Supreme Court New South Wales Medium Neutral Citation: Brand v Brand [2015] NSWSC 52 Hearing dates: 4 February 2015 Date of orders: 11 February 2015 Decision date: 11 February 2015 Jurisdiction: Equity Division Before: Pembroke J Decision: See paragraph [39] Catchwords: SUCCESSION – family provision order – application by two adult sons of testator SUCCESSION – family provision order – freedom of testamentary disposition SUCCESSION – family provision order – factors to be taken into account when making family provision order – appropriate order Legislation Cited: Succession Act 2006 Cases Cited: Alexander v Jansson [2010] NSWCA 176 Andrew v Andrew [2012] NSWCA 308 Bosch v Perpetual Trustee Co (Ltd) [1983] AC 463 Goodman v Windeyer (1980) 144 CLR 490 Goodswell v Wellington [2011] NSWSC 1232 Gwenda Jane Toth v Ronda Sedelia Graham [2014] NSWSC 393 Madden-Smith v Madden (Estate of the late Doris Linda Madden) [2012] NSWSC 146 Pontifical Society for the Propagation of the Faith v Scales (1961-62) 107 CLR 9 Singer v Berghouse (1994) 181 CLR 201 Verzar v Verzar [2014] NSWCA 45 Vigolo v Bostin (2005) 221 CLR 191 Wilcox v Wilcox [2012] NSWSC 1138 Category: Principal judgment Parties: 2014/007630 Peter Leslie Brand - plaintiff George Charles Brand - defendant 2014/155212 Stephen John Brand - plaintiff George Charles Brand - defendant Representation: Counsel: 2014/007630 M M Pringle – for the plaintiff R L Wilkinson – for the defendant 2014/155212 R E Quickenden – for the plaintiff R L Wilkinson – for the defendant Solicitors: 2014/007630 Bale Boshev Lawyers – for the plaintiff Philip W Hill & Associates Pty Limited – for the defendant 2014/155212 Kennedy & Cooke – for the plaintiff Hunter Legal & Conveyancing – for the defendant File Number(s): 2014/0076302014/155212 Judgment Introduction 1. In these two proceedings the adult sons of the late Stanley Athol Brand seek family provision orders from his estate pursuant to Section 59 of the Succession Act 2006. 2. The plaintiffs are half-brothers. Their mothers were the first and second wives respectively of the testator. The evidence has satisfied me that, to some extent during his life, and particularly in the distribution of his estate, the testator's attitude towards his sons was not merely lacking in generosity, but it was unfair and inconsistent with the standards of a wise and just father cognisant of the circumstances of his sons. He was clearly disappointed by them – apparently only because neither had made a financial success of their lives - but for no other apparent reason. There was really no evidence of any sound, justifiable or rational ground for ignoring his sons' moral claims on his benevolence, especially given the difficult lives that they had experienced and the circumstances in which they found themselves at the date of death of their father. I have also taken into account, as I am required to do for the purpose of determining what is appropriate, their circumstances as at the date of the hearing. The Will 1. The testator made his last will on 27 February 2013 and died on 26 May 2013. His estate at the time of his death was relatively modest and its primary asset was an unencumbered property located in Bishops Bridge. The property was sold in December 2013 and the net proceeds of sale were $604,978.19. 2. Counsel for the plaintiff (Peter) provided a breakdown of the assets of the testator's estate including his notional estate. The figures were not disputed by the other parties and are as follows: Estate assets: Realty sold for $625,000 CBA account $ 2,625 Nett proceeds of estate $ 598,840.11 held in trust account as at 26 March 2014 Notional estate assets: Section 79 Succession Act 2006 Proceeds of sale of personalty $ 5,700.00 nett distributed/held by executor Cash withdrawn from account $ 30,000.00 distributed to beneficiaries by George Brand before probate Nett estate and notional estate: $634,540.11 Potential estate liability: $ 62,066.01 mortgage of June Marjory Doyle at the completion of the sale of 3 Willunga Close, Ulladulla, 15 August 2014 if paid from estate 1. At the hearing, counsel for the defendant informed me that $583,573 is currently held in the trust account for the estate of the testator. 2. By his will the testator divided his estate into thirds. He gave a legacy of one third of the estate to his nephew (George), who is the executor of his will and the defendant in these proceedings. He directed that the remaining two thirds be used to discharge the mortgage over the testator's first wife's property, with the balance to be divided equally between the plaintiffs, (Peter and Stephen); three of the testator's nephews (Barry Roy Brand, Geoffrey Brand and Terry James Brand); and his niece (Jennifer Ann Brand). The approximate amount to which each son is entitled according to the will is $61,000. As the above schedule shows, the defendant distributed $30,000 before probate was granted. I deal with this more fully in paragraph [35] below. Peter's Circumstances 1. Peter is the testator's youngest son and a child of his second marriage. He is 51 years old, married to his second wife and the father of six children. He resides with his wife and five of their children in a three bedroom dwelling in Rutherford provided by the Department of Housing. Rent is $200 per week. Peter has never owned his own home. 2. Peter is presently employed on a casual basis as a console operator at a petrol station and earns a gross monthly income of $4,028. His wife is a homemaker and carer for the children. She receives approximately $400 per month calling bingo once a week at a local Leagues Club. The household receives a Family Tax Benefit for the children of $1,404 per month. 