Supreme Court New South Wales Medium Neutral Citation: Bradley Bates v Robert Henry Cooke [2014] NSWSC 1259 Hearing dates: 23 & 25 July 2014 Decision date: 15 September 2014 Jurisdiction: Equity Division Before: Kunc J Decision: Summons dismissed Catchwords: FAMILY PROVISION AND MAINTENANCE - Adult son - Mother and stepfather made mutual wills -Plaintiff's financial predicament result of plaintiff's own decisions - Need for provision for superannuation - Succession Act 2006, ss 59, 60 Legislation Cited: Succession Act 2006 (NSW) Cases Cited: Birmingham v Renfrew (1937) 57 CLR 666 Camernik v Reholc [2012] NSWSC 1537 Daniels v Hall (as administrator of the estate of Daniel) [2014] WASC 152 Smilek v Public Trustee [2008] NSWCA 190 Verzar v Verzar [2014] NSWCA 45 Walker v Walker [2005] NSWSC 1024 West v Mann [2013] NSWSC 1852 Category: Principal judgment Parties: Bradley Bates (Plaintiff) Robert Henry Cooke (Defendant) Representation: Counsel: A.D. Crossland and K. Jones (Plaintiff) B.J. Skinner (Defendant) Solicitors: Low Doherty & Stratford (Plaintiff) Djekovic, Hearne & Walker (Defendant) File Number(s): 2013/341075 Publication restriction: No Judgment Summary 1The plaintiff (Bradley Bates) is an adult son of the late June Melita Cooke ("Mrs Cooke") and the stepson of the defendant ("Mr Cooke"). Mrs Cooke died on 9 January 2013 at the age of 62. Without disrespect, I shall refer to the plaintiff and several others who feature in this judgment by their given names. 2On 10 August 2006 Mr and Mrs Cooke made mutual wills. Each left their entire estate to the other and, in default, to be divided equally between their five children: Bradley and Michael (Mrs Cooke's sons from a previous relationship), Lisa and Cassandra (Mr Cooke's daughters from a previous relationship) and Benjamin (the son of Mr and Mrs Cooke). Mr Cooke survived Mrs Cooke and has inherited her entire estate. Bradley and his siblings received nothing but remain equal beneficiaries under Mr Cooke's will. At the commencement of the hearing Mr Cooke undertook to file an application for administration of Mrs Cooke's estate. 3In addition to Mr Cooke, Bradley and his four siblings are the only other eligible beneficiaries in the estate. While each of his siblings has been notified of these proceedings, none of them has participated. There is no evidence about any of their circumstances other than their respective ages. 4Mrs Cooke's actual estate is of no value. However, assets which could form part of her notional estate have an estimated total value of at least $1,100,000 (after deducting liabilities). 5By summons filed on 12 November 2013 Bradley applies for provision out of his mother's estate under s 59 of the Succession Act 2006 (NSW) (the "Act"). Mr A.D. Crossland of Counsel appeared with Ms K. Jones of Counsel for Bradley. Mr B.J. Skinner of Counsel appeared for Mr Cooke. 6By the end of the hearing the main issue for determination had been identified as whether provision should be made for Bradley to assist him in building a suitable amount of superannuation for his retirement. The Court is not satisfied that adequate provision was not made for Bradley. Even if it were satisfied, the Court would not order provision for him. The summons will be dismissed. The Act 7Part 3.2 of the Act deals with family provision orders. Division 1 of that part identifies, in s 57, who are "eligible persons who may apply to the Court for a family provision order in respect of the estate of a deceased person". Section 58(2) requires an application for a family provision order to "be made not later than 12 months after the date of the death of the deceased person, unless the Court otherwise orders on sufficient cause being shown". 8Division 2 of Part 3.2 of the Act deals with determination of applications for family provision orders. For the purposes of these proceedings, the relevant provisions are: 59(1) The Court may, on application under Division 1, make a family provision order in relation to the estate of a deceased person, if the Court is satisfied that: (a) the person in whose favour the order is to be made is an eligible person, and (b) in the case of a person who is an eligible person by reason only of paragraph (d), (e) or (f) of the definition of "eligible person" in section 57 - having regard to all the circumstances of the case (whether past or present) there are factors which warrant the making of the application, and (c) at the time when the Court is considering the application, adequate provision for the proper maintenance, education or advancement in life of the person in whose favour the order is to be made has not been made by the will of the deceased person, or by the operation of the intestacy rules in relation to the estate of the deceased person, or both. 59(2) The Court may make such order for provision out of the estate of the deceased person as the Court thinks ought to be made for the maintenance, education or advancement in life of the eligible person, having regard to the facts known to the Court at the time the order is made. ... 60(1) The Court may have regard to the matters set out in subsection (2) for the purpose of determining: (a) whether the person in whose favour the order is sought to be made (the "applicant") is an eligible person, and (b) whether to make a family provision order and the nature of any such order. 60(2) The following matters may be considered by the Court: (a) any family or other relationship between the applicant and the deceased person, including the nature and duration of the relationship, (b) the nature and extent of any obligations or responsibilities owed by the deceased person to the applicant, to any other person in respect of whom an application has been made for a family provision order or to any beneficiary of the deceased person's estate, (c) the nature and extent of the deceased person's estate (including any property that is, or could be, designated as notional estate of the deceased person) and of any liabilities or charges to which the estate is subject, as in existence when the application is being considered, (d) the financial resources (including earning capacity) and financial needs, both present and future, of the applicant, of any other person in respect of whom an application has been made for a family provision order or of any beneficiary of the deceased person's estate, ... (f) any physical, intellectual or mental disability of the applicant, any other person in respect of whom an application has been made for a family provision order or any beneficiary of the