the condition expressed by these words that the authority of the court to intervene depends, its "jurisdiction" as it is commonly expressed with more respect for the language of Chancery tradition than for juristic theory. The nature and effect of the condition has of course been much examined judicially. It is settled that you look at the circumstances as they were at the time when the testator died and not at the time when the application is made to the court. But the contingencies which a testator ought reasonably to have foreseen are not to be left out of view: Dun v. Dun [1959] UKPCHCA 2; (1959) 100 CLR 361 (PC); (1957) 99 CLR 325 (HCA)

Fullagar J in Coates v National Trustees Executors & Agency Company Ltd[10] cited Evershed MR in Re Howell; Howell v Lloyds Bank Ltd[11] as saying:

I think, prima facie, at any rate, that it must be right to judge this matter, whether the testator was unreasonable, in the light of the circumstances which did present, or should have presented, themselves to him up to the moment of his death.

23 Those passages prima facie seem to me to be applicable to the consideration of the first question. If the issue is whether the deceased carried out his moral obligation to use his testamentary powers for the purpose of making proper and adequate provision after his death for a person for whom he had responsibility to make provision, the circumstances which go to the determination of whether the plaintiff is such a person must be decided on the basis of those circumstances which were or should have been known to the testator at the time when he used those powers.

24 However, I note the requirement of paragraphs 91(4)(a) and (b) of the Act that in considering both the first and the second questions the Court "must have regard to" the matters set out in paragraphs (e) to (p) of sub-section 91(4). Paragraph (h) reads, with emphasis added:

(h) the financial resources (including earning capacity) and the financial needs of the applicant, of any other applicant and of any beneficiary of the estate at the time of the hearing and for the foreseeable future;

These are matters which it cannot be assumed were or should have been known to the deceased at the time of making his testamentary dispositions. However, given the specific inclusion of the emphasised passage in paragraph (h) and in no other paragraph of sub-section 91(4), it is to be assumed that Parliament had in mind when enacting that provision the rule that Acts altering the common law should be construed as doing so only so far as is necessary to give effect to their provisions.[12] Thus the principles set out in the passages cited above still apply in relation to the other matters listed in the sub-section to which the Court is required to have regard.

A person for whom the deceased had responsibility to make provision

25 Whether or not the deceased had a responsibility to make proper provision for the plaintiff is, a question of fact. Section 91(4)(a) now requires that, in considering that question, the Court must have regard to all of the matters set out in paragraphs (e) to (o) of that sub-section as well as any other matter the Court considers relevant (paragraph (p)). I have set out above my findings of fact, and referred those findings to the relevant paragraphs of the sub-section.

26 Ms Sparke submitted that I should adopt the approach of Nettle J in McKenzie v Topp.[13] In that case the facts were broadly similar to those before me, save that the genders were reversed; the claim by an adult son was made against the estate of his deceased stepmother, to whom his father had left the whole of his estate. His Honour said:[14]

[J]ust as community attitudes are the touchstone of adequate provision [Goodman v Windeyer (1980) CLR 490 at 501; White v Barron [1980] HCA 14; (1980) 144 CLR 431 at 440 ], so too are they the criterion of responsibility to provide. Other things being equal, right thinking members of society are likely to accept that the needs of the widow of a second marriage should rank in priority ahead of the claims of the children of a first marriage; although of course it is always a question of fact. But equally, upon the death of the widow, and as it were in the event of a surplus, most would surely say that the children of the first marriage should rank for their fair share. For once the widow is gone, and therefore no longer in need of provision, her needs no longer warrant that the children rank behind her or thus her chosen successors. . . .

[T]he point of principle for present purposes is one of modest proportions. If children of a first marriage have stood aside in order that their father might make adequate provision for the widow of a second marriage, and upon her death there are assets in her estate, the amount left by their father to the widow may be relevant to the question of whether she is responsible to provide for them.

. . . Given that the only other significant claim upon the estate is the defendant's claim, and that his claim is for the whole of the residual estate, I consider that the amount of money left by the plaintiff's father to the testatrix is a relevant consideration in the determination of whether the plaintiff is a person for whom the testatrix had a responsibility to provide.

