Plaintiff v Defendant

Ashhurst v Moss [2006] VSC 287; (2006) 14 VR 291

Barrot, Re [1953] VicLawRp 45; (1953) VLR 308

Borg v Hawke [2004] VSC 279

Day v Raudino [2009] VSC 463

Fyffe v Fyffe [2001] VSC 48

Groser v Equity Trustees Ltd [2007] VSC 27

Guskett, Re [1947] VicLawRp 28; (1947) VLR 212

Lauer (deceased), Le [1984] VicRp 14; [1984] VR 180

Leahy v Trescowthick [1999] VSC 409

Marland (deceased), In re [1957] VicRp 48; [1957] VR 338

Nassim (deceased), Re [1984] VicRp 5; [1984] VR 51

Valbe v Irlicht [2001] VSC 53

Walker v Walker [2004] VSC 94

1 The plaintiff, Ms Sheppard, applies under s 99 of the Administration and Probate Act 1958 ("the Act") for an extension of time to bring a testator family maintenance ("TFM") claim against the estate of her late father, Robert Digby Haliburton Smith Sheppard, deceased.

2 Her late father died in 2004 at the age of 93. He was survived by his former second wife, Mrs S M Sheppard and three daughters. His eldest daughter, Mrs Beverly Heathcote was a child of his first marriage and was born in 1937. His second and third daughters are children of his marriage to Mrs S M Sheppard: the plaintiff, who was born in 1952 and her sister, Mrs Diane MacDonald born in 1951. The defendant, the executor and trustee of Mr Sheppard's will and estate is the husband of Mrs Heathcote and the son in law of the deceased.

3 At the time of his death, Mr Sheppard lived with his former wife, Mrs S M Sheppard, in his home at 671 Orrong Road Toorak despite their divorce in 1960. She cared for him in his old age for many years until his death. Mr Sheppard made his last will on 1 October 1991. As mentioned above, he died on 3 June 2004. Probate of his will was granted to Mr Heathcote on 9 September 2004. Under his will, he left some $50,000 to his former wife and carer, Mrs S M Sheppard. He left the residuary of his estate to his three daughters equally.

4 Mr Heathcote as executor valued the estate at some $2,600,000. It included Mr Sheppard's home at 671 Orrong Road. On 15 October 2004, Mrs S M Sheppard brought a TFM application against the estate. Under Mr Sheppard's previous will she had been left a life interest in 671 Orrong Road. That provision was omitted from his 1991 will.

5 Mrs S M Sheppard's counsel in her TFM application considered that a litigation guardian should be appointed for Mrs S M Sheppard. Mr Hughes, a solicitor, was appointed litigation guardian by this Court. Proposed terms of settlement were entered into in June 2005. The plaintiff, who lived with her mother, did not consider the settlement adequate. Mr Hughes was replaced by Judge & Papaleo Pty Ltd, solicitors. In September 2005, the plaintiff applied to be joined as a defendant to her mother's TFM application. Eventually, on 21 July 2008, fresh terms of compromise were made between the estate and Mrs S M Sheppard's administrator. Under these terms, Mrs S M Sheppard was given a contractual right to live in 671 Orrong Road during her life and a fund of $215,000 was set aside to provide for her and maintain her home. On her death, the fund would remain part of the estate. Under these arrangements, no material money or property would form part of her estate.

6 The plaintiff opposed the terms of the compromise. The proposed compromise was approved by Vickery J on 14 August 2008. In his reasons, he said he was satisfied that the plaintiff was seeking to use those proceedings not for the benefit of her mother, but to enhance her own position in respect of the estate of her mother from which she ultimately expected to benefit.[1] Vickery J also ordered that the plaintiff be removed as a defendant.

7 In the mean time, in 2005, the plaintiff had taken proceedings against the estate claiming she was the beneficial owner of a flat at 5/821 Punt Road that was in her father's name and was included by Mr Heathcote as an asset of Mr Sheppard's estate. The plaintiff had lived at the flat and her son continued to live there. In June 2008, Harper J dismissed the plaintiff's claim. She had appeared for herself in the litigation and was ordered to pay costs on a solicitor and client basis.

8 In any event, in the month following Vickery J's approval of the compromise of Mrs S M Sheppard's TFM application, on 3 September 2008, the plaintiff issued this application and an application to restrain the sale of the Punt Road flat. On 31 March 2009, Kyrou J dismissed the plaintiff's application to restrain the sale of the Punt Road flat and ordered the plaintiff to pay the costs of the proceedings on a solicitor and client basis. The defendant as executor has now sold the flat.