deceased person's estate that is in existence when the application is being considered or that may reasonably be anticipated, (g) the age of the applicant when the application is being considered, (h) any contribution (whether financial or otherwise) by the applicant to the acquisition, conservation and improvement of the estate of the deceased person or to the welfare of the deceased person or the deceased person's family, whether made before or after the deceased person's death, for which adequate consideration (not including any pension or other benefit) was not received, by the applicant, (i) any provision made for the applicant by the deceased person, either during the deceased person's lifetime or made from the deceased person's estate, (j) any evidence of the testamentary intentions of the deceased person, including evidence of statements made by the deceased person, ... (m) the character and conduct of the applicant before and after the date of the death of the deceased person, (n) the conduct of any other person before and after the date of the death of the deceased person, ... (p) any other matter the Court considers relevant, including matters in existence at the time of the deceased person's death or at the time the application is being considered. 9In West v Mann [2013] NSWSC 1852 at [9]-[11] I explained the reasons for the approach I adopt to applications under the Act. That is how I will proceed in this case. 10By reference to the language of the Act, the questions and issues which the Court must take into account are: (1)Is the person who has applied to the Court for a "family provision order" (as defined in s 3 of the Act) an eligible person under s 57 of the Act? In accordance with s 60(1)(a), the Court may (not must) have regard to the matters set out in s 60(2) in determining whether that person is an eligible person. It is not readily apparent how many of those matters could be relevant to the issue of eligible person, but nothing turns on that observation. (2)If the answer to question (1) is "yes", has the application been filed in the Court's Registry not later than 12 months after the deceased's death (ss 58(2) and (3))? (3)If the answer to question (2) is "no", has the eligible person who has brought the application shown sufficient cause for the Court to order otherwise to extend the date for the filing of the application in the Court's Registry (ss 58(2) and (3))? (4)If the answer to question (2) is "yes" or the Court has otherwise ordered under s 58(2), is the Court satisfied that the person in whose favour the order is to be made (the "applicant") is an eligible person (s 59(1)(a))? In reaching the requisite state of satisfaction the Court may (not must) have regard to the matters set out in s 60(2). As a theoretical matter this question admits of the possibility that "the person in whose favour the order is to be made" is not the person who has brought the application (in which case, the latter must also be an eligible person). (5)If the answer to question (4) is "yes", what provision has been made for the proper maintenance, education or advancement in life of the applicant by the deceased's will or by the operation of the intestacy laws (the "Provision")? (6)Is the Court satisfied, at the time when the Court is considering the application, that the Provision is not adequate for the proper maintenance, education or advancement in life of the applicant? (7)If the answer to question (6) is "yes" (i.e. the Court is satisfied the Provision is not adequate for the specified purpose) then the Court's discretion conferred by the chapeau to s 59(1) to make a family provision order in favour of the applicant (the "Discretion") is enlivened. (8)Once the Discretion is enlivened then, noting s 59(2), what provision, if any, does the Court think ought to be made for the proper maintenance, education or advancement in life of the applicant, having regard to the facts known to the Court at the time the order is made (the "Proposed Provision")? This is an evaluative judgment which arises from the word "ought" and requires examination of the applicant's needs. In making this judgment the Court may (not must) have regard to the matters set out in s 60(2) ("the nature of any such order": s 60(1)(b)). (9)Having answered question (8), should the Court exercise the Discretion to make an order for the "Proposed Provision"? In deciding whether to exercise the Discretion to make such an order, the Court may (not must) have regard to the matters set out in s 60(2) ("whether to make a family provision order": s 60(1)(b)). (10)Section 60(2) provides a helpful checklist but it is no more than that. The Court is not obliged to take those matters into account. The extent to which it does (if at all) will depend upon the facts of each particular case. (11)Section 60(2)(p) confirms the breadth of matters the Court can take into account. Once enlivened, the Discretion is expressly fettered only by the requirement in s 59(2) that if an order is made, it must be such order "as the Court thinks ought to be made for the maintenance, education or advancement in life of the eligible person, having regard to the facts known to the Court at the time the order is made". The Discretion is otherwise unconfined, which means that in answering question (8) the Court is otherwise constrained only by the need to act judicially, that is to say "not arbitrarily, capriciously or so as to frustrate the legislative intent": Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 at [22] per Gaudron and Gummow JJ. The Court must act rationally and exercise the Discretion for the purpose for which it was conferred. 11Having identified what I consider to be the correct approach under the Act to an application of this kind, I will make some preliminary observations and then set out the facts. With the exception of the matters set out in paragraphs [14] to [16] and [51(2)] below, they were not in dispute. Preliminary observations 12Two particular features of the conduct of these proceedings should be noted by way of preliminary observations: first, each party's challenge to the credit of the other; and, second, the approach initially adopted by Bradley. 13Each party sought to discredit the other. Neither succeeded. 14Mr Skinner sought to make something of what he said was Bradley's inexplicably late disclosure that Bradley's mother-in-law had died in April 2014, as a result of which Bradley's wife (Leanne) would be receiving a legacy of approximately $180,000. However, it became apparent that Bradley's legal advisers had intended to disclose this development at the start of the hearing. No adverse inference can be drawn against Bradley in relation to this issue. 