Sherborne Estate: [1] Vanvalen & Anor v Neaves & Anor;

Supreme Court of NSW|2004-10-28|Before: Palmer J

CITATION : Sherborne Estate: [1] Vanvalen & Anor v Neaves & Anor; [2] Gilroy v Neaves & Anor [2005] NSWSC 593

HEARING DATE(S) : 25 to 28 October 2004, and 21 April 2005

DECISION : Granddaughter's application dismissed; further provision for daughters made; costs reserved.

CATCHWORDS : FAMILY PROVISION ACT - Whether a granddaughter applicant was "an eligible person" - whether adequate provision had been made for deceased's daughters.

LEGISLATION CITED : Family Provision Act 1982 (NSW) - s.6, s.7, s.22, s.23, s.26, s.27, s.28, s.33

Fulop, Re (1987) 8 NSWLR 679 - Leahey & Trescowthick [1999] VSC 409 - MacEwan Shaw v Shaw [2003] VSC 318 - O'Dea v O'Dea [2005] NSWSC 46 - Pearson v Jones [2000] NSWSC 799 CASES CITED : - Petrohilos v Hunter (1991) 25 NSWLR 343 - Sayer v Sayer [1999] NSWCA 340 - Shearer v The Public Trustee [1998] BC9801169 at 21 - Simons v Permanent Trustee Co Ltd [2005] NSWSC 223 - Singer v Berghouse (No 2) (1994) 181 CLR 201 - Tsivinsky v Tsivinsky (unrep) NSWCA 5 December 1991

[1] Barbara Anne Vanvalen - First Plaintiff [1] Helen Lorraine Fahey - Second Plaintiff PARTIES : [2] Julia Eva Gilroy - Plaintiff [1] & [2] Clarence Albert Neaves - First Defendant [1] & [2] William Grant Sherborne - Second Defendant

[1] J.B. Whittle SC, B. Townsend - Plaintiffs COUNSEL : [2] S.M. Foda - Plaintiff [1] & [2] G.C. Lindsay SC, M.K. Meek - Defendants

[1] & [2] O'Hearn & Bilinsky - Plaintiffs SOLICITORS : [1] & [2] M. Russoniello - Defendants

1 These are applications under s.7 of the Family Provision Act 1982 (NSW) ( "FPA" ) by two children and one grandchild of the late Mrs Alma Sherborne ("the deceased"), who died on 24 February 2001 aged eighty-one years leaving a will dated 22 February 2001. Probate of the will was granted to the First Defendant on 29 January 2002. 2 For the sake of convenient reference and without intending any disrespect I will refer to the members of the families concerned in these applications by their first names. 3 The deceased was married twice, first to John Clivery, who died in 1957. There were two children of this marriage: Barbara, born on 4 November 1940, and Helen, born on 9 September 1947. Barbara and Helen are the Plaintiffs in proceedings 1865/02. Helen's daughter, Julia, born on 20 May 1969, is the Plaintiff in proceedings 1866/02. 4 In 1960 the deceased married William Sherborne, who died in 1976. There was one child of this marriage, William Grant Sherborne, born on 14 February 1963. He is usually referred to as Grant. 5 The deceased's will gave to Grant all the deceased's real estate and interests in real estate and her share in the farming partnership which she carried on with Grant, upon condition that Grant pay $20,000 to each of Barbara and Helen. She left the residue of her estate to Barbara and Helen in equal shares. The will made no provision for Julia.

