Howard Norman Sampson v Ethel Esther Sampson & Perpetual Executors Trustees & Agency Company (WA) Ltd [1945] HCA 20; (1945) 70 CLR 576 (14 September 1945)

Howard Norman Sampson Defendant, Appellant; and Ethel Esther Sampson Plaintiff, Respondent; and Perpetual Executors Trustees and Agency Company (W.A.) Limited Defendant, Respondent.

E. F. Downing, for the respondent, the Perpetual Executors Trustees & Agency Co. (W.A.) Ltd., as to costs.

This is an appeal by a party appointed to represent the residuary legatees under the will of Richard Stanley Sampson deceased against an order of Northmore C.J. made in favour of the widow of the testator under the Testator's Family Maintenance Act 1939-1944 W.A.. By the order under appeal, the Chief Justice directed that the will and codicil of the deceased should be varied so as to provide that, in lieu of the provision made therein in favour of the widow for an annuity of £9 a week, there should be substituted a provision that the plaintiff be paid a lump sum of £5,000, and that during her life she should also be paid a weekly sum of £20, such lump sum and weekly payments to be free of all State and Federal probate and estate duty. His Honour further ordered that the provision for the foregoing extra benefit for the plaintiff should be raised and paid out of the residuary estate of the testator. The appeal on behalf of the residuary legatees does not extend to the direction as to the incidence of the provision but attacks only the order providing the extra benefits for the widow.

The case is a peculiar one. The testator was married to the respondent Ethel Esther Sampson on 30th April 1900. At that time, he does not seem to have been in good circumstances. The affidavit does not state his age, but his widow was then twenty years of age. After a year of marriage, they separated. A deed of separation was executed, dated 6th July 1901. Under it, the testator agreed to pay her what is described as a clear weekly annuity of £1 weekly, a somewhat exiguous sum for an annuity. After a short time, however, they re-united and the deed lapsed. They lived together for some years, but again fell apart in 1909. A deed of separation dated 16th July 1909 was made between them, and by that he agreed to pay her £2 a week for maintenance. The separation continued from that time until the testator's death. In 1910, he instituted proceedings against her for divorce on the ground of adultery. The petition was tried before a jury, which found for the respondent. A new trial was moved for before the Full Court and was granted. Upon appeal to this Court, however, the verdict was restored. In her affidavit filed in this application, the widow alleges that the allegations made in support of the suit were wholly false. In July 1931, the weekly maintenance was increased to £3 at her instance, and later to £4 a week. In December 1940, after she had instituted proceedings before the magistrates, a new deed was executed increasing her allowance to £9 a week. During this period, the testator appears to have been amassing not inconsiderable wealth. The solicitor acting for his wife in 1940 obtained, not a full, but a not inadequate understanding of his financial position. His client nevertheless accepted £9 a week for her maintenance on the ground that she says that she was faced with expensive litigation which she knew her husband would carry to the highest court. By the indenture, the allowance of £9 a week was expressed to be payable to her during her life and did not terminate with the death of her husband. In his testamentary dispositions, which on this point are expressed in a codicil, the testator made no new provision for his widow, but directed his trustees to continue the payment to her during her life of the weekly sum of £9, being the same sum as he had covenanted and agreed to pay her. He further directed his trustees to appropriate an amount sufficient to answer the weekly payments and he declared that the income should be the primary fund for that purpose and the capital the secondary fund.

It appears from the facts that the testator was, to say the least of it, parsimonious in his habits and outlook, and there is not much reason to doubt that the breakdown of the marriage was attributable to his nature and his unfitness for the matrimonial state. At the same time, it must be remembered that he is not here and that the statements made concerning him are ex parte and cannot be answered, and, further, that in the divorce proceedings in 1910 the Full Court considered that the verdict for the respondent ought not to stand.

The gross amount of the estate of the testator, as appearing from the statement of assets and liabilities, was £231,209, and the liabilities shown upon that statement amounted only to £8,360. After payment of probate duty, debts and portion of the administration expenses, the amount of the estate was reduced to £172,501. Pecuniary and specific legacies, apart from the provision for the widow, amount to £40,837. There are liabilities for Federal estate duty, income tax and further administration expenses amounting to £65,265. Without allowing for any provision for the respondent, the net value of the residuary estate appears to be £66,400 or thereabouts. It is said that to answer the annuity of £20 a week directed by the Chief Justice £35,000 must be set aside. The specific and pecuniary legacies include considerable gifts to charities.

The first ground taken in support of the appeal is that the Testator's Family Maintenance Act does not authorize the allowance of both a lump sum and a periodical payment. Section 3 (1) of that Act provides that, if any testator disposes of his property by will in such a manner that his widow widower or children or any of them are left without adequate provision for their proper maintenance education or advancement in life, the court may at its discretion order that such provision as the court thinks fit shall be made out of the estate of the testator for the maintenance education and advancement of such widow widower or children or any of them. Sub-section 4 of s. 3 then provides that, in making the order, the court may, if it thinks fit, order that the provision shall consist of a lump sum or periodic or other payments. The contention is that sub-s. 4 empowers the court to do one or other of three things, viz., to make a provision consisting of a lump sum, a provision consisting of a periodic payment or a provision consisting of other payments, but that it does not empower the court to do any two of them.

In one sense, the Testator's Family Maintenance Act is restrictive or derogates from private right; for it derogates from the absolute power of the testator to dispose of his property by will. In another sense it is remedial; for it empowers the court to remedy the injustice which a capricious or unfair use of the testamentary power may inflict upon those who may be considered to have moral claims upon the post mortem dispositions of the testator.