9 Under s 99 of the Act, a TFM application is not be heard unless the application is made within six months of the date of the grant of probate. In this case, the six months expired in March 2005, some three and half years before the plaintiff made her application. Under s 99 the Court may, after hearing such of the parties affected as the Court thinks necessary, extend the time for making an application. However, in all such cases the application for extension shall be made before the final distribution of the estate. The plaintiff's two sisters are the parties affected by her application and have had notice of this application. The estate has not been finally distributed. There is no issue between the parties that the Court's discretion to grant the application for an extension of time has been enlivened by the application of the plaintiff.

10 The basis of the plaintiff's claim and the reason for her delay in applying are explained in her affidavit of 12 March 2009. She says that by reason of the provision made out of the estate for her mother, her father's estate has been depleted and her share "severely diminished" such that she is now a person in need of proper maintenance and support from her father's estate. Mr Cook, counsel for the plaintiff, argued that her share is now only some $75,000 after taking into account the costs orders against her arising out of the Punt Road proceedings and the application to restrain the sale of the Punt Road property. He arrives at that figure as follows. Mr Heathcote estimates the value of the estate as at 25 June 2009 as: assets $1,949,400 less liabilities of $252,457 making a net value of $1,696,925. Of this, Mr Cook says $800,000 is represented as the value of 671 Orrong Road subject to the remainder interest of Mrs S M Sheppard. He says this portion is not available for distribution until Mrs S M Sheppard dies. He says the amount currently available for distribution is approximately $750,000 which is $250,000 for each daughter. He says that the plaintiff owes $175,000 to the estate, so she will only receive $75,000.[2] This calculation, however, is made on the basis of valuing 671 Orrong Road subject to the right of Mrs S M Sheppard to live there for the balance of her life. The current unencumbered value of the 671 Orrong Road property is some $1,600,000.

11 The plaintiff further relies on her failure to obtain the Punt Road flat which she considered had been given to her by her father. Her other two sisters were also given property by their father before he died. The plaintiff alleges Diane was lent money interest free to buy a house. She says the non payment of interest has been of considerable value to Diane. The defendant informed the Court, however, that the estate may not seek to recover this alleged debt. The plaintiff alleges that Beverley was given a flat in Toorak Road. Evidence was led that Beverley transferred a flat in her father's name to herself and her father jointly using the enduring power of attorney she held. The plaintiff says that she finds herself in strained financial circumstances as she had presumed that her assets would include the Punt Road flat. The plaintiff says she has no assets other than her interest in her father's estate. She says she does not have a job and that she is occupied caring for her elderly mother. She says she is in receipt of a widow's pension of approximately $250 per fortnight and a carer's allowance of $90 per fortnight.

12 She has issues with the defendant's administration of the estate. In open Court her counsel made allegations on her behalf that the defendant had caused an enduring power of attorney given by Mr Sheppard to Beverley to be misused and had misappropriated property of Mr Sheppard's. These allegations were strongly denied by the defendant. In her affidavit of 31 August 2009 the plaintiff raises issues as to whether Mr Sheppard was mentally competent to make a valid will and even produces a psychiatrist's report which raises some arguments in support of that contention.

13 The defendant objects to the affidavits of Katy Ann Briggs, Marilyn Burdon, Elaine Margaret Hanneberry and Peter Kenneth Speer who express an opinion on Mr Sheppard's mental faculties. He also objects to the opinion of the psychiatrist, Carmelle Perisah. As it is, I have not taken this evidence into account.

14 Section 99 provides:

Time within which application may be made

No application shall be heard by the Court at the instance of a party claiming the benefit of this Part unless the application is made within six months after the date of the grant of probate of the will or of letters of administration (as the case may be):

Provided that the time for making an application may be extended for a further period by the Court after hearing such of the parties affected as the Court thinks necessary, and this power shall extend to cases where the time for applying has already expired but in all such cases the application for extension shall be made before the final distribution of the estate and no distribution of any part of the estate made prior to the application shall be disturbed by reason of the application or of any order made thereon.

15 The authorities on section 99 and its predecessor make several points clear:[3]

(a) The Court has a discretion under s 99 to extend the time in which the plaintiff may make a TFM application.

(b) There are no statutory criteria that must be taken into account.

(c) The plaintiff is seeking an indulgence from the statutory time limit and thus the onus is on the plaintiff to show reason for the exercise of the discretion to extend time.

(d) The plaintiff should satisfy the court that it would be unjust to penalise the plaintiff for being out of time.[4]

(e) The discretion to extend time will not be exercised if the plaintiff's TFM case is hopeless. The strength of her case is a relevant consideration.

(f) The reason for any delay in making the application is a relevant consideration.

(g) Prejudice to other interested parties is a weighty factor.