6 Under the will of her first husband, the deceased inherited the whole of his estate. However, Mr Clivery's main asset was an interest as joint tenant with the deceased in a property known as Tarlo , so that the deceased became sole owner of that property by survivorship. Mr Clivery and the deceased farmed Tarlo in partnership and the major asset in Mr Clivery's estate was his interest in that partnership, valued at the date of his death at £3,424. 7 When the deceased married the late Mr Sherborne, he already owned a property called Willow Vale , which is near Tarlo but is not contiguous with it. Mr Sherborne remained sole registered proprietor of Willow Vale . 8 After their marriage, the deceased and Mr Sherborne together acquired further properties. In 1969 they bought Taracoonie , a property near but not contiguous with Tarlo and Willow Vale . In 1971, they bought a property called Maloneys , which lies between Tarlo and Willow Vale . 9 As at the date of Mr Sherborne's death, he owned Willow Vale outright and a half share in Taracoonie and Maloneys . Mr Sherborne's will gave Willow Vale to Grant absolutely and the remainder of his assets equally between Grant and the deceased. 10 Accordingly, after administration of Mr Sherborne's estate the position as between the deceased and Grant was as follows. The deceased owned Tarlo outright and a three-quarter interest in Taracoonie and Maloneys , having taken half of her husband's half interest in those properties under his will. Grant owned Willow Vale outright and a quarter interest in each of Taracoonie and Maloneys . 11 Tarlo, Willow Vale, Taracoonie and Maloneys had been used by the deceased and Mr Sherborne to run a dairy farm. After Mr Sherborne's death, the deceased continued to run the dairy farm on her own with the assistance of Grant. When Grant turned eighteen in 1981 he entered into a partnership with the deceased in the dairy farm business although the partnership agreement was not documented until 1 July 1992, when a Deed of Partnership was executed. 12 In January 1991 the deceased and Grant purchased as joint tenants a residential property in Dale Street, Burrawang. The property has been rented out to supplement the income from the dairy farming business. On the deceased's death, the Dale Street property passed by survivorship to Grant. 13 It is clear that from a time not long after Mr Sherborne's death the deceased formed the intention that Grant alone should inherit the dairy farming properties on her death. She implemented that intention shortly before she died. From a letter to the deceased from her solicitor, Mr Tsalidis, dated 28 February 2000 it is unarguably clear that the deceased wished to carry out her intention in such a way as would defeat any application by Barbara and Helen for further provision out of her estate under the Family Provision Act . 14 In furtherance of that intention, on 14 April 2000 the deceased, for no consideration, executed a transfer of Tarlo , of which she was then sole registered proprietor, to herself and Grant as joint tenants. The agreed present value of Tarlo is $1,600,000, so that the value of the deceased's gift to Grant is $800,000. 15 On 17 April 2000 the deceased executed by way of gift transfers of Taracoonie and Maloneys , previously held as to a 75% interest by the deceased, whereby those properties were now held by the deceased and Grant as joint tenants. The agreed present values of Taracoonie and Maloneys are $620,000 and $950,000 respectively so that the values of the deceased's gifts to Grant are $155,000 and $237,500 respectively. 16 In accordance with the deceased's plan, when she died Tarlo , Taracoonie , Maloneys and the Dale Street property passed to Grant by survivorship, and not by any gift under her will. The deceased had no real estate or interest therein which passed to anyone under her will. The total current value of the deceased's real estate interests which passed to Grant by transfer and survivorship is, therefore, $3,022,500. The Plaintiffs say that these assets should be designated as notional estate under s.22 and s.23 of the Act. The Defendants dispute that contention. 17 If one leaves out of account all property which may possibly be designated as notional estate, the value of the deceased's estate passing under her will is relatively small. The most significant item is the deceased's interest in the farming partnership, which she gives to Grant in her will. The executor valued the deceased's interest in the farming partnership at $62,573. However, the Plaintiffs' accountants value it at between $406,700 and $576,500, in round terms. That valuation depends on including as an asset of the partnership the capital account payable to Grant on dissolution of the partnership and the death of the deceased. I think that Mr Whittle SC, who appears with Mr Townsend for Barbara and Helen, concedes that this approach is not correct. 18 Grant also disputes the value placed by the Plaintiffs' accountants on certain assets of the partnership. It is not necessary to resolve that dispute for the purposes of these proceedings. It is clear that if one excludes Grant's capital account in the partnership as an asset of the partnership one is still left with an estate that is modest in comparison with the value of the alleged notional estate which passed to Grant on the deceased's death. Although Grant denies that any of the Plaintiffs is entitled to further provision out of the deceased's estate, he concedes that if any provision is to be made it will have to be made by recourse to the notional estate. 19 Grant concedes that the following transactions are, arguably, "prescribed transactions" within the meaning of s.22 FPA :

the deceased's transfers of Tarlo , Taracoonie and Maloneys to herself and Grant as joint tenants and the passing of the deceased's interests in those properties by Grant by survivorship;

the passing to Grant by survivorship of the deceased's interest as joint tenant in the Dale Street property;

the passing to Grant by survivorship of the deceased's interest as joint tenant in 167,000 shares in Australian Co-operative Foods Ltd ("ACF");

the transfer by the deceased to herself and Grant as joint tenants on 22 February 2001 of an additional 44,243 in ACF and the passing of those shares to Grant by survivorship;

the passing to Grant by survivorship of the deceased's interest as joint tenant in shares in Pivot Pty Ltd;

the passing to Grant by survivorship of monies held in the joint ANZ bank accounts of the deceased and Grant, including an amount $110,000 deposited in those account with the authority of the deceased on 10 January 2001. 20 Grant submits that if, contrary to his contentions, any of the Plaintiffs is entitled to further provision out of the deceased's estate, that provision should be made by recourse only to the Dale Street property, as notional estate. The Dale Street property has an agreed value of $490,000. The whole of that property may be designated as notional estate even though Grant had an interest therein as joint tenant which did not pass to him by survivorship: s.23 FPA . 21 Grant submits that whatever further provision may be made out of the deceased's estate, the result should leave him with the dairy farming properties which he needs to preserve intact in order to continue carrying on a viable dairy farming business. In other words, he says that he should retain Tarlo , Taracoonie , Maloneys and Willow Vale .

