Chapman v Chapman & Ors [2004] ACTSC 121 (22 November 2004)

Last Updated: 25 November 2004

VALERIE CONSTANCE CHAPMAN v MARK SETON CHAPMAN and OTHERS [2004] ACTSC 121 (22 November 2004)

WILLS - Family provision - application by separated wife - substantial contributions made by deceased after separation - adequate provision made.

Family Provision Act 1969, s 7

Hackett v Public Trustee (unreported, Higgins J, Supreme Court of the ACT, 2 May 1997)

Singer v Berghouse [1994] HCA 40; (1994) 181 CLR 201

Byrne v Byrne [2000] NSWCA 168

Bladwell v Davis [2004] NSWCA 170

In the matter of the Will of Michael Lewkowicz [2001] ACTSC 54

The Pontifical Society for the Propagation of the Faith v Scales [1962] HCA 19; (1962) 107 CLR 9

No SC 444 of 2003

Judge: Connolly J

Supreme Court of the ACT

Date: 22 November 2004

IN THE SUPREME COURT OF THE )

) No SC 444 of 2003

AUSTRALIAN CAPITAL TERRITORY )

BETWEEN: VALERIE CONSTANCE CHAPMAN

Plaintiff

AND: MARK SETON CHAPMAN and GEOFFREY JOHN CHAPMAN executors of the Will of EDWARD CHARLES CHAPMAN

First Defendants

AND: DONGMEI YANG

Second Defendant

ORDER

Judge: Connolly J

Date: 22 November 2004

Place: Canberra

THE COURT ORDERS THAT:

1. The application be dismissed.

2. The costs of the application be borne by the estate.

1. This is an application pursuant to s 7 of the Family Provision Act 1969 (the Family Provision Act) for a declaration that the plaintiff/applicant, Valerie Constance Chapman, is entitled to provision out of the estate of Edward Charles Chapman (the deceased), who died on 28 July 2001. The plaintiff married the deceased on 2 May 1953. There are two sons of the marriage, Mark Chapman and Geoffrey Chapman, who are the executors of their father's estate. It is common ground that the marriage became difficult in the late 1970's, and that the deceased had an affair with another woman, and left the matrimonial home in Canberra in about 1979. Despite living in separate homes and in separate cities since 1994 when the plaintiff moved to Sydney to be near her son and his family, they never divorced, and the plaintiff remained the legal wife of the deceased. They remained in contact on good terms and the deceased maintained a good relationship with his sons. During the 1990's the deceased formed a de facto relationship with Ms Dongmei Yang, and in his will he left the bulk of his estate to her, leaving only one item of furniture to the plaintiff.

2. The plaintiff, feeling perhaps understandably aggrieved, has commenced these proceedings. She commenced proceedings in this Court and in New South Wales, but the New South Wales proceedings were, by order of that Court on 9 September 2003, transferred to this Court for determination.

3. There is no question that the plaintiff, still being the legal wife of the deceased at the time of his death, is eligible to bring a claim pursuant to the Family Provision Act. This legislation, in common with testators' family maintenance legislation in other Australian States and Territories, allows a court to make orders that a person not provided for in a will, be provided for out of the proceeds of the estate. The test to be applied in this jurisdiction is that set out in s 8 of the Family Provision Act, which allows such an order to be made if the court is satisfied that "adequate provision for the proper maintenance, education or advancement in life of the applicant" was not made under the will of the deceased.

4. The task of a court determining a testator's family provision suit is not, as has often been said, to attempt to re-write a will, or to ask what a reasonable testator would have done. In Hackett v Public Trustee (unreported, Supreme Court of the ACT, 2 May 1997) Higgins J, as he then was, made the observation that any eligible claimant excluded from a testator's bounty will feel that an injustice has been done, but that this alone does not permit a court to intervene. His Honour said -

There are two reasons for that. One is that a testator may make whatever provision he or she pleases. Freedom of testamentary disposition, like freedom of contract, is an important principle deserving of respect.... However, both freedom of contract and freedom of testamentary disposition are modified by statute law. In the case of testamentary disposition, that result is achieved by the Family Provision Act.

Whilst that Act enables the 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 J noted in Gorton 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.

