Wills and Probate Case Update. by Carol McOmish and Nathan McOmish

Transcription

1 Wills and Probate Case Update by Carol McOmish and Nathan McOmish Testators Family Maintenance Extension of time Younan v Younan [2015] VSC 549 An originating motion seeking Part IV provision had been struck out by an associate justice as it was one day out of time (the originating motion had not sought an extension of time). The plaintiff appealed, and brought an application for an extension of time. The appeal issue was whether s 99A of the Administration and Probate Act operated to extend the six month limitation period in s 99. The section gives a personal representative protection from personal liability where distribution is properly made after the expiration of six months from the date of the grant of probate without notice of an intended application or where written notice has been given but has lapsed (which is after three months unless there is notice that an application has been made). Valuable real estate had been distributed about a month after written notice of the plaintiff s intended Part IV claim and within the limitation period. The plaintiff contended that the written notice, given to the estate about two months before the expiration of the limitation period, extended the limitation period by a month or so and therefore her originating motion had been within time. The appeal was dismissed. Bell J, noting that there was no authority on point in relation to the operation of s 99A of the Administration and Probate Act in that regard, was of the view that the section only applies where distribution is made after the expiration of the limitation period, and that it simply implies personal liability on the part of executors in respect of distribution after the expiration of the limitation period but within three months of receipt of written notice of a claim and does not extend the limitation period. The section was therefore considered to be of no assistance to the plaintiff as distribution had taken place within the limitation period. Note that his Honour considered s 99A as it was prior to the insertion of subsection (5) by the Justice Legislation Amendment (Succession and Surrogacy) Act 2014, which provides that nothing in the section extends the period within which a person can make an application for a family provision order without a Court order. The application for an extension of time was also dismissed. The plaintiff had had a strong case for an order for family provision (she was an elderly daughter and the estate had been left to her two brothers, the delay was short and the fault of her former solicitors, and the 1

2 brothers were the executors), but the estate had been distributed. Her submission that distribution was not final for the purposes of s 99 as it had been made within six months and with notice of the plaintiff s intended application and was therefore not a final distribution as it was improper was, reluctantly in the circumstances, rejected by his Honour, distribution being a bar to the court s power to grant an extension of time under the current legislation. Substantive application Smith v Jones [2015] VSC 398 Claims by an adult daughter and an adult grandson against the daughter s mother s estate of approximately $5.9m. Various properties were left to the daughter and her two brothers, the residuary estate was divided equally between them, and a $450,000 Lifeplan Fund had been divided equally between them. The daughter s claim for further provision (under the will she received 22% of the estate) was based on the financial and psychological impact on herself and her family of her father s sexual abuse that the deceased knew of and did nothing about, promises that she would get an equal share of the family wealth if she kept quiet about the abuse, and the deceased s receipt of the family wealth from the father when he died. The grandson s claim was based on his grandfather s sexual abuse that the deceased was aware of and did nothing about that resulted in drug and alcohol addiction and mental health issues. Proceedings he had issued against his grandfather had been thwarted by his death and the fact that he did not leave an estate (assets had been jointly owned and the deceased took by survivorship). The daughter and her husband had substantial assets, but their business had wound down substantially due to the grandson s issues caused by the abuse, and their working lives were finite. The grandson had no assets and had debts of $60,000. One of the deceased sons had savings of about $400,000 and was on a disability pension but was sound financially due to his inheritance under the will. He did not admit the sexual abuse and in any case argued that the Part IV legislation is not a substitute for compensation claims suffered by a person as a result of a deceased s wrongful acts. The other son did not give evidence and did not put forward any competing financial need. McMillan J referred to the helpful summary by Hallen J in Walsh v Walsh of the general principles in relation to claims made by adult children, and noted that in the absence of some special factor or unusual circumstance prevailing community standards would not impose a responsibility on a grandparent to provide for a grandchild, referring to Mandie J s much quoted statement in Petrucci v Fields that grandchildren can neither be ruled in nor ruled out until all the facts are examined. 2