22 Grant was married in 1993 and has three children, born in 1995, 1997 and 2003. Grant and his family live at Willow Vale and he and his wife carry on a dairy farming business in partnership on Tarlo, Willow Vale, Taracoonie and Maloneys . Both he and wife are actively engaged in that business. 23 As a child and teenager, Grant assisted his father in running the dairy farm. When his father was killed in a tractor accident, the farm was taken over by the deceased and Grant assisted her in the daily chores. He left school when he was fifteen and has worked full time on the farm ever since. 24 When Grant was eighteen years of age, he and the deceased went into partnership in conducting the farm business although, as I have noted, the partnership agreement was not reduced to writing until 1992. 25 In 1994 the deceased suffered an injury and was no longer able to carry out any physical work on the farm. Grant undertook all of the work with the assistance of his wife and some casual workers. 26 From 1994 onwards, at Grant's instigation, the partnership embarked on a process of modernising the dairy operation on the farm. New buildings were erected and new plant and equipment was bought at a cost exceeding $400,000. Grant says, and I accept, that he worked extremely hard to develop the dairy farming business on the properties. His efforts have resulted in an increase in milk production from 400,000 litres per year in 1993/94 to 1.5/1.8 million litres per year at present. 27 I accept Grant's unchallenged evidence that the deceased told him on a number of occasions that she intended that on her death the farming properties would go to him but that he would have to give some money to Barbara and Helen. I accept that Grant's work on the farming properties was motivated, in part, by this assurance and that he had a reasonable expectation that, in consideration of his efforts in conducting and improving the partnership farming business, the farming properties would come to him alone on the deceased's death. 28 In short, Grant's whole life has been spent on the dairy farm and he has no qualifications other than in the dairy industry. 29 Grant's financial position may be summarised as follows. He owns outright Willow Vale , Maloneys , Taracoonie , Tarlo and the Dale Street property. The farming properties have a value of about $5.3M. Of this figure, about $2.5M represents interests which Grant had in the properties prior to the deceased's death. The Dale Street property is valued at $490,000. 30 Grant and his wife own farming stock, plant and equipment valued at about $280,000 and a share portfolio valued at about $560,000. The liabilities of the dairy farming business are relatively small, in the order of about $70,000. 31 Part of the Willow Vale property is zoned as suitable for subdivision. Grant says, and I accept, that he has no present intention of subdividing that land and that if and when he subdivides and sells it the proceeds of sale will be used to acquire additional land for the dairy farming business.

32 There is no dispute that Barbara and Helen, as daughters of the deceased, are "eligible persons" within the meaning of s.6(1)(b) of the Act. Julia is a grandchild of the deceased. She asserts that she is an "eligible person" because she was, for a time, "wholly or partly dependent" upon the deceased within the meaning of s.6(1)(d)(i). The Defendants deny that she was, at any time, wholly or partly dependent upon the deceased. 33 The facts as to Julia's relationship with the deceased are not much in dispute and may be summarised as follows. 34 In 1976, when Julia was seven years old, she, her mother (Helen) and her brother (Brett) went to live with the deceased for about three months. The circumstances in which this occurred were that Helen's husband had become violent and Helen feared for the safety of herself and her children. It is clear that Helen went to the deceased only for temporary accommodation as, after three months, she and the children went to Bowral to live. 35 Julia says that during this period of three months she shared a bedroom with the deceased. She says also that Helen milked the cows on the deceased's farm in the mornings and in the afternoons and nights she worked at the Bowral Bowling Club. To a limited extent, this evidence is corroborated by Helen. Ms Foda of Counsel, who appears for Julia, submits that although Julia does not say so in her evidence, it is open to infer that during this period of three months the deceased looked after Julia and cared for her. However, Helen's evidence is that the deceased merely "helped her look after Brett and Julia" . 36 Ms Foda submits that this period of three months is the first of three periods of time during which Julia was wholly or partly dependent on the deceased, within the meaning of s.6(1)(d) of the Act. 37 The second period of dependency is said to be when Julia spent school holidays at the deceased's farm, from the age of twelve to sixteen years. Julia says of this experience: "In school holidays I went to work on the farm and stayed with the deceased and Grant at Willow Vale. I enjoyed working on the farm."

