Plaintiff v Defendants

(a) Her house at 50 Wingate Avenue, Ascot Vale ("Wingate Avenue") to be sold and the net proceeds divided five ways, with each of her four children receiving one-fifth and the remaining one-fifth divided equally between the four children of her late son, John White;

(b) Her bank accounts to be divided equally between her four children; and

(c) Her residuary estate, consisting only of furniture and personal effects, to be divided between her three daughters, the defendants.

3 The plaintiff says that his mother did not make adequate provision for him in her will. By originating motion filed 4 February 2005, the plaintiff seeks further provision under Part 4 of the Administration and Probate Act 1958 ("the Act") from his mother's estate.

4 The defendants are the executors of their mother's will. They obtained probate on 6 August 2004. The total value of the deceased's assets at the time of her death, according to the inventory of assets and liabilities for probate purposes, was $307,260.60. The deceased's liabilities at that time totalled $808.80.

The court's power

5 As a matter of general principle, a person is entitled to make a will leaving their property to whomsoever they choose. However, governments have introduced legislation such as the Act as a matter of social policy, to ensure that people make adequate provision in their wills for the maintenance and support of those closest to them.

6 Under s.91(1) of the Act, this court has power to 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. The court must not make such an order unless it is satisfied that the distribution of the estate of the deceased does not make adequate provision for the proper maintenance and support of the applicant.

7 In this case, there is no dispute that the deceased had a moral obligation, a responsibility in the relevant legal sense, to make provision for the plaintiff. However, the defendants say that the provision made for the plaintiff in the will was adequate.

8 In determining both the "responsibility" and "adequacy" issues, the court must have regard to a variety of factors, which are set out in ss.91(4)(e)-(p) of the Act and will be discussed shortly.

9 In determining what constitutes adequate provision, the court must first consider whether the will is such as to make adequate provision for the proper maintenance and support of the plaintiff; this is a question of fact. If inadequacy of the provision is established, the court must then consider what provision ought to be made out of the estate of the deceased.

10 This two stage approach is set out by the High Court in Singer v Berghouse (No. 2)[1], where their Honours Mason CJ, Deane and McHugh JJ said:

"The determination of the first stage in the two-stage process calls for an assessment of whether provision (if any) was inadequate for what, in all the circumstances, was the proper level of maintenance etc appropriate for the applicant having regard, among other things, to the applicant's financial position, the size and nature of the deceased's estate, the totality of the relationship between the applicant and the deceased, and the relationship between the deceased and other persons who have legitimate claims upon his or her bounty.

The determination of the second stage, should it arise, involves similar considerations. Indeed, in the first stage of the process, the court may need to arrive at an assessment of what is the proper level of maintenance and what is adequate provision, in which event, if it becomes necessary to embark up on the second stage of the process, that assessment will largely determine the order which should be made in favour of the applicant."[2]

11 With respect to the first stage, it is necessary for the court to put itself in the position of the testator and what he or she ought to have done in all the circumstances_[3]_, but when determining the second stage, reference may be made to facts existing at the time of the hearing.

12 The easiest way to summarise the evidence and the parties' submissions is to apply each of the factors in s.91(4)(e) - (p) of the Act to the facts of this case. Before doing so, I will just make a few observations about the witnesses and their evidence. I received affidavit and oral evidence from the plaintiff and his daughter, Mrs Lynda Szegedi, and two of the defendants, Mrs Kane and Mrs Lampard. I also received an affidavit of Paul Birchell, but he did not give oral evidence. The affidavits of both sides contained much inadmissible evidence, some of which was hearsay, some pure speculation, and much of which was irrelevant. The affidavits contained often colourful or emotive allegations against the other side or their family members. Rather than spend more time and money going through the affidavits line by line, deleting objectionable material, counsel agreed that I should simply give such material little or no weight. Accordingly, I have not referred to or resolved every factual dispute that arose on the evidence.

