Plaintiff v Defendants

1 Helen Freeth Marsella died on 27 April 2016, aged 74 years ('the deceased'). She was survived by her husband ('the plaintiff') and her two adult children, Caroline Wareham ('the first defendant') and Charles Swanson ('the second defendant'). The defendants are the children of the deceased's first husband, David Swanson.

2 Pursuant to Part IV of the Administration and Probate Act 1958 ('the Act'), the plaintiff seeks further provision from the estate of the deceased. The defendants accept that the deceased owed a moral duty to provide for the plaintiff.

3 The deceased's will dated 13 April 2015 named the plaintiff as the executor and trustee of her estate. Probate of the deceased's will was granted to the plaintiff on 11 August 2016.

4 The deceased left her jewellery and other possessions of value to the plaintiff and directed that he distribute them equally between the defendants. She directed the plaintiff as trustee to hold the property known as Unit 5, 36-40 Tanti Avenue, Mornington ('the Tanti Avenue unit') upon trust as a home for him until his death or upon him permanently leaving the unit of his own accord, whichever first occurs, when the unit will form part of her residuary estate.

5 The deceased's will authorised the plaintiff as trustee to pay the mortgage in full and fully upgrade the Tanti Avenue unit at the expense of the estate prior to the plaintiff moving in and directed that if any rental income is derived from the unit, that income is the property of the plaintiff. The trustee was authorised to invest the sum of $100,000 and that fund with interest was to pay for all taxes, repairs, interest and any other charges or amounts necessary for the general upkeep of the unit while it is held for the plaintiff.

6 The deceased's will stated that no further provision was made for the plaintiff 'by agreement' and bearing in mind that the assets disposed of by her will were pre-marital assets acquired during the deceased's previous marriage and that the plaintiff has money of his own and business interests, including his surveying practice.

7 The deceased's will directed the trustee to hold a sum of money on trust for the deceased's grandchildren of a value equal to that provided to them from the estate of Robyn Elizabeth Swanson. The defendants' entitlements to benefits held in the estate of their father, David Swanson, being two real properties, are to be equalised, with one property to be left to each of the defendants and the defendant who receives the property of lesser value to be compensated by a cash payment equal to the difference. Subject to the preceding directions, the balance of the deceased's residuary estate is to be divided between the defendants as tenants in common in equal shares.

8 The parties agree that the reference in the deceased's will to benefits held in the estate of David Swanson refers to properties in Medley Place, South Yarra ('the Medley Place property') and Cardigan Street, Carlton ('the Cardigan Street property'). It is agreed the deceased held these properties on trust and that, under the terms of the trusts, the properties would pass to the defendants. Both properties are unencumbered, with the Medley Place property valued at $1,500,000 and the Cardigan Street property valued at $1,350,000. Rent collected for the properties since the deceased's death has been held in trust. There may be tax liabilities associated with the properties.

9 There is a dispute between the parties as to the assets of the deceased's estate. In his most recent affidavit sworn 16 November 2017, the plaintiff deposes that the nature and approximate value of the assets of the deceased are:

58 Alicudi Avenue, Frankston ('the Alicudi Avenue property')

Entitlement under Swanson Superannuation Fund as at 20 June 2017

10 The first defendant asserts that the Alicudi Avenue property is subject to certain trust claims initiated by her in a separate proceeding ('the trust claims proceeding') and should not form part of the assets of the estate.[1] The plaintiff objects to the assertions made by the first defendant. Her causes of action are unclear and the factual basis for the trust claims proceeding is difficult to follow. The claims concern events that took place many years ago when the deceased controlled various trusts. In the trust claims proceeding, the first defendant in this proceeding is the plaintiff and the defendants are the executor of estate of the deceased and CB Norwood Nominees Pty Ltd, as trustee of the CB Norwood Trust. The first defendant in this proceeding alleges that the assets of the CB Norwood Trust are held by the trustee for the benefit of herself and the second defendant in this proceeding and that the value of the CB Norwood Trust has been diminished by the actions of the deceased during her lifetime by her removal of certain assets from the CB Norwood Trust.

11 The first defendant also disputes that the entitlement of $486,716.34 in the Swanson Superannuation Fund is an asset of the estate. The plaintiff included it as an asset as he believed it was payable to the estate but now accepts that this may not necessarily be so. He contends that he is eligible to receive the death benefit as he falls within the definition of dependant. In a further proceeding against the first defendant and her husband as trustees of the Swanson Superannuation Fund, the plaintiff, both personally and as executor of the estate of the deceased, seeks to set aside the resolution of the trustees to pay the whole of the death benefit to the first defendant ('the superannuation proceeding').[2] On 2 June 2017, the defendants in the superannuation proceeding undertook to take all steps to cause the whole of the death benefit distributed to the first defendant to be invested in an account and not released except by agreement or order of the Court.

12 By affidavit sworn 16 November 2017, the plaintiff provided the Court with an updated inventory of the liabilities of the estate, including litigation costs, accounting costs and trust claims against the estate of the deceased, amounting to approximately $476,000.

13 As at 15 November 2017, the mortgage on the Tanti Avenue unit was in arrears of $12,680.10. The total of the mortgage debt and arrears amounts to approximately $308,000. These liabilities do not include any capital gains tax payable on the sale of the Tanti Avenue unit. As to the arrears, the plaintiff deposed that he understood the repayments to be automatically paid from the rental income account and that, while there might be a slight shortfall, it would be covered. The plaintiff deposed that he was shocked when his solicitors provided him with letters indicating that the mortgage was in arrears.

