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[2008] QSC 159
Supreme Court of Queensland
2008-07-15
Jones J
Original judgment source is linked above.
Williams Graham & Carman for the first and second respondents
[1] Before me are four applications pursuant to s 41 of the Succession Act 1981 ("the Act") each seeking adequate provision for maintenance and support from the estate of Peter Charles Underwood who died on 9 May 2006. The first, second and third applicants are the lawful children of the deceased. The fourth applicant was his de facto spouse who lived with him during the period July 2003 to his death. All parties acknowledge that the fourth respondent falls within the definition of "spouse" for the purpose of the Act. For convenience the claimants will be referred to by their given names.
[2] The first respondents are the executors of the deceased's will and trustees of his estate. They contend that in each instance adequate provision has been made for the claimants having regard to the circumstances obtaining at the date of the deceased's death.
[3] The second respondent, Gregory Underwood, is also a lawful child of the deceased and a beneficiary of the estate. He has taken no part in this proceeding.
[4] The deceased duly executed his will on 17 October 2003 following considerable discussions with his accountant, Mr Wedrat, and his solicitor, Mr Payne of the firm of Williams, Graham & Carman. To explain the rationale behind the provisions the testator on the same day made a written statement, the terms of which I will set out in full -
"I, Peter Charles Underwood of 47 Granadilla Drive, Earlville, Cairns set out hereunder the reasons for bequeathing my assets in the manner in which I have in my Will made 17 October 2003:-
(b) My children have shown no interest whatsoever in the businesses. My children, Greg and Scott, were given an opportunity to be part of the businesses but did not succeed in those endeavours for reasons known only to themselves. My son Derek showed no inclination to have anything to do with the businesses whatsoever.
(c) My nephews, Louis Underwood and Glen Underwood, are the only persons who have shown an interest and have worked in the businesses since they were apprentices and they have been the reason why the businesses have succeeded, and why the businesses have grown with much of the income from the businesses being reinvested in business assets.
(d) My daughter, Peta Chanel Underwood, is presently twenty-four years old and has been drug dependant for approximately ten years. She has not established a career and has been on social security benefits for many years. The reason I have established a trust to hold her interest in my estate is to protect her from herself so that she is not given large sums at any one time which are used to support her habit.
(e) My friend, Annette Sheppard, has been what I describe as "my girlfriend" for at least twelve years. Until July 2003, we maintained our own households when, at her insistence, and with my agreement and appreciation, she moved in to my house to take care of me during the severe illness with which I am inflicted as at the date of my Will.
(f) It is my wish that neither Annette nor any of my children or beneficiaries make any claim against or with respect to my estate.
[5] The deceased, by the terms of his will, made a clear distinction between the disposition of his business assets and his non-business assets. The business assets are identified as follows:-
108 Buchan Street (passed to Peter and John as joint tenants - passed to Peter by survivorship)
These assets were left entirely to his nephews, Louis Underwood and Glen Underwood, who were his business partners. The assets were left to them in proportions which would have the effect of bringing the businesses and the business real estate into equal ownership of the two nephews.
[6] The business assets had been accumulated over three generations, commencing with the deceased's father, Alfred Underwood, who was later joined by his two sons, the deceased and John Underwood (deceased). In 1971, Alfred and his sons commenced a machinery hire business "Underwood Hire". This business was later restructured to include as partners the respective wives of each of the existing partners. The composition of the partnership changed with the deaths of various members and a company structure was later adopted. Without descending into detail, new businesses were added from time to time including a party hire business which commenced in 1978. The original machinery hire business was sold in 2003.
[7] Throughout the course of this history various parcels of real estate were acquired by the partners. The deceased's interests in various parcels of land were also dealt with by the provisions of his will and this provoked an argument about the construction of the terms of the will which was dealt with by the Court in earlier proceedings. The relevant details are set out in the Reasons for Judgment [2007] QSC 256.
[8] Thus the estate intended for distribution amongst the applicants and the second respondent comprises the following:-
[9] These assets were shared between the members of the testator's immediate family and his de facto spouse. The outcomes, if the terms of the will were allowed to take effect would have been:
Peta Chanel Underwood:- 25% of the proceeds of the sale of 47 Granadilla Drive being $144,791 to be held on trust and 10% of the capital and any interest to be paid to her annually plus one quarter of the residuary estate valued at $68,749.91. The notional value of the provision was $213,541.90.
Derek Underwood: **Scott Underwood: Gregory Underwood: -**Each to receive $144,791 from the sale of 47 Granadilla Drive plus one third of any income distributed, at the discretion of the trustees, of the one sixth interest of the businesses Underwood Hire and Underwood Party Hire held by the trust company to be incorporated by the trustees for that purpose, plus one quarter of any residuary. The notional value of these provisions was $249,587.73 for each son.
