WADDINGHAM -v- BURKE as Executor of the Will of GRAHAM SCOTT WADDINGHAM [2015] WASC 65 (23 February 2015)

Supreme Court of WA|2015-02-23|Before: Mitchell J

1 MITCHELL J: The plaintiff applies under s 6 and s 7 of the Family Provision Act 1972 (WA) (the Act) for orders making provision for her out of the estate of her late husband Graham Scott Waddingham (Graham).[1]

2 The primary facts in this case are not in dispute. Evidence was adduced by affidavit in the proceedings, and only the plaintiff was crossexamined on her affidavits. That crossexamination was not directed to challenging the account the plaintiff gave in her affidavits, but rather sought to obtain additional information or confirm material already evident in her affidavit. The factual findings set out below are based on the affidavits and the plaintiff's oral evidence.

4 Graham died on 31 July 2011. He did not have any children. He was married to the plaintiff, and lived with the plaintiff at their matrimonial home in Cowaramup Bay Road, Gracetown. That house, which has been referred to in the proceedings as the '1994 house', is constructed on a lot of land referred to in these proceedings as 'Lot 1194', which has an area of 58.8 ha.

5 Probate of Graham's last Will and Testament and Codicil was granted to the first defendant by the court on 14 October 2011. The effect of those testamentary documents was, in circumstances where Graham predeceased the plaintiff, to:

(a) give all his personal chattels to the plaintiff;

(b) direct that money held in his name in any superannuation fund be distributed in accordance with his beneficiary nomination to the trustee of the fund;

(c) give all his interest in Lot 1194 to the first defendant on trust 'to sell the property as quickly as possible and divide the proceeds as tenants in common in equal shares between [the plaintiff] and my sister Valma Jean Millman' (who is the second defendant); and

(d) to give the remainder of his property to the first defendant to pay the liabilities of his estate and hold the balance upon trust for the plaintiff 'absolutely'.

6 At the time of his death, Graham was the sole registered proprietor of an estate in fee simple in Lot 1194. He also owned a 2008 model Nissan XTrail motor vehicle and personal chattels with an estimated value of $2,500. Those were the only assets of his estate. The unencumbered value of Lot 1194 at the date of Graham's death has been assessed at $2,000,000.

7 Graham was the plaintiff's second husband. They commenced a de facto relationship in 1977 and married on 28 June 1987. The plaintiff has five children from her first marriage, who were aged between 15 and 25 when Graham and the plaintiff commenced their relationship.

8 At the time of their marriage the plaintiff was employed. However, Graham worked as a pumping house technician for the Water Corporation (as it is now known) at the Cane River pumping station which supplied the Onslow township with water. The pumping station was located about 50 km from Onslow. Graham and the plaintiff lived onsite in governmentprovided accommodation. The accommodation provided was initially very old, but was later replaced by a demountable house.

9 Graham and the plaintiff were the only residents at this remote location for nearly 21 years. To live with Graham, the plaintiff ceased her own employment and provided assistance to Graham in his work and maintained the house and garden at the pumping station.

10 Graham's conditions of employment included three months' leave per year. For three months of each year between 1987 and 1999, Graham and the plaintiff resided in a house they had built on land adjoining Lot 1194, which has been referred to in these proceedings as Lot 1191. I shall later describe the land tenure of Lot 1191.

11 In 1999 Graham and the plaintiff moved back to Gracetown permanently and lived in their house at Lot 1191. Following the sale of Lot 1191 in 2000, they used the proceeds of sale to purchase a house in Augusta in the plaintiff's name, where they lived until April 2009. In early 2009, the plaintiff sold her property in Augusta and moved into the 1994 house with Graham.

12 The plaintiff lived with Graham in the 1994 house until he died, nursing him during his preceding illness. The plaintiff regards the 1994 house as her home and feels close to her husband there. She wishes to continue to live in the 1994 house for the rest of her life or for so long as she is fit enough to remain.

Financial position of the plaintiff at the time of Graham's death

13 The plaintiff was 79 years old at the date of the Graham's death.

14 An affidavit filed by the plaintiff on 10 April 2012 described her financial position at that time. In her oral evidence the plaintiff indicated that there had been little change in her financial position between the date of Graham's death on 31 July 2011 and 10 April 2012. I proceed on the basis that the position described in the plaintiff's affidavit of 10 April 2012 reflected the situation at the time of Graham's death.

15 At that time, the plaintiff held assets with an estimated value of approximately $634,000. The principal asset was a 'Lifeplan Funds Management' account valued at $407,000, which was purchased using the proceeds of the sale of the plaintiff's Augusta property. She also held approximately $144,000 in cash and approximately $54,000 in shares. The balance of her assets comprised a motor vehicle with an estimated value of $19,000 and household effects with an estimated value of $10,000.

16 The plaintiff's income at that time was $835 per week, being receipts from an annuity, two pensions and dividends from shares. Her weekly expenses were estimated at $784 per week.

17 Since Graham's death, the plaintiff's financial position has not altered greatly. Her income in July 2013 was $954 per week. She described her expenses for the period June 2013 to June 2014 to be $979 per week.

18 In July 2013 the plaintiff had approximately $107,000 cash in the bank, $80,000 in shares and $419,523 in the Lifeplan Funds Management account.

19 I also note that the plaintiff has made a contribution to Graham's estate to cover various expenses incurred by the estate in the amount of approximately $38,000.

