//
[2019] VSC 820
General information, not legal advice.
Supreme Court of Victoria
2019-12-18
MOORE J
Original judgment source is linked above.
ADMINISTRATION AND PROBATE - Testator's family maintenance - Where plaintiff is adult daughter of testator - Whether adequate provision made for the proper maintenance and support of the plaintiff - Significant additional inter vivos gifts provided during deceased's lifetime - Adequate provision for applicant's proper maintenance and support under the will - Administration and Probate Act 1958 Part IV.
1 Margaret Edith Ross died on 2 June 2017, leaving a will dated 2 December 1997. She was survived by her three adult children Leanne Ross, Wayne Ross and Gregory Ross. In the interests of clarity and without any disrespect to the parties, I will refer to the children by their first names.
2 On 6 November 2017 probate of the will was granted to Wayne and Gregory, with leave reserved to Leanne.
3 At the trial of the proceeding, the net value of the deceased's estate was $3,402,286.43. The principal assets of the estate are a term deposit valued at $1,865,415.63, a property in Mount Martha valued at $925,000 and shares held by the estate of the deceased's late husband, Keith Ross, valued at $508,889.60.
4 It was agreed at trial that, if the estate was to be distributed in accordance with the will,[1] the distribution as between the three siblings would be as follows:
5 Leanne seeks further provision from the estate pursuant to Part IV of the Administration and Probate Act 1958 (the Act). She seeks a total sum of $1.4 million, being $588,626 more than she would receive if the estate was distributed in accordance with the will. The broad rationale for this claim is that $1.4 million is equal to one third share in the estate ($1.2 million), plus $200,000 for what are said to be necessary repairs and maintenance to Leanne's six acre property located at Five Ways in Victoria.
(a) whether the distribution of the deceased's estate fails to make adequate provision for the proper maintenance and support of Leanne; and
(b) if the estate fails to make adequate provision for the proper maintenance and support of Leanne, what if any further provision should be made for the benefit of Leanne by the making of a family provision order.
7 For the reasons which follow, I am not satisfied that the distribution of the deceased's estate fails to make adequate provision for Leanne's proper maintenance and support. The second issue referred to above accordingly does not fall for determination.
8 The factual background to the proceeding and various aspects of the parties' circumstances are either agreed or not in dispute. Those relevant facts which are controversial are addressed later in this judgment when considering the application of the various considerations referred to in the Act.
9 Keith Ross was the husband of the deceased and the father of Leanne, Wayne and Gregory. He and the deceased had no other children. They established a home where they raised their family in Bentleigh East. They bought the Mount Martha property in the mid 1990s. The Bentleigh East property was sold in October 2004 for $445,000.
10 Leanne, Wayne and Gregory all maintained close and loving relationships with their parents until their deaths. Mr Ross died on 6 December 2016. His estate passed to the deceased. In the years leading up to her death, the deceased suffered from Alzheimer's disease.
11 The principal divisions of the estate made under the will are as follows:
(a) In respect of the Bentleigh East property, clause 8 of the will provides as follows:
GIVE DEVISE AND BEQUEATH to my daughter Leanne Margaret Ross my property situated at 20 Wamba Road Bentleigh East Victoria ("the Bentleigh property") charged with a payment to my estate of the sum of $120,000.00 which sum equates to advancements I have made for my daughter's benefit during my lifetime but should I not be the owner of the Bentleigh property at the date of my death I GIVE DEVISE AND BEQUEATH to my said daughter the sum of $80,000.00 for her own use and benefit absolutely.
(b) The Mount Martha property, together with its contents, is devised to Wayne and Gregory. If the deceased is no longer the owner of the property, Wayne and Gregory are each to receive a legacy of $200,000.
(c) A bequest of $3,000 to each of Gregory and Wayne for each year from 1 July 1997 to the date of the deceased's death.
(d) Any loans owed by any child of the deceased are to be repaid on the date that the first distribution of any asset from the estate is made to that child.
(e) The residue of the estate is to pass to Gregory, Wayne and Leanne equally.
13 Leanne married in 1988. She separated from her husband in 1992 and was divorced in 1994. Leanne has not since remarried, does not have a partner and has no children.
14 In 1991 or 1992, Leanne suffered a serious horse riding accident. She suffered a cracked skull and spent three months in a coma on life support.
15 As I have noted, Leanne owns a property in Five Ways in Victoria. She has lived at the property for the last 15 years. The property is unencumbered and valued at approximately $1.1 million.
16 Leanne was unemployed for nine years following her accident. She is currently employed full-time as a purchasing officer and earns $65,000 per annum. She has no formal qualifications.
17 Leanne owns a Land Cruiser valued at $20,000, has approximately $34,000 in superannuation and $12,000 in savings.
18 Gregory is 60 years of age and has been married to Wendy Ross for 31 years. Gregory and Wendy have three children, all of whom live at home. Two of the children are gainfully employed as accountants, the third is still at university and remains dependent on her parents.
19 Gregory is employed on a full-time basis and is a qualified fitter and turner, mechanical technician and mechanical design draftsman. Since 2010, he has worked as a building officer with the City of Casey, where he earns approximately $90,000 per annum.
