Steinmetz v Shannon

The Testator's Judgment

1. What is obvious is that the deceased appears to have thought carefully about what was appropriate for his second wife in her particular circumstances and given their particular relationship; and that he requested her concurrence to his will. Other testators may possibly have been more generous. But we do not simply tinker with wills just because one outcome may be thought to be fairer than another. As Callaway JA said in Grey v Harrison [1997] 2 VR 359 at 366: There is no single provision of which it may be said that that is the provision that a wise and just testator would have made. There is instead a range of appropriate provisions, in much the same way as there is a range of awards for pain and suffering or a range of available sentences. Minds may legitimately differ as to the provision that should be made.
2. Just as we cannot divine the deceased's inner motivations and feelings toward his children, we cannot really know the true nature of his relationship with the plaintiff. The plaintiff and the deceased were certainly not inseparable. And among other things, a number of witnesses referred to the 'ups and downs' between them - whatever range of conduct that may have encompassed. But it is simply not possible to know with any reliability.
3. The reasons why considerable respect should be given to the judgment of a capable testator are well known, but all too often ignored. I referred to those reasons in Madden-Smith v Madden [2012] NSWSC 146 at [32]-[33]: [32] There are sound practical reasons for not encroaching too readily on the testator's freedom of testamentary disposition and especially not in accordance with abstract concepts such as fairness or the misguided notion that there should be equality … In Pontifical Society for the Propagation of the Faith v Scales (supra) at 20 Dixon CJ articulated the unique difficulty which these cases present with the following memorable apophthegm: The difficulty is that the Court itself can never be certain that it knows all the circumstances. More often than not, one may be sure that the Court knows few of them. Experience of forensic contests should confirm the truth of the common saying that one story is good until another is told, but a testator is dead and cannot tell his. [33] To similar effect were some observations of Taylor J in Stott v Cook (1960) 33 ALJR 447 at 453-4, who explained that the reason why a court does not have a mandate to rework a will according to its own notions of fairness, is because such an approach would serve justice no better than: …acceptance of the judgment of a competent testator whose knowledge of the virtues and failings of the members of his family equips him for the responsibility of disposing of his estate in far better measure than can be afforded to a Court by a few pages of affidavits sworn after his death and which only too frequently provide but an incomplete and shallow reflection of family relations and characteristics.
4. White J (as he then was) elaborated on the importance of these considerations in Slack v Rogan (2013) 85 NSWLR 253; [2013] NSWSC 522 at [127]. He returned to the issue (as White JA) in Sgro v Thompson [2017] NSWCA 326 at [80]-[88]. In the former, he said at [127]: In my view, respect should be given to a capable testator's judgment as to who should benefit from the estate if it can be seen that the testator has duly considered the claims on the estate. That is not to deny that s59 of the Succession Act interferes with the freedom of testamentary disposition. Plainly it does, and courts have a duty to interfere with the will if the provision made for an eligible applicant is less than adequate for his or her proper maintenance and advancement in life. But it must be acknowledged that the evidence that can be presented after the testator's death is necessarily inadequate. Typically, as in this case, there can be no or only limited contradiction of the applicant's evidence as to his or her relationship and dealings with the deceased. The deceased will have been in a better position to determine what provision for a claimant's maintenance and advancement in life is proper than will be a court called on to determine that question months or years after the deceased's death when the person best able to give evidence on that question is no longer alive. Accordingly, if the deceased was capable of giving due consideration to that question and did so, considerable weight should be given to the testator's testamentary wishes in recognition of the better position in which the deceased was placed. (emphasis added)