20 The genesis of the family dispute which has arisen in this case can be found in the history of land transactions concerning Lot 1191 and Lot 1194.

21 Lots 1191 and 1194 had been owned by Graham's mother Dorothy Agnes Waddingham (Dorrie) since the 1950s. Dorrie was the sole registered proprietor of Lots 1191 and 1194 at all material times prior to her death.

22 Dorrie and her husband, Alfred Bertram Waddingham (Ben), had eight children, including Graham and the second defendant. Their other children included Wilfred Ross Waddingham (Ross) and William Ronald Waddingham (Tom).

23 Ben built a large house on Lot 1194 in about 1967, with the assistance of the second defendant's husband who did all the electrical wiring on the house. Ben and Dorrie moved into that house in 1968 and lived there until it burned down in 1969. The house which burned down was replaced by a smaller prefabricated house which has been referred to in these proceedings as 'the Farmhouse'.

24 Dorrie executed a Will on 16 March 1973, in which she gave all her real estate to Tom, and divided the rest of her estate equally between her surviving children.

25 Ben died in 1979. At that stage all of Ben and Dorrie's children, other than Tom, had left the family home. Tom continued to live at the Farmhouse with his mother until her death.

26 In around 1987, Dorrie, Graham and the plaintiff came to an arrangement which saw Graham and the plaintiff construct a house on Lot 1191. The plaintiff's understanding of that arrangement was that '[i]n 1987, Dorrie allowed Graham and me 5 acres of land on Lot 1191 so we could build a house there'.

27 In July 1987 Dorrie executed a codicil to her Will, which provided for Graham and the plaintiff to receive 5 acres of Lot 1191 on which their house was constructed together with certain easements.

28 As I noted above, between 1987 and 1989 Graham and the plaintiff would reside in their house on Lot 1191 for about three months a year during Graham's annual leave from his work in the northwest.

29 Following Dorrie's death in 1989, Tom became registered proprietor of Lot 1194. He continued to live in the Farmhouse. In 1992, Ross and his wife Margaret Waddingham (Margaret) left their home in Exmouth and moved into the Farmhouse with Tom.

30 Also following Dorrie's death, Tom, as executor of her estate, received legal advice as to whether it was possible to transfer an unsubdivided part of Lot 1191.

31 Following receipt of that advice, in around July 1992 Tom, Graham and the plaintiff executed a deed of family arrangement. That Deed provided for the transfer of Lot 1191 to Tom, Graham and the plaintiff as tenants in common, with Tom having 28 of 29 shares in that land and Graham and the plaintiff holding (as joint tenants) one 29th share.

32 In 1994, Tom built another house on Lot 1194, referred to in evidence as the 1994 House, and moved into that house where he remained until his death. Ross and Margaret continued to live in the Farmhouse.

33 From 1996 Graham and the plaintiff began living permanently at the house they had built on Lot 1191.

34 In 2000, Lot 1191 was sold for approximately $1,000,000. Tom received 50% of the proceeds of that sale, with the plaintiff and Graham jointly receiving the other 50%. Graham and the plaintiff used their proceeds from that sale to acquire their house in Augusta in the plaintiff's name, and to make other investments.

35 Ross died in 2003. Margaret has continued to reside in the Farmhouse since that time.

36 Tom died on 1 January 2009. His Will gave Lot 1194 to Graham, subject to:

(a) Ross and Margaret having 'the right to reside on my land free of cost for the rest of their lives or until they no longer desire to reside there'; and

(b) the second defendant having the right to reside in the 1994 House 'and use the furniture, furnishings, fittings and personal effects situate in or around such house free of cost for the rest of her life or until she no longer desires to reside there'.

37 Graham and the second defendant both received about $250,000 in cash from Tom's estate. The second defendant used the money to purchase the unit in Collie which she was renting.

38 In early 2009 Graham and the second defendant agreed that he and the plaintiff would move into the 1994 House. The second defendant agreed to waive her right to reside in the 1994 House, and Graham and the plaintiff moved into the 1994 House shortly thereafter. The second defendant also gave Graham some money to assist in renovations to the 1994 House and the purchase of a tractor at about this time. (There was a minor difference in recollection as to whether the amount was $20,000 or $30,000, but that difference is not material to my consideration of this application.)

39 On 8 April 2011 Graham and the second defendant executed a deed of family arrangement which recorded that the second defendant had no wish to reside in the 1994 House and agreed to the clause of Tom's Will which gave her that right being revoked and to be of no effect.

40 Since Graham's death on 31 July 2011 the plaintiff has continued to reside in the 1994 House. She wishes to continue doing so, and wants to be able to continue living in the 1994 House even if Margaret (who is three years older than the plaintiff) predeceases her.

41 The second defendant is 86 years old and is the only remaining surviving child of Ben and Dorrie. The second defendant has four adult children who have all moved out and live independently. She suffers from a number of conditions associated with old age, for which she requires medication. Although she is elderly, she is able to live independently at present. She owns her unit in Collie, which has an approximate value of $185,000, and a 1998 Ford Festiva. She has about $120,000 in savings. She receives an age pension, which she estimates more than covers her general living expenses (leaving the costs of this dispute out of account).

42 Margaret still resides in the Farmhouse. In her affidavit filed on 10 April 2012, the plaintiff said that she did not know whether Margaret was still living in the Farmhouse at that time. In her more recent affidavit of 26 November 2014, she refers to Margaret as her closest neighbour who resides at the Farmhouse.

