Plaintiff v Defendant

2 The plaintiff is the deceased's second husband. At the date of the deceased's death, the plaintiff and the deceased had been married for some 28 years.

3 Probate of the deceased's will dated 24 November 2012 was granted to her daughter, the defendant, on 28 May 2018.

4 At the date of her death, the plaintiff and the deceased owned a property in East Boundary Road, Bentleigh East ('the Boundary Road property') as tenants in common in equal shares. The deceased's interest in the Boundary Road property is the sole asset in her estate.

5 Pursuant to the deceased's will, the plaintiff was devised a life interest in the deceased's half share of the Boundary Road property. That interest was to be held on trust for his use and occupation during his life, with him to pay all rates, taxes and outgoings. Upon the plaintiff's death, the deceased's interest in the Boundary Road property will form part of the residuary estate, which is to be distributed in equal shares to the deceased's four remaining children and her grandson, Tasou Pappas, the child of the son who predeceased her. One of the deceased's daughters also predeceased the deceased. That daughter was survived by her two children and they will receive their mother's entitlement in the estate.

6 The Boundary Road property is valued between $780,000 and $900,000, making the value of the estate's interest in the property between $390,000 and $450,000.

7 By originating motion filed 26 November 2018, the plaintiff seeks, pursuant to Part IV of the Administration and Probate Act 1958 ('the Act'), further provision from the estate. At trial, it was submitted that appropriate further provision would consist of:

(a) a transfer of between 10 and 20 per cent of the deceased's interest in the Boundary Road property absolutely, and an extended portable life interest in the deceased's remaining interest in the Boundary Road property. This would mean that the plaintiff would hold between 55 and 60 per cent of the Boundary Road property, with the estate holding the remaining 40 to 45 per cent;

(b) alternatively, an extended portable life interest in the deceased's interest in the Boundary Road property.

8 The defendant's position is that the deceased's moral duty to the plaintiff was discharged by the provision she made for him in her will, and that no further provision should be made to the plaintiff. The defendant also submitted that, at the time of simultaneously making their wills, the deceased and the plaintiff intended that their respective children would share in their respective estates upon their deaths.

9 The plaintiff was born on 26 December 1930 and is now aged almost 89 years. In 1973, the plaintiff and his first wife purchased the Boundary Road property. The plaintiff's first wife died in 1979. A mortgage over the Boundary Road property was discharged in 1980.

10 Although the plaintiff's first wife died in 1979, the plaintiff only became the sole registered proprietor of the Boundary Road property in 1996. In 1990, the plaintiff and the deceased married, having been engaged for about a year.

11 In 2012, the plaintiff and the deceased attended on Mr Thomas Koutsoupias, solicitor, for the purpose of making their wills. At the same time, Mr Koutsoupias prepared a transfer of the Boundary Road property from the plaintiff's name into the names of both the plaintiff and the deceased, as tenants in common in equal shares, without any financial consideration. The objective evidence is that the plaintiff brought the unencumbered Boundary Road property into the relationship. The plaintiff's evidence was that at the time of the transfer of the Boundary Road property, Mr Koutsoupias did not advise him of the consequences of the transfer of the Boundary Road property.

12 Throughout their marriage the plaintiff and the deceased lived in the Boundary Road property. Since the deceased's death, the plaintiff has continued to reside there.

13 Pursuant to s 91(2) of the Act, the Court must not make a family provision order under s 91(1) unless it is satisfied that:

(a) an applicant is an eligible person;

(b) in the case of certain types of 'eligible persons', that the person was wholly or partly dependant on the deceased for their proper maintenance and support;

(c) at the time of death, the deceased had a moral duty to provide for the eligible person's proper maintenance and support; and

(d) the distribution of the deceased's estate fails to make adequate provision for the proper maintenance and support of the eligible person.

14 In making a family provision order, s 91A(1) provides that the Court must have regard to:

(a) the deceased's will, if any;

(b) any evidence of the deceased's reasons for making the dispositions in the will; and

(c) any other evidence of the deceased's intentions in relation to providing for the eligible person.

