Plaintiffs v Defendants

Supreme Court of Victoria|2009-07-03|Before: Mandie J

ADMINISTRATION AND PROBATE - Family Provision - application for further provision by three daughters of deceased - residuary estate including farm properties left to son of deceased.

1 The plaintiffs, who are three of the five daughters of Lyla Margaret Shalders deceased ("the testatrix"), claim further provision from her estate pursuant to Part IV of the Administration and Probate Act 1958 ("the Act"). The first defendant ("David") is the only son of the testatrix and is the residuary beneficiary under her will. He is also co-executor of the will and trustee of the estate with the second defendant (a sister of the testatrix).

2 The testatrix died on 2 June 2006, aged 75, leaving a will dated 4 November 1999. Probate was granted to the defendants on 28 March 2007.

3 The plaintiffs, together with their other two sisters who do not make any claim, received benefits under the will valued at date of death in total at about $540,000 (i.e. about $108,000 each). The plaintiffs contend that the testatrix, in all the circumstances, failed to make adequate provision for their proper maintenance and support. The residuary estate primarily comprises real estate used by the testatrix and David for farming operations conducted by them in partnership, together with the share of the testatrix in the partnership business. The total value of the residuary estate left to David under the will was, at the date of death, about $2.1M.

The provisions of the will and the assets in the estate

4 By cl.4 of the will, the testatrix gave such of her daughters Anne Maree Ryan, Jennifer Margaret Torney (the first plaintiff - "Jennifer"), Sally Kathryn[1] Hicks (the second plaintiff - "Sally"), Helen Jane Butt and Clare Denise Shalders (the third plaintiff - "Clare") as survived her, in equal shares, the following:

(a) the house and land known as 11 Springs Road, Brown Hill (a residential property in Ballarat);

(b) all moneys payable under life assurance policies;

(c) any moneys in any bank account in her sole name;

(d) any AMP shares owned by her.

5 In addition, the testatrix gave to each of her daughters a legacy in the sum of $30,000 charged upon the real estate given to David. The testatrix directed that her trustees have five years from the date of her death within which to pay the legacies with interest thereon at 5% per annum calculated from the date of death.

6 By cl.6 of the will, the testatrix gave the residue of her real and personal estate to David.

7 The inventory of assets[2] lodged by the defendants attributed the following values to the assets of the testatrix:

"Fairview" (590 acres[3])

(on which is erected a brick veneer family home and substantial improvements including shedding, silos and very large grain storages)

"Jeitz" (235 acres)

(located 1-2km from Fairview and on which is erected a three bedroom home and substantial farm improvements)

"Red Hill" (207 acres)

(on which is erected a four bedroom home and substantial farm improvements)

8 In addition, it was common ground that David, as residuary beneficiary, was also entitled to the interest of the testatrix in the farming partnership business. The farming partnership owns a cropping and livestock business conducted on the various farm properties, substantial crops and livestock and plant equipment and vehicles. The partners' capital accounts and balance sheet for the year ended 30 June 2006 showed the testatrix as having a closing balance of $237,919. That amount represented her share in the net assets of the partnership. The balance sheet showed that the principal assets of the partnership were bank account moneys (totalling some $34,000), Farm Management Deposits (totalling $220,000), plant and equipment ($199,378), "sheep on hand"($20,973) and "land" valued at $97,606. The last mentioned land was a farm block, comprising some 118 acres, known as "Aunty Belle's", in fact registered in David's name as sole proprietor.

9 The testatrix was born on 1 September 1930. In 1951, she married Roy Trevor Shalders ("the father"). There were six children of the marriage: Anne Maree,[4] the plaintiff Jennifer (who was born on 30 April 1956 and is now aged 53 years), David (who was born on 15 August 1958 and is now aged 50 years), the plaintiff Sally (who was born on 31 January 1961 and is now aged 48 years), Helen Jane[5] and the plaintiff Clare (who was born on 18 July 1968 and is now aged 40 years).

10 Shortly after their marriage the parents acquired and moved onto a farm at "Fairview," Holmes Road, Willaura. Willaura is in the Western District near the Grampians, north-east of Dunkeld and south of Ararat.

The parents subsequently purchased another property, not far from "Fairview," known as "Jeitz."

11 In the 1950s and 1960s the parents' farming business was predominantly that of raising about 2000 sheep for wool, using approximately 700 acres of land.

12 All of the daughters received their primary education at Willaura's primary school. They received secondary education at colleges in the region, generally as boarders. The parents encouraged the girls to take up nursing and they all undertook nursing courses and entered that profession. David received a similar education up to Form 1 and then attended Ararat Technical School for three years.

13 I will now outline the evidence as to the farming business and David's participation in it. I will later refer to the evidence concerning the plaintiffs' role in the family and their subsequent lives.

14 As a young boy, David was expected to and did assist his father with work around the farm whenever he was told to do so. From 1966 onwards, David worked with his father during every hay carting season and his labour contribution increased as he grew older. From an early age he drove a truck and, later, drove a tractor towing a slasher. From about 1970, David assisted his father with land preparation and crop planting and with drenching and jetting sheep, generally during school holidays. From about 1973, David began to assist his father with crutching sheep and he replaced labourers who had formerly been employed to carry out this "very physical" work. David did not receive wages for his work.

15 David became interested in pursuing carpentry as a trade but his father told him that he was needed on the farm. At the age of 16, David left school to work on the farm and has worked there ever since. From the age of 16, David worked full time with his father which involved 60 - 70 hours per week for about 50 weeks of the year. He worked on Saturday, except when playing football, and they both usually took Sunday off. David did not take annual holidays or sick leave - nor did his father until he took ill during the last 18 months of his life.

16 David has taken one holiday in his life - spending one week in Surfers Paradise at the age of 25.

17 Once David joined his father in farming full time, his father employed casual labourers only for seasonal work. David did not receive any wages for doing the farm work but received room and board at no cost. He did not receive any pocket money as a boy or young adult. His father often said to him that "this will all be yours one day." David deposed that he believed that his father meant, by this, the farming business and assets and that, but for these promises, he would have branched out on his own, purchasing land and stock and farming by himself.