43 In June 2011 Margaret lodged a caveat on the title of Lot 1194 in which she claimed an interest pursuant to Tom's Will. The supporting statutory declaration indicates that Margaret and Ross carried out renovations on the Farmhouse which Margaret said were carried out with Tom's approval and on the understanding that Margaret and Ross could reside on Lot 1194 for their lives. She said that, subsequently, it was agreed between Tom, Ross and Margaret that a portion of Lot 1194 would be subdivided and transferred to Ross and Margaret. Margaret said that the Shire of Margaret River agreed to the subdivision but the 'West Australian Government Planning Authority' did not give approval and the subdivision never proceeded.

44 Margaret deposed on 6 February 2015 that she has resided on Lot 1194 since 1992 and wishes to continue doing so. She deposed to having received legal advice in 2012 to the effect that she had no prospect of making a claim for a constructive trust against Graham's estate. She said that she had no interest whatsoever in making a claim against Graham's estate 'apart from exercising my right to reside for life pursuant to' Tom's Will.

45 Before me all parties assiduously avoided making any detailed submissions as to the character of Margaret's current interest in Lot 1194 (if any) and the nature and content of the rights which she might have against Graham's estate or any future purchaser of Lot 1194.

46 The first defendant obtained a valuation report in relation to Lot 1194. That report indicates that the unencumbered market value of Lot 1194 was $2,000,000 at the date of Graham's death and $1,800,000 as at 2 May 2013. The parties agreed that these figures represented the unencumbered value of Lot 1194 at the indicated dates.

47 The valuation also assesses the value of Lot 1194 encumbered by a life tenancy to Margaret over the whole of Lot 1194 as being $950,000 as at the date of Graham's death and $940,000 as at 2 May 2013.

48 Whatever the nature and extent of Margaret's interest in Lot 1194, it plainly is not a life tenancy over the whole of Lot 1194. However, the plaintiff and second defendant agreed that these encumbered values represented the value of Lot 1194 while Margaret was residing on that land. It was put to me by counsel that this agreement avoided the need for me to make any finding as to the nature and extent of Margaret's rights in, or in relation to, the land. I shall attempt to resolve the application on that basis.

49 I also note that an affidavit of the first defendant's solicitor sworn on 10 February 2015 indicated that an approach had been made by the current owner of Lot 1191 in relation to the purchase of Lot 1194. It was contemplated that Lot 1194 might be purchased for $1,800,000 with provision for the plaintiff and Margaret to continue to reside on the land and for payment of the purchase price by instalments. While the approach was not a formal offer, it does call into question whether the parties' agreement as to the 'encumbered' value of Lot 1194 reflects market value. Notwithstanding the questions which this evidence raises, I will still proceed on the basis of the plaintiff's and second defendant's agreement as to this factual matter.

Graham's understanding of the value of Lot 1194

50 Both parties invited me to reach certain conclusions about Graham's understanding of the value of Lot 1194. There was evidence that, in March 2011, Graham obtained an appraisal report for Lot 1194 from a real estate agent which valued the land at $2.55 $2.75 million. There was also evidence that Graham regarded this appraisal as being too low, and said that the land should not be sold for under $6 million.

51 I have not been able to reach any conclusion from this evidence as to Graham's subjective view as to the amount which Lot 1194 would realise on sale at any particular time. In particular, the view of the value of Lot 1194 expressed above appears to relate to the unencumbered value of Lot 1194 and not the value of that land as affected by Margaret's residence thereon.

52 The first defendant adduced evidence of reports as to the potential capital gains tax liability of Graham's estate on the sale of Lot 1194. I have not found those reports to be of any significant assistance in this matter as they appear to be based on assumptions which are not established by the evidence before me. In particular, at least parts of the reports proceed on the assumption that the first defendant holds Lot 1194 as executor of Tom's estate rather than Graham's.

If any person (in this Act called the deceased) dies, then, if the Court is of the opinion that the disposition of the deceased's estate effected by his will is not such as to make adequate provision from his estate for the proper maintenance, support, education or advancement in life of any of the persons mentioned in section 7 as being persons by whom or on whose behalf application may be made under this Act, the Court may, at its discretion, on application made by or on behalf of any such person, order that such provision as the Court thinks fit is made out of the estate of the deceased for that purpose.

54 The plaintiff, as the person who was married to Graham immediately before his death, is entitled to make an application under s 7(1)(a) of the Act. The application was made within the time required by the Act.

Every provision made by an order shall, subject to this Act, operate and take effect either as if the same had been made by a codicil to the will of the deceased executed immediately before his death.

56 The general principles relating to applications of this kind are not in dispute in this case. Those principles were summarised in DevereauxWarnes v Hall (No 3),[2] to the following effect. (Paragraph references in what follows are to paragraphs of the reasons given in DeverauxWarnes.)

57 By s 6(1) of the Act, the court is required to carry out a twostage process [66].

58 The first stage involves the determination of whether the disposition of the deceased's estate effected by will or the law relating to intestacy is not such as to make adequate provision from his or her estate for the proper maintenance, support, education or advancement in life of the claimant. The first stage has been described as the 'jurisdictional question', which means no more than that the court's power to make an order in favour of the claimant is conditioned upon the court first being satisfied of the state of affairs referred to in the opening passage of s 6(1), ending with the words 'made under this Act' [67].

59 The first stage involves a question which is strictly one of fact, notwithstanding that it involves the exercise of value judgments. The evaluative character of the decision arises from the fact that the court must determine whether the claimant has been left without 'adequate' provision for his or her 'proper' maintenance, etc [68].

