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Paola & Ors v State Trustees Limited [2012] VSC 158 (26 April 2012)

Last Updated: 27 April 2012

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION

S CI 2010 0950

S CI 2010 1065

IN THE MATTER of Part IV of the  Administration and Probate Act 1958 

-and-

IN THE MATTER of the Estate of KEITH BENNETT (deceased)

B E T W E E N

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TESTATOR’S FAMILY MAINTENANCE – Application by stepsons – Intestacy – Whether deceased testator had responsibility to provide for the proper maintenance and support of stepsons – Amount of provision.

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S CI 2010 0950

S CI 2010 1065

HER HONOUR:

1 By originating motions dated 23 February 2010 and 26 February 2010, the plaintiffs seek orders that provision be made for their proper maintenance and support out of the estate of Keith Bennett (“the deceased”), who died on 5 May 2009, at the age of 76.

2 The plaintiffs, Wayne Anthony Paola, Carl Joseph Paola and Gavin James Paola, are the deceased’s stepsons. The plaintiffs say they are persons for whom the deceased had responsibility to make provision within the meaning of  s 91  of the  Administration and Probate Act 1958  (Vic) (“the Act”).

3 The deceased died intestate. He had married, but was divorced. His parents predeceased him and he appears to have had no siblings. His next of kin are cousins on his mother’s side, Sybil Price and Beryl Harrison.[1]

4 As the deceased died intestate, he is taken to have made a will in terms to the effect of the intestacy provisions of the Act.[2]

5 Pursuant to  Part IV  of the Act, the Court is only empowered under  s 91  to order that provision be made out of the estate of a deceased person for the proper maintenance and support of a person “for whom the deceased had a responsibility to make provision.” The Court is not to make such an order in favour of such a person unless the Court is of the opinion that the distribution of the estate by the will does not make adequate provision for the proper maintenance and support of such a person.

6 In determining whether the deceased had a responsibility to make provision for a person, the Court is required by  s 91(4)  of the Act to have regard to a list of specific criteria. The Court must have regard to the same criteria in determining whether or not the distribution made adequate provision for the proper maintenance and support of the person and also when determining the amount of any provision to be ordered.

7  Section 91  of the Act provides as follows:

91. Power of the Court to make maintenance order.

(1) Despite anything in this Act to the contrary, the Court may order that provision be made out of the estate of a deceased person for the proper maintenance and support of a person for whom the deceased had responsibility to make provision.

...

(3) The Court must not make an order under sub-s(1) in favour of the person unless the Court is of the opinion that the distribution of the estate of the deceased person affected by –

(a) his or her will (if any); or

(b) the operation and provisions of  Part 1 , Division 6; or

(c) both the will and the operation of the provisions –

does not make adequate provision for the proper maintenance and support of the person.

(4) The Court in determining –

(a) whether or not the deceased had responsibility to make provision for a person; and

(b) whether or not the distribution of the estate of the deceased person is affected by –

(i) the deceased’s will; or

(ii) the operation of the provisions of  Part 1 , Division 6; or

(iii) both the will and the operation of the provisions –

makes adequate provision for the proper maintenance and support of the person; and

(c) the amount of provision (if any) which the Court may order for the person; and

(d) any other matter related to an application for an order under subs(1) –

must have regard to –

(e) any family or other relationship between the deceased person and the applicant, including the nature of the relationship and, where relevant, the length of the relationship;

(f) any obligations or responsibilities of the deceased person to the applicant, any other applicant and the beneficiaries of the estate;

(g) the size and nature of the estate of the deceased person and any charges and liabilities to which the estate is subject;

(h) the financial resources (including earning capacity) and the financial needs of the applicant, of any other applicant and of any beneficiary of the estate at the time of the hearing and for the foreseeable future;

(i) any physical, mental or intellectual disability of any applicant or any beneficiary of the estate;

(j) the age of the applicant;

(k) any contribution (not for adequate consideration) of the applicant to building up the estate or to the welfare of the deceased or of the family of the deceased;

(l) any benefits previously given by the deceased person to any applicant or to any beneficiary;

(m) whether the applicant was being maintained by the deceased person before the person’s death either wholly or partly and, where the Court considers it relevant, the extent to which and the basis upon which the deceased had assumed that responsibility;

(n) the liability of any other person to maintain the applicant;

(o) the character and conduct of the applicant or any other person;

(p) any other matter the Court considers relevant.