18 In about 1974, the parents purchased a property known as "Brophy's" (about 542 acres) at Wickliffe. His father told David that this purchase was in order to expand the business upon David joining him in farming. His father told David that he bought the land at Wickliffe rather than Willaura as it was cheaper but that he planned to sell it in the future and to buy land closer to Willaura when it became available.

19 From the age of 17, David did the bulk of the sheep shearing, one of the most physically taxing jobs in farming. His father did some shearing and from time to time additional shearers and rouseabouts were employed. The sheep numbers increased from about 2,000 to about 3,200 by 1976, to about 5,200 by 1984 and to about 6,500 by 1988.

20 David received no wages for shearing on the farm but, from the age of 17 to 30, he also took casual jobs doing shearing work or hay carting for other farms in order to earn some money for himself. He earned on average about $10,000 per annum and used this money for personal expenses such as food, clothing, vehicles and "pub money." When he was 17, he purchased a motorbike from his savings and, when he was 19, he purchased a motor vehicle from his savings. David also bought a second hand combine and header from his earnings which he used in the parents' farming business.

21 In or about October 1976, the testatrix and her sister (the second defendant) inherited from their mother a property at Staverley known as "Red Hill." In 1977, the parents bought the second defendant's half share of "Red Hill" for about $22,000.

22 In 1978, David took a lease of the farm property known as "Aunty Belle's." David used his earnings from his outside shearing work to pay the rent. He bought himself a small herd of 150 sheep which he soon bred up to about 500. He paid the parents' partnership one fuel bill per annum of approximately $1,000 to compensate them for the petrol he used for his own farming purposes.

23 During the drought of 1982, David gave his parents some of his own wool income to assist them with partnership expenses and he took on additional outside shearing jobs to make up that contribution.

24 In 1983, David took up residence in the soldier settler's cottage on the parents' land at "Jeitz" and he still lives there. When he moved onto "Jeitz," there was no heating and the toilet and shower were outdoors. He paid for the furniture himself. The parents' partnership paid for his electricity and telephone expenses and for contents insurance. Later, when he became a partner, these expenses were allocated to his partnership drawings. Over the period of nearly 25 years that David has lived on "Jeitz," he has made numerous improvements and, as he deposed, it is now a simple but comfortable small home.

25 In 1984, David suggested to his father that he should rent a further 500 acres at Glenthompson, which he did. This enabled an increase in sheep numbers and made available substantial extra hay to feed the sheep.

26 In 1985, David entered a contract of sale for the purchase, for the price of $124,820, of a property called "Austin Hills" in Staverley (near the "Red Hill" property) comprising some 200 acres. David paid a deposit of $12,482 from his own earnings and obtained bank finance of $70,000 and three year vendor finance by a mortgage back for the balance. David used his shearing earnings to repay the bank loan and the mortgage back. The parents' partnership used "Austin Hills" for sheep and, in later years, for rotation crops and grazing.

27 In 1986 there was an increase in the price of wool and the farming business benefited due to the increased number of sheep then held, stemming from the decision to buy "Austin Hills" and from renting some other land. In July 1986, David entered into a written partnership agreement with his parents. At that time, he made available to the partnership his lease of "Aunty Belle's" and he also thereby contributed 760 sheep (valued at $16,874) and plant and machinery (valued at $11,275).

28 His parents told David that all of the income earned from the farming business was to be deposited into the partnership account and that all the farming expenses were to be paid from that account and that any personal expenses were to be listed as drawings. Any profits made by the partnership were described as drawings for tax purposes but were actually left in the business and not distributed.

29 After joining the partnership and contributing his herd, David was worse off in terms of cash earnings. He did not receive any wages or distribution of profits from the farming business, so he continued to do outside shearing work when time permitted until about the time that his father took ill.

30 In 1988, the father contracted cancer and stopped working on the farm. As a result, David had to work additional hours and, as he deposed, "I was extremely busy and overtired, especially during the busiest seasons of the year on our farm."

31 In about July 1989, a property adjacent to "Fairview" known as "Wheelers," comprising some 460 acres, came up for sale. It was purchased at auction for the sum of $440,000 which was financed by the sale of "Brophy's" for $367,420 and the balance of the price was the subject of mortgage finance. "Wheelers" was registered in David's name as sole proprietor and the mortgage was in his name as mortgagor. David thus received a substantial benefit represented by the proceeds of Brophy's. The mortgage was repaid from partnership income but David did all of the farm work to enable the partnership to earn that income.

32 On 25 November 1989, the father died and, under his will dated 20 September 1988, the father left his partnership interests to the testatrix and David in equal shares and the whole of his real estate and the residue of his personal estate to the testatrix. Probate of the father's will was granted to the testatrix and the defendants on 11 May 1990. The real estate that passed to the testatrix under the father's will constituted his interests as a tenant in common in equal shares with the testatrix in the properties known as "Fairview," "Jeitz" and "Red Hill."

33 David continued to operate the farming business in partnership with the testatrix. The testatrix assisted by running errands and paying the bills and she also did the clerical work until GST was introduced, when David hired a bookkeeper. The testatrix also cooked and provided substantial meals for David and any seasonal labourers, on a daily basis. As David deposed, he was "the only real farmer" - he conducted the farming business and was aware of the income and expenses.

34 The partnership profits continued to be left in the business and were not distributed, save that the partners drew out some living expenses. The testatrix was free to draw on the partnership account into her personal account into which she also received a war widow's pension and the rental income from the Brown Hill property. The testatrix also ensured that there was some money in David's personal account for his living expenses. Prior to 2001, David's drawings for this purpose totalled about $10,000 per annum and the drawings of the testatrix totalled about $12,000 per annum.

35 David deposed that, after his father's death, the testatrix came to rely heavily upon him not only for running the farm but also to monitor her general health and wellbeing. He checked on her daily. They were confidantes and they could and did talk about everything.

36 In order to increase the efficiency of the farming operations and to make it easier for a sole farm labourer (himself) to operate the farm, David introduced a number of improvements to the farm properties (many by his own labour), added to the plant and equipment and made a number of changes and additions to farming practices and activities. It is unnecessary to set out all the details.[6]

37 In October 1993, David purchased an investment property "Fairview Lodge" at Lot 15, Thompson Street, Halls Gap for the sum of about $250,000. The deposit of about $60,000 came from partnership funds and, according to David, the mortgage for the balance was repaid from partnership funds but attributed to drawings by him.

