OTTO WILHELM SCHAECHTELE AS EXECUTOR OF THE WILL OF MARIA REGINA GRUNDNER-SCHAECHTELE

Succession - Application by widower under Inheritance (Family and Dependants) Act 1972 (WA) for provision from estate of late wife - Settlement - Application to vary deceased's will as agreed by the beneficiaries - Turns on own facts

Inheritance (Family and Dependants Provision) Act 1972 (WA), s 6

1 LE MIERE J: The plaintiff has applied by originating summons for an order that the court make provision out of the estate of Maria Regina Grundner-Schaechtele, deceased, (the Estate) pursuant to the provisions of the Inheritance (Family and Dependants) Provisions Act 1972 (WA) (the Act) on the grounds that the plaintiff was the husband of the deceased immediately before she died and there has been no, or alternatively no proper, provision made for him in the will of the deceased.

2 The parties reached agreement and by consent asked the court to order that the will of the deceased be varied by deleting the clause of the will by which the deceased bequeathed her real estate to the plaintiff and the second defendant equally, subject to certain directions, and replacing it with a provision that the deceased bequeaths her real estate to the plaintiff subject to him making payment to the second defendant of $333,000.

3 On 25 June 2008 I made orders to give effect to that settlement. These are my reasons for doing so.

4 Where parties have agreed to settle proceedings under the Act the court will usually make orders to give effect to the settlement. In Hadley v McNamara Re the Estate of Mary Anne McNamara (Unreported, NSWSC, 7 December 1995) Young J said:

In former times the court used to look at these applications as if they were discretionary matters and seek to work out whether the court had jurisdiction. It is now clear that that is the wrong approach under the Family Provision Act and that if parties agree to settle proceedings under the Family Provision Act, and there is no other interest involved, ordinarily the court should merely make the orders in accordance with the terms of settlement. There will, of course, be the odd exception where it clearly appears on the face of it that there is no jurisdiction in the sense that the plaintiff has no need of provision.

5 In Hore v Perpetual Trustee Co Ltd (Unreported, NSWSC, 8 June 1995) Windeyer J referred to the provisions of the Family Provision Act 1982 (NSW) that gives power to the court to make orders in favour of eligible persons out of the estate of a deceased person, for such provision as it considers ought to have been made and continued:

Those provisions give the basis for exercise of jurisdiction by the court. Parties are absolutely entitled of course to make any rearrangement of the terms of a will they wish, if all beneficiaries are of age and absolutely entitled. That has nothing whatever to do with the jurisdiction under the relevant Act. Section 7 and s 9(2) raise jurisdictional questions. This has been described in various ways, sometimes making it appear discretionary, but there is no doubt now that for the court to assume jurisdiction, the provisions of s 9(2) must be satisfied.

As the power to make orders is governed by s 9(2) and s 7, the court cannot by consent, assume a wider jurisdiction. Parties cannot by consent, confer power upon the court to make orders which the court lacks power to make.

Settlements of claims under the Family Provision Act are of course very common. It is obviously in the interest of the parties and the court to encourage settlement and in any week the Masters and Equity Division may be asked to make a number of orders agreed between the parties in such actions. In such matters in my experience the court looks quickly at the evidence, and is informed of the relevant facts by counsel or solicitor, and if the matter appears to be reasonable makes the orders. No detailed consideration of jurisdiction takes place as long as the plaintiff appears to have a proper basis for his or her claim. In cases where the interests of infants or unascertained classes of persons may be affected by the orders, then the proposed orders are considered in more detail, not usually on the jurisdictional question, but more often on relevant terms of the orders themselves, and the extent of the benefit provided by them. On occasions the court refused to make the orders proposed, but this is unusual.

6 It is in the public interest that matters be resolved by mediation and agreement. The court should give effect to an agreement of the parties if it is proper to do so.

7 Jurisdiction is conferred upon the court by s 6(1) of the Act. The court only has jurisdiction to make an order if it is of the opinion that the disposition of the deceased's estate effected by her will is not such as to make adequate provision from her estate for the proper maintenance, support, education or advancement in life of the plaintiff.

8 I will now consider the jurisdiction issue having regard to the approach I have outlined.

9 The plaintiff was married to the deceased immediately prior to her death. The plaintiff is the executor of the Estate and has been granted probate of her will. In his capacity as executor of the will of the deceased the plaintiff is the first defendant. The second defendant is the son of the deceased and, other than the plaintiff, the only beneficiary named in the will and the only other person interested in the Estate.

10 The plaintiff was born on 27 April 1945. The plaintiff and the deceased were married on 11 August 1988. The deceased died on 30 July 1999. At the time of the deceased's death the plaintiff was aged 54 years. He is now aged 63 years. At the time of the deceased's death the plaintiff had long standing heart disease. At the time of the deceased's death the plaintiff had no substantial assets and had significant debts. His income was modest and consisted almost entirely of a pension from Germany, the country of his birth.