14 If the Alicudi Avenue property is excluded as an asset of the estate, the net asset position of the estate is marginal. The estate's only other major asset is the Tanti Avenue unit valued at $550,000. On the basis that the liabilities of the estate are $476,000 (excluding any capital gains tax), the net balance of the estate would be $74,000.

15 The first defendant sought to have the trust claims proceeding and the superannuation proceeding determined before this proceeding. This was said to be on the basis that the resolution of the trust claims proceeding and the superannuation proceeding would determine the assets of the estate. Having regard to the plaintiff's claim for further provision and the other two proceedings on foot, it was practicable to determine the financial need of the plaintiff first as this should narrow the issues and perhaps form a basis for the resolution of the trust claims proceeding and the superannuation proceeding.

16 The plaintiff seeks the Alicudi Avenue property absolutely so that he has financial independence from the defendants. The plaintiff submits that the first defendant has taken significant steps to deprive the estate of any assets by issuing the trust claims proceeding in response to this proceeding and to deprive him of any benefits from the deceased's superannuation.

17 The first defendant's position is that provision for the plaintiff ought be made by an absolute interest in the Tanti Avenue unit.

18 The second defendant's position is that provision for the plaintiff should be made by way of a flexible life interest in respect of the Alicudi Avenue property.

19 The deceased was born on 1 October 1941. She had two children, being the defendants, with her first husband, David Swanson. The second defendant was born on 17 June 1968 and the first defendant was born on 21 October 1970.

20 In approximately 1972, the deceased, her first husband and the defendants moved to a 50 acre property at One Chain Road, Merricks North ('the Merricks North property'). The deceased's first husband died on 18 August 1981.

21 The plaintiff was born on 5 October 1941. He met the deceased in May 1982 and they commenced living together in December 1982. At that time, the defendants were aged 12 and 14 years respectively and attending private schools in Melbourne.

22 The deceased lived in a unit in Stonehaven Court, Toorak ('the Toorak unit') during the week for the children to attend school and returned to the Merricks North property for the weekend. The plaintiff lived at the Merricks North property and visited the Toorak unit on Wednesdays. This arrangement continued for approximately four years, at which point the deceased commenced living full time at the Merricks North property, although there were differences between the parties as to exactly when this occurred. The Toorak unit was sold shortly after this time.

23 The couple married in December 1986. It was the plaintiff's first marriage. At an early stage in the relationship, the couple decided not to have children. While not privy to the decision, nevertheless, the first defendant set out her view on this topic. This was irrelevant but is an example of her negative attitude towards the plaintiff.

24 In 1987, the deceased and the plaintiff incorporated a company called Super Sprouts Pty Ltd with two other directors. The company's business was the sprouting of seeds for commercial sale. It was based at the Merricks North property and had ten employees. The company was undercapitalised and intense competition forced it to close in 1992. As a result of the company's failure, the plaintiff and the deceased suffered financial losses. During the life of the company, the plaintiff continued to work full time in his surveying business. The plaintiff contributed the majority of the money for the business. After the failure of the business, the plaintiff sold a flat he owned in Carlton and used the net proceeds of approximately $50,000 to cover his share of the debt. The deceased paid her share of the loss of approximately $50,000.

25 In late 2001, the plaintiff and the deceased decided the Merricks North property was too costly to run as it did not produce any income and drained the plaintiff's income. The deceased sold the farm for approximately $1,200,000 and the plaintiff sold the saleable machinery for approximately $10,000.

26 In early 2002, the deceased purchased the Alicudi Avenue property for approximately $880,000 in the name of Norwood Farm Pty Ltd. This company was the trustee of one of the trusts the subject of the trust claims proceeding. In October 2002, the Alicudi Avenue property was transferred into the deceased's name.

27 In mid-2006, the deceased developed a rare and aggressive mouth cancer. She had surgery, followed by a lengthy period of convalescence that included radiotherapy. She recovered and led a reasonably healthy life until mid-2102, when the cancer returned, requiring surgery to remove large parts of the deceased's jaw. In October 2015, the deceased had further surgery that took away her ability to speak or eat. The couple were able to take a planned overseas trip following the surgery but the deceased was in much pain and the plaintiff cared for her as best he could. By late January 2016, it became known that the deceased's cancer was incurable and she died on 27 April 2016.

28 The plaintiff continues to reside at the Alicudi Avenue property.

Relationship between the plaintiff and the defendants

29 The plaintiff deposes that, while the deceased was alive, he had a good relationship with both defendants. Some of the defendants' children refer to the plaintiff as 'grandpa'. The first defendant often introduced the plaintiff as her father and the deceased and he as her parents. The second defendant agrees that he has enjoyed a good relationship with the plaintiff. Since the deceased's death, the plaintiff deposes that his relationship with the first defendant has vanished and he has not seen the second defendant for some time. The plaintiff notes that '[w]e were all uptight when [the deceased] was dying and there could have been words exchanged but nothing that would have created a real problem that I can see'.

30 The plaintiff deposes that his current will leaves his estate to the defendants but, as a result of the litigation surrounding the deceased's will, he now intends to leave his estate to the deceased's grandchildren. This is because if he inherits assets from the deceased, the plaintiff believes it to be fair and honourable to leave his estate to the 'Swanson/Wareham interests'.

