Sellars v Maeyke

[4] The testator bequeathed the sum of $10,000, any motor car of which he was possessed at death and any shares and listed property trust investments which he possessed at death to the applicant. He left the remainder of his estate to be divided equally between his three surviving children subject to a right of residence at his property at Pine Mountain to the applicant.

[5] That property is semi-rural and of some 82 acres comprising a house, shed and cattle yards with boundary and internal fencing on which some 25 cattle are run. These cattle and some equipment are owned by the applicant who had and has an interest in showing cattle. The applicant's right of residence is dependent upon her continued residence at the property while she remains of sound mind and pays all rates, insurance and other outgoings and keeps the property in good repair. She is concerned that she will have insufficient funds to maintain the property as required by the conditions in the will and as she would wish and have flexibility for a less demanding residence as she ages or becomes ill.

[6] The respondent as personal representative contends that the applicant has not shown a prima facie case that adequate provision has not been made out of the estate as required by Practice Direction No 8 of 2001.

[7] The parties were not able to agree to terms of the directions order provided for in the Practice Direction and, in accordance with paragraph 9(d), the originating application was listed by the applicant. The hearing was adjourned by Douglas J on 9 November 2005 to allow the applicant to place further material before the court to demonstrate a prima facie case. The applicant has filed further material. The respondent nonetheless maintains that she has failed to show a prima facie case. Neither Mr Lane for the applicant nor Mr Matthews for the respondent contend that the court cannot dispose of an application brought under s 41 of the Succession Act 1981 summarily. I have discussed the status of Practice Direction No 8 of 2001 and summary dismissal in Higgins v Higgins [2005] QSC 110 at [9]- [16] and do not propose repeating those observations.

[8] There is no affidavit from the respondent/executrix setting out the assets of the estate and their values although the estate solicitors have indicated in correspondence the value of the shares and listed property trust assets. The applicant has assessed the value of some property without any indication as to how she has done so. In my view, she has incorrectly calculated her entitlements to the listed property trusts by a significantly reduced amount. The figures contended for by Mr Matthews in supplementary submissions sought by me have not been challenged by Mr Lane. I have, therefore, relied on his figures and not the applicant's. The list of assets and valuations set out below reflect her valuations where they are the only ones available.

Furniture and contents of Pine Mountain (app's valuation)

The value of the estate excluding the Pine Mountain property is $810,358 using these valuations and figures.

[9] Of those assets the applicant, by the terms of the will, receives the share portfolio, the property trust investments, the motor vehicle and $10,000 in cash - an amount of $463,954. The residuary beneficiaries receive the DDH Graham short term deposits, the ING life policy, the National Australia Bank deposit, the funds with the estate solicitors and, strictly, the contents of Pine Mountain (less $10,000 to the applicant) giving a figure of $146,404. To that must be added the estimated $200,000 for the real estate at Raceview, making $346,404. Realistically the value of the contents of Pine Mountain should be ignored because their value will diminish with use over the years of the applicant's residence. Using those figures the applicant obtains just over half of the estate excluding the Pine Mountain property.

Part-time income with Phillips Group Pty Ltd per annum

[11] The applicant describes her present liabilities as

[12] The applicant described outgoings on the Toowoomba home as $2,800 and her yearly living expenses, not including expenses associated with maintaining the Pine Mountain Home at $38,810.

[13] The applicant does not disclose her own family situation save that she mentions two adult daughters. Neither does she provide information about her financial situation at the time when she commenced living permanently with the testator and when they married. She is employed by one of her daughters in her daughter's business but does not say expressly what that is or where it occurs. The applicant described herself as a "financial controller" in her first affidavit. However, in her second affidavit she resiles from that description. She says that she maintains "the accounts of the managing director, Stephanie Paul, who is my daughter. I also deal with the excess work of the accounts section of the Phillips Group." In her marriage certificate under "usual occupation" she described herself as "director" living at Upper Mount Gravatt.