15 Section 91A(2) of the Act provides that the Court may also take into account:

(a) the nature of the relationship between the deceased and the eligible person, including, if relevant, the nature and length of the relationship;

(b) any obligations or responsibilities of the deceased to the eligible person, any other eligible persons, and the estate's beneficiaries;

(c) the size and nature of the estate;

(d) the current and foreseeable future financial resources, including earning capacity and financial needs, of the eligible person, any other eligible persons and any beneficiary;

(e) any physical, mental or intellectual disability of any eligible person or any beneficiary;

(f) the age of the eligible person;

(g) any contribution of the eligible person, otherwise than for adequate consideration, to building up the estate or to the welfare of the deceased or the deceased's family;

(h) any previous benefits provided to the eligible person or any beneficiary;

(i) whether the eligible person was being wholly or partly maintained by the deceased, and if so, the extent and basis of such maintenance;

(j) the liability of any other person to maintain the eligible person;

(k) the character and conduct of the eligible person or any other person;

(l) the effect that a family provision order would have on the amounts received from the deceased's estate by other beneficiaries; and

(m) any other matter the Court considers relevant.

16 Pursuant to ss 91(4)(a) and (b) of the Act, in determining the quantum of any provision, the Court must take into account the degree to which, at the time of death, the deceased had a moral duty to provide for an applicant, and the degree to which the distribution of the estate fails to make adequate provision for the proper maintenance and support of an applicant.

17 In relation to all claims, pursuant to s 91(5)(a) of the Act, the amount of provision must not provide for an amount greater than is necessary for an applicant's proper maintenance and support.

18 The moral duty of a deceased to provide for their spouse's proper maintenance and support, expressed as a broad general rule, is to provide the security of an appropriate home in which to live, a secure income and a fund to meet unforeseen contingencies, with an entitlement to independence, self-respect and autonomy.[1] As with all general rules, each proceeding ultimately rests upon statutory inquiry of the facts and circumstances, and involves consideration of the applicant's station in life, age, sex, health and financial resources, the size and nature of the estate, the totality of the relationship between the applicant and the testator, and the relationship between the testator and other persons who have legitimate claims upon his or her bounty.

19 The determination of what provision should be made for the plaintiff, in light of all the relevant circumstances, must be answered by reference to a wise and just testator. The Court must place itself in the position of such a testator and consider what he or she ought to have done in all the circumstances of the case.[2] The Court must be mindful to interfere with the terms of a will only where a testator has failed in his or her moral duty.[3]

20 In determining the extent of any provision, the Court must have regard to the relative concepts of 'adequate' and 'proper,' which are assessed by reference to the Court's inherent knowledge and inquiry into current social conditions and standards.[4] In this context, it is paramount that an applicant demonstrate need in order to be successful in his or her claim; mere proof of a moral claim is not in itself adequate.[5] However, an applicant is not required to show that his or her circumstances are destitute and, as such, the need is 'not restricted to the requirements of basic necessity or sustenance.'[6] The Court must not allow an amount that is greater than is necessary for an applicant's proper maintenance and support. The nature and content of what is adequate provision is a flexible concept, adapted to conform to acceptable community standards, and involves a broad evaluative judgment not constrained by preconceptions and predispositions.[7] Other relevant constraints or limiting factors may be that further provision should be made only if, and to the extent that, it is necessary to alter the will to make adequate provision for an applicant's proper maintenance and support,[8] or that any further provision must be limited by balancing the needs of an applicant against the proper claims that a testator recognised needed to be satisfied out of his or her testamentary bounty.

21 Where there are competing claims, the Court's enquiry necessarily involves a balancing exercise between the claims of other beneficiaries, the needs of an applicant and the size of the estate.[9] The appropriateness of proposed solutions, and indeed whether there is in fact an obligation to provide a home for an applicant, depends on all the facts and circumstances of the case, including the moral obligation owed by the testator to an applicant for provision. It is often said that the obligation of a deceased is to ensure a surviving spouse has a roof over his or her head. That roof has been provided either by matrimonial homes being awarded absolutely, sufficient funds to purchase another suitable residence, a life interest in a property or even a mere right of occupancy.[10]

22 The assessment as to whether the testator failed to make adequate provision for an applicant's maintenance and support is determined by reference to matters that were known, ought to have been known, or were reasonably foreseeable to the deceased at the time of his or her death.[11] The assessment as to what provision the court should make is determined at the date of the trial, taking into account the plaintiff's circumstances at that time.[12] The plaintiff bears the onus of proving the extent of any provision that should be granted.[13]

Factors that must be taken into account in making a family provision order: s 91A(1) of the Act

23 The provisions of the deceased's will are summarised above. Absent the terms of the will, there is no other evidence of the deceased's reasons for making the dispositions in her will or her instructions in relation to provision for the plaintiff. The terms of the deceased's will clearly indicate that she intended to provide for both the plaintiff and her own children, the children's interests postponed until after the plaintiff's death.