Although Julia does not say so in her evidence, Ms Foda submits that it is open to infer that the deceased looked after and cared for Julia during these school holidays. 38 Julia left school at the end of Year 10 in 1985 and came to work on the deceased's farm at Willow Vale . This was at Julia's own request. From November 1985 to early 1993 Julia lived and worked at Willow Vale , received a wage from the partnership, and paid the deceased a board of $30 per week. 39 In early 1993, when Julia was twenty-four, she and the deceased moved from Willow Vale to live at Tarlo because Grant was about to get married and intended to live at Willow Vale as the matrimonial home. Julia lived on Tarlo with the deceased from early 1993 to January 1994, when she left because of a dispute with the deceased and Grant concerning her ownership of a herd of cows. 40 During this period of about a year, Julia continued to be employed by the partnership and to receive a wage. She did not pay board to the deceased but, instead, she bought all of the household food. Ms Foda relies on evidence from Grant that during this period: "… the deceased was more looking after [Julia] , cooking meals, probably doing washing, although I couldn't be certain. She may have done washing for both."

Ms Foda submits that this was the third period during which Julia was wholly or partly dependent on the deceased. 41 The following is a convenient summary of the principles which I understand to be applicable to the determination whether a grandchild is an eligible person: "25. The authorities make it clear that a grandchild is not normally regarded as a natural object of a testator's testamentary recognition and that additional factors need to be shown to bring a grandchild into the category of persons for whom the testator ought to have made provision. These additional factors usually show that the testator had come to assume, for some significant time in the grandchild's life, a position more akin to that of a parent than a grandparent, with direct responsibility for the grandchild's support and welfare, or else that the testator has undertaken a continuing and substantial responsibility to support the plaintiff financially: see e.g. Tsivinsky v Tsivinsky (unrep) NSWCA 5 December 1991 per Kirby P; Sayer v Sayer [1999] NSWCA 340; MacEwan Shaw v Shaw [2003] VSC 318; O'Dea v O'Dea [2005] NSWSC 46.

The authorities are equally clear that the grandchild's dependence, whether whole or partial, on the grandparent must be direct and immediate; it is not sufficient that the grandchild's dependence is the indirect result of the testator providing support and maintenance for his or her own adult child and thereby incidentally benefiting the testator's grandchildren who are directly dependent on that child: see e.g. Petrohilos v Hunter (1991) 25 NSWLR 343, at 346; Re Fulop (1987) 8 NSWLR 679, at 682; Pearson v Jones [2000] NSWSC 799; MacEwan Shaw v Shaw (supra).

Further, the fact that the testator occasionally, or even frequently, made gifts to or for the benefit of the grandchild does not in itself make the grandchild wholly or partially dependent on the testator for the purposes of s.6(1)(d). To qualify the grandchild as a dependant, the gifts or benefits provided by the testator must be of such regularity and significance that one can say that the testator had clearly assumed a continuing and substantial responsibility for the grandchild's support and welfare: see e.g. Leahey & Trescowthick [1999] VSC 409; MacEwan Shaw v Shaw (supra); Pearson v Jones (supra)" : Simons v Permanent Trustee Co Ltd [2005] NSWSC 223 . 42 I am unable to accept that the period of three months in 1976 when Helen, Julia and Brett came to live with the deceased at Willow Vale qualifies as the period during which Julia was wholly or partially dependent on the deceased for the purposes of s.6(1)(d) of the Act. My reasons are as follows. 43 First, whatever assistance the deceased was giving by providing accommodation during this period may be seen as given for the support and maintenance of Helen, as the deceased's daughter, rather than as direct support and maintenance of Julia. 44 Second, I am unable to find that the deceased provided this accommodation and assistance free. Julia's evidence is that Helen worked on the farm and at the Bowral Bowling Club during this period of three months. Helen confirmed this evidence, so that it is clear that during this time Helen was receiving some income. Helen says that she did not pay the deceased cash for board but that, using her wages from the Bowling Club, she bought most of the groceries for everyone in the house, that is, for herself, her children, the deceased and Grant. 45 Third, I cannot infer that this period of three months was anything more than a temporary arrangement of convenience, seen as such by both the deceased and Helen, until Helen was able to find more suitable accommodation in Bowral. I cannot infer that what was done by the deceased in relation to Julia during this period was anything more than by way of temporary assistance to Helen. I cannot infer that during this period the deceased undertook a responsibility for Julia which was more akin to that of a parent rather than to that of a grandparent, or a temporary minder. 46 I am unable to accept that the time spent by Julia on the deceased's farm during the Christmas holidays on four occasions qualifies as a period during which Julia was wholly or partially dependent on the deceased for the purposes of s.6(1)(d) of the Act. My reasons are as follows. 47 First, I am unable to infer that Helen did not make some arrangement with the deceased by way of contribution to Julia's board and lodging during these holidays. Second, if the deceased provided Julia with free board and lodging during these holidays, the deceased's actions are more properly to be seen as the offering of hospitality rather than the undertaking of a responsibility towards Julia's maintenance and support akin to that of parental responsibility. That assumption of such a responsibility was never intended is shown by the fact that at the end of each of the farm holidays Julia returned to live with her mother. 48 It would be a curious application of the Act if the offer by a grandparent of hospitality to a grandchild during school holidays was sufficient to cast upon the grandparent an obligation to make testamentary provision for the maintenance and support of the grandchild for the rest of his or her life. 49 I am unable to accept that the time spent by Julia living with the deceased at Tarlo from early 1993 to January 1994 qualifies as a period during which Julia was wholly or partially dependent on the deceased for the purposes of s.6(1)(d) of the Act. My reasons are as follows. 50 First, Julia was not financially dependent upon the voluntary support of the deceased during this period. She was then twenty-four years of age and was working as an employee on the farm, for which she was receiving a wage from the partnership. 51 Second, although Julia did not pay the deceased for board and lodging in cash, she and the deceased agreed that, instead of a cash payment, Julia's contribution to the household would be to buy all of the household food. 52 Third, I am unable to accept that the evidence of Grant to which Ms Foda refers shows that Julia was in any way dependent upon the deceased during this period. The evidence cannot be taken out of context. The relevant evidence given by Grant was as follows: "Q. The period upon which Julia lived with the deceased was about 8 years? A. From?