Relationship between the deceased and the plaintiff

13 The plaintiff is the only surviving son of the deceased.

14 The plaintiff and all of his siblings moved out of Wingate Avenue in their early 20s. The plaintiff returned to live with his mother at that house in or around 1991, when he was 48 years old and she was 73 or 74 years old. He remained there for another 12 or so years until she died. The parties agree that it is only the last 12 years that are relevant for the purposes of this application.

15 The plaintiff has a long history of serious health problems, which are relevant both to his relationship with his mother and his financial needs. Around 1991, he was diagnosed with cerebellar gait, a condition which has subsequently rendered him wheelchair-bound. About 12 months later, after a heart attack which caused him to miss work for 4 months, he experienced spinal problems which caused him to retire early from his employment as a heavy earth machinery operator. In 1993, he fractured both tibia and fibulae and in 1999 was diagnosed with oesophagitis. In 2000, he was diagnosed with macular degeneration, the effect of which has been failing eyesight which is likely to eventually lead to blindness. In 2003, he was diagnosed with tongue cancer, which required the removal of a substantial part of his tongue.

16 Except for some casual work towing a mobile billboard behind his car, which work ceased around 2000 due to failing eyesight, he has been unemployed and in receipt of a disability pension since the early 1990s.

17 The plaintiff was married, but divorced in 1988. Following a subsequent unsuccessful relationship, the plaintiff moved back into Wingate Avenue with his mother in about late 1991 or early 1992. He lived there with her until the end of her life, except for a short period in 2003 when, after surgery for tongue cancer, he went and stayed with his daughter for a few weeks.

18 Perhaps unsurprisingly in a case such as this, both sides have opposing views as to the true nature and value of the plaintiff's relationship with the deceased. I do not doubt that their beliefs in this regard are genuinely held. Of course, the deceased is not here to say how she regarded her relationship with the plaintiff.

19 The plaintiff says that he and the deceased had a close relationship and enjoyed each other's company. As she was generally in better health than the plaintiff, she tended to take care of him and his physical and financial needs. He says she told him that he gave her a purpose in life.

20 On the other hand, the defendants believe that the plaintiff's heavy drinking and lack of contribution to the household caused discord in the relationship with the deceased. They believe she looked after him reluctantly.

21 It is clear that the plaintiff made little financial contribution to the household. He received "full board", did not pay regular rent, and only contributed financially on a sporadic basis. However, it is also clear that he provided his mother with companionship during the last dozen years of her life. He took her shopping on a weekly basis and drove her on occasional day trips, until his eyesight failed around 2000 and he became unable to drive. He also mowed the lawns in his wheelchair on some occasions and weeded the garden for her when he was able to do so.

22 To say that is not to deny that the defendants and their families also assisted the deceased with shopping and other chores around the house, particularly as the deceased's health declined in the later years of her life.

The deceased's responsibilities and obligations

23 The plaintiff was effectively maintained by the deceased during the last 12 or so years of her life. It is common ground that none of the defendants had been in any way dependant upon or maintained by the deceased since they left the family home in their early 20s. Nor was the deceased maintaining any of the four grandchildren beneficiaries.

24 The plaintiff's evidence was that a couple of years after moving in with his mother, she told him that he had "better get [his] name down for a house" (being a reference to applying for public housing), because the arrangement that they had would not last forever. The plaintiff says he did put his name down with the Tenants Union or some tenant rental body at that time. However, some 4 or 5 years before his mother died, he discovered that they were either the wrong organisation or they had lost his application. He then went with his daughter to put his name down at the Department of Human Services. On that occasion they were told that it would be a 10 to 20 year wait before suitable ground floor accommodation would be available.

25 The defendants' evidence was that, as time went on, their mother grew tired of the plaintiff's lifestyle, and she told her daughters she would have preferred the plaintiff to live independently of her. That may have been so, but it seems that, beyond the initial suggestion that he put his name down for public housing, the deceased took no step to request or require him to move out.

26 She not only provided a roof over his head, but provided "full board". Indeed the plaintiff admitted that there had been the odd occasion whilst he was living with his mother when he had lived beyond his means and run up a "slate" that he could not pay off at various hotels in the Ascot Vale area. He said that on occasion his mother had assisted him in paying off his "slate".