3 Her Honour considered the sexual abuse to be relevant to the claims, and was satisfied that it had occurred as alleged. The evidence of the daughter and grandson was accepted, and was considered corroborated by one of the son s failure to contradict evidence that made it clear that he had acknowledged the abuse and was aware of it from 1981, and by the grandson having sought professional help from 2000 and reported the abuse to police in Her Honour also considered promises made many times over the years by the deceased and her husband to the daughter that the estate would be divided equally between she and her brothers relevant, the promises having been the price for her silence about the abuse. Her Honour considered that in extracting the daughter s silence about the abuse and failing to protect her the deceased owed her a significant moral duty, and that a significant moral duty was owed to the grandson due to silence and failure of protection in relation to the abuse (which abuse and the loss of the opportunity to pursue compensation constituted the necessary special factor or unusual circumstance). As a first step her Honour equalized the daughter s share in the estate with that of her brothers, considering that the deceased s moral obligation included that she keep her promises that the daughter be treated equally. Further future provision of $100,000 was awarded to the daughter, and $175,000 to the grandson, for the future costs of professional advice and assistance to address the emotional, psychological, and financial damage caused by the deceased s failings in relation to the abuse, and to contribute to their financial welfare. Semmler v Todd [2015] VSC 567 A clause in the deceased s will leaving his entire estate to his former wife had no effect as he was divorced. A survival clause meant that his estate was left to his four children. The deceased s alleged de facto partner bought a claim. The major issues in the case, as identified at pre-trial directions before McMillan J, were the nature and length of the alleged de facto relationship, the financial needs and competing claims and the size of the estate. After costs of litigation the estate was worth $280,000. The plaintiff alleged that she was in a relationship with the deceased for 21 continuous years. They had an ongoing sexual relationship, there was a child of the relationship and they had purchased property together. In his final years the plaintiff provided some care to the deceased and was described in hospital records as the next of kin. They lived separately at the end of the relationship because the deceased had assaulted two of the children in the household. The defendant alleged that the plaintiff and the deceased had an on again/off again relationship and she could most accurately be described as an ex-girlfriend. They had not 3

4 lived together for 16 of 21 years, and did not live together for the four years prior to the date of death. They mainly kept their financial affairs separate. The plaintiff was 57 years of age, had a house worth $350,000 with a $257,000 mortgage, $100,000 in superannuation and earned $90,000 pa. She inherited the deceased s share of their jointly held property by survivorship. She and her son were the only applicants claiming the deceased s superannuation of $397,000, although the trustee had not yet made a determination. The deceased s three children from his earlier marriage were now aged between 34 and 43. They all had financial need. One was unemployed, had no assets, relied on social security, had two dependent children and suffered from depressive bipolar disorder. Another was a single mother with three dependent young children. Having regard to the totality of the relationship between the plaintiff and the deceased, Zammit J found that it was underpinned by an emotional commitment akin to that of family members, even if they did not live together. While it was still loving and close, it did not have the hallmarks of a de facto relationship. The plaintiff s position stood in contrast to the deceased s four children who were in financial need. While the relationship was a positive factor for the plaintiff, the application was dismissed. Costs Semmler v Todd [2015] VSC 609 Zammit J found that even though the plaintiff s claim failed, it was not without merit. The plaintiff sought her costs from the estate. The defendant sought 50 per cent of the estate s costs from the plaintiff on the basis of two Calderbank offers. The first letter offered the plaintiff one-fifth of the estate, then $95,000 inclusive of costs. The letter did not set out the basis on which it should be accepted. That offer was rejected by the plaintiff and met with a counter-offer of $175,000 all-in. The second letter offered the plaintiff $125,000 inclusive of costs, being approximately 25 per cent of the estate. It was subject to court approval as one of the beneficiaries, who was also the plaintiff s child, would not consent to the offer. The second letter was more fulsome, and set out the plaintiff s stronger financial position. It did not, however, set out the beneficiary s competing financial needs, which did not become known until 7 weeks before the trial when affidavits were filed. The offer remained open until the conclusion of the trial. Again the offer was rejected and met with a counter offer of $175,000 all-in. Zammit J found that it was reasonable for the plaintiff to reject the first Calderbank offer and the second Calderbank offer at the time it was made. However, the second Calderbank offer had been unreasonably rejected from 7 weeks before the trial, being the time all of the affidavits of financial position had been filed. Ordinarily, that would result in an order that the plaintiff pay some of the estate s costs. However the Calderbank offers were based on 4