8 In Blair v Blair,[3] Chernov JA (with whom Hansen AJA agreed) said (citations omitted):

... [i]t is probably apt to describe the obligation of the testator that forms the subject of the inquiry under sub-ss.(1) and (3) as a moral obligation, as that concept that has been explained in cases that preceded the recent amendments to  Part IV  of the Act, including the decision of Ormiston J in Collicoat v McMillan and Grey v Harrison. Thus, it is clear enough that the “responsibility” of which subs.(1) speaks is the moral duty or obligation of the testator to make adequate provision for the proper maintenance and support of the claimant. Similarly, sub-s.(3) is essentially concerned with whether the deceased – as a wise and just testator – has fulfilled his moral obligation to make adequate provision for the claimant’s proper maintenance and support. Given, however, that the Court is now directed by the legislation to have regard to the matters specified in paragraphs (e) to (p) of s 91(4) when determining the jurisdictional issues, characterisation of the deceased’s relevant obligation by reference to moral duty is likely to be of less utility than was the case prior to the recent amendments to  Part IV  of the Act. Be that as it may, it should be noted that while the criterion in each of the paras (e) – (o) of  s 91(4)  is concerned with a specific matter, para (p) is open ended, enabling the Court to consider “any other matter [it] considers relevant” and giving it a wide discretion to look beyond the specific statutory matters which are set out in the immediately preceding subparagraphs for the purpose of determining if the jurisdictional requirement has been satisfied and, where relevant, bringing into consideration the testator’s moral obligation to the claimant.

9 In a concurring judgment in the same case, Nettle JA said:[4]

I agree with Chernov JA, for the reasons which his Honour gives, that the appeal should be dismissed. I wish, however, to add to his Honour’s observations with respect to the continuing relevance of the conception of moral duty to the jurisdictional questions posed by  ss.91(1)  and  91 (3) of the  Administration and Probate Act 1958 .

The Court is bound in answering each of those questions to have regard to the matters mentioned in  ss.91(4)(e)  – (o) and, pursuant to  s.91(4)(p) , to any other matter considered to be relevant. Self-evidently, such matters are of themselves incapable of providing an answer to either question. To reason from the matters mentioned in  ss.91(e)  to (p) to a conclusion that a testator had a responsibility to make provision for a claimant, or that the testator failed to make adequate provision for the claimant, necessitates the application of a test or standard to the matters to be considered. That test remains one of whether and if so what provision a wise and just testator would have thought it his moral duty to make in the interests of the claimant.

10 The breach of the moral duty is an objective test to be measured against all the relevant factors and in particular the matters referred to in  s 91(4)(e)  – (o) of the Act and any other matter the Court thinks relevant under subparagraph (p).[5]

11 The duty to make provision for a person is a limited duty.[6]

12 In determining jurisdiction, or the amount of any provision to be made, the Court must have regard to the matters in  s 91(4)(e)  to (p). In Collicoat v MacMillan Ormiston J (as he then was) said:[7]

Indeed, in order to succeed, an applicant must show what would have amounted to “proper maintenance and support” of the applicant and at the same time show that the distribution made by the testator’s will (or resulting from intestacy) was not “adequate” or sufficient to provide for such proper maintenance and support having regard to that applicant’s needs.

13 In considering the concept of proper maintenance and support, Callaway J said in Grey v Harrison:[8]

... It is one of the freedoms that shape our society, and an important human right, that a person should be free to dispose of his or her property as he or she thinks fit. Rights and freedoms must of course be exercised and enjoyed conformably with the rights and freedoms of others, but there is no equity, as it were, to interfere with a testator’s dispositions unless he or she has abused that right. To do so is to assume a power to take property from the intended object of the testator’s bounty and give it to someone else. In conferring a discretion in the wide terms found in  s 91 , the legislature intended it to be exercised in a principled way. A breach of moral duty is the justification for curial intervention and simultaneously limits its legitimate extent. So much may be derived from the concept of “proper” maintenance and support but also, and more fundamentally, from those considerations.