27 Because the deceased allowed a dependency to exist and continue, and did not actively steer the plaintiff down other paths, the plaintiff became accustomed to a lifestyle that he could not change easily. After such a long period of time and given the plaintiff's disabilities, it would be unrealistic to expect that, upon his mother's death, the plaintiff would be able to cope on his own, financially or otherwise.

28 Finally, I note that there is no dispute that the defendants have been loyal and dutiful daughters to the deceased, having kept in regular contact and providing practical assistance over the years.

29 The estate is not large, and most of the value of the estate is referable to Wingate Avenue. The house was prepared for sale by the defendants (for much of which work they paid their own family members not insignificant sums out of the estate) and sold after probate was granted. The net proceeds of sale of Wingate Avenue are $259,409.31. The proceeds of bank accounts, less estate expenses to date, total $23,743.01. There are no other assets of commercial value. This means the value of the net estate at present is $283,152.32.

30 After deducting the anticipated solicitor-client legal costs of both sides in this proceeding of approximately $80,000 to $85,000, and executors' commission of approximately $7,500, the total amount available for distribution will be in the vicinity of $190,000 to $195,000. Of course, the legal costs and executor's commission may come in at more or less than those estimates, but they are the best estimates that the parties can provide at this stage.

31 As I commented at the trial, it is tragic that the parties have been unable to reach agreement when the estate is so small. It is clear that the estate will be significantly reduced due the parties' expenditure on the legal fees of this proceeding.

32 The next matter for consideration is the financial resources, including earning capacity, and financial needs of the plaintiff and other beneficiaries, at the time of the hearing and the foreseeable future.

33 The plaintiff's case is particularly strong in this regard and there are no other applicants. He has acute financial needs and no financial resources or earning capacity to assist him. Due to his disabilities, his only source of income for the rest of his life is likely to be the disability pension which he currently receives. His current income of $374.80 per fortnight (which takes into account a deduction for rent of approximately $60 per week) is managed for him by his daughter.

34 His daughter gave evidence that meeting all of the plaintiff's expenses on the pension he receives is often difficult, and some months there is a shortfall. He needs some new clothes and needs to update various appliances and pieces of furniture in his flat, however he cannot afford to do that on his current income. After payment of utility bills, telephone, home help, medicine and food including "meals on wheels", there is little, if any, disposable income.

35 Around 1988, he received approximately $17,000 by way of divorce settlement, and $37,000 by way of a redundancy package. Both funds have since been exhausted. There was no evidence before me as to what happened to those funds, and counsel for the plaintiff conceded that I can infer that there must have been some imprudence on the plaintiff's part, in that the money was not invested wisely. That said, they were not enormous sums for somebody to have spent over a period of almost 20 years, supplementing a pension.

36 As there are no other applicants, the court must consider the financial resources and needs of the other beneficiaries, particularly the three defendants. Whilst not suggesting that any of them could be described as wealthy, the defendants' counsel rightly conceded that the evidence did not demonstrate any financial need on the part of any other beneficiary. The only beneficiaries who gave evidence were Mrs Lampard and Mrs Kane, both of whom are able-bodied and still working in stable jobs which provide them with regular income. They are in long-term marriages to working spouses, own their own homes (or, in one case, have sufficient assets to pay off a negatively-geared investment mortgage), and have some albeit modest financial resources for their future retirement.

Any physical, mental or intellectual disability

37 The plaintiff is 62 years old; the defendants are aged 64, 59 and 58.

38 The plaintiff is confined to a wheelchair due to his cerebellar gait. His macular degeneration means that his eyesight is poor. His other medical problems are under control through treatment, which he receives regularly, both from his general practitioner who he sees once a month, and the hospital he attends once every three months. None of his current problems are life-threatening at the moment, although they severely impact on his mobility and lifestyle.

39 There was no evidence before me that any other beneficiary suffers from any disability that affects earning capacity.

40 The next matter to consider is any unpaid contributions made by the plaintiff to building up the deceased's estate, or to the welfare of the deceased or her family.