60 The second stage, which only arises if the 'jurisdictional question' is determined in favour of the claimant, involves the exercise of discretion: the court may order that such provision as the court thinks fit be made out of the deceased's estate for the proper maintenance, etc, of the claimant [69].

61 The question which arises at the first stage must be formulated and determined as at the date of death of the deceased, having regard to all material facts that existed at the date of death, whether the deceased knew of them or not, and all material eventualities that might at that date reasonably have been foreseen by a deceased who knew the facts [70].

62 At the second stage the court exercises its discretion to order adequate provision for the proper maintenance, etc, of the claimant by reference to the circumstances as they exist at the date of the order [71].

63 The word 'proper' connotes something different from the word 'adequate' [72].

64 For example, a small sum may be sufficient for the 'adequate' maintenance etc of the claimant but, having regard to all the circumstances, including the size of the deceased's estate and the lifestyle to which the claimant had become accustomed during the deceased's lifetime, may be wholly insufficient for his or her 'proper' maintenance. By contrast, a sum may be quite insufficient for the 'adequate' maintenance etc of the claimant, and nevertheless be sufficient for his or her maintenance etc on a scale that is 'proper' in all the circumstances [73].

65 The determination of whether the provision, if any, made for the claimant is 'adequate' for his or her 'proper' maintenance etc involves not only a scrutiny of the requirements of the claimant for maintenance etc that were reasonably foreseeable by the deceased, but also an examination of the totality of the relationship between the claimant and the deceased [74].

66 The totality of that relationship would include: any sacrifices made or services given by the claimant to or for the benefit of the deceased; any contributions by the claimant to building up the deceased's estate; and the conduct of the claimant towards the deceased and of the deceased towards the claimant [75].

67 Any such sacrifices, services or contributions (whether described as giving rise to a moral duty/moral claim or not) are a relevant consideration (as part of the totality of the relationship between the claimant and the deceased), but are neither a necessary nor a sufficient condition for the making of an order under the Act [76].

68 'Adequate' is concerned with the quantum, whereas 'proper' prescribes the standard, of maintenance, etc. The propriety of the provision, if any, for the claimant is to be assessed by reference to all the circumstances including contemporary accepted community standards [77].

69 Freedom of testamentary disposition is a relevant and important consideration. A will should only be disturbed if, and to the extent that, 'adequate' provision has not been made for the 'proper' maintenance etc of the claimant. All authorities agree that it was never meant that the court should rewrite the will of a testator. Nor was it ever intended that the freedom of testamentary disposition should be so encroached upon that a testator's decisions expressed in his will have only a prima facie effect, the real dispositive power being vested in the court [91].

70 Other cases have also held that a testator's freedom of testamentary disposition is to be interfered with only as far as may be necessary to make adequate provision for the applicant's proper maintenance etc. The court must have regard to the will of the testator and interfere only to the minimum extent necessary to make such adequate provision.[3] In my view the approach adopted in those cases, which deal with broadly equivalent legislation, is appropriate when dealing with an application under s 6 of the Act.

71 It is well-established that, in determining an application under s 6(1), the court should have regard to the deceased's 'moral duty' to other people who are within the statutory class of claimants (whether or not they are also beneficiaries of the deceased's will), and the 'moral claims' of those other people against the deceased, both when considering the 'jurisdictional question' and, if that question is resolved in favour of the claimant, at the second stage, especially where the deceased's estate is of modest or moderate value [95].

72 The court, in determining an application under s 6(1), should have regard, at the first and second stages, to:

(a) the totality of the relationship between the deceased and a beneficiary of the deceased's will; and

(b) the financial and personal circumstances of the beneficiary,

even though the beneficiary is not an eligible claimant within s 7 [103].

73 A beneficiary who is not an eligible claimant may have a 'moral claim' on the testator's estate arising, independently of the Act, from the totality of the relationship between the claimant and the testator and contemporary accepted community standards. The existence of such a 'moral claim' and its relative strength or weakness, or the absence of such a claim, is a relevant consideration at the first and second stages [104].

74 Both parties in the present matter referred to a number of decisions relating to claims under the Act or its analogues in other jurisdictions by spouses of a testator.

75 In Graham v Graham,[4] approaches of the courts under family provision legislation were described in the following terms:

(i) A wife, particularly of many years, has a primary right to be considered by her husband, but the extent that he should provide for her is to be governed by her needs, both at present, and in the foreseeable future. It is also governed by the claims and circumstances of the competing claimants, whose positions also have to be weighed with their needs and merits.

(ii) As a broad general rule, and in the absence of special circumstances, the duty of the deceased to the widow, to the extent to which his assets permit him to do so, is to ensure that she is secure in the matrimonial home, to ensure that she has an income sufficient to permit her to live in the style to which she is accustomed, and to provide her with a fund to enable her to meet any unforeseen contingencies. The amount should be sufficient to free her mind from any reasonable fear of any insufficiency as she grows older and her health and strength fail.

(iii) The capacity of the widow, herself, to provide for her own needs must also be considered. In Re Crewe [1956] NZLR 315 at 323 it was said:

'It may probably be said with truth that the proper maintenance which a testator owes to his widow in cases where there are no claims of other dependants is such maintenance as will enable her, taken in conjunction with her own means, to live with comfort and without pecuniary anxiety in such state of life as she was accustomed to in her husband's lifetime, or would have been so accustomed to if her husband had then done his duty to her.'