5. This role has been long described as involving a two stage process, first in determining whether need has been established, and then determining what provision should be made. The first part of this process traditionally was described as involving considerations of need and moral claim, but in more recent years reference to moral duty has been discouraged. In Singer v Berghouse [1994] HCA 40; (1994) 181 CLR 201 at 209, Mason CJ, Deane and McHugh JJ, after noting that "references to `moral duty' or `moral obligation' might well be understood to amounting to a gloss on the statutory language", described the first stage of the process as follows -

The determination of the first stage of the two stage process calls for an assessment of whether the provision (if any) made was inadequate for what, in all the circumstances, was the proper level of maintenance etc appropriate for the applicant having regard, amongst other things, to the applicant's financial position, the size and nature of the deceased's estate, the totality of the relationship between the applicant and the deceased, and the relationship between the deceased and other persons who have legitimate claims upon his or her bounty.

6. The Court said (at 210) that this first question -

is strictly one of fact, notwithstanding that it involves the exercise of value judgments. The evaluative character of the decision stems from the fact that the court must determine whether the applicant has been left without adequate provision for his or her proper maintenance, education and advancement of life.

7. The only provision made for the plaintiff in the will was for one item of furniture, an item of furniture which, she says in an affidavit, she had always told the deceased she did not like and had encouraged him to get rid of it. Effectively, she has been left nothing in the will, with the bulk of the estate going to Ms Yang. The plaintiff's case is simply that, as the wife and widow, she remains a person who is entitled to be provided for and that there has been no effective provision in the will. Although it is acknowledged that the marriage broke down in 1979 and the plaintiff and the deceased lived apart since then, this is no bar to bringing a claim. In Byrne v Byrne [2000] NSWCA 168 the Court of Appeal upheld a decision that the de jure wife should be provided for in circumstances where 50 years had elapsed since the de jure wife and the deceased ceased living together, and where the deceased left the bulk of the estate to a de facto wife.

8. The application is resisted by the beneficiary, Ms Yang, who argues that, although there was minimal provision in the will, the deceased had over the years arranged his affairs so that the plaintiff was adequately provided for, and that she should not be seen as a person in need. In these circumstances, it is said, he was free to dispose of his property as he wished. It will clearly be necessary to set out the facts of the relationship between the deceased and the plaintiff in some detail.

9. The deceased and the plaintiff met at Sydney University when they were both undergraduates in 1949. She qualified as a librarian, and he qualified in Geography. In 1954 he obtained a position as a lecturer in Geography at the University of New England in Armidale, and she obtained a position as a librarian at the University library. She continued to work as a librarian until they moved to the United States for a year's study in 1960, when their first son was born. Upon their return to Australia, she did not work. Their second son was born in 1962.

10. Throughout the 1960's the family spent time in Asia where the deceased worked on aid projects, and the plaintiff cared for the family. In 1969 the deceased was appointed a Reader in Geography at the Australian National University, and the family moved to Canberra. He continued to travel extensively throughout Asia. He assumed more senior positions within the University, being acting or deputy Dean of Arts. The plaintiff returned to some part-time library work and resumed studies towards her Masters qualification, which she obtained in 1982, by which time they had separated and were living separately.

11. After the deceased moved out of the matrimonial home, he purchased a home in Weetangera in the ACT in 1981, which is the property bequeathed to Ms Yang in his will. The plaintiff says in her affidavit of December 2002, and I accept, that this property was purchased for $89,000, and that the deceased contributed $25,000 of the purchase price from a joint account then held by the deceased and the plaintiff, without her knowledge. He moved into the house with another woman, who contributed some $6,000 to the purchase price. That relationship did not last, and in 1982 the plaintiff loaned him $6,000 to buy out his then partner. I am satisfied that the plaintiff has made a contribution to the acquisition of the Weetangera property in that joint funds were used for the original purchase and she provided funds for the buy out.

12. In 1983 the matrimonial home was sold, and the proceeds distributed equally. She says that after the discharge of mortgages this realised about $80,000, which was distributed equally. She purchased a townhouse in Canberra. In 1984 she resumed full-time employment as director of the library at the Institute of Aboriginal Studies. The deceased continued to teach and engage in consultancy work on aid projects throughout Asia. In 1990 he met Dongmei Yang who was assigned as his translator on a project in China. They formed a relationship over the next few years, and became romantically involved in 1993, after he retired from his position as Reader in Geography. She moved to Australia in 1993 and lived with the deceased as a de facto spouse.

13. Upon his retirement in 1993 the deceased received various payouts and he passed a sum of $90,000 to the plaintiff. The plaintiff says that she said to him at the time, "Why are you giving me this money?" and he replied, " You're my wife and I just want to do this for you. It is part of our accumulated assets".

