Birrell v Birrell [2000] ACTSC 9 (11 February 2000)

Last Updated: 29 February 2000

Birrell v Birrell [2000] ACTSC 9 (11 February 2000)

CATCHWORDS

PROBATE - Family Provision Act 1969 (ACT) - Plaintiff seeking provision from estate of testator for his "maintenance, education or advancement in life" - Discretion of the Court - Two stage process - Whether adequate provision has been made and if not, what provision is to be made - Factors to be taken into account - Section 8(3) of the Act - No issue of principle.

No. SC 72 of 1999

Coram: Master T Connolly

Supreme Court of the ACT

Date: 11 February 2000

IN THE SUPREME COURT OF THE )

) No. SC 72 of 1999

AUSTRALIAN CAPITAL TERRITORY )

BETWEEN: GORDON BIRRELL

Plaintiff

AND: DONALD BIRRELL

Defendant

ORDER

Judge Making Order: Master T Connolly

Where Made: Canberra

Date of Order: 11 February 2000

THE COURT ORDERS THAT:

1. The executor make provision in the sum of $35,000 for the plaintiff out of the estate.

2. The reasonable legal costs of the parties be met out of the estate.

1. This is an application pursuant to section 8 of the Family Provisions Act 1969. The plaintiff is the seventh of eight children born of Elsie and Peter Birrell, being born on 25 April 1934, and being now retired and 65 years of age. There are four surviving siblings, Ann living in New Zealand, Peter living in Scotland, Donald living in Moruya and Dorothy, living in the Australian Capital Territory. The plaintiff's father died in 1977. The plaintiff's mother died on 22 April 1997 aged 95 years. Probate was granted on her will of 6 August 1991 on 27 February 1998. The will appointed her son Donald Birrell as executor, and gave the whole of the estate, which was sworn under $253,000, to him. The plaintiff brings this action pursuant to section 8 of the Act, claiming that adequate provision for his proper maintenance education or advancement of life was not made in the will.

2. Jurisdiction to hear and determine applications pursuant to s 8 of the Family Provisions Act 1969 is conferred on the Master pursuant to Order 61A rule(1)(q). The application was brought by way of originating application filed on 28 January 1999. The defendant has at times been represented by various Sydney and Canberra solicitors. The defendant was born in July 1926, and so is 73 years of age, and not in good physical or mental health. His consultant geriatician, Dr Lloyd, has provided reports to say that these proceedings have been stressful to him, and that he is not fit to be actively involved in the proceedings. Dr Lloyd recently contacted the Court advising that the defendant remains unwell and suggested that this decision be communicated to the defendant via the doctor himself. The defendant has been able to file various affidavits in the course of the proceedings. In an opinion of 1 December 1999 Dr Lloyd confirmed that the defendant continued to be unwell, but said

"I would like to emphasise the importance to his mental health that the matter is dealt with so that he can return to concentrating on surviving the threats of his potentially fatal medical condition and his unresolved state of significant clinical depression."

3. This letter was put before Justice Cooper on 6 December 1999 by Mr Blank, who advised that he had no further instructions to act for the defendant, and would be withdrawing from the matter on the defendant's instructions. Justice Cooper ordered that the matter proceed before me on 7 December 1999.

4. At the time probate was granted the defendant, as executor, swore that the deceased had real property being Unit 5 Argyle Square Reid in the Australian Capital Territory with a value of $190,000, and bank accounts to the value of $63,000, and liabilities in the sum of $3,980.40, giving a total value of the estate in the sum of $249,019.60.

5. The plaintiff immigrated to Australia from Scotland with his parents and four of his siblings in 1955 when he was 21. He was a qualified mechanic, and pursued that trade. He lived with his parents, contributing his wages to the family finances, until 1961. He ran a coffee lounge business in Cooma until about 1964, and then purchased a restaurant in Darlinghurst in Sydney. At this stage his father had retired, and his mother helped him to run the business, and he says was particularly helpful when his two children were born in 1965 and 1967.

6. His mother continued to help until 1970, when he sold the business and moved to Canberra setting up an ice cream business in Civic. In 1971 his parents decided to leave Sydney and live in Canberra, where the plaintiff and his sister were living. They initially moved in with his sister Dorothy and her family. The plaintiff owned an investment unit on a block in Braddon, and he invited them to live there rent free, which they did for about 12 months. He says that in about 1972 he sold them the unit for $41,000, covering his purchase price of $40,000 and some re carpeting. He says this was convenient as both he and his sister had businesses in the city, and their parents were able to have daily contact with them. His mother regularly helped in his shop over this time.