Annette Sheppard: Shares valued at $76,336.24 at the time of trial plus paintings from the residence of Peter Underwood.
[10] The value of the assets bequeathed jointly to the nephews, Louis and Glen, was $1,463,506.50.
[11] The parties have agreed that certain bequests are to be exonerated from any adjustment by reason of these proceedings. These are the items referred to in Clause 3(c)-(e) of the will, namely -
• paintings in the residence of Peter Underwood bequeathed to Annette
• legacies of $5,000 payable to each of the testator's seven grandchildren.
[12] The testator was born on 12 September 1941 and was thus 64 years old at the date of his death. His working life was devoted to a business which was conducted on the lines of a traditional family business. Drawings by family members were kept to a minimum and profits were used for the further development of the business. If a partner died, the business continued to support the partner's family.
[13] From 1987 the testator played a lesser role in the business. By this time his nephews, Louis and Glen, had shown themselves to be capable of running the business and effectively the testator was handing over to them the control of the business. Witnesses described his position then as being "semi-retired". In fact, he took leave for the whole of the year 1988 and in the ensuing years until he fell ill he attended the business on three days per week. In the latter years of his life he had little involvement. He nonetheless maintained his full entitlement to profits of the business and took weekly drawings at a level consistent with the other partners.
[14] In 1991 the testator and his then wife separated, leading to their divorce in 1996. In the adjustment of property interests which coincided with this, Annette Underwood's interest in the partnership was acquired and an amount of $260,000 was paid to her. To meet this payment $150,000 was provided to the testator by way of an interest free loan from Jill Underwood, the mother of Louis and Glen. That loan has been repaid.
[15] The divorce proceedings engendered considerable bitterness which apparently lingers to the present time.[3] The testator, it seems, felt that his children took the side of their mother against him in this conflict. Whether that is so, is not particularly important. Relevant to the issues before me is the fact that the testator obviously had an expectation that his former wife would also provide for their children from her assets which are quite substantial. This might represent a change in the testator's stated position in 1995 when he expressed an intention to hold his interest in the business on "behalf of his family and heirs".[4] No doubt the Family Court's decision in favour of his wife to some extent explains the change. In any event he was entitled to review the situation and it appears he did so with considerable care after his fatal condition was diagnosed.
Annette Underwood lives with her daughter Peta in a home at Collinson Street, Westcourt. She also owns a house in Reservoir road which Gregory occupies. She has four units at McManus Street, Edge Hill and has entitlements to a superannuation fund. The expectation that Annette Underwood will support the children in the future is reinforced by her own evidence which is in the following terms:-
"And [Peta] is living there with you? - Yes, that's correct.
I assume you're also providing her with the moral support that she needs in order to see her get back on her feet? - Mmm
Okay, and that's what I wanted to point out, that as a mother, you perceived that your former husband had not constructed his will honourably in the interests of the children? - Yes.
And also as a mother, you intend to provide all the support that is necessary to your daughter in order to ensure that she gets back onto her feet? - Yes, I do.
And similarly, as a mother, your concerns also remain with Derek and Scott, insofar as their interests and needs in their life? - Mmm.
So, I can assume therefore that as a mother, when the day comes many, many years form now when you pass from the world, that you will make provision for your children? - Yes, I will.
And that effectively makes sure that the assets of your estate will be going to your children? - Yes, it does."[5]
[17] The continuing support for the testator's children by their mother is a consideration relevant to the threshold question of whether adequate provision was made for each child and as well to the exercise of my discretion if not.
[18] The testator's relationship with his nephews, Louis and Glen, was a close and mutually supportive one. They are now aged 49 years and 42 years respectively. The nephews had been involved in the business since their school days. In those days the business was a partnership between the testator, his father Alfred and the nephews' father John. Their father died in 1973 when Louis and Glen were aged 14 and 7 years respectively. The business continued with their mother taking the father's interest. The business was conducted under the banner of various entities in which members of the family had uneven interests. Despite this, it was carried on as a traditional family business where the benefits were shared.
[19] Louis has been actively involved as a proprietor of the business since 1977 and Glen since 1986. Some of the real estate interests associated with the business were acquired by Alfred in the 1920s and 1930s. Other adjoining properties were acquired as they came onto the market to provide an opportunity for the business premises to be relocated or to expand. A "10 year plan" indicating this was drawn up by the testator prior to 1998.[6] Those plans have been significantly delayed, if not indeed thwarted, by these proceedings. On the other hand, both Louis and Glen with their respective wives have accumulated assets beyond their business interests. In relative terms they are financially secure.