Q. From about 1988 until she left … A. … 1994. That is six years.

Q. The time which she was living with the deceased she was not paid to look after the deceased? A. No but she wasn't actually looking after the deceased. The deceased was more looking after her, cooking meals, probably doing washing, although I couldn't be certain. She may have done washing for both.

Q. It was a grandmother looking after her grandchild situation? A. That would be assumed but it could also have been assumed anyone living in the house, sharing domestic duties." [sic] 53 It will be seen that this evidence does not relate just to the period between early 1993 and January 1994. Further, Grant was concerned to deny a suggestion that Julia was looking after the deceased. All he could say in the end was that one could assume that Julia and the deceased were sharing household chores. One may observe that adult people living together even as co-tenants could be expected to do as much. 54 For these reasons, I cannot be satisfied that Julia was wholly or partly dependent on the deceased, within the meaning and for the purpose of s.6(1)(d) of the Act, during any of the three periods relied upon by Ms Foda. Accordingly, I am unable to find that Julia qualifies as an "eligible person" for the purpose of s.7 of the Act. 55 It follows that Julia's claim fails at the threshold and that her Summons must be dismissed.

56 In case I am wrong in my conclusion as to whether Julia is an "eligible person", I should give my views as to whether her application was warranted, within the meaning and for the purpose of s.9 of the Act. 57 I do not think that Julia's residence with the deceased for three months in 1976 or during four Christmas holidays in itself warranted the application. As I have said, I am not satisfied that during either of these periods Julia was dependent in any way on the deceased. 58 Julia resided with the deceased from the end of 1985 to January 1994 and during that time she worked on the dairy farm as an employee of the partnership between the deceased and Grant. Julia herself had sought this employment. She was paid an award wage and overtime. She says that she worked hard and for long hours and was not remunerated commensurately, so that she has increased the deceased's estate by her own unremunerated effort. Further, she says that she hurt her back while working on the deceased's farm and that that circumstance in itself gave rise to a testamentary obligation towards her on the part of the deceased. Grant denies that Julia worked for the partnership without proper remuneration. 59 I am unable to find that Julia's hours of work were excessive and not adequately remunerated. It is clear that for much of the period she was residing with the deceased she was developing her own herd of cattle on the deceased's property. I cannot say how much of Julia's time and effort, remunerated or unremunerated, was devoted to her duties as an employee of the deceased and how much was devoted to looking after her own cattle. 60 As to Julia's back injury, it does not seem to have caused her any lasting disability. She has been active as a hockey player for many years and she continues to play hockey. 61 Julia's assets and her income are very modest. However, that circumstance in itself cannot warrant her application. 62 I do not doubt that Julia and the deceased provided companionship for each other from the end of 1985 to the beginning of 1994, and that during that time they shared a common interest in dairy farming. However, I do not think that that circumstance, seen in the context of the relationship of grandchild and grandparent and of dairy farmer and dairy farming employee, is sufficient to warrant Julia's application. 63 Accordingly, I am not satisfied that there are any factors which, taken singly or together, warrant the making of Julia's application.