20 Wendy was employed until 2018, when she was retrenched.
(a) their home in Wantirna, Victoria with an estimated value of $950,000;
(b) a half interest as tenants in common in a small warehouse in Carrum Downs. Wayne is the co-owner. The property was purchased in 2018 for $157,500 and does not produce income. It is used for storage and personal activities;
(d) a motor vehicle valued at approximately $14,000;
(f) a superannuation balance of approximately $395,000.
22 In addition to the shares referred to above, Wendy owns shares worth approximately $400,000.
23 Wayne is 53 years of age and has been married to Sally Henderson for 27 years. Wayne and Sally have two children aged 23 and 20. Both children live at home and are dependent on their parents. One of the children is studying at university and working part-time. The other suffers from auditory and memory issues and works part-time at Woolworths. He is likely to remain dependant on his parents into the future.
24 Wayne is a qualified electrical engineer in IT and has a Bachelor of Engineering (Electrical) and a Graduate Diploma (Business). He was employed at Rockwell Automation from 2003 until he was made redundant on 9 August 2018. He received a severance payment of $30,217.32, plus 12 weeks accrued long service leave and annual leave and five weeks base salary. In his current employment he earns $120,000 per annum.
25 Sally is not in paid employment and, save for delivering retail catalogues for a period, has not been in paid employment since the birth of their first child.
(a) their home in Mordialloc valued at approximately $1.3 million;
(b) an investment property in Berwick valued at approximately $490,000;
(c) a half interest as tenants in common in the Carrum Downs property also owned by Gregory and Wendy;
(d) a motor vehicle valued at approximately $38,000;
(e) an interest in a timeshare facility worth approximately $10,000; and
(a) a bank loan for the Berwick property with a balance of $225,000 secured by mortgage over the Mordialloc property;
(c) a $45,000 loan to fund purchase of the Carrum Downs property secured by a mortgage over the Mordialloc property;
(d) fees of approximately $2,500 per year for the time share facility; and
28 Section 90A of the Act provides that an 'eligible person' may make an application to the Court for a 'family provision order', being an order under s 91 of the Act. It is uncontroversial that Leanne is an 'eligible person' within the meaning of the Act.
29 Section 91(2) of the Act provides that the Court must not make a family provision order in favour of a person unless satisfied of certain matters, including that the 'distribution of the deceased's estate fails to make adequate provision for the proper maintenance and support of the eligible person', whether by the deceased's will (if any), the Act's intestacy provisions, or both (s 91(2)(d)).
30 Section 91(4) requires the Court to take certain matters into account in determining the amount of provision to be made by a family provision order, if any. These matters include the degree to which the distribution of the deceased's estate fails to make adequate provision for the proper maintenance and support of the eligible person (s 91(4)(b)).
31 Section 91A provides that, in making a family provision order, the Court must and/or may (as the case requires) have regard to certain mandatory and discretionary factors.[3]
32 The provisions of the Act summarised above are the product of amendments effected by the Justice Legislation Amendment (Succession and Surrogacy) Act 2014 (the Amending Act) from 1 January 2015. The Amending Act implemented recommendations of the Victorian Law Reform Commission in its August 2013 Report, 'Succession Laws' (the VLRC Report).
33 The question posed by s 91(2)(d) of the Act - whether the distribution of the deceased's estate fails to make adequate provision for the proper maintenance and support of the eligible person - is substantially identical to that posed by its precursor, s 91(3) of the pre-amendment Act. Section 91(3) of the pre-amendment Act was followed by s 91(4)(b), which required a court in determining whether a deceased's estate made adequate provision for the proper maintenance and support of a person to have regard to a list of factors in s 91(4)(e)-(p).
34 However, s 91(2)(d) of the Act and s 91(3) of the pre-amendment Act differ in two respects:
(a) Section 91A of the Act distinguishes between the matters to which the Court must have regard and the matters to which the Court may have regard in making a family provision order. In contrast, the factors identified in s 91(4)(e)-(p) of the pre-amendment Act were all mandatory considerations.
(b) In determining the question posed by s 91(2) of the Act, the Court is not expressly obliged or permitted (as the case requires) to have regard to the matters set out in s 91A. In contrast, s 91(4)(b) of the pre-amendment Act provided that 'the court in determining whether or not distribution of the estate makes adequate provision for the proper maintenance and support of the person ... must have regard to [s 91(4)(e)-(p)]'.
35 The change in provision made by the Act described in the second of the above subparagraphs raises the question of whether s 91A of the Act is enlivened as part of the Court's determination of the jurisdictional question in s 91(2)(d), or whether it is enlivened only after the jurisdictional questions in s 91(2) have been satisfied (that is, as going to the exercise of the Court's discretion).
36 I consider that the correct approach required by the Act is that, in determining the jurisdictional question posed by s 91(2)(d), the Court must and/or may (as the case requires) have regard to the mandatory and discretionary factors set out in s 91A.
