Plaintiff v Defendant

2 By her last will, made on 23 October 2003, the deceased appointed her youngest child, the defendant, as executrix, and left her entire estate to the defendant.

3 Probate of the will was granted to the defendant on 18 May 2006. Therefore, under s 99 of the Act, the time for making a Part IV application expired six months later, in November 2006.

4 The originating motion in this proceeding was filed on 23 March 2009. It seeks an extension of time under s 99, as well as substantive relief under Part IV of the Act.

5 In support of the extension application, the plaintiff has sworn two affidavits, dated 24 March and 5 August 2009, respectively. He also relies upon the affidavits of his partner, Ms Ann Gleeson, sworn 17 April 2009, his general practitioner, Dr Anil Lal, sworn 19 June 2009, and his solicitor, Mr Andrew O'Bryan, sworn 5 August 2009. The defendant has sworn an affidavit dated 31 July 2009, and also relies upon the affidavit of her father, Ernest Marriott, sworn on the same day.

6 An applicant must make out a case to justify the granting of the indulgence sought, namely the extension of time. The court's discretion in this regard is broad and unfettered by any "rigid rules"[1], but must be exercised judicially.

Whether the estate has been finally distributed

7 Section 99 of the Act permits the court to extend the time for bringing an application for further provision, but no extension application can be made after the final distribution of the estate.

8 In this case, there is a dispute as to whether the estate had been finally distributed before the extension application was made. For the purposes of s 99, an application is made when the originating process is issued, not when the application is heard. Were the position otherwise, an executor in the position of the defendant could defeat an extension application simply by distributing the estate whilst the extension application was waiting to be heard.

9 The inventory filed with the application for probate valued the total estate at approximately $475,000, comprising an interest in two pieces of real property, and amounts payable in respect of a life insurance policy and bank accounts.

10 It is not entirely clear from the defendant's evidence just how much of the estate has in fact been distributed. Although paragraph 12 of her affidavit states that she has distributed or transferred the estate's half interest in a unit in Coolangatta, and the bank and insurance monies, the paragraph then goes on to suggest that the monies, at least, are still being held in the estate name for revenue purposes, and will not be transferred into the defendant's name for three years. If, in fact, any of these assets are still being held in the estate name, it is not apparent to me in what sense they are said to have been "distributed" to the defendant. No doubt the extent of any such distribution will need to be considered further in the Part IV proceeding.

11 What is clear is that a unit in High St, Cranbourne was still in the name of the defendant in her capacity as executrix when the extension application was made. Earlier this year, the defendant executed the documents necessary to have the Cranbourne unit transferred into her personal name, and sought to have the transfer registered, as she was entitled to do. Her attempt at that time was thwarted by the plaintiff having lodged a caveat against the title. The caveat subsequently lapsed. However, the plaintiff issued this proceeding prior to the registration of the defendant's transmission application on 4 April 2009. Therefore, at the least, the Cranbourne unit had not been distributed at the time the extension application was made. I am therefore satisfied that the estate had not been fully distributed at the time when the extension application was made.

12 The total delay in this case was from mid-November 2006 (being the end of the six month period) to 23 March 2009, a period of 2 years 4 months.

13 Ignorance of the right to claim under Part IV has been accepted as a reasonable excuse for delay.[2] There is no onus on an applicant to prove ignorance of the ability to claim upon the estate. Rather, ignorance is a relevant factor, the weight of which will vary according to all the circumstances.[3]

14 As mentioned earlier, the deceased died on Christmas Eve 2005. Although the defendant repeatedly asserts in her affidavit that the plaintiff always knew that he would be getting nothing under their mother's will, she provides no basis for that assertion (for example, by referring to earlier conversations or communications to that effect). The plaintiff says, and I accept, that he first learned that his mother had left him nothing in her will at a meeting of the four siblings in April or May 2007.

15 It is clear that the plaintiff has been suffering from depression and alcohol abuse on and off over a number of years, particularly since the breakdown of his marriage in late 2002 and the death a few years later of his closest friend. I accept that his mental state probably played some role in his passivity in relation to inquiring into whether there was any possibility of challenging his mother's will.

16 I accept that the plaintiff was not aware of the possibility that he could bring a Part IV claim until a conversation with his partner in about June 2008, after she learned from the internet of the possibility of challenging the will.

17 Attempts by her to obtain a copy of the probate file from the Prothonotary's Office were delayed by a flood which damaged many documents held by the court, including probate records. The probate records were not available for collection until the end of December 2008, and the plaintiff's current solicitors were consulted in January 2009. This proceeding was commenced some two months later.