[14] The applicant mentions another daughter, Debbie Phillips, with whom she jointly owns a house in Toowoomba. That daughter lives in the house with her two children and has done so, according to the applicant, for some 17 years. The applicant values her share of that property at $92,000. She deposes that she does not wish to live with her daughter nor could she since the house is occupied completely by that family.

[15] The applicant describes her marriage to the testator as a happy one and there is no suggestion that it was not. The applicant deposes that they travelled overseas and took holidays together and enjoyed sharing in each other's extended families.

[16] The applicant deposes that the testator's health deteriorated from about 1994 due to lung disease which resulted in several operations including major lung surgery in 2001. As a consequence the testator became very depressed and the applicant deposes that she cared for him in physical and emotional terms. The testator provided the applicant with her own share portfolio in the late 1980's to give her some financial security. The applicant deposes that during their relationship she "was almost totally dependent upon" the testator and that her income dropped from $31,338 taxable income in 1999 to $0 in 2004. What this letter figures means, presumably, is that the applicant earns below the taxable income threshold. Prior to 1992 when she lived continuously at Pine Mountain the applicant deposes that she was in full-time employment. Thereafter she worked part-time approximately three days per week until the testator's health worsened from about 2002. Thereafter she reduced her hours of work until she was working approximately 18 hours per week. She deposes that she now works approximately 12 hours per week but it may be accepted that this is a family arrangement and may not continue long into the future.

[17] Since the applicant does not explain the source of the term deposit of $105,000 and the Suncorp Life Insurance policy with a cash value of $39,705, in view of her assertion that throughout their relationship she was "very" dependent financially upon the testator it may be inferred that the testator provided those funds as well as her share portfolio. It seems correct to infer that superannuation benefit of almost $270,000 has derived from her employment.

[18] The applicant's concern is that her income will be insufficient to maintain her life at Pine Mountain where she is adamant she wishes to live for the foreseeable future. The testator acquired the property in the mid to late 1970's so far as the applicant's material reveals. She says that they jointly constructed the boundary fences and when completed started breeding cattle. It seems that the cattle were principally the applicant's interest and numerous prizes were won in Queensland and NSW. The applicant wants to increase her breeding program so her cattle start paying their way which is not presently the case, nor was it at the date of the testator's death.

[19] Of the property the applicant says in paragraph 33 of her second affidavit

"Pine Mountain is in constant need of maintenance. The soffit and eaves to the home at Pine Mountain need painting. I estimate that this will cost several thousand dollars. Due to lack of water Pine Mountain needs to have a dam constructed in the middle paddock. I estimate that this will cost several thousand dollars. The fences at Pine Mountain constantly need to be maintained. There is a new fence required at in the road paddock Pine Mountain [sic] so as to create a smaller paddock and make it easier to run the cattle up to the yard. That fence will be approximately 1km in length. I estimate it will cost several thousand dollars. The road to the house at Pine Mountain needs grading because the road has become uneven due to erosion and general wear and tear. I estimate the grading will cost several thousand dollars. Weeds constantly need to be eradicated."

[20] The applicant elaborates in paragraph 17 of her second affidavit about the maintenance. She deposes that the drott's hydraulics presently need repair and in paragraph 18 that the capital expenditure required in maintaining the property over the next 10 years will be approximately $87,000.

[21] The basis for that assessment is said to be from Mr Diarmid Mackiehan's calculations. Mr Mackiehan is the applicant's professional financial advisor. But he has done nothing more than take figures, presumably supplied by the applicant, and calculate the capital sum that will be necessary to undertake certain tasks and provide certain equipment over the next 10 years. He has allowed $5,000 for painting, $4,000 for floor coverings and curtains, $3,800 for generators, $12,800 for road maintenance, $2,000 for the provision of a television and $2,200 for the provision of white goods. He has also provided $35,000 for a 4WD vehicle in 2007 and some $35,000 for the replacement of the drott in 2010. The television, white goods and a motor vehicle are matters personal to the applicant irrespective of where she lives. Perhaps the replacement of white goods is arguable an aspect of maintaining Pine Mountain. It is also arguable that if the applicant purchased a new drott she would own it subject to any accounting for the value of the existing drott to the estate. This leaves capital costs of less than $15,000.

