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[2005] VSC 354
plaintiff. Hargrave J found both jurisdictional prerequisites under s 91 satisfied, held the will did not make adequate provision, and ordered that further provision of $425,000 be made for the plaintiff and...
Hargrave J held that a son, previously prosperous but rendered impecunious largely through his own drug addiction, gambling and criminal conduct, remained a person for whom his deceased father had responsibility to make provision. The father's will, which left most assets to a daughter and only a flat to the son, did not make adequate provision. The court ordered further provision of $425,000 to be paid into a trust for the son's benefit, with trustees to be appointed and final order details and costs to be determined.
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This is an application under s 91 of the Administration and Probate Act 1958 (Vic) by Morris Herszlikowicz (the plaintiff) for further provision from the estate of his father, Hercko Herszlikowicz (the deceased). The deceased's last will (18 December 2002) left the bulk of his residuary estate to his daughter, Sally Lust, and gave the plaintiff one flat at 5/30 Hunter Street, Malvern (paras 50-52). Significant inter vivos transfers had been made before death: the Caulfield property was transferred to Sally on 23 November 2003 and Flat 9/30 Hunter Street was transferred to Mark Lust (paras 53-55, 77-78). The estate (counting real estate, inter vivos transfers and personal estate) was assessed by the judge at $2,240,508.49 (para 83).
No linked legislation citations have been extracted yet.
The plaintiff was formerly a successful medical practitioner who, from the late 1970s onwards, developed chronic pain, substance dependence, engaged in fraudulent prescriptions and defrauded Medicare, was convicted and imprisoned, and later incurred catastrophic gambling losses that exhausted his assets (paras 21-37). At the date of his father's death he was heavily indebted, had been deregistered as a doctor, was dependent on government disability pension and unlikely to return to significant remunerative work (paras 31-39, 74-76, 84-95). The plaintiff applied for court-ordered maintenance out of the estate; the executor (Norman Czarny) resisted, with Sally as major beneficiary supporting the will (paras 1, 50, 96).
Hargrave J heard the matter (2–3 August 2005) and delivered judgment on 8 September 2005. The judge found the two jurisdictional predicates under s 91 were satisfied: the deceased had responsibility to make provision for the son, and the will did not make adequate provision for the son (paras 126-128). The judge ordered that further provision of $425,000 be made for the plaintiff and that it be paid into a trust for his benefit; the judge indicated trustees should include the plaintiff's solicitor Ms Patricia Duke and another solicitor Mr Wright, and that the court would hear parties as to precise orders and costs (paras 174-180, 186).
Two statutory gateways had to be met: (1) whether the deceased had responsibility to make provision for the plaintiff; and (2) whether the will failed to make adequate provision for the plaintiff's proper maintenance and support (paras 104-105). Hargrave J applied the established "wise and just testator" lens, the moral duty concept articulated in Bosch and later authorities, as the normative standard the court must simulate when assessing what provision the testator ought to have made (paras 106-110). The judge also repeated the statutory command that factors listed in s 91(4)(e)-(p) must be considered in answering both jurisdictional questions and in fixing quantum and terms (paras 103-105).
The plaintiff's clear need, poor health, very limited earning capacity, dependence on a modest pension, insolvency and little prospect of substantial future income, was central (paras 74-76, 84-95). The estate, by contrast, was substantial and, especially when inter vivos transfers and earlier gifts to Sally and her children were considered, could comfortably meet both the daughter's receipt and provide more for the son (paras 76-83, 132-133). The court accepted that the plaintiff's own misconduct (drug addiction, gambling, fraud, criminal conviction) had majorly contributed to his plight (paras 145-147), and that the deceased had been disappointed and embarrassed by that conduct (paras 152-153). But Hargrave J concluded that misconduct not directed at the deceased, although properly taken into account under s 91(4)(o), did not absolve the deceased of his moral duty in these circumstances; the bequest of a flat worth roughly the value of the plaintiff's debts effectively left him penniless and condemned him to a life of penury (paras 154-156).
Applying the s 91(4) matrix the judge concluded a wise and just testator would have provided (i) unencumbered ownership of modest accommodation (value about $330,000), (ii) funds to discharge creditors (about $165,000–$175,000), and (iii) a nest egg to supplement the plaintiff's pension and meet contingencies. Having regard to the plaintiff's life expectancy (actuarially about 18 years) and available evidence, the judge fixed $425,000 as the appropriate further provision (paras 166-174). Recognising the plaintiff's tendency to squander funds, the court exercised its power under s 96 to provide the relief by way of a trust and accepted the plaintiff's solicitor Ms Duke (and Mr Wright) as suitable trustees (paras 176-180). The judge refused the estate's suggestion that a wholly independent professional trustee must be used, favouring the solicitor trustee because of familiarity with the plaintiff and the need to restrain unnecessary costs (paras 178-180).
Before this judgment the governing legal yardstick, the moral duty of what a wise and just testator would have done, had long been embedded in the successor legislation and decisions; Hargrave J reaffirmed that approach and cited Bosch v Perpetual Trustee Company Ltd and recent Victorian authorities (paras 106-110, 111-115). The judgment reiterates established temporal principles: facts at the date of death determine jurisdictional questions, while the court uses facts at hearing to determine quantum and terms (para 116).
After this judgment (internal to this decision), the practical applications reaffirm: (1) adult children are judged on the same statutory criteria without a presumption against them merely because they are adult sons (para 119); (2) character and conduct can reduce but not necessarily extinguish entitlement, especially where need is caused by health factors as well as misconduct (paras 121-156); and (3) the court will comfortably use protective trusts and appoint non-professional but appropriate trustees to manage distributions for vulnerable beneficiaries (paras 176-185). The judgment therefore reinforces established law but illustrates its pragmatic application in a case of substantial estate disparity and a high-need but culpable applicant.
"I find that, notwithstanding the admitted failings of the plaintiff, the deceased ... continued to have a moral responsibility to make provision for the plaintiff in his will." (para 127)
"The provision which has been made in the will for the plaintiff is not adequate for the proper maintenance and support of the plaintiff." (para 128)
"The character and conduct of the plaintiff ... were matters which it was proper for the deceased ... to take into account ... However ... the deceased nevertheless remained under a moral duty to make adequate and proper provision." (para 154)
"Further provision should be made ... in the amount of $425,000." (para 174)
"I have power to order that the further provision ... be paid to the trustees of a trust for the benefit of the plaintiff." (para 176)
This decision is triggered where:
When these features co-exist, Herszlikowicz v Czarny provides a roadmap for applying the s 91(4) factors, balancing moral duty against misconduct, and structuring relief.
This judgment itself cites High Court and Victorian appellate authority in developing the law (see para 106 onward). The judgment does not, and cannot in its text, report subsequent treatments of this specific decision by later courts. To determine how later courts have treated Herszlikowicz v Czarny, practitioners should consult citators (for example, LawCite, AustLII annotations, and commercial citators) to identify subsequent citations and appellate consideration. The present judgment supplies a well-reasoned instance of applying s 91(4) factors; whether it has persuasive weight will depend on later citation, which is not described in the judgment itself.
Extent to which inter vivos transfers may be attributed to the estate for purposes of quantification under s 91(4)(g) versus s 91(4)(p): Hargrave J accepted that inter vivos transfers can be taken into account under s 91(4)(p) (para 79). The precise limits and methodology for valuation and whether recipients of inter vivos transfers may later assert changed expectations remains a factual and legal question to be refined in later cases.
The outer bounds of "character and conduct" relevance: Hargrave J follows authorities limiting the relevance of character to misconduct towards the testator or conduct that caused the applicant's need (paras 121-123). But borderline cases where misconduct is neither directly towards the testator nor the sole cause of need pose judgment calls about proportional discounting of entitlement.
Trustee selection and costs: The judge accepted a solicitor known to the applicant as an appropriate trustee rather than a professional independent trustee to limit costs and for practical oversight (paras 178-180). How tribunals balance the risk of conflicts, perceived partiality, and practical cost-saving in trustee appointment will continue to be litigated.
Interaction with social security and pension entitlements: The judgment observed uncertainty about taxation and pension means-testing if lump sums are paid to the applicant versus held in trust (para 94). Future cases may require evidence and findings about the fiscal consequences of different forms of provision.
Remedial discretions where will reflects strong testamentary preference: Hargrave J sought to respect the deceased's wish to favour one child while correcting a deficiency of provision for the other (paras 132-137, 174). The precise balancing methodology remains fact-sensitive and open to refinement.
Practical takeaway: Herszlikowicz v Czarny is a concrete application of the s 91 statutory matrix showing that significant misconduct by an applicant does not automatically bar relief where the estate can, consistently with the wise and just testator standard, make further provision that protects both the testator's testamentary preferences and the legitimate maintenance needs of a vulnerable child. Counsel should prepare full evidentiary material on (a) need and earning capacity at date of death, (b) precise valuation of estate including relevant inter vivos transfers, (c) the causal contribution of any misconduct to the applicant's need, and (d) practical structuring of protective trusts with evidence as to trusteeship and likely effects on pension/tax entitlements (see paras 76-83, 84-95, 145-156, 176-186).
TESTATOR'S FAMILY MAINTENANCE - application by 59 year old son - whether plaintiff a person for whom testator has responsibility to make provision - relevance of character and conduct of the plaintiff - plaintiff's need caused by his own conduct - Administration and Probate Act 1958 (Vic), s. 91.
INTRODUCTION
1 In this proceeding the plaintiff, Morris Herszlikowicz, seeks an order under s. 91(1) of the Administration and Probate Act 1958 ("the Act") that further provision be made out of the estate of his late father for his proper maintenance and support. The defendant is the executor of the will of the plaintiff's late father, and is sued in that capacity.
2 There is no dispute that the plaintiff is in extremely poor health and is in great financial need. It is not likely that the plaintiff will ever work again. It is the causes of the plaintiff's parlous financial circumstances, and to some extent his poor health, which occupied much of the evidence in the hearing.
3 Further, the application for further provision out of the estate is complicated by the fact that, because the plaintiff is such a poor manager of money, he seeks that any amount of further provision awarded to him be paid on condition that it be paid directly to the trustees of a discretionary trust of which he is the principal, but not the sole, beneficiary. The plaintiff acknowledges that this condition is necessary to protect him from squandering the amount of any such further provision, as he has squandered his own assets over the years.