15For his part, Mr Crossland contended for Bradley that Mr Cooke had been less than forthcoming about the details of the assets of the R & J Cooke Superannuation Fund (the "Fund") and, in particular, whether Mrs Cooke had "received the benefit" of funds borrowed from the National Australia Bank ("NAB") for which Mr and Mrs Cooke were liable. It was also submitted that there were inconsistencies in Mr Cooke's disclosure of his current income. 16By the end of the hearing the Court was left with the clear impression that, to the extent that there was any evidence which might support these criticisms of Mr Cooke, they were in the nature of nitpicking. The overall picture was clear. Over the course of their relationship, Mr and Mrs Cooke had acquired (and sold) a number of properties either in their own names or in the Fund. Those acquisitions were made with finance from NAB. As the size of their property portfolio grew, the extent of their facility with the NAB also grew, to its current fully drawn amount of $1,265,000. Furthermore, despite the criticism of Mr Cooke's disclosure, Bradley was unable to point to any undisclosed assets or income. 17The second matter to be noted is to record the approach which, at least initially, Bradley adopted in making his application for provision. Mr Crossland drew attention to the fact that while there was no doubt that Bradley was an eligible person under s 57 of the Act in relation to Mrs Cooke's estate, the particular circumstances of Mr and Mrs Cooke's blended family meant that Bradley would not be an eligible person in Mr Cooke's estate. On the facts adduced in these proceedings, that submission is correct. It was candidly put on behalf of Bradley that his application was motivated by a concern that there was no guarantee that Mr Cooke would adhere to the scheme evidenced in his and Mrs Cooke's mutual wills that, upon Mr Cooke's death, the whole of his estate (including what Mr Cooke had received from Mrs Cooke) should be divided equally between their various natural and step-children including Bradley. 18This concern translated into a submission that the Court should approach Bradley's application on the basis that relief should be granted to secure, in some way, Bradley's one-fifth interest in what was described as "the assets of the marriage". That interest was said to be worth $625,000. Orders were proposed for either a payment of that amount out of Mrs Cooke's notional estate or for orders that various parts of the notional estate to the value of $625,000 be held on trust for Bradley or charged to protect that interest, which would then inure for Bradley's benefit upon Mr Cooke's death. An order restraining Mr Cooke from dealing with those assets to the extent inconsistent with the proposed orders was also sought. 19The Court accepts Mr Cooke's criticism of this approach. It appeared to be designed to achieve, directly or indirectly, something in the nature of specific performance of what was said to be the agreement between Mr and Mrs Cooke evidenced by their mutual wills. To determine the question of whether or not any provision should be made for Bradley in the way at least initially proposed on his behalf would be to privilege expectation or entitlement over need and thereby depart from the inquiry required by the Act (which I have set out in sub-paragraph [10(7)] above). However, this conclusion does not mean that the matters raised by Bradley may not be taken into account, if otherwise relevant, in the exercise of the Court's discretion to make an order for provision if the Court's discretion is enlivened (see sub-paragraph [10(11)] above). 20I made my concerns about Bradley's initial approach known to his counsel during the course of the hearing. As a result, by the end of the hearing, without resiling from the proposition that his motive for the proceedings to which I have referred was nevertheless relevant to the exercise of the Court's discretion, the focus of Bradley's submissions changed. The debate became whether or not provision should be made for Bradley from Mrs Cooke's notional estate to enable him to build a suitable amount of superannuation upon which to retire. The estate and other property 21At the date of her death Mrs Cooke's significant assets and liabilities were: (1)Her entitlement as a member of the Fund estimated at $950,000 (see further paragraph [24] below). (2)As joint tenant with Mr Cooke: (a)An unencumbered property in Newstead, Tasmania with an agreed value of $525,000 and currently rented for $400 per week ("Newstead"). (b)Unit 3, XXX, Mainbar with an agreed value of $325,000 ("Unit 3"). Unit 3 is part of the security for the NAB Mortgage (see the next sub-paragraph) and is rented for $600 per month; (c)A joint liability with Mr Cooke under a fully drawn mortgage with NAB for $1,265,000 (the "NAB Mortgage"). 22Since Mrs Cooke's death Mr Cooke has personally paid funeral and related expenses, the estate's legal costs and minor debts of Mrs Cooke totalling approximately $36,000. 23At the time of her death Mrs Cooke was a trustee with Mr Cooke of the Fund. The Fund's accounts for the year ended 30 June 2013 disclose that the Fund's income producing assets are: (1)A 50% unencumbered interest in commercial premises at Sutherland ("Sutherland") with the agreed value of that interest being $1,500,000. Sutherland is currently rented for $208,500 per annum and the Fund receives half that amount. (2)Unit 4, XXX, Mainbar with an agreed value of $650,000 ("Unit 4"). Unit 4 is unencumbered and currently rented for $430 per week. 24Mrs Cooke had made a non-binding nomination of Mr Cooke as the beneficiary of her interest in the Fund on her death. However, under the Fund's trust deed how her interest will be dealt with is a discretionary matter for the trustees of the Fund. The trustees are now Mr Cooke and Benjamin and, as at the date of the hearing, no decision had been made by them. 25Mr Cooke accepted that Mrs Cooke's interests as joint tenant in Newstead and Unit 3 and her entitlement in the Fund were all potentially available as notional estate (see Part 3.3 of the Act). However, the parties asked the Court to refrain from making a notional estate order until they had had an opportunity to consider how any provision ordered by the Court could be met. 26Finally, Mr Cooke is the registered proprietor of the former matrimonial home ("Pacific Crescent"). It has an agreed value of $1,300,000 and is part of the security for the NAB Mortgage. Mrs Cooke was never a registered proprietor of Pacific Crescent and Bradley accepted that it could not form part of any notional estate. Bradley 27Bradley is 42 years old. He is a very experienced electrician and enjoys good health. For the last year or so he has worked full time as a shift electrician at an industrial kitchen which produces packaged, fresh food. For the last financial year his earnings after tax were approximately $70,000. 