3. At the age of 17 Peter joined the Royal Australian Air Force and served for just over 11 years. During his time in service Peter accrued $91,900 in Military Superannuation. This is his primary asset. In 1986 Peter married his first wife. They had one child who is now 25 years of age and does not reside with Peter. In 1989 Peter and his first wife separated. 4. After leaving the RAAF in 1992 Peter worked in various low income earning jobs including as a trade's assistant with a builder in the Canberra region, as a spray painter and at a Holden dealership in Ulladulla. In or around 1995 he met a woman named Claire and commenced a relationship. During their relationship Peter and Claire had two children. After separating from Claire in 2002, Peter gained full custody of both children. One child spends four nights per fortnight with her mother, while the other lives with Peter and his current wife on a permanent basis at the Rutherford property. 5. In 2000 Peter suffered an injury to his lumbar spine after falling down stairs in his home. This resulted in partial damage to L3/4, L4/5, L5/S1, disc damage, and resultant chronic low back pain. He has reduced ability to sit or stand for long periods, and difficulty bending and lifting. As a result of this injury, Peter's capacity to work is limited. He also suffers from epilepsy, and has experienced seizures during his sleep. Because of this condition he is not permitted to operate heavy machinery or hold a heavy vehicle licence. 6. After his father became ill in 2003, Peter and his two eldest children moved in with his father at his home in Bishops Bridge. Although his father would occasionally sleep at his partner's house I am satisfied that the four lived together as a family unit until early 2007. During this time Peter assisted his father with maintaining and improving the property and there is no reason to doubt his assertion that during this time he and his father had a good relationship. In 2006 Peter met his second wife. In August 2007 they were married. They have since had three children – the youngest born in January 2015. 7. Despite not speaking to his father about his will or his assets Peter assumed that reasonable provision would be made for him in his father's will, especially given his limited financial circumstances. This was an appropriate expectation. Indeed, the defendant concedes that the will does not make adequate provision for Peter and, prior to the hearing, made an offer of further provision in the sum of $91,000. Peter submits however that adequate and appropriate provision for his needs would be an amount sufficient to enable him to purchase his own home and have a fund for future needs. He estimates that this amount would be up to $350,000. Stephen's Circumstances 1. Stephen is the eldest son of the testator and a child of his first marriage. He is 63 years old and works two days a week as a volunteer for St Vincent de Paul. Stephen's only source of income is a New Start allowance. His wife receives a carer's pension of $705 a fortnight. Stephen suffered a mild stroke in 2007 and takes medication to treat diabetes, high blood pressure and high cholesterol. Stephen and his wife rent a property at South Ulladulla for $280 per week. During the week their granddaughter stays with them, as she is unable to be adequately cared for by her mother. 2. Stephen had a dysfunctional childhood and was a disappointment to his father. After his parent's divorce in 1960, Stephen attended The King's School. His fees were paid by his father, who complained frequently to his young son about the amount of the fees. During his first two years at King's, Stephen lived with his father's friends at Guildford and was periodically beaten by his father's male friend. Stephen spent his holidays with his mother and her new husband in Milton. At the instruction of his father, Stephen delivered money from his father to his mother. When handing his mother the money, he was told by his father to say 'Here's your blood money Mum'. For some of the time Stephen resided with his father and his new wife in Ettalong and commuted to King's in North Parramatta. This was an arduous journey and eventually caused him to leave the school prematurely. 