The provision which we are now considering concerns the remedies put at the service of the court for carrying out the policy, rather than the qualification which the statute makes of the testamentary power of the individual. The question is whether the powers are more or are less flexible, and upon that question we should interpret the provision so as to provide as complete a remedy as the language permits. In construing sub-s. 4, its relation to sub-s. 1 should be kept in mind. Sub-section 4 does not confer a new and independent power. It is enacted by way of explanation or amplification of sub-s. 3, to which it may be said to be epexegetical. The substantive power is given by sub-s. 1 and it is to order that such provision as the court thinks fit shall be made out of the estate. The alternatives stated by sub-s. 4 are to make it clear that, within the power conferred by sub-s. 1, there is enough authority to make a lump sum order as well as enough authority to make an order for periodic or other payments. The intention of sub-s. 4 might have been as well expressed if it had said that it should be no objection to the exercise of the power under sub-s. 1 that the order was for a lump sum or periodic or other payments. We think there is nothing in the language which precludes us from holding that an order may be made for a lump sum, as well as for periodic payments, and we so construe sub-s. 4. The first objection to the order of the Chief Justice therefore fails.

The second ground upon which the appellant relied was that it was not shown that the dispositions made by the testator's will were such that his widow had been left without adequate provision for her proper maintenance, education or advancement in life, and that his Honour the Chief Justice had no jurisdiction under s. 3 unless he was satisfied that she had been so left without adequate provision.

In considering whether the provision made for the widow was adequate, all the circumstances must be taken into account. The purposes of the legislation have been recently stated by the Privy Council in Bosch v. Perpetual Trustee Co.[1], and it is unnecessary to set out textually what is there said. It is no doubt true that the circumstance that the testator and his wife had lived so long apart and that by agreement between them her maintenance had been fixed at £9 a week in 1940 formed part of the material circumstances. On the other hand, the disparity between this provision and the size of his estate is another material circumstance. The reasons which the widow gives for accepting £9 a week and the evidence of the testator's persistent and inflexible attitude towards the allowance for her maintenance cannot be left out of consideration. An important matter too is the incidence of income tax upon her allowance under the deed of separation. By s. 23 (l) of the Income Tax Assessment Act 1936-1944, the income received by way of periodical payments in the nature of alimony or maintenance by a woman from her husband is exempt from income tax. But that provision would not appear to carry the exemption beyond the death of the husband. We were informed from the Bar that the income tax which she would bear if her income remained at £9 a week would be £151 per annum. We were also informed that, if her allowance were fixed, as the Chief Justice fixed it, at £20 a week, the income tax payable would be £467 per annum, leaving her about £11 a week. No doubt these calculations were made at rates at present in force. These are material considerations, and we think that no cogent reason has been advanced for doubting the conclusions of the Chief Justice, that the provision made for her was inadequate, and that the provision of £20 a week would be proper.

The lump sum of £5,000, however, demands separate consideration. In ordering that this sum should be paid in addition to the annual payment of £20 a week, the Chief Justice appears to have been guided by the fact that the applicant was no longer young, appeared to be in poor health, and to require considerable medical attention, that she had for some years been forced to live from hand to mouth on what he described as a beggarly pittance, first of £2, then of £3 and of £4, and that that had affected her health, that she had no furniture and no home, and that whatever her gross income might be it would be seriously affected by high income tax.

These are important considerations, and when the value of the testator's net estate is considered in relation to them, we agree that they do establish the propriety of allowing a capital sum as well as an income allowance. We would not ourselves have been disposed to have allowed so large a sum. It is not a usual course to allow such a large lump sum as well as a periodical payment in the nature of an annuity, but no doubt this is an exceptional case.

The difficult task of fixing an amount in matters of this sort essentially depends upon the exercise of a discretionary judgment. It cannot be done by calculation or computation and must depend upon an estimate of the requirements of the party, a consideration of the competing claims upon the fund and a knowledge of the general conditions which must always affect the adequacy of a pecuniary provision to meet the needs that exist. Upon this last subject, the Privy Council has made the following observations which are repeated in Bosch's Case[2]:—"These are essentially questions for the discretion of the local Courts who are entrusted with the administration of the Act. They are well acquainted with all the local conditions as to employment, standard of living, and other matters necessary to be borne in mind in adjudicating on questions of this class, and their Lordships would be slow to advise any interference with the discretion founded upon such knowledge."

These considerations have not the same application as between the various States of Australia as they have between the parts of the Empire, but they cannot be overlooked. In any case, it is the practice of appellate courts to require a strong and cogent case before they interfere with a discretionary estimate made by a court of first instance of a monetary sum of the nature of that now in question. On the whole, we think that we should not disturb the provision for the widow ordered by the Chief Justice of a lump sum of £5,000. The appeal should be dismissed. Having regard to the incidence of such an order for costs and to the circumstances, we think that we should order that the costs of the appeal should be paid out of the estate; those of the trustee as between solicitor and client.

Appeal dismissed. Costs of all parties out of the residue of the estate; those of the trustee as between solicitor and client.

Solicitors for the respondent Perpetual Executors Trustees and Agency Co. (W.A.) Ltd., Downing & Downing.

[1] (1938) A.C. 463, at pp. 477-479.

[2] (1938) A.C., at p. 479.

High Court of Australia

Howard Norman Sampson v Ethel Esther Sampson & Perpetual Executors Trustees & Agency Company (WA) Ltd [1945] HCA 20; (1945) 70 CLR 576 (14 September 1945)

HIGH COURT OF AUSTRALIA