28Bradley lives with his partner Leanne. They have no dependents. Leanne worked in back office operations for financial organisations before being made redundant in 2008. She has not worked in paid employment since then. Bradley agreed in cross-examination that there was no impediment to Leanne seeking paid employment, but said it was for her to decide whether she returned to the paid workforce. Since her redundancy Leanne had been engaged in home duties, helped manage her late mother's affairs (particularly since her mother had entered a nursing home) and attended to her and Bradley's Katoomba bed and breakfast property (the "Katoomba Property"), including dealing with bookings and inquiries (see further paragraph [32] below). Leanne's mother died on 30 April 2014 and Leanne will receive a legacy of approximately $180,000 from her mother's estate. 29Bradley and Leanne jointly own a home in Blacktown (valued at $460,000) (the "Blacktown House") and the Katoomba Property (valued at $360,000). Apart from other minor assets, Bradley has $61,000 in superannuation and Leanne has $109,000 in superannation. 30Bradley and Leanne are jointly liable to Westpac Banking Corporation ("Westpac") in relation to a mortgage over the Blacktown House ($74,000), the Katoomba Property ($367,000), a further line of credit ($163,000) and a Mastercard debt of $28,000. In addition, Bradley has a separate credit card liability of $11,500 and Leanne has her own credit card liabilities to three providers totalling $43,500. 31While Bradley and Leanne's assets exceed their liabilities by approximately $308,000, there is no doubt those liabilities are substantial. 32It is necessary to say something more about the Katoomba Property, which Bradley and Leanne have attempted to run as a bed and breakfast. They purchased the Katoomba Property in 2002 when they were both employed and at a time when, as Bradley explained, people in their position were being encouraged to make fully financed investments of that kind. They paid $340,000 for the Katoomba Property, with the purchase price, stamp duty and other costs being fully financed by an interest only loan from Westpac. Bradley and Leanne perceived that there would be a tax advantage in making such an investment. They have achieved some reduction in their taxable incomes from the Katoomba Property. 33Despite their best efforts, the Katoomba Property has run at a loss from when they first bought it. In the last 12 months, for example, the Katoomba Property had generated income of less than $20,000. Since purchasing the Katoomba Property, Bradley and Leanne have used their line of credit with Westpac and their credit cards to maintain and make improvements to the Katoomba Property. Nevertheless, it has not appreciated in value. They attempted to sell the Katoomba Property several years ago but were told that they would only achieve a sale price of less than they had paid for it. Bradley's evidence was that they had "chosen to cling on for better times" and that they would sell the Katoomba Property when it was "viable" to do so, which was "not currently". However, Bradley thought that they could get $360,000 for the Katoomba Property in the current market. 34Bradley accepted that the $74,000 mortgage over the Blacktown House was "very modest ... and very manageable". However, the balance of their debt was "crippling" and to service their various loans he needed to earn over $4,000 a month just to meet the interest. He accepted that with his current income he and Leanne could meet their interest and minimum repayment obligations, with "just enough left over to shop for food and put fuel in the car to get to work". To meet their liabilities, Bradley was working 50-65 hours per week (including overtime). He wished to reduce his and Leanne's debts to enable him to work less. He thought he would require approximately $700,000 in superannuation for him and Leanne to live comfortably when he retired. 35In addition to reducing their debts and supplementing his superannuation, in his affidavit evidence Bradley informed the Court that he required dental work likely to cost around $2,000, maintenance and replacement of furniture and whitegoods at the Blacktown House valued at $32,500 and maintenance "in order to sell the Katoomba Property" valued at $26,800. 36Finally, there was no dispute between the parties that Bradley enjoyed a good relationship with Mrs Cooke. While it was not an unusually close relationship, there was no question of estrangement. The parties agreed that for the purposes of Bradley's application in these proceedings, the nature of his relationship with Mrs Cooke was a neutral factor. Mr Cooke 37Mr Cooke has his entitlement as a member of the Fund and is now sole owner of Newstead and Mainbar by survivorship. Together these have a value of approximately $1,800,000. He is liable under the NAB mortgage for the entire debt of $1,265,000. 38Mr Cooke is also the sole owner of and resides in Pacific Crescent (agreed value $1,300,000). Mr Cooke receives a pension from the Fund and the income from Newstead and Unit 3. From all of that income he meets his obligations under the NAB Mortgage and his living expenses. But for the legal expenses he is currently incurring in relation to these proceedings, his income normally exceeds his outgoings by approximately $2,000 per month. Other interested persons 39Apart from Bradley and Mr Cooke, the only other persons interested in Mrs Cooke's estate are Bradley's four siblings. No evidence was adduced about them other than their birth dates, demonstrating that they are all well into adulthood. They were all given notice of these proceedings and have chosen not to participate. Having been given notice of these proceedings but not made an application, the Court may (not must) disregard their interests in determining Bradley's application (s 61 of the Act). Uncontroversial matters 40Because Bradley is Mrs Cooke's son, he is an eligible person under s 57 of the Act. The summons was filed less than 12 months after Mrs Cooke's death. It follows that the questions set out in sub-paragraphs (1), (2) and (4) of paragraph [10] above are all answered "yes". 