31 In the past, the plaintiff provided financial assistance to the defendants. He loaned the sum of $5,000 to the first defendant on two occasions, with no set repayment period and no interest. Subsequently, these amounts were repaid. The plaintiff paid the second defendant's Melbourne Cricket Club annual membership from 1983 until 2005. In early 2000, the second defendant purchased land in Frankston and the plaintiff did the necessary subdivision survey work for two units to be built. The value of this work was approximately $5,000 but the plaintiff did not charge a fee. In addition, in the early days of his marriage, the plaintiff provided both defendants with paid casual work.

32 The first defendant deposes that she heard the plaintiff say repeatedly over many years:

(a) in relation to the deceased's finances - 'I'm a simple man, what would I need';

(b) referring to the Merricks North property - 'I'm looking after this for you and Charles';

(c) 'I'm not after your father's money'; and

(d) in relation to the Alicudi Avenue property and its contents - 'none of this is mine except for the things in my office'.

The plaintiff denies making any comments to the effect of paragraph (a) and deposed that he cannot remember any general conversation to the effect of the matters in (b) or (c) but his general feeling 'would be if it belonged to them it's not mine'.

33 During the relationship, all of the plaintiff's income derived from his surveying business was directed into the family home and activities. While the deceased also contributed her income to the couple's expenses, her income was less than the plaintiff's in the 20 years before her death. The deceased did not work in paid employment during their relationship and was not involved in the plaintiff's surveying business. The plaintiff was unable to save any money during their life together.

34 During the relationship, the plaintiff paid for their overseas holidays taken every two to three years and their frequent holidays within Australia. He also paid when they entertained friends and when they dined out, which was frequent. The first defendant differed on whether the plaintiff paid when they entertained and dined out, on the basis that she often observed the deceased paying for these activities.

35 The parties agreed that the deceased was responsible for capital costs, including improvements to the farmhouse, council rates and insurance for the Merricks North property. The issues as to the beneficial ownership of this property and the proceeds of its sale are included in the trust claims proceeding.

36 At the time the plaintiff met the deceased, part of the Merricks North property had been developed by the deceased's first husband into a blueberry farm of approximately half an acre. The plaintiff deposed that he further developed the blueberry farm, increasing it to one acre in size. The first defendant disputes this. The plaintiff deposed that he purchased a tractor, slasher, rotary hoe, tyres, large spray unit and grader blade from his own funds to assist in the development of the Merricks North property. The first defendant suggests that those purchases were at least partly funded through the sale of equipment that had been purchased by her father.

37 The plaintiff deposed that he did much of the running of the farm, including spraying blackberries and thistles, buying and selling four or five cattle each year to keep the grass under control, maintaining fences, mowing and slashing, developing and maintaining irrigation and watering systems for the cattle and for the horticulture and purchasing diesel as required, which was used for the tractor and household water heating.

38 In contrast, the first defendant claims that the deceased employed a farm manager after the death of her first husband until shortly before the sale of the property in 2001. The first defendant suggests that a large part of the plaintiff's work on the farm was establishing and maintaining a large vegetable garden, giving him enjoyment as he is a keen gardener and actively assisted in the garden.

39 After the move to the Alicudi Avenue property, the plaintiff continued to work full time and paid for all recurrent payments of the household, including holidays, attendance by tradespeople and utilities, including gas, electricity, water, two telephone fax machines and a mobile phone, as well as the majority of the groceries. However, the first defendant submits that she paid for the deceased's mobile telephone bill and she observed the deceased shopping for food with her personal account or credit card.

40 Also after the move to Alicudi Avenue property, the deceased and the plaintiff each acquired cars, registered and paid for by the plaintiff's surveying business and the costs of maintaining the vehicles were also paid by the plaintiff's surveying business.

41 The parties agree that the deceased paid for capital improvements to the Alicudi Avenue property, including renovations to the kitchen, repainting the house, new carpets and interior decoration. The couple established a large garden at the property, with the deceased buying flowers, trees and shrubs and the plaintiff planting them. Both the deceased and the plaintiff enjoyed the garden.

42 The plaintiff deposed that, during each of the periods that the deceased was recovering from surgery, he was her full time carer, including bathing and feeding the deceased and doing all the household chores. He received occasional assistance from family members to care for the deceased. As he could not leave the deceased alone, he sometimes employed an extra person to help in his business.

43 The first defendant deposed that she visited the deceased every second day to assist with household chores and that she first reduced and then completely ceased her employment so that she could be with the deceased. A nurse also attended on the deceased every day. On the days she was not with the deceased, the first defendant attended to tasks the deceased had given her in relation to the Medley Place property. The first defendant deposed that the deceased attended to her own feeding, as this was done via a peg in her stomach and she was concerned about possible mess, and her own showering, with the first defendant sitting outside of the shower. The first defendant also deposed that when the plaintiff needed to go out, she would make arrangements to be with the deceased in addition to her visits every second day. In particular, she remembers being with the deceased from 7.00 am to 7.00 pm in hospital one day because the plaintiff needed to attend a conference.