FACTS
The Deceased
4 Hercko Herszlikowicz ("the deceased") was born on 25 May 1923 in Poland into a Jewish family. He spent the duration of the Second World War in concentration camps in Germany. At the end of the war the deceased was the only survivor of his parents and eight siblings. The deceased met his future wife, Rachel, in a hospital in Germany after the war. The deceased and Rachel married in 1945 in Germany. Rachel Herszlikowicz was also of Jewish faith, and the deceased and Rachel actively practised their faith and maintained a traditional Jewish home.
5 The plaintiff and his sister, now known by her married name of Sally Lust, are the only children of the deceased and his late wife Rachel. The plaintiff was born in Biberach, Germany on 26 May 1946.
6 In approximately 1948 the deceased and Rachel moved with their son, the plaintiff, to Israel. Sally Lust was born on 16 March 1949 while the family was in Israel. The deceased was conscripted into the Israeli army for three years, rising to the rank of Sergeant over that time. The deceased was a self-taught carpenter by trade.
(1) The defendant was appointed executor and trustee;
(2) Flat 9/30 Hunter Street, Malvern was left to the deceased's grandson, Mark Lust;
(3) Flat 4/30 Hunter Street, Malvern was left to the deceased's grandson, Adam Lust;
(4) Flat 5/30 Hunter Street, Malvern was left to the plaintiff;
(5) 51-53 Capella Crescent, Moorabbin and the Caulfield property were left to Sally Lust; and
(6) Residuary estate was left to Sally Lust.
51 In 1999 the deceased and his wife each made reciprocal wills leaving their estate to each other. In the event of both their deaths these earlier wills provided that:
(1) The defendant was appointed executor and trustee;
(2) Flat 9/30 Hunter Street, Malvern was left to the deceased's grandson, Mark Lust;
(3) Flat 4/30 Hunter Street, Malvern was left to the deceased's grandson, Adam Lust;
(4) Flat 5/30 Hunter Street, Malvern and a unit in Surfers Paradise, Queensland were left to the plaintiff;
(5) 51-53 Capella Crescent, Moorabbin and the Caulfield property were left to Sally Lust; and
(6) Residuary estate was left to Sally Lust.
52 These earlier wills leave two properties to the plaintiff: a Malvern flat and a unit in Surfers Paradise. The will that is the subject of this proceeding leaves the plaintiff the Malvern flat only. Otherwise the wills are in exactly the same terms.
Events leading up to the death of the deceased
53 The deceased in fact transferred the Caulfield property to Sally Lust and her husband as joint proprietors inter vivos on 23 November 2003, approximately 10 weeks prior to his death. The consideration on the transfer is shown as "love and affection" and the stamp duty of $31,660 was paid by the deceased.
54 Before his death, the deceased also transferred Flat 9/30 Hunter Street, Malvern to his grandson Mark Lust.
55 Sally returned to work in February 2003. A carer stayed with the deceased during the day and Mrs Lust would stay with him overnight. This arrangement continued until August 2003 when the deceased was admitted to the Emmy Monash Nursing Home in Caulfield, although it was interrupted by lengthy hospital stays. Between December 2002 and August 2003, Sally's husband lived at their family home in Brighton and Sally lived with her father in the Caulfield property. In October 2003, Mr and Mrs Lust sold their Brighton home, for about $800,000 to provide the accommodation bond of approximately $500,000 required for the deceased to remain in the Emmy Monash Nursing Home. The deceased died in the Emmy Monash Nursing Home on 8 February 2004.
The deceased's relationship with his children
56 It is clear that the deceased had a strong love and affection for his daughter Sally. That much is conceded by the plaintiff and is reflected in the will.
57 The plaintiff says that his father was never able to relate to him, even as a small child and also that his father never liked him. The plaintiff recalls being strapped by his father for any perceived minor transgression and also his father telling him repeatedly, from about the age of six, that he would never amount to anything. The plaintiff said that as he grew older, he and his father argued frequently. The plaintiff said that his father expressed no pleasure or satisfaction when the plaintiff qualified as a doctor in 1970.
Left to Sally Lust as part of the residue of the estate
77 As I have said, two additional properties were included in the deceased's will, the Caulfield property and Flat 9/30 Hunter Street, Malvern. These properties were transferred to Sally Lust and Mark Lust respectively before the death of the deceased.
78 The value of the Caulfield property is approximately $625,000. The transfer of the Caulfield property to Sally Lust prior to the deceased's death was made in accordance with the deceased's wishes expressed in his will. As Sally remains a beneficiary under the will, it was conceded by counsel for the defendant that this property can properly be taken into account in assessing the overall value of the estate for the purposes of any order the court is inclined to make under s. 91(1) of the Act.
79 The value of the flat at 9/30 Hunter Street, Malvern is approximately $330,000. This property was subsequently sold by Mark Lust. It was submitted on behalf of the defendant that, as Mark Lust is no longer a beneficiary under the will, this property cannot be included in any calculation of the value of the estate when considering the requirement under s. 91(4)(g) of the Act. That may be so. However, I consider that this matter is highly relevant and that I can take it into account under s.91(4)(p) of the Act.
80 In addition to the real property, the estate of the deceased included some personal assets. The proceeds of sale of the Capella Crescent property have been invested in a term deposit account of $279,437.50. $5,455 has been received in rent from the tenancy of the apartment left to the plaintiff. There remains $41,070.99 in the solicitors trust account. The total personal estate is, according to the estate accounts, $325,963.49.
1. Real estate $960,000.00
2. Inter vivos transfers $955,000.00
3 Personal estate $325,508.49
The financial position of plaintiff if the will is given effect
84 Having regard to the plaintiff's physical limitations, his age of nearly 60 years and the fact that he is trained as a medical practitioner, it is likely that the only work that the plaintiff could undertake would be work as a medical practitioner or in a related occupation. Obviously enough however from what has been set out earlier in these reasons, the plaintiff is unlikely to be allowed to work as a medical practitioner in Victoria again following the cancellation of his registration in 2003. The plaintiff's efforts to secure work to date in both medical and unrelated fields have been unsuccessful. The plaintiff does currently undertake voluntary work at ParaQuad which is a charitable organisation that provides community based services to paraplegics and quadriplegics. The plaintiff does general clerical work. The plaintiff commenced this work on 28 May 2004 and currently works three sessions totalling eight hours per week.
85 The plaintiff has a rental liability of $275 per week. This amount has been paid by his solicitor, Patricia Duke since January 2003. His primary source of income is the Disability Support Allowance of $580.10 per fortnight. In addition, he receives a weekly mobility allowance from Centrelink of $34.85 to allow him to get to and from ParaQuad. The plaintiff is also paid $14 per week for his voluntary work. The plaintiff's total weekly income is approximately $340. That this sum is inadequate to meet his reasonable needs is obvious.
86 The plaintiff's poor financial position is further compounded by his debts totalling approximately $330,000 to $350,000. In April 2005 the plaintiff entered into a Personal Insolvency Agreement pursuant to Part X of the Bankruptcy Act 1966 (Cth) ("the Part X arrangement"). The effect of the arrangement is that the plaintiff must pay an amount equal to 50% of the amount outstanding to his creditors. That amount is approximately $165,000 to $175,000. This payment is to be funded out of any net proceeds of this proceeding and the plaintiff's assets and income.
(1) owning very basic accommodation acquired at a cost, including acquisition costs, of between $145,000 and $160,000. In addition, he will be in receipt of approximately $340 per week in pension entitlements; or
(2) owning no real estate, having an investment of between $145,000 to $160,000 and receiving a gross income of approximately $25,000 per annum or $480 per week. There may be some tax on this. From this income, the plaintiff would need to pay for all of his living expenses, including rent on accommodation.
The financial position of Sally Lust if the will is given effect
96 If the will is given effect and no further provision is made for the plaintiff by this court then Sally Lust and her husband will have:
(1) The Caulfield property valued at $625,000 and its furnishings and other contents.
(2) Cash investments of $750,000, returning an income of approximately $40,000 based on a conservative estimate of a 5% return but not taking into account the tax payable on this income.
(3) A flat in Surfers Paradise valued at $330,000 and its furnishings and contents.
(4) Cash assets of the deceased estate of $325,963.49.
(5) $50,000 superannuation from the Department of Education.
(6) Approximately $30,000 per annum combined income until such time as Sally and her husband cease remunerative work.
(7) The income which the Surfers Paradise flat returns and, in addition, the ability to use the Surfers Paradise flat for rent-free holidays if they so desire.
(8) A motor vehicle purchased by the deceased for $20,000.
97 The unpaid legal costs of the estate in this proceeding will need to borne by the estate and need to be subtracted from the amount that Sally and her husband receive under the will. These costs are approximately $20,000 to $30,000.
98 In summary, if the will is given full effect, Sally and her husband will have:
(1) Real estate worth approximately $955,000, being the combined values of the Caulfield property and the Surfers Paradise flat. Each of these properties will be fully furnished with furniture of the deceased.
(2) Cash investments of approximately $1,100,000, assuming the net cash assets of the estate[1] and Sally's $50,000 superannuation entitlement are added to the existing $750,000 investment.
(3) The motor vehicle purchased by the deceased for Sally.
(4) Gross income of approximately $100,000 per annum as follows:
(a) $30,000 combined income of Sally and her husband;
(b) $55,000, assuming a conservative 5 percent return on the cash investment of $1,100,000; and
(c) $15,000, assuming a conservative 4.5 percent rental return on the Surfers Paradise apartment and allowing for the use of that apartment for rent-free holidays for Sally and her husband.[2] The approximate rental return which I have estimated is based on my own estimates and may need substantial adjustment. However, the fact that the Surfers Paradise apartment is capable of achieving a rental return is undoubted.
The financial position of Adam Lust if the will is given effect
99 If the will is given effect then Adam Lust, Sally's son and the deceased's grandson, will receive from the deceased an unencumbered property at 4/30 Hunter Street, Malvern. The evidence is that Adam lives in this property as his principal place of residence.
The financial position of Mark Lust
100 As a result of the inter vivos transfer from the deceased Mark Lust, Sally's son and the deceased's grandson, became the registered proprietor a property at 9/30 Hunter Street, Malvern. The evidence is that Mark has sold this property and put the proceeds towards the purchase by him of a larger home in Caulfield.