41The Provision referred to in the question posed in sub-paragraph [10(5)] above is nil. Has adequate provision not been made for Bradley? 42It is next necessary to consider what is sometimes referred to as the jurisdictional question. This is set out in sub-paragraph [10(6)] above, namely whether the Court is satisfied, at the time when the Court is considering the application, that the Provision for Bradley is not adequate for his proper maintenance, education or advancement in life. If that question is answered "yes", then the Court's discretion to make a family provision order in favour of Bradley is enlivened. 43In Verzar v Verzar [2014] NSWCA 45, Meagher JA (with whom Macfarlan and Barrett JJA agreed) summarised the legal principles governing this stage of the inquiry: 39. The primary judge concluded that Stephen's will did not make adequate provision for the respondent's proper maintenance, education and advancement in life. Whether such provision has been made requires an assessment of the applicant's financial position, the size and nature of the deceased's estate, the relationships between the applicant and the deceased and other persons who have legitimate claims upon his or her bounty and the circumstances and needs of those other persons: see Tobin v Ezekiel [2012] NSWCA 285; 83 NSWLR 75 at [70] and McCosker v McCosker [1957] HCA 82; 97 CLR 566 at 571-572; Singer v Berghouse [1994] HCA 40; 181 CLR 201 at 210; and Vigolo v Bostin [2005] HCA 11; 221 CLR 191 at [16], [75], [112]. Such an assessment is necessary because of the inter-relation between "adequate provision" and "proper maintenance". Whilst the inquiry as to what is "adequate" directs particular attention to the needs of the applicant, what is "proper" requires regard to all the circumstances of the case, and in particular the size and nature of the estate and the needs of the other beneficiaries or potential beneficiaries. As was observed by Sackville AJA in Foley v Ellis [2008] NSWCA 288 at [88], a court cannot consider the propriety and adequacy or inadequacy of any testamentary provision for an applicant in isolation from the resources and needs of the other claimants on the deceased's bounty. 44In addition to the passage from Verzar quoted in the preceding paragraph [33] above, I also respectfully adopt what Hallen J said in Camernik v Reholc [2012] NSWSC 1537 both as to the general approach to be adopted to applications for family provision and judicial observations concerning claims by adult children. 154. Yet, in considering the question, the nature and content of what is adequate provision for the proper maintenance, education or advancement in life of an applicant, is not fixed or static. Rather, it is a flexible concept, the measure of which should be adapted to conform with what is considered to be right and proper according to contemporary accepted community standards: Pontifical Society for the Propagation of the Faith v Scales at 19; Walker v Walker (NSWSC, Young J, 17 May 1996, unreported); Vigolo v Bostin at 199 and 204; Stern v Sekers; Sekers v Sekers [2010] NSWSC 59. 155. An important consideration is whether, in all the circumstances, the community expectation would be for greater benefaction to have been made for the proper or adequate provision of the person seeking provision. Gleeson CJ observed in Vigolo v Bostin, at 199, that the justification for interference with freedom of testation is to be found in the failure of a deceased to meet the obligations, which the community would expect in terms of maintenance, for those persons within the class of eligible persons. The process requires the court to "connect the general but value-laden language of the statute to the community standards". 156. As Allsop P said in Andrew v Andrew, at [16]: "If I may respectfully paraphrase Sheller JA [in Permanent Trustee Co Limited v Fraser (1995) 36 NSWLR 24 at 46F-47B], the Court in assessing the matter at s 59(1) and the order that should be made under s 59(1) and (2), should be guided and assisted by considering what provision, in accordance with prevailing community standards of what is right and appropriate, ought to be made. This, Sheller JA said ... involved speaking for the feeling and judgment of fair and reasonable members of the community. It is to be emphasised that s 59(1)(c) and s 59(2) refer to the time when the Court is considering [an application for a family provision order] and the facts then known to the Court. The evaluative assessment is to be undertaken assuming full knowledge and appreciation of all the circumstances of the case. This ... makes the notion of compliance by the testator with a moral duty (on what he or she knew) apt to distract from the statutory task of the Court." 157. In all cases under the Act, what is adequate and proper provision is necessarily fact specific. An inflexible approach cannot be taken in assessing the questions to be answered. 158 The Act is not a "Destitute Persons Act", and it is not necessary, therefore, that the applicant should be destitute to succeed in obtaining an order: In re Allardice, Allardice v Allardice (1909) 29 NZLR 959 at 966. 159. In relation to a claim by an adult child, the following principles are useful to remember: (a) The relationship between parent and child changes when the child leaves home. However, a child does not cease to be a natural recipient of parental ties, affection or support, as the bonds of childhood are relaxed. (b) It is impossible to describe in terms of universal application, the obligation, responsibility, or community expectation, of a parent in respect of an adult child. It can be said that, ordinarily, the community expects parents to raise, and educate, their children to the very best of their ability while they remain children; probably to assist them with a tertiary education, where that is feasible; where funds allow, to provide them with a start in life, such as a deposit on a home, although it might well take a different form. The community does not expect a parent, in ordinary circumstances, to provide an unencumbered house, or to set his, or her, children up in a position where they can acquire a house unencumbered, although in a particular case, where assets permit and the relationship between the parties is such as to justify it, there might be such an obligation: McGrath v Eves [2005] NSWSC 1006; Taylor v Farrugia [2009] NSWSC 801. (c) Generally, also, the