44 Over the years, the deceased bought and sold a number of properties. Her income was derived from rental income and sale proceeds of the properties. These properties and their sale proceeds are also the subject of the trust claims proceeding. The plaintiff was not privy to the deceased's income, nor the purchase and sale of these properties. The first defendant claims that the deceased explained her desire to keep the couple's finances separate by saying it was because she did not want the plaintiff to have any claim to her estate. The first defendant also says that over the years she assisted the deceased with choices regarding decoration of these properties and, in recent years, property management.

45 For a period of three years, while attending university, the first defendant lived in a property in Canterbury purchased by the deceased. The deceased also paid the household expenses for the Canterbury property. Around 1981, the Canterbury property was sold and the first defendant received $110,000 from the deceased, who said that it was from 'one of dad's trusts'. With this amount, the first defendant funded almost the entire purchase of a unit in Fitzroy in her own name. For a period of time commencing in November 1993, when the first defendant went overseas, the deceased collected and retained rent from the Fitzroy unit. The first defendant considered that this was her repaying some of the expenses the deceased had incurred on her behalf over the years. In around 1995, after the first defendant married, the Fitzroy unit was sold and the proceeds were put towards the purchase of her family home in Sandringham.

46 In 1990, a property in Burwood that is now the second defendant's family home was purchased for just under $140,000 with money from the deceased. The second defendant paid rent to the deceased for two years, and the deceased collected and retained rental income from the property for a further 10 to 15 years after the second defendant moved out. In this way, as the second defendant understood it, he was repaying the deceased the sum of $100,000 of the $140,000 capital sum in instalments. He has not, however, calculated whether the combination of his rent payments and the later rental income actually amounts to $100,000 in total. The second defendant and his wife moved back into the Burwood property after their second child was born and have subsequently used it as security to purchase an investment property in Frankston. The deceased also supported the second defendant while he completed his building apprenticeship.

47 The plaintiff was also aware of a unit having been bought in Carlton and subsequently sold in or around 2010. His evidence is that when the unit in Carlton was sold, the deceased distributed $100,000 to each of the defendants. The second defendant agreed that there was a property in Carlton and that he received $100,000 but admitted he had no direct knowledge as to the source of the money. While the first defendant accepts that she received approximately $100,000 two to three years before the death of the deceased, she did not think that this amount came from the sale of a unit in Carlton. The first defendant deposes this amount was to help her with her children's school fees, her mother having insisted that they attend a private school, and that she received no other amounts for this purpose. The second defendant deposes that he was also given amounts totalling $4,000 towards his children's school fees.

48 After selling all of her investment properties, apart from the Cardigan Street and Medley Place properties, the deceased created a self-managed superannuation fund.

49 The Alicudi Avenue property comprises a two-level, four bedroom house situated on two thirds of an acre. The plaintiff lives there alone. He uses one of the rooms in the house as his office and the garage for his car and to store his surveying and gardening equipment. Gardening is his enjoyment and relaxation. He works in the garden most weekends on both days. When the deceased was alive, the two of them generally spent Saturday and Sunday afternoons working in the garden together.

50 The plaintiff wishes to continue living at the Alicudi Avenue property, stating:

It's been my home for 15 years. I'm comfortable with it. I know where everything is. I keep it clean. It's mine at this stage in my life.

51 His health is such that he can continue living at the Alicudi Avenue property and, with help, he can keep it running in the manner that he and the deceased ran it when she was alive. The plaintiff pays to get the lawns mown and the house cleaned fortnightly for a total cost of $50 per week. While the deceased was alive, she paid for these services. The plaintiff acknowledged that the Alicudi Avenue property would become more difficult for him to maintain as he aged and that he should look to move when he turned 80, noting that he would always want a home with a garden.

The contents of the house at the Alicudi Avenue property

52 There is a significant dispute regarding the contents of the house at the Alicudi Avenue property.

53 The plaintiff's position is that items given to the deceased by her family or by the family of her first husband should pass to the defendants but that anything that the deceased acquired during their marriage should pass to him, as her husband. The first defendant is concerned that, although she and the second defendant were left the deceased's possessions, the plaintiff has donated the deceased's art materials to the deceased's art teacher.

54 The plaintiff deposed that most of the furniture in the home came from the Merricks North property and he is reliant on that furniture remaining in the house.

55 Beyond the everyday furniture, the plaintiff is unsure which furniture and other items, such as paintings and vases, the deceased brought to the marriage and which items were purchased after they married. The deceased frequently attended Joel's Auctions and bought antique furniture for the house and as an investment for the two of them, as well as expensive jewellery. The plaintiff agrees that some items in the house are heirlooms from the family of the deceased's first husband.

56 The first defendant submits that, apart from a few minor pieces, the antique furniture at the Alicudi Avenue property was purchased prior to the deceased's relationship with the plaintiff. She also submits the deceased more often visited auction houses to sell items, rather than to buy them. The origin of particular items, for example, an antique chamber pot holder, is disputed. The first defendant believes that there is antique furniture of a value in excess of $100,000 in the house that ought to have been listed in the inventory of assets and that this furniture includes substantial pieces inherited through the deceased's first husband. The second defendant believes that the antiques are worth in the vicinity of $150,000. No sworn valuations for the furniture were produced by the defendants.

57 In early 2014, the deceased purchased the Tanti Avenue unit for $357,000. The unit is a one storey self-contained townhouse with a small front garden and a backyard mostly covered by deck, with no space for a garden.