[22] The applicant deposes that her yearly expenses in running the property will be approximately $32,763. The applicant relies upon the affidavit of Mr Mackiehan, in arriving at that figure. It is difficult to see what expertise Mr Mackiehan has brought to this exercise. He has merely listed items provided to him by the applicant including items which clearly are not referable to Pine Mountain at all. For example, there are items presumably relating to the applicant's jointly owned real estate in Toowoomba, namely, "maintenance Toowoomba" with an annual amount of $800; "insurance Toowoomba" at $350; "rates Toowoomba" at $1,500; "brokerage share investments" with an annual figure of $240; "financial planning fees" in the amount of $400; "interest on borrowings" at $960 - to what this refers is not explained.

[23] In the absence of the applicant's and the testator's tax returns for the business of cattle breeding associated with Pine Mountain it is not possible to ascertain how items such as the motor vehicle, fodder, cartage and freight have been dealt with in the past. It is clear, however, that the figure of $32,763 is greatly inflated by items not at all associated with maintaining Pine Mountain. This would give a figure of something in the order of $5,000 less than estimated by the applicant and Mr Mackiehan, that is, about $28,000 on the applicant's own unexamined figures.

[24] The applicant contends that after the distribution to her under the testator's will her income would be approximately $33,571 per annum which she says is insufficient to maintain Pine Mountain.

[25] The value of the cash assets received from the testator by his will is approximately $460,000 ($459,954). Invested at 6 per cent per annum this sum would produce an annual income of $27,600 which would meet the expenses of running Pine Mountain using the figures which the applicant has provided but excluding those items which are clearly not referable to the maintenance and operation of the property. She then has her own resources which she has estimated at just under $600,000 with modest outstanding debts of $15,000.

[26] According to the life expectancy tables the applicant is expected to live another 15 years although her family has a history of longevity. Although the applicant is in good health she notes that her mother suffered from dementia.

[27] It is necessary to make some brief reference to the position of the residuary beneficiaries. Combining the facts revealed by the applicant in her two affidavits, she deposes that the respondent is in good health and employed by the Department of Defence as a cleaner. She has two adult children. Her husband works for Queensland Rail. The testator told the applicant that he had loaned them several sums of money in the past to assist in business ventures and they had made some repayments on those loans. In 1999 the testator gave the respondent and her husband a block of land near Pine Mountain and had given the respondent sums of cash from time to time.

[28] Susan Edwards is said to be in good health and employed as an aqua aerobics instructor. She has three children aged 22, 20 and 16 who live with her and her husband who works as a delivery driver for Steggles Chickens. The applicant deposes that the testator gave Susan a car worth approximately $16,500 several years ago and on occasions the testator told her that he had paid some sums of money to her which were probably loans which were repaid, at least in part.

[29] The applicant deposes that Robert Sellars is in good health and is self employed as a concreter and asphalter. He has three children aged 16, 14 and 8 who do not live with him. The testator told the applicant that he had assisted Robert by loaning him cash which she deposes has been repaid in part.

[30] From this material it seems that there was an affectionate and appropriate relationship between the testator and his children whom he was concerned to assist financially during his life. Given their circumstances as revealed by the applicant, even in that limited fashion, it may be concluded that they are not financially well off and the testator has sought to make some provision for them by leaving them the real estate and some amounts of cash.

[31] The applicant does not articulate what she would regard as adequate maintenance from the testator's estate but her concern is the cost of maintenance of the property which she cannot achieve without recourse to her own funds for living expenses if the capital left to her by the testator is to remain intact. When she needs other accommodation she would have to realise a significant part of that capital sum.

[32] Mr Lane contended that it was not appropriate that the applicant should need to erode her own capital to provide for her maintenance over her remaining years. He referred to an observation by Wilson J in White v Barron [1980] HCA 14; (1979) 144 CLR 431 in his written submissions

"The Privy Council in Bosch's Case made it clear that what is 'adequate provision for proper maintenance' was not a question to be determined solely by reference to the material needs of the widow. All the circumstances, including the size of the testator's estate at the date of death and the style to which the widow has been accustomed during his life time are relevant to this question ... I do not think a wise and just testator would think it right for his widow to be required to draw on her own capital assets in satisfaction of her need of proper maintenance, especially when he had the means to protect her from the risk of financial anxiety in the future by a provision which enabled her to preserve her own capital." At p 457.