101 A further benefit to Adam and Mark Lust if the will is given full effect is that that their mother's receipt of all the contents of the Caulfield property as part of the residual estate enabled Sally Lust to give her sons the surplus furniture and other contents from the combined contents of Sally's Brighton home and the Caulfield property.
APPLICABLE LAW
General principles
102 I turn to consider the applicable law to be applied to an application of this kind. I will deal first with the general principles applicable in every case of an application under s. 91 of the Act.
103 The power of the court to make an order for provision, or further provision, out of the estate of a deceased person is contained in s. 91 of the Act. That section provides:
"91. Power of the Court to make maintenance order
(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.
(2) The Court must not make an order under subsection (1) in favour of a person unless--
(b) another person has applied for the order on behalf of that person.
(3) The Court must not make an order under subsection (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--
(b) the operation of the provisions of Part I, Division 6; or
(c) both the will and the operation of the provisions--
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--
(ii) the operation of the provisions of Part I, Division 6; or
(iii) both the will and the operation of the provisions--
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;
(p) any other matter the Court considers relevant."
104 There are two jurisdictional requirements to the making of an order under s. 91. First, it must be established that the deceased had responsibility to make provision for the proper maintenance and support of the applicant for the order: s. 91(1). Secondly, if such responsibility is established, the court must be of the opinion that the will of the deceased does not make adequate provision for the proper maintenance and support of the applicant for the order: s. 91(3).
105 By s. 91(4) the court is commanded, in determining each of these two jurisdictional requirements, and also in determining the amount of any provision or further provision to be ordered if the two jurisdictional requirements are met, to have regard to the matters set out in paragraphs 91(4)(e) to (o) of the Act and, under paragraph 91(4)(p) to have regard "to any other matter the Court considers relevant".
106 The mandatory command of the legislature to take account of the specified matters was introduced by the amendments to the Act in 1997. However, it is accepted that the appropriate standard or test to be applied in answering each of the two jurisdictional questions remains that which applied under the previous form of the legislation. That standard or test was expressed in the following way by Lord Romer, in delivering the judgment of the Privy Council in Bosch v Perpetual Trustee Company Ltd[3]:
"Their Lordships agree that in every case the Court must place itself in the position of the testator and consider what he ought to have done in all the circumstances of the case, treating the testator for that purpose as a wise and just, rather than a fond and foolish, husband or father."
107 In Blair v Blair[4] Nettle JA agreed with the principal judgment which was delivered by Chernov JA, and continued:
"40. I wish, however, to add to his Honour's observations with respect to the continuing relevance of the conception of moral duty to the jurisdictional questions posed by ss. 91(1) and 91(3) of the Administration and Probate Act 1958.
41. The court is bound in answering each of those questions to have regard to the matters mentioned in ss. 91(4)(e) to (o) and, pursuant to s. 91(4)(p), to any other matter considered to be relevant. Self evidently, such matters are of themselves incapable of providing an answer to either question. To reason from the matters mentioned in ss. 91(e) to (p) to a conclusion that a testator had a responsibility to make provision for a claimant, or that the testator failed to make adequate provision for the claimant, necessitates the application of a test or standard to the matters to be considered. That test remains one of whether and if so what provision a wise and just testator would have thought it his moral duty to make in the interests of the claimant[5]."
"A similar point was made in Grey v. Harrison when I said, in relation to the previous legislation, that the touchstone of what a wise and just testator would have thought to be his or her moral duty "supplies the norm that the legislature left unexpressed"[8].
109 Batt JA concurred in the reasons of Callaway JA on the question of the continuing relevance of moral duty[9]. Buchanan JA also concurred with Callaway JA on the subject of moral duty continuing to inform the determination of the question whether a responsibility exists to make provision for a claimant[10].
110 The concept of moral duty or responsibility to act as a wise and just testator is an exception to the important human right of any person to dispose of his or her property as he or she thinks fit. Callaway JA expressed this principle in Grey v Harrison in the following way[11]:
"... there is no legislative justification to abridge freedom of testation unless the testator has breached a moral duty, or alternatively that there is no judicial reason to exercise the statutory discretion except for the purpose of remedying such a breach."
"Secondly, 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 freedom 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."
111 In determining whether adequate provision has been made for the proper maintenance and support of the claimant for an order under s. 91 of the Act, attention must be given to the words of the Act. In Vigolo v Bostin[13], the High Court considered an application for provision out of an estate governed by the law of Western Australia. The relevant statutory provision was s. 6(1) of the Inheritance (Family and Dependants Provision) Act 1972 (WA). That section provides:
"6. Claims against the estate of deceased person
(1) if any person (in this Act called 'the deceased') dies, then, if the Court is of the opinion that the disposition of the deceased's estate effected by his will, or the law relating to intestacy, or the combination of his will and that law, is not such as to make adequate provision from his estate for the proper maintenance, support, education or advancement in life of any of the persons mentioned in section 7 as being persons by whom or on whose behalf application may be made under this Act, the Court may, at its discretion, on application made by or on behalf of any such person, order that such provision as the Court thinks fit is made out of the estate of the deceased for that purpose."
112 On the question of the meaning of the terms "proper" and "adequate" in the context of maintenance and support for a claimant under that section, Callinan and Heydon JJ, who were in the majority, stated[14]:
"114. The first of the indications is the use of the word "proper". It implies something beyond mere dollars and cents. Its use, it seems to us, invites consideration of all of the relevant surrounding circumstances... 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.
115. The next of the indications is the expression, in comprehensive language, of the sorts of provision that the court may order, that is, provision by way of maintenance, support, education or advancement. "Maintenance" may imply a continuity of a pre-existing state of affairs, or provision over and above a mere sufficiency of means upon which to live. "Support" similarly may imply provision beyond bare need. The use of the two terms serves to amplify the powers conferred upon the court." (Emphasis added.)
113 Gleeson CJ, who was also in the majority, also gave consideration to the words "adequate" and "proper"[15].
114 In doing so, his Honour stated that the concept of "moral duty" was, although not a substitute for the text of the legislation, nevertheless an appropriate concept to apply to all of the circumstances of the particular case in making the value judgments required by the legislation.
115 It is clear that the question whether the provision under consideration is adequate is qualified by the word "proper".
116 In considering the two jurisdictional questions, the question arises as to the time at which the relevant facts and circumstances must be considered. A similar temporal question arises if the two jurisdictional pre-conditions are satisfied and the court reaches the stage of considering the amount of any provision which should be ordered and the terms of any such order. Both questions are dealt with by authority. In Prosser v Twiss[16], Lush J said:
"There is of course conclusive authority for the proposition that the question whether adequate provision has been made must be determined by a consideration of the facts existing and eventualities which might reasonably have been foreseen at the date of the testator's death, whereas the question what order should be made is to be decided by reference to the state of facts existing at the time of the hearing by the court..."
117 A related question to be considered in all applications under s. 91 is the knowledge which is to be attributed to the hypothetical wise and just testator for the purpose of considering whether he or she has complied with his or her moral duty to make adequate provision for the proper maintenance and support of the applicant. In this regard, the conduct of the testator is to be considered on the basis that he or she was, at the time of death, fully aware of all the relevant circumstances[17]. The fact that this is so emphasises the role of the court to consider the conduct of the testator having regard to all of the relevant circumstances, including reasonably foreseeable eventualities, existing at the date of death whether or not actually known to the testator.
Particular issues relevant to this case
118 I turn from general principles applicable to all applications under s. 91 of the Act to consider some particular issues which arise on the facts of this case.
119 First, this case raises the issue of the attitude to be adopted by courts towards an applicant who is an adult son. I can deal with this issue briefly. Older cases referred to the need for an adult son to show some special need, because an adult son was prima facie presumed to be able to support himself[18]. However, this approach is no longer appropriate, especially in light of the 1997 amendments and the failure of the legislature to include, in paragraphs 91(4)(e) to (o), any direction to the court to consider the sex of the applicant as a relevant matter[19].
120 Secondly, this case raises the issue of the approach to be adopted by a court to an application by an adult child who has enjoyed a high level of prosperity in life but has, through a combination of factors including his own fault, folly and moral failings been placed in a position, as at the date of the testator's death and at the date of the hearing of the application, of great financial need. These matters are obviously relevant for me to consider under paragraph 91(4)(o) of the and in considering whether the provision made in the will for the plaintiff was proper and adequate.
"Ordinarily each of the persons who have a statutory right to make application are entitled to have their position considered by a testator but their behaviour (right or wrong) towards the testator may only provide a basis for measuring appropriately the testator's obligation to make provision for each of those applicants. Their sins are irrelevant except insofar as a testator might properly take exception to their behaviour."[21] (Emphasis added.)
"That 'moral obligation', as described in Re Allen and many later cases, reflects a duty resting on a testator to make not merely adequate or sufficient financial provision for members of his or her family in the specified class but also the obligation to measure that adequacy or sufficiency by reference to what is right and proper according to accepted community standards. What is right and proper, and thus what the wise and just testator must do, is not determined by the 'character and conduct' of each applicant but by what the testator ought to have felt in duty bound to provide notwithstanding any defects in character or conduct but nevertheless having due regard to the nature of their relationship with and their treatment (whether morally reprehensible or the opposite) of the testator during his or her lifetime. It is only when that behaviour has affected, or (arguably), is perceived to have affected, the testator that he or she is in good conscience entitled to make lesser or greater provision for an applicant than that to which the applicant would have been entitled having regard only to the bare bones of his or her financial needs and circumstances."[22] (Emphasis added.)
122 In further support for his submission, Mr Wells relied on the following statement by Nettle J (as he then was) in McKenzie v Topp[23]:
"It appears that the requirement to have regard to character and conduct in s. 91(o) of the Act now stands in place of the former provisions of s. 96(1) (which provided that if the character and conduct of the plaintiff were such as to disentitle that person to relief the court might refuse to grant an order). I take it therefore that the sort of character and conduct to which one is to have regard for the purposes of s. 91(o) is limited, as it was under the former s. 96(1), to misconduct towards the testatrix or which shows that the plaintiff's need is the result of his own default. (Emphasis added.)