18 In the circumstances, I conclude that the delay is relatively short and has been fully and adequately explained. The plaintiff acted relatively promptly once he became aware of his rights.

19 I turn to consider the question of the merits of the plaintiff's case. In Ansett v Moss Buchanan JA said at [11]:

The strength of an applicant's claim for relief is a relevant factor to be considered, together with other factors, in an application to extend the time for applying for further provision to be made from the estate of a deceased person. The trial judge in this case, however, used this factor to determine the application. That required a high threshold to be met, namely that the appellant's case was hopeless.

20 In considering the merits, the court must have regard to the criteria set out in s 91(4) of the Act. The following matters are of particular relevance here:

Size of the estate (s 91(4)(g))

1"> 21 The value of the total estate was approximately $475,000. The Cranbourne unit has recently been valued at $205,000.

22 As mentioned earlier, it is not clear how much of the estate has in fact been distributed into the defendant's personal name, and how much is still held by her in her capacity as executrix.

23 The affidavits of the defendant and her father assert that the Cranbourne unit was in fact held by the deceased under some sort of express or constructive trust for the benefit of the defendant, and does not form part of the estate. However, that is directly contrary to the position asserted by the defendant in the inventory of estate assets. In the inventory, the accuracy of which was verified on oath, the defendant listed the Cranbourne unit as an estate asset, without any suggestion that the property was subject to some sort of constructive or other trust. The defendant has offered no satisfactory explanation for what appears to be a total change of position. No doubt that is a matter which can be explored fully at a later stage, if need be, but, for present purposes, I proceed on the basis that the Cranbourne unit forms part of the deceased's estate.

Relationship with the deceased and contributions to her estate and welfare (s 91(4)(e) and (k))

1"> 24 The deceased had four children, by two different marriages. The plaintiff, his sister Christine, and his brother David, are the children of the deceased's first marriage to Robert Menzies, which lasted until around 1969.

25 A few years later, the deceased married Ernest "Skip" Marriott. They had only one child, the defendant, who was born around 1976.

26 The plaintiff's affidavits depose to the history of his relationship with his mother, including those periods when he was living with her in childhood and adulthood. He also deposes to the nature and frequency of his ongoing contact with his mother, when he was living interstate or away from Melbourne.

27 As is common in proceedings such as these, the defendant challenges the closeness of her step-brother's relationship with their mother, particularly in the end stages of her life.

28 It is not possible to make any definitive findings as to such matters, without the opportunity to test each side's assertions through the provision of discovery of documents and cross-examination. But I am satisfied, for the purposes of the extension application, that the plaintiff maintained a loving relationship and a degree of regular contact with his mother throughout his life.

29 Finally, there is no suggestion that the plaintiff contributed to the building of the deceased's estate.

Issues of financial obligation and responsibility (s 91(4)(f) and (m))

1"> 30 The plaintiff moved back home with his mother and her husband after his marriage broke down in late 2002, and stayed with them for about 8 months. He apparently stayed or lived with them on subsequent occasions as well.

31 The precise details, including financial details, are not clear and are disputed. But, it seems that the deceased lent or gave the plaintiff money or provided other material support, from time during his adult life, particularly after his marriage broke down.

32 As with so many of the factual disputes in this case, it is not necessary or desirable for me to make any more specific findings for the purposes of this application.

Plaintiff's age, health, employment and earning capacity (s 91(4)(h), (i) and (j))

1"> 33 The plaintiff is 54 years old, unemployed and an undischarged bankrupt.

34 I have already mentioned the issues of depression and alcohol abuse, which have affected and may continue to affect his earning capacity.

35 He currently receives social security benefits of $330 per fortnight. His domestic partner, Ms Gleeson, receives social security benefits of $440 per fortnight.

36 The plaintiff does not own a car or any real property. He has about $6,000 in superannuation. His partner has no superannuation and owes about $30,000 in various debts.

37 Although originally trained as a motor mechanic, the plaintiff has not worked as such for a number of years. His primary employment has been in marketing. There is a factual dispute as to the amount of income which the plaintiff used to earn in his marketing days, but it is unnecessary for me to resolve that for present purposes.

38 Nor is it necessary to resolve any dispute as to just how much the plaintiff received by way of property settlement after his marriage broke down in late 2002, or for what purpose it was used or intended to be used.

39 It is common ground that a gift card marketing business which the plaintiff set up in early 2005 failed, leaving him with the debts which ultimately led to his current bankruptcy. There are competing explanations for the failure of the business.