58 The deceased's intentions, as set out in clause 4(b) of her will, was for the plaintiff to live at the Tanti Avenue unit after her death. The first defendant deposed that she witnessed conversations between the deceased and the plaintiff to the effect that the plaintiff wanted the Tanti Avenue unit to be purchased because it was near his favourite beach, he had grown up in Tanti Avenue and he liked the area. The first defendant also says that the deceased discussed the plan for the plaintiff to live in the Tanti Avenue unit after her death at length, including renovations that should be made to the property for that purpose.

59 The plaintiff says that it was the deceased's decision to buy the Tanti Avenue unit and he believed the purpose was mainly for investment. He was aware that the deceased's plan was that he would live there after her death but claims that he never said that he wanted to live there. The plaintiff deposes that, in response to the deceased raising that he might live there, he would say '... if I go live there that means you'll be dead and we don't want that' and that that is as far as the conversation ever went.

60 The plaintiff agrees that the deceased bought the Tanti Avenue unit because he grew up in Mornington, but not in Tanti Avenue itself. He also agrees that he has friends in Mornington and is a member of the Mornington Bowls Club. When the second defendant was building the deck at the Tanti Avenue unit, the plaintiff did not object as he thought it did not have anything to do with him and he understood the deck was built at the request of the tenant. The deck takes up a substantial amount of the backyard that could be used for a garden. The Tanti Avenue unit would not suit his needs. The plaintiff was not aware that the deceased had told her solicitors that she and the plaintiff had an arrangement that he would go and live at the Tanti Avenue unit after her death and he did not find out that it was left to him in her will until sometime after it was made.

61 The plaintiff is a licenced land surveyor. He has had his own surveying business since 1978. He works most days and intends to continue working until he is no longer capable of doing so. His job is not physically demanding and he cannot see any reason at the moment to stop working. The plaintiff has arthritis in his wrists and hands and a bad back, as well as high blood pressure and high cholesterol controlled by medication, but these conditions do not stop him working.

62 In the financial year ending 30 June 2016, the plaintiff received a salary of $37,000 from his surveying business, while the business made a net profit of $7,779. In the financial year ending 30 June 2017, the plaintiff received a salary of $38,668. It also appears that rates, cleaning and mowing costs, home insurance and utilities for the Alicudi Avenue property, totalling $12,890, were paid by the plaintiff's business that year.

63 The plaintiff spends his spare time meeting friends for lunch, visiting next door and working in the garden. While the deceased was alive, the couple would travel together overseas every two to three years and the plaintiff hopes to continue to be able to do this. He has relatives in Italy and a sister in the United States of America, as well as two sisters in Australia.

64 The plaintiff has not given much thought as to what he will do when he retires, but would like to continue gardening, playing bowls, seeing his friends and 'just do the general things elderly people do'.

65 The current assets of the plaintiff are as follows:

IOOF Pursuit Personal Superannuation (approximately)

66 The first defendant's ability to understand her own personal finances was limited. This was despite the fact that her affidavit sets out her financial position. In cross- examination, she was unable to answer questions as to the details of her financial situation saying 'I don't do our money, my husband does our money'.[3]

67 The first defendant works part time as a community educator and her net fortnightly income is $1,744. Her husband is employed full time as a teacher and his net fortnightly income is $3,523.18. The couple has no other income.

68 They own their home in Sandringham estimated at around $1,400,000. The property secures a mortgage of $335,000. In addition, the first defendant owes $10,500 in credit card debt. The first defendant's superannuation balance is $94,004.56 and her husband's is $180,680.52. The first defendant has a bank account with a current balance of $274.

69 The first defendant has a tax liability arising from her present entitlement to some of the property which is the subject to the trust claims proceeding, but has not yet received any money or property from the trust.

70 The couple have two dependent children, aged 17 and 16 years, and their combined school fees for 2017 are $33,000.

71 Overall, the first defendant's evidence is that her expenses are $6,073.85 per fortnight, creating a fortnightly deficit of $806.67.

72 The first defendant is a Type 1 diabetic and has unrelated gastroparesis. These conditions require medication and treatment costing $577 per fortnight, limit her employment capacity and will worsen over time.

73 The second defendant is a self-employed builder. He is married and has two children aged 21 and 19 years who continue to be dependent and live at home while they pursue tertiary education. The second defendant's wife is also employed in his building business. Together, the couple have an annual income of approximately $70,000.

74 The second defendant owns the family home in Burwood, with an estimated value of $1,500,000, subject to a $350,000 mortgage. They also own an investment property in Frankston valued at $500,000 that is subject to a mortgage of $176,000. The Frankston property is rented for $1,660 per calendar month. The second defendant and his wife have $21,936 and $9,592 in superannuation respectively. The couple also own a 2002 Falcon Ute of no value and a 2014 Toyota Corolla, worth approximately $15,000.

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

(a) an applicant is an eligible person;

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

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

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

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

(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 an eligible person.

77 The concept of a testator's moral duty remains the focus of family provision cases notwithstanding the recent amendments to the Act. While s 91A(1) of the Act mandates that the Court must take into account what a testator provided in his or her will and whether he or she gave any reasons or made his or her intentions known in relation to the provision made for an eligible person, it has always been the case that courts have taken into account the terms of any expressions of the deceased in admissible form.[4] An express legislative requirement that the Court take such expressions into account, when determining an application, does not mean that such evidence, whether by will or in another form, suddenly takes on some higher status.[5] The weight to be attached to such statements will depend on the specific circumstances of the particular case.