38 In March 1999, David, the testatrix and the second defendant and her husband purchased, in equal shares, an investment property in Wirilda Court, Halls Gap for the sum of $180,000.

39 On 1 March 2001, a daughter, Haylee, was born to David out of wedlock. Haylee lives with her mother and David pays child support.

40 The circumstances surrounding Haylee's birth led to a virtually complete breakdown in the relationship between David and his sisters. The circumstances of the breakdown and the subsequent conduct both of David and his sisters are in my view irrelevant to the issues in this proceeding, although the fact of the breakdown must have contributed to some distancing between the testatrix and her daughters, given that she was living on the farm and in constant contact with David and that David was not generally speaking to his sisters, whom he perceived, in a number of instances, as having sided with Haylee's mother.

41 In October 2001, David purchased a house at Tandara Road, Halls Gap, for the sum of $130,000. This house was purchased as a residence for Haylee and her mother, "Ros". The deposit was financed from partnership funds and the balance by mortgage to the Commonwealth Bank of Australia. David owed $112,500 on the mortgage as at November 2007. Haylee, and Ros and her two older children, lived at the Tandara Road property rent free for the first two years. After that they moved out for reasons connected with Ros's employment and then they moved back again. Subsequently, a bitter Family Court battle took place between David and Ros which lasted for some years.

42 In or about 2002, David commenced to live with his continuing de facto partner, Lyn Webster.

43 A relative, Aunty Belle, died in March 2002. David's lease of "Aunty Belle's" expired at the end of 2003. In 2004, David and a neighbour purchased one half each of "Aunty Belle's." After subdivision, David became registered as proprietor of half of "Aunty Belle's" comprising 115 acres. The purchase had been financed from partnership funds and, although the property was registered in David's name, it was listed as a partnership asset in the partnership accounts.

44 Growing up on the farm, Jennifer helped with all of the farm duties that she was capable of performing, including driving the utility to feed the sheep and household chores of cleaning, washing, ironing, vacuuming, chopping wood, filling the wood box, mowing the grass and gathering eggs. Her morning tasks in winter were often to vacuum the lounge, clean out the fireplace and set it for the evening (usually with pine cones that the children had collected from the paddock before going to school). She helped mark lambs, learned to inject them for pulpy kidney disease and round up sheep.

45 Jennifer was a weekly boarder during secondary school. On weekends her time was spent washing, ironing and helping her father. Her summer holidays were spent hay carting. She and David helped their father with this and other farm jobs, including jobs associated with shearing during the September school holidays.

46 In 1973 Jennifer left school and she worked in Willaura as a shop assistant until she was old enough to enter the intake for nursing training at Hamilton Base Hospital. After commencing nursing training, she still returned home regularly to assist her mother with cleaning, gardening and mowing and her father with all types of farming tasks.

47 Jennifer married her first husband, Steven McArthur, on 29 March 1975. The parents paid for the reception costs (approximately $300) and she paid for the other wedding expenses. The parents gave them the sum of $800 to help with the deposit on a house they intended purchasing in Hamilton. Andrew was born on 24 August 1975. Her husband Steven was killed in a car accident on 12 June 1976. After one week's compassionate leave, Jennifer resumed her nursing duties.

48 On 2 June 1979 Jennifer married her present husband, John Torney.

49 During her early childhood, Sally spent a lot of time with her father while he was going about his normal farming duties. She was taught to drive when very young and by the age of 12 was driving a tray truck for hay carting around "Fairview." In the early 1970s, when Sally was the eldest child living at home during the week, she was required to carry out many farm duties on a daily basis, including cutting and stacking firewood, feeding chickens, watering animals and milking the family cow. She drove vehicles during the hay carting season and the shearing season. She assisted in feeding stock, herding sheep and cattle, marking lambs, dipping sheep, helping to raise pet lambs and she assisted her father in the completion of fencing in a property that he was leasing from a relative. She helped her father fit out one of the sheds on "Jeitz," a barn that was converted into a grain storage shed. In about 1972 or 1973, the family went on a caravan holiday to Warrnambool and Sally was left for about two weeks to assist her uncle in looking after the various farm properties, including feeding and checking stock and she cooked all of the meals.[7] Sally helped with the family's washing and, when attending boarding school, helped with the washing every Saturday and did other farm chores at weekends.

50 In 1977-1978, Sally was attending Monivae College in Hamilton. At the same time Sally assisted Jennifer in caring for Jennifer's baby son Andrew. Sally found this period extremely difficult financially. The father occasionally gave her $20 to $50 in cash which would last for weeks. She lived in her school uniform as she had few other clothes other than those handed down by Jennifer.

51 In January 1979 Sally commenced nursing at Hamilton Base Hospital, residing at the nursing home. She married her husband Gerald in December 1979.

52 Clare grew up on "Fairview." She deposed that she was almost an only child as her siblings were at secondary school when she was at primary school and had left school by the time she started secondary school. She does not remember her eldest two sisters living at home, nor does she have much recollection of David until he returned to work on the farm at about 15 years of age. At school, Clare excelled academically and at sport.

53 Clare spent a great deal of time with her father as a young child and then as a teenager. On weekends she would always ensure that she was up early in order to go with him to help with farming chores. She was taught to drive the farm utility when very young and helped with stock feeding and hay carting and various seasonal farm tasks. Clare also assisted with many household tasks. She did a lot of cleaning and tidying.

54 In 1988 Clare enrolled at Ballarat University College to undertake a diploma of nursing which she completed in 1990 and then undertook a graduate year at the Royal Children's Hospital in Melbourne. By her second year she had become engaged to Paul Anthony Clarke whom she subsequently married.

Matters to which the Court must have regard pursuant to s.91(4) of the Act (so far as applicable)

"(e) Any family or other relationship between the deceased person and the applicant, including the nature of the relationship and, where relevant, the length of the relationship."

"I lived all my early life in a close family environment on the family farming properties. I enjoyed a very good relationship with my mother. My mother was not a nurturing type of mother and she was not one to put you on her knee or cuddle you. At the age of 20 when I had a 9 month old child and my husband Steven died it was my father who consoled me in my grief. It was the first time I ever saw my father cry. I saw my mother 4 days later at the funeral. Notwithstanding my mother's character, I got on well with her having many conversations over the years in the lounge room at her home on nights when I used to stay...After my father's death I continued to support my mother in every possible way as time permitted. My mother would come to Ballarat to go shopping and either my sisters or I would accompany her and assist her in the purchase of clothing and other items she liked to purchase...Visits to the farm usually consisted of helping my mother in various ways, either by cleaning or by organising her home...