41 As noted above, the plaintiff agreed that whilst living with his mother he had "full board", did not pay regular rent, but made occasional financial contributions to the household when he could. His only source of regular income during this time was the disability pension, except for the casual billboard job in the late 1990s, for which he apparently received irregular and relatively small amounts of money. His financial contributions were therefore small.

42 Until around 2000, whilst he was still able to drive, he took his mother shopping and on some outings. Given his physical limitations, aside from some weeding of the garden and mowing the lawns, it is hard to see what else he could have done for the deceased in terms of chores. He also provided companionship to the deceased.

43 The next matters for consideration are any benefits previously given by the deceased to the plaintiff or any beneficiary; whether the plaintiff was being maintained by the deceased at the time of her death, either wholly or party and, where relevant, the extent to which and the basis upon which the deceased had assumed that responsibility.

44 The defendants say that their mother provided many benefits to the plaintiff over the years that he lived with her, in that he rarely paid rent, which allowed him to spend his pension on other things.

45 The defendants also say that the deceased purchased two scooters for the plaintiff, with the intention that he would repay her when he could. Although he made some repayments, the defendants say that the plaintiff still owes the estate $800 for the first scooter and $1,350 for the second scooter. They intend to deduct the sum of $2,150 from his share of the estate as a debt.

46 Although the deceased provided the plaintiff with free accommodation and board, in my opinion this is not a case where there has been a substantial settlement made inter vivos, so that the deceased's financial assistance of the plaintiff is something that should be considered an advance on the plaintiff's inheritance, which would remove or water down the deceased's testamentary obligations.

47 Both counsel made submissions as to whether the deceased intended the living arrangement to be temporary or permanent. The fact that the deceased indicated in the early 1990s that he should put his name down for public housing, meant that at least at that time she had viewed the arrangement as temporary. However, whilst it may have initially been the deceased's hope that the plaintiff would move out and live independently of her, there was no evidence that the issue was raised again by the deceased. Given the forceful characters and open hostility displayed in court by Mrs Lampard and Mrs Kane, I have no doubt that had the deceased really wished the plaintiff to move out, she need only have mentioned this to the defendants and they would have provided her with all necessary assistance.

48 The deceased effectively maintained the plaintiff for the last 12 or so years of her life. By the time of her death, she had assumed responsibility for a substantial portion of the plaintiff's upkeep.

49 He continued to live at Wingate Avenue for four months after his mother's death, until his sisters required him to move out.

The liability of any other person to maintain the plaintiff

50 Unlike his sisters, the plaintiff is single and has no partner. He has an adult daughter and adult son. Although his daughter provides him with some financial assistance when his pension does not meet the amount necessary to pay his bills, she does not have a "liability" to assist the plaintiff financially. It is not suggested that there is any other person with a liability to maintain the plaintiff.

The character and conduct of the plaintiff or any other person

51 The defendants say that the plaintiff took the benefit of the deceased supplying him with accommodation and board but provided little material support in return. However, as discussed above, having regard to his physical and financial situation, it seems clear to me that there was not much material support that he could have provided to the deceased.

52 The defendants are very critical of their brother's alcohol consumption; they complain that he has drunk and smoked his pension away whilst being supported by their mother. I accept that the plaintiff has been a heavy drinker and smoker for much of his life. He says he has ceased smoking and reduced his alcohol consumption since the diagnosis of tongue cancer in 2003. The question arises as to whether the plaintiff's past conduct might be relevant to his application.

53 Prior to 1998, the Act had a specific section which provided that if an applicant was guilty of "disentitling conduct" then, despite anything else, the court would not make additional provision for him or her out of an estate. The onus of proving disentitling conduct lay on the estate because it was a defence to the claim for additional provision rather than an element of an applicant's claim.

54 Since 1998, a less stringent approach has been taken to conduct that might have been referred to as disentitling conduct. Now, the court is required to consider the character and conduct of the applicant merely as one of the relevant factors to be considered.

