Re May [2000] QSC 478 (20 December 2000)

[2] On 25 April 1997 Mr Brian May, aged sixty-two years and then of Mermaid Beach, Queensland, died leaving a will dated 27 October 1995. The respondents, his solicitor Mr John Ffrench and his accountant Mr Willem Vanderstaay, are the executors of his will. Probate of the will was granted in Queensland on 2 January 1998. Clauses 3, 4, and 5 of the will made provision for two legacies each of $50,000.00 and for forgiveness of any debt owed to the testator at the date of his death by two named people. By clause 6 the residue of the estate was left to establish `The Brian May Trust'. The income of the residuary estate, and, if necessary, the capital, was to be used to provide an annual scholarship. The first scholarship was to begin within eighteen months from the day on which the trustees received the balance of the estate, to pay for, or contribute to, such travel, tuition, and living expenses, as the trustees might, in their absolute discretion deem fit, for a promising film composer ordinarily resident in Australia to obtain twelve months tuition in film scoring at the University of Southern California. The will continued to provide for the manner in which the scholarship was to be awarded.

[3] The testator was a musician who accumulated substantial assets from his work in popular entertainment - in radio, television, and cinema. He had four children: Gregory John May who was born on 21 December 1957, Katharine Margaret Swan born on 19 May 1959, Elizabeth Eunita Haythornthwaite born on 28 April 1961, and Jennifer Ann May born on 9 June 1962. The testator did not leave anything to any of his children in his will, and by an originating summons filed on 15 January 1998 each has applied for an order providing out of the estate for his or her support. Each asks that the two bequests and the forgiveness of debt be exonerated from the incidence of any order made in his or her favour. The respondents do not oppose an order to that effect. The applicants are the only eligible applicants for family provision.

[4] The balance sheet of the testator's estate as at 30 June 2000, supplemented by the accounts to 15 September 2000, shows the net distributable value of the estate as at 15 September 2000 to be $2,020,164.42. All debts, funeral and testamentary expenses, and legacies have been paid. All of the assets of the estate, with the exception of entitlements to royalties and a grand piano, have been realized.

[5] To 15 September 2000, $500,307.62 has been paid to the estate as royalties, and it has received the benefit of $31,971.65 in foreign tax credits. A report dated 20 September 2000 by Mr David McDougall, a director of KPMG Corporate Finance (Aust) Pty Ltd, shows the net value of the royalty rights owned by the estate, which will expire in 2047, to be $329,886.00 as at mid-September 2000. That value was arrived at by applying discounted cash flow methodology and then adopting the mid-point in a range of $315,634.00 (arrived at from a discount rate of 17.20 per cent.) to $344, 139.00 (arrived at by a discount rate of 14.30 per cent.). The fee charged by KPMG Corporate Finance on the sale of those rights would be $50,000.00 to $75,000.00. The parties agreed that if the rights were sold in Australia there would be legal costs of up to $20,000.00, and if the rights were sold in the United States of America the costs are unknown.

[6] On 13 January 2000 the respondents began a proceeding for the recovery of the piano, which they assert is an estate asset. The defendant in that proceeding has counterclaimed $4,200.00. If both claim and counterclaim are successful the net gain to the estate will be less than $5,000.00, based on an estimate of the value of the piano accepted by the respondents. Bearing in mind that the result of that litigation is uncertain, I shall disregard the $5,000.00 in arriving at the value of the estate for the purpose of determining these applications.

[7] So too for that purpose shall I ignore an issue raised on behalf of the applicants as to possibly excessive charges to the estate by the respondents for non-professional work as executors. The sum in question is not clear, but may, according to the argument for the applicants, be of the order of $50,000.00 to $100,000.00 if one assumes - contrary to the view acted on by the respondents - that the will does not permit the charges made. This is not I think the proper time to determine such a matter, particularly since its determination in favour of the applicants' assertion would not make any difference, on the view I have reached as to the proper outcome of these applications, to that outcome.

[8] I think it reasonable to conclude that $235,000.00 ($329,886.00 less $75,000.00 and $20,000.00, rounded) should be treated as the value of the royalties the property of the estate. Adding that sum to the net distributable value as at 15 September 2000, I arrive at the sum of $2,255,000.00 ($2,020,164.42 plus $235,000.00, rounded) as the value of the estate. The applicants' estimated costs, calculated on an indemnity basis, are between $150,000.00 and $160,000.00. The respondents' costs are estimated to be about $85,000.00.