7. His father died in 1977. In 1981 the plaintiff went with his mother and sister Ann from New Zealand for a three month holiday to Scotland. They each paid their own fares, but the plaintiff says that he looked after expenses. There had been interest from developers to acquire the unit, and the plaintiff says that he had been advising his parents over some years. Eventually the unit was sold in 1984 for $250,000, and the deceased purchased a new unit in the Argyle Square development at Reid for $75,000.

8. The plaintiff says that through the 1980s his mother got on well with each of the family members living in this area, being Dorothy, who had moved herself to a unit in Reid, and his brother Donald, who lived at Moruya on the South Coast. Donald often did paper work such as taxation returns for his mother, as well as the plaintiff. The plaintiff says he saw his mother daily. In 1991 his health deteriorated and he sold his ice cream business, and spent most of his time on his property near Sutton, so he did not continue with the same frequency of visits, although he says relations continued to be good.

9. As the deceased's health deteriorated in the early 1990's there developed tensions between the three siblings over her future care. Dorothy and Donald both brought proceedings in the Guardianship and Management of Property Tribunal. This caused certain family tensions. The Tribunal eventually decided that Dorothy would be appointed guardian. The decision of the Tribunal dated 9 May 1994 was tendered in these proceedings, and it is appropriate to quote the following observations of the Tribunal:

"We finally say on the question of Guardianship that it is obvious to us that Elsie Birrell loves all of her children. She has a strong tendency to be critical of her children, particularly in their absence, to other children. She seems to have a great ability to stir up people's emotions about that criticism. She is not to be criticised for that; that is her way of exercising her own powers as the mother of her family. Often misleading information and ambivalent attitudes from time to time have led to confusion and conflict between the parties that had the true situation been available to both, we are sure that the conflict would not have existed."

10. The Tribunal noted that

"...there has been quite a degree of family distrust and division over Elsie Birrell's property situation, ongoing over some years."

It observed, presciently as it turns out, that

"...there is certainly potential for dispute and perhaps litigation, particularly concerning the efficacy of various transactions and documents and testamentary dispositions in July and August 1991."

11. The August 1991 will, as was apparently known to the family, left the entire estate to Donald. The plaintiff says that Donald showed him this will shortly after it was made and said

"I am the executor and beneficiary of this Will. Don't worry I will split it with the rest of the family except Dorothy,"

or words to this effect. A previous will had split the estate between the plaintiff and Donald. In his affidavit of 25 August 1999 filed in these proceedings the defendant denied making such a statement. The defendant was not present and able to be cross examined on his affidavit. I have looked at the affidavits filed in this matter by the defendant, but wherever they are in conflict with the evidence of the plaintiff I prefer the evidence of the plaintiff who was present in Court and gave oral evidence.

12. In an affidavit filed in the Guardianship and Management of Property Tribunal proceedings the plaintiff said of his mother in about 1991

"She often spoke about her finances, saying to me words to the effect of `I want Don to have all my assets. I've never given Don any money before'. She used to say to me `You don't need it Gordon. You've got plenty' or words to that effect. As a matter of fact she has never given me any money either, but she always thought I was well off and had plenty to look after myself."

13. The bitterness between the siblings seems to have continued after the decision of the Guardianship Tribunal. The plaintiff says that visits to his mother who was residing with his sister Dorothy became difficult, and telephone calls were refused by his sister. He says that when his sister Ann visited from New Zealand, it was necessary to make appointments for access. This is confirmed by the defendant in his affidavit.

14. The plaintiff says that the dispute between Dorothy and Donald continued until after his mother's death, and that Dorothy lodged a caveat on the unit and indicated her intention to dispute the will. The plaintiff says that in about February 1988 Donald told him

"Dorothy has put a caveat on mother's unit. I am going to have to pay her $80,000 from the estate to remove the caveat and settle the claim. After I pay this then we can divide up the rest of the estate"

or words to that effect. The defendant by affidavit denies that he made any promise in relation to a split with the plaintiff, but agrees that he agreed to sell the unit to Dorothy in order to avoid litigation. The caveat was withdrawn by order of the Chief Justice on 27 February 1998, and an affidavit filed in those proceedings by Dorothy Barclay stated

"I lodged the caveat because I had doubts about the circumstances under which my mother made her most recent Will in which my brother, Donald, was named as executor. Donald and I have resolved our differences and I have no present objection to his proposed application for probate."

Probate was then granted on that same day.

15. The unit was sold to Dorothy in April 1999. The transfer document tendered in these proceedings states that the consideration for the sale was $179,000. In an affidavit of accounts filed by the defendant pursuant to my order of 6 August 1999 the defendant states that the property realised $142,514.60 on sale. This also discloses that Dorothy Barclay was paid $80,000. I am satisfied that the daughter Dorothy has received this sum, and so has been well catered for, being apparently in otherwise secure financial circumstances. The affidavit of accounts puts the balance of the estate at $83,580.26. Significant payments have been made by the defendant to legal practitioners, in the sum of $32,950. Of this sum $20,000 was paid to the solicitors who represented the defendant in the Guardianship and Management of Property Tribunal proceedings.