[Jennifer had earlier deposed that on his death bed her father had told her that her mother would take care of them (Jennifer and her husband) and help with their children's education.]

My mother loved to come to Ballarat to shop for clothes. I would spend the day going from shop to shop with her...it was on one of these visits...that I first spoke to my mother about our father's wishes."

[Jennifer went on to depose that, in this and several subsequent conversations on the same topic her mother said that Jennifer was lying concerning her father's wishes.]

56 Jennifer deposed that, over the last 12 months or so of her mother's life, contact was initiated only by Jennifer or by seeing her mother at family gatherings or at the farm. During the last 7-8 months of her life, Jennifer spoke regularly with her mother about her health and she and her sisters were with her during her last few days.

57 Jennifer deposed that, after her father was diagnosed with terminal lung cancer in 1988, her life was "virtually on hold" for the next 18 months although she was still working and had her own family of 4 children under 13 years of age to care for. Jennifer would often pick her father up from "Fairview" and take him to Ballarat for chemotherapy treatment and then return him to his home. Whilst in hospital, Jennifer spent time talking to him about many topics.

58 On one occasion when Jennifer was taking her father to Ballarat for treatment, her father mentioned the possible purchase of "Wheelers" and said that he would have to sell "Brophy's" which he had always wanted to give to his daughters. Jennifer said to him that if this was his chance to secure the "Wheelers" property then she was supportive of his decision. "Wheelers" came up for auction whilst her father was attending the Peter MacCallum clinic in Melbourne for treatment. Jennifer drove to Melbourne and took her father to the auction although she did not attend it herself. She subsequently viewed the auction on video and saw to her surprise that David signed the papers for the purchase of "Wheelers" in his own name.

59 Having taken 8 days off work, Jennifer stayed at the farm with her father until his death. In that time she attended to all of his needs and slept in the room with him giving him 24 hour care. She also helped her mother cook for the shearers at that time.

60 Sally always enjoyed a close relationship with her parents. She was 28 when her father died. During his illness, she was working but she travelled home on her days off to help care for her father and to support her mother. When her father was first sent to Ballarat for treatment, Sally took her holidays on the farm to help cook for the shearers so that her mother could be with her father. Sally visited her mother regularly and telephoned her regularly. Sally regularly attended at the family farming properties to assist her mother with household tasks, including the gardening and mowing of lawns until prevented from doing so by a back injury. For many years, she went home to the farm on her holidays and cleaned David's house as well as her mother's house until such time as her mother had engaged a housekeeper.

61 When the testatrix became ill a few years before her death, she required regular treatment at Ballarat. Sally took time off to drive her to and from the hospital and would be away with her for days at a time every 2 or 3 months. When she took ill in May 2006, Sally again took time off work to be with her. She and her sisters helped to nurse her at the Ararat Hospital in the palliative care unit in the 9 days prior to her death, at that time rarely leaving her side.

62 Clare enjoyed a close relationship with her mother throughout her life. She and her husband resided in Cairns from 1991 to 2001. On returning to Ballarat, she resumed her visits to the farm and her assistance to her mother around the house.

"(f) Any obligations or responsibilities of the deceased person to the applicant, any other applicant and the beneficiaries of the estate."

63 Apart from what might be described as the broad obligation of any parent to an adult child, the testatrix had no specific obligations or responsibilities to any of her children save and except, in my opinion, a general obligation that arose in all the circumstances, to satisfy, so far as possible, the reasonable expectation of David to inherit a farming business and a number of farming properties upon which to conduct that business.

"(g) The size and nature of the estate of the deceased person and any charges and liabilities to which the estate is subject."

64 I have referred to the assets of the estate and their inventory values at para [7] above.

65 The assets given to the daughters are as follows:

66 In addition, the residuary real estate is charged with legacies to the daughters totalling $150,000 (plus interest at the rate of 5 percent per annum which is accumulating thereon).

67 There is a dispute about the value, at date of trial, of the residuary real estate[8] as shown by the following table:

Defendants' value at date of trial (per Mr McAlpine)

68 It is necessary to resolve the dispute about the value of the farm properties comprised in the residuary real estate. Each side called a qualified valuer. Peter Geoffrey Wigg was called by the plaintiffs and Robert John McAlpine was called by the defendants.

69 Mr Wigg valued "Fairview", "Red Hill" and "Jeitz" as at 6 March 2009 in the amounts appearing in the above table. He valued "Fairview" and "Red Hill" at $2,450 per arable acre and "Jeitz" at $2,550 per arable acre. Mr Wigg had in the first instance provided written valuations of these properties as at 28 February 2008 in which he had adopted around $2,000 per arable acre for each property and then made appropriate allowances for improvements. His written valuations were in conventional and appropriate form and were not the subject of criticism.

70 Oral evidence was adduced from Mr Wigg to support his upward revaluation of the properties as at 6 March 2009. Mr Wigg testified that his revaluations were based on evidence of recent comparable sales. The defendants consented to the admission into evidence of Exhibit "G" which comprised a spreadsheet summarising these sales and maps showing their location. The defendants admitted that the contents of the spreadsheet (sale details) contained in Exhibit "G" were accurate.

71 Mr Wigg referred to a sale of 91 Hollows Road, Willaura North in October 2008 at $3,000 per acre. He said that it was a comparable sale because it was in the same region and comprised arable property and mixed-used grazing land. He next referred to a sale of 6332 Mortlake-Ararat Road in October 2008 at $2,500 an acre and which he said represented $2,916 per acre for the arable component of the land. He said that it was another recent sale within the same region and provided comparable cropping and mixed grazing land. I note that the property is in the vicinity of "Fairview" and "Jeitz". Mr Wigg next referred to a sale at Watgania Road, Willaura North in November 2008 at $3,000 per acre and also to a sale of land in the same area at Andrews Lane, Maroona in November 2008 at $3,061 per acre. These properties were about 7km from "Fairview" and "Jeitz" and were also comparable farming properties. Mr Wigg also referred to another sale of a property in Andrews Lane, Willaura in February 2009 at $2,899 per acre. He said that it was in a similar region and provided arable cropping land of a similar size to "Fairview" and "Jeitz".