Factors that may be taken into account in making a family provision order: s 91A(2) of the Act

(a) the nature of the relationship, including the length of the relationship

24 The plaintiff is the deceased's husband. At the time of the deceased's death, they were married for approximately 28 years.

(b) any obligations or responsibilities of the deceased to the eligible person, any other eligible person and the beneficiaries

25 The deceased had a moral responsibility to provide for the plaintiff. The remaining beneficiaries are the deceased's children of a previous marriage, to whom she also had a moral responsibility, and her grandchildren.

26 The estate comprises the deceased's half interest in the Boundary Road property, valued at between $390,000 and $450,000.

(d) the current and future financial resources, earning capacity and financial needs of the eligible person and any beneficiary

27 The plaintiff owns the remaining half of the Boundary Road property. At the commencement of this proceeding the plaintiff had savings of approximately $47,000. At trial, this amount had been reduced to approximately $29,000. The principle reason for this was that since the deceased's death, the plaintiff paid for the deceased's funeral, headstone and a medical bill, the total of which amounted to $16,998.58.

28 The plaintiff lives frugally. He receives the aged pension of approximately $450 per week. This is spent on his basic living expenses. Pursuant to the will, the plaintiff also pays for the rates, taxes and outgoings in respect of the Boundary Road property. The rates for the 2019 financial year were $1,347.20. The plaintiff relies on his two children for further financial support.

29 At trial, the defendant suggested that the Boundary Road property was in reasonable condition, however, she was speaking of the condition of the property a long time ago. The plaintiff's evidence was to the contrary, speaking of its current condition. His evidence, which is accepted, detailed the poor condition of the dwelling on the Boundary Road property, which has had little or no maintenance done on it over the past 28 years. The plaintiff has minimal funds and is not able to pay for basic and necessary renovations and improvements, such as fixing an air conditioning system, fixing doors and windows, installing new blinds, and painting the house.

30 The defendant and her brother, Terry Pappas, co-own a house in Toogoom, Queensland, which they stated was valued at $320,000. The defendant receives the age pension. Terry Pappas receives the disability pension. The other brother, George Pappas, has a one-third interest in a property in Tarneit, which interest is valued at approximately $180,000. He receives the New Start Allowance. The deceased's three grandchildren all work, however, no evidence was adduced as to their financial circumstances.

(e) any physical, mental or intellectual disability of any eligible person or any beneficiary

31 The plaintiff is elderly and frail. In 2012, he was diagnosed with cancer. Recently he suffered a minor stroke. He wears an ileostomy bag. He otherwise currently enjoys reasonably good health for a person of his age.

32 The physical health of the residuary beneficiaries was not disclosed, save that at trial George Pappas mentioned that he had suffered a stroke. Mr Pappas did not produce any medical evidence to support his prognosis.

33 The plaintiff was born on 26 December 1930 and is now aged almost 89 years.

(g) any contributions of the eligible person, otherwise than for adequate consideration, to building up the estate or to the welfare of the deceased or the deceased's family

34 At the time of their marriage, the plaintiff was the owner of the unencumbered Boundary Road property. In 2012, he transferred half of his interest in the property to the deceased, without any financial consideration. Although the defendant suggested that this was not the case, alleging that the deceased contributed funds, it was apparent from the evidence that the deceased would not have had the necessary funds to pay any consideration at the time. The Court accepts the plaintiff's evidence that the transfer was made without any financial contribution by the deceased.

35 The plaintiff paid for the deceased's funeral, headstone and a medical bill, collectively amounting to $16,998.58. These amounts were paid from his own funds and are expenses that would ordinarily have been paid from the estate. In view of the size of the estate and the plaintiff's limited financial means, these payments represent a significant contribution.

(h) any previous benefits to the eligible person or any beneficiary

36 The plaintiff was not aware of the deceased having any assets at the time of their marriage. After the deceased's death, the plaintiff discovered a passbook account in the joint names of the plaintiff and the deceased. The plaintiff was not previously aware of this account. The passbook indicates that the funds in this account were expended by 2007. The funds were not expended by the plaintiff, and he has no knowledge of who did spend the funds.