123 On behalf of the plaintiff, it was submitted by Mr Phillips that, although the character and conduct of the applicant is relevant to be considered when assessing whether the provision made in the will was proper and adequate, the court should recognise "the rough and tumble of family relationships" when making this assessment. It was submitted by Mr Phillips that family disharmony and a parent's disappointment in a child are commonplace in family relationships, but are only one factor "in the whole scene" to be considered by the court in its assessment of whether the provision made is proper or adequate.
124 I accept this submission on behalf of the plaintiff. In Kleinig v Neal (No.2)[24], Holland J said:
"A wise parent will recognise that perfect harmony between parent and child is in the nature of things not to be looked for and that, coming to adulthood, a child will want to make his own life just as the parent had done before him. Differences of outlook between different generations is not exceptional, it is the general rule, so some friction between parent and child or disappointment in a parent's hopes and expectations concerning his child will be accepted by the wise parent as almost inevitable. If it occurs, the parent who is just as well as wise will not allow such disharmony or disappointment to blind him to the needs of his child for maintenance, education or advancement in life. The duty of a parent towards his child to provide for those needs on his death, if he can, continues in spite of such disharmony or disappointment and the statute obliges the court to consider whether it has been performed. The court must take in the whole scene and make the judgment that it considers that a wise and just parent would have made in the circumstances."
125 In McKenzie v Topp, Nettle J (as he then was) considered a similar theme, the disharmony which is to be expected in ordinary family relationships. His Honour said[25]:
"That is what happens in families, often. Parents and children misbehave towards each other, and the older they get the more they seem to do it. But absent extraordinary circumstances, it does not mean that the parents love the children any less or that their duties and responsibilities towards the children are in any way diminished, and usually it does not mean that the children are any less deserving of the parents' love and support."
Jurisdictional requirements met in this case
126 In light of the above principles, I turn to consider whether the jurisdictional requirements of s. 91 have been met in this case.
127 In my view, each of the two jurisdictional requirements of s. 91 of the Act have been met. I find that, notwithstanding the admitted failings of the plaintiff, the deceased, in all the circumstances of the case, continued to have a moral responsibility to make provision for the plaintiff in his will. Indeed, the deceased recognised this by including in the will a devise of a flat to the plaintiff.
128 Furthermore, I find that the provision which has been made in the will for the plaintiff is not adequate for the proper maintenance and support of the plaintiff.
129 In reaching these conclusions, as appears below, I have had regard to each of the matters specified in paragraphs 91(4)(e) to (o), and also to some other matters under paragraph 91(4)(p) which I consider to be relevant.
SECTION 91 MATTERS
Paragraph 91(4)(e): family or other relationship
130 The plaintiff is the only son of the deceased. The only other child of the deceased is his sister Sally.
Paragraph 91(4)(f): obligations and responsibilities of the deceased
131 In my view, the only obligations or responsibilities which the deceased had were to provide for his daughter and son. The deceased did not have any obligation or responsibility to provide for his grandchildren in circumstances where each of his own children were still alive.[26] In this regard, it was submitted on behalf of the plaintiff that, to the extent necessary to fund any further provision which I may order in favour of the plaintiff, it is open to me to set aside the devise to the grandson, Adam Lust. This is particularly so in circumstances where Adam Lust is likely to inherit half of his parent's estate in due course, which estate is likely to be not insubstantial. Although I accept this submission, as will appear, it is not necessary for the devise to Adam Lust to be set aside in order to fund further provision to the plaintiff.
(1) The plaintiff finds himself in his present circumstances, and those which prevailed at the time of his father's death, as the result of his own fault.
(2) The character and conduct of the plaintiff caused shame and embarrassment to the deceased, to such an extent that it was proper for the deceased to take that character and conduct into account in determining the amount of any provision to be made for the plaintiff in the will.
151 There is no dispute that, in large part, the plaintiff caused his own demise from a successful and prosperous doctor to an unemployable man who is in poor health and has no employment prospects.
152 The direct evidence about the deceased feeling shame and embarrassment as a result of the character and conduct of the plaintiff is, in my view, not strong. I have canvassed this evidence earlier in these reasons. Sally Lust said that she witnessed her parents' increasing distress at the plaintiff's conduct over the years. Mr Czarny gave evidence that the deceased expressed concerns to him about the plaintiff's inability to manage his finances at the time that the deceased drew up the will. Ms Manaszewicz gave evidence that the deceased expressed his disappointment in the plaintiff to her on a number of occasions.
153 However, in addition to the direct evidence, it is obvious that the character and conduct of the plaintiff must have disappointed his father and caused him some embarrassment and distress.
154 Accordingly, the character and conduct of the plaintiff, and the effect which it had upon the deceased, were matters which it was proper for the deceased, as a wise and just father and testator, to take into account in making his will. However, having regard to the health and financial position of the plaintiff at the time of the deceased's death, I am of the firm view that the deceased nevertheless remained under a moral duty to make adequate and proper provision in his will for his son. In my view, the deceased failed in the exercise of this moral responsibility. The provision which he made in his will for the plaintiff was, in all of the circumstances, neither adequate nor proper.
155 At the date of the death of the deceased, the debts of the plaintiff were equal to or in excess of the value of the flat given to him under the will. I must approach the matter on the basis that the deceased knew this at the time of his death. It follows that the net effect of the provision made for the plaintiff under the will is to provide the plaintiff with an asset which was roughly equivalent to his debts at the time. Viewed in this way, even with the gift of the flat, the deceased was, by his will, condemning the plaintiff to live out the rest of his life on a small pension with no assets whatsoever.
156 In my view, any shame or disappointment which the deceased may have felt in respect of his son and his conduct was not, in all the circumstances as they existed at the time of death, sufficient justification for a wise and just testator to provide such a small bequest to his son. Given the debts of the plaintiff, the bequest of the flat amounted to no more than a provision to pay out the large proportion of such debts. Absent a arrangement under the bankruptcy legislation, the failure of the deceased to comply with his moral responsibility was such as to cast his son adrift to live out his days in a life of penury.
"63. Section 91 of the Act confers wide power to make such order as is thought fit in all the circumstances of the case. It is plain, however, that the discretion is not untrammelled or to be exercised according to idiosyncratic notions of what is thought to be fair or in such a way as to transgress unnecessarily upon the testatrix's freedom of testation, but rather carefully and conservatively according to current community perceptions of the provision which would be made by a wise and just testatrix."
163 I will approach the task of assessing the amount of further provision which I will order, and the conditions to be attached, in accordance with this statement of principle by Nettle J.
164 I begin with the current position of the plaintiff. He has no assets. He is on a pension. He cannot even afford to pay his rent, which is being paid by his solicitor pending the outcome of this case. He has no reasonable prospect of employment of any substance. His health is bad and, even with government assistance for those on the pension, will likely result in significant cost to him over and above government assistance in that regard.
165 Under the provisions of the will, the plaintiff's position will not materially alter. He will be required to sell the flat bequeathed to him in order to pay his creditors. This would leave him with, about $145,000-$160,000, most of which would be swallowed up by legal costs if no order were made for them to be paid out of the estate.
166 In my opinion, a wise and just testator would have wished to ensure that his son was placed by his will in a position where he had:
(i) unencumbered ownership of a modest dwelling suitable to his needs and legitimate wishes;
(ii) sufficient money to pay out his creditors; and
(iii) a fund or "nest egg" sufficient to provide the plaintiff to live out his days in modest pleasure.
167 I will deal first with the dwelling. It should be no more and no less salubrious than the flat devised under the will. That is, a property valued at about $330,000 should be suitable to the plaintiff's needs and legitimate wishes.
168 Secondly, the evidence establishes that a fund of approximately $165,000 to $175,000 is required to pay out the plaintiff's creditors under the arrangement made with them.
169 Thirdly, I will deal with the appropriate amount of the fund or "nest egg" to be provided for the plaintiff to enjoy a modest standard of living. In my view, such a fund is necessary because without it, there is no prospect of the plaintiff being able to live his life with modest pleasure. He will be restricted to the bare necessities of life, with no capital to fall back on in times of need or to provide for the purchase of a modest car, a modest holiday from time to time, clothing and other capital items required to live a modest, but pleasurable life.
170 The evidence before me as to the appropriate amount of a nest egg is sparse. All that is known is that the plaintiff's pension and other entitlements are about $340 per week and that his pension will be affected, in an unspecified way, if the fund is put in the plaintiff's name, as opposed to being held in a bona fide discretionary trust.
171 Based on unchallenged actuarial evidence, the plaintiff's life expectancy is approximately 18 years. Based on this life expectancy, it would cost approximately $460,000 to purchase an annuity which would return $40,000 per annum. It was submitted on behalf of the plaintiff that an amount of this order was appropriate.
172 On behalf of the defendant executor, based on instructions from the deceased's daughter Sally, it was submitted that no further provision should be made at all. However, if further provision was to be made, it should be limited to the amount required to pay out the plaintiff's creditors under the arrangements made by him. It was acknowledged that this would leave the plaintiff to live out his days on the pension, with no capital to assist him in times of need or to provide for the requirements of a modest life. On more than one occasion, I asked counsel for the defendant to obtain instructions as to whether this was the result which the estate contended was in accordance with the moral responsibility of the deceased. On each occasion, I observed Mr Wells obtain instructions in court from the deceased's daughter Sally. As a result, I was informed that this submission was persisted in, albeit as a fall back from the principal submission that no further provision whatsoever should be made.
[1] Approximately $300,000 after deduction of unpaid legal costs of the estate.
[2] There was no evidence about the amount of the rental return on the Surfers Paradise apartment or as to its value to Sally and her husband for free holidays if they so desired.
[3] [1938] AC 463 at 478-9.
[4] [2004] VSCA 149 at [40] and [41].
[5] Collicoat v McMillan [1999] 3 VR 803 at p. 815, per Ormiston JA.
[7] [2005] VSCA 127 at [4].
[8] Grey v Harrison [1997] 2 VR 359 at 365.
[9] [2005] VSCA 127 at [54].
[10] [2005] VSCA 127 at [57].