37 If s 91A could not be used in determining s 91(2)(d), recourse would need to be had to the common law for determining the jurisdictional question. Section 91A would then need to be applied separately and distinctly by the Court in exercising its discretion to make or not make a family provision order. This would require the Court to conduct two highly similar, but distinct, enquiries, in contrast to a synthesised approach involving the statutory mandatory and discretionary considerations in s 91A and the common law. An interpretation of the provisions as necessitating dual enquiries would be complicated and inconvenient and, for that reason, an interpretation enabling the use of s 91A for the purposes of s 91(2)(d) should be preferred.[4]
38 This conclusion is also supported by a consideration of the extrinsic material to the Amending Act. Although, as counsel for the defendants submitted, the VLRC Report, the Second Reading Speech to the Amending Act and the Explanatory Memorandum to the Bill which became the Amending Act contain no explanation for the differences in the statutory language referred to in paragraph 34 above, the VLRC Report recommended no changes to the pre-amendment family provision order regime. The VLRC Re[5]ort stated:5
The Commission considers that the Victorian statutory criteria should be retained, as well as the test of whether adequate provision has been made for the applicant's proper maintenance and support. The court should continue to take these factors into account when determining whether adequate provision was made for the applicant's proper maintenance and support [and] the amount of further provision that should be made, if any (emphasis added).
39 After concluding that the current family provision order regime should be retained, the VLRC Report recommended that the Court should be required to consider the criteria set out in ss 91(4)(e)-(p) when determining whether adequate provision was made for an applicant's proper maintenance and support and the amount of further provision that should be made, if any.[6] This is a strong indication that Parliament intended, in the context of the provisions of the Act after the above amendments commenced operation, that the Court must and/or may (as the case requires) take the factors identified in s 91A into account when determining the jurisdictional question in s 91(2)(d) of the Act.
40 In summary, although the VLRC Report does not explain the change in statutory language to which I have referred, it does indicate that there was no explicit intention to alter the pre-amendment family provision order regime.
41 I am fortified in the conclusion I have reached by the approach which has been adopted in the authorities which have considered the relationship between ss 91(2)(d) and 91A of the Act. In each of those cases it was held, or the Court proceeded on the basis, that the mandatory and discretionary factors in s 91A must and/or may (as the case requires) be considered when determining the jurisdictional question in s 91(2)(d).[7]
42 As has been identified, the jurisdictional preconditions which must be satisfied to enliven the Court's power to make a family provision order are set out in s 91(2) of the Act. It is uncontroversial that all of those requirements are satisfied in this case, except whether the distribution of the deceased's estate by the deceased's will fails to make adequate provision for Leanne's proper maintenance and support (para (d)).
43 The distinction between 'adequate' and 'proper' was described by Lord Romer in the following oft-quoted passage in Bosch v Perpetual Trustee Co Ltd:[8]
The first thing to be noticed is that the powers given to the court only arise when any of the persons mentioned is left without adequate provision for his or her proper maintenance, which word will be used in this judgment where necessary as including education and advancement. The use of the word "proper" in this connection is of considerable importance. It connotes something different from the word "adequate". A small sum may be sufficient for the "adequate" maintenance of a child, for instance, but, having regard to the child's station in life and the fortune of his father, it may be wholly insufficient for his "proper" maintenance. So, too, a sum may be quite insufficient for the "adequate" maintenance of a child and yet may be sufficient for his maintenance on a scale that is "proper" in all the circumstances. A father with a large family and a small fortune often can only afford to leave each of his children a sum insufficient for his "adequate" maintenance. Nevertheless, such sum cannot be described as not providing for his "proper" maintenance, taking into consideration "all the circumstances of the case"
...
The amount to be provided is not to be measured solely by the need of maintenance. It would be so if the court were concerned merely with adequacy. But the court has to consider what is proper maintenance, and therefore the property left by the testator has to be taken into consideration.
As McMillan J observed in relation to this passage in Re Marsella, '"proper maintenance and support" means provision from the estate not simply to alleviate poverty, but also to take into account the vicissitudes of life'.[9]
... assessment of whether the provision (if any) made was inadequate for what, in all the circumstances, was the proper level of maintenance etc. appropriate for the applicant having regard, amongst other things, to the applicant's financial position, the size and nature of the deceased's estate, the totality of the relationship between the applicant and the deceased, and the relationship between the deceased and other persons who have legitimate claims upon his or her bounty.
It has often been pointed out that very important words in the statute are "adequate provision for the proper maintenance and support" and that each of these words must be given its value. "Adequate" and "proper" in particular must be considered as words which must always be relative. The "proper" maintenance and support of a son claiming a statutory provision must be relative to his age, sex, condition and mode of life and situation generally. What is "adequate" must be relative not only to his needs but to his own capacity and resources for meeting them. There is then a relation to be considered between these matters on the one hand, and on the other, the nature, extent and character of the estate and the other demands upon it, and also what the testator regarded as superior claims or preferable dispositions. The words "proper maintenance and support", although they must be treated as elastic, cannot be pressed beyond their fair meaning. The Court is given not only a discretion as to the nature and amount of the provision it directs but, what is even more important, a discretion as to making a provision at all. All authorities agree that it was never meant that the Court should rewrite the will of a testator. Nor was it intended that the freedom of testamentary disposition should be so encroached upon that a testator's decisions expressed in his will have only a prima facie effect, the real dispositive power being vested in the Court.