Not only were the efforts of Louis and Glen critical to the survival of the business and therefore the value of the testator's interest, but also each of them provided him with the family support and companionship which was missing in his relationship with his own children. I accept the evidence of Louis about his close relationship with the testator and his role as friend and confidante in connection with his personal affairs.[7]
[21] I am left with the impression that the testator saw Louis and Glen as filling the role he had hoped for with his own sons who, however, showed no interest in pursuing the role. To Louis and Glen I expect the testator was something of a father figure, given their ages at the time of their own father's death. Their views about the business and the importance of it being a traditional family business coincided with the views of the testator. He was concerned both to see the business protected and to redress the imbalance in the legal interests in which the business property was held.
[22] None of the testator's children manifested any desire to work for the family business and none of them made any contribution to its ultimate value. By contrast the testator had an obvious moral obligation (using the term in a neutral sense) to his nephews for their personal contribution to the maintenance of the value of his interest in the business.
[23] Having regard to these matters, the disparity between the nephews' entitlements under the will and those of the testator's natural children, does not of itself provide any grounds for adjustment of those entitlements. The question turns on the individual claims and the circumstances relevant to each of them.
[24] The applicants make their application under s 41(1) of the Succession Act 1981 (Qld) which states:
"41(1) If any person (the 'deceased person') dies whether testate or intestate and in terms of the Will or as a result of the intestacy adequate provision is not made from the estate for the proper maintenance and support of the deceased person's spouse ...the court may, in its discretion, on application by or on behalf of the said spouse...order that such provision as the court things fit shall be made out of the estate of the deceased person for such spouse, child or dependent."
[25] The High Court in Singer v Berghouse[8] identified that the determination of such applications is a two step process. From the joint judgment of Mason CJ, Deane and McHugh JJ the following appears:-
"It is clear that, under these provisions, the court is required to carry out a two-stage process. The first stage calls for a determination of whether the applicant has been left without adequate provision for his or her proper maintenance, education and advancement in life. The second stage, which only arises if that determination be made in favour of the applicant, requires the court to decide what provision ought to be made out of the deceased's estate for the applicant. The first stage has been described as the "jurisdictional question". That description means no more than that the court's power to make an order in favour of an applicant under s 7 is conditioned upon the court being satisfied of the state of affairs predicated in s 9(2)(a)."[9]
[26] What constitutes "adequate provision" for "proper maintenance" was considered in Bosch v Perpetual Trustees Co Ltd[10] and requires having regard to "the applicant's financial position, the size and nature of the deceased's estate, the totality of the relationship between the deceased and other persons who have a claim upon his or her bounty".[11]
The proper time to consider what would have been adequate provision is the date of death. Coates v National Trustees and Executors Agency Co Ltd.[12] The approach is explained:-
"But this involves "what is necessary or appropriate prospectively from that time". To determine that question, contingent events must be taken into account as well as what may be considered certain or exceedingly likely to happen. When a court is called upon to consider such a question, many years after the date as at which the court must take its stand, all the advantage is available of knowing the events that have occurred. The intervening events may be taken into consideration because they suggest or tend to show what antecedently might have been expected. But they must not be outside the range of reasonable foresight."[13]
[28] Only if the response to the jurisdictional question is that proper provision was not made, does the Court proceed to determine what the provision ought to have been. This second stage involves similar considerations but the decision is discretionary in nature.[14] So the first question is one of objective fact though it necessarily involves making a value judgment. Kozak v Matthews.[15]
The second question, whilst it is to be determined on a discretionary basis, has the constraints that the amount must be no more than what is adequate for proper maintenance and not exceed "that which the foresight, wisdom and fairness of a reasonable man in the testator's situation" would have made.[16]
Finally, I should observe that there is necessarily an overlap of considerations relevant to either question. This was noted in Vigolo v Bostin[17] where the following passage appears in the joint judgment of Callinan and Heydon JJ (at [122]:-
"We do not therefore think that the questions which the Court has to answer in assessing a claim under the Act necessarily always divide neatly into two. Adequacy of the provision that has been made is not be decided in a vacuum, or by looking simply to the question whether the applicant has enough upon which to survive or live comfortably. Adequacy or otherwise will depend upon all of the relevant circumstances, which include any promise which the testator made to the applicant, the circumstances in which it was made, and, as here, changes in the arrangements between the parties after it was made. These matters however will never be conclusive. The age, capacities, means, and competing claims, of all of the potential beneficiaries must be taken into account and weighed with all of the other relevant factors."