55 As Ormiston J (as he then was) said in Collicoat v McMillan[4]:

"What is right and proper ... 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."[5]

56 Here, there was no evidence before me that the plaintiff's drinking and smoking behaviour had any serious effect on his relationship with the deceased. On the contrary, she voluntarily paid some of his hotel bills and enabled him to spend his pension on alcohol and cigarettes by supporting him financially.

The existing provision

57 There is no dispute that the deceased had a responsibility to make some provision for the plaintiff in her will. The next question for the court to determine is whether the provision made in the will is adequate for his proper maintenance and support. The plaintiff bears the onus of proving such inadequacy.

58 "Adequate" is not the same thing as "proper". A sum which is adequate for maintenance and support of an applicant may not be a proper sum having regard to the wealth of the deceased. Equally, a sum may be inadequate in absolute terms, but because of the size of the estate, it is regarded as proper for the applicant's maintenance and support.

59 The question of the adequacy of the provision is determined at the time of the deceased's death[6].

60 The evidence did not readily reveal the current monetary value of the plaintiff's entitlement under the will, due to very inadequate book-keeping by the defendants. Given those difficulties, at the conclusion of the trial, I asked counsel to see whether they could agree on the amount of the provision he would have received had no application for further provision been made, and no consequent litigation costs incurred by either party. A joint memorandum from counsel, dated 28 April 2006, records agreement that he would have been entitled to no more than $57,817.61, calculated by adding together 1/5 x $259,409.31 (being the net proceeds of sale of Wingate Avenue) and 1/4 x $23,743.01 (being the total monies in bank after deduction of estate costs). That figure would have been reduced slightly if the defendants had applied for executors' commission.

61 At the time of the deceased's death, it was unknown how and where the plaintiff would be accommodated. Having regard to the factors in s91(4)(e) - (p) of the Act, in particular to his disabilities and financial position, and in the absence of any competing claim against the estate, I conclude that to leave him with less than $60,000 and no security of accommodation was an inadequate provision.

62 The quantum of the plaintiff's future needs is difficult to determine, largely because it is not possible to say with any certainty what the plaintiff's life expectancy is. The plaintiff concedes that he is not in good health for his age.

63 Counsel for the plaintiff submitted that any additional provision should enable the plaintiff to meet his immediate capital needs of updating household furniture and appliances, extinguish any indebtedness he may have to the estate, and provide a "nest egg" which will allow him to have a greater weekly disposable income. This in turn will improve the standard of his accommodation and give him a financial buffer for life's general contingencies such as medical and associated expenses.

64 The plaintiff's only assets are his wheelchair and scooter, furniture, household goods and clothing. He has no realistic employment capacity.

65 His short-term capital needs are said to total approximately $23,600. Of that total, some $16,600 relate to mobility aids, being $7,579 for a scooter he has recently purchased, and approximately $9,000 for the cost of his next scooter; his scooters require replacement every four years or so. The remaining $7,000 is said to be for updated household furniture and appliances, in the form of a new lounge suite and a larger television, as well as new clothing. He has apparently had no new clothing since his daughter bought him some in 2003; otherwise he shops for used clothing at charity shops. Whilst a larger television might sound like a luxury item to some people, his failing eyesight makes it harder for him to see a small screen and, given his mobility problems, television is one of his major daily activities.

66 The plaintiff is currently living in a small, one bedroom flat in public housing. His scooter and wheelchair take up much of the small living room and his current accommodation is extremely cramped. It seems unlikely that, as a single person, he would be able to get a two bedroom flat in public housing. On the plus side, his current accommodation is on the ground floor, has wheelchair access, is close to all amenities he needs and is in an area in which he is happy to live and close to his friends and carers. Importantly, he also has security of tenure.

67 He would like to have enough funds to be able to privately rent a 2 bedroom apartment in the same general suburban area, to give him more room to move himself and his mobility aids around. However, as counsel for the defendants pointed out, entering the private rental market would make the plaintiff more financially vulnerable, as he would be subject to market rent increases and less secure tenure than in public housing. Private rental accommodation would also be significantly more expensive than his current rent of approximately $60 per week, perhaps four to five times as expensive.