16 In my view, if the plaintiff has a prima facie case, it is relevant to consider whether or not the prejudice caused to others by the delay in making the application or her other actions and omissions no longer make it unjust for her to be penalised for being out of time. In Re Guskett[5] Herring CJ said:

Every case will have to be dealt with on its own facts, but it would seem necessary for the applicant to satisfy the Court that the circumstances are such as to make it unjust for him to be penalised for being out of time.

17 In Ansett v Moss[6] the Court of Appeal considered the relevance of the applicant's delay in making an application and his alleged ignorance of his right to claim for relief. The applicant was the son of Sir Reginald Ansett and a solicitor. He sought an extension of time to make a claim against his father's estate 24 years after his father's death. The trial judge had dismissed the application for an extension of time. He accepted that if the son satisfied him that he failed to apply for relief under Part IV of the Act in time because he was ignorant of his right to claim relief, it would be unjust to penalise him for delay in instituting proceedings. The trial judge held that the son had not discharged this burden. Buchanan JA, with whom Redlich JA and Cavanough AJA agreed, said the discretion conferred by s 99 should not be confined by any rigid rules. Accordingly, he said, there is no requirement in every case, that delay be satisfactorily explained.[7] He said:

I doubt that there is an onus upon an applicant to prove ignorance of an ability to claim upon the estate of a deceased. Rather, ignorance is a relevant factor, the weight of which will vary according to all the circumstances.[8]

Redlich JA, with whom Cavanough AJA agreed, added that the absence of a satisfactory explanation will in some circumstances be decisive but in others it will not.

18 The defendant submits that the plaintiff's case is hopeless. He also contends that the plaintiff is motivated by a desire to use the proceedings to challenge the mental capacity of Mr Sheppard to make his will and by a desire to challenge the defendant's conduct during the time his wife had an enduring power of attorney and his actions as executor. The defendant also says that the existing beneficiaries have been prejudiced in the circumstances which have happened. He submits that the usual procedure on TFM applications is for affected parties to be notified. They may then apply to be joined as the defendant was in this case. He contends that under s 97 of the Administration and Probate Act 1958 the Court is to specify the manner in which the provision (that is the provision where adequate provision has not been made) shall be raised or be paid out of some of the estate of the deceased and, if so, what part or parts of the estate. He argues that in this case it was open to the plaintiff to be joined to her mother's application and to seek an order that any further provision for her mother not come out of her part of the estate or some other such order that suited her interests. He goes further and says that if the plaintiff was concerned that by reason of the diminution in the estate to meet her mother's claim she felt that adequate provision was no longer made for her, then it was incumbent on her to raise that issue in her mother's proceedings. Mr Heathcote contends that her failure to do so is akin to an Anshun estoppel and that it would be unfair to permit her to raise a TFM claim which should have been dealt with at the same time as her mother's application.

19 The evidence establishes that the plaintiff was well aware of her right to bring a TFM application. There is no dispute about that issue. She was a defendant to her mother's application. No evidence was led by her to suggest that her solicitors did not inform her that she could make submissions as to the part of the estate that any further provision for her mother should be paid from. Nor was any evidence led to suggest that she was not aware that she could have brought a concurrent TFM application to be dealt with at the same time as her mother's.

20 The defendant says that the plaintiff did not bring her application until after she became aware that she would not be getting indirectly any part of her father's estate through the compromise in favour of her mother. Although the plaintiff did not become aware that she was not going to receive the Punt Road flat until June 2008, the defendant contends that the plaintiff was well aware that her claim to the Punt Road flat was disputed by the estate and that she must have been aware when she was made a party to her mother's TFM application that there was a risk that she would not succeed in having the flat transferred to her.

21 The plaintiff contends that she was not represented during the hearing over the Punt Road flat in June 2008, nor at the hearing before Vickery J on 13 and 14 August 2008. She says she was not legally represented in the period May to September 2008 and that she was unsure of her legal rights during that period.

22 The defendant contends that the plaintiff's sisters must have been prejudiced by the plaintiff's delay in bringing her TFM application and by the plaintiff's failure to raise her claims in her mother's application. Neither Diane nor Beverley filed an affidavit. There is no evidence of any actual prejudice. At its highest, it seems to me, the prejudice suffered is the extra expense the estate must incur in meeting a TFM claim by the plaintiff, when if she had taken advantage of the legal claims open to her, that claim could have been resolved for less expense and at the same time as her mother's. It is well established that prejudice does not include the possibility that further provision may be made under Part IV. The defendant says that the reason the plaintiff made her application, the month after her mother's TFM application was resolved, was due to the fact that the plaintiff did not indirectly profit by that application as she had expected. That may be so. The plaintiff does not rely on this factor in her application for an extension of time. Rather, she relies on the diminished size of the estate, the loss of the flat and her position with no assets living on a pension.