Herszlikowicz
Czarny [2005] VSC 354
(2005) 213 ALR 692
Hargrave J found both jurisdictional prerequisites under s 91 satisfied, held the will did not make adequate provision, and ordered that further provision of $425,000 be made for the plaintiff and paid into a trust for his benefit; the court contemplated appointment of the plaintiff's solicitor Ms Patricia Duke and Mr Wright as trustees and directed that details and costs be finalised at further hearing (paras 127-128, 174-176, 178-180, 186).
7 In 1955 the deceased and his wife and family moved to Australia. The family lived in North Carlton. By the early 1960s the deceased was unable to obtain enough carpentry work to make a living and so purchased a milk bar in Essendon. The deceased owned and operated this milk bar, with the assistance of his children for approximately five years.
8 In 1968 the deceased moved with his wife to a property at 5 Rosehill Avenue, Caulfield ("the Caulfield property"). The deceased returned to carpentry work at this stage and enjoyed moderate success constructing houses and factories.
9 The deceased suffered poor health from his early fifties onward. The deceased had a heart attack in November of 1975 and retired from work. The deceased suffered a second heart attack in 1977 and underwent open heart surgery in 1988. After this time the deceased's health progressively worsened. He also suffered from kidney failure, three strokes, gangrene resulting in the amputation of three toes and chronic respiratory conditions. In 2000 the deceased was diagnosed with cancer of the colon, requiring surgery.
10 The plaintiff described his father as an unpleasant man who suffered from "bad nerves" attributable to his suffering during the war. He said that his father was moody and paranoid, suffered from depression and was prone to outbursts of rage. The plaintiff said further that the deceased was very controlling about matters of family life, reacting angrily at family members who did not act in accordance with the deceased's expectations or instructions. The plaintiff acknowledged, however, that the deceased did have a good social manner and that the family home was always full of people, it was just that the deceased's relationships with members of his immediate family were "not so good". The plaintiff gave evidence that his mother, Rachel, confided in him that, at times, the deceased had made her life very difficult.
11 Sally Lust, who grew up in the same household as the plaintiff, did not refute the plaintiff's evidence that their father could, at times, be a difficult and unpleasant man. Likewise, Sally Lust's son, Adam Lust, who gave evidence of a close relationship to his grandfather, also did not refute the plaintiff's evidence as to the deceased's temperament.
12 Other individuals who were closely involved with the Herszlikowicz family, Mr Jack Stiglitz, a family friend since childhood and the deceased's doctor for his last 10 years before death and Ms Rosetta Manaszewicz, a close friend of Sally Lust since childhood, both gave evidence that they never saw any signs of unpleasantness or ill-treatment of anyone by the deceased whether visitors or family members. Of course it may be said that no matter how close Mr Stiglitz and Ms Manaszewicz were to the Herszlikowicz family, their insight into the family dynamic is likely to be less penetrating than that of family members.
13 Both Sally Lust and the defendant Norman Czarny, who is a solicitor and has been a longstanding family friend, described the deceased as intelligent and hardworking with strong moral and ethical standards. They described the deceased as well respected in the local Jewish community and someone to whom others would come for advice on family and business matters. Sally Lust gave evidence that her father worked as a volunteer for the local Jewish community and was awarded by that community for his work.
Rachel Herszlikowicz
14 As I have said, the deceased met his wife Rachel in Germany shortly after the end of the war. They met in a hospital where Rachel was recovering from typhus and the deceased was visiting a friend. They were married in Germany in 1945.
15 Rachel Herszlikowicz died on 14 December 2002. It appears that this death was quite sudden and unexpected as Mrs Herszlikowicz had always enjoyed good health. After the deceased's retirement in 1975 and throughout the deceased's declining health, Mrs Herszlikowicz had nursed her husband in the home, apart from his occasional hospital stays. For some months prior to her death, the deceased required her full-time care in the home. Upon her death, Rachel left her estate to the deceased.
The plaintiff
16 Both the plaintiff and his sister were raised by the deceased and his wife in a traditional Jewish home. Both the plaintiff and his sister attended secondary school in Melbourne and helped the deceased run the family milk bar after school from the early to late 1960s.
17 The plaintiff performed well academically at school and was offered a place at University High School mid-way through his secondary schooling. The plaintiff matriculated in 1963. His good results earned him a free place to study medicine at the University of Melbourne. The plaintiff attended university from 1964 to 1970 and lived with his family at the Caulfield property while he studied.
18 The plaintiff graduated from medical school in 1970. In that same year he married his wife, Krystyna Felinski. In 1971 the plaintiff completed his first year residency at Darwin hospital. In 1972 the plaintiff did his second year residency at the Repatriation Hospital in Queensland. In 1973 the plaintiff did his final year residency at the Royal Children's Hospital and the Mercy Maternity Hospital, both in Melbourne.
19 In 1974 the plaintiff commenced medical practice in Collingwood. He became a partner in that medical practice until the partnership dissolved in 1978 and the plaintiff continued as a sole practitioner. The plaintiff's Collingwood practice was both busy and financially lucrative.
20 The plaintiff and his wife, Krystyna have two sons: Joshua born 4 July 1975 and Thomas born 15 November 1977. The plaintiff's sons now both reside in the United States.
21 In 1978 the plaintiff experienced the onset of severe and chronic back pain. The plaintiff began self-prescribing and injecting himself with pethidine to treat his pain.
22 In 1985 the plaintiff was involved in motor vehicle accident. As a result he required back surgery in 1986. The plaintiff continued with his occasional pethidine use throughout this time.
23 In 1987 the plaintiff sold his Collingwood medical practice and opened another in Caulfield. Again, this practice appears to have been busy and financially lucrative.
24 The plaintiff earned a high income during his years practising as a doctor between 1970 and the late 1980s. This income enabled the plaintiff to accumulate a number of valuable properties including a family home in Camberwell and a second family home in East Hawthorn as well as three or four investment properties. The plaintiff also built up a substantial share portfolio and had interests in some thoroughbred horses.
25 Around 1987 the plaintiff incurred substantial losses as a result of a bad investment in stock options. These losses resulted in the sale of the family home in Camberwell in 1991 to cover those losses.
26 Throughout the period from the onset of his back pain in 1978 to the early 1990s the plaintiff continued to self-prescribe and inject pethidine. Occasional use escalated to the point where, in 1992, the plaintiff was injecting himself with pethidine intramuscularly 12 to 15 times per day. In large part, the plaintiff's drug use was in response to his ongoing and severe back pain. However, the plaintiff concedes that he also used the drug to assuage daily stresses in his life and that he developed a dependence.
27 In 1992 the plaintiff voluntarily admitted himself into a four-week detoxification program in Brisbane and suspended his medical practice for that time. The plaintiff unfortunately resumed his drug use upon his release.
28 As a consequence of his drug use, the plaintiff was suspended from medical practice by the Victorian Medical Practitioners' Board from mid-1993 to the end of 1994. In 1995 the plaintiff resumed medical practice. It was a condition of the Victorian Medical Practitioners' Board lifting the plaintiff's suspension that the plaintiff could only work in salaried, supervised positions and that he underwent regular drug testing. The Victorian Medical Practitioners' Board also prohibited the plaintiff from possessing or prescribing what were described in the evidence as "Schedule 8 drugs". The plaintiff therefore closed his Caulfield practice and began working for a salary at Supercare Clinics in Richmond. He worked there until late 1997. It would appear that his income was not significant from this employment.
29 During the period 1995-1997, while working as a doctor at the Supercare Clinics in Richmond, the plaintiff continued to oversubscribe drugs of addiction both for his own, and others' use. Although somewhat unclear on the evidence, it appears that at this stage the plaintiff transferred his dependency from pethidine to Panadeine Forte. The evidence was that the plaintiff's use of this drug peaked at 60-80 tablets per day. During this time, the plaintiff also defrauded the Medicare scheme of approximately $70,000.
30 On 1 December 1997 the plaintiff was admitted to the Warburton Hospital Drug & Alcohol Rehabilitation Program.
31 On 18 December 1997 the Victorian Medical Practitioners' Board suspended the plaintiff from practise.
32 In March 1999 the plaintiff pleaded guilty in the Magistrates' Court to 22 charges of prescribing addictive drugs for his own use. A fine was imposed on the plaintiff.
33 On 7 February 2000 the plaintiff was convicted in the County Court of two counts of defrauding the Medicare Scheme under s. 29D of the Crimes Act 1914 (Cth). The plaintiff was sentenced to 12 months imprisonment on one count and three months on the second count to be served concurrently and to be released on a three year good behaviour bond after three months. The plaintiff was released from prison on 9 May 2000.
34 On 25 September 2000 the Medicare Participation Review Committee disqualified the plaintiff as a medical practitioner under the Medicare Scheme for five years.
35 After the plaintiff's release from prison he began gambling and incurred heavy losses. At some stage in 2002 the plaintiff lost $500,000 over a four month period. The plaintiff was forced to sell all his assets to cover his gambling losses including the sale of the second matrimonial home in December 2002 for $1.135 million.
36 The plaintiff separated from his wife on 17 December 2002, just a few days after his mother's death. The plaintiff and his wife had not shared a bedroom since 1988 after the plaintiff had an affair with another woman. The plaintiff and his wife are not divorced and continue to see each other weekly and speak on the phone.
37 On 26 March 2002 the Victorian Medical Practitioners' Board cancelled the Plaintiff's registration as a medical practitioner due to unprofessional conduct of a serious nature. The plaintiff has not practised medicine since December 1997. He currently bears the onus of persuading, first, the Victorian Medical Practitioners' Board that he is fit to resume medical practise and, secondly, the Medicare Participation Review Committee that he is fit to re-qualify for participation in the Medicare scheme. It was submitted by counsel for the plaintiff that the plaintiff is highly unlikely to ever be allowed to practice medicine again and this submission was not contested by counsel for the defendant.
38 In addition to the plaintiff's drug-use, financial, marital and professional difficulties, the plaintiff has suffered from a number of health problems. The plaintiff's severe, chronic back pain has already been canvassed as the initial instigator for the plaintiff's drug use. In addition, since 1988 the plaintiff has suffered from a number of heart conditions, hypertension, high cholesterol and impaired respiratory functioning. The plaintiff's poor health has been exacerbated by his heavy smoking over many years and the fact that he is overweight. He continues to smoke but has lost some weight.