community does not expect a parent to look after his, or her, child for the rest of the child's life and into retirement, especially when there is someone else, such as a spouse, who has a primary obligation to do so. Plainly, if an adult child remains a dependent of a parent, the community usually expects the parent to make provision to fulfil that ongoing dependency after death if he or she is able to do so. But where a child, even an adult child, falls on hard times, and where there are assets available, then the community may expect a parent to provide a buffer against contingencies; and where a child has been unable to accumulate superannuation or make other provision for their retirement, something to assist in retirement where otherwise they would be left destitute: Taylor v Farrugia. (d) If the applicant has an obligation to support others, such as a parent's obligation to support a dependent child, that will be a relevant factor in determining what is an appropriate provision for the maintenance of the applicant: Re Buckland Deceased [1966] VicRp 58; [1966] VR 404 at 411; Hughes v National Trustees Executors and Agency Co. of Australasia Ltd [1979] HCA 2; (1979) 143 CLR 134 at 148; Goodman v Windeyer at 498, 505. But the Act does not permit orders to be made to provide for the support of third persons to whom the applicant, however reasonably, wishes to support, where there is no obligation to support such persons: Re Buckland Deceased at 411; Kleinig v Neal (No 2) [1981] 2 NSWLR 532 at 537; Mayfield v Lloyd-Williams, at [86]. (e) There is no need for an applicant adult child to show some special need or some special claim: McCosker v McCosker; Kleinig v Neal (No 2), at 545; Bondelmonte v Blanckensee [1989] WAR 305; and Hawkins v Prestage (1989) 1 WAR 37 per Nicholson J at 45. (f) The adult child's lack of reserves to meet demands, particularly of ill health, which become more likely with advancing years, is a relevant consideration: MacGregor v MacGregor [2003] WASC 169 (28 August 2003) at [181], [182]; Crossman v Riedel [2004] ACTSC 127 at [49]. Likewise, the need for financial security and a fund to protect against the ordinary vicissitudes of life, is relevant: Marks v Marks [2003] WASCA 297 at [43]. In addition, if the applicant is unable to earn, or has a limited means of earning, an income, this could give rise to an increased call on the estate of the deceased: Christie v Manera [2006] WASC 287; Butcher v Craig [2009] WASC 164 at [17]. (g) The applicant has the onus of satisfying the court, on the balance of probabilities, of the justification for the claim: Hughes v National Trustees, Executors and Agency Co of Australasia Ltd at 149. 45Applying the principles just set out, the Court is not satisfied that the Provision is not adequate for Bradley's proper maintenance, education or advancement in life. The question posed in sub-paragraph [10(6)] above is answered "no". The reasons for this conclusion are set out in the following paragraphs. 46Bradley proposed that there were seven interrelated reasons for concluding that adequate provision had not been made for his proper maintenance, education or advancement in life: (1)Bradley and Leanne were in considerable debt, had only a modest pool of assets and had been able to make only limited provision for their retirement. (2)Bradley's ability to provide for his retirement was unlikely to increase or greatly increase. (3)There was a real risk that Mr Cooke would change his will in a way that reduced or removed Bradley's entitlement so that there was a real risk that Bradley would ultimately receive nothing from the estate in circumstances where Bradley would not be an "eligible person" in relation to Mr Cooke's estate. (4)Mrs Cooke's estate was not a small one if the notional estate was taken into account. (5)The "net assets of the marriage" were approximately $3,000,000 and a provision of approximately one fifth would still leave Mr Cooke with substantial assets. (6)Under the mutual wills Bradley was ultimately to receive 20% of the "assets of the marriage". (7)There was no evidence that Mrs Cooke or her estate "received the benefit" of the borrowings of $1,265,000 from NAB and, furthermore, Mr Cooke had not given proper evidence of how the funds had been applied. 47In addition, Bradley drew attention to the decision of the Court of Appeal in Smilek v Public Trustee [2008] NSWCA 190, which recognised as legitimate two adult brothers' real need for advancement in life by the provision of additional funds for their retirement. 48Mr Cooke's position was summarised in the written submissions provided on his behalf: The defendant does not comprehend why it is that two people in good health and of working age are unable to manage their financial affairs in circumstances where they are able to own an investment property. The notion that provision should be made for the plaintiff in family provision proceedings to make good an investment property for sale to "top up" superannuation funds is contrary to "community values" ... The community would not expect the Court to radically interfere with the needs of a widower in order to satisfy the wishes of an adult stepson, particularly where the stepson has a non-working wife and an investment property. 49It was further submitted for Mr Cooke that any significant provision for Bradley would have an adverse impact upon Mr Cooke's living standards and that the size of the estate (including notional estate) was such there were insufficient funds with which to make provision for Bradley. While it depends upon the size of any proposed provision, I should record immediately that I do not accept either of these submissions. The size of the notional estate (see paragraph [4] above) is substantial and the mix of assets available to Mr Cooke is such that, for example, a provision of $189,000 could be made without a deleterious effect on Mr Cooke. It was suggested that $250,000 invested this year in superannuation along with 9% annual contributions from Bradley's wages would yield approximately $700,000 by the time Bradley turned 66. Bradley currently has $61,000 in superannuation (see paragraph [29] above). 