72 Mr Wigg said that when he came to assessing the value of "Fairview", "Jeitz" and "Red Hill" in the light of these comparable sales that he had adopted lower values of $2,450 - $2,550 per arable acre because the comparable sales had been negotiated privately and it might be that the parties were "over anxious" in their negotiations. He also noted that some of the buyers were "immediately adjoining owners". Mr Wigg said that he was aware that the defendants' valuer Mr McAlpine had valued the estate properties at something less than $2,000 per acre. Mr Wigg said that he was not aware of any recent sales evidence that supported valuations at this level and that Mr McAlpine had not brought any to his attention.

73 In cross-examination, it was put to Mr Wigg that economic conditions had changed since the making of his written valuations. Mr Wigg said that considering the sales evidence of the last six months it would appear that recent economic events had not influenced the farmers' decisions to pay the prices that they recently had paid. Mr Wigg said that the low interest rate environment had continued although his original references to a "strong economy" was no longer applicable. Mr Wigg said that he had taken the continuing low rainfall and drought conditions into account.

74 It was put to Mr Wigg that there had been recent activity by a company interested in developing wind farms in areas to the north of "Fairview" and "Jeitz" and that this might have influenced values in that area of some of the comparable sale properties. Mr Wigg said that he had conducted some analysis in that regard but it was unclear as to whether any potential income stream from wind farming had added value to the relevant properties. It was put to Mr Wigg that some of these sales had shown an increase from $2,500 an acre to $3,000 an acre in five months and were an aberration but Mr Wigg said that there were other sales indicating similar levels of value up to $3,000 per acre and that such sales were to the south as well as to the north of "Fairview" and "Jeitz".

75 Mr Wigg said that the most recent sales evidence he had was in January and February of 2009 and he did not see any reason for the values to have shifted since then.

76 As I have said, Mr McAlpine was called by the defendants. He had been a practising valuer for 45 years.

77 Mr McAlpine provided written valuations of "Fairview", "Jeitz" and "Red Hill" as at 28 February 2009. He described the three properties, their uses and their improvements. He said that it was basically good to very good country which up until recent economic events had been in demand. Under the heading "Basis of Valuation" he said that "we have noted a number of sales and valuations of rural properties in the district that in some ways are comparable to the subject property" and that "the valuation was assessed on the basis of direct comparison with some adjustment being made where appropriate" but that "there does not appear to be the same demand for this country now" (he referred to the lack of lime being spread). He said "there was previously some overseas interest from superannuation funds which do not appear to be so active in the marketplace at present. Land sales and values are often higher per hectare if individual or smaller lots are sold separately and also if there is a demand from adjacent property owners. However, in the current economic climate this could be problematic and we have no evidence of such interest."

78 Mr McAlpine also provided written valuations of "Wheelers", "Austin Hills" and "Aunty Belle's". Under the heading "Basis of Valuation" he made some general comments similar to those made in his valuation of "Fairview", "Jeitz" and "Red Hill".

79 Mr McAlpine said that Mr Wigg was a pretty competent valuer and he respected his work. He was asked to explain why he had arrived at a different value in relation to "Fairview". He said that "property values are crumbling as we speak - it was more than a recession or deep recession, it was a depression in the country areas." He was referred to recent sales at $3,000 an acre and he said that he suspected "that there's something funny going on in the area brought about by the activities of...wind farms" and "I suspect that...there are farmers that have got wind of it and are taking a bit of a punt and paying a higher price." He said that "Fairview", "Jeitz" and "Red Hill" were not suitable for wind farming activities.

80 Mr McAlpine said that a company involved in buying land in the area for blue gum plantations had had a substantial beneficial effect on prices but the company was no longer in business.

81 Mr McAlpine said that since the last sale in February 2009 to which Mr Wigg had referred;

"What has happened since is a catastrophe. There's no other word for what is happening out there in the farming community. Farmers who would otherwise sell are not selling. They're holding back. [He referred to evidence of rural land sales in Victoria from 1 December 2008 to 13 March 2009 and said that sales were down in volume and passed in on vendor bids]. I don't know how to put this. We are in uncharted waters. What's happened to the real estate market in general and the real estate market in particular in the area we're talking about at Willaura is nothing short of unexplored territory...We're in the eleventh year of a drought and things are pretty grim...The confluence of no grass, no rain, no super phosphate or trace elements, hardly any....There's a general glumness because of the economic downturn generally being experienced in the community..."

82 Mr McAlpine said that prices in the Halls Gap area had mostly declined "it's very sick. It's a basket case."

83 Cross-examination of Mr McAlpine disclosed that he did not keep proper files in relation to his valuations. He said that he had "folders" but it emerged that these were large envelopes upon which he wrote his notes and that in fact these envelopes did not contain any other documents. Of more substance, Mr McAlpine was completely unable to identify any comparable sale relied upon in reaching his valuations despite the statement in his written valuation that "we have noted a number of sales and valuations of rural properties in the district that in some ways are comparable to the subject property." Further, despite what he said in his written valuations, he testified that "I consider that the previous sales were not admissible." He said that he had referred to other documents before making his valuations but he was unable to produce them or identify them (apart from one valuation as at December 1996 that he had undertaken in 1997 and another valuation that he had done in 1998). He said that he had had regard to a lot of other valuations and sales but that he had "dismissed them."

84 When pressed as to why he had dismissed the sales to which he had been referred by Mr Wigg, he said "as we're speaking, property prices are plummeting. There are no sales to substantiate what's happening in the marketplace at this time."

85 Further cross-examination revealed that Mr McAlpine found it difficult to explain how he had arrived at his valuations.