(iv) The broad general rule should not be regarded as one of immutable application.

(v) Concern as to the capacity of the applicant to maintain herself, independently and autonomously, may also bear upon the notion of what is proper provision.

(vi) It should be remembered that the three elements identified in (ii) above are not necessarily mutually independent. While an applicant's standard of living during the lifetime of a deceased may be a useful yardstick, it is not necessarily decisive as to what would be an appropriate provision for the in the future. The court is not to approach the assessment of what is proper by attempting precisely to replicate the way of life that the deceased and the applicant widow planned to have had he survived.

(vii) In the case of a widow, the Court will make more ample provision than in the case of children, if the children are physically and mentally able to maintain and support themselves.

(viii) In Magill v Magill [2006] HCA 51; (2006) 226 CLR 551, Gleeson CJ, at [24], said:

'The structure of marriage and the family is intended to sustain responsibility and obligation.'

This accords too, with what Hodgson JA said in Marshall v Carruthers; Marshall v Marshall [2002] NSWCA 47:

'In my opinion, a formal and binding commitment to mutual support through good times and bad, other factors being equal, adds strength to a legitimate claim.'

76 The second of those propositions was derived from the decision of Powell J in Luciano v Rosenblum,[5] and the sentiment which has been adopted in other cases.[6]

77 Counsel for the second defendant also referred to the following comment of Young CJ in Eq in Marshall v Carruthers:[7]

Mr Ellison for the respondent strongly submitted that a person who makes a claim as a spouse of a class (a) eligible person is entitled to take comfort from the words of Mr Justice Powell in Luciano v Rosenblum (1985) 2 NSWLR 65 at 69 that a spouse is more or less entitled to have a home plus income to enable her to live in the style to which she is accustomed provided out of the estate. Indeed this passage is actually a summary of a similar but longer statement made by Powell J in Elliott v Elliott 18 May 1984 unreported which was approved by the Court of Appeal on 24 April 1996 and which is set out in the learned Master's judgment.

It must be remembered that Powell J put his proposition as a 'broad general rule'. However, there is in fact no 'standard former spouse' to which one can just apply that proposition as a rule of thumb.

Powell J's broad general rule may not be a good guide as to what the Court will consider as the duty of a testator towards a spouse except in the case of a financially dependent spouse where there is a history of bringing up children with the deceased or in supporting the deceased while he was amassing his fortune. The broad general rule may well be inapplicable in cases of other spouses. Indeed, the cases in the first half of the 20th century show that as far as widowers were concerned, the proposition was quite untrue.

78 The question of what is adequate provision for the proper maintenance etc of the plaintiff is a question of fact. The 'broad general rule' referred to in Luciano reflects a common approach to resolving that factual question in one category of case. However, the question facing this court is to be answered by reference to the evidence and all of the circumstances of the present case. The answer to the question is not dictated by previous authority, although some comfort may be found if the value judgement which is made in this case is broadly consistent with the approach adopted in like cases.

79 The plaintiff seeks orders in the following terms:

Paragraph 5 of the Will be varied in the following manner:

'5. DISPOSITION OF COWARAMUP LAND

5.1 I GIVE ALL my right, title and interest in the land at Lot 1194 on deposited plan 225760 and being the land described in Certificate of Title Volume 1965 Folio 846 and more generally known as 854 Cowaramup Bay Road, Cowaramup, Western Australia ("the Cowaramup Land") to my Executor and Trustee UPON TRUST to allow my wife Cath to occupy the 1994 House situated thereon and an area of 2 hectares immediately surrounding it as her principal place of residence for as long as she wishes, if she:

(a) pays 50% of the rates and other outgoings in respect of the Cowaramup Land;

(b) pays 50% of the premiums on any insurance policies taken out by my Executor on the Cowaramup Land;

(c) keeps the 1994 House in repair to the reasonable satisfaction of my Executor.

(a) the death of my wife, Cath;

(b) my wife Cath informing my Executor that she no longer wishes to reside in the 1994 House;

(c) my Executor forming the opinion that my wife Cath has ceased to reside in the 1994 House,

my Executor shall sell the Cowaramup Land and divide the Net Sale Proceeds thereof in the following manner:

(i) to my wife Cath (or to Cath's estate if she has died), a sum equivalent to the greater of:

(ii) to my sister VALMA JEAN MILLMAN (or to her estate if she has died), the balance thereof.

(a) 1994 House means the house built on the Cowaramup Land in 1994 by my brother WILLIAM RONALD WADDINGHAM (known as Tom).

(b) Net Sale Proceeds means the sale proceeds of the Cowaramup Land less my debts, funeral and testamentary expenses and any duties or taxes payable by reason of my death or in consequence of the sale of the Cowaramup Land or for which my estate is otherwise liable.'

The Second Defendant pay the Plaintiff's costs to be taxed if not agreed.

80 While the second defendant did not concede the 'jurisdictional question', counsel for the second defendant did not really contend that I should find that Graham's Will and Codicil made adequate provision for the maintenance etc of the plaintiff.

81 The obvious difficulty which Graham's will poses is the requirement that Lot 1194 be sold as quickly as possible. That provision in Graham's will in its terms requires that the property be sold while Margaret continues to reside at the Farmhouse, and also requires that his wife be ejected from the matrimonial home as soon as a sale can be arranged. The requirement that the property be sold while Margaret continues to reside in the Farmhouse dramatically reduces the amount for which the property might be realised, on the facts agreed by the parties, to the prejudice of all beneficiaries of the Will and, importantly for the purposes of this application, to the prejudice of the plaintiff.