64 I turn to the question whether Barbara has been left without adequate provision for her maintenance, guided by the well known principles enunciated in Singer v Berghouse (No 2) (1994) 181 CLR 201, at 209-210. 65 Barbara is now sixty-four years of age. I accept her evidence that she had, generally, a happy childhood. She left school when she was about fifteen at the deceased's request and, for a short time, she worked in a fruit and vegetable shop at Robertson which the deceased was then running. Later, Barbara went to work on the deceased's farm at Tarlo , where she continued to live with her father and mother until she got married in 1958, at the age of eighteen, to her present husband, Mr Peter Vanvalen. 66 Mr Vanvalen pursued a career in the Army. He and Barbara moved around Australia frequently. However, during this time Barbara kept in constant contact with the deceased. 67 Barbara's three children were born in 1959, 1961 and 1965. 68 In 1976, Barbara trained as a nurse and thereafter she obtained employment in various hospitals and nursing homes. In 1980, Mr Vanvalen retired from the Army and he and Barbara moved to Dungog, near Newcastle, where they tried their hand at various small businesses, without much success. 69 In 1992, Barbara injured her lower back at work. Thereafter she was unable to continue working as a nurse or, indeed, to pursue any active paid employment. She has been in receipt of a worker's compensation payment of $258 per fortnight, after tax. 70 Barbara's health is far from good. She suffers from severe degeneration of the spine, a disc prolapse in the lower back, osteo-arthritis and carpal tunnel syndrome in her wrists. She has chronic pain in the back and in her left knee, and her movements are severely restricted. She finds it very difficult to climb stairs, which is a particular problem for her because her present home has two storeys. Consequently, she spends most of her time living on the lower floor. She is no longer able to assist her husband in running the small accountancy practice which he still maintains. 71 Barbara is due to have a knee reconstruction operation which may alleviate her pain in the left knee. However, her back pain is, and will continue to be, chronic and severe. 72 Barbara's financial position is as follows. She and Mr Vanvalen own a home at Dungog, valued at $235,000. The property is unencumbered. Their other assets total in value some $31,000. Their liabilities are very small. 73 The combined income of Barbara and Mr Vanvalen is $21,6000 from Mr Vanvalen's Army pension, and about $7,000 per annum from a small accountancy practice which Mr Vanvalen is conducting. Barbara ceased receiving worker's compensation payments when she turned sixty-three. If Mr Vanvalen dies before Barbara, Barbara will continue to receive five-eighths of Mr Vanvalen's Army pension. 74 For the year ended 30 June 2004, the expenditure of Barbara and Mr Vanvalen exceeded their annual gross income, which was then $41,500 in round terms. Their expenditure for that year was just over $45,000. I must take into account, however, that in that financial year Mr Vanvalen derived a profit from his accounting business of $15,000 approximately and he does not expect that level of income to continue. It must also be borne in mind that during that financial year Barbara and Mr Vanvalen paid some $7,000 in legal costs in respect of proceedings in which their son, Robert, was involved. 75 Notwithstanding minor adjustments which are to be made for one-off expenses, it is clear that Barbara's circumstances are very modest and that she is likely to need continuing medical treatment and medication as she grows older. 76 Mr Vanvalen's health also is not good. He has developed diabetes, severe lower spinal problems and recurrent prostate infections. He now has gross limitation of movement due to his spinal canal and its related effects to his legs. He walks with the aid of a stick and is unable to drive. The prognosis is that there will be continuing deterioration of Mr Vanvalen's condition and that it is not treatable. It is clear that Mr Vanvalen will not be able to give Barbara a great deal of physical assistance as they both grow older. Indeed, it may be that Barbara has to give some assistance to Mr Vanvalen. 77 Barbara says that she needs a one storey, three bedroom house closer to the medical facilities at Newcastle and that, after using the proceeds of sale of the house at Dungog, a further $200,000 would be required to purchase such a house and meet the costs and expenses of the purchase. She estimates that she will require physiotherapy costing about $20,000, pharmaceuticals costing about $25,000, and domestic assistance costing about $90,000, ie. a total of about $135,000 in medical and associated expenses. In addition, she says that she needs a financial buffer against the vicissitudes of life. 78 I am of the opinion that, having regard to Barbara's medical condition, her modest assets and income, the size and nature of the deceased's estate including possible notional estate, and the relationship between the deceased and other persons having legitimate upon her bounty, namely Grant and Helen, a gift of only $20,000 from the deceased's estate to Barbara has left her without adequate provision for her proper maintenance. 79 I am not satisfied that $200,000 is necessary for the provision of more suitable accommodation for Barbara. It seems that Barbara wishes to purchase a three bedroom house because her son, Robert, and Robert's daughter are presently living with her. While it is very understandable that Barbara would wish to assist her son and granddaughter, the deceased had no obligation to provide such assistance and I do not think that it is justifiable to do so now at the expense of the deceased's estate. 80 A testator is not usually regarded as having a testamentary obligation to provide his or her child with a house: see e.g. Shearer v The Public Trustee [1998] BC9801169 at 21, per Young J (as he then was). However, in the present case, because of Barbara's medical condition, I accept that she has a need for more suitable accommodation. It should be a one-storey house and closer to public transport. Evidence from a real estate agent shows that a three bedroom house in suburbs near Newcastle would cost about $380,000. Allowing for any rise in real estate prices since that valuation was obtained, allowing for the fact that I do not think it appropriate for Barbara to purchase a house larger than two bedrooms at the expense of the deceased's estate, and allowing also for the fact that Barbara's house presently is valued at about $235,000, I do not think that more than $150,000 further provision from the deceased's estate is warranted to provide for Barbara's accommodation needs. 81 I accept that Barbara will need provision for medical expenses such as further medical treatment, physiotherapy and pharmaceuticals. I would allow the estimated sum of $45,000 for these needs. However, I do not think it justifiable to provide $90,000 for domestic assistance and a further sum to provide for the vicissitudes of life. Barbara has not required paid domestic assistance to date and, despite the difficulties of herself and her husband, it is not certain that she will require it in the future to a high level. 82 I would allow a certain figure for the vicissitudes of life, bearing in mind Barbara's medical condition. For that purpose, I would allow a further $105,000. That amount should cover such items as paid domestic assistance, should it ever prove necessary. I bear in mind, of course, that Barbara's income is not confined to what she receives from the deceased's estate and is able to invest: she will have the benefit of Mr Vanvalen's pension while he is alive and five-eighths of that amount if he pre-deceases her. 83 In short, I conclude that a legacy of $300,000 from the deceased's estate is required in order to provide adequately for Barbara's proper maintenance in life. The sum of $300,000 includes the legacy of $20,000 provided under the deceased's will. 84 In arriving at this figure, I have not overlooked the value of the property transferred by the deceased to Grant before her death, which may be liable to be designated as notional estate. Nor have I overlooked the fact that Grant is in a far stronger financial position than Barbara. However, the latter circumstance alone does not justify making greater provision for Barbara from the deceased's estate than is adequate for her proper maintenance.