[31] There is no principle that able bodied adults earning a living may not have a claim,[18] however any such claim must be evaluated in accordance with the above principles. For example, adequate provision will not require the provision of the means to acquire a house for a claimant, without some other pressing circumstances being evidenced.[19] It is also clear from the decision of Bosch however that maintenance must be proper and adequate. As their Honours noted, the term "proper" denotes a moral standard to be applied to the adequacy of the provision in the circumstances of the case. In a case where a very large estate is in issue what is proper and adequate will be quite different to what would be proper were the estate more modest.[20] Similarly, poor relationships between testator and child for whatever the reason or even hostility between them will not necessarily bring an end to any moral duty to make provision for an eligible person.[21]
[32] Peta was born on 4 May 1977. She was 29 years of age at the date of her father's death and is now 31 years old. She is unmarried, unemployed and now resides with her mother in Cairns. She cares for her son Benjamin who was born on 5 December 2000 and is now seven years old. His father is obliged to pay $83.17 per month for his maintenance but does so only spasmodically. Peta regards herself as solely responsible for Benjamin's financial support.
[33] Peta has no assets other than insignificant personal affects. She supports herself with the receipt of Social Security payments of $400 per week and with financial assistance from her mother. Peta has a number of health issues which impact on her capacity to work.
[34] From the age of 16 years Peta developed a debilitating and expensive drug addiction. This addiction led to her being convicted of a number of drug related offences, some of which were punished by periods of imprisonment. This happened on six separate occasions. Her elder sister Amanda died of a drug overdose in 2000 when Peta was 23 years of age and this fact added to her established emotional trauma. She also contracted Hepatitis C during this period.
[35] When 26 years of age, Peta was the victim of a violent rape which resulted in her suffering injuries which now require vaginal repair. She is yet to receive compensation of $37,500 awarded to her because of injuries suffered in the commission of that crime. She has dental problems which require treatment likely to cost $2,500.
[36] Unsurprisingly, during the period of her addiction Peta's relationship with her father was strained and distant. She did, however, have a close reconciling moment with him some five weeks before his death.
[37] Since the death of the testator, Peta has taken steps to overcome her addiction with the help of Addiction Help Agency Cairns Inc. She has been successful in this quest to the extent that she has been "clean" now for two years. She, however, continues to suffer with psychological problems for which she undergoes counselling. Peta has embarked upon a course of further study which she hopes will qualify her as an Aged Person carer. This course is on hold because she is unable to find tuition fees of $900 required for her to continue. She wishes ultimately to acquire a house and a motor vehicle to better provide for herself and her son.
[38] This narrative indicates that Peta has needs which cannot be met from her current sources of income. Her lack of education, her physical disabilities and her past offending greatly limit her capacity and opportunity for work. Much of this situation has been brought on by her own conduct but it was conduct that commenced in her impressionable teenage years. The prospect of her rehabilitating herself and the needs associated with that undertaking, were matters which ought to have been within the contemplation of the testator. His approach to providing for Peta distinguished between her and her brothers, not only to reduce the level of her entitlement under the will, but also to prohibit her access to that entitlement as a lump sum. It is obvious from that fact that the testator continued to have concerns about Peta's capacity to control a large sum of money. Whilst that was an understandable attitude it did not allow for the prospect of rehabilitation and the needs which would flow to prepare herself for the workforce and to care for her infant son.
[39] In identifying her needs, Peta included the provision of a house and the provision of a large motor vehicle in addition to costs associated with medical, dental and rehabilitative treatment. I regard the cost of supplying those needs as being overstated. Nor is she entitled to expect that all her needs should be met in full from the estate of the testator. Notwithstanding that, it is a fact that a lesser provision was made for her when her call on the testator's bounty was greater than that of her siblings. She ought, in my view, to have received the same level of provision as her siblings with an additional allowance to cover the expense of her rehabilitation and retraining. It follows therefore that Peta has shown an entitlement to further provision from the estate.
[40] Peta's immediate personal needs to pay for her retraining and her medical expenses would be met with an allowance of $5,000. But then there is the considerable difficulty of finding employment and maintaining it. She may receive an ex gratia payment of the criminal compensation but given her own offending at the relevant time, this may not be guaranteed. There is obviously a strong bond with her mother who has provided substantial support in the past. This fact allows me to conclude that such support is likely to continue.
[41] In my view proper provision for Peta would require firstly for her to be placed in the same position as each of her brothers which would result in her being granted a share in the business or an equivalent monetary value. Secondly, she should receive an additional $25,000 to cover her immediate financial needs.