23 In deciding whether or not to grant her application, I believe that relevant matters in my discretion include:

(a) Has the plaintiff met the onus on her of establishing a reason for granting the extension?

(b) That is, has the plaintiff a prima facie case for further maintenance and support?

(c) If yes, does the prejudice caused by the plaintiff's delay and her other actions and omissions outweigh the prejudice to the plaintiff in not being able to make this claim for further provision from the estate?

24 The plaintiff's case, although not strong, is not hopeless. The defendant contends that in determining whether the distribution of the estate made adequate provision for the proper maintenance and support of the person, the Court must have regard to the financial needs of the applicant at the time of the testator's death. The defendant contends that despite s 91(4)(h) of the Act, the Court can only look at the position at the time of the testator's death. He submits that if the Court decides that adequate provision was not made, then its discretion is enlivened and the Court can then take into account the financial position of the applicant at the time of the hearing. The defendant argues that the changed financial circumstances of the plaintiff since her father died are irrelevant to the question of whether the Court's jurisdiction is enlivened.

25 Assuming without deciding that that is the case, at the date of her father's death the plaintiff was still in a position that she owned no home, unlike her sisters, and was to be deprived of her then use of the Punt Road flat. Also at the date of her father's death, she was a widow of 52 years of age, with no occupation and no source of income, save a pension. The estate had a value at that time of about $2.6m. Her share would have been about $867,000. That might not be considered to be a large sum for somebody with no home of her own, in view of the size of her father's estate and the other benefits received by her sisters. In my opinion, it is not inconceivable that the Court's discretion to make further provision might be enlivened under s 91 of the Act. On this view, the fact that her motive for bringing the application is her current financial predicament does not detract from my finding that she has a prima facie case, even on the basis submitted by the defendant.

26 The defendant asserts that it is also relevant to take into account that her present financial position is some of her own doing. However, on his own argument, her current financial position does not go to whether her claim is hopeless. On the other hand, her present financial position may be a relevant factor for the court to consider if its jurisdiction is enlivened. The defendant argues that the plaintiff is seeking to use these proceedings for ulterior purposes, in particular to challenge the validity of the will and the actions of Beverly as the attorney of Mr Sheppard and Mr Heathcote as the executor of the estate. I accept that these are not irrelevant considerations.

27 I accept that the plaintiff has not adequately explained why she did not raise her claims as a defendant in her mother's application or in her own TFM proceedings brought at the same time. At that time she was aware of the impact of the provision made for her mother on the estate. She was aware of the size of the estate. She was aware that her claim to the Punt Road flat was resisted. She was in a similar financial position to the one she is in now.

28 I accept that as the defendant suggests, her TFM application may have been prompted by her knowledge that she would not receive more of her father's estate through her mother. That issue, however, does not go to prejudice or whether her case is hopeless.

29 I do not understand the defendant to be saying that if the plaintiff is motivated by her current financial position in making an application she is thereby not entitled to an extension of time. Rather, I understand the defendant to be submitting that in considering whether or not she has a prima facie case (or in deciding whether her case is not hopeless) the Court should look at her financial position at the date of the testator's death. I have carried out such an analysis and formed the view that she has a prima facie case or, if that not be the test, that her case is not hopeless.

30 After taking all these matters into account including her delay in making the application, I am satisfied that it would be unjust for her to be penalised for being out of time in making a claim that is not hopeless in light of the financial position she now finds herself in and after having due regard to the prejudice she has otherwise caused or will cause to her sisters.

31 For all the reasons set out above, in my discretion I allow the application and will extend the time accordingly. I will hear the parties on the form of the order and costs.

[3] Re Guskett [1947] VicLawRp 28; (1947) VLR 212; Re Barrot [1953] VicLawRp 45; (1953) VLR 308; In re Marland (deceased) [1957] VicRp 48; [1957] VR 338; Amos v Amos [1966] VicRp 61; [1966] VR 442; Re Lauer (deceased) [1984] VicRp 14; [1984] VR 180; Re Nassim (deceased) [1984] VicRp 5; [1984] VR 51; Leahy v Trescowthick [1999] VSC 409; Fyffe v Fyffe [2001] VSC 48; Valbe v Irlicht [2001] VSC 53; Walker v Walker [2004] VSC 94; Borg v Hawke [2004] VSC 279; Ashhurst v Moss [2006] VSC 287; (2006) 14 VR 291; Groser v Equity Trustees Ltd [2007] VSC 27; Ansett v Moss [2007] VSC 92; Ansett v Moss [2007] VSCA 161; Ansett v Moss [2008] VSC 277 and Day v Raudino [2009] VSC 463.

[4] Re Guskett [1947] VicLawRp 28; (1947) VLR 212 at 214 per Herring CJ.

[6] [2007] VSCA 161.