14. The evidence as to the precise nature of the funds received by the deceased was somewhat uncertain. The plaintiff, in her affidavit of 11 December 2002 said that the deceased, on his retirement, received -

ETP $ 40,000.00

Superannuation lump sum $164,182.48

Super Index Pension per annum $ 36,424.23

Accrued leave $ 87,000.00

$327,606.71

15. In cross-examination she agreed that the per annum sum was an ongoing pension received on a fortnightly basis, so that the total capital sum received would have been the balance, being $291,182. She did not know whether this was a gross or net sum. But it seems to me that, assuming the payments were in gross figures, there would have been a substantial taxation component (at least on the accrued leave and termination payment, with a more beneficial treatment of the superannuation lump sum) so that the figure of $90,000 looks like about half of the likely net amount. In any event, it was a substantial contribution at a time when the parties were no longer living together, and must be seen, it seems to me, as part of a contribution that the deceased had made for his wife's long-term provision.

16. In addition to the equal distribution of the equity of the matrimonial home in 1983 and the substantial lump sum payment of $90,000 on his retirement in 1993, evidence also emerged that the deceased had, consciously, arranged his affairs so that, upon his death, the plaintiff would receive a benefit from his ongoing superannuation pension. She acknowledged in cross-examination that the deceased would have been aware that the pension he received throughout his retirement would, upon his death, revert to her as his lawful wife, in the amount of 75% of the pension that was payable to him. She acknowledged that this pension was now the principal source of her income. Her bank statement, tendered as exhibit L, shows that she receives a pension due to her own former employment in the sum of $513, and a pension from the university superannuation fund, being the widow component of her husband's former pension of $1672.71.

17. There was some confusion in counsel's instructions as to whether these payments were fortnightly or monthly. Although I was told they were monthly, these payments, if monthly, do not reach the figure she has disclosed in successive affidavits as being her combined superannuation income. Exhibit L is a partial extract from her bank statement, running from 12 August 2004 to 3 September 2004. This shows two Comsuper payments of $513.75 on 19 August and 2 September, indicating that the superannuation payments from her own fund are paid fortnightly. The university superannuation figure of $1,672.71 is on 25 August, and it is not apparent from the page whether this is monthly or fortnightly. However, in her latest affidavit she said that she received some $36,000 in superannuation payments for the 2003/2004 income tax year from superannuation payments, which would be consistent with fortnightly Comsuper pension payments and monthly university pension payments. On this basis, her pension payments from her own superannuation fund, accrued during her working life, is $1027 per month, and the pension payment as a result of her entitlement to the deceased's university superannuation contributions, is $1672 per month.

18. The plaintiff states that her income for the year 2003/4 was $49,094. Of this sum $36,492 was attributable to superannuation payments, the balance being share dividends and interest. Of the superannuation component, $20,000 is attributable to the pension that she derives from the deceased's university superannuation fund. Her most recent affidavit asserts that against her annual income of $49,094 there is an annual expenditure of $47,476. One item is the sum of $212 per week, or $11,024 for travel, transport and holidays, including overseas trip and Perth visits.

19. The plaintiff acknowledged that when the executors, her sons, commenced the handling of their father's estate, it was discovered that there was a joint bank account which still identified her as a signatory and which had some $12,000 in it. She said that she exercised her right to take this money, although she acknowledged in cross-examination that she was unaware of the existence of this account, and that all the funds would have come from her husband's efforts after their relationship had ended in 1979. This cash sum, which has gone to her, must also be taken into account in determining her needs.

20. The plaintiff has clearly used her funds prudently. Although her years in the labour market were fewer than the deceased's, and she was not employed at the same level of seniority, she has invested her assets wisely. The proceeds of the matrimonial home were used to purchase a small property in Canberra, and she has been prudent with successive home purchases, so that she now holds a unit in a retirement complex in Dee Why in New South Wales that she has identified as having a net equity of $324,000. In addition she holds a share portfolio of $225,850, and cash account holdings of some $70,000, for a total asset holding of $619,850. This is significantly larger than the estate of the deceased, and I note that this wealth was accumulated over the years from the original equal distribution of the equity in the matrimonial home together with a substantial cash injection in 1993.