The Relationship

1. Some facts are clear. The plaintiff is 65 years of age. She met the deceased in 1988. In 1991, on the advice of the deceased, the plaintiff purchased two adjoining properties in Crescent Head. In 1998, she sold one and retained the other. This property remained her home - in the sense that she maintained it, did not rent it, and paid the rates, taxes and other incidents of ownership. I reject the plaintiff's evidence that during their relationship she 'lived with the deceased at his home at 1717 Crescent Head Road'. This is only partly true. It may possibly have been the case after they eventually married in 2011 although I doubt that it is entirely accurate even then. I thought the plaintiff was dissembling on this issue, too obviously concerned to rebut any contention that she was independent or that she had not been a true de facto spouse before marriage. She was not an impressive witness and I was not confident that she was always entirely truthful, especially on this issue.
2. The evidence suggested that whether or not the plaintiff regarded the deceased's home as her principal residence, she moved between the deceased's home and her home. As did he. And they retained their respective financial independence. She had her property, her superannuation, her investments and deposits. He had his business, his properties and investments. There was no suggestion of joint ownership of any significant asset or any commingling of accounts. Naturally, the deceased paid for their mutual expenses of entertainment and holidays, as well as the household expenses relating to his property at Crescent Head Road. He also provided the plaintiff with a credit card for fuel for her car. She paid for her own personal expenses and those relating to her property.
3. Theirs was a mature relationship between persons who came together in mid-life, who retained considerable financial independence and sometimes physical distance, who did not share children and who married 23 years after the commencement of a relationship. There is no doubt that the plaintiff was caring, especially during the deceased's later years when he suffered much ill-health. But the nature of her relationship with the deceased - whether as his de facto spouse for many years or after marriage - always retained a quality of independence. She was, in her own words, his 'companion'.
4. If any family member was the deceased's effective practical business partner, it was his daughter, the first defendant (Nicole). The plaintiff did not contribute to the deceased's business or the management of his affairs or the accumulation of his wealth. Similarly, the assets that the plaintiff acquired during her lifetime were derived from her own exertions, hard work and good management, not from or with the assistance of the deceased.

The Plaintiff's Financial Position

1. The net present value of the plaintiff's annuity is $880,000. As a form of endowment, an indexed annuity is an inherently conservative, yet nonetheless thoughtful provision. It is protective, albeit rigid. By its nature, it is designed to ensure the continuation of regular income for the whole of the beneficiary's life without the problems associated with poor investment advice, voracious agent's fees, market fluctuations, capital dissipation and the stress and anxiety that may accompany the gift of a large capital sum and the necessity for its management. It is sometimes said to be a paternalistic form of legacy but it is undoubtedly a caring one: Gardiner v Gardiner, (Santow J), unreported, 28 May 1998 at 15-16.
2. Partly as a result of the income from the annuity, the plaintiff's financial position is now modestly comfortable - as the deceased appears to have anticipated. Her evidence on this topic was not entirely frank however. She stated that the value of her superannuation fund is approximately $300,000, although the annual income from that fund is $28,158. This represents an unusually high return of almost 9.4%. It suggests that she may have misstated the true value in accordance with her perceived advantage in the litigation. Similarly, she asserted that the value of her home is $250,000, when the evidence disclosed that the adjoining, almost identical, property (part of a duplex) has recently sold for $310,000.
3. The plaintiff is clearly thrifty, prudent and organised. In addition to her superannuation fund, she currently maintains a good amount of cash on deposit - $22,380 on call and $82,000 on fixed deposit at St George Bank, $21,000 with Westlawn Investments and $13,000 with the Diocesan Investment Fund. She also owns several insignificant parcels of shares in IAG and Telstra and a motor vehicle whose value is said to be $14,000. She made no mention of the value of the personal effects, household furniture or other items, which the deceased left to her in their entirety. The approximate total value of the plaintiff's assets, excluding the personal property left by the deceased, is $750,000. Her gross annual income is $81,146, consisting of the annuity of $52,988 ($1,019 per week) and superannuation income of $28,158. The net annual income after tax, is $71,704. Her annual expenditure is $37,750 including a $5,000 provision for holidays. Hence the expected annual surplus of $34,000.
4. In her written evidence, the plaintiff said that she wanted to be able to move to Port Macquarie. But this evidence was unconvincing and variable. She was clearly expressing a preference rather than a need. In her first affidavit, she insisted that she wanted to move to South West Rocks and be able to live in a house 'as I had done with the deceased'. She stated that she wished to have a home 'to a similar standard I enjoyed with the deceased with land enough for a garden'.
5. At the hearing, the plaintiff stated that she wished to move to Port Macquarie partly for health reasons and partly to avoid sad memories while driving past the former home she shared with the deceased. The evidence of the former was nebulous and uncorroborated and the grounds for the later were insufficient to justify a genuine need. She expressed a preference for a two bedroom waterfront apartment in Port Macquarie, off the ground floor. But she did not contend that her home in Crescent Head no longer met her needs. She agreed that if her home in Crescent Head were moved to a convenient street in Port Macquarie, she would not want to change houses.
6. I am quite satisfied that the plaintiff's home is adequate for her requirements. There was no evidence that during the marriage she ever discussed with the deceased any desire, let alone need, for her to move after his death. Indeed, it is obvious that he prepared his will on the basis that it would not be necessary for her to do so. And she did not suggest otherwise when asked by him if she was happy with the terms of the will. The plaintiff's evidence on this topic was partly aspirational and partly specious. It provides no ground for concluding that the will did not make adequate provision for her proper maintenance.