85 Helen is now fifty-seven years of age. She has been married twice and has three children. Before her first marriage she gave birth to a daughter, Maria, in 1964. She married Alan Gilroy in 1965. There are two children of this marriage, Brett, born on 4 December 1965, and Julia, born on 20 May 1969. 86 Helen married Russell Fahey in September 1984. They separated in 2001 but are not divorced. There were no children of that marriage. 87 Helen kept in close touch with the deceased throughout her life. I accept that the relationship was sometimes difficult and that Helen, like Barbara, believed that the deceased favoured Grant excessively and in preference to themselves and their children. Nevertheless, Helen, like Barbara, continued to assist the deceased as much as she was able. 88 Helen left school at the age of about fifteen, at the deceased's request. She has been in fairly regular employment since then and now works as a casual gardener near Bowral. Her income over the last twelve months was about $22,000. She owns a half share in the former matrimonial home at Bowral. She presently lives in what I gather is a de facto relationship with Mr John Parnell. That relationship has subsisted for about two years and Helen has not given any reason why it will not continue. She and Mr Parnell share accommodation. 89 Helen's assets are as follows. Her half share in her former matrimonial home is valued at $150,000. She has superannuation of $44,500 in round figures. She has money on deposit in a credit union in a total of $42,400, $20,000 of which represents the $20,000 legacy received under the deceased's will. She has furniture and shares of just over $8,000 so that her present assets total in value some $245,000. 90 Helen's liabilities are not significant. 91 Helen suffers from hypertension and frequent upper and lower respiratory tract infections. She says that she has found it difficult to find full time employment as a gardener at her age. She would like to remain living in the Bowral area and says that she needs at least a three bedroom house in order to have her son, Brett, and his family stay with her from time to time. She does not have a car and if she needs to go to work in Bowral she gets a lift from either Mr Parnell or Julia. 92 It is clear that Helen is in a much better financial position than Barbara. Helen's health is not bad; she has savings and superannuation and, at present, she does not have to pay for accommodation. As I have noted above, the testator is not usually expected to provide a home for his or her child. Unlike Barbara, I cannot see that Helen has shown a special need for accommodation so that it would follow that the deceased had failed to make adequate provision for her in that regard. 93 However, it is clear that Helen will not be able to continue working as a gardener for much longer and that while she is working she has need of reliable transport. Helen's means are fairly modest and it would cause her hardship to have to use her savings to buy herself a car. 94 I am satisfied that Helen has a need for a car and for a further sum to provide an income when her ability to work ceases. In my view, a gift of only $20,000 from the deceased's estate is not sufficient for those purposes so that I conclude that Helen has been left without adequate provision for her proper maintenance. 95 Helen says that a suitable car would cost about $20,000. I accept this as reasonable. I think that a further sum of $75,000 is required to supplement the income which Helen would receive from her superannuation funds after her retirement and to provide for the vicissitudes of life as she grows older. I conclude, therefore, that a legacy of $100,000 from the deceased's estate is required in order to provide adequately for Helen's maintenance. The sum of $100,000 includes the legacy of $20,000 provided under the deceased's will.

