R & Anor v Public Trustee for the Northern Territory [1996] NTSC 31

Regarding the second plaintiff, a person of her "age, condition and mode of life and situation generally" faced numerous possibilities affecting her proper maintenance, education and advancement at the time of the testator's death. The court is empowered to not only examine circumstances at the time of the plaintiff's death but circumstances that could reasonably have been foreseen by the testator. There is a prospective element involved in the examination of circumstances; In Re McCaffrey (1982) 29 SASR 582 at 585. The purchase of a family home is such a prospective possibility. Purchase of a home would mean undertaking a mortgage involving both considerable monthly repayments and a substantial deposit. Additionally, her pursuit of education incurs fees under the Higher Education Contribution Scheme (HECS) which, on average, amount to $2,500 per annum. Four years of planned study would accumulate a liability of approximately $10,000. This excludes the purchase of textbooks and other incidentals. The second plaintiff also indicated a desire to have more children and her domestic position at the time indicated such would not be unlikely. Understandably, this would involve increased expenditure on household items, food, childcare and education. The purchase of a larger 'family' car would also be a foreseeable prospect for someone in this 'mode of life and situation generally'. Expenditure in the vicinity of $25,000 for a vehicle alone would not be unreasonable.

In consideration of the factors above, I find the $25,000 disposition to LAR, inadequate for her proper maintenance, education and advancement, having regard to all the circumstances of the case. I take into account the second plaintiff too is relieved of the financial burden of raising her first child. Nonetheless, she still faces significant hurdles to her further education and advancement in life.

Having satisfied the 'jurisdictional' issue, the question of quantum must now be considered. It is clear the court is empowered with a discretion in this matter. In considering whether to make provision the High Court recently observed in Singer, supra, at 209, that:

"In Australia it has been accepted that the correct approach to be taken by a court invested with jurisdiction under legislation of which the Act is an example was that stated by Salmond J in Re Allen; Allen v Manchester (1921) 41 NZLR 218. In that case his Honour said, 'The provision which the court may properly make in default of testamentary provision is that which a just and wise father would have thought it his moral duty to make in the interest of his widow and children had he been fully aware of all the relevant circumstances."'

Doubt was expressed by the High Court as to the utility of "moral duty" in providing useful assistance in elucidating the statutory provision. References to "moral duty" or "moral obligation" may well amount to a gloss on the statutory language; see Singer, supra.

Counsel for the second plaintiff submitted the residual beneficiaries, the plaintiffs' children, are not to be considered when determining what amount, if any, is appropriate to apportion to the plaintiffs. The reason submitted was that grandchildren are not catered for under s7 of the Family Provision Act. I do not agree with this submission. A relevant consideration is the relationship between the deceased and other persons who have legitimate claims upon his or her bounty: see Singer, supra, at 210 per Mason CJ, Deane and McHugh JJ. Other persons who have legitimate claims should not be limited to those other persons whose claims arise only under the Family Provision Act. They include those beneficiaries who have a legitimate claim on the estate's residue as named beneficiaries. The submission also runs counter to s8 of the Act which requires the court to act "having regard to all the circumstances of the case". In exercising its discretion this court must have regard to the grandchildren's interests and the testator's wishes. All authorities agree it was never meant that the court should re-write the will of a testator: Scales case, supra, at 19 per Dixon CJ.

The size of the estate and other demands pressed upon it are also relevant factors for the court to consider in exercising its discretion. It is clear that estates of a larger character are more equipped to cope with claims placed upon them. In the case of a more substantial estate the court has the opportunity to provide for contingencies: Bosch v Perpetual Trustee Co Ltd [1938] AC 463 at 478.

Since the testator's death both plaintiffs' predicaments have worsened substantially. The plaintiff KR has few assets, her most valuable being a motor vehicle worth some $6,500. Much of what she has appears to be second-hand. She is in receipt of Social Security payments in the vicinity of $274.00 per week. She lives with her mother in rented accommodation. The accommodation is unsuitable for her child due to the child's infliction. More appropriate accommodation is beyond her current means. The first plaintiff is still unable to work; almost all her time is devoted to caring for her child. She will be unable to work for some considerable time. There are debts presently outstanding. They arise out of the events of everyday life such as car repairs, for example. Full-time care of a child with cystic fibrosis is a big strain resulting in the first plaintiff presently undertaking a form of therapy to alleviate stress arising from this responsibility.