78 In making a family provision order, s 91A(2) of the Act provides that the Court may take into account:

(a) the nature of the relationship between the deceased and the eligible person, including, if relevant, the 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 (at the time of the hearing) 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 (not for adequate consideration) of the eligible person to building up the estate or to the welfare of the deceased or the deceased's family;

(h) any previous benefits 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.

79 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 the eligible person, and the degree to which the distribution of the estate fails to make adequate provision for the proper maintenance and support of the eligible person.

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

81 Section 91(1) of the Act does not contain the word 'adequate' before the words 'provision ... for the proper maintenance and support of an eligible person' however the word 'adequate' is included in ss 91(2)(d) and 91(4)(b) as a factor in determining the quantum of any provision. These words have developed legal meaning over many years. Where a word used in statute has an established legal meaning, the Court assumes that Parliament intended that word to be used with that meaning, unless the context indicates otherwise.[6] There is no indication of a contrary intention in respect of s 91(4)(c) of the Act, so the words 'adequate provision' and 'proper maintenance and support' must be construed in accordance with their legal meaning.

82 Generally, 'proper maintenance and support' means provision from the estate not simply to alleviate poverty, but also to take into account the vicissitudes of life, whereas 'adequate' means something that it may be insufficient for an applicant's proper maintenance.[7] What constitutes adequate provision for the proper maintenance and support of an applicant involves a consideration of the mandatory and discretionary matters under the Act, having regard to the meaning of these terms as developed in the jurisprudence of the family provision jurisdiction.[8] This also involves a consideration of the nature, extent and character of the estate and the other demands upon it, and also what the testator regarded as superior claims or preferred dispositions. In determining these questions, a balance must be struck between the established claims of named beneficiaries, the needs of an applicant, the size of the estate, and the benefits provided to an applicant and others with legitimate claims upon the testator. The Court's function is not to ensure a fair distribution of the testator's estate or to achieve equality amongst various claimants but goes no further than making adequate provision for the proper maintenance and support of an applicant.[9]

83 In determining the amount of further provision to be made, that amount should not be 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.[10]

84 Other relevant constraints or limiting factors include 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,[11] or that any further provision must be limited by balancing the needs of an applicant against the proper claims that a testator recognised as requiring satisfaction out of his or her testamentary bounty.

85 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,[12] whereas the assessment as to what provision the Court should order, if any, is to be made with regard to the plaintiff's circumstances at the time of the trial.[13]

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

86 The provision for the plaintiff under the deceased's will is an interest in the Tanti Avenue unit until his death or upon him leaving the property of his own accord, whichever shall first occur. This is on the basis that the estate pays the mortgage in full and upgrades the property fully at the expense of the estate before the plaintiff moves into it and, if there is any rental income derived from the unit, such income is the property of the plaintiff. The trustee of the estate is also directed to invest $100,000 for the payment of all taxes, repairs, interest and any other charges or amounts necessary for the general upkeep of the Tanti Avenue unit while it is held for the plaintiff.

87 In her will, the deceased included her reasons for making no further provision for the plaintiff as follows:

... by agreement and bearing in mind that the assets herein disposed of were pre-marital assets acquired during my previous marriage and my husband has monies of his own and business interests including his surveying practice.

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

88 The discretionary factors that may be taken into account in making a family provision order under s 91A(2) of the Act are set out below.

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

89 When the plaintiff met the deceased, she was a widow and her children were aged 14 and 12 years, respectively. The plaintiff and the deceased met in May 1982, commenced living together in December 1982, married in December 1986 and were together until the deceased's death in April 2016. Their relationship was a happy and loving relationship.

90 From the plaintiff's perspective, while the deceased was alive, his relationships with the defendants were good. For reasons that he is unaware, those relationships changed after the death of the deceased. The second defendant has simply drifted away from seeing him. The first defendant, in her affidavits and at trial, showed a strong dislike of the plaintiff, disagreed with much of his evidence or gratuitously commented negatively about him, in many instances giving no reasons for doing so. Since the deceased's death, the relationship between the plaintiff and the first defendant has broken down irretrievably.

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

91 The deceased had a moral responsibility to the plaintiff and to her two children. The deceased's will makes limited provision for the plaintiff, with the residue of the estate left to the defendants. Both defendants were provided with substantial financial assistance during the deceased's lifetime.

92 The size and nature of the estate is disputed. Both defendants deposed as to their belief concerning the value of the antique furniture in the Alicudi Avenue property, although neither provided any evidence for their beliefs. Some of the items are from the family of the deceased's first husband but mostly it seems they were purchased by the deceased during her marriage to the plaintiff.

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

93 The evidence of these factors for the plaintiff and the defendants is set out above. In addition, the defendants stand to receive substantial financial benefits in the form of Medley Place property and the Cardigan Street property, valued at $1,500,000 and $1,350,000, respectively.

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

94 The plaintiff has some health issues, being high blood pressure, high cholesterol and osteoarthritis in his wrists and hands.

95 The first defendant has Type 1 diabetes and unrelated gastroparesis. There was no mention of any health issues by the second defendant.

96 The first plaintiff was born in October 1941 and is now aged 76 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

97 The plaintiff contributed to the welfare of the deceased as a loving and dutiful husband, cared for her during her illness and made significant contributions towards the family finances.

98 The first defendant contributed to the welfare of the deceased by caring for her during her illness. The second defendant's evidence did not address this factor.