(i) whether the eligible person was being wholly or partly maintained by the deceased, and if so, the extent and basis of such maintenance

37 At the time of the deceased's death, the plaintiff and the deceased were living together at the Boundary Road property and they pooled their pension incomes to fund their living expenses.

(j) the liability of any other person to maintain the eligible person

38 There is no other person liable to maintain the plaintiff.

(k) the character and conduct of the eligible person or any other person

39 There is no evidence of any conduct that reflects adversely on the character and conduct of the plaintiff or the residuary beneficiaries.

(l) the effect that a family provision order would have on the amounts received from the deceased's estate by other beneficiaries

40 Any further provision for the plaintiff will affect the interests of the residuary beneficiaries, however, as their interests are subject to the plaintiff's life interest in the estate, they will not be affected until after the plaintiff's death.

42 The parties agree that the plaintiff is an eligible person for the purposes of making a family provision order. As the spouse of the deceased at the time of her death, the plaintiff is an eligible person under the Act and is entitled to make an application for a family provision order pursuant to s 91(1).

43 The plaintiff is the deceased's husband of many years. As set out above, the deceased had a moral duty to provide for the plaintiff's proper maintenance and support, that is, in broad general terms, to provide the plaintiff with the security of an appropriate home in which to live, a secure income, and a fund to meet unforeseen contingencies.[14]

44 The estate is small estate, comprising of a half interest in the Boundary Road property. The plaintiff has lived in this property for more than 45 years. Consistent in part with the broad general rule for provision for a surviving spouse, the deceased's intentions were to provide the plaintiff with a secure roof over his head in the form of a life interest in her share of the Boundary Road property. However, there are difficulties with provision in that form. While a life interest provides a benefit to the plaintiff, it comes with shortcomings that will restrict his future security. Under his present entitlements according to the will, the plaintiff is unable sell the Boundary Road property and use the estate's interest in the proceeds to fund an accommodation bond. As a life tenant, the plaintiff may raise money by mortgage to improve the Boundary Road property, pursuant to s 71 of the Settled Land Act 1958. However, the improvements authorised under that Act are limited, and not all of the necessary improvements may be authorised, for example, the replacement of faulty doors.[15] If the plaintiff needs to raise funds for his own living expenses, he must rely on his own interest in the Boundary Road property.

45 The difficulty is how to strike the right balance between the interests of the plaintiff and those of the residuary beneficiaries.[16]

46 The plaintiff has the security of a home for the time that he is able to remain living at the Boundary Road property. The plaintiff wishes to remain in the Boundary Road property, but it is in poor condition and work needs to be done to improve the dwelling. The plaintiff has limited income, and is reliant on the pension. He has limited savings with which to fund any repairs or improvements to the Boundary Road property. He has no funds for unforeseen contingencies. At his age, it is unknown whether he would be able to raise funds using the Boundary Road property as security and, without those funds, he is unable to afford any improvements to the property or fund any future contingencies.

47 Given the plaintiff's age and health, the prospect will arise at some point that he may need to move into supported accommodation. Should he need to move to some form of supported accommodation, he will need to meet those costs, which are likely to be greater than the value of his half share of the Boundary Road property.

48 In determining the appropriate amount of further provision to be made, the Court must assess the need of the plaintiff by reference to the needs of the residuary beneficiaries. As stated, their interests are postponed until after the death of the plaintiff. When these competing considerations are properly balanced and recognised, adequate provision for the plaintiff should be in the form of a secure home with a small nest egg for future contingencies, and a sufficient amount for reimbursement of estate expenses that he has paid from his own limited resources. Further provision is appropriate for the plaintiff having regard to the fact that he has paid estate expenses of approximately $17,000, his limited assets, the poor condition of the Boundary Road property and his obligations under the will to pay for all rates, taxes, insurance and other outgoings in respect of the Boundary Road property.

49 The appropriate balance between the plaintiff and the residuary beneficiaries is for the plaintiff to receive 20 per cent of the estate's interest in the Boundary Road property and for the plaintiff's existing life interest in the deceased's remaining share of the Boundary Road property to take the form of an extended portable life interest.