[42] The value of the estate has changed by the costs incurred in the contested construction proceedings and by the executors' expenses in these proceedings. One result is the loss of the residuary estate which was to be shared by the testator's children. Depending on the costs orders yet to be made there is a likelihood that the interests of other beneficiaries will also be reduced. As a consequence and consistently with the requirement to exercise the discretion in the circumstances "as they have come to exist"[22]. I will, in accordance with the parties' wishes, adjourn for further consideration the means by which effect can be given to my decision.
[43] Derek is an adult son of the testator. He was born on 3 December 1966 and is now 41 years of age. He was 39 years at the date of the testator's death. Derek lives with his de facto spouse in a house owned by her but to which he makes a financial contribution. He has one child, Brant, who is now aged 15 years and for whom he pays $140 per week maintenance. Brant is the recipient of a $5,000 legacy under the will which will relieve him of some part of the burden of providing educational expenses for Brant.
[44] Derek is currently employed as a foreman/site supervisor for an engineering construction company. His work involves the operation of machinery, supervision of contractors and small earthworks but mainly in a supervisory role. Derek receives $1,250 gross and $990 net per five day week. His commitments are to contribute to the house expenses jointly with his de facto wife who is also in fulltime employment.
[45] Derek had a work related injury in 1999, the effects of which were temporary and for which he received compensation in the sum of $10,000. This injury, however, discloses some underlying degenerative changes which reduce his capacity to undertake heavy labouring work. At best, his whole person disability was assessed at 8%. However, Derek is unlikely to engage in that heavy type work in the future and there is no suggestion that he will not be able to continue working at his present level until normal retirement age. He presents as having had a secure working background and is in a stable relationship. He is the beneficiary of superannuation contributions from his employers and has no significant debts or financial commitments. He does not claim to have made any contribution to the testator's acquisition of the estate other than by working with his brothers in the family business after school. This, I anticipate, is set off by the provision of pocket money and other benefits while he lived at home.
[46] Having regard to the fact that Derek has not been dependant on the testator, has not contributed in any significant way to his estate and has the capacity to provide well for himself and his dependants, I am not persuaded that the bequest of almost $250,000 (10% of the entire estate) is not an adequate provision in the context of the other competing claims on the testator's bounty, I therefore dismiss Derek's application and adjourn for further consideration the question of costs.
[47] Scott was born on 21 July 1968 and was therefore 38 years of age at the time of the testator's death. He is now 40 years old.
[48] After leaving school, having completed year 10, Scott undertook an apprenticeship leading to his becoming a tradesman painter and decorator. Apart from working for Underwood Hire for one year in 1991, Scott has worked as a self employed painter in Cairns and in the Torres Strait.
[49] He married Simone in 2003 and they have two children, aged six years and three years. He owns, jointly with his wife, and subject to mortgage, real property in Thursday Island and in Cairns. The market value of these properties is said to be $230,000 and $365,000 respectively. The family has business assets valued at $5,000 and other personal items worth between $15,000-$20,000. Some of the assets were acquired using funds which Simone borrowed from her mother. Some $40,000 of which remains outstanding. Scott tendered a schedule of his financial assets showing family assets of approximately $300,000 of which Scott's half share is $150,000 to which has to be added some $25,000 reflecting his entitlement to superannuation.[23]
From his business Scott and his wife draw a combined taxable income of approximately $100,000 per annum. From the rental of the house on Thursday Island there is another $30,000.[24] His evidence does not disclose any particular financial needs other than to provide for the education of his children and to pay off existing mortgage debts which are adequately serviced from existing income and to complete the project of building a house on his land at White Rock. His two children will benefit from the individual legacies referred to above.
Scott, being dyslexic, has some limitations in expressing himself verbally and in writing but this has not prevented him from establishing a successful business. Otherwise he is in good health.
During the year Scott worked for Underwood Hire business he received the usual remuneration, though he claims he was not paid for some overtime. He ceased working because of differences with the management. Otherwise, his involvement with that business was similar to that of his brothers and sisters - working after school hours and during holidays. It is not suggested there was no compensation for these activities. In December 2005 Scott and his family moved into the testator's home for a period of four months. There were no features flowing from this relocation which would enhance Scott's claim for further and better provision. The testator expressed the view rather that it was he who was contributing to the upkeep of Scott's family.
[53] As with the claim by Derek, Scott's application depends upon his showing that adequate provision was not made for him in the will. I regard his position to be similar to that of Derek and for the same reasons I am not persuaded that Scott's claim has been made out. Scott's application is dismissed and I adjourn the question of costs for further consideration.