82 I have little difficulty in finding that a provision of the deceased's will which has the practical effect of requiring that his wife be ejected from the matrimonial home as soon as possible and that the land be sold at half its unencumbered value fails to make adequate provision for her proper maintenance.

83 There are a number of factors which reinforce that conclusion in this case.

84 The plaintiff and Graham had been married since 1987 and been partners together since 1977. They had merged their finances at the time they were married, and continued to operate as a financial partnership since that time. They had a long term, happy, stable and contented relationship. Graham had been the breadwinner since their marriage, in large part because the remote location at which they had stayed for 21 years of Graham's working life precluded the plaintiff from taking on employment if they were to live together. The role adopted by the plaintiff was one of supporting Graham by providing practical assistance (Graham had called the plaintiff the best trades assistant he had ever had) and maintaining their house (which was allocated by the government as part of Graham's remuneration) and garden. The existence of a longstanding relationship with these features counts strongly against the conclusion that a provision in a will having the practical effect I have described constitutes adequate provision for the proper maintenance of the plaintiff.

85 Further, the evidence, which I accept, is that the plaintiff and Graham moved to the 1994 House on Lot 1194 with the intention of spending the rest of their lives at that location. While they lived in the house for only a couple of years before Graham's death, their plan was to make it their permanent home. That was how the plaintiff regarded the 1994 House. It was the matrimonial home of the plaintiff and Graham at the time of his death. In my view the community would expect, in all the circumstances, that Graham would make provision in his Will that would allow the plaintiff to continue to reside in the 1994 House for so long as she was willing and able to do so. In my view, that is what adequate provision for the plaintiff's maintenance and support required.

86 I am reinforced in this conclusion by the absence of any competing claims by other beneficiaries. The second plaintiff does not seek to advance any moral claim on Graham's estate. Her position is that she is an intended beneficiary of Graham's Will and Codicil and effect should be given to his testamentary intention. The absence of any other person than the plaintiff with a legitimate claim on the bounty of Graham's estate, so that there was no compelling need for such a person to secure the early sale of Lot 1194, counts in favour of the conclusion that by requiring a sale of that land as soon as possible the plaintiff failed to make adequate provision for the proper maintenance and support of the plaintiff.

87 I am also reinforced in this conclusion by the fact that it accords with the general approach commonly adopted by the courts under the Act and its equivalents in other jurisdictions in cases of this kind. That is to say, it accords with that general approach to conclude that adequate provision for the proper maintenance of a person in the position of the plaintiff requires that, so far as the assets of the husband's estate permit, she should be left secure in occupation of the matrimonial home.

What provision should be made for the plaintiff out of Graham's estate?

88 The 'jurisdictional question' being answered in the affirmative, it then becomes necessary for the court to determine the different provision which should be made from Graham's estate for the plaintiff's proper maintenance etc.

89 An obvious response to the conclusion I have reached in relation to the jurisdictional question is that the requirement in Graham's Will that Lot 1194 be sold as soon as possible after his death should be removed. I did not understand any party to contend to the contrary, if the jurisdictional question were answered in the affirmative.

90 There remained two issues in contention between the plaintiff and second defendant as to what different provision should be made for the plaintiff's proper maintenance etc. The first concerned the proportion of the net realisation from the sale of Lot 1194 that should be given to the plaintiff. The second concerned what provision should be made as to the time when sale of Lot 1194 should be required or allowed.

91 A third issue, as to the extent to which the plaintiff should be responsible for ongoing costs associated with holding Lot 1194, ceased to be contentious during the course of the hearing. The plaintiff accepted that, as a practical matter, she would need to advance the first defendant money for the ongoing costs associated with holding Lot 1194 in order to avoid the first plaintiff being forced to sell Lot 1194 in order to meet those costs. Both counsel accepted that provision as to those costs did not need to be made in the Will.

92 I then turn to deal with the two issues remaining in dispute.

93 The plaintiff did not contend that the provision which Graham made in his Will for the net proceeds of the sale of Lot 1194 to be divided equally between the plaintiff and the second defendant failed to make adequate provision for the plaintiff's proper maintenance etc in the event that Lot 1194 is sold for its unencumbered value.

94 Rather, the plaintiff's submission proceeded from her contention that the situation is uncertain at present because it is not known whether Lot 1194 will be able to be sold 'unencumbered by Margaret's residence' and it is not known whether Margaret will pursue her claim for an interest in Lot 1194 or the proceeds of its sale, or whether such a claim would succeed if made.

95 As to the second of those matters, there is no basis on the evidence before me for concluding that Margaret presently intends making a claim for a share of the proceeds if a sale occurs after her residence of the Farmhouse ceases. Margaret's evidence is to the contrary. Nor is there any evidence before me of facts which would give rise to such an interest. In those circumstances, I do not consider adequate provision for the plaintiff's proper maintenance etc to require an allowance to be made for the contingency that Margaret will receive any substantial portion of the proceeds of the sale of Lot 1194.

96 In those circumstances, the plaintiff's argument on this aspect of the case depends on allowing for the contingency that Lot 1194 may need to be sold for less than its unencumbered value due to Margaret's continued residence in the Farmhouse.

97 I shall first deal with this issue on the assumption, favourable to the plaintiff, that Margaret has some enforceable right which would substantially reduce the net proceeds which Lot 1194 would realise if sold while Margaret was still in residence.