There is no single provision of which it may be said that that is the provision that a wise and just testator would have made. There is instead a range of appropriate provisions, in much the same way as there is a range of awards for pain and suffering or a range of available sentences. Minds may legitimately differ as to the provision that should be made. Furthermore, it is not at all clear that the reasons for an appropriate provision need be fully articulated. To borrow again from the analogy of sentencing, what is required is an instinctive synthesis that takes into account all the relevant factors and gives them due weight.

14 In Henderson v Rowden,[9] Beach J held, in an application for an extension of time by a stepchild, that, essentially, whilst a stepparent may have a moral obligation or responsibility to make adequate provision for the maintenance and support of a stepchild, the mere fact of such a relationship, in the absence of any other factor, does not give rise to such an obligation or responsibility. Where a stepchild makes a claim pursuant to  Part IV  of the Act, he or she will have to establish one or more of the criteria set out in  s 91(4)(e)  – (p). The Court will look at factors including the closeness of the relationship, that is, whether it is one which might be properly described as parent and child, what was the age of the plaintiff when he or she became a member of that family and the extent to which the plaintiff was supported by the deceased, whether financially or emotionally. If a consideration of these matters leads the Court to the opinion that the plaintiff was brought up and treated as a child of the testator, and if all the other circumstances show that there may have been a moral duty on the part of that testator to provide for the plaintiff, then there are factors which would warrant the making of the application. The ordinary principles that apply for determining the jurisdictional issue of any applicant are the starting point for determining the jurisdictional issue in relation to a claim for family provision by a stepchild against the estate of a stepparent.

15 In Robertson v Koska,[10] Vickery J examined the New South Wales precursor cases and subsequent Victorian cases, including McKenzie v Topp,[11] which concerned claims by stepchildren. The cases confirm that the raising of a child in loco parentis will be a compelling circumstance in the assumption of testamentary responsibility.

The Facts

16 Each of the plaintiffs was born in South Africa: Wayne Paola in 1962, aged 49 at date of trial; Carl Paola in 1965, aged 47 at date of trial; and Gavin Paola in 1972, aged 39 at the date of trial. In both proceedings Deirdre Gael Roche, the plaintiffs’ mother, has sworn affidavits dated 9 July 2010 in support of the plaintiffs’ claims, which outline the family history and background.

17 The deceased and Deirdre met and commenced a relationship in early 1969 and married on 14 December 1973.

18 Prior to marrying Deirdre, the deceased would visit Wayne and Carl Paola at boarding school with Deirdre. The deceased provided financial and emotional support for the family prior to his marriage to Deirdre. For example, in January 1973 the deceased bought a home for Deirdre and her sons but did not move in until he had married Deirdre.

19 The deceased was 41 years old and Deirdre 29 when they married. Shortly after the marriage the deceased suggested that he adopt the boys. The couple eventually decided that there was no real benefit to adoption and did not pursue that course.

20 The deceased played the role of the father to the three plaintiffs and it appears was the only father that they had ever known.

21 The plaintiffs referred to the deceased as Dad and he to them as his sons. The plaintiffs used the surname Bennett until they were adults.

22 In January 1975, the deceased and Deirdre immigrated to Australia with the plaintiffs.

23 The deceased and Deirdre separated in January 1983. The separation was amicable.

24 After the separation, the family still saw each other regularly. The deceased continued to pay day to day expenses and school fees for Gavin Paola to the date of Deirdre’s remarriage.

25 Deirdre Roche deposes that the family relationship between the boys and their father continued over the years. In May 1986, the deceased and Deirdre divorced. Shortly afterwards, Deirdre married Peter Roche, who is now Deirdre’s widower.

26 Following the separation and divorce, the plaintiffs had less contact with the deceased. Wayne married and went to live independently in 1981. Carl and Gavin remained living with Deirdre when she remarried.

27 In Wayne and Gavin’s case, contact dwindled away altogether and in Carl’s case, any personal connection seems to have ended in the last two years of the deceased’s life.

28 In 1991, Carl Paola moved to Dubbo where Deirdre and Peter were living. On one occasion when Carl returned to Melbourne he took the deceased to his favourite pub. Carl visited the deceased in hospital in the early 1990s when the deceased had undergone heart surgery. Gavin Paola also visited the deceased in hospital. It was the last time Gavin saw the deceased. Carl kept in touch with the deceased by telephone and later by email.