[54] Annette was born on 12 September 1946 and was thus 59 years of age at the date of the testator's death. The parties acknowledge that Annette and the testator lived in a de facto relationship from July 2003, the date when Annette moved into his house to care for him.
[55] After leaving school at 16 years of age, Annette undertook nursing training which she completed in 1965. She worked as a nurse until her marriage later that year. Thereafter she assisted in her husband's business and cared for her son and two daughters who were born in 1967 and 1978 respectively. Annette and her husband divorced in 1984 and she has been supporting herself ever since.
[56] In 1991 Annette was elected as a local government councillor and was thereafter re-elected at each election until 2008. Her remuneration as a councillor was her only source of income during this period. In the financial year of the testator's death her gross salary was $57,459 plus allowances totalling $3,867. As with all elected positions there was always the spectre of her not being re-appointed. Annette sought to secure her future by commencing study leading to a Masters Degree in Primary Health Care through the University of Queensland. This course of study was put on hold while she was engaged in the fulltime care of the testator. She has not resumed this pursuit in the period since the testator's death.
[57] In 2001 in an attempt to better secure her financial future Annette was planning to start a study-tour business for foreign students. She, however, ceased involvement before the business commenced to trade. In 2002 she decided to set up a naturopathic clinic and to this end commenced renovations to the proposed premises with the testator's help. This project was abandoned also when care for the testator became fulltime.
[58] Her association with the testator started in 1992, some 14 years before his death. During this period they enjoyed social outings together which included occasionally staying at each other's homes. It included also going on camping trips and generally sharing occasions with their respective families. They partnered each other at various official and charity events and they undertook three overseas trips together. There were three occasions prior to July 2003 when Annette lived continuously in the testator's house. The first occasion was for 18 months between 1994-5 and the second occasion was for four months in 2002. There was evidence to indicate that whilst they enjoyed each others company, the testator also enjoyed living independently.
[59] One measure of the closeness of their association and its duration is the fact by his earlier will executed on 2 February 1999 the testator made provision for her future by leaving to her virtually the whole of his interest in "money held with any banks on current account or savings bank account or fixed deposit and accrued interest as at my death together with all my investments with financial institutions... and all similar investments... issued by any corporation, government, semi-government, local authority or public authority and/or interest in or dividends paid..."[25] Despite the broad scope of this provision, as at that date the testator did not have any significant money invested in shares or held in bank deposits. As will be discussed later, Annette relied upon this provision to assert that she believed her entitlement under the subject will included term deposits as well as shares in privately listed corporations.
In December 2005 the testator finalised a damages claim against the James Hardie Corporation wherein he was awarded $402,620 less Workers' Compensation refund. It was this award that was the source of the liquid assets which the testator held on term deposit at the date of his death. Some of the funds were also used for an overseas trip and for the purchase of a BMW motor vehicle.
[61] Under the will Annette was entitled to receive shares valued as at the date of the death of approximately $76,000. At the time of the trial the value had risen to $110,000 but in the present economic climate the value of the parcel would be somewhat less. The testator held bank deposits, or the equivalent, to the value of $300,000 which became part of his residuary estate. By providing for Annette in the will as he did, the testator was able to control the balance between the shareholding which would benefit Annette and the residuary estate. The history of his share purchases is set out in ex "NW1" to affidavit of Mark Wedrat sworn 3 February 2008. This shows only a limited shareholding as at 1999 with increasing shares purchases between 2003-2005. Despite funds being available to him in early 2006 he did not increase the shareholding.
[62] Following his death, Annette became entitled as his de facto spouse to workers' compensation as a dependant. On 6 June 2007 she received $202,282.50 from WorkCover. It is reasonable to assume that the testator would have been aware of her right to claim as a dependant at the time of his death. He was at that time in contact with solicitors in relation to his own litigation and aware of his entitlement to compensation in respect of the injuries which ultimately resulted in his death.
[63] Much effort at trial was consumed in examining how Annette dealt with these funds and her property generally. Part of her assets were gifted to her son and his wife to assist in their purchase of real property. Also from these funds, $150,000 was lent by Annette to her daughter to assist in the purchase of a home at Westcourt. These actions have undoubtedly left Annette somewhat lacking in financial security but she has confidence that she will be supported by her children should the need arise and that fact has been confirmed particularly by her son and daughter-in-law.
[64] I do not propose the detail to manner in which she has dealt with her entitlements but rather I will consider whether what she has received from the testator constitutes adequate provision for her proper maintenance in the circumstances existing as at the date of his death. This approach makes less relevant the resolution of the credit issues which have arisen between Annette and the executors but I should touch upon them briefly.