39 The unchallenged medical evidence before the court was that the plaintiff would be unlikely to be physically fit for any type of work in the future except for a sedentary job over a short amount of hours at any one time. Having regard to the plaintiff's physical limitations, his age and qualifications, the plaintiff appears to only be fit to work as a medical practitioner. However, for the reasons set out above, the plaintiff appears highly unlikely to ever be allowed to work as a medical practitioner again.
40 The plaintiff's drug addiction is currently being controlled under the supervision of his doctor. The plaintiff has reduced his use of Panadeine Forte to nine per day and expects to be off the drug this year. The plaintiff has also lost some weight.
41 There was evidence put before the court that the plaintiff also demonstrates severe difficulties in his executive functioning which is thought likely to reflect minimal to moderate neuropsychological impairment. However the expert opinion was that this condition appears to be improving, and can be expected to continue to improve, as the plaintiff's general health improves.
Sally Lust
42 After secondary school in Melbourne, Sally obtained a Bachelor of Arts degree from Monash University and a Teacher's Certificate from the University of Melbourne.
43 Sally began teaching in 1971. Sally went to Israel to marry her husband, Michael Lust in 1972. Sally and Michael returned to Australia in 1973. Sally resumed her teaching career at a number of secondary schools finishing up at University High School where she taught until her retirement in 2003. Sally continues to work as an emergency relief teacher. Sally and Michael have two children Adam and Mark Lust, both aged in their late 20s. Michael Lust currently works as a taxi driver, although he appears to have had business interests in the past. The plaintiff gave evidence that the deceased had financially assisted Michael Lust when his business failed. There was no evidence to the contrary.
44 Sally enjoyed a close relationship with both her parents and they were involved to a high degree in each others lives. Sally says that she saw her parents at least daily and sometimes two or three times per day. The deceased and his wife were also very involved in the lives of Sally's children. They looked after her children when the children were small and Sally was working full time. Sally's sons continued to have a close relationship with their grandparents into adulthood. The Lust family had regular Friday night dinners at the deceased's home and the deceased and his wife often went to Sally's family home in Brighton for meals. At times the Lust family holidayed with the deceased and his wife.
45 When the deceased became ill and required hospitalization prior to Mrs Herszlikowicz's death, Sally helped her mother by dropping her off and collecting her from the hospital, assisting her with shopping and meals and delivering both her parents to medical appointments.
46 It is not disputed by the plaintiff that his sister Sally had a much closer relationship with the deceased than him, and that Sally's family was involved to a much greater extent in the lives of the deceased and his wife than the plaintiff and his family.
Rachel Herszlikowicz's death
47 As I have already said, Rachel Herszlikowicz died on 14 December 2002.
48 After the funeral and the traditional Jewish mourning period the plaintiff went to Queensland for 10 days. The plaintiff says he was under considerable stress in his life at that time and also that he was made to feel unwelcome in his father's home after the death of his mother. As has been explained above, around the time of his mother's death, the plaintiff had served a prison sentence, had been de-registered as a medical doctor, had sold, or was facing the imminent sale of his second family home in Hawthorn to cover gambling losses and had separated from his wife on 17 December 2002, just three days after his mother's death.
49 After her mother's death, Sally moved into the Caulfield property and commenced nursing her father on a full time basis. Sally took three months of long service leave from her job to enable her to devote more time to her father.
The Will
50 The deceased made his last will on 18 December 2002 ("the will"), 4 days after the death of his wife. Pursuant to the will:
58 The plaintiff did not indicate that the deceased's attitude toward him had changed in response to the way the plaintiff had conducted his life. The picture painted by the plaintiff was that the deceased had a very low opinion of the plaintiff from the beginning and that this opinion remained consistently low throughout the plaintiff's fall from grace.
59 Sally said that she cannot remember her father laying a hand on the plaintiff in their childhood and that her father was very proud of the plaintiff's achievements, even throwing him a party when he graduated from medical school. Mr Czarny also gave evidence that he recalled attending this celebration.
60 Ms Manaszewicz gave evidence that the deceased would continually refer to the plaintiff as, "my son the doctor" and the plaintiff's achievement brought the deceased great esteem in the Jewish community because of the traditional respect for academic learning and medicine. Likewise, Mr Stiglitz gave evidence that the deceased and his wife often told him how well the plaintiff was doing and how proud they were of their son the doctor, using a pet-name, "Moshe" to describe the plaintiff.
61 Neither the plaintiff nor Krystyna can recall attending a celebration of the plaintiff's qualification as a doctor in late 1970. Krystyna could not recall the deceased ever referring to the plaintiff as "my son the doctor" in her presence but remembered that the deceased said to her before her marriage words to the effect that "hairs will grow out of the palms of my hands before he [the plaintiff] amounts to anything".
62 The plaintiff also said that his father disapproved of his marriage to Krystyna in 1970 on the grounds that his father believed Krystyna was not the child of a Jewish mother. The plaintiff said that his father invested considerable time and money in an attempt to prove that this was the case. This evidence was not contested.
63 It is not necessary to resolve the conflict on the evidence as to matters such as whether or not the deceased strapped the plaintiff as a child or whether or not the deceased ever held a party to celebrate the plaintiff's graduation from medical school. Regardless of whether or not these specific events occurred or not, I accept the evidence of the plaintiff that the deceased had a low opinion of the plaintiff throughout his childhood and into his adulthood. I also accept the evidence of Krystyna Herszlikowicz that the deceased held a low opinion of the plaintiff at the time Krystyna and the plaintiff were married in 1970.
64 In arriving at this conclusion, I do not reject the evidence of Sally Lust, Mr Czarny, Ms Manaszewicz and Mr Stiglitz. However, I do not accept that their evidence refutes the evidence of the plaintiff and Krystyna Herszlikowicz that the fundamental dynamic of the relationship between the deceased and the plaintiff was that the deceased had a low opinion of the plaintiff and communicated this sentiment to the plaintiff frequently.
65 Sally Lust, who grew up in the same household as the plaintiff and one would expect to have been privy to the inner workings of the Herszlikowicz family, does not refute that the deceased repeatedly told the plaintiff that he would not amount to anything or that the deceased and the plaintiff argued frequently. Instead Sally Lust points to the fact that the deceased held a party to celebrate the plaintiff's graduation as establishing that the deceased was proud of his son's achievements. I am not persuaded that the fact that the deceased may have held a party to celebrate the plaintiff's graduation or the fact that the deceased may have expressed pride in his son's achievements to Ms Manaszewicz and Mr Stiglitz establishes that the deceased did not have a generally low opinion of his son.
66 Despite the low opinion of the deceased concerning the plaintiff, they were not estranged. The plaintiff says that he and his father used to meet for lunch every couple of weeks up until his father's death in 2004. Sally Lust gave evidence that she never saw the plaintiff visit the deceased after their mother's death, although she conceded that he may have visited during the day while she was at work. I find that this was the case and accept the plaintiff's evidence of regular contact with the deceased up until his death.
67 It was not contested by the plaintiff that Krystyna and the plaintiff's children were not as close as Sally Lust and her children to the deceased and his wife. For example, the plaintiff's family usually went to Krystyna's parents' house for dinner on the Sabbath. Nevertheless, Krystyna and her sons maintained consistent contact with the deceased and his wife. After Krystyna's separation from the plaintiff, she continued to see the deceased. Again, there was no evidence of estrangement.
68 Sally said that, while initially the deceased was very proud of the plaintiff's achievements, she witnessed her parents' distress at the plaintiff's conduct over the years. She said that her parents often complained to her after visits to the plaintiff and his wife that they had been ignored and that the deceased had been rebuked by Krystyna for pinching their grandson's cheeks. Sally said her parents were mortified when the plaintiff made their parents pay rent to stay in a flat in Surfers Paradise which the deceased had lent the plaintiff $70,000 to purchase.
69 Sally also said that her parents were totally devastated when the plaintiff left his wife and children and went to live with another woman, and when the plaintiff lost both his family homes to gambling debts. Sally explained that in losing his assets to gambling, his house, his wife and family the plaintiff went against everything her father had stood for throughout his life. Sally said that her parents became aware that the plaintiff had been deregistered as a doctor when his name appeared in the papers and friends had made snide comments. She said her parents were very worried about the plaintiff's health and physical appearance but felt rejected when their offers of advice were met with hostility.
70 Mr Czarny gave evidence that in discussions with the deceased about the will, the deceased expressed particular concern to him about the plaintiff's gambling problem and his inability to manage his finances. Ms Manaszewicz gave evidence that on numerous occasions the deceased expressed to her his disappointment with his son's behaviour and attitude.
71 As I have said, the plaintiff's evidence was to the effect that the deceased held a consistently low opinion of the plaintiff from childhood onward and that this low opinion was not only as a result of the plaintiff's conduct. I accept the plaintiff's evidence in this regard. However, I am satisfied that there is no doubt that this low opinion was exacerbated, or at least reinforced, by the plaintiff's conduct during his adulthood.
72 The deceased appears on the evidence to have been aware of the substance of the plaintiff's demise, if not the detail. There was sufficient evidence that, before he died, the deceased was aware that the plaintiff was in poor physical health, was using drugs, had been disqualified from medical practice, had been in jail, was gambling heavily, had lost all his assets to pay gambling debts, had separated from his wife and was living on a pension. I am satisfied that the plaintiff's conduct in this regard caused the deceased distress and disappointment.
Position of Sally Lust at the death of the deceased
73 As I have set out above, the deceased died on 8 February 2004. Upon his death Sally Lust received the return of the nursing home bond minus administrative costs to an estimated total of $480,000. This sum was invested along with the remainder from the sale of her Brighton home, an estimated total investment of $750,000. She was entitled to approximately $50,000 in superannuation from the Department of Education, which has been paid out. Between her employment as an emergency relief teacher and her husband's employment as a taxi driver, the family had a combined income of around $30,000 per annum in addition to the return on the capital which was invested.
Position of the plaintiff at the death of the deceased
74 The plaintiff has, and at the date of the death of the deceased had, a number of serious health conditions which I have set out in detail above. The unrefuted medical evidence of Dr Pitt was that the plaintiff is "not in sufficient health to resume remunerative work". The prognosis of his doctors is that he would be able to resume employment under limited, sedentary conditions, only if he experienced a significant improvement in health.