98 On that assumption, there is a reasonable prospect that the property might need to be sold for substantially less than its current unencumbered value. That requirement may arise, for example, if a sale of the land is ultimately required to meet the liabilities of Graham's estate.

99 Counsel for the plaintiff submits that 'the marked element of uncertainty engenders in [the plaintiff], quite reasonably, a fear of insufficiency'. It is submitted that all that the plaintiff seeks is certainty; a base minimum figure which she knows she will receive from the proceeds of sale. She proposed that she receive 50% of the net sale proceeds or $650,000, whichever is the greater. It is contended that this will give the plaintiff the comfort and security to which it is alleged she is entitled in all the circumstances.

100 The difficulty I have with this submission is that there is no evidence that the proceeds of sale of an 'encumbered' Lot 1194, when combined with the plaintiff's other assets and sources of income, will be inadequate to provide for her proper maintenance etc. As things stand, the plaintiff has approximately $600,000 in realisable assets together with an income stream which is generally sufficient to meet her current expenses. Counsel for the plaintiff was unable to point to any evidence that this capital and income, combined with the net proceeds of an 'encumbered' Lot 1194, would be insufficient to provide for her proper maintenance. Nor was counsel for the plaintiff able to proffer any reason why the sum of $650,000, rather than some other sum, was required to make adequate provision for the plaintiff's proper maintenance etc.

101 As the Court of Appeal noted in Chappell v Hewson,[8] the very broad discretion of the court to make an award 'as it thinks fit' must be exercised only upon evidence before the Court or, less commonly, upon facts of which the court can take judicial notice. In Chappell, the decision of the primary court was set aside because it involved making provision which was not supported by evidence or sufficient evidence to support the conclusions reached by the primary court as to facts on which the exercise of the court's discretion was based.

102 The need for the court to act on sufficient evidence presents a difficulty for the plaintiff's submissions in the present case. For example, counsel for the plaintiff postulated that at some time in the future, perhaps while Margaret still resides at the Farmhouse, the plaintiff may cease to be able to live independently and may need to move to accommodation where assistance can be provided. So much of the argument may be accepted. However, there is no evidence to show that the current assets and income of the plaintiff would be insufficient to secure a place in a facility which would provide a standard of accommodation which, having regard to the standard of accommodation to which the plaintiff is accustomed, is reasonable.

103 Nor am I satisfied that uncertainty provides a reason for making greater provision from Graham's estate. For example, if the property sells 'encumbered' by Margaret's residence at the value of $940,000 (which the parties agree the property currently has with Margaret residing on it) then the plaintiff can be certain that she will have half that amount less the liabilities of Graham's estate after the sale occurs. The position will be no less certain than if there is an unencumbered sale and she receives half of $1.8 million less the liabilities of the estate.

104 In order to show that she should receive more than half the net proceeds of the sale of Lot 1194, whatever the sale amount, the plaintiff needs to show that the amount she will receive from sale at the lower amount will, when combined with her other assets and income, be inadequate to make proper provision for her maintenance etc. The plaintiff does not discharge that onus by pointing to uncertainty which she feels and identifying a figure without providing any rationale or criteria for arriving at that figure.

105 In considering this issue I bear in mind the circumstances and considerations which I addressed in dealing with the 'jurisdictional question'. Taking all those matters into account, I am not satisfied that that adequate provision for the plaintiff's proper maintenance etc requires that she receives more than half of the net proceeds of the sale of Lot 1194. The plaintiff has been left with a significant income and substantial assets, which may be used to deal with the contingencies of life. In my view, the evidence does not establish that the resources of the plaintiff, which formed part of the joint finances of the plaintiff and Graham while the latter was alive, are insufficient when combined with half of the net proceeds of the sale of Lot 1194 at the lower postulated value to make adequate provision for her proper maintenance etc.

106 The plaintiff and defendant have different views as to what, if any, substituted provision should be made for the time when Lot 1194 should be sold. The plaintiff contends that it should be able to be sold only after she is unwilling or unable to continue to reside in the 1994 House, whether or not Margaret continues to reside in the Farmhouse at that time. The second defendant contends that the Property should be able to be sold when Margaret ceases to reside in the Farmhouse, regardless of whether or not the plaintiff continues to reside in the 1994 House at that time. As an alternative, the second defendant contends that Lot 1194 should only be able to be sold after both the plaintiff and Margaret cease to reside on the land.

107 I am not convinced that it is necessary or appropriate for the Will, or any order which takes effect as a codicil to the Will, to make any specific provision about when Lot 1194 must be sold.

108 It does not appear to me to be necessary, in order to make adequate provision for the plaintiff's proper maintenance etc, that the sale of Lot 1194 should be absolutely prevented while the plaintiff is in residence at the 1994 House. There are a number of circumstances where a sale could properly occur which would not interfere with the plaintiff's occupation of the 1994 House. One option, apparently contemplated by the neighbour who made the approach referred to above, is a sale of Lot 1194 on terms which provide for the plaintiff to reside in the 1994 House for so long as she is willing and able to do so. Another possibility, which is not addressed by the evidence, is that there might be some subdivision of Lot 1194 followed by the sale of a portion or portions of the land on which the plaintiff does not reside. While there are some hints that subdivision to create a residential lot of 2 5 ha might be difficult to achieve, the evidence in this case does not substantively address the prospects of any subdivision of the land. For example, I am unable to conclude on the current evidence whether a subdivision of Lot 1194 into two lots of roughly equal size might be achievable.