46 More recently, in Re Williams; Smith v Thwaites,[14] McMillan J summarised the relevant principles as follows:
What constitutes adequate provision for the proper maintenance and support of an applicant involves a consideration of the mandatory and discretionary matters under the Act, having regard to the meaning of these terms as developed in the jurisprudence of the family provision jurisdiction.[15] This also involves a consideration of the nature, extent and character of the estate and the other demands upon it, and also what the testator regarded as superior claims or preferred dispositions. In determining these questions, a balance must be drawn between the established claims of named beneficiaries, the needs of an applicant, the size of the estate and the benefits provided to an applicant and others with legitimate claims upon the testator. The court's function is not to ensure a fair distribution of the testator's estate or to achieve equality amongst various claimants.[16] The court's role goes no further than making adequate provision for the proper maintenance and support of an applicant.
The assessment as to whether the testator failed to make adequate provision is determined by reference to matters that were known, ought to have been known, or were reasonably foreseeable to the deceased at the time of his or her death.[17]
Other relevant constraints or limiting factors may be that further provision should be made only if, and to the extent that, it is necessary to alter the will to make adequate provision for an applicant's proper maintenance and support,[18] or that any further provision must be limited by balancing the needs of an applicant against the proper claims that a testator recognised needed to be satisfied out of his or her testamentary bounty.
47 Freedom of testamentary disposition is relevant to the assessment of whether the provision made by a testator is adequate for the proper maintenance, education and advancement of a claimant. As Ferguson JA (as she then was and with whom the other members of the Court agreed) stated in Jones v Smith, '[t]he Court will not interfere with the testator's freedom to leave their estate to whomever they choose, unless there is some proper basis for doing so under the legislation.'[19] Amongst other considerations, this reflects the fact that 'it is the deceased who is in the best position to determine what provision is proper and considerable weight should be given to his testamentary wishes'.[20]
48 The Court of Appeal of New South Wales recently outlined in Steinmetz v Shannon[21] how freedom of testamentary disposition is to be taken into account in assessing whether the provision made by a testator was adequate for the proper maintenance, education and advancement in life of a claimant for further provision. White JA stated that freedom of testamentary disposition was one of the matters to be 'factored in by a recognition that in appropriate cases, deference should be given to the testator's better position in making an assessment as to what provision for proper maintenance and advancement in life is adequate'.[22] To similar effect, Brereton JA stated:[23]
... that respect should be given to the judgment of a capable testator who has duly considered the claims on the estate, and that a court should not interfere just because the judge would have made a different disposition. Although the analogy is not perfect, there are similarities with the manner in which a court approaches reviewing a discretionary decision; it will not interfere with the testator's will if it merely considers that it would have made a different will, but only if the testator's discretion has in some way miscarried.
49 As John Dixon J explained in Firth v Reeves,[24] a case involving an application for further provision under the Act brought by an adult daughter, '[c]oncepts of 'fairness' or 'equality' of treatment between beneficiaries have little role to play in determining the jurisdictional question, and equality of treatment is not a necessary element of testamentary duty'.[25] The positon was explained in the following way by Fullagar and Menzies JJ in Blore v Lang:[26]
The measure to be applied is not what has been given to the one, but what the other needs for his or her proper maintenance, giving due regard to all the circumstances of the case. The Testator's Family Maintenance Act is legislation for remedying, within such limits as a wide discretion would set, breaches of a testator's moral duty to make adequate provision for the proper maintenance of his family - not for the making of what may appear to the court to be a fair distribution of a deceased person's estate among the members of his family. ... Equality is not something to be achieved by the application of the Act, although in some cases equality may set a limit to the order to be made - for instance, where there is not enough to provide proper maintenance for all entitled to consideration whose need is the same.
Indeed, it may be difficult for an adult child in a sound financial position to establish the jurisdictional requirements.[30] The concept of 'need' is relevant when considering whether the testator has made adequate provision for the proper maintenance and support of any claimant. However, 'need' is a relative concept[31] and must be considered in all the circumstances of the case.[32] Adult children did not have to establish some special need or circumstances before relied would be granted.[33]
The strongest ground for relief urged by Rosemary and Marion, though put somewhat obliquely, is that the provision made for them by the testator is vastly disproportionate to the provision made for Alan. One can understand the sense of grievance which one child may have at being treated by a parent differently from another child. Some may be tempted to think that great disproportionality of testamentary treatment in itself indicates some essential error in the testamentary process which requires amelioration under the Family Provision Act so as to achieve approximate equality between a testator's children.
That is not, of course, a position from which one can begin in this, or in any other case under the family provision legislation. It is useful to remind oneself of the parable of the labourers in the vineyard. Those who worked the whole day complained, not because their agreed wage was inadequate, but because those who worked only part of the day received the same wage and were therefore treated more generously. The moral of the parable is: what is fair and adequate to start with does not become unfair and inadequate just because someone else has been treated differently.
52 In the following paragraphs, I consider the mandatory and discretionary factors set out in s 91A of the Act for the purpose of determining whether the distribution of the deceased's estate fails to make adequate provision for the proper maintenance and support of Leanne.
The deceased's will, evidence of the deceased's reasons for making the dispositions in the will and any other evidence of the deceased's intentions in relation to providing for Leanne.
53 It is convenient to deal with these considerations together.
54 As I have noted,[36] if the deceased's estate was distributed in accordance with the will, Wayne and Gregory would receive shares of approximately equal value. Leanne would receive a share worth approximately $460,000 less.