50However, having dismissed those aspects of Mr Cooke's submissions, for reasons which I will now develop the Court accepts his primary submission that in the circumstances of this case the application of community standards or expectations does not support the conclusion that adequate provision has not been made for Bradley's proper maintenance and advancement in life. 51While I shall refer to some of these matters again in applying the principles set out in paragraphs [43] and [44] above, the reasons I do not accept some of Bradley's submissions are: (1)Leanne's inheritance of $180,000 from her late mother will substantially eliminate most of the liabilities which are causing Bradley and Leanne financial difficulty and meet Bradley's identified needs save for the question of a supplement to his superannuation. Any remaining drain on his financial resources (including an inability to supplement his superannuation) is a product of their own decision to retain the Katoomba Property rather than to sell it and "cut their losses". (2)The evidence does not support Bradley's submission that there is a real risk that Mr Cooke will change his will in a way that reduces or removes Bradley's entitlement under it. On the contrary, the Court accepts Mr Cooke's evidence that he has no present intention to change his will and that, at least at the moment, he intends to honour the arrangement between him and Mrs Cooke that their five children should ultimately benefit equally. However, the Court also recognises (as did Mr Cooke) that for entirely proper reasons, including the possibility of re-marriage, circumstances may change. Furthermore, the Court accepts that to the extent there was a binding agreement for mutual wills, Mr Cooke remains absolutely entitled to deal with the assets during his lifetime as he sees fit (Birmingham v Renfrew (1937) 57 CLR 666 at 689 per Dixon J). (3)As developed in paragraphs [17] to [19] above, the "net assets of the marriage" approach is a distraction which does not reflect the Court's task under the Act. (4)Contrary to Bradley's submission, the fact that there is a real prospect that he will ultimately receive 20% of Mr Cooke's estate is a factor to be taken into account which weighs against the making of any provision for him from Mrs Cooke's estate. (5)For the reasons set out in paragraph [16] above, the attack made on Mr Cooke in relation to the NAB Mortgage and how the funds from it have been applied has not been made out. 52Turning to approach the question by reference to the principles set out in paragraphs [43] to [44] above, the critical matter for consideration is Bradley's financial position. Leanne's inheritance of $180,000 significantly changes Bradley's financial position from what might otherwise have been the subject of the Court's consideration. Bradley accepted in cross-examination that he and Leanne would apply the $180,000 first in reduction of their credit card debts and thereafter to matters such as his dental work, the purchase of white goods and repairs to the Katoomba Property. 53Relying on that evidence the Court will assess Bradley's financial position on the basis that the $180,000 will be applied to reduce his and Leanne's credit card debts (see paragraph [30] above) and for his proposed dental work and the foreshadowed maintenance and improvements at the Blacktown House and Katoomba Property (see paragraph [35] above). This would leave a balance of $35,700 to be applied as they saw fit, noting they would otherwise be left with the mortgages over the Blacktown House ($74,000), the Katoomba Property (full drawn to $367,000) and the further line of credit of funds expended in relation to the Katoomba Property (fully drawn at $163,000). 54Analysing Bradley's financial position in this way means that of his total outstanding debt, only 12% would relate to the Blacktown House with the balance being referable to the Katoomba Property. If, however, the Katoomba Property were to be sold for the $360,000 postulated by Bradley (see paragraph [33] above), his remaining debt would be reduced by that amount, leaving the Blacktown House to secure its own mortgage debt ($74,000) and a balance of $170,000 in debt referable to the Katoomba Property. This total debt of $214,000 would be secured against the Blacktown House valued at $460,000. 55The preceding paragraph demonstrates that a substantial part of Bradley's (and Leanne's) financial predicament - including, the Court finds, Bradley's inability to make a larger contribution towards his superannuation - extends from their expenditure on and continuing commitment to the Katoomba Property. That predicament could be significantly eased if they decided to sell the Katoomba Property, even in the current market. However, they continue to wish to spend money on and incur interest in relation to an investment which, while it may have brought them some tax benefits, has always run at a loss and failed to achieve any capital appreciation in twelve years. 56While they are entitled to do with their income and assets as they wish, viewed objectively their decision to retain the Katoomba Property is economically questionable and has the effect of making Bradley's financial position much worse than it otherwise would be. That raises the question of how the Katoomba Property and its impact upon Bradley's financial position should be treated for the purposes of determining whether adequate provision was not made for Bradley under Mrs Cooke's will. 57In Walker v Walker [2005] NSWSC 1024, McLaughlin AsJ said: 43 It is not for the Court to tell people how they should conduct their lives or how they should manage their financial affairs. But if the Plaintiff seeks to obtain an order which will disturb the testamentary provisions of the Deceased and dispositions made by her during her lifetime, then the Court must consider whether the present financial arrangements of the Plaintiff are such that the Plaintiff can be said to have been left without adequate provision for his proper maintenance. 44 Where, as here, the Plaintiff chooses to maintain a lifestyle, as a farmer, which results to him in little financial return, in circumstances where, by giving up the farm he could achieve a greater income from investments without the necessity for conducting either the cartage business or the farming business, I am not satisfied that the Plaintiff has demonstrated that he has been left without adequate provision for his proper maintenance. 58A similar situation was considered by EM Heenan J in Daniels v Hall (as administrator of the estate of Daniel) [2014] WASC 152 where the plaintiff's poor financial condition was due to his insistence upon operating what the evidence disclosed to be an unviable farming operation which had suffered due to the plaintiff's poor farming management and practices. 