86 Mr Wigg's testimony was credible and evidence-based. It was untouched by cross-examination and I see no inherent reason to reject it. On the other hand, Mr McAlpine's evidence was unimpressive. Mr McAlpine was unable to verify his written valuations and unable to support his oral evidence of market "catastrophe" with any particulars. I cannot accept his evidence. I am satisfied that it is appropriate to value "Fairview", "Jeitz" and "Red Hill" at the time of the hearing at the valuation levels put forward by Mr Wigg and that similar levels of value must be attributed to "Austin Hills" and "Wheelers".[9] As a result, I consider that the total value of the residuary real estate at the date of the hearing was $2.75M.[10]

87 The residuary estate also includes the value of the interest of the testatrix in the farming partnership business which, according to the balance sheet, was valued at $237,919. That amount included one half of the value of "Aunty Belle's" at $97,606. However, as "Aunty Belle's" is registered in David's name I am content to treat it as his property for the purposes of this proceeding. Accordingly, the estate's interest in the partnership can be valued in round figures at $140,000. There was some dispute, in the course of the evidence, about the value of various assets of the partnership (including cattle, sheep, wool and plant and equipment) but the evidence is not such that I feel able to depart from the balance sheet amounts.

88 The principal liability of the estate is costs. The plaintiffs' estimated legal costs are $150,000 and those of the estate are estimated in a similar amount.

"(h) the financial resources (including earning capacity) and the financial needs of [the applicants] and of any beneficiary of the estate at the time of the hearing and for the foreseeable future."

89 Jennifer and her husband are the joint owners of their residence at 28 Rowan Parade Ballarat (together with a block at the rear being 81 Marie Crescent) valued at approximately $360,000. They own a holiday home at 2-4 Dalton Street Halls Gap valued at about $300,000 subject to a mortgage of about $85,000. Jennifer retired due to ill health in 2004 and, after undertaking relevant studies, commenced a business as a natural therapist under the name "Ballarat Healing and Energy Centre" and the net income of the business in 2008 was about $1,400. Jennifer has superannuation of about $86,000. They own two motorcars and a motorbike valued in all at about $19,500. They have personal loans/bank card liabilities of $15,000 and have also borrowed $8,000 from a daughter. They have annual expenses (including mortgage interest and repayments and personal loan interest) of about $39,000. Jennifer has four children and testified that they were independent and well able to support themselves. Jennifer's husband is employed full-time as a cleaner at the University of Ballarat earning $30,757 gross per annum and has superannuation of approximately $20,000. He has a high cholesterol count.

90 Sally suffers with back-related symptoms. She severely injured her back at work in 1992 and has severe disc rupture at L4-L5 and also has canal stenosis. She is restricted in how long she can sit or stand and she takes painkilling medication regularly. She also has chiropractic care as required. Due to the severity of her injury, she could not return to nursing and she is employed as the Deputy Human Resources and Occupational Health and Safety Manager for Western District Health Service and earned $50,627 gross in 2008. Gerald was diagnosed in July 2000 with an autoimmune disease known as Sarcoidosis and Erythema Nodosum. During testing and treatment, he was unable to work for about six months. He underwent cortisone treatment. His last tests revealed scarring of the lungs which might cause problems later in his life. Gerald subsequently attended night school and now has a Diploma of Natural Resources Certificate IV in Workplace Training and Assessment. He is employed as a teacher at a TAFE college earning approximately $54,000 gross per annum. Gerald was diagnosed with hypertension and diabetes in August 2007 and is taking medication for both conditions.

91 Sally and Gerald jointly own their residence in Hamilton a four bedroom weatherboard home worth about $250,000 and subject to a mortgage of about $70,000. It is an older home which requires a good deal of upkeep and maintenance. Gerald owns a property at Mount Napier Road Hamilton on which he has constructed an industrial shed. This property is worth about $180,000 and is subject to loan finance of about $120,000 (of which $60,000 was borrowed for a shed as yet unerected). He receives gross rental income from the property of about $17,160. Sally has superannuation of about $80,000 and Gerald has superannuation of about $15,000. Sally has a liability under a personal loan of about $35,000 and a credit card debt of $6,500. Sally drives her daughter's motor vehicle. Gerald owns a work vehicle worth about $15,000 subject to a loan of $8,000. Gerald also owns a boat valued at about $19,000. Sally and Gerald have annual expenses (including mortgage and loan repayments) of about $64,451. Sally has two children and she testified that they were financially independent.

92 Clare and her husband Paul have five dependant children: Jamiah (aged about 12), Eesha (aged about 10), Javier (aged about 8), Tazarni (aged about 5) and Darchi (aged about 4). Eesha has been diagnosed with epilepsy or acute confusional migraine syndrome and is required to attend a paediatrician each month. In about the year 2000 Clare was diagnosed with ulcerative colitis and remains on medication for this illness. Paul suffers from severe clinical depression. He receives clinical support from a psychiatrist, a psychologist and his general practitioner and remains under close observation and regular medication. Clare is a registered nurse and midwife and employed part-time, earning from all sources about $32,050 gross in 2008. Paul is employed as an Indigenous Mentor for the Central Murray Area Consultative Committee earning a gross income in 2008 of $58,890. At the time of the trial, they had sold their then residence and were purchasing another house in Echuca for the sum of $410,000. After settlement of the sale and purchase they anticipated a mortgage liability of about $245,000. They have superannuation totalling about $119,000 (Clare: $49,000; Paul: $70,000). They own motor vehicles worth in all about $23,000. They have credit card debts of about $6,000 and a bank account in credit to about $2,000. Their annual expenses including mortgage repayments are about $69,000.

93 David is the only beneficiary affected by the plaintiffs' claim.

95 Having regard to my conclusions in relation to the valuation evidence, I find that, as at the date of hearing, Austin Hills was valued at $748,800 and Wheelers was valued at $1,104,000. I am content to accept the defendants' values for the other real estate assets. I conclude that the total value at the date of the hearing of David's real estate assets was in round figures $2.3M.

96 In addition to his real estate assets, David has his share of the partnership assets and some superannuation.

97 David exhibited a financial statement for the farming partnership conducted by himself and the estate of the testatrix, containing actual results for the year ended 30 June 2008 and projected results for the year ended 30 June 2009. The statement showed gross primary production income for both of the years of about $230,000. The total expenses for the year ended 30 June 2008 were in the region of $260,000 and the projected expenses for the year ended 30 June 2009 were about $30,000 more. This projected increase in expenses appears to have flowed primarily from an increase in the cost of repairs and maintenance of plant and equipment and buildings, sheds, fencing and yards. The partnership loss for the year ended 30 June 2008 was $12,609 and the projected loss for the year ended 30 June 2009 is $63,087. David's projected capital account in the partnership for the year ended 30 June 2009 shows a total proprietorship amount of $301,983 after making provision for his half share of the projected loss and for drawings by David of $29,907 and superannuation contributions for David of $1,000. The balance sheet shows that the drawings for David and the partnership losses are projected to be financed principally by a reduction in the partnership's investment constituted by a Farm Management Deposit. I note that the drawings by David for the year ended 30 June 2008 were $26,241.

