145 This evidence does not reconcile with the recorded performance of the Laundromat as shown in the tax returns in recent years and explains his vagueness in his answers to question in this area. Plainly Russell Vogt has been receiving a substantial income from the Laundromat over the period.
146 The deceased and Russell Vogt met in July 1987 and they commenced to live together in October or November of that year. They were married on 17 February 2002.
Consideration of the plaintiffs' claims
147 Having given consideration to the value of the shares which the deceased had in the company and concluding that half are held by the Estate on trust for Colin Vaughan and the other half have been rendered virtually valueless, it is plain that there is little actual Estate. The Estate has liabilities to Russell Vogt for motor vehicle repairs of $18,447.10 and there is an American Express card account of $18,021.92. In addition to this at the date of death Russell Vogt had advanced the deceased some $53,097.23 most of which was to cover mortgage instalments paid to Burrawong Investments Pty Ltd. Since the date of death and up until April 2005 he made further advances to the estate of $102,579.53.
148 The deceased and Colin Vaughan each held one share in the company, Oakbar Pty Ltd. Oakbar purchased the freehold of the Strawberry Hills Hotel, Elizabeth Street, Surry Hills and the leasehold of the Red Cow Inn at Penrith. In the course of these transactions Oakbar borrowed $280,000 from Burrawong and this was supported by mortgages given by Colin Vaughan and his wife, Margaret Vaughan, over their house and the company over the premises at Roslyn Gardens. Mr and Mrs Colin Vaughan and the company are guarantors for that loan. The period of the loan has expired and what has happened is that the loan remains outstanding with Russell Vogt paying the interest. The amount payable is $762.92 a week.
149 No doubt following upon this case the property at Roslyn Gardens will have to be sold and this will cause the loan to be repaid. Alternatively, the company might seek repayment, which it could do at any time. In these circumstances there is an additional liability in the Estate to repay the loan of $280,000. Having regard to the fact that the company and Colin and Margaret Vaughan are co-guarantors the Estate could recover from Mr and Mrs Vaughan at least one half of the amount paid on the discharge and to this extent there is an asset in the Estate to set off against these liabilities of $280,000.
150 Mr and Mrs Colin Vaughan own their home at 129 Riverview Road, Clareville, which is valued at $2 million. Without going into the details of their financial position it is clear that they also owe the ING Bank $1,300,000 substantially as a result of the ventures with the deceased since 1990. In these circumstances the right the Estate has to recoup against Mr and Mrs Vaughan is real and no doubt could be enforced. I mention that of the $1,300,000 only the sum of $120,000 was advanced for the benefit of Mr and Mrs Vaughan personally. This was because Mrs Vaughan's practice loan as a doctor was consolidated into the loan in 1994. That practice loan was for an amount of $120,000.
151 If one considers the claim of Russell Vogt it is plain that he and the deceased had a 15-year relationship during which time they lived together as man and wife. Shortly before her death, he and the deceased were married. It is also clear from the evidence that he helped the deceased when she became ill in the last years of her life. The last year was particularly demanding for Russell when the deceased was in a wheelchair.
152 Russell Vogt has made substantial contributions to maintain the Estate during the lifetime of the deceased and since the date of her death. If he had not met the mortgage payments the property would have been sold some time ago. To an extent this was in his interest but at this stage he has no means of recovering the amounts he has advanced to the Estate.
153 Having regard to these circumstances, Russell Vogt, has a substantial claim against the estate or notional estate of the deceased. So far as the claim by Diane Vaughan is concerned, I have earlier set out the way in which she says that she has been left without adequate and proper provision. The claim which she makes is somewhat removed from that of the plaintiff, Russell Vogt, in the sense that his claim would normally take priority if one gets to that position. Diane clearly needs some moneys to give her relief from her somewhat difficult situation at the present time. Assuming that one were dealing with an Estate of approximately the amount of the potential notional Estate in this Estate I would have thought that, notwithstanding the substantial claim of Russell Vogt, that she would have a claim for a small legacy out of the notional Estate.