75 At the time of the death of the deceased the plaintiff owned no real estate or other significant assets and was not gainfully employed. The plaintiff was in receipt of a pension and living in rental accommodation.
The assets of the estate
76 The real estate forming part of the deceased's estate is conveniently summarised as follows:
81 I note that no value has been placed on the personal property of the deceased, such as the furniture and other contents of the Caulfield property. It appears that these were simply taken by Sally as hers once the Caulfield property was transferred to her and her husband. There is no evidence of an inter vivos gift to her of these assets.
82 The deceased loaned the plaintiff $70,000 in December 1983, at 11 per cent interest calculated annually. The plaintiff contends that the loan was forgiven by the deceased. The defendant offered to forgive the loan and interest in an open offer of compromise dated 30 March 2005. In opening submissions counsel for the defendant stated that the view of the estate was that this loan has been waived or forgiven and should not be included as an asset of the estate. Accordingly, the loan and interest have not been taken into account when calculating the total estate.
83 I therefore find that the total value of the deceased's estate, together with the inter vivos transfers, is $2,240,508.49. This is comprised of:
87 The plaintiff does not appear to have anyone to provide him with financial support. The plaintiff is separated from his wife and there was no evidence that she supports the plaintiff financially. As stated above, the plaintiff's solicitor has paid the plaintiff's rent since January 2003. However, that money appears to have been advanced by way of a loan pending the outcome of this proceeding.
88 If the will is given effect and no further provision is made for the plaintiff by this court, the plaintiff will receive the property at 5/30 Hunter St Malvern, valued at approximately $330,000.
89 As I have said, under the Part X arrangement, the plaintiff must pay approximately $165,000 to $175,000 to discharge his debts. The plaintiff's only asset is the Malvern flat bequeathed to him by the deceased. The plaintiff will need to sell that property to discharge his debts. The sale of the Malvern flat will involve some legal and real estate agency costs which one would expect to be at least $5,000 to $10,000.
90 After the sale of the Malvern flat and discharge of his debts, the plaintiff would be left with approximately $145,000 to $160,000 in cash.
91 As I have said, the plaintiff's total income from his disability support pension and volunteer work is approximately $340.00 per week. I am satisfied that the plaintiff is highly unlikely to ever undertake full time remunerative work again and will be more or less dependent on a disability support pension for the rest of his life.
92 From this lump sum of $145,000 to $160,000 and a weekly income of $340.00, the plaintiff must meet expenses associated with accommodation, utilities, food, transport, insurance, health care, entertainment and recreation. There was no evidence of the plaintiff's actual financial needs at present. Evidence given by the plaintiff in October of 2004 in an examination of a judgment debtor in a proceeding by the ANZ Bank against the plaintiff estimated his total weekly expenses at that time to be $785. This allowed for $185 in weekly loan repayments that would no longer be required in light of the Part X arrangement. Not including the loan repayments, this leaves estimated weekly expenses of $600. The plaintiff would obviously need to meet these expenses for the rest of his life. The plaintiff is currently 59. The unchallenged actuarial evidence was that the plaintiff would be likely to live for another 18 years.
93 The cash lump sum could be used by the plaintiff to purchase a property. In my view this amount would only be sufficient to purchase very basic accommodation in Melbourne. This much is clear even from the simple exercise of comparing the money available to the plaintiff and the valuation of the property at 5/30 Hunter Street, Malvern of $330,000. Clearly, purchasing equivalent accommodation to the Hunter Street flat will be well in excess of $145,000 to $160,000. Assuming the plaintiff could find a suitable property at a price of $145,000 to $160,000, there are also of course fairly significant costs associated with purchasing and owning a property that would need to be paid by the plaintiff. Assuming the plaintiff was able to find a suitable property to purchase, the plaintiff would then live on his pension of $340.00 per week.
94 If, instead of being used to purchase a property, the cash lump sum was invested, this would produce an annual return of approximately $8000 (based on a 5% estimated return on low-risk, long-term investments, such as long-term government bonds). There is no evidence as to the tax the plaintiff would be liable for on this income or how this income would affect his pension. Assuming the plaintiff paid no tax on this income and that it did not affect his pension entitlement, the plaintiff's net income from his pension and investments would be around $25,000 per annum from which he would have to pay rent on his accommodation.
95 In summary, if the will is given full effect, the plaintiff will, after payment of the amount due under his Part X arrangement, be in the financial position of either:
121 On behalf of the estate, it was submitted that these matters were extremely relevant to be taken into account in considering whether the provision made for the plaintiff in the will was "proper" in the sense discussed above. Mr Wells, who appeared for the executor of the will, submitted that the objective propriety of the character and conduct of an applicant under s. 91 of the Act, judged according to prevailing community standards, was highly relevant to any assessment by the court as to whether proper provision has been made in the will. In support of this submission, Mr Wells relied upon the judgment of Ormiston J (as he then was) in Collicoat v McMillan[20]. In particular, Mr Wells emphasised the following statements by Ormiston J in that case:
Paragraph 91(4)(g): size and nature of the estate
132 In my view, the estate is large enough to both provide adequate provision for the proper maintenance and support of the plaintiff and also to honour the understandable wishes of the deceased to give preference to his daughter Sally over the plaintiff.
133 Although not strictly relevant to the size and nature of the estate, the fact that the deceased made significant inter vivos gifts to his daughter Sally and to her son Mark are relevant, in an indirect way, in considering the available pool of assets for distribution between the children of the deceased. In any event, these matters are either specifically referred to in other paragraphs of s. 91(4) or are, in my view, other matters which I consider to be relevant under paragraph 91(4)(p).
Paragraph 91(4)(h)(i) and (j): financial resources, state of health and age
134 In my view, these matters permit, indeed require, a comparison to be made between the respective positions of the plaintiff and his sister Sally, both of whom are beneficiaries under the will. Further, as I have said, it is the plaintiff and his sister to whom the deceased owed a moral responsibility to make adequate provision for their proper maintenance and support.
135 At the time of the death of the deceased, the plaintiff was aged 57 and Sally was aged 54.
136 There is no evidence of Sally suffering from any health problems which will affect her ability to earn an income. On the other hand, there is clear evidence that the health of the plaintiff is such that he has virtually no earning capacity. Furthermore, the health of the plaintiff is likely, in my view, to continue to worsen and both affect his enjoyment of life and his financial needs in the future.
137 As to the respective financial positions of the plaintiff and his sister Sally if the will is given full effect, the evidence establishes a startling discrepancy amounting to a gross imbalance. If the will is given its full effect, without any further provision being made for the plaintiff, Sally is likely to enjoy financial comfort for the rest of her life. On the other hand, unless further provision is made for the plaintiff, he will have to endure a life of penury and bad health. These comments are apposite both to the time of death of the deceased and to the present time.
Paragraph 91(4)(k): contributions to building up the estate or to the welfare of the deceased
138 The evidence establishes that both the plaintiff and Sally worked in the family milk bar when they were children. Other than that, it does not appear that the plaintiff made any contribution to building up the estate or to the welfare of the deceased. On the other hand there is ample evidence that Sally sacrificed her ability to earn income during the period she was caring for her father, following her mother's death, and that the nature and frequency of Sally's conduct towards her father no doubt gave him great joy and therefore increased his overall well-being or welfare. On the other hand, notwithstanding these contributions by Sally, she was well rewarded by gifts made to her during the deceased's lifetime. Furthermore, as a parent, she has benefited from the gift of a flat to Mark during the deceased's lifetime and will benefit from the devise in the will to Adam.
139 It must be said, in this regard, that the character and conduct of the plaintiff, although not directed towards the deceased, must have caused him considerable stress and disappointment, thus reducing his overall well-being or welfare.
Paragraph 91(4)(l): benefits previously given to the plaintiff and other beneficiaries
140 The evidence discloses negligible financial benefits given to the plaintiff by the deceased during his lifetime. Of course, the plaintiff benefited from being brought up in the household of the deceased. In this regard, although there were differences between the deceased and his son, such that the plaintiff felt that he was looked upon unfavourably by his father, the plaintiff frankly acknowledged that he was brought up in an atmosphere which was conducive to his successful academic career and qualification as a medical practitioner.
141 Sally received the same general benefits as the plaintiff, derived from living in the deceased's household until she left home. However, Sally was the recipient of very significant gifts from the deceased during his lifetime. In particular, she was given the family home and all of its contents. The stamp duty on the transfer of the family home was paid by the deceased. Further, the deceased purchased a car for her in the sum of approximately $20,000.
142 The deceased also made significant contributions to the school fees of Sally's two sons and, when they turned 18, bought each of them a second-hand car. Mark Lust was given a flat worth $330,000. In this way, indirect benefits were provided to Sally, having regard to her own responsibility to maintain and make proper provision for her children. To the extent that these matters are not relevant under this paragraph of s. 91(4), I believe that they are relevant matters to consider under paragraph 91(4)(p).
Paragraph 91(4)(m): whether the plaintiff was being maintained by the deceased
143 The defendant was not being maintained by the deceased prior to his death. I do not consider that the small gifts and loans which were made, or the unspecific offer to Krystyna to provide assistance, amounted to the assumption of any responsibility by the deceased, prior to his death, to maintain the plaintiff.
Paragraph 91(4)(n): liability of others to maintain the plaintiff
144 Apart from the Commonwealth government's responsibility to continue to provide the plaintiff with a pension, there is no other person with a liability to maintain the plaintiff.
Paragraph 91(4)(o): character and conduct of the plaintiff
145 There is no dispute that the plaintiff finds himself in his current state of impecuniosity, and consequent great need, by reason, in large part, of deficiencies in his own character and conduct. His conduct evidences a combination of mere foolishness, extravagance, excessive gambling to the point of addiction, drug addiction, weakness of character and even moral turpitude attracting criminal convictions and penalties, including a term of imprisonment.
146 On the other hand, the plaintiff's failings and current position of great need have been contributed to by extremely poor health. His pethidine, and subsequent Panadeine Forte, addictions seem to have been initiated by severe back pain which cannot be seen as his fault. His downward spiral from prosperity to penury can, in large part, be seen as the result of these addictions and their consequent effect upon his actions. His heart complaints appear to be the result hereditary factors, although they must have been contributed to by his smoking and drug addictions.