11 At the time of the deceased's death, the second defendant was 35 years of age, having been born on 30 January 1964. The second defendant works as an orthodontist in Germany. He is, and was at the time of the deceased's death, married. His wife is a doctor. The second defendant and his wife have no children but are proposing to adopt a child.

12 The estate of the deceased consisted of a property at Lesmurdie that was the former matrimonial home, shares, the proceeds of an insurance policy, a unit trust fund and a cash fund, together with chattels and personal effects. Since the death of the deceased the plaintiff, as executor of the estate, has distributed certain chattels to the second defendant and to himself in accordance with the terms of the will. The plaintiff has got in the cash and realised the insurance policy and shares and paid debts and expenses of the estate. Out of the estate the plaintiff has paid $126,105.39 to the second defendant and paid the same amount to himself. The assets remaining in the estate are the Lesmurdie property and shares, or the proceeds of shares, to the value of approximately $20,000.

13 By cl 5 of her will the deceased bequeathed her real estate to the plaintiff and the second defendant on certain terms. The deceased bequeathed the residue of her estate to the plaintiff and the second defendant equally. The effect of cl 5 of the will is not clear and has given rise to a difference between the plaintiff and the second defendant concerning its proper construction and effect. The plaintiff's counsel says that cl 5 entitled the plaintiff to pay to the second defendant half of the value of the Lesmurdie property at the time of the deceased's death and upon making that payment to become entitled to the full ownership of the Lesmurdie property providing the payment was made within three years of the date of the deceased's death. If the payment was not made within three years of the date of the deceased's death then the plaintiff and the defendant would own the Lesmurdie property as tenants in common in equal shares. The defendant says that he was entitled to a half interest in the Lesmurdie property by reason of cl 5 of the will or alternatively because cl 5 is uncertain and the Lesmurdie property forms part of the residuary estate. The Lesmurdie property is at the time of this hearing valued at $1,050,000. At the date of death of the deceased it was valued at $390,000.

14 The principal matter of contention between the plaintiff and the second defendant concerns the Lesmurdie property. If the property was sold or the plaintiff pays out the second defendant the amount he is entitled under the terms of the will, then the second defendant is entitled to a sum between $195,000 and $525,000 depending upon the effect of cl 5 of the will.

15 The terms of cl 5 of the will are difficult. The plaintiff did not pay out to the second defendant half of the value of the Lesmurdie property at the time of the deceased's death. The parties have reached a compromise agreement and have not pursued their different constructions of cl 5 of the will. I have not received the benefit of full submissions from counsel concerning the construction or effect of cl 5 of the will. In the circumstances it is not appropriate that I make any final decision on the construction or effect of cl 5 of the will. It is sufficient that I observe that the plaintiff did not pay out to the second defendant half of the value of the Lesmurdie property and in those circumstances it appears most likely that the second defendant is entitled to have the Lesmurdie property transferred to himself and the plaintiff as tenants in common in equal shares.

16 I am of the opinion that the disposition of the deceased's estate affected by her will is not such as to make adequate provision from her estate for the proper maintenance or support of the plaintiff. I form that opinion on the basis of the evidence contained in the affidavits of the plaintiff and of the second defendant. I take into account that the second defendant agrees that the deceased's will does not make adequate provision from her estate for the proper maintenance or support of the plaintiff.

17 Having found that adequate provision has not been made the court must consider whether to exercise the discretion to order further provision to be made out of the estate of the deceased for the maintenance or support of the plaintiff. The court must take into account the relevant facts as they exist at the time of the making of the order.

18 This court cannot make an order giving effect to the proposed settlement unless the court thinks that such provision should be made out of the estate of the deceased for the proper maintenance or support of the plaintiff. But that does not mean that the court is in effect to hear the matter as if it was a contested application and then to give or to withhold orders to give effect to the settlement by comparing the settlement with the judgment which the court would have given. The court must give proper consideration to the evidence before it. The court should be aware of the risks of litigation in an area in which reasonable people can reasonably reach different conclusions and give proper weight to the fact that the parties wish to effect the settlement. If the court is satisfied that the settlement falls within the bounds of a reasonable exercise of discretion then the court should make orders to give effect to the settlement.

19 The plaintiff is 63 years of age. He has minimal earning capacity and does not have good health. The second defendant is now aged 44 and has many more years of earning capacity. There are no claims as to disentitling conduct and both the plaintiff and the second defendant had good relationships with the deceased. Approval of the consent orders will mean the plaintiff is able to keep the Lesmurdie property so that he has secure accommodation. The payment to the second defendant of $333,000 will significantly enhance his financial security and his ability to properly provide for his wife and the proposed adopted child. In the circumstances, the settlement represents a proper exercise by the court of its discretion under s 6 of the Act.