3. In 1968 Stephen moved to Sydney and worked as a clerk. In 1971 he left clerical work and followed in his father's footsteps by becoming a bricklayer. During this time he generally contacted his father on a weekly basis. In 1981 he moved to Milton. In 1984 Stephen met his wife and in 1985 they moved to Sydney so that he could work as a customs officer. 4. In or about 1988 or 1989 Stephen purchased a property in Ulladulla through HomeFund, which was a state government mortgage lending institution. This proved to be an unfortunate investment decision by Stephen as HomeFund shortly afterwards collapsed. Stephen unsuccessfully used his superannuation to attempt to repay the mortgage over the property. Eventually the government wiped the debt and sold the property. 5. In 1996 Stephen and his wife moved back to Milton to look after Stephen's sick mother. The house in Milton was sold in 1997 and Stephen's mother purchased a smaller and more manageable property in Ulladulla. After this relocation, Stephen, his mother and the testator began to visit each other in their respective homes. During this time, and until his death, Stephen's father developed the habit of telephoning every Sunday morning to talk to Stephen and his mother. As his mother and father became friendlier, Stephen recalls his father expressing regret that his second wife had received a better divorce settlement than his mother (the first wife). In 2004, Stephen's mother took out a reverse mortgage on the property in Ulladulla to raise sufficient funds to enable her to renovate the garage into a granny flat. The testator wished that his first wife's reverse mortgage be repaid from his estate. 6. In August 2013 Stephen's mother died, two weeks after probate of his father's will was granted to the defendant. Stephen and his wife were the executors and beneficiaries named in his mother's will. The estate's primary asset was the property in Ulladulla, which was valued at $320,000. Notwithstanding the fact that the mortgage of $58,000 was to be paid out of his father's estate, Stephen sold the property in Ulladulla for $305,000 in July 2014. This does not appear to have been a wise financial decision. After payment of the mortgage and sale expenses, Stephen and his partner received a net sum of $230,000. Stephen and his wife deposited $110,000 of the proceeds in a savings account, purchased a $45,000 demountable home in a caravan park for their daughter, a $15,000 car, a $2,000 car, spent $5,000 holidaying in Tasmania and paid legacies of $3,000 to each of their daughters as they were beneficiaries of the will. The balance of the proceeds can no longer be accounted for. 7. Like his half-brother, Stephen also seeks sufficient provision from his father's estate to enable him and his wife to purchase their own home. He expected that his father's estate would be split evenly between the defendant, Peter and himself. Freedom of Testamentary Disposition 1. Freedom of testamentary disposition is a fundamental principle of our legal system: Pontifical Society for the Propagation of the Faith v Scales (1961-62) 107 CLR 9 at 19; Vigolo v Bostin (2005) 221 CLR 191 at [10]; Madden-Smith v Madden (Estate of the late Doris Linda Madden) [2012] NSWSC 146 at [30]-[34]; Goodswell v Wellington [2011] NSWSC 1232 at [108]. 2. As I said in Madden-Smith v Smith (supra): 32. There are sound practical reasons for not encroaching too readily on the testator's freedom of testamentary disposition and especially not in accordance with abstract concepts such as fairness or the misguided notion that there should be equality between the children of the testator. In Pontifical Society for the Propagation of the Faith v Scales (supra) at 20, Dixon CJ articulated the unique difficulty which these cases present with the following memorable apophthegm: The difficulty is that the Court itself can never be certain that it knows all the circumstances. More often than not, one may be sure that the Court knows few of them. Experience of forensic contests should confirm the truth of the common saying that one story is good until another is told, but a testator is dead and cannot tell his. 33. To similar effect were some observations of Taylor J in Stott v Cook (1960) 33 ALJR 447 at 453-4, who explained that the reason why a court does not have a mandate to rework a will according to its own notions of fairness, is because such an approach would serve justice no better than: …acceptance of the judgment of a competent testator whose knowledge of the virtues and failings of the members of his family equips him for the responsibility of disposing of his estate in far better measure than can be afforded to a Court by a few pages of affidavits sworn after his death and which only too frequently provide but an incomplete and shallow reflection of family relations and characteristics. 