21. The deceased's de facto relationship with Ms Yang continued through the 1990's. It is common ground that Ms Yang wished to start a family, which was not possible with the deceased, and that he encouraged her to marry and start a family with her present husband, Mr Tobler. At their wedding in July 2000 the deceased acted as "father of the bride", and remained close friends with Ms Yang and her husband. In January 2001 the couple had their first child, and in that month the deceased permitted Ms Yang and her husband and child to move into the Weetangera house, where he also resided in a spare room. In March 2001 Ms Yang and her husband acquired their own home in Canberra, with the deceased gifting $10,000 towards the purchase price and certain repairs.

22. By his will the deceased directed that the bulk of his estate go to Ms Yang. The will provided that his home in Weetangera in the ACT was to go to Ms Yang, together with his motor vehicle and all personal household chattels, with the exception of the item of furniture, which he directed should go to the plaintiff. He directed that the residue of the estate should be distributed in five shares, with one share to each of his two sons, and three shares to Ms Yang.

23. Probate was granted to the executors of the will on 2 August 2002. In an affidavit of 5 October 2004 Mark Chapman, provided an estimate as at 23 September 2004 of the value of the estate, which estimated the house at Weetangera valued at $420,000 and household furniture and effects valued at $12,000. Under the terms of the will this was to go to Ms Yang. There was a share portfolio valued at $155,000 and cash in the sum of $5,534. Liabilities amounted to $3,528. This provides a residue of the estate to be subject to the split under the terms of the will of some $157,000. A motor vehicle, valued for the purposes of probate at $8,200 and under the terms of the will to go to Ms Yang came into her possession in October 2002.

24. It seems to me that in assessing the plaintiff's needs, and the extent to which they have been provided for by the deceased, I must look not only to the minimal contribution in the will, but to other provisions that the deceased has made over the years. It is common ground that the principal asset at the time they separated, the matrimonial home, was sold and the proceeds divided equally. At that time both sons were adults and living independent lives. After the plaintiff and the deceased ceased co-habiting, their finances were separate and they both worked. The plaintiff has invested wisely in property and in shares. At the time that the deceased retired, he received certain payments by way of a lump sum, and he gave $90,000 to the plaintiff, notwithstanding that they had been living separate lives for some 13 or 14 years by that time. The plaintiff has built on the original distribution of the equity in the matrimonial home and the cash gift of $90,000 in 1993, and now has an estate that is in fact of greater value than that of the deceased, notwithstanding that it is common ground that he always enjoyed a higher income.

25. Her income for the last financial year was in excess of $49,000. Some of this is from interest and share dividends, but of the $36,000 that she attributes to pension payments, $20,000 comes from the residual widow's pension attributable to the deceased's superannuation. She conceded that the deceased would have been aware that she would receive this payment on his death, and that this may have been in his mind as a reason why they never divorced. This, it seems to me, must be seen as provision that he has made for the plaintiff's ongoing support.

26. There was evidence that the deceased obtained a significant benefit from his father's estate, which he passed on to his sons rather than retaining it for his own use. The affairs of the deceased's father were somewhat complex, but it is common ground that by the terms of his will, and after the expiration of a life interest to his wife, the estate was to be divided in eight shares, five to the deceased, one to the plaintiff, and one each to Mark and Geoffrey Chapman. It is common ground that the deceased and the plaintiff agreed that they would forego their shares, and that the estate would in effect be split between their sons. This eventually occurred in 1999, and the two sons each received $220,000. It seems to me that this can be taken into account both in considering the way in which the deceased provided for his family and the plaintiff's needs, as it shows that in 1999 she was prepared to pass over an entitlement of some $50,000 in favour of her sons, noting that the deceased was prepared to forego a significantly greater sum.

27. The claimed need is that the plaintiff would like to move into a larger retirement apartment, with facilities for a carer. In her affidavit of September 2003 she gives indicative costs of an apartment at Spit Junction of $457,000 and Mosman of $750,000. In cross-examination Mr Ellison, for Ms Yang, questioned why only units in these suburbs had been chosen, noting the prevailing property prices in Mosman.

28. I am not satisfied that the deceased has failed in his will to make adequate provision for the plaintiff. It seems to me that on all the evidence the plaintiff and the deceased effected a property settlement shortly after their relationship ended which resulted in each receiving half the proceeds of the sale of the then matrimonial home. Despite living separate lives and having separate financial affairs from 1979, the deceased, upon his retirement in 1993, gifted a substantial proportion of his retirement lump sum benefit to the plaintiff, in the sum of $90,000. Moreover, despite being separated since 1979, the deceased was aware that, because there had been no divorce and, it might be added, because he made no adjustment to his superannuation fund to direct benefits to a de facto spouse, his lawful wife would, on his death, receive for the balance of her life an ongoing indexed superannuation pension.