50 The value of the additional provision of 20 per cent of the estate's interest in the Boundary Road property is estimated at between $78,000 and $90,000 and would mean that the plaintiff would hold 60 per cent of the whole of the Boundary Road property absolutely.

51 Such further provision should be sufficient to provide adequately for the plaintiff, for the present and for the future in the event that it becomes necessary for him to enter into supported accommodation. It ensures that the plaintiff is able to continue to live at the Boundary Road property for as long as he wishes and he can more easily raise funds for his living expenses and any improvements to the Boundary Road property without relying on the provisions of the Settled Land Act 1958. The plaintiff may also use the Boundary Road property for his benefit, such as renting it out to earn income or sell it and purchase another property. Most importantly, he may sell the Boundary Road property and use the proceeds to fund any accommodation costs of a retirement home or nursing home or other like institutions.

52 The parties are to provide minutes of orders reflecting the findings of the Court and also any further submissions as to the costs of the proceeding.

[1] Thompson v Thompson [2015] VSC 706, [63] (McMillan J). See also, Downing v Downing [2003] VSC 28, [44] (Osborn J); Montague v Montague [2002] NSWSC 328, [62]-[65] (Austin J); Smith v Barker [2005] NSWSC 14, [44] (Master McLaughlin); Moore v Moore [2005] VSC 95, [28]-[33] (Mandie J); Abrego v Simpson [2008] NSWSC 215, [23] (Windeyer J).

[2] Bosch v Perpetual Trustee Co Ltd [1938] AC 463, 478-9 (Lord Romer), citing Re Allardice [1911] AC 730, and cited in Grey v Harrison [1997] 2 VR 359, 364-5 (Callaway JA); Collicoat v McMillan [1999] 3 VR 803, 818-19 [43]-[45] (Ormiston J).

[3] Forsyth v Sinclair [2010] VSCA 147, [60] (Neave JA); Lee v Hearn [2005] VSCA 127; (2005) 11 VR 270, 273-4 [6] (Callaway JA); Grey v Harrison (n 2) 365 (Callaway JA, with whom Tadgell and Charles JJA agreed).

[4] See, eg, Goodman v Windeyer [1980] HCA 31; (1980) 144 CLR 490, 501-2 (Gibbs J); Pontifical Society for the Propagation of the Faith v Scales [1962] HCA 19; (1962) 107 CLR 9, 19 (Dixon CJ). See generally, GE Dal Pont and KF Mackie, Law of Succession, (LexisNexis Butterworths, 2nd ed, 2017) 607 [17.86].

[5] MacEwan Shaw v Shaw [2003] VSC 318; (2003) 11 VR 95, 104 [50] (Dodds-Streeton J).

[6] Ball v Newey (1988) 13 NSWLR 489, 492 (Samuels JA).

[7] See, eg, Camernik v Reholc [2012] NSWSC 1537, [154] (Hallen J); Slack v Rogan [2013] NSWSC 522; (2013) 85 NSWLR 253, 284 [125]-[126] (White J), interpreting the similar legislative regime in New South Wales under s 59 of the Succession Act 2006 (NSW).

[8] Grey v Harrison (n 2), 366 (Callaway JA, with whom Tadgell and Charles JJA agreed).

[9] Grey v Harrison (n 2), 366-7 (Callaway JA, with whom Tadgell and Charles JJA agreed); Friend v Brien [2014] NSWSC 613, [59] (White J).

[10] See, eg, Montague v Montague (n 1), [62]-[65] (Austin J); Smith v Barker (n 1), [44] (Master McLaughlin); Moore v Moore (n 1) [28]-[33] (Mandie J); Abrego v Simpson (n 1) [23] (Windeyer J).

[11] Coates v National Trustees Executors & Agency Co Ltd [1956] HCA 23; (1956) 95 CLR 494, 507 (Dixon CJ).

[12] See, eg, Blore v Lang [1960] HCA 73; (1960) 104 CLR 124, 130 (Dixon CJ); Prosser v Twiss [1970] VicRp 29; [1970] VR 225, 232 (Lush J); Slack v Rogan (n 7) 285 [127] (White J).

[14] See paragraph 18 above, and the cases referred to therein.

[15] See Settled Land Act 1958 (Vic) s 83 and Sch 2.

[16] See, eg, Thompson v Thompson (n 1) (McMillan J).