68 The size of the estate is such that it may not be sufficient to enable him to move into private rental accommodation at $300 per week. Very little evidence was presented as to just what might be available privately and at what price. Nevertheless, he may be able to rent a larger flat in the private market for something between his current rental and $300 per week.

69 The standard of lifestyle to which an applicant was accustomed to enjoying as a result of support from the deceased is a relevant factor in determining the applicant's needs[7]. Although far from luxurious, thanks to his mother's support for the past dozen years of her life, he was accustomed to a much better standard of living than he now experiences.

70 There was no evidence before me as to the possible effect of receipt of provision under the will on the plaintiff's disability pension. For the reasons expressed by Smith J in Coller v Coller[8], I agree that means tested sources of income should not generally be taken into account by a just and wise testator when making provision.

71 An important factor in calculating provision is the existence of any competing claims against the estate. Here there are no such claims; none of the other beneficiaries has any financial need sufficient to found a claim of their own for an entitlement to financial provision.

72 The calculation of an appropriate provision is not a scientific exercise, and involves a degree of "instinctive synthesis"[9], in an area in which minds may legitimately differ as to the provision which should be made.

73 As mentioned earlier, the total net estate is approximately $190,000-$195,000.

74 Counsel for the plaintiff proposed that I should replace the plaintiff's existing entitlement under the deceased's will of approximately $57,800, with the sum of $123,579, being $23,579 for short term capital needs and $100,000 as a financial buffer and income stream to supplement his pension over the rest of his lifetime.

75 An alternative submission put forward by counsel for the plaintiff was that I could, in lieu of the plaintiff's existing entitlements, award him a fixed legacy of $57,800, representing roughly the value of his existing entitlements, and then set aside a further amount of, say, $65,000 which could be held on trust for the plaintiff and drawn on for specific fixed purposes. I could specify that it be treated as a fund of "last resort", and any monies remaining in the fund at the time of the plaintiff's death would then revert back to the deceased's estate.

76 Whilst there is considerable attraction in the latter route, in that it does not give a windfall to the plaintiff's beneficiaries in the event that he dies sooner rather than later, it is impracticable in the present circumstances. Both counsel agreed that the size of the proposed trust fund, some $65,000, is too small to justify appointing a professional trustee to manage it; the fund would largely be consumed in professional fees. Unfortunately, the parties are unable to agree on a trustee who would be willing to manage the trust fund on a voluntary basis. Given the lack of trust and communication between the parties, were I to select a family member on either side to administer the trust, I have no doubt that would only produce further disputes and probably further litigation.

77 Although I would have preferred a fixed legacy and trust fund proposal, the lack of a suitable trustee means that a lump sum is the only practical solution.

78 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 so that, after the payment of:

(a) Any debts which he owes to the estate in respect of the scooters or the four months in which he lived in Wingate Avenue after his mother's death;

he receives a total payment of $100,000. This provision should be borne by the other beneficiaries in proportion to the values of their respective estates and interest in the estate.

79 I will hear from the parties with respect to the precise wording of the orders to be made and costs.

I certify that the 16 preceding pages are a true copy of the reasons for judgment of Hollingworth J of the Supreme Court of Victoria delivered on 8 June 2006.

............................................

Associate to Justice Hollingworth

[1] [1994] HCA 40; (1994) 181 CLR 201.

[2] At 209 - 210.

[3] Bosch v Perpetual Trustee Co [1938] AC 463 at 478-479.

[4] [1999] 3 VR 803.

[5] Ibid at 818.

[6] Prosser v Twiss [1970] VR 255 per Lush J

[7] Re Buckland deceased [1966] VicRp 58; [1966] VR 404 at 412.

[8] [1998] VSC 80 at [15].

[9] Grey v Harrison [1997] 2 VR 359 at 366-7 per Callaway JA; Madden v Singvongsa [2003] VSCA 62 at [16] per Warren AJA.