5 the defendant s view of the plaintiff s relationship with the deceased, whereas at trial Her Honour s view was more consistent with the plaintiff s case that the relationship was more than that of girlfriend/boyfriend. In these circumstances, Her Honour ordered that both parties pay their own costs. Informal wills Jageurs v Downing [2015] VSC 432 The plaintiff applied for a grant of probate to his father s will and to an informal document as a codicil to a will. The deceased was survived by two sons and two daughters and one of the daughters opposed the application. In the will the daughter was left the deceased s half interest in a property that she had the other half interest in. The informal document was written by the deceased at the plaintiff s business premises on a page from a notepad headed Things to do Today and was signed by him and witnessed by an employee of the plaintiff. The plaintiff contended that the document gave the back 100 feet of the property to his brother (however the deceased was only in a position to give the 100 back feet of his share of the property). The plaintiff and his brother had interests in the property that adjoined the rear of the property owned by the deceased and the daughter. Her Honour noted that the plaintiff did not have the benefit of the presumptions of testamentary capacity or knowledge and approval associated with a duly executed will, but that if a document is rational on its face and the circumstances of its creation are rational, then save for any other fact, the inference is that a deceased had testamentary capacity and knew and approved of the document. Her Honour did not consider the document to be rational on its face. It contradicted a statement the deceased had made to the daughter that he was leaving his share of the property to her, and it was inconsistent with a family assumption that the daughter would be given the deceased s share of the property and with the daughter s care of the deceased after her mother died. Her Honour was not satisfied that the deceased knew and approved of the contents of the document or that he intended it to be a testamentary document. The plaintiff and his brother received a benefit under it, evidence of its creation was insubstantial and contradictory, it was created in the plaintiff s workplace, the deceased was familiar with the formal requirements for a will but had not consulted his solicitor and had not told his solicitor about it when he subsequently consulted him about six weeks later, the document purported to devise property that the deceased was unable to devise, and the plaintiff and his brother were found not to be credible witnesses. Nor was her Honour satisfied that the deceased had testamentary capacity when the document was signed. He had been unable to give details of his assets to his solicitor and 5

6 had not told him of the document, and had not appeared to the solicitor to appreciate his responsibility to his daughter. Finally, her Honour considered that there was an inference of influence over the deceased. In refusing the application her Honour raised the question of whether the plaintiff was the appropriate person to propound the will, said that she would hear the parties and to costs, and, subject to further submissions, indicated a preliminary view that the entitlements of the two daughters under the will should not be affected in any way. Jageurs v Downing [2015] VSC 509 The daughter sought the passing over of the plaintiff as executor. She was the only sibling to do so, the others considering that the estate was relatively straight forward and that an independent appointment would incur unnecessary expense. McMillan J, despite considering that the siblings submissions failed to take account of the doubts expressed in the judgment as to the plaintiff s ability to administer the estate, allowed the plaintiff to remain as executor, subject to the Court being informed as to the progress of the administration of the estate. Her Honour did not apply the usual rule as to costs in probate proceedings, i.e. that costs will be paid from the estate were litigation has been caused or contributed to by the way in which a testator made his or her testamentary intentions known. Her Honour was of the view that the application to propound the informal document, supported by the other son, was not the fault of the deceased and nor was it proper or appropriate in the circumstances. The opposing daughter s indemnity costs, the other daughter s standard costs, and the plaintiff s costs were ordered to be paid from the estate without affecting the daughters entitlements. The plaintiff was ordered to personally pay the opposing daughter s indemnity costs of an application under s 15 of the Administration and Probate Act 1958 that she had brought prior to the proceeding. Estoppel/Unconscionable Conduct/Undue Influence Mahoney v Mahoney [2015] VSC 600 The plaintiff, a son, obtained a grant of probate pursuant to leave reserved and then brought the proceeding, seeking the recovery of a farm property on behalf of the estate and further provision under Part IV of the Administration and Probate Act 1958 in his own right. The deceased had died at the age of 91 survived by six children. She had left her farm, chattels, and livestock to her other son, who had been granted probate and who defended the proceeding, in her will. On the same day that she made her will she, then in her mid 6