Notional estate
154 The Court is able to designate as notional estate certain property in respect of certain prescribed transactions. Section 23 of the Family Provision Act 1982 provides:
23 Notional estate - prescribed transactions
On an application in relation to a deceased person made by or on behalf of an eligible person, if the Court is satisfied:
(a) that an order for provision ought to be made on the application, and
(b) that, at any time before death, the deceased person entered into a prescribed transaction:
(i) which took effect within the period of 3 years before death and was entered into with the intention, wholly or in part, of denying or limiting, wholly or in part, provision for the maintenance, education or advancement in life of that or any other eligible person out of the deceased person's estate or otherwise,
(ii) which took effect within the period of 1 year before death, and was entered into at a time when the deceased person had a moral obligation to make adequate provision, by will or otherwise, for the proper maintenance, education and advancement in life of that or any other eligible person which was substantially greater than any moral obligation of the deceased person to enter into the prescribed transaction, or
(iii) which took effect or is to take effect on or after the death of the deceased person,
the Court may, subject to sections 26, 27 and 28, make an order designating as notional estate of the deceased person such property as it may specify, being property which is held by, or on trust for the disponee or, where there is more than one disponee, any of the disponees, whether or not that property was the subject of the prescribed transaction.
155 I am satisfied that an order for provision ought to be made on the application of the two plaintiffs. The relevant prescribed transaction is that referred to in s 23 (b) (iii) as the result of the operation of the 1997 resolution. In Shaeffer v Shaeffer (1994) 36 NSWLR 315 the Court held in circumstances which include the Articles of Association with which I am here concerned that such a resolution effecting the conversion of the ordinary shares into preference shares constituted a prescribed transaction for the purposes of the Act. Because of the circumstances involved in that case it did not deal with all the relevant provisions of s 22 but only whether or not the conversion of the deceased's ordinary shares in the capital of the company to preference shares on her death in accordance with the Articles of Association fell within s 22 (1) (a) (i) and s 22 (4) (e). In order to understand the matters which arise it is necessary to have regard to the various provisions of s 22. The relevant provisions are as follows:
"22 Prescribed transactions
(1) A person shall be deemed to enter into a prescribed transaction if:
(a) on or after the appointed day the person does, directly or indirectly, or omits to do, any act, as a result of which:
(i) property becomes held by another person (whether or not as trustee), or
(ii) property becomes subject to a trust, whether or not the property becomes in either case so held immediately, and
(b) full valuable consideration in money or money's worth for the first mentioned person's doing, or omitting to do, that act is not given.
(2) Except as provided in subsections (5) and (6), a prescribed transaction referred to in subsection (1) shall, for the purposes of this Act, be deemed to take effect at the time property becomes held by a person or subject to a trust as referred to in subsection (1) (a).
…………..
(4) In particular and without limiting the generality of subsection (1), a person shall, for the purposes of subsection (1) (a), be deemed to do, or omit to do, an act, as a result of which property becomes held by another person or subject to a trust if:
…………….
(e) being, on or after the appointed day, a member of, or participant in, a body (corporate or unincorporated), association, scheme, fund or plan, the person dies and, as a result of the person's being such a member or participant and of the person's death or the occurrence of any other event, property becomes held by another person (whether or not as trustee) or subject to a trust (whether or not the property becomes in either case so held immediately), or
…………………..
(5) Except as provided in subsection (6), a prescribed transaction involving the doing of, or omitting to do, an act as referred to in subsection (4) (paragraph (f) excepted) shall be deemed to be entered into immediately before, and to take effect on, the death or the occurrence of the other event referred to in that subsection in relation to that act or omission.
(6) Where:
(a) a prescribed transaction involves any kind of contract, and
(b) valuable consideration, although not full valuable consideration, in money or money's worth is given for the disponer's becoming a party to the contract, the transaction shall, for the purposes of this Act, be deemed to be entered into and to take effect at the time the contract is entered into.
………………."
156 What is immediately apparent from a consideration of sub-section (1) of s 22 is that not only does there need to be an appropriate act in sub-section (a) but there is a cumulative requirement that full valuable consideration in money or monies worth was not given for the deceased's doing of that act. It is also apparent from sub-section 6 that a distinction is drawn between valuable consideration and full valuable consideration. The purpose of this no doubt in a case where there is only valuable rather than full valuable consideration is to move the prescribed transaction from one falling within 23 (b) (iii) into either 23 (b) (i) or (ii) which have different time periods. An appropriate intention or comparison must also be found or drawn by the Court in these circumstances.
157 The consequence of my finding earlier that full consideration was given for the dual promise in relation to the transfer of shares and the passing of the resolution effectively means that in the circumstances of this case there is no prescribed transaction.
158 Accordingly, as there is no Estate which can be declared notional Estate the Court cannot make orders in favour of the applicants.
159 Accordingly, I dismiss each plaintiff's summons. I also dismiss the cross-claim filed on behalf of the Executor.
160 I will hear submissions on costs.
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