The Estate

1. The deceased's children and - if his stated wish is realised, ultimately his grandchildren - will share in a relatively substantial estate. It consists of a number of commercial and investment properties in Crescent Head, as well as the business and assets of the Crescent Head Bottle Shop and Crescent Head Real Estate. The latter is owned by Winsome Properties Pty Ltd. In 2000 Nicole became a director of the company. She holds a Bachelor of Business degree. In 2003, she commenced to manage her father's finances.
2. In 2007, Nicole became the sole licensee of the real estate business and was entrusted with its management. And she and her husband also commenced to operate the Crescent Head Bottle Shop. Nicole is the only person with access to the trust account of the real estate business. Her brother, the second defendant is the principal salesman in that business.
3. After the death of the deceased, Nicole arranged to discharge an $800,000 loan from Bankwest to Winsome Properties. There were no other significant liabilities. At the time of the hearing, the assets of the estate consisted of the following: Winsome Properties Pty Ltd $2,450,000.00 Liquor Licence - Crescent Head Bottle Shop $ 200,000.00 4 Main Street, Crescent Head $ 350,000.00 6-10 Main Street, Crescent Head $1,250,000.00 1717 Crescent Head Road, Crescent Head $ 650,000.00 100 acres at Crescent Head Road, Crescent Head $ 350,000.00
4. There was some evidence that the property at 1717 Crescent Head Road may now be worth approximately $1 million. In addition, the deceased was the sole beneficiary of the Steinmetz Superannuation Fund, for which there was no binding death nomination. The defendants are the trustees of the fund. The approximate value of the fund at the date of death was $1.4 million. The assets consisted of shares in public companies and property at Kempsey. There has been a partial realisation of the assets and $450,000 has been distributed to the defendants.

The Defendants

1. Nicole was an impressive witness who gave frank evidence. She is a hard-working and honest woman, who is 41 years old and married to Matthew Shannon, a solicitor. They have two dependent children. Matthew appears to have worked as an employed solicitor with many different country firms. He now works part-time as a sole practitioner and part-time in the Crescent Head Bottle Shop. Their joint assessable income for the 2017 financial year was $89,000. They reside in a property owned by the deceased's first wife, Pamela, and pay rent of $150 per week.
2. Nicole was clearly invaluable to her father in the conduct of the real estate business and the management of his financial affairs. Her brother, the second defendant (James) has worked at Crescent Head Real Estate since 2004. He is 37 years old, unmarried, and still finding his feet. He has no significant assets and lives in the former home of his father at 1717 Crescent Head Road. His assessable income for the 2017 financial year was $53,000. There was clearly a close bond between James and his father. I accept his evidence that the deceased told him on a number of occasions that he wanted to keep his estate whole and that he did not wish it to be split up.
3. I have no doubt that the defendants can be relied upon to faithfully administer the annuity. The deceased was entitled to place his trust in his adult children. The plaintiff's suggestion that she was concerned about being dependent on them was faint and unjustified. Indeed, she exhibited an occasional regrettable tendency to denigrate Nicole without any sound foundation.