[9] Gregory, forty-three years old tomorrow, married his wife Carolyn in 1979. He and Carolyn and their two daughters Rebecca aged nineteen years and Allana aged sixteen live in a house in Croydon, Melbourne. He is employed four days a week by lawyers in Williamstown as a law clerk dealing with disability, superannuation, and insurance claims. His income from that position is $24,000.00 per annum after the deduction of income tax. Carolyn earns $27,600.00 per annum after the deduction of income tax. Rebecca is studying at the Royal Melbourne Institute of Technology University. She has a part-time job, but the cost of her education and other expenses to Gregory and Carolyn is about $3,000.00 per annum. Allana's expenses as a student at Luther College, Croydon, are $10,000.00 per annum. Gregory and Carolyn own the Croydon house, which they bought for $247,000.00. Its value is now $250,000.00 and that of its contents $40,000.00. They have a half interest in a rental unit at Portland valued at $44,000.00 which returns about $2,100.00 per annum when let. They own three motor vehicles worth together $49,000.00 and have savings of $2,000.00. Their liabilities are $234,500.00: $198,000.00 arising from their purchase of real estate, and $36,500.00 from other borrowings. Gregory and Carolyn are entitled to $50,000.00 in private superannuation, and he has a $200,000.00 life assurance policy and an accident and sickness policy. Allana wishes to pursue tertiary studies and will need her parents' support for some years to come. Gregory's present income is below his true earning capacity, because he has embarked on a new line of work, which may in time return a greater income than he earns now. His taxable income in the financial year which ended on 30 June 1998 was $86,441.00, and in the following financial year he was paid $83,000.00 in commissions. Those incomes indicate his true earning capacity. He enjoys reasonably good health apart from a damaged cruciate ligament caused by an old sporting injury, which can be repaired surgically. He has no condition likely to affect his earning capacity, since no employment he is likely to undertake will require physical exertion. His career so far has been as a bank employee and in similar occupations.

[10] Katharine, now forty-one years old, married in 1978 but the marriage ended in divorce in 1988. She and her two children Mark aged nineteen years and Anita aged sixteen, live in a house in Wantirna, Melbourne. Katharine is employed as a credit controller earning $33,228.00 per annum after the deduction of income tax. Mark is studying marketing, at a cost of $1,000.00 per annum. Anita is a student at a secondary school. Mark and Anita wish to continue their studies at a university. Katharine receives $225.00 per week in child maintenance and government payments. She was paid $50,000.00 as a property settlement on her divorce, and used that money to purchase her house, for $112,500.00. Its present value is $130,000.00 to $135,000.00. She has entitlements of $29,505.00 in superannuation funds. She has a $128,000.00 life assurance policy. The value of Katharine's other assets is $14,500.00: shares in a company $3,500.00, and a motor car $11,000.00. Her liabilities are $74,500.00: a $70,000.00 mortgage line of credit and $4,500.00 owing on credit cards. The house is in need of repairs which would cost $8,000.00. Katherine says it is too small for her needs and those of her children. Katherine is in good health, and has accident and sickness insurance.

[11] Elizabeth, now thirty-nine years old, married her husband Gary in 1979. She had three children: Glennn who is now twenty years old, Michael who was killed in a motor vehicle accident in June this year at the age of eighteen, and Rodney who is fifteen. Elizabeth lives on a 1280 hectare farm near Quairading, approximately 180 kilometres east of Perth. The farm is owned by a trust called the Sunnyside Farm Trust of which Gary is the trustee and Gary, Elizabeth, Glenn, and Rodney are beneficiaries. Its assets have a value of $897,428.00, and its liabilities are $397,328.00. Gary and Elizabeth are partners in a farming business which works the Trust land and other land which has assets of $231,200.00 and liabilities of $519,640.00. For the financial year which ended on 30 June 2000 the partnership made an operating profit of $59,901.00. In the previous financial year there was an operating loss of $58,078.00, and in the financial year before that there was an operating loss of $50,400.00. Elizabeth is employed as a part-time carer at a home for the aged at Quairading. For the year which ended on 30 June 2000 she was paid $14,683.00, $12,369.00 after the deduction of income tax. In the current year her income is at the rate of $18,564.00 per annum before the deduction of income tax. Gary and Elizabeth bought a house in Perth for $89,000.00. They borrowed $76,000.00 to do so, and they now owe $75,000.00 to the mortgagee. Elizabeth has savings of $2,500.00 and Gary has none. Elizabeth has a superannuation entitlement of $1,800.00. Glenn is employed as a sign writer and lives in the house in Perth. Rodney works on the farm. Elizabeth is in good health.

[12] Jennifer, now thirty-eight years old, is unmarried. She lives in Balwyn, Melbourne where she shares a rented flat. She pays rent of $487.50 per month and is employed as a business systems analyst by a bank. Her salary is $33,602.00 per annum after the deduction of income tax. Her expenses are about $24,000.00 per annum. She has savings of $35,000.00 and an entitlement to about $40,000.00 in superannuation, and some small parcels of shares. The value of her other possessions is $16,000.00. Jennifer's health is reasonably good. She has asthma, but she can control it with a spray.

[13] After the death of the testator each of the applicants received a share of the proceeds of superannuation policies held in the name of the testator. As a result each received $28,821.49.