109 Nor has it been demonstrated to my satisfaction that the sale of Lot 1194 immediately after the plaintiff ceases to reside in the 1994 House is necessary to achieve adequate provision for her proper maintenance etc. It has not been shown that the reasonably anticipated circumstances of the plaintiff will require the immediate sale of Lot 1194 even if Margaret continues to reside in the Farmhouse, with the assumed consequence that Lot 1194 can only be sold for substantially less than its unencumbered value. I do not regard a requirement that might substantially reduce the proceeds received by the plaintiff as necessarily conducive to securing her proper maintenance etc. Depending on the circumstances of the plaintiff at the time of sale, such a requirement could be quite contrary to her financial interests.

110 Finally, I see no reason why the sale of the land should be required when Margaret ceases to reside at the Farmhouse, even if the plaintiff wishes to continue to reside in the 1994 House at that time. Such a requirement would be contrary to the conclusion I have reached that adequate provision for the plaintiff's proper maintenance etc requires that she be in a position, so far as that can be secured by the assets of Graham's estate, to continue to reside in the matrimonial home for as long as she is willing or able to do so. Further, I see no reason why provision for the plaintiff's proper maintenance etc should be dictated by Margaret's arrangements for her own accommodation.

111 In my view the variables involved in determining the appropriate time to sell the property are too many, and of too uncertain influence, to enable me to reliably reach any conclusion as to the appropriate time and terms of the sale of Lot 1194. As the plaintiff's counsel noted in submissions, the problem arose in this case because Graham's Will was too prescriptive as to the time when sale was to occur. I run the risk of creating similar problems if I am too prescriptive as to the circumstances in which sale must occur at some indeterminate time in the future.

112 In my view, making adequate provision for the plaintiff's proper maintenance etc requires that the Will's requirement that Lot 1194 be sold as soon as possible after Graham's death be substituted by a provision which allows the plaintiff to reside in the 1994 House for so long as she is willing and able to do so. The current provision in the Will that the plaintiff receive half of the net proceeds of the sale of Lot 1194 should not be altered. The Will should empower the first defendant to sell Lot 1194 so long as the plaintiff's continued residence is accommodated, but should not mandate the sale of Lot 1194 in any particular circumstance.

113 The orders proposed by the plaintiff will not achieve this result and should not, therefore, be made.

114 In my view, the appropriate approach is to make a direction to the parties to seek to agree upon a form of order which gives effect to my conclusions, or to submit competing minutes if agreement cannot be reached. I make that direction, rather than attempt to formulate a final order myself, for two reasons.

115 First, the first defendant, who has appropriately played a neutral role in the proceedings, seeks to be heard as to the form of any final order on matters such as the identification of the area surrounding the 1994 House which the plaintiff is to be given a right to occupy. The first defendant should be given the opportunity to make those submissions in light of these reasons.

116 Secondly, there may be more than one means of achieving the outcome I propose. One option would be for provision to simply be made for the direct transfer of legal title in Lot 1194 to the plaintiff and second defendant as tenants in common in equal shares. Another option would be for Lot 1194 to be given to the first defendant on trust for the plaintiff and second defendant, with provision for the plaintiff to reside in the 1994 House for so long as she is willing and able to do so. The terms of the trust might also confer a power of sale of Lot 1194 on terms which secure for the plaintiff an entitlement to reside in the 1994 House for so long as she is willing and able to do so. Whatever means are chosen, the terms of the order will necessarily be subject to the discharge of the liabilities of Graham's estate, of which Lot 1194 is the only remaining asset.

117 As not all of the above issues have been addressed in submissions, it is appropriate that the parties be given a further opportunity to make submissions directed to these issues before final orders are made.

118 I recognise that the conclusion I have reached has the undesirable consequence of leaving room for future disputes between the parties as to when Lot 1194 should be sold. Hopefully, good sense will prevail and the parties will reach a reasonable compromise which accommodates all their interests. If there is debate or doubt about the position then the assistance of the court may be required at that time, if the property is held on trust, by the trustee seeking direction from this court. At this time, however, my function is not to resolve all future debates and disputes which might arise in relation to Lot 1194. Rather, my function is confined to making the minimum alteration to Graham's testamentary wishes which is necessary to make adequate provision for the plaintiff's proper maintenance etc.

119 For the above reasons I will adjourn this matter to a directions hearing and direct that the parties confer in relation to the appropriate orders which give effect to the conclusions I have reached, and submit either an agreed minute or competing minutes of orders within 10 days of the date of publication of these reasons.

[1] Without intending any disrespect to anyone involved, I shall adopt the approach, commonly adopted in this kind of case, of referring to those involved by their first names. In this case a number of the persons referred to in these reasons were commonly known by a first name other than their given names. In these reasons I shall, again without intending any disrespect, refer to those persons by the first names by which they were commonly known.

[3] Friend v Brien [2014] NSWSC 613 [34] [37] and cases there cited.

[4] [2011] NSWSC 504 [88] (citations generally omitted).

[6] O'Loughlin v O'Loughlin [2003] NSWCA 99; Nicholls v Zis [2001] WASC 301 [14].

[7] [2002] NSWCA 47 [72] [74].

Family Provision Act 1972(WA)

At a glance

Court

Decision date

Before

Catchwords

Source

Catchwords

Judgment (155 paragraphs)

Legislation Cited (1)

Cases Cited (3)