59Having regard to the principles set out in paragraph [43] above, the impact of Bradley and Leanne's decision to retain the Katoomba Property is captured in this question: did Mrs Cooke fail to meet the obligation, which the community would expect in terms of maintenance and advancement, for Bradley to the extent that Bradley's financial need is the product of Bradley's own economic decisions including where Bradley could significantly ameliorate his financial position by selling the Katoomba Property but has advisedly decided not to do so? In this case the Court concludes that the answer to the question thus posed is "No". 60In other words, I am firmly of the view that insofar as Bradley's (and Leanne's) financial position is attributable to their expenditure on and continuing commitment to the Katoomba Property, provision that would be considered right and proper according to contemporary community standards would not extend to provision to alleviate the need generated by what the Court finds is a deliberate but economically risky course of action on the part of Bradley and Leanne. While respecting the right of Bradley and Leanne to organise their financial affairs as they wish, in the case of the Katoomba Property the Court considers that those standards would reflect a community expectation that as a competent adult Bradley should take responsibility for and accept the consequences of the investment decision rather than look to provision out of Mrs Cooke's estate to ameliorate those consequences. Those consequences are both a significant debt and interest burden and a commensurate inability to build up his superannuation. 61Applying McLaughlin AsJ's approach in Walker, the conclusion which I have just expressed would be sufficient to justify answering the question set out in sub-paragraph [10(6)] above "No" and dismiss Bradley's summons. That is the first basis upon which I reach that conclusion. 62However, an alternative approach, is to look at Bradley's financial circumstances excluding the impact of the Katoomba Property. Approaching the matter in that way, I reach the same conclusion for slightly different reasons. 63This alternative approach clearly raises the issue of whether or not some provision should be made to ensure he has adequate superannuation for his retirement. Although there was no expert evidence to this effect, I will accept for the purposes of this part of the argument Bradley's submission that an amount of $700,000 at retirement will be adequate for Bradley and that a current superannuation account balance of $250,000 would, with 9% annual contributions based on his current wage, yield approximately the desired amount of superannuation by 2036 (when Bradley will be 66). This result would be achieved by making a provision for Bradley of $189,000, given that he currently has superannuation of $61,000 (see paragraph [29] above). 64There is no doubt that, in appropriate cases, ensuring that an adult son has sufficient funds for retirement is a proper matter for an order for provision under the Act. In the present case the extent of Mrs Cooke's notional estate means that such a provision could be made with minimal impact on both Mr Cooke's lifestyle and the overall scheme of the mutual wills to the intention that Mr Cooke's estate is to go to Bradley and his siblings equally. 65However, even granting all of the matters referred to in the preceding paragraph, the Court is of the view that community standards would not have required Mrs Cooke to have made provision for Bradley to assist in building up his superannuation. Rather, those standards would, in the circumstances of this case, respect the overall testamentary intention demonstrated by Mrs Cooke's will made in mutual terms with Mr Cooke to the effect that Mr Cooke was to have the benefit of her estate and then everything was to pass to Bradley and his siblings equally. 66The features of this case which lead to the conclusion in the preceding paragraph are: (1)On the assumption that Bradley retires at 65, he has 21 years of productive working life ahead of him. He is currently employed and employable and enjoys good health. While it is always possible he may become unemployed, the evidence does not support the conclusion that there is any particular risk of this. (2)He has $61,000 superannuation and Leanne has $109,000 superannuation (see paragraph [29] above). He will continue to add to that over his working life. (3)Bradley and Leanne have no dependents and own their own home with a "modest" and "manageable" mortgage.. (4)There is no impediment to Leanne seeking paid employment if she wished to do so. (5)Assessing the situation at the date of the hearing, the Court is satisfied that Mr Cooke intends to honour his agreement with Mrs Cooke that their combined estate should pass to Bradley and his four siblings equally. The Court reaches that conclusion taking into account the possibility of innocent reasons why that might not occur and that the size of that estate may be depleted in the ordinary course of meeting Mr Cooke's needs for the rest of his life. However, the Court concludes that the prospect of the reasons which motivated Bradley in bringing these proceedings becoming a reality is more theoretical than real. 67For these reasons, even when the Katoomba Property and its financial consequences for Bradley are taken out of consideration, the same conclusion is reached to the effect that, while no provision has been made for Bradley in Mrs Cooke's will, the Court is not satisfied that Mrs Cooke has not made adequate provision for Bradley's proper maintenance and advancement in life. Therefore, the question posed in sub-paragraph [10(6)] above must still be answered "No". What provision ought to be made for Bradley? 68It follows from the Court's conclusion in the preceding paragraphs that the Court's discretion to make a family provision order in favour of Bradley under s 59(1) of the Act has not been enlivened. However, I will record what I would have done in the exercise of the Court's discretion had I reached the conclusion that adequate provision had not been made for Bradley. In that event, for all the reasons set out in paragraphs [50] to [66] above, I would not have exercised the Court's discretion to make any provision for Bradley. Conclusion and orders 69No provision should be ordered for Bradley from Mrs Cooke's actual or notional estate. The summons will be dismissed. I will give the parties an opportunity to bring in short minutes of order reflecting these reasons and, if not able to be agreed, to make submissions as to costs. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 15 September 2014