16. The defendant lives with his wife in a rental property at Longbeach New South Wales which is owned by his son, and for which he pays $290 per fortnight. He says he has no other assets. The car they drive is owned by his wife. He receives a Defence (Navy) pension of about $400 per week and a $20 per week United Kingdom pension. At the time of the Tribunal hearing the defendant's asset position seems to have been more substantial as he deposed to owning a 25 acre property, but he was unable to be cross examined on this point.

17. The plaintiff says that he sold his ice cream business in 1991 for $95,000. He says his mother knew of this. He says that he used the proceeds to pay of a $60,000 mortgage on his rural property, and to discharge a $20,000 mortgage on a unit owned by his former wife. This property has now gone to their daughter following his former wife's death. He says that the balance of about $15,000 was used to purchase a car and meet living expenses, together with about $30,000 in savings. He says that his mother was not aware of the extent of his debts at the time, and he did not want to burden her with this information. He says that following heart surgery he has been unable to work, and has supported himself from his savings until 1995, when his funds were exhausted. He then made application to the Department of Social Security for a disability pension, which was granted, but which was reduced by reason of the assets test because 30 acres of the property was deemed to be an asset, and only 10 acres on which his home is built was allowed. As a result he has been on a part pension since then, which now amounts to $246.50 a fortnight. He says that he did not tell his mother anything of his deteriorating financial situation. From time to time his daughter has assisted him financially.

18. I am satisfied that the plaintiff, being the son of the deceased, is entitled pursuant to section 7 of the Act to bring a claim. Section 8 provides that

"...the Court shall only make an order under subsection (1) if satisfied, in consideration of the criteria set out in subsection (3), that as at the date of the order, adequate provision for the proper maintenance, education or advancement of life of the applicant is not available (a) under the will of the deceased."

No provision at all was made for the plaintiff under the Will of August 1991.

19. The criteria to be taken into account are set out in s 8(3). These include:

"(a) the character and conduct of the applicant;

(b) the nature and duration of the relationship between the applicant and the deceased;

(c) any financial and non financial contributions made directly or indirectly by or on behalf of either or both the applicant and the deceased to the acquisition, conservation or improvement of any of the property or financial resources of either or both persons;

(d) any contributions (including any in the capacity or home maker or parent) by either the applicant or the deceased to the welfare of the other, or of any child of either person;

(e) the income, property and financial resources of the applicant and the deceased;

(f) the physical and mental capacity of the applicant, and the deceased (during his or her life) , for appropriate gainful employment;

(g) the financial needs and obligations of the applicant and the deceased (during the life of the deceased)...;

(h) any other matter the Court considers relevant."

20. Taking these into consideration I was urged by counsel for the plaintiff to find on the evidence that the plaintiff had long had a good and supportive relationship with his deceased mother, that the sale by him to his parents for the price he paid for the investment unit was the basis of much of the value of the estate, and that the plaintiff, while he had been a successful businessman, has now realised the fruits of his labours, and, unknown to his mother at the time, was living on a part pension.

21. The law to be applied in determining a claim pursuant to section 8 of the Act was analysed in depth by Higgins J in Hackett v Public Trustee for the Australian Capital Territory, unreported, 2 May 1997. He concluded after an extensive examination of the authorities, that

"...the question is whether as at the date of the order, which must practically equate with the date of hearing, it appears to the court that adequate provision has not been made for the `proper' maintenance etc of the eligible person and, if not, what provision is to be made, if it is available."

22. The criteria for consideration in exercising the discretion in section 8 were redrafted in 1996, but Higgins J in Hackett noted that

"...it is not apparent that the new form of s8 materially alters the tests to be applied to an application for provision, but it is unnecessary now to consider the question."

23. In referring to the equivalent provisions of the Family Provision Act 1982 (NSW) Mason CJ, Deane and McHugh JJ in Singer v Berghouse [1994] HCA 40; (1994) 181 CLR 201 said at 208:

"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 only 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."

24. In In the Matter of the Will of Jose Rosa, unreported decision of the Supreme Court of the Australian Capital Territory, 25 July 1997, Ryan J said that it is well established that, in respect of the first question,

"...the Court must put itself in the position of the deceased and, after reviewing all of the relevant circumstances, consider what he should have done for the plaintiff `treating the testator for that purpose as a wise and just, rather than a fond and foolish husband and father' citing Bosch v Perpetual Trustee Co Ltd [1938] AC 463 at 479."