55 This difference reflects the differential treatment of the siblings under the will in relation to real property. Whereas Wayne and Gregory are to receive the Mount Martha property equally, Leanne was to receive the Bentleigh East property, but with a charge to the estate of $120,000.00 equating to advancements the deceased made to Leanne during her lifetime. However, with the sale of the Bentleigh East property in 2004, pursuant to clause 8 of the will, Leanne is entitled to the amount of $80,000.00.
56 For the reasons explained below, the evidence before the Court establishes that the differential treatment of the siblings in relation to the estate's real property (or equivalent), reflects a careful and purposeful design on behalf of the deceased and Mr Ross to account and adjust for the value of the substantial inter vivos benefits which they provided to Leanne which exceeded the value of those benefits provided to Gregory and Wayne. These inter vivos benefits concerned financial assistance the deceased and Mr Ross provided to all three of their children to purchase homes.
57 In relation to Wayne, in 1991 the deceased and Mr Ross lent him and his wife $62,500, at a compound interest rate of 10% (at a time when interest rates were at around 16%). That loan and the repayments of it were tracked by Mr Ross in a ledger which he maintained. The loan was repaid in December 1996.
58 A similar arrangement was established with Gregory. In 1992, his parents lent him and his wife $50,000. Compound interest was also paid on this loan. The loan and repayments were again tracked by Mr Ross in a ledger which he maintained. The loan was discharged in February 1998.
59 The nature and circumstances of the assistance the deceased and Mr Ross provided Leanne in financing her purchase of a home is more complex than that provided to Wayne and Gregory and is set out below.
60 Leanne and her then husband purchased a property in Dingley in 1988. In 1992, they considered selling the property because they were struggling to pay the mortgage. Mr Ross advanced them a loan which enabled them to discharge the mortgage. As with Gregory and Wayne, it would appear that Mr Ross charged Leanne interest on the loan. Mr Ross again maintained a ledger of the loan. As at January 1993, the balance of the loan was $64,738.52.
61 In addition to this amount, Mr Ross also paid $26,293.68 for Leanne's property settlement with her husband. The amount is also recorded in the ledger. According to Leanne, the payment was made 'to get rid of' her husband.
62 The ledger maintained by Mr Ross records an amount of $91,032.20 as being 'K.R Equity' as at September 1993 in relation to 'house value at divorce time' which is listed as $110,000. The amount of $91,032.20 is equal to the sum of the amounts referred to in the preceding two paragraphs. The ledger records 'L.R. Equity' in September 1993 as being $18,967.80.
63 It is clear from these entries in Mr Ross' ledger that, in September 1993, he considered that he held equity in the Dingley property of $91,032.20 and that Leanne's held equity in the property of $18,967.80.
64 Mr Ross' ledger records that, from February 1993, he charged Leanne rent of $650 per month on the Dingley property. Leanne denied that she was charged rent. The ledger records that, with the monthly rent charges, by June 1994 Leanne's equity in the property was zero.
65 Mr Ross' ledger also records that, from 1 July 1997, rent on the Dingley property would be free but 'valued at $3,000 per annum'. It is to be noted that the will provides for a bequest of $3,000 to each of Gregory and Wayne for each year from 1 July 1997 to the date of the deceased's death.
66 The Dingley property was sold for $210,000 in 2001. Mr Ross handled the sale. The net proceeds of sale were paid into his and the deceased's joint bank account.
67 The Five Ways property was purchased for $320,000 in September 2000,[37] but does not appear to have settled until about April 2001. The purchase was again handled by Mr Ross. The purchase price was paid from the proceeds of sale of the Dingley property, with the remainder paid by Mr Ross and the deceased. Leanne's evidence was that this was a gift.
68 The following conclusions can be drawn from this history of support provided by the deceased and Mr Ross to their children for the purpose of purchasing property. Wayne and Gregory each received the benefit of loans of similar amounts which they repaid with interest. It would appear that Leanne received a loan of a similar amount to purchase the Dingley property. However, unlike her brothers, Leanne also received funds from her parents to purchase the Five Ways property.
69 Whether or not that advance was a loan or a gift, the critical facts are that: (a) additional funds were provided to Leanne over what was provided to her brothers; (b) there is no suggestion that Leanne repaid any of the funds used to purchase the Five Ways property; and (c) that property is a valuable and unencumbered asset which Leanne has owned for many years. These benefits Leanne has received can readily be viewed as the corollary to the fact that Leanne stands to take considerably less than her brothers if the deceased's estate is distributed in accordance with the will.
70 There is evidence that this difference in provision under the will was intended to reflect and take account of the greater value of the inter vivos benefits provided by the deceased and Mr Ross to Leanne than her brothers. The provision of a bequest to Wayne and Gregory which is exactly equal to the value Mr Ross attributed to the rental benefit enjoyed by Leanne most strikingly confirms that conclusion.[38] The fact that Mr Ross kept meticulous and detailed records in relation to the loans provided to each of his children also reveals an intention to account and adjust for the value of benefits provided to each of his children.
71 More generally, in light of the above discussion, I accept the submission advanced by counsel for Gregory and Wayne that the affairs of the deceased and Mr Ross were managed in a precise and particular fashion which was reflected in the precision and particularity made in the provisions of the will. I accept that the will is the work of a thoughtful, careful and considered testator.