Freedom of Testamentary Disposition

1. In Madden-Smith at [30]-[31], I referred to a number of authoritative statements of high authority concerning a testator's freedom of testamentary disposition as follows: [30] It is useful, I think, not to lose sight of the fact that freedom of testamentary disposition remains a foundational principle in our system of law. In Vigolo v Bostin (2005) 221 CLR 191, Gleeson CJ pointed out that the relevant legislation did not confer new rights of succession and did not create legal rights of inheritance. Rather, his Honour explained, 'It preserved freedom of testamentary disposition, but subjected that freedom to a new qualification': [10] Hallen AsJ expressed the same point when he said recently in Goodsell v Wellington [2011] NSWSC 1232 at [108] that: Freedom of testamentary disposition remains a prominent feature of the Australian legal system. Its significance is both practical and symbolic and should not be underestimated. [31] And many years ago Sir Owen Dixon said in Pontifical Society for the Propagation of the Faith v Scales (1961-2) 107 CLR 9 at 19 that it was never intended by the legislation that 'freedom of testamentary disposition should be so encroached upon that a testator's decision expressed in his will have only a prima facie effect, the real dispositive power being vested in the Court'.
2. To the statements by Gleeson CJ and Dixon CJ, one may add that of Bray CJ in Estate of Bridges (1975) 12 SASR 1 at 5-6: … it seems to me that Parliament had indicated its intention that the scheme of things set up by a testator in his will … shall be interfered with so far as is necessary to make adequate provision for the proper maintenance, and advancement of the claimants specified in the Act, but no further. … I think that Parliament no more intended to grant an unlimited liberty to recast dispositions resulting from the law of intestacy on moral grounds than it did to give a similar liberty to recast dispositions made by will.
3. The deceased's estate is certainly large enough to accommodate the plaintiff's aspirations without causing undue hardship to the defendants. But why should it? After all, it is his property, his choice and his final act. He was proud of his success in building considerable assets for the benefit of the following generations of his family. He saw it as his life's achievement. His will referred to the assets 'that I have worked my whole life for'.
4. Taylor J explained in Stott v Cook (1960) 33 ALJR 447 at 435-453 why it is wrong in principle, other factors aside, to 'redistribute' an estate simply because it is large enough to do so without disadvantaging the other beneficiaries: After all a testator's property is his own and he is entitled to dispose of it as he pleases subject only to correction if he omits to make proper provision for those whose maintenance, education or advancement is his especial responsibility. The word 'advancement', is, as was pointed out in McCosker v McCosker (1957) (97 C.L.R. 566) a word of wide import but it does not justify the redistribution of a testator's estate merely because it is of considerable value and because those to whom it has been given can well afford to have their interests diminished in order to confer a benefit upon a disappointed son or daughter.
5. As was said in a New Zealand decision, 'the statute is not an Act to modify or set aside unjust wills, but is meant only to provide for maintenance of persons whom the testator was bound to maintain': Handley v Walker (1903) 22 NZLR 932 at 933. We do not simply ride roughshod over the solemn wishes of a testator that have been formally and deliberately expressed in his last will and testament. We do not re-distribute a testator's wealth according to indeterminate and unreliable concepts such as fairness or equality. The law requires courts to respect a testator's freedom of testamentary disposition, to recognise that the making of a will is often the last and most significant decision a person might make, and to interfere only to the extent rendered necessary by the application of the statutory language to the particular circumstances.
6. We will do the community a disservice if our decisions lead ordinary persons to believe - and solicitors to advise - that a will is hardly worth the paper on which it is written. Unless a tight rein is exercised - conformably with principle and authority - the court will just become a shopping forum in which unmeritorious and misconceived claims multiply. In Sgro v Thompson at [88], White JA referred to the disturbing increase in these claims in New South Wales: Applications are filed in the Supreme Court's Family Provision List at an average rate of about 80 per month. One commentator has criticised the apparent readiness of courts to vary the expressed will of the deceased by granting family provision claims (A Gray, 'Family Provision Applications: A Critique' (2017) 91 ALJ 750.

Claims by Widows

1. There is one further consideration that I should emphasise. Claims by widows do not represent a special category deserving more favourable treatment. There is no general rule that if the size of the estate is sufficient, a widow is entitled to expect that she will be provided for in such a way that she may continue to 'live in the style to which she is accustomed': Luciano v Rosenblum (1985) 2 NSWLR 65 at 69-70. The position was stated succinctly by Sir Frederick Jordan in the Will of Gilbert (1946) 46 SR (NSW) 318 at 322: … there is no general rule that the widow's right is in all cases paramount; although, on the facts, and in the circumstances, of particular cases, it may be proper to regard it as such. On the other hand, where, for example, the applicant is a second wife who has been married to the testator for only a short period, it may be proper, on the facts of a particular case, to take specially into account the position of the children of the first marriage.
2. The plaintiff's counsel referred to many decisions involving claims by widows. They involved different facts and circumstances and included, among others, Golosky v Golosky [1993] NSWCA 111; Bladwell v Davis [2004] NSWCA 170; Marshall v Carruthers [2002] NSWCA 47; Sayer v The Public Trustee [2009] NSWSC 89; Tchadovitch v Tchadovitch [2010] NSWCA 316; and Gardiner v Gardiner, Santow J, (unreported) 28 May 1998. But as Jordan CJ also said in Gilbert at 322: … with this type of statute, decided cases have a negative rather than a positive value. They may help Courts to avoid wrong methods of approach, but give little or no help towards determining what result should follow from the application of the provisions of the statute to the facts of particular cases.
3. What is required, as Callaway JA explained in Grey v Harrison at 367, is 'an instinctive synthesis that takes into account all the relevant factors and gives them due weight'. To similar effect was White JA in Sgro v Thompson at [86]: What is proper requires an evaluative judgment that has regard to all relevant circumstances, not merely the parties' financial circumstances. Whilst the court will know the latter, it will only have an incomplete picture of the former.