25. I am satisfied that the plaintiff has a limited income, being restricted to his part pension, and that he has exhausted his savings. I am satisfied that his financial affairs were not known to the deceased, who no doubt thought that, having sold his successful business in 1991, he was well situated financially. I note that this seems to be the belief of the defendant, who in his affidavit of 25 August 1999 stated that he believed that the plaintiff's financial position remained sound. While I accept that the plaintiff does own a substantial asset, being his rural property on which he resides, I note that this asset has been held against him for the purposes of reducing his pension entitlements, and he has a limited income only by way of a part pension.

26. I am satisfied, in all of the circumstances of this case that had the deceased been fully appraised of the financial affairs of the plaintiff she would have made some provision for him. I am thus satisfied that the plaintiff has made out that he, having had no provision made for him at all in the will, has satisfied the first stage of the test. Being satisfied that adequate provision for his maintenance or advancement of life has not been made, the question then arises as to what provision should be made, as a matter of discretion in all of the circumstances of the case for the plaintiff out of the estate of the deceased.

27. It seems to me that, although I have been found that the deceased ought to have made some provision for the plaintiff, I am entitled, and indeed ought to have regard to the deceased's apparent desire to provide in particular for the needs of the defendant, who I am satisfied lives solely on a pension and now has no assets, in contrast to the plaintiff, who although he does receive a pension by way of income, has a substantial asset. I observe that no estimate of value was provided by the plaintiff of his 40 acre property near Sutton in New South Wales, but it seems to me to be open to me to observe that rural residential properties close to Canberra are in considerable demand and of significant value. While the deceased was apparently ignorant of the plaintiff's reduced income and limited liquid assets, she was correctly aware of the fact that the defendant had no assets of any real value at all. I am thus not persuaded by the argument from counsel for the plaintiff that an equal split with the brother is appropriate.

28. It seems to me also appropriate to take into account the plaintiff's own evidence of the considerable assistance that the deceased gave to the plaintiff over the years working in his various businesses as he built them up. It was again open to the deceased, as a "wise and just testator" to favour to some extent the plaintiff's brother in the distribution of her estate.

29. In Hackett Higgins J observed that

"No doubt, any eligible claimant excluded from a testator's bounty, or given without obvious reason much less provision than others in similar relationship to the testator, will feel an injustice has been done."

He went on to say that whilst the Act

"...enables to Court to modify the effect of a testator's disposition, it permits that modification only to the extent necessary to achieve, so far as it can or should, the proper maintenance etc of the person for whom provision should be made. It requires a balance between the established claims of named beneficiaries, the needs of the applicant, the size of the estate and, of course, the benefits provided otherwise to the applicant and others with legitimate claims on the testator's bounty. As Bryson noted in Gordon v Parks (1989) 17 NSWLR 1,6, it is not appropriate to endeavour to achieve a `fair' disposition of the deceased's estate. It is not part of the Court's role to achieve some kind of equity between the various claimants, see also Re Hodgson (1955) VLR 481. The Court's role goes no further than the making of `adequate' provision in all the circumstances for the `proper' maintenance etc of an eligible applicant."

30. In this case the defendant was faced with a caveat from another person who could well have had a claim on the estate, and he settled this by making a gift to his sister of $80,000, following which she consented to the withdrawal of the caveat, and the estate was thus able to proceed to the grant of probate. The affidavit of accounts reflects this gift, although it also states that the sale price of the unit, which it is common ground was purchased by the plaintiff's sister, was some $142,514. This is a substantial discrepancy from the evidence of the transfer which reveals a consideration on the sale of $179,000. I note also that the accounts show that the defendant has used the estate to pay legal costs apparently related to his personal costs in the Guardianship and Management of Property Tribunal. On the defendant's evidence, only $83,580.26 remains of the estate. As the defendant did not participate in this hearing, he was unable to be cross examined on these matters.

31. The plaintiff says that if he was provided with a share of the estate it would go towards his daily living expenses, and allow him to repay his daughter, who has been providing him with funds. I note that these have been described as gifts and not loans, and are probably not repayable unless the plaintiff has a windfall.

32. In all of the circumstance, it seems to me that the need for adequate provision can be met, without unduly interfering with the testator's intentions and the provisions made for the benefit of the defendant, if I order that the plaintiff be awarded the sum of $35,000 from the estate.

33. I order that the executor make provision out of the estate accordingly.

34. In the circumstances the reasonable legal costs of the parties should be met out of the estate.

I certify that this and the eleven (11) preceding pages are a true copy of the Reasons for Judgment herein of the Master, Mr T Connolly.

Associate:

Date: 11 February 2000

Counsel for the Plaintiff: Mr B Meagher

Instructing Solicitors: Elrington Boardman Allport

Counsel for the Defendant: Unrepresented

Instructing Solicitors: No appearance

Dates of hearing: 7 December 1999

Date of judgment: 11 February 2000