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

99 The deceased provided financial benefits to the plaintiff by the provision of their home and for other capital expenses during their marriage.

100 Both defendants received significant financial benefits during the deceased's lifetime, either from the deceased or from their father's assets or trusts controlled by the father and then the deceased. They were provided with a good education and a comfortable lifestyle.

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

101 The plaintiff was partly maintained by the deceased by the provision of their family home and the payment of capital expenses during their marriage.

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

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

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

103 There is no evidence that reflects adversely on the character and conduct of the plaintiff.

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

104 Any provision for the plaintiff will affect the entitlements of the defendants under the deceased's will.

105 Other relevant matters are the trust claims proceeding and the superannuation proceeding, which, if they continue, will cause the plaintiff to incur further legal costs. In addition, the first defendant provided no explanation for failing to initiate the trust claims proceeding or failing to make any of the claims therein during the deceased's lifetime, despite the deceased having been the person responsible for the administration of the various trusts. The deceased should have been given the opportunity in her lifetime to answer the allegations now made against her.

106 Equally, it is unusual for the first defendant and her husband, as trustees of the Swanson Superannuation Fund, to resolve to pay the whole of the deceased's death benefit to the first defendant in circumstances where the plaintiff claims that he is a dependant of the deceased.

107 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, satisfying s 91(2)(a) of the Act.

108 At the time of her death, the deceased had a moral duty to provide for the plaintiff's proper maintenance and support. The disputed issue is what is the appropriate amount of such provision.

109 As a broad general rule, the duty of a testator is to provide a surviving spouse with 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.[14] 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.

110 The determination of the issues in dispute necessarily involves questions relating to the credibility of the witnesses. Most of the evidence included recollections of events that took place many years ago, some critical events and others, in the main, not so critical to the issues in dispute. Memories fade over time and a witness may unwittingly tailor the evidence to suit his or her case. There are obvious difficulties for a witness to remember events that took place many years ago, particularly where little or no contemporaneous documentary records exist. The question of what weight can be placed on such evidence is an issue that must be carefully scrutinised, including by some corroboration, if possible. The first defendant's evidence tended to be jaundiced by her negative feelings towards the plaintiff and her own sense of entitlement from the deceased's estate. Many of her statements were made without any factual foundation. She was unable to give oral evidence of her own family's financial position when she had previously sworn an affidavit on the issue. Where her evidence conflicted with the plaintiff's evidence, the plaintiff's evidence is to be preferred.

111 The plaintiff was financially dependent in part on the deceased during their relationship. The deceased provided the family home and other funds for capital expenses. The plaintiff provided his income for their joint lifestyle. They lived a comfortable lifestyle and enjoyed a happy and long relationship, with the plaintiff assisting with and engaging with the deceased's two children when they were in their teens. After the death of the deceased, the plaintiff's relationship with the defendants ended and, in the case of the first defendant, she exhibited a marked negative attitude towards him. The plaintiff thought he had a good relationship with her but now accepts it is no longer possible for him to have a relationship with the deceased's grandchildren.

112 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 the Tanti Avenue unit, with her estate paying to upgrade the unit, discharge the mortgage and provide a fund of $100,000 for all outgoings and the general upkeep of the unit. This is clearly not achievable in light of the substantial estate liabilities and the trust claims proceeding now made against the estate.

113 The deceased's reasons, set out in her will, for making this provision for the plaintiff are, in part, inaccurate. There is no evidence that there was an agreement between them or that the plaintiff has business interests outside his surveying practice. The plaintiff has some money, but not a substantial amount. It was common ground that the deceased's assets were acquired during her first marriage. In denying that there was an agreement that he would live in the Tanti Avenue unit after the deceased's death, the plaintiff also said that he never liked it, it was completely different to his wishes and the deceased did not discuss her idea that he would live there on her death with him. The Tanti Avenue unit is an inappropriate home for the plaintiff in the context of his lifestyle with the deceased over many years. The plaintiff wishes to remain in the Alicudi Avenue property in the short term until he can no longer manage it and he does not wish to be confined to a relatively small unit without a garden.

114 At the time the deceased made her will, the deceased must have assumed that the Alicudi Avenue property would form part of her estate as a substantial amount was required to fund the provision that she did provide to the plaintiff in her will. At that time, she could not know that the first defendant would mount a challenge as to the beneficial ownership of the Alicudi Avenue property. The provision suggested by the first defendant that the Tanti Avenue unit be provided to the plaintiff absolutely is, as no doubt she must realise, an empty proposal. The Tanti Avenue unit is encumbered with a substantial mortgage and the estate has substantial liabilities. The Tanti Avenue unit must be sold to pay out the mortgage and other reasonable estate liabilities. With the estimated liabilities of the estate at approximately the value of the Tanti Avenue unit, it is likely that there will be little or no amount available to the plaintiff. In reality, the first defendant's suggested provision for the plaintiff means that he would have no financial provision at all from the estate of the deceased. It is difficult enough for an elderly person after a long and happy marriage to be confronted by the first defendant's position that effectively leaves him without any adequate and proper provision. This position would seem contrary to the overarching obligations incumbent on litigants and their practitioners.

115 The plaintiff's proposal that he receives the Alicudi Avenue property absolutely is also not viable, in view of the claims in the trust claims proceeding made by the first defendant.