27 That approach was also adopted by Cummins J in James and Anor v Day[15] where the facts were similar to those in the present case, although the estate was smaller and there were competing claimants.

28 The other authority to which I was referred on this point was the decision of Beach J in Henderson v Rowden,[16] which was decided before McKenzie v Topp. In that case, his Honour found that the deceased stepmother had no moral obligation or responsibility to make provision for the maintenance and support of her stepson. This matter had come before the Practice Court on an application to extend time within which to make an application under Part IV of the Act. There was no evidence that the birth parent had made any contribution to the assets of the stepmother, and thus it is not entirely on all fours with the present matter.

29 It is trite to say that every application under Part IV must be considered on its own facts. Relevant facts here are that Edna left the whole of her estate to Paul, or failing him to the plaintiff; that the beneficiaries under Paul's will are not people to whom he had any obligation or responsibility; that the beneficiaries have already received funds from the estate; and the financial position of the plaintiff and of the beneficiaries. It is clear that there are no significant competing claims. The extent of Edna's contribution to Paul's estate is discussed further at [32] and following below but there is no issue as to the $60,000 which she left to him by will. It can be seen that, when making her will (see [4] above), Edna recognised a primary moral obligation to her husband, and after him to her son.

30 Taking all of these matters into account, I am satisfied, consistently with the decisions in McKenzie v Topp and James & Anor v Day, that Edna had a responsibility to make provision for the plaintiff, and that that responsibility transferred itself, as it were, to Paul on the receipt by him of her money. On that basis I find that the plaintiff was a person for whom Paul had a responsibility to make provision, in terms of section 91(a) of the Act.

31 The next question for consideration, as required by section 91(3), is whether the Court is of the opinion that the distribution of Paul's estate effected by his will does not make adequate provision for the proper maintenance and support of the plaintiff. That distribution in fact makes no provision for the plaintiff, and it can hardly be said, therefore, that it makes adequate provision for him.

32 It follows from the reasoning above that the measure of the amount of the provision to be made for the plaintiff out of Paul's estate must be related to the extent of Edna's contribution to that estate. I have already referred to the $60,000 which he received under her will. It can be assumed that the proceeds of the sale of the house in Parkdale made some contribution to the purchase of the unit in Beaumaris.[17] This is particularly clear on consideration of the fact that she had received $182,500 for the house only two years previously but left only $60,000 in her estate, and there is no suggestion that she and Paul had an extravagant lifestyle. In any case, whatever her contribution may have been, her half share in the Beaumaris unit, purchased for $185,000, passed to Paul by right of survivorship. It is to be noted that the plaintiff contributed his labour to the construction and later the maintenance of the house in Parkdale.

33 Taking those matters into account, noting that there are no significant competing claims, and considering the question in the light of the authorities to which I have referred, I am of the view that an appropriate provision for the plaintiff out of his stepfather's estate would be a lump sum payment in the amount of $150,000, which equals the total of the $60,000 in Edna's estate and $90,000 being the approximate value, at the time of its purchase, of her half share of the unit in Beaumaris. There will be an order to that effect. Counsel may wish to make submissions as to costs.

1. [1] See [9] above.
2. [2] [1997] 2 VR 359.
3. [3] At 364.
4. [4] [1922] 41 NZLR 218 at 220-1.
5. [5] At 366.
6. [6] See [2] above.
7. [7] See the thoughtful consideration of this question by Harper J in Schmidt v Watkins [2002] VSC 273.
8. [8] [1994] HCA 40; (1994) 181 CLR 201 at 210.
9. [9] [1960] HCA 73; (1960) 104 CLR 124 at 128.
10. [10] [1956] HCA 23; (1956) 95 CLR 494 at 522.
11. [11] [1953] 1 WLR 1034 at 1038.
12. [12] See Burchett and Ryan JJ in Thompson v Australian Capital Television Pty Ltd (1994) 127 ALR 317 at 329 and the cases there cited.
13. [13] [2004] VSC 90.
14. [14] At [58] - [61].
15. [15] [2004] VSC 290.
16. [16] [2001] VSC 267.
17. [17] See [8] above.