72 At the trial of the proceeding, the net value of the deceased's estate was $3,402,286.43.[39]
73 Leanne seeks a family provision order in the amount of $1.4 million. Such an order would reduce the share of the estate to be paid to Wayne and Gregory by approximately $300,000 each.[40] Contrary to the submissions made on behalf of Leanne, I do not accept that this is not a material sum. However, I do accept that Wayne and Gregory are each in reasonable and secure financial circumstances which are better than Leanne's financial circumstances.
75 Leanne is the daughter of the deceased. They enjoyed a close and loving relationship throughout the deceased's life.[43]
76 The deceased did not owe any specific obligations to any person.[44] However, during her life, she did take on the responsibility of supporting Leanne during difficult times, including after her horse riding accident, during her divorce and during her period of unemployment. Leanne was not however being maintained by the deceased at the time of her death.[45]
Benefits previously given by the deceased to any of the parties[46]
77 As I have already observed, the deceased and her husband assisted each of their children in purchasing a home. In relation to Leanne, however, her parents also effectively paid for the Five Ways property, in addition to the Dingley property.
78 Mr Ross also funded Leanne's purchase of motor vehicles and other services including mobile phones and car insurance. Leanne gave evidence that she repaid these payments. However, in the absence of any details or documentary records to support this assertion, I am unable to accept this aspect of Leanne's evidence having regard to her tendency to exaggerate aspects of her evidence which I refer to below.
Any physical, mental or intellectual disability of the parties[47]
79 Although the evidence establishes that both Wayne and Gregory have various health issues, no submission was advanced on their behalf they had a disability so as to engage s 91A(2)(e) of the Act.
80 Counsel for Leanne asserted, however, that she was a person with a physical disability as a result of injuries she sustained from a horse riding accident in the early 1990s. Relevantly, Leanne gave the following evidence-in-chief:
In 1990-1991, when preparing for Australian Nationals (equestrian), I had a serious horse riding accident where I sustained a cracked skull and was in a coma for three months on life support. I lost my sense of smell and was blind in one eye for a period of time. I am in constant pain and have limited movement, muscle dystrophy and arthritis in my back, hips and knees as a result. I am on blood pressure tablets and over the counter pain medication. I cannot stand for more than 10 minutes or else my left leg goes numb as the damage to my back compresses the nerve and blocks it. I try to take natural anti-inflammatories as the scripted anti-inflammatory medication prescribed to me has Celebrex which has a risk of stroke when combined with my blood pressure medication...I also have a loss of memory and am told that I have scar tissue in my brain which causes headaches.
I was treated by a Neurosurgeon and many other medical practitioners after my injuries. I regularly see my General Practitioner. As well, I will need both hip and knee replacements as a result of the injuries I received.
Beyond emphasising this evidence, how it was said that Leanne's condition was a 'disability' within the meaning of the Act was not developed in submissions.[48]
81 The impression of disablement conveyed by Leanne's evidence extracted above was seriously undermined in cross-examination. Leanne admitted that she is able to climb onto and drive a tractor, slash grass at the Five Ways property, manage the property including by filling water tanks and that she is able to groom, brush and look after her horses. She also gave evidence that, each week, she is able to unload from her Land Cruiser eight 30kg sacks of horse feed by dragging them from the back of the vehicle.
82 In the absence of medical evidence, I am unable to reconcile Leanne's capacity to perform these manual tasks with the degree of claimed incapacity conveyed by her evidence-in-chief. I accept the submission put on behalf of Gregory and Wayne that Leanne has exaggerated the nature and extent of her injuries and claimed incapacity.
83 Although she gave evidence that she had been treated by a neurosurgeon and was consulting a general practitioner, Leanne did not adduce any medical evidence to establish the current and ongoing nature of her claimed injuries and the extent to which she suffers any disability as a result. In cross-examination, Leanne claimed that a medical report from her doctor which 'outlines the state of my spine' was 'coming later'. No such report, or any other medical report, was sought to be admitted into evidence.
84 I do not accept, as counsel for Leanne submitted, that criticism based on the absence of medical evidence is 'disingenuous'. The basis for that complaint was that Gregory and Wayne did not object to Leanne's evidence of her injuries in her affidavit material, nor did they put her injuries in issue in their affidavit material filed before trial. This complaint is without substance. Gregory and Wayne are not qualified to give evidence as to their opinion about Leanne's claimed injuries and their effect on her. The nature and effect of Leanne's claimed injuries did not form part of the agreed facts submitted by the parties to the Court before trial. As such, the onus remained on Leanne to establish that she suffers the claimed injuries and, in the context of the factor identified in s 91A(2)(e), that she has a disability. She has failed to discharge that evidentiary burden.
Financial resources, earning capacity, and financial needs of the parties[49]
86 Leanne is employed full-time as a purchasing officer and earns $65,000 per annum. She is single and has no dependants. She owns the Five Ways property which is unencumbered and valued at $1.1 million. She has combined superannuation and savings of $46,000.
87 Leanne's evidence was that, because of her back, she would not be able to continue working until retirement age. Although I accept that Leanne continues to generally experience some medical issues of potential consequence as a result of her horse riding accident in the 1990s, the absence of any expert medical evidence and the difficulties in relation to her own evidence about her medical condition, to which I have referred, means that I am not able to identify the extent, nature and likely effect of her medical issues on her future capacity to work. It is not for the Court to speculate about those matters, or to proceed on a worst case scenario basis. I am therefore not satisfied that it is more likely than not that Leanne will be unable to continue working until retirement age.