7 eighties, signed a transfer of land transferring the farm to the defendant in consideration of natural love and affection. She later transferred the livestock and chattels to the defendant for no consideration. The plaintiff claimed that the farm was held on a constructive or resulting trust for the estate on the alternate grounds of proprietary estoppel, unconscionable conduct, or undue influence. The proprietary estoppel claim was the plaintiff s principle claim. It was based on a common understanding in the family, brought about by representations made by his parents, that the sons would inherit the farm, livestock, and chattels on the death of the surviving parent and the daughters would inherit the residuary estate. McMillan J referred to the elements of proprietary estoppel, being a promise or representation in clear terms to vest a proprietary right in another, knowledge or intention that the promisee will act or abstain from acting in reliance on the promise, reliance on the promise, acting reasonably in relying on the promise, and detriment to the promisee in acting on the promise if the promisor resiles from the promise. Her Honour held that the defendant was estopped from denying the plaintiff s entitlement and interest to the farm, livestock, and chattels. The plaintiff had lived virtually the whole of his life being promised that he and the defendant would one day inherit the farm, he had ordered his life around the promise, including working without wages on the farm for at least 20 years, and the relevant detriment flowed from the deceased resiling from her promise. Her Honour also found in favour of the plaintiff s alternative claims based on unconsicionability and undue influence. Her Honour was satisfied that the elements of the doctrine of unconscionability, being a transfer by a person under a special disability vis-á-vis the donee that affected his or her judgment as to his or her best interests and knowledge of the special disability and taking unfair advantage of it, were made out. The deceased was elderly and frail, dependent emotionally and financially on the defendant, there was no evidence that she had received legal advice, and the farm, livestock, and chattels were her only significant assets. Her Honour considered that the circumstances fell into the second category of undue influence, being where an antecedent relationship between a donor and donee raises a presumption that the donee had undue influence over the donor. The presumption was not rebutted by the defendant showing that the deceased exercised her free judgment. Independent legal advice, an important factor in rebutting the presumption, was lacking. Her Honour stated that there should be a declaration the defendant held the farm, livestock, and chattels on a constructive trust for he and the plaintiff in equal shares as tenants in common, and that it was therefore unnecessary to consider the Part IV claim. 7

8 Knowledge and Approval Barbon v Tessari [2015] VSC 490 The deceased was survived by her two children, the plaintiff and the defendant. The deceased s will left her entire estate to the plaintiff. The will stated that the defendant was excluded as he posed a serious threat to the preservation of the assets of my estate. The defendant challenged the will, alleging that the deceased did not know and approve of the contents of the will by reason of her inability to speak, read and understand English, family disharmony at the time the will was executed and that the will was prepared by solicitors that had recently acted for the plaintiff. At trial, family disharmony was conceded as not being a proper ground. The deceased executed an earlier will in 1978 that left her estate equally between the plaintiff and the defendant. In 1998 there was a dispute over a family discretionary trust. The plaintiff, an accountant, had set up the family trust for his parents. The defendant s husband was surprised to learn that he was a director of the corporate trustee, and was concerned over the level of debt it held. He thought he might lose his dentistry business. The defendant and her husband demanded trust documents for their accountant to inspect. The request was refused in order to protect family privacy, with an indemnity instead offered. The dispute escalated at a family meeting. The plaintiff sided with his parents, while the defendant and her husband became estranged from the family. The deceased was denied access to her grandchildren to whom she was very attached. They remained estranged until the deceased s death. As a result of the dispute, the deceased and her husband attempted to see their solicitor so as to restructure their legal affairs. He had ceased practice, so instead the plaintiff recommended a solicitor who he had worked with during the course of his employment. In relation to the family trust, the deceased and her husband changed the guardian/appointor, replaced the corporate trustee and removed the defendant as a beneficiary. They also executed power of attorney documents and changed their wills to exclude the defendant. The solicitors later acted for the plaintiff in preparing his will. Both the plaintiff and the defendant called many witnesses regarding the deceased s command of the English language, with evidence of her English skills ranging from extremely poor to quite good. McMillan J found that the deceased knew and approved of the contents of the will as: a) The plaintiff s version of events concerning the family trust dispute was preferred as it was supported by letters, file notes and documents from the deceased, her husband and their solicitors, and the threats that the deceased would not see her grandchildren again did, in fact, occur; 8