96 It is clear that legacies totalling $400,000 cannot be paid except by recourse to notional estate, as Grant concedes. 97 In my view, each of the transactions by the deceased referred to in paragraph 19 above falls within the definition of a "prescribed transaction" provided in s.22(4)(b) FPA . I am satisfied by the letter of Mr Tsalidis dated 28 February 2000 that each of those prescribed transactions was entered into by the deceased with the intention of denying or limiting provision for the maintenance of Barbara and Helen out of her estate, so that the Court has power under s.23 FPA to designate as notional estate any property of Grant. 98 In accordance with the requirements of s.26(a) FPA , I find that each of the prescribed transactions directly disadvantaged the deceased's estate and Barbara and Helen as eligible persons. 99 In accordance with the requirements of s.27(1) FPA , I take into account the following considerations. 100 First, I accept that Grant had, and has, a reasonable expectation that the properties used in the dairy farming business, i.e., Tarlo , Taracoonie , Willow Vale and Maloneys , would all pass to him alone on the deceased's death. There can be no doubt that Grant has spent the whole of his working life in the dairy farming business on these properties, and that the deceased expressed the intention during her lifetime that the properties would ultimately be his. Those properties, and the business which is conducted upon them, are the only substantial means of Grant's livelihood. 101 Second, I consider that the substantial justice and merits of the case require that there be further provision out of the deceased's estate in favour of Barbara and Helen but without disappointing the reasonable expectation of Grant that he would retain the farming properties, if this is possible. 102 As required by s.27(2) FPA , I take into account the following considerations:

the values of the property the subject of the prescribed transactions, as referred to in paragraphs 14, 15, 16, 19 and 20;

that no consideration was given by Grant for such prescribed transactions;

that Grant has used and improved the farming properties in the course of running the dairy farming business since the deceased's death;

that the Dale Street property has never been used for the conduct of the farming business;

that the agreed value of the Dale Street property is $490,000, which would be sufficient to make the further provision for Barbara and Helen which I envisage;

that Grant himself proffers the Dale Street property as property which should be designated as notional estate to meet any further provision which is to be made in favour of Barbara and Helen. 103 In accordance with s.28(1), I am satisfied, for the reasons given earlier, that the deceased's estate is insufficient to allow the making of provision for Barbara and Helen that, in my opinion, should be made. 104 For these reasons, and in accordance with the requirements of s.28(2) FPA , I will make an order pursuant to s.23 FPA designating as notional estate of the deceased the Dale Street property to the extent that the value of that property satisfies the provision for Barbara and Helen which I propose to make out of the deceased's estate.

105 The costs incurred by the parties in these proceedings have been extraordinarily high. By the time the trial started, Julia had incurred costs and disbursements exceeding $61,000, with a further $22,000 in costs anticipated. Barbara and Helen had incurred costs and disbursements totalling $295,000, with a further $88,000 in costs and disbursements anticipated. 106 These were not unusually difficult or complicated applications under the Family Provision Act . That Julia could have incurred some $83,000 and Barbara and Helen incurred some $383,000 in legal costs in making these applications is alarming. Bearing in mind the relief to which I have found the applicants to be entitled, the level of expenditure on legal costs and disbursements is grossly disproportionate. 107 The Court must consider under s.33 FPA how the burden of costs is to fall. All parties have indicated that it is appropriate to reserve the ultimate decision as to costs until the parties have had the benefit of these reasons and are able to make further submissions on costs having regard to the findings which I have made. 108 Accordingly, I say nothing further about costs at this stage.

109 The orders which I propose to make are as follows:

i) order that, in addition to the legacy provided in the deceased's will, further provision out of the estate of the deceased be made for Barbara Vanvalen in the sum of $280,000;

ii) order that, in addition to the legacy provided in the deceased's will, further provision out of the estate of the deceased be made for Helen Fahey in the sum of $80,000;

iii) order that the Dale Street property be designated as notional estate of the deceased for the purpose of satisfying the said further provision in favour of Barbara and Helen;

iv) order that Julia's Summons be dismissed. 110 I will stand the proceedings over for a short time to enable the parties to digest these reasons and to formulate Short Minutes of Order to encompass the orders which I have indicated. I will fix a date for further submissions as to costs. ~ oOo ~

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Family Provision Act 1982(NSW)

At a glance

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Judgment (43 paragraphs)

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Legislation Cited (1)

Cases Cited (9)