[65] At issue was Annette's motivation for her making this claim. As mentioned above part of Annette's justification for making the claim was an expectation that the bank deposits were intended to be part of the bequest to her upon the basis of some analogy with 1999 will. I reject any such suggestion. The 1999 will was made at a time when the testator had little in the way of liquid assets. He acquired shareholdings over time and particularly after 2003. He made it clear, both to Annette and to others that he was purchasing shares for the ultimate benefit of Annette under the terms of his will. There was no similar expression of intention that she would inherit the bank deposits which formed the major part of his residuary estate.
[66] In the period immediately after death, according to both executors, she on different occasions expressed her satisfaction (even gratitude) with the extent of her entitlement under the will. I am satisfied that at the time of these discussions with the executors on different occasions she was aware that her true entitlement was limited to shares in publicly listed companies. In a statement made in January 2007 as her initial response to the claim made by Peta, Annette detailed the extent of discussions she had with the testator about his will. Her statement included the following:-
"57 ...I said that his home and other personal things should be equally distributed amongst his children and that my estate would go to my family...
[67] The tenor of her statement was support for the contention that the entitlements under the will should remain as the testator had expressed. Annette never gave to the executors any indication to that time of her intention to make a claim on her own behalf. According to the executors, the first time any such intention was expressed was in the context of forcing a mediation between the parties which ultimately occurred on 20 August 2007. The full expression of Annette's claim was made on 3 May 2007. She disputes the further suggestion made by the executors that she was pursuing her claim to provide further protection to Gregory's entitlement under the will.[27] Annette denies that any such conversation took place but the timing of her claim, when it had not even previously been hinted at, rather gives credence to the executors' suggestion. In short I accept the evidence of Mr Wedrat and Louis Underwood about the terms of the disputed conversations and the frequency with which Annette raised them. These events occurred before Annette took independent legal advice about her proper entitlement. Even if the motives for her initial actions were misguided or naïve, her claim has been underpinned by relevant evidence which has not been the subject of any significant challenge.
[68] As to the jurisdictional question for Annette's claim, the respondents concede that if no provision at all had been made she would have been entitled to succeed in her claim. I would also add that had the benefits been only the shares without benefits externally to the estate, the provision under the will was clearly inadequate. But the executors argue that the bequest of the shares, coupled with the spousal dependency benefit from Workers' Compensation, resulting a total benefit of approximately $270,000 amounted to adequate provision.
[69] The nature of the relationship between the testator and Annette was such that their financial affairs were kept separate. Until deliberately disposing of her real estate, Annette maintained her own home and she had an independent income. She had agreed with the testator that in the disposition of property he would look after his family and she would look after hers. In other words, she had no expectation of receiving any large benefit from the testator's property but she was aware of the terms of the will and the earlier will. The disposition of her property to her children was done for a purpose unrelated to the claim. She does not now assert, and never has asserted, that she has a "need" as a consequence of this action. Rather, her claim relies on the fact that she has a limited capacity to earn income, that her health is not good and that the contribution she made to the testator's wellbeing benefited the estate but her making of the contribution worked to her considerable disadvantage.
[70] As to the first of these matters, at the date of death Annette had an income of approximately $60,000 per annum but its continuance was in doubt. It was reasonably foreseeable that she might lose her position as a councillor and thus the entire income stream. The planning which Annette had made against this eventuality of setting up a natural therapy clinic might have been successful had the practice been established while she had the public profile as a councillor and while she had the testator's financial and physical support. That plan had to be shelved because of the testator's illness and the need for her to attend to his care. Because of her age, her deteriorating health, the opportunity to establish the business may well have passed.
[71] The major problem with regard to Annette's health is her deafness. This is a worsening condition and seriously limits her engagement in fields of employment dealing with people. Her other disabilities such as the eye cataract and dental problems are minor and remediable. But at her age and with a background of grieving and stress, it will be difficult for her successfully to establish a new business and equally it is unlikely that she will gain fulltime remunerative employment.
[72] Finally, Annette's contribution to the testator's wellbeing by engaging in his fulltime care was a significant benefit for the estate. Care of that level extending over a three year period was unlikely to have been provided by any family members with a sufficiently amicable relationship with the testator. There was no doubt considerable saving to the testator's assets by not having to pay for nursing care. Whilst Annette did not herself lose direct income during this period she did, I find, lose the opportunity to establish for herself a business which would have lessened the financial blow of losing her position as a councillor.