98 David's taxable income for the financial years ending 30 June 1995 to 30 June 2008 was as follows:

99 As at March 2009, David's monthly expenses (including $940 for mortgage payments and $135 for child support) were $2,758 resulting in total annual expenses of about $33,000. Broadly speaking, it would appear that David's expenses are covered by drawings from the farming partnership and other income (including rental income).

100 David's partner, Lyn Webster, owns substantial real estate and other assets in her own right with a net value of about $700,000. Although assisting David around the farm, she has independent employment and uses her income therefrom to pay for her own expenses.

101 David deposed that the farming business had been conducted for decades in an interrelated way over all the land held by the testatrix and himself and that the farming business would suffer financially (and probably never recover) if it could not continue to be conducted over all this land. David further testified that "Austin Hills", "Aunty Belle's" and "Red Hill" were close together and that he could move sheep from one to the other via various lanes. He also described the physical integration of "Fairview" and "Wheelers". David said that he used "Red Hill" for his sheep shearing operations and that was where had had his sheep yards. As regards "Jeitz", apart from farming operations, that was where he and his partner lived.

102 David deposed that he had full responsibility for the educational expenses of Haylee and that his strong desire was that she attend as a boarder at Monivae College in Hamilton, as his younger sisters did. That would involve the payment of private school fees.

"(i) Any physical, mental or intellectual disability of any applicant or any beneficiary of the estate."

103 David deposed that he was in average health but that he had been advised by his doctor that he had high blood pressure and an ulcerated gullet, which can become cancerous (from years of breathing in grain dust and pesticide sprays). David further deposed that in August 2005 he severely broke his leg and in February 2007 broke his ankle. He said that both injuries occurred when performing duties around the farm and that his knee and ankle are very unstable. He deposed that, as a result of those injuries, he had difficulty with movement (in particular going down steps) and was struggling to perform all physical labour involved with raising sheep. He said (in his affidavit of November 2007) that he had received insurance moneys as a result of personal injury which had all been paid directly into the farm account and had assisted the partnership during the drought, an extremely difficult period which was still ongoing.

104 David testified that he had received specialist medical advice that, due to his injuries, in a few more years he would not be able to perform the physical labour involved in raising sheep. In cross-examination, he said that if he was unable to handle sheep in the future he would have to pay more wages and that hopefully Haylee would be a farmer. I note that Haylee is aged 8 years. David said that he did not know what he would do if Haylee had no interest in farming.

105 I have already referred to the illnesses suffered by Sally, Sally's husband Gerald, Clare, Clare's husband Paul and Clare's daughter Eesha.

106 Jennifer is 53 years old, Sally is 48 years old and Clare is 40 years old.

"(k) Any contribution (not for adequate consideration) of the applicant to building up the estate or to the welfare of the deceased or the family of the deceased."

107 I have referred to these matters above. In summary, the plaintiffs during their younger years all assisted their parents on the farm by undertaking various farming chores and household duties. More recently the plaintiffs cared for and nursed both their father and the testatrix when they were ill prior to their deaths.

"(l) Any benefits previously given by the deceased person to any applicant or to any beneficiary."

108 Apart from the expenses associated with their upbringing and education, the benefits received by the plaintiffs from their parents were minimal. The affidavit material discloses a number of small pecuniary advances to each of the plaintiffs from time to time, by far the largest of which was a contribution of $10,000 to Sally for her first home.

109 David received the benefit of the proceeds of Brophy's. Further, in cross-examination, David conceded that his share of purchase moneys and repayments on mortgages in relation to the properties at Thompson Street, Halls Gap, Tandara Road, Halls Gap, Wirilda Court and "Aunty Belle's" were all sourced from partnership funds without any adjustment in favour of the testatrix. In addition the substantial expenses of his custody fight in the Family Court were paid out of partnership funds. By the same token, the Court heard expert evidence that the equivalent value of the farm work performed by David from 1974 to 2008 by reference to the Federal Pastoral Award, making appropriate adjustments, was in excess of $900,000 by way of gross wages (i.e. before tax).

"(n)" The liability of any other person to maintain the applicant."

110 Apart from the plaintiffs' respective husbands, there are no other persons liable to maintain the plaintiffs.

"(o) The character and conduct of the applicant or any other person."

111 The defendants made limited critical submissions in relation to the conduct of the plaintiffs but I am satisfied that no significant issue arises in this proceeding in relation to the character or conduct of the plaintiffs and I find it unnecessary to say anything further.

"(p) Any other matter the Court considers relevant."

112 I have generally taken into account, in addition to the matters referred to in paras [55] to [111], the matters referred to from paras [2] to [54] and the matters and considerations referred to under the heading "Conclusions" below.

113 The plaintiffs submitted that, taking into account the size of the estate, the provision to the plaintiffs of approximately $115,000 each was patently inadequate in all the circumstances and, in particular, having regard to their very modest financial positions, the very substantial provision for David and David's existing financial position. The estate was a large one and presented the testatrix with the opportunity of making a proper provision for the plaintiffs notwithstanding David's strong claim based on working on the farm for the whole of his working life and his contribution to the maintenance and preservation of the farm properties. It also had to be recognised that David had been able to acquire substantial assets in his own right as a result of working the estate's farming properties.

114 The plaintiffs submitted that the testatrix's exercise of her freedom of testamentary disposition to give effect to her desire to benefit David and to pass the family farm to the next generation had to yield to her obligation to make adequate and proper provision for her daughters.[11]

115 The plaintiffs submitted that a proper provision for the plaintiffs was $600,000 to Clare and $450,000 to each of Jennifer and Sally which would allow them to each discharge their mortgages and have a nest egg for future contingencies. It was put that these amounts would be in substitution for their existing benefits under the will. The plaintiffs submitted that there were more than sufficient assets available to David to support the legacies to the non-claiming daughters and this further provision for the plaintiffs without selling "Fairview", "Jeitz" and "Wheelers", by way of sale of some other real estate assets (either those in the estate or those in his own name).