147 However, had the plaintiff been a man of strong character, and acted accordingly, it is likely that he could have maintained a level of prosperity which would at least equate, in asset terms, with that which his sister will enjoy if the will is given its full effect. There is no doubt that the plaintiff was prosperous by the early 1990s.
148 In addition, absent his failings in character and conduct, at the date of death of the deceased the plaintiff would have had a far superior earning capacity, as a doctor, to that of his sister. This would have been so even if the plaintiff's ability to practise as a doctor had been significantly reduced due to his hereditary heart and other non-drug induced ailments.
149 On behalf of the estate, it was submitted by Mr Wells that, although the misconduct of the plaintiff was not directed towards the deceased, it nevertheless ought to disqualify the plaintiff from any relief because, in all the circumstances, the provision which was made for the plaintiff in the will was both adequate and proper.
150 Mr Wells submitted that:
157 Notwithstanding the plaintiff's failings and misdeeds, the moral responsibility of the deceased, given that the need of the plaintiff was far greater than that of his sister Sally, and given that the size of the estate was sufficient to both satisfy the deceased's moral duty to his son and his understandable desire to prefer his daughter in his will, such as to require the making of far greater provision for his son. Furthermore, given the plaintiff's profligacy, a wise and just testator would no doubt have provided such greater provision for his son in the form of a trust which was structured in a way to, in effect, protect his son from himself.
Paragraph 91(4)(p): other matters considered to be relevant
158 As I have said in the course of considering the specified matters in paragraphs (e) to (o), the gifts and bequests which the deceased made to Sally's children have, in my view, benefited Sally in a material way. I have taken this into account in arriving at my decision that each of the jurisdictional requirements of s. 91 have been met. Further, in my view, it is appropriate for me to take account of these gifts and bequests when considering the amount of further provision to be made for the plaintiff and the manner in which it is to be made.
159 I note also, under this heading, that Sally is married and in a stable relationship with her husband. On the other hand, the plaintiff is, and was at the time the deceased died, separated from his wife. He has since entered into a property settlement with her. I infer that divorce is likely to occur. The lack of a partner in life is, especially given his poor health, likely to increase the needs of the plaintiff as time goes by.
160 Finally, under this heading, the fact that the plaintiff has entered into an arrangement with his creditors, under which he is liable to a maximum amount of 50 cents in the dollar, is a relevant matter for me to consider. This amounts to a changed circumstance from the time of the death of the deceased. This fact is, in my view, highly relevant to the amount of any further provision to be made for the plaintiff.
161 The jurisdictional requirements of s. 91 having been established, and consideration given to each of the matters specified in s. 91(4)(e) to (p), I turn to consider the question of the amount of any further provision which should be ordered and the form of that provision.
WHAT ORDER SHOULD BE MADE?
162 In McKenzie v Topp[27], Nettle J (as he then was) said:
173 In an attempt to support this position taken by the estate, Mr Wells submitted that any further provision beyond the amounts required to satisfy the plaintiff's creditors would have the effect of providing the plaintiff with a complete indemnity against the consequences of his own fault. I do not accept that this is an appropriate way to characterise the making of further provision. In no sense will the provision of a fund or nest egg to supplement the plaintiff's pension, of the amount under consideration, indemnify the plaintiff against all of the consequences of his own actions and place him back in the position of prosperity which he previously enjoyed.
174 In my view, based on all the circumstances and having considered all of the matters which I am obliged to consider under s. 91(4) of the Act, further provision should be made for the plaintiff out of the estate of the deceased in the amount of $425,000. In arriving at this amount, I have considered the amount of approximately $175,000 required to pay the creditors of the plaintiff under the Part X arrangement which has been entered into. This will leave approximately $250,000 over to be used to supplement the plaintiff's pension and to provide capital to meet contingencies and other modest capital requirements of the plaintiff during the remainder of his life. Further provision in this amount will, in my view, be consistent with both making proper provision for the plaintiff's maintenance and support and with giving due recognition to the understandable wishes of the deceased to prefer his daughter and her sons to the plaintiff in the bequests made by him in his will. In effect, although the plaintiff has a far greater need, Sally Lust and her sons will together receive approximately two-thirds of the estate of the deceased, including the inter vivos gifts to Sally and Mark Lust. Further, Sally will have received all of the furniture and contents of the Caulfield property and the Surfers Paradise flat.
175 As I have said, it is accepted that any further provision ought be the subject of a trust for the benefit of the plaintiff. I turn to consider the appropriate orders to be made in that regard.
FORM OF TRUST
176 Under s. 96 of the Act, the court has a wide discretion to impose such conditions, restrictions and limitations upon any order for further provision as it thinks fit. Accordingly, I have power to order that the further provision which I believe is appropriate be paid to the trustees of a trust for the benefit of the plaintiff.[28] Further, as a condition of relief, I am entitled to order that the flat be transferred to the trustees and to direct that the plaintiff's creditors be paid out of the trust fund arising from the payment of the further provision to the trustees.
177 Although it was accepted that any further provision ought be the subject of a trust, in order to protect the plaintiff from himself, there is dispute about the identity of the trustees and about the form which the trust should take.
178 On behalf of the plaintiff, it was contended that the appropriate trustees were the plaintiff's solicitor Ms Patricia Duke, and another solicitor Mr Wright. Ms Duke was cross-examined before me and I was impressed by her as a witness and as a person of obvious integrity who, in my view, will, if appointed, perform the duties as trustee in a sensible manner without giving in to any inappropriate demands for trust distributions which may be made by the plaintiff. I have no reason to doubt that the same applies in respect of Mr Wright.
179 On behalf of the defendant, it was submitted that the trustee should be someone wholly independent of the plaintiff, such as a professional trustee. I do not accept this submission. I can see great benefits in Ms Duke being one of the trustees, having regard to her familiarity with the plaintiff and with all of his faults. This knowledge and experience should not be wasted. In my view, if an independent person were appointed, this would likely lead to increased costs and may increase the risk of the plaintiff pressuring the trustee to give in to inappropriate demands for trust distributions. Based on the plaintiff's past history, this risk should be minimised. In my view, having Ms Duke as trustee is the most appropriate way to do this. The addition of Mr Wright as a second trustee is appropriate, as Ms Duke may not always be available. No doubt she will explain to him the relevant circumstances of the trust.
180 As to the form of the trust, it was submitted on behalf of the plaintiff that it was appropriate to establish a discretionary trust which will nominate the plaintiff and his children as the primary beneficiary, with the general beneficiaries to include Krystyna and other relatives of the plaintiff. The form of the trust will give absolute discretion to the trustees to make distributions of income until the trust vests, and an absolute discretion as to who is to receive the corpus of the trust when it does.
181 A trust in this form, it was submitted, will address the apparent concerns of the deceased about the plaintiff's gambling addiction and inability to meet his finances. Further, it will enable the trust to purchase a suitable residence for the plaintiff and to invest the remainder of the trust fund to produce an income stream to augment the plaintiff's pension. In this way, the plaintiff will be deprived of any ability to squander the further provision which is to be the subject of the court's order.
182 On behalf of the defendant, it was submitted that a discretionary trust in the form proposed on behalf of the plaintiff would, in effect, be to provide for the plaintiff's relatives because they would be entitled to the remainder upon the plaintiff's death. As an alternative, it was proposed on behalf of the defendant that it would be appropriate for the trust to name Sally Lust and her relatives, other than the plaintiff, Krystyna and their children, as the remaining beneficiaries.
183 I reject the submissions of the defendant in this regard. In my view, a wise and just testator would have thought it proper that any provision which he made for the plaintiff would, in all the circumstances of the case, enure for the benefit of the plaintiff's wife and children. This is especially so in circumstances where, having regard to the generosity of the deceased towards Sally and her husband and children, they have been well provided for.
184 In the end, the purpose of making further provision is, in my view, to benefit the plaintiff. The fact that a trust is necessary in order to protect the plaintiff from himself ought not mean that the plaintiff's own moral responsibility to ensure that his wife and children are provided for on his death is taken away from him. In the ordinary course, absent a trust, the plaintiff would have freedom of testamentary disposition. I see no reason why this should be taken away from him by the establishment of a trust of the kind proposed by the defendant.
185 Finally on this issue, I note that, on the evidence, the plaintiff has a life expectancy of some 18 years. If he lives that long, it is not likely that there will be any significant fund left beyond his dwelling. Under the terms of the will, the flat was left to the plaintiff absolutely. There is no evidence of any intention on the part of the deceased to limit the capacity of the plaintiff to deal with the flat as he saw fit. A trust in the form proposed by the defendant would be inconsistent with the will which he has sought to maintain.
186 I will hear the parties as to the precise form of orders and as to costs.
[11] [1997] 2 VR 359 at 365.
[12] [1997] 2 VR 359 at 366.
[16] [1970] VicRp 29; [1970] VR 225 at 232.
[17] Collicoat v McMillan [1999] 3 VR 803 at [37] and [45] per Ormiston J; McKenzie v Topp [2004] VSC 90 at [15] per Nettle J.
[18] See, for example, In re Sinnott [1948] VicLawRp 48; [1948] VLR 279 at 280 per Fullager J.
[19] See, for example, Allan v Allan [2001] VSC 242 at [64]- [67] per McDonald J; Marshall v Spillane [2001] VSC 371 at [26] per Byrne J; Blair v Blair [2002] VSC 95 at [3]- [7] per Harper J; Collicoat v McMillan [1999] 3 VR 803 at [49] per Ormiston J.
[20] [1999] 3 VR 803 at [39]-[43].
[21] [1999] 3 VR 803 at [40].
[22] [1999] 3 VR 803 at [43].
[23] [2004] VSC 90 at [39].
[24] [1981] 2 NSWLR 532 at 540.
[25] [2004] VSC 90 at [45].
[26] See Ross v Ross [2002] VSC 544 at [74] per Ashley J; MacEwan Shaw v Shaw [2003] VSC 318 at [59]- [65] per Dodds-Streeton J.
[27] [2004] VSC 90 at [63].
[28] Administration and Probate Act 1958 (Vic), s. 96(2); Re Liston [1957] VicRp 5; [1957] VR 50; Re Wren [1970] VicRp 58; [1970] VR 449; Re Lawrence [1973] Qd R 201; Carroll v Cowburn [2003] NSWSC 248.