[14] The testator married the applicants' mother, Ms Beryl Clark, on 29 September 1956. The marriage was not a success and it ended in divorce in January 1981. The family lived for some time in Adelaide and then moved to Melbourne. The testator provided the bare necessities for his family. Shelter and clothing were provided but little else. He subjected his wife and children to physical and verbal abuse. He was an unduly harsh, bad-tempered, disciplinarian. He showed little interest in the applicants' education or any other aspect of their development. Each applicant left school without proceeding beyond the secondary stage: Gregory at eighteen years, Katharine at seventeen, Elizabeth at sixteen and Jennifer at fifteen. The testator's overt indifference and hostility to the applicants discouraged their pursuing further education. Responding to his unnatural behaviour towards them each became permanently and completely estranged from him in 1980 save for one attempt by Jennifer in 1987. She spoke to him on the telephone, and then wrote a letter to him. He wrote back to her making no reference to the family and wrote only of himself. Jennifer later made some unsuccessful attempts to speak to him again on the telephone, but there was no further attempt at communication on either side. Elizabeth had planned to visit him with her children, but her journey to Queensland was cancelled because an equipment failure on the farm prevented it. It is not clear when that was. In an affidavit filed on 25 February 1998 she said 1995 (para. 42), but in oral evidence on 19 September 2000 she said about 1988 (transcript, p. 59).

[15] It was submitted on behalf of the respondents that the applicants were each guilty of disentitling conduct in that they had failed to communicate with the applicant after 1980 except for the one instance to which I have referred. To treat their behaviour as disentitling conduct would, however, be grossly to distort the true state of affairs. Their conduct was a natural human reaction to the hostility and indifference the applicant had shown to them and their mother for many years. Ms Coral Drouyn, a producer and friend of the testator, related that in March or April 1989 he told her and her husband that he was very sad and upset that his children turned against him after his marriage to their mother broke down, that their attitude had hurt him very much, that he had not heard from them `for the past 10 years', and that he was so upset with his children that he did not think they deserved to be left anything in his will. That is some evidence of his state of mind over six years before he made the will which has given rise to these applications. He appears to have overlooked Jennifer's approach to him in 1987, but more importantly he ignored the real reason for the estrangement: his indifference, parsimony, and cruelty.

[16] Each applicant is in good health and lives in modest comfort. There has been no material change to their circumstances since the testator's death, apart from their receipt of the proceeds of the superannuation policies. All but Jennifer have, however, substantial financial liabilities and children for whom to provide. Jennifer, though free of debt and without children, does not own a home. An applicant can succeed only if adequate provision was not made for his or her proper maintenance and support, and in determining that issue regard must be had to, among other things, the applicant's financial position, the size and nature of the testator's estate, the totality of the relationship between the applicant and the testator, and the relationship between the testator and other persons - in this case the other applicants - who have legitimate claims upon his bounty: Singer v. Berghouse [1994] HCA 40; (1994) 181 C.L.R. 201, at pp. 209-210 per Mason C.J., and Deane and McHugh JJ. Bearing in mind those considerations, I must decide whether in the case of each applicant no provision was adequate provision.

[17] I think not. The testator's failure to include the applicants in his will was not the act of a wise and just father. While each applicant could survive without the testator's bounty, the size of his estate sets the test for what should be regarded as adequate provision for proper maintenance and support at a higher level than would apply to the estate of a poor man. The greater an estate `the more may contingencies, even remote contingencies which may arise in the future, be provided for in the assessment of . . maintenance': Re Buckland [1966] VicRp 58; [1966] V.R. 404, at p. 415.

[18] The applicants have agreed that they will pool any money they receive as a result of any orders for provision made on these applications and then divide the total sum equally among them. Such an agreement could indicate an applicant's lack of bona fides, but not in this case in my view. On my assessment of the applicants they are all genuine, and their agreement reflects no more than their solid family bond. What they intend to do with any money they receive is irrelevant to the matters I must consider in deciding their applications.

[19] Adequate provision for Gregory, Katherine, and Elizabeth would have been to give each something towards reducing their liabilities and something towards greater support for their children than they can at present afford. Katherine has a valid claim to something more than the other two because she, unlike them, has no spouse for support. Apart from that distinction between Gregory and Elizabeth on the one hand and Katherine on the other I do not think there is any call for any disparity of treatment of those three. They are close in age, each has two children, and any financial differences tend to balance out. Elizabeth for instance has more assets than the others but she also has greater liabilities, and her assets may be difficult to realize. The income they produce is subject to great fluctuation, as is shown by the results of the last three financial years. I conclude that legacies of $150,000.00 each to Gregory and Elizabeth and a legacy of $200.000.00 to Katherine would have been adequate provision and that orders should be made to that effect.

[20] Jennifer has no home of her own, and some provision should be made to enable her to acquire one - not necessarily the whole of the purchase price, but enough to make it possible for her to meet mortgage commitments. Like Katherine, she has no spouse for support, but unlike Katherine she has no children to provide for. In her case a legacy of $125,000.00 would have been adequate provision and I shall make an order to that effect.

[21] I shall invite submissions on the form of the orders to be made and on costs.