"Generally speaking, it may be wrong in principle for a court to assume jurisdiction under this legislation in order to build up out of the estate of the testator the capital assets of an elderly widow."

[34] There can be little doubt that the preponderance of authority supports a proposition that a right of residence will often not afford a widow of advancing years security in her accommodation, Permanent Trustee Co Ltd v Fraser (1995) 36 NSWLR 25 per Sheller JA at 47.

[35] As Bryson JA, with whom Ipp JA and Stein AJA agreed, in Bladwell v Davis [2004] NSWCA 170 (4 June 2004)

"There have been many statements in judicial decisions, including decisions in the Court of Appeal, generally to the effect that primacy of some kind is accorded to claims of widows for proper maintenance and advancement in life including continuance of housing arrangements which they enjoyed during the lifetimes of their late husbands. These statements are not altogether uniform in their expression, and should be understood as made in each case in relation to the facts under consideration; and those facts vary widely and in truth are unique to each particular case. 'Widow takes all' is not a rule which has been or could be established by judicial decisions: the Court cannot resign the functions which it has under s 7 of the Family Provision Act 1982 in favour of rules of thumb. ..."

The observations of Kirby P (as his Honour then was) in Golosky v Golosky NSWCA, 5 October 1993, (unreported) were quoted by Bryson JA

"Matters such as these rule out an inflexible rule that every spouse or every widow is entitled, as of right and in every case, to look to a testator to provide accommodation for life. Such inflexible rules used to exist in this area, as for example the previous rule that an 'able bodied son' was disentitled to a claim under the predecessor to the Act for that reason alone. That rule has now been abandoned in this State ... so should inflexible rules about spousal provision."

[36] What may be said to be clear from the authorities is a recognition that the needs of older people for appropriate accommodation will vary from an ordinary home, to an retirement village, to a nursing home and, perhaps, finally, hospital or a combination of all of these residences depending on the person's physical and mental health. What constitutes adequate provision will depend in every case on the detailed circumstances and it is the analysis of the detail which will provide the answer, as Kirby P commented in Golosky at 16.

[37] On the question whether the applicant has shown a prima facie case it is necessary to consider only the general question whether adequate provision has been made for the applicant's proper maintenance and support and not the quantum of that provision, although, as has been recognised, the two-stage process identified in Singer v Berghouse [1994] HCA 40; (1994) 181 CLR 201 is not necessarily a neat division since adequacy or not may need to be measured in monetary terms.

[38] The testator was conscious of the need to make adequate provision for the applicant and, it may be assumed, believed that he had done so. It may be that the cost of the maintenance of Pine Mountain that the applicant attests to was not fully comprehended by the testator when he executed his will nor, perhaps, did he have full regard to the applicant's need for alternative accommodation. He has left her with a substantial legacy in terms of the shares and investments and, no doubt, was aware of the assets which she herself had some, at least, of which he had provided. The testator must have been aware that although the applicant had a half interest in the house in Toowoomba it was unlikely that it could be utilised as a residence for her in her advancing years or if her health made living at Pine Mountain impracticable. The applicant reveals nothing about the Raceview real property save her nominated value. It may provide her with appropriate alternative accommodation. Again, the competing interests of the residuary beneficiaries will be an important consideration in assessing the adequacy of the maintenance and support.

[39] The failure of the applicant to identify and describe her assets and the assets of the estate with more particularity is unfortunate. But I do not think this failure is in the same category as not putting her "best foot forward" as Mr Matthews quoted from Higgins. Although not a compelling case, nonetheless I am not persuaded that it is one which ought to be dismissed summarily.

[40] Since the respondent agrees with the terms of the directions order proposed by the applicant the order will be as per that draft.