40 Based on the above material, it would have to be said that the plaintiff would have good prospects of establishing financial need.

Other sources of support (s 91(4)(n))

1"> 41 The plaintiff is unmarried, but has been living in a de facto relationship for about 2 years. His partner's financial position is discussed above. It appears that she is probably paying more of the couple's bills, in what must be a fairly frugal existence.

42 There does not appear to be any other person who would have an obligation to support the plaintiff.

The financial resources of any other applicant or beneficiary (s 91(4)(h))

1"> 43 Neither of the parties' two other siblings has made an application under Part IV, or indicated any intention to do so.

44 The defendant, as sole beneficiary, has not yet gone on oath as to her financial position. Such evidence as there is before me suggests that she is in a much stronger financial position than the plaintiff.

Other relevant matters (s 91(4)(p))

1"> 45 The fact that the plaintiff is an undischarged bankrupt needs to be considered.

46 The right to apply for relief under Part IV is personal, and does not vest in a person's trustee in bankruptcy.[4] That means that the plaintiff, not his trustee in bankruptcy, is the appropriate party to bring the proceedings. However if, whilst he remains an undischarged bankrupt, the plaintiff receives money or other property through Part IV proceedings, either by way of judgment or a settlement sum, such property will be available to the trustee for distribution to creditors.

47 In Collicoat v McMillan[5], Ormiston J considered an application for provision under Part IV. His Honour held that in deciding whether to make provision for a bankrupt applicant, the court should have regard to whether, once the creditors are paid out, there would be something left over for the benefit of the applicant.[6] In the exercise of the court's discretion, an order for provision should generally not be made if it would not in fact benefit the applicant, but would only benefit his or her creditors.

48 The plaintiff deposes that he believes the value of his provable debts to be less than $100,000. On the other hand, his solicitor deposes that they are in excess of $100,000. Whatever the precise amount, there is evidence that the trustee has agreed that if the plaintiff succeeds in recovering the full value of the Cranbourne unit, the trustee would accept:

(a) $50,000 in full discharge of the plaintiff's bankruptcy, if the parties' total legal costs are between $70,000 and $90,000; or

(b) $70,000 in full discharge of the plaintiff's bankruptcy, if the legal costs are between $50,000 and $70,000.

49 No doubt the precise terms of such an agreement would need to be documented in a binding form before the hearing of the Part IV application.

50 The plaintiff's solicitor has deposed to his considerable experience in proceedings under Part IV. No contrary evidence has been led. In his opinion, the sorts of costs figures mentioned above would be within the usual range of costs for a proceeding such as this. Of course, the precise amount of costs cannot yet be known and may end up being more or less than those estimates.

51 It is also too soon to say what proportion (if any) of the Cranbourne unit (and any other undistributed property) the plaintiff might ultimately receive by way of further provision out of the estate. But, on the evidence presently before the court, it cannot be said that an application by the plaintiff under Part IV would necessarily fail on the ground that the plaintiff would receive no real or substantial benefit because of his bankruptcy.

52 Finally, I turn to consider the question of prejudice to beneficiaries. Because the entire estate was left to the defendant, and there has been no other claim for provision under the Act, this is not a case where the burden of a late claim might fall unfairly on only some beneficiaries.

53 The defendant argues that it would be unfair for provision to be made in respect of the Cranbourne unit, because she has treated it as her own since her mother's death, by receiving the rental income and making payments for repairs and maintenance. But those are matters that ought to be capable of calculation and adjustment, depending on whether she has paid out more or less than she has received by way of rent, and depending on the ultimate outcome of the Part IV proceeding. I do not regard this as prejudice which is irreversible or otherwise sufficient to defeat the present application.

(b) The delay is relatively short and has been explained by ignorance of rights.

(c) The plaintiff acted reasonably promptly once he became aware of his rights;

(d) Whilst I would certainly not describe the plaintiff's case as particularly strong on the material before me, it is certainly not hopeless; and

(e) There is no prejudice to the residuary beneficiary.

55 In the circumstances, I am satisfied that the plaintiff's application for an extension of time should succeed.

[1] Ansett v Moss [2007] VSCA 161 at [6] per Buchanan JA.

[2] Re McPhail [1971] VicRp 65; [1971] VR 534; Valbe v Irlicht [2001] VSC 53, see particularly [69]; and Ansett v Moss, op cit.

[3] Ansett v Moss , op cit at [6].

[4] Coffey v Bennett [1961] VicRp 41; [1961] VR 264; McLeod v Johns [1981] 1 NSWLR 347.

[5] [1999] 3 VR 803.