9 b) Any suspicion resulting from the substantial change in disposition was dissipated by the change in family circumstances following the serious argument over the family trust; c) The best independent evidence was from a barrister who had acted for the deceased in 2003 when the defendant made application for an intervention order against her following a flare-up in animosities. The barrister had worked as a teacher of English as a foreign language and acted for many non-english speaking clients. His evidence was that the deceased s English was adequate and he did not have any difficulty in taking instructions from her. The deceased had read and signed terms of settlement; d) The barrister also gave evidence that the deceased was a dominant uncompromising personality. It was improbable that she would have signed the will without being certain that she understood it; and e) The solicitors for the deceased and her husband had not been the plaintiff s personal solicitor. Their file notes showed that they had acted with due care and were at pains to find out that they acted for the deceased and her husband and not the plaintiff. The plaintiff did drive the deceased to appointments with the solicitors, but that was because the deceased did not drive. The plaintiff did not attend the meetings. He was not sent copies of the will or powers of attorney. The rule in Cherry v Boultbee Stewart v Moden [2015] VSC 369 The plaintiff and the defendant were both adult children of the deceased. Under the deceased s will they were both appointed executors and trustees and were each to receive one third of the amount held in the deceased s bank accounts and one third of her residuary estate. The plaintiff had earlier had the defendant removed as executor, and now sought declarations that the defendant s entitlement to the estate be offset from funds misappropriated by him during the deceased s lifetime through the sale of her assets and loans and mortgages secured against her real estate solely for his own benefit. The value of the estate was now only $212,000; the deceased s East Brighton home having been sold for $900,000 and the mortgage debts repaid. The mortgages over the East Brighton property consisted of two main loans, a $380,000 bank loan made in 2004 and increased to $450,000 in 2007, and a $100,000 loan from a credit corporation made in There was also a personal loan of $65,000 made to the deceased in late The defendant had obtained the deceased s signature on an enduring power of attorney in late In the days following he sold the deceased s car for 9

10 $3,500 and attempted to sell the East Brighton property. The plaintiff gave evidence that the defendant had denied him access to his mother from The plaintiff submitted that the deceased was not aware that her money was being spent or that the loans and mortgages were taken out, and even if she was aware of the loans and mortgages, she was not aware of what the defendant spent her money on and it was not used for her benefit. The self-represented defendant s case was that his mother had full knowledge of the reasons for the loans, which included failed investments in boxing promotion and greyhound racing and dental work for the defendant, and she approved of the reasons. He maintained that the 2004 mortgage was overseen and witnessed by his aunty, the 2010 loan was signed in front of lawyers and his mother had full mental capacity until her stroke in October He produced invoices for the failed investments from 1999 to The medical evidence was that the deceased had visited her GP in 2007 and was diagnosed with dementia and advised to cease driving. The GP did not see the deceased again, but he expected that the dementia would worsen over time. In 2011 the deceased was admitted to Cabrini hospital following a stroke. She was unclean and had indicators of neglect such as extremely long fingernails, malnutrition and dehydration. She was diagnosed with severe dementia at this point and her dementia was assessed as dementia too severe to learn new information. McMillan J found that the deceased did not have sufficient mental capacity from 2007 onwards to make investment decisions, including signing the power of attorney in late The defendant s evidence showed that the spending for the business ventures took place before the loans had been taken out. There was therefore no justification for taking out the two loans. The defendant was unlikely to meet any judgment debt as he was not employed and he gave no evidence of his financial state. Her Honour found that the rule in Cherry v Boultbee applied, so that the plaintiff was entitled to the declaration that the defendant s share of the estate be retained by the plaintiff, as the executor of the estate, for the benefit of the residuary beneficiaries, other than the defendant. 10