1. In cases such as this the role of a court is not to ride roughshod over a testator's intentions, but only to alter the will to the extent that adequate provision is not made for the eligible person, for whom a testator has failed in his or her moral duty: Wilcox v Wilcox [2012] NSWSC 1138 at [23]. The process is deductive, not intuitive. There is only a warrant for making an award (and altering the will) when the statutory criteria have been established. Adequate and Proper Provision 1. In Singer v Berghouse (1994) 181 CLR 201 and later in Vigolo v Bostin (supra) the High Court held that in determining whether a family provision order should be made, the court should conduct a two-stage inquiry. The first stage involves a determination of whether the provision applicable in the absence of intervention by the court is 'adequate', and the second stage requires the court to engage in a discretionary exercise to determine what provision ought to be made: See also Andrew v Andrew [2012] NSWCA 308 at [69] – [71] (per Barrett JA) 2. Section 59(1)(c) of the Act is a codification of the first stage of this approach. It provides that a family provision order may only be made in relation to the estate of a deceased person if the court is satisfied that adequate provision for the proper maintenance, support, education or advancement in life of the plaintiff has not been made by the will of a deceased person. 3. The term 'adequate' and especially the term 'proper', are value laden concepts. They cannot always be neatly divided but in general terms, the former is concerned with quantum while the latter directs attention to what is appropriate in all the circumstances: Madden-Smith v Madden (supra) at [36]; Alexander v Jansson [2010] NSWCA 176. In Goodman v Windeyer (1980) 144 CLR 490, Gibbs J at 502 stated: The words 'adequate' and 'proper' are always relative. There are no fixed standards, and the court is left to form opinions upon the basis of its own general knowledge and experience of current social conditions and standards. 1. What is proper turns on whether a wise and just testator, aware of all the circumstances, would have thought it his or her moral duty to do more: Vigolo v Bostin (supra) at [15] – [22]; Bosch v Perpetual Trustee Co (Ltd) [1983] AC 463 at 479; Goodsell v Wellington (supra) at [56] – [72]; Madden-Smith v Madden (supra) at [36]. I gratefully adopt the following statement in Verzar v Verzar [2014] NSWCA 45 at [39]: Whether [adequate] 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. 1. The determination of what is adequate provision for a plaintiff's proper maintenance, support and advancement in life requires consideration of the relativities. It also involves an evaluative judgment having regard to a plaintiff's station in life and the standard of living he or she is entitled to expect: Madden-Smith v Madden (supra) at [36]. 2. Sections 59(2) and 60(1)(b) of the Act are analogous to the second stage of the approach enunciated by the High Court. They provide that the court may make such order for provision out of the estate of the deceased person as it thinks ought to be made for the proper maintenance, education or advancement in life of the plaintiff, having regard to the facts known to the court at the time the order is made. This is an evaluative judgment which arises from the word 'ought' and requires examination of the applicant's needs: Gwenda Jane Toth v Ronda Sedelia Graham [2014] NSWSC 393 at [10(8)]. Section 60(2) Factors 1. Section 60(2) of the Act sets out the matters that may be considered by the court in determining whether to make a family provision order. Those matters include: 1. any family or other relationship between the applicant and the deceased person, including the nature and duration of the relationship; 2. 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; 3. 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; 4. 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; 5. if the applicant is cohabitating with another person the financial circumstances of the other person; 6. 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; 7. the age of the applicant when the application is being considered. 1. In his analysis of section 60(2) in Toth v Graham (supra) Kunc J said at [10(11)], and I gratefully adopt: (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 (9) 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. Appropriate Award 1. Applying these principles, I am quite satisfied that adequate provision has not been made in the testator's will for Peter and Stephen. I have reached the conclusion that a wise and just testator in the position of the deceased would have recognised the genuine needs of his sons and made greater provision for their proper maintenance, support, education or advancement in life. 2. In the case of Peter, although he did not make a financial success of his life, which disappointed his father, I am satisfied that they had a good relationship – which makes the parsimony of the provision made by the testator in his will, even less explicable. They appear to have communicated regularly until the date of the testator's death. And Peter was always willing to support his father whenever called upon. When his father became ill in 2003, Peter saw it as his responsibility as a son to live with and care for his father. During this period Peter also assisted in the maintenance of his father's home. The testator's obligation becomes more apparent upon scrutiny of Peter's financial circumstances, which would have been known to the testator. Peter's financial situation is hapless. Due to his spinal injury and epilepsy, his capacity to earn an income and provide for his large family is diminished. His wife has also recently had another child. Their current home of three bedrooms houses seven family members. Without further provision, and barring some unforseen good fortune, Peter and his wife are likely to experience significant hardship in providing for their children. 