116 The second defendant's proposal that the plaintiff be provided for by way of a flexible life interest in the Alicudi Avenue property is the most appropriate option for the provision of a secure home for the plaintiff. This can only be achieved if the beneficial ownership of the Alicudi Avenue property is no longer challenged by the first defendant. The benefit of a flexible life interest means that the plaintiff may remain in the property, as is his current wish. The age of the plaintiff raises the prospect that, at some point in the near future, he may need to move into a smaller home or supported accommodation. On balance, a smaller home or supported accommodation should cost less than the value of the Alicudi Avenue property at $1,500,000. The costs for supported accommodation are generally in the range of $500,000 and upwards. When the plaintiff wishes to downsize to a smaller home or supported accommodation, the sale proceeds from the Alicudi Avenue property should provide him with sufficient funds to do so. In addition, the plaintiff would also receive a small income from the investment of the balance of the sale proceeds for life. On the death of the plaintiff, the capital sum will pass to the defendants absolutely. By its nature, this proposal limits the plaintiff's independence as he would not own the Alicudi Avenue property absolutely, but it does provide him with a secure home for his life. The added advantage of a flexible life interest is that, if common sense prevails, it may dispose of the trust claims proceeding as the capital sum of the property will eventually pass to the defendants.

117 This provides a secure home for the plaintiff but it does not provide him with a fund to meet unforeseen contingencies. The second defendant sought to pre-empt this by submitting the interest on the capital sum from the sale of the Alicudi Avenue property would be a sufficient amount for the plaintiff's unforeseen contingencies. The capital sum would necessarily be reduced by the purchase of a smaller home or a bond for supported accommodation. It is doubtful that the interest rates in today's markets on the net capital sum would provide a sufficient fund for the plaintiff's unforeseen contingencies.

118 Although the plaintiff continues to work in his surveying practice, his age is such that it is likely he may not work too far into the future. A person in the position of the plaintiff should be provided with a nest egg for future contingencies. He enjoyed a comfortable lifestyle with the deceased and he contributed to that lifestyle by using his earnings from his surveying business. A reasonable amount for the plaintiff's future unforeseen contingencies would allow him to take holidays and provide him with a buffer for the vicissitudes of life. In the circumstances, an appropriate amount for the plaintiff is the sum of $100,000 by way of a pecuniary legacy.

119 The Court determines that provision should be made for the plaintiff's proper maintenance and support by way of a flexible life interest in the Alicudi Avenue property and a pecuniary legacy in the sum of $100,000.

120 The Court will list this proceeding, the trusts claims proceeding and the superannuation proceeding for further directions on 20 July 2018.

[3] Transcript of proceedings, Re Marsella; Marsella v Wareham (Supreme Court of Victoria, S CI 2016 04180, McMillan J, 22 November 2017) 55-57 (C E Wareham).

[4] Hughes v National Trustees Executors and Agency Co of Australasia Ltd [1979] HCA 2; (1979) 143 CLR 134, 149-50, 152 (Gibbs J).

[5] Brimelow v Alampi [2016] VSC 135; (2016) 50 VR 219, 223.

[6] See, eg, Davies v Western Australia [1904] HCA 46; (1904) 2 CLR 29, 42-3 (Griffiths CJ); Yorke v Lucas [1985] HCA 65; (1985) 158 CLR 661, 668 (Mason ACJ, Wilson, Deane and Dawson JJ); Palgo Holdings Pty Ltd v Gowans [2005] HCA 28; (2005) 221 CLR 249.

[7] In essence, this concept is founded on the reasoning of Stout CJ in Allardice v Allardice [1909] NZGazLawRp 268; (1909) 29 NZLR 959 and has been applied in family provision cases time and time again. See also Bosch v Perpetual Trustee Co Ltd [1938] AC 463, 476 (Lord Romer).

[8] See, eg, Singer v Berghouse (No 2) [1994] HCA 40; (1994) 181 CLR 201.

[9] See, eg, Re Hodgson [1955] VicLawRp 77; [1955] VLR 481; Blair v Blair [2004] VSCA 149; (2004) 10 VR 69; Delaney v Jones [2008] NSWSC 229 (11 March 2008).

[10] See, eg, Camernik v Reholc [2012] NSWSC 1537 (13 December 2012) [154] (Hallen J); Slack v Rogan [2013] NSWSC 522; (2013) 85 NSWLR 253, 284 [125]-[126], interpreting the similar legislative regime in New South Wales under s 59 of the Succession Act 2006 (NSW).

[11] Grey v Harrison [1997] 2 VR 359, 366 (Callaway JA, with whom Tadgell and Charles JJA agreed).

[12] Coates v National Trustees Executors & Agency Co Ltd [1956] HCA 23; (1956) 95 CLR 494, 507-8 (Dixon CJ).

[13] 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 [2013] NSWSC 522; (2013) 85 NSWLR 253, 285 [127].

[14] Thompson v Thompson [2015] VSC 706 (11 December 2015) [63]. See also Downing v Downing [2003] VSC 28 (24 February 2003) [44] (Osborn J); Montague v Montague [2002] NSWSC 328 (22 April 2002) [62]-[65] (Austin J); Smith v Barker [2005] NSWSC 14 (2 February 2005) (McLaughlin M); Moore v Moore [2005] VSC 95 (8 April 2005); Abrego v Simpson [2008] NSWSC 215 (13 March 2008) (Windeyer J).