29. I was provided with ample authority for the proposition that, notwithstanding a long period of separation, a widow can make a claim which will result in an adjustment of a will. In Byrne v Byrne, the deceased left all of his estate to a de facto spouse, and the Court of Appeal upheld a decision at first instance that the widow, who the deceased had finally left in 1955 and had only irregularly cohabited with since 1949, should receive a substantial benefit. The evidence in that case, however, established that the deceased had made no provision at all for the lawful wife, and that she had struggled to bring up four young children of the deceased over many years.

30. That being said, it is equally settled on the authorities that "it would be an error to accord to widows generally primacy over all other applicants regardless of circumstances" (per Bryson JA, Bladwell v Davis [2004] NSWCA 170 at [19]. Each case will depend on its circumstances, and the question that must be asked is whether the deceased has made adequate provision, taking into account all the facts of the case. This will involve looking at contributions made before death, and it would be wrong to assume that the fact that a claimant has not been provided for in the will itself is prima facie evidence that the person has been left without adequate provision (In the matter of the Will of Michael Lewkowicz [2001] ACTSC 54 at [15] (per Miles CJ).

31. In the present case, in contrast with Byrne v Byrne, the plaintiff and the deceased split their assets fairly upon separation and the deceased made substantial contributions after separation, both by way of the lump sum gift in 1993, and by ensuring that the plaintiff benefits by way of an ongoing pension. This pension provides the greater proportion of her income. She has wisely invested her funds, and owns her own property, with a substantial share portfolio. Her position, it seems to me, can be equated with that of the plaintiff in Singer v Berghouse at 213 where their Honours Mason CJ, Deane and McHugh JJ said that the Master, at first instance, was entitled to reach the conclusion that -

There is nothing to suggest that she is not able to lead a perfectly satisfactory life comfortable in her own home with a secure income backed by a large capital sum. In many cases the need for maintenance is obvious without any particular expression of the need but in this case no need has been shown for anything now or likely to be required in the future which would not easily [be] covered by the [appellant's] own resources.

32. The evidence in this case establishes that the plaintiff would prefer to move to a more expensive residence, but that of itself falls well short of need.

33. The deceased has chosen to leave his residence to his former de facto partner, knowing that he and his wife had equally divided their assets after separation, that he had made a substantial contribution to her by way of a gift in 1993, and a substantial contribution to his two sons by way of his benefit under his own father's estate in 1999. He also knew that his widow, the plaintiff, would upon his death become entitled to an ongoing superannuation payment. His widow is dissatisfied with this decision, but I must bear in mind the remarks of Dixon CJ in The Pontifical Society for the Propagation of the Faith v Scales [1962] HCA 19; (1962) 107 CLR 9 where his Honour said at 19 -

The Court is given not only a discretion as to the nature and amount of the provision it directs but, what is even more important, a discretion as to making a provision at all. All authorities agree that it was never meant that the Court should re-write 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.

34. It seems to me that in all the circumstances of this case the deceased exercised his freedom of testamentary disposition in the knowledge that he had through his life made adequate provision for his widow, despite living separately from her since 1979, and in the knowledge that she would receive his superannuation entitlements. In these circumstances, he has chosen to leave his real property to his former de facto spouse. I am not satisfied that the plaintiff has established that the Court should intervene to re-write the will to provide her with additional benefits.

35. It seems to me that the application should be dismissed. The normal form of costs order in these applications is that the estate bear the costs of the parties on a trustee basis, and I was provided with evidence showing what these costs were expected to be and the impact this would have on the estate. Although the second defendant argued that the estate should not bear the costs due to what she asserted was inappropriate resistance by the executors to her claims, it seems to me that this is an appropriate case for the normal orders to be made.

I certify that the preceding thirty-five (35) numbered paragraphs are a true copy of the Reasons for Judgment herein of his Honour, Justice Connolly.

Associate:

Date: 22 November 2004

Counsel for the plaintiff: Mr AM Colefax SC

Solicitor for the plaintiff: Dibbs Barker Gosling

Counsel for the first defendants: Mrs MA Gilmour

Solicitor for the first defendants: Snedden Hall & Gallop

Counsel for the second defendant: Mr L Ellison

Solicitor for the second defendant: Phelps Reid

Dates of hearing: 12 and 13 November 2004

Date of judgment: 22 November 2004