88 Leanne also gave evidence that she has general expenses of about $44,500 per annum and up to $40,000 per annum of expenses for farrier and veterinary bills. I do not accept that these are realistic and accurate estimates. Leanne accepted that her net income was about $51,000 per annum and that she had no other sources of income. On that basis, after taking into account her claimed general living expenses, Leanne's available income to meet the claimed farrier and veterinary expenses is only around $6-7,000 per annum. Leanne was nevertheless insistent in her evidence that the Court should take into account the need for her to pay up to $40,000 a year for these particular expenses. This was so even though she was unable to nominate a year in which she actually incurred $40,000 for farrier and veterinary expenses. The absence of any arithmetic sense to Leanne's evidence leads me to conclude that she has overstated her expenses.
89 Leanne also gave evidence that the Five Ways property is in need of urgent fencing repairs the cost of which she estimated to be $150,000. The evidence establishes that the Five Ways property is generally in poor condition, with various features, including the fencing, in need of repair. The controversy concerns the likely cost of the necessary fencing repairs.
90 Counsel for Gregory and Wayne accepted that repairs and maintenance worth approximately $50,000 were required on the property. However, the expert valuation evidence before the Court expressly excludes a cost estimate for the fencing repairs. Leanne also did not provide any basis for her estimate of the cost of those repairs. Her estimate, which would mean that the cost of the claimed essential fencing repairs would be equal to about 13% of the value of the property overall, seems inherently high. Given the various respects in which I have found that Leanne has exaggerated her claims in this proceeding, in the absence of other supporting evidence, I am unwilling to accept Leanne's evidence about the cost of the essential fencing repairs. On the evidence before me, I find that the Five Ways property requires essential repairs worth about $50,000.
Any contribution by Leanne to the estate or the welfare of the deceased or family[50]
91 It was not submitted on behalf of Leanne that she had contributed to the building up of the deceased's estate. However, a very general submission that she 'looked after the welfare of the deceased' was advanced.
92 Leanne's evidence in support of this contention was that she was the deceased's primary carer. I reject this evidence as another instance of Leanne's propensity to exaggerate her claims. The unchallenged evidence before the Court was that the deceased's husband was the deceased's primary carer from 2007 or 2008[51] and that the deceased was admitted to full-time aged care in 2015.
93 I nevertheless accept that Leanne, as with Wayne and Gregory, generally assisted the deceased in various ways prior to her passing.
Character and conduct of Leanne or any other person[52]
94 Two principal issues arise in relation to the character and conduct of the parties to the proceeding. First, Leanne admitted that, after she discovered that she was to receive less under the will, she vandalised the locks to the Mount Martha property. Counsel for Leanne conceded that this conduct was not to her credit, but that it was explicable, although not justified, in the circumstances.
95 Leanne's conduct reflects poorly on her character, particularly given that it was directed at her parents' former property in circumstances where she had significantly benefitted from their support over many years. Further, in her evidence about this issue, there was an absence of any contrition or acceptance of responsibility for her wrongful actions.
96 It was also alleged that Leanne had, over the years, badgered her parents for financial benefits. On the evidence before the Court, I am unable to make any findings in relation to that claim.
97 The second issue raised in relation to the character and conduct of the parties concerns the circumstances in which Wayne and Gregory added to the inventory of assets and liabilities for the estate a debt of $877,692 said to be owing by Leanne in relation to the Five Ways property. No such debt was claimed as part of Mr Ross' estate. Further, this significant debt was not originally included in the inventory of assets and liabilities of the deceased's estate. It was only added to the deceased's estate by Wayne and Gregory after Leanne indicated that she intended to contest the will. However, shortly before the commencement of the trial of the proceeding, the debt was removed from the affidavit recording the financial position of the estate, on the claimed basis that it had been disputed by Leanne and Gregory and Wayne did not press it.
98 Counsel for Leanne submitted that, as Wayne accepted in his evidence, the claimed loan should never have been pressed in the first place and that it was used improperly as a negotiating tactic against Leanne. In that regard, before the debt was raised by Wayne and Gregory, Leanne stood to take approximately $800,000 from the estate; that share would be wholly eliminated by the late raising of the claimed debt. In this way, it was submitted that Wayne and Gregory had engaged in disgraceful conduct against Leanne.
99 It was a term of the will that the appointment of the executors did not extinguish any loans outstanding to the deceased at the time of her death. Consistent with their obligation to get in the assets of the deceased's estate, it was accordingly the duty of Wayne and Gregory in administering the estate to properly identify those loans outstanding to the deceased at the time of her death.
100 However, the manner in which Wayne and Gregory approached this aspect of their duty as executors was unsatisfactory and reflects poorly on them. The loan was only raised after Leanne made clear her intention to 'challenge the will' and then ultimately abandoned on the eve of the trial. The inconsistency in their approach to the loan combined with their admissions in evidence enable me to find that their approach to this issue was driven by a desire to improve their negotiating position with Leanne in relation to the dispute over the deceased's estate by creating a risk of financial jeopardy to Leanne in the event that she pressed her claim. In acting in this way, they wrongly elevated their personal interests over their duties as executors of the estate.