Public Trustee has offered an undertaking that a weekly supplement will be made available from the deceased's estate for expenses that relate to both beneficiaries. Given the disposition of the first plaintiff's child, allocation of a substantial periodic sum from the testator's estate is justifiable, perhaps in the form of a weekly payment. Even considering the indirect benefits flowing to the plaintiff from having the child's expenses catered for, there still exists little surplus for improved accommodation or necessary domestic purchases. Periodic payments should more properly be made out of income rather than capital. The need to preserve the capital for the beneficiaries is a relevant factor.

I consider the predicament of the first plaintiff would be remedied by adequate provision for a home. Such provision would not only be proper provision for the first plaintiff's 'maintenance, education and advancement in life' but would also directly benefit her child, a beneficiary under the will. There are contingencies that should be hedged against in addition to provision for a home. The size and nature of the estate are such that valid provision can be made for contingences. A contingency, although not in the conventional sense, is the possible premature death of the infant R. This should be borne in mind when exercising any discretion under s8 of the Act. The testator's intent, as objectively ascertained from the will, was that the dispositions to his daughters be equal with the residue divided equally as between his grandchildren. If the first plaintiff's child should prematurely die (a possibility unknown to the testator at the time of his death but a possibility conceded to exist given the presence of cystic fibrosis), then the first plaintiff is left with a most parsimonious disposition; she would be deprived of almost all the advantage of the estate.

The second plaintiff is also in a financial position of need. She is in receipt of Social Security payments and a payment from the Department of Employment Education and Training. All payments total $264.00 per week. Although the second plaintiff has a half share in a residential property valued on 27 November 1995 between $95,000 and $98,000 - the property is under mortgage. The second plaintiff's share of that mortgage totals $39,000. She also has a half share in a debt of owing to Westpac Banking Corporation for a loan. The loan was taken out to pay taxation with the total loan being approximately $18,000. Undertaking tertiary study incurs liabilities under the HECS scheme that will total approximately $10,000 at the completion of the second plaintiff's studies. When her total debts are set off against the value of her most substantial asset, a half share in the residential property, the second plaintiff is still in debt.

The needs of the second plaintiff's child are not as great as those of the first plaintiff's child and LR does have an additional two sources of income per week: $90 for the taking of aerobics classes and currently $50 as child maintenance. The second plaintiff also has reasonable prospects of obtaining gainful employment once her study is completed. She will have the ability to obtain work and earn money for her keep. The second plaintiff seeks 25% of the estate to enable her to purchase a home and forego the need to work while she completes her final two years of study. The need for a home is recognised. A 25% share of the estate is too large a proportion however, in view of the estate's size and the need to observe the interests of the beneficiaries in maintaining the residual capital.

I order provision be made in the sum of $125,000 out of the testator's estate to the first plaintiff, KR. Such provision is to include the $25,000 legacy left her. This provision will enable her to provide a clean and suitable home for her child, purchase any necessities and meet the debts of day to day life. It also includes an amount for contingencies that may arise. Public Trustee will continue to ensure that all child related expenses are provided for in respect of RR pursuant to clause 8 of the deceased's will.

I order provision be made in the sum of $90,000 from the testator's estate, to the second plaintiff LAR. This provision is inclusive of the $25,000 legacy directed by the testator. The second plaintiff's prospects for re-employment and her ability to supplement her income through the teaching of aerobics classes is of significance.

Provisions in accordance with the above orders still leaves a not insubstantial capital provision for the residual beneficiaries. In removing a portion of the capital sum left to the residual beneficiaries it is pertinent to bear in mind the High Court's statement in Blore v Lang [1960] HCA 73; (1960) 104 CLR 124 at 135:

"The measure to be applied is not what has been given to the one, but what the other needs for his/her proper maintenance, giving due regard to all the circumstances of the case."

Adequate advances will be made to or on account of both residual beneficiaries by Public Trustee. This was the clear intention of the testator. No doubt, where possible, these advances will be made from income rather than capital. Using figures supplied during argument, if the capital sum that remains after account is taken of provision for the two plaintiffs, were to be invested at 7% and the maximum tax rate of 47% is applied to the income produced from investment, a maximum weekly income of about $120 per week is produced for each residual beneficiary. This would leave intact a capital sum of about $190,000 per beneficiary if the maximum weekly advance is made to each beneficiary. R's current medical expenses total some $103 per week and an advance by the Public Trustee of the full amount of income produced by investment of the remaining capital could be necessary. The second plaintiff's child does not have the same needs, and advances of income to the second child are likely to be less.

I order that provision out of the estate of the deceased be made in favour of each plaintiff in the sums previously referred to.

I order that the costs of both plaintiffs be paid by the defendant out of the estate of the deceased and I order that the costs of the defendant on a trustee basis be paid or retained by the defendant out of the estate of the deceased.