[73] I am required to look at the jurisdictional question objectively. Annette's expressions of gratitude for the bequest of the shares and details of the conflict about her motivation for making the claim are not relevant to this issue. Annette filled a very special need for the testator and in doing so they created the relationship which gives her this right to claim. Had the testator not had the need, their relationship may have continued on at the same level as it had for the previous 11 years, or it might indeed have blossomed into a permanent relationship. These are matters of speculation. The relevant considerations for the assessment of the jurisdictional question does include the fact that period of the de facto relationship was short, the extent and value of Annette's contribution and the impact the making of that contribution has had on her wellbeing and financial security.
[74] In terms of the competing financial needs of Annette as compared with the testator's children other than Peta, I see little difference. The benefit she received under the will and compensation is of about the same value. But the consequences of her contribution as a spouse have had some adverse effects for her financial security.
[75] Counsel for the respondent in arguing that the jurisdictional question has not been made out, points to the shortness of the de facto relationship; her limited contribution to the testator's assets; the testator's clear intention as to the benefit she should receive and her unsatisfactory conduct in the way in which she has conducted her claim. This later consideration it seems to me is relevant only to the question of how the discretion should be exercised.
[76] Counsel referred particularly to a number of decisions where claims were made by a spouse following a short relationship. In Bladwell v Davis[28] the Court of Appeal determined that a claim by a widow (a fortiori by a de facto spouse) had not primacy over other claims. The claims and circumstances of all claimants have to be weighed. In Marshall v Public Trustee[29], Macready AJ cited from an unreported decision the remarks of Young J to the effect "that if a person is entitled to an order, what they do with the money is their business..." Though that conduct might be relevant to the question whether in limiting the flow of funds the testator has breached his moral duty.[30]
[77] Finally, in Manly v Public Trustee of Queensland[31] McMeekin J dealt with a claim by a widow who married the testator only three and a half years prior to his death at age 83 years. The widow was then 51 years of age. The learned trial judge found that the marriage was one of convenience whereby the widow had agreed to come to Australia form overseas on an arrangement that she would care for the testator who was ill and then would have the advantage of permanent residency in Australia and an entitlement to a veteran's pension when he died.[32] By his will, the testator had left to his widow a car, some household effects and a quarter share of his residuary estate. The balance of residuary estate was shared with the testator's three adult sons by an earlier marriage. The estate was a small one, approximately $350,000 in total and as a consequence of the proceedings more than 40% of it was consumed in legal costs. In circumstances where the widow had the capacity to gain employment, was the recipient of a pension and free medical care and there were competing claims by sons with health problems, adequate provision was made for her. His Honour applied the well known principles in determining that the widow had failed to make out her claim that the provision made for her was inadequate.
[78] The respondents seek to draw from a comparison with these, and a number of other, cases a conclusion that the short term of actual de facto cohabitation should result in a finding of adequate provision having been made. This disregards other features beyond the period of actual cohabitation. Features such as the quality of the relationship, the level of services and support provided and how that impacted on the estate are all relevant. Cases dealing with family provision under these statutory regimes turn on their own unique facts. Courts have been discouraged from trying to classify cases into categories of whether the claims have been made by adult sons, widows of marriages of short duration or by de facto spouses. Ultimately, I must make an objective assessment of whether in the circumstances of this case Annette had a claim on the testator's bounty in circumstances where the estate is moderately large, where there are competing claims and where she has received benefits which are reasonably substantial.
[79] In the end result I am satisfied that by reason of the closeness of the association between them, the testator's physical dependency upon Annette during that three year period, and the sacrifice that she made in terms of her future financial security, the jurisdictional question of inadequate provision has been made out. However, I do not regard the shortfall in the testator's consideration of her needs as being particularly large. The necessary amount to provide proper maintenance is to cover the loss of the opportunity to provide for her ongoing financial security which she had embarked upon six years ago. She may still be able to establish a means of creating income, but her distraction from the task by caring for the testator has made the task much more difficult, if not indeed unlikely, to succeed. The cost of setting up the business was estimated to be $146,000.[33] Equivalent expenses would have been incurred had the business proceeded prior to the testator's death. The issue for me is the effect of the delay. The measure of her entitlement to further provision, I assess at $30,000.
In accordance with the request of the parties, I adjourn the further consideration of this matter to allow them the opportunity to make submissions on how best to give effect to my findings and to provide submissions on the question of costs.
1. I direct that these reasons be published and delivered to the parties.
2. I adjourn the further consideration of how the further provisions for Peta Underwood and Annette Sheppard may be implemented.
3. I adjourn for further consideration the question of costs.
4. I direct each party seeking an order for costs to provide to each other party an estimate of such costs.
Underwood
Underwood
(1956) 95 CLR 494
(1994) 181 CLR 201
(1980) 144 CLR 431