3. Stephen, like his half-brother, had a tolerably good relationship with his father notwithstanding the latter's disappointment in him. From a young age, Stephen regularly conformed to his father's demands and made numerous sacrifices throughout the course of his life to please him. In the testator's latter years, his affinity for Stephen and particularly to Stephen's mother increased, and they shared a bond as a family. 4. Although Stephen is more financially secure than Peter, Stephen and his family have reasonable financial needs that neither he, nor his wife, can satisfy. Stephen is unemployed, and his age and state of health diminish his capacity to earn an income. He and his wife also care for their granddaughter, who is unable to be properly cared for by her mother. Stephen did of course inherit a substantial sum of money from his mother's estate and as a result has over $100,000 of accessible savings. This factor, coupled with the number of dependants Peter has to provide for, leads me to conclude that Peter has a greater need for provision than Stephen. Prior Distributions 1. Before the commencement of the hearing the defendant made the following distributions from the estate of the testator: 2. (a) $12,500 to himself; 3. (b) $3,333 to each the plaintiffs; 4. (c) $4,053 to each Barry Brand, Geoffrey Brand and Terry Brand; and 5. (d) $3,933 to Jennifer Brand. 6. I was also informed that the defendant distributed $200 and $240 to two non-beneficiaries of the testator's will in return for assistance they provided the defendant on the date of the auction of the testator's property. The total amount of the testator's estate distributed prior to the hearing was $35,698. Other Beneficiaries 1. Counsel for the defendant conceded that the other beneficiaries named in the will would suffer no hardship if the will were altered in such a way as to deprive them of the whole, or substantially the whole, of the legacies left to them. This is particularly the case with the defendant, who is wealthy. It is not necessary to enumerate his assets and their value, but it was obvious during his evidence that he had not been full and frank about his financial position. Several properties were not accounted for in his statement of assets. He was not an impressive witness. 2. The testator's benevolence towards the defendant, at the expense of his sons, reflected his friendship towards him, rather than the defendant's needs. I acknowledge that in the early 1990s the defendant provided $60,000 the testator to assist him to acquire his property at Bishops Bridge. This was a gift, for which the defendant did not expect or require repayment. Nonetheless, the testator appears to have intended, in effect, that the defendant be repaid from his estate. While this may be understandable, the circumstances of the sons made their requirements, and the testator's moral obligation, greater. 3. In my view, it is in the interests of justice that, save for the notional estate that has already been distributed, the testator's remaining estate be divided between Peter and Stephen in the ratio of 60:40. The fact is that Peter and Stephen have limited financial resources and obvious financial needs, while the defendant is financially secure. And despite being informed of the plaintiffs' claims, none of the other beneficiaries put on any evidence from which an inference of hardship might be derived. The contrary inference is more probable. Counsel for the defendant made no submission against that conclusion. I am therefore satisfied that the orders I propose to make will not cause hardship to any of the other beneficiaries named in the testator's will. There are sound pragmatic reasons for leaving the notional estate in the hands of those who have already received distributions. My orders are not intended to affect the receipt of monies by those persons to whom prior distributions have already been made. Orders and Costs 1. For those reasons, I make orders as follows: 1. The costs of the plaintiffs be paid out of the estate on an ordinary basis. 2. The costs of the defendant be paid out of the estate on an indemnity basis. 3. The net balance of the estate remaining after the payment of the amounts in (1) and (2) above, be paid as to: 1. 60% to Peter Leslie Brand; 2. 40% to Stephen John Brand. 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: 11 February 2015