116 The effect of the plaintiffs' submissions was to seek a net additional provision for them in the sum of about $1.14M and to reduce David's benefit under the will by that further amount together with the estimated costs of some $300,000.

117 In considering what a wise and just testatrix should have done in all the circumstances, the defendants emphasised the following matters:

• the preservation of the integrity of the family farm as being critical to the operation thereof and the diversification of farming operations;

• the limited income produced by the farming operations despite the value of the farm properties;

• the financial pressures facing David in raising funds to pay the existing legacies;

• the substantial provision already made for the daughters by the will;

• David's obligations for the education of his daughter;

• David's ability to carry out the physical work involved in sheep farming was limited and he would be required to employ more labour on the farm;

• David had made a very substantial contribution in building up the estate;

• the plaintiffs had received the benefits of a good education due to the sacrifice of their parents.

118 The defendants submitted that the needs of the plaintiffs had been adequately recognised by the will. Jennifer and her husband John had paid off their house in Ballarat, they had a holiday house in Halls Gap and they lived within their means. Sally and her husband Gerald had good careers with a combined income substantially in excess of that enjoyed by David and his partner. They had a home in Hamilton with a small mortgage on it and investment properties of value. Sally had received a $10,000 gift towards the purchase of her home which had now substantially increased in value. Clare and her husband Paul had good skills and careers with a combined income of $90,000. Clare had received benefits from the testatrix during her lifetime.

119 The parties were not in dispute as to the relevant law and both sides referred to the principles referred to in the well-known authorities that have expounded upon the interpretation of the Act and its predecessors.

120 In my opinion, having regard in particular to the size of the estate and to the substantial real estate assets that David has accumulated in his own name, the testatrix, in all the circumstances to which I have referred, failed to make adequate provision for the proper maintenance and support of each of the plaintiffs by her will. Having regard to the modest financial circumstances of each of the plaintiffs, I consider that, in all the circumstances, the provision by the testatrix for each of the plaintiffs of the share of specified assets plus the legacy (approximately $115,000 each), as provided by the will, fell short of that provision which would have been made by a wise and just testatrix. The value of the assets in the estate, and David's independent asset position, were such that the testatrix was in a position to provide to a greater extent for the needs and contingencies of the plaintiffs than she did.

121 I have taken into account David's reasonable expectation of inheriting the farm properties and his contribution to their preservation and maintenance. I have also taken into account the modest income enjoyed by David, his obligations to Haylee and the need to maintain his income by the operation of all or most of the existing farm properties. However, given David's substantial independent asset position, I think that a wise and just testatrix would have made a better provision for the future needs of the plaintiffs. A wise and just testatrix would have contemplated that David had a number of feasible options, given the range of assets at his disposal, for the satisfaction of appropriate further provisions for the plaintiffs.

122 I consider that the testatrix was in a position to better provide for the future needs and contingencies of the plaintiffs beyond the relatively modest amount provided for each of them by her will, without derogating from her obligations to David. I turn to give consideration as to the additional amount that should be provided for each of the plaintiffs. This is not an arithmetical exercise but involves the exercise of discretion within the confines of the Act and having regard to the numerous factors, both tangible and intangible, for which the Act provides and to which I have referred.

123 Jennifer and her husband have accumulated real estate assets of some value together with some superannuation but Jennifer's income prospects are problematic. They have borrowings, including from a daughter, that indicate a lack of sufficient income. I consider that the testatrix should have provided a further amount to give Jennifer a modest degree of additional security for her future. I think that, in all the circumstances, further provision should be made for Jennifer by way of an additional legacy in the sum of $100,000 plus interest at the rate of 5 per centum per annum from 1 January 2010 (in the event that the legacy is unpaid at that date).

124 Sally and Gerald have also accumulated real estate assets of some value together with superannuation. Sally has a reasonable income but suffers from illness and injury that affects her future income prospects and her husband has a number of serious health problems. The benefit provided to Sally by the testatrix during her lifetime should be taken into account - however, I consider that the testatrix should have provided a further amount to give Sally a modest degree of additional security for her future. I think that, in all the circumstances, further provision should be made for Sally by way of an additional legacy in the sum of $100,000 plus interest at the rate of 5 per centum per annum from 1 January 2010 (in the event that the legacy is unpaid at that date).

125 Clare clearly has more needs than the other plaintiffs. She and her husband each have health problems and they have five young dependant children. They have the potential to earn income for a longer period of time but the contingencies affecting them are considerably greater. I think that the testatrix should have recognised that Clare was in need of a significantly greater provision in order to better equip her to deal with her future exigencies and those of her dependants. I think that in all the circumstances, further provision should be made for Clare by way of an additional legacy in the sum of $195,000 plus interest at the rate of 5 per centum per annum from 1 January 2010 (in the event that the legacy is unpaid at that date).

126 I would propose (subject to any submissions as to form or as to costs) to order as follows:

1. That further provision for the plaintiffs be made out of the estate of Lyla Margaret Shalders deceased by inserting in her will dated 4 November 1999 clause 5A as follows:

"5A(a) I GIVE AND BEQUEATH the following further legacies:

(i) to my daughter JENNIFER MARGARET TORNEY the sum of $100,000;

(ii) to my daughter SALLY KATHRYN HICKS the sum of $100,000;

(iii) to my daughter CLARE DENISE SHALDERS the sum of $195,000.

(b) The said legacies shall bear interest at the rate of 5 per centum per annum from 1 January 2010 (to the extent that the said legacies or any part thereof are not paid by the said date).

(c) The said legacies and any interest thereon shall be charged on the real estate hereinafter devised to my said son DAVID LESLIE SHALDERS."

2. The costs (including any reserved costs) and expenses of the defendant executors shall be retained or paid out of the residuary estate and the costs of the plaintiffs (including any reserved costs) shall be taxed as between solicitor and client and when taxed paid out of the residuary estate.

3. A copy of these orders shall be endorsed on the probate.

[2] There were no pre-death liabilities.

At a glance

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Decision date

Before

Source

Judgment (163 paragraphs)

Parties

Legislation Cited (1)