The Will

1. I have said enough to indicate that I do not think that the facts and circumstances of this case justify interference with the will of the deceased. I do not think that the plaintiff has established that the provision given to her in the will is not adequate for her proper maintenance or advancement in life. I have taken into account all of the considerations urged on me by counsel for the plaintiff. But the thrust of them seems to me to be misplaced. The plaintiff's claim, and the presentation of her case, were largely influenced by the size of the estate and the relative lack of hardship that (it was assumed) would be caused if I removed $2 million from the defendants and gave it to the plaintiff. It is only one factor.
2. The evidence makes clear that such a division of his property would have been anathema to the deceased. The plaintiff's counsel said that a testator cannot rule from the grave. But that is an unhelpful statement which is correct, if and only if, the application of the statutory language to the facts of the case warrants the intervention of the court. It ignores the importance of the respect that must be given to the judgment of a capable testator who knows better than anyone else 'the virtues and failings of the members of his family'. And it gives insufficient weight to the principle of freedom of testamentary disposition.
3. I respectfully adopt what Callaway JA said in Grey v Harrison at 366 about that freedom: …[I]t is one of the freedoms that shape our society, and an important human right, that a person should be free to dispose of his or her property as he or she thinks fit. Rights and freedoms must of course be exercised and enjoyed conformably with the rights and freedoms of others, but there is no equity, as it were, to interfere with a testator's dispositions unless he or she has abused that right.
4. I do not think the deceased has abused his right of freedom of testamentary disposition. And I am wary of resorting to concepts such as 'moral duty' or 'moral obligation' in order to justify an alteration to the scheme of distribution of assets specified in the will. I share the scepticism, and the reasons for that scepticism, explained by Gummow and Hayne JJ in Vigolo v Bostin (2005) 221 CLR 191 at [73]; by Mason CJ, Deane and McHugh JJ in Singer v Berghouse (1994) 181 CLR 201 at 209; by Williams and Fullager JJ in Coates v National Trustees Executors & Agency Co Ltd (1956) 95 CLR 494 at 512 and 522; and by Windeyer J in Stott v Cook at 455; cf Gleeson CJ in Vigolo at [2] - [25]. In Stott v Cook, Windeyer J said at [455]: Questions of duty, when not determinable by the fixed criteria of law, become questions of casuistry. Standards and principles may be stated. But their application to a particular case can seldom be beyond all debate even when all the facts are known.
5. I have already referred in paragraph [38] to the emphasis in the presentation of the plaintiff's case. There was no reference to any of the particular statutory considerations specified in Section 60(2) of the Succession Act, 2006. Rather, the case was presented more generally, with contentions such as that a 'sensible spouse' would have acted differently; or that the deceased clearly 'had an obligation to provide for a comfortable life style for his wife'; or that the deceased failed 'to discharge what the community would expect'.
6. I have addressed those contentions and also taken into account each of the matters specified in Section 60(2) that would appear to arise for consideration on the facts of this case - paragraphs (a), (b), (c), (d), (g), (h), (i), (j) and (p). And I have not overlooked the fact that in an earlier will, executed in 2013 (less than two years after the marriage), the deceased left the home at 1717 Crescent Head Road to the plaintiff and made other more generous provisions for her. But the proximity of death and the clear light of perspective sometimes focus the mind; providing a final opportunity for considered reflection. The only will that matters is the deceased's last will.
7. The deceased's last will was executed on 19 September 2016. The question is whether the provision for the plaintiff in that will was not adequate for her proper maintenance in all of the circumstances. That is an issue on which reasonable minds may differ - as between testators and as between judges hearing cases like this. For the reasons that I have explained, I have concluded that the provision made for the plaintiff was adequate for her proper maintenance and that the claim must fail.
8. I therefore make the following orders: 1. Summons dismissed. 2. The plaintiff to pay the defendants' costs. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 17 July 2018