101 It follows from the above discussion that all of the parties in this proceeding have engaged in conduct which reflects poorly on their character. I do not however consider that this factor is of particular assistance in considering the relevant jurisdictional question.
Any other matter the Court considers relevant[53]
102 As I have noted, Leanne seeks an order for further provision from the estate of a lump sum of $1.4 million, including $200,000 to be used for necessary repairs and maintenance to the Five Ways property.
103 It was submitted on behalf of Leanne that, on the basis of her current age of 57 years and with a further life expectancy of approximately 29 years, a lump sum of $1.2 million at 1% interest would yield an income of approximately $3,930.84 per month and be exhausted after 29 years.
104 There are various difficulties with this submission which lead me to reject it. First, there is no evidence before the Court about life expectancy. Secondly, there is no evidence to support the proposition that 1% is the correct multiplier to apply. Thirdly, the submission appears to proceed on the erroneous basis that a fund would be required to generate an income for a period of 29 years, being Leanne's asserted life expectancy. This ignores the fact that Leanne is currently employed on a full-time basis and the absence of any credible evidence which would allow me to find that it is more likely than not that Leanne will be unable to continue working until retirement age.
[1] Without taking into account legal costs, chattels or capital gains tax embedded in shares.
[2] The same as Gregory, less repayment of a small loan.
[3] The mandatory factors are set out in s 91A(1) and the discretionary factors are set out in s 91A(2).
[4] Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation (1981) 147 CLR 297, 320-1.
[6] Recommendation 40(b) of the VLRC Report.
[7] See Re Williams; Smith v Thwaites [2017] VSC 365, [22], [52], [57]; Re McKenzie [2017] VSC 792, [91]; Re Marsella; Marsella v Wareham [2018] VSC 312, [82] ('Re Marsella'); Naismith v Fraser [2018] VSC 689, [61]-[62].
[8] [1938] AC 463, 476, 478 ('Bosch v Perpetual Trustee Co Ltd').
[10] [1994] HCA 40; (1994) 181 CLR 201 ('Singer v Berghouse').
[12] [1962] HCA 19; (1962) 107 CLR 9 ('Pontifical Society').
[14] [2017] VSC 365, [22]-[25].
[16] See, eg, Re Hodgson [1955] VicLawRp 77; (1955) VLR 481 ('Re Hodgson'); Blair v Blair [2004] VSCA 149; (2004) 10 VR 69 ('Blair v Blair'); Delaney v Jones [2008] NSWSC 229 (11 March 2008).
[17] Coates v National Trustees Executors & Agency Co Ltd [1956] HCA 23; (1956) 95 CLR 494, 507-8 (Dixon CJ).
[18] Grey v Harrison [1997] 2 VR 359, 366 (Callaway JA, with whom Tadgell and Charles JJA agreed) ('Grey v Harrison').
[19] [2016] VSCA 178, [33] ('Jones v Smith'), citing Pontifical Society (n 12) 19 (Dixon CJ, McTiernan J agreement); Blair v Blair (n 16) 76 [15] (Chernov JA), 84 [39] (Nettle JA), 84 [42] (Hansen JA); Grey v Harrison (n 18) 363 (Callaway JA), 360 (Tadgell JA), 361 (Charles JA).
[20] As stated by McMillan J in Peter Morris v Smoel [2014] VSC 32, [124].
[21] [2019] NSWCA 114 ('Steinmetz').
[26] [1960] HCA 73; (1960) 104 CLR 124, 135.
[29] Jones v Smith (n 19) [38]. See also the general principles set out by Hallen J in Walsh v Walsh [2013] NSWSC 1065, [121]-[126].
[31] Collicoat v McMillan [1999] 3 VR 803; MacEwan Shaw v Shaw [2003] VSC 318; (2003) 11 VR 95, 117 [195], 120 [213].
[32] Goodman v Windeyer [1980] HCA 31; (1980) 144 CLR 490, 497 (Gibbs J, Stephen and Mason JJ agreeing).
[34] Carey v Robson; Nicholls v Robson [2009] NSWSC 1142.
[37] The total cost of the purchase including stamp duty was $336,867.00.
[40] Ibid s 91A(2)(l).
[41] Ibid s 91A(2)(f).
[42] Ibid s 91A(2)(j).
[43] Ibid s 91A(2)(a).
[44] Ibid s 91A(2)(b).
[45] Ibid s 91A(2)(i).
[46] Ibid s 91A(2)(h).
[47] Ibid s 91A(2)(e).
[48] See the definition in s 90 of the Act.
[51] Mr Ross' capability was exemplified by the fact that, as Leanne conceded in her evidence, he was still sailing at the age of 86.
[54] At 3% capital growth, a fund of approximately $940,000; at 4% capital growth, a fund of approximately $1,036,000; and at 5% capital growth, a fund of approximately $1,140,000.
Ross
Ross [2019] VSC 820
(1981) 147 CLR 297
(1994) 181 CLR 201
(1962) 107 CLR 9
(2004) 10 VR 69
(1956) 95 CLR 494
(1960) 104 CLR 124
(2003) 11 VR 95
(1980) 144 CLR 490