29 Wayne Paola moved to Dubbo in 1993 with his second wife. A rift occurred between Wayne and his mother which affected other relationships. Wayne Paola did not see the deceased from 1993. Wayne tried to initiate contact with the deceased by telephone and by sending cards and letters but these efforts were not reciprocated by the deceased.

30 In 2000, Gavin Paola was diagnosed with schizophrenia and has had recurring mental health issues. He has been hospitalised for his condition and compulsorily detained in psychiatric wards.

31 The deceased died at age 76 and as noted, died intestate. The defendant obtained letters of administration in respect of the deceased’s estate on 4 September 2009.

32 Deirdre Roche died on 8 March 2012. Her estate passed to her husband of 25 years, Peter Roche. Deirdre’s last will was made leaving everything to her husband, Peter Roche. The plaintiffs, along with two children of her husband Peter, share her estate in default.

33 There is approximately $558,000 in the estate available for distribution, subject to the costs of the proceeding.

34 The plaintiffs are all in financial need. Carl’s taxable income for 2009/2010 was $32,400 and for 2010/2011, $40,500. Carl is married to Kate Genders. Ms Genders’ income is from Centrelink benefits and is approximately to $4,500 per annum. Their combined household income for 2011 was $45,000 before tax. Carl Paola and Kate Genders have a child who is less than 12 months old.

35 Wayne Paola’s taxable income for 2009/2010 was $115,400 and for 2010/2011, $83,726. The Court was informed, though no evidence was adduced, that Wayne Paola’s taxable income for the year 2011/2012 will be approximately $70,000 due to a change of role and loss of management commissions.

36 Wayne Paola is obliged to pay $16,300 per annum in child support and the net value of his assets, excluding household chattels, is approximately $82,725.

37 Gavin Paola is a Centrelink disability pensioner. He is unemployable because of his medical condition. Gavin Paola lives in rental accommodation with a friend. He has no assets, but debts of approximately $11,000. His current pension payment is approximately $731 per fortnight. The defendants accept that each of the plaintiffs is in a situation of demonstrable financial need and that Gavin Paola appears to have greater needs than the other two defendants.

Having regard to the wise and just testator’s test and statutory criteria, did the deceased have a responsibility to make provision for the plaintiffs?

38 The defendant does not support the plaintiffs’ claims but nor does it oppose appropriate orders being made to make “adequate provision for the proper maintenance and support of” the plaintiffs. In determining whether the deceased had a responsibility to make provision for the proper maintenance and support of the applicants, the Court must have regard to the 11 factors specified in  s 91(4)(e) -(p) of the Act. The critical factors in this case are the family or other relationship between the deceased and the plaintiffs and the length of the relationships; the size of the estate; the obligations of the deceased to the applicants or to any other person; any disability of the applicants; the ages of the applicants; the financial needs of the applicants at the time of the application; and the character and conduct of the applicants.

39 Each of the plaintiffs was treated as if he were a child of the deceased. The deceased was effectively the only a father figure in the plaintiffs’ lives while they were young.

40 The estate has a gross value of approximately $558,000. It is a modest estate and is not so large as to admit a wide range of objects as beneficiaries given the deceased had three stepsons whom he raised and who are in financial need.

41 Gavin Paola suffers from schizophrenia, while the other two plaintiffs do not suffer from any physical, mental or intellectual disability.

42 There is no financial contribution to the deceased’s estate asserted by any of the plaintiffs.

43 The plaintiffs do not assert that any benefits were previously given by the deceased to them or to any beneficiary. There is no maintenance asserted immediately prior to the death by any of the plaintiffs. However, there is evidence before the Court of the deceased’s support for the plaintiffs during their childhood years. The evidence before the Court is that there is no liability of any other person to maintain the plaintiffs. The plaintiffs’ mother died and has left her estate to her husband, Peter Roche. The home in which she lived with Peter Roche was held jointly by them and passes by survivorship.

44 Wayne Paola has no partner and nobody is liable to maintain him. Carl Paola’s partner, Kate Gender, has disclosed her financial position. While Kate Gender’s assets put the combined household asset position in the black, their relationship has only recently begun and it is not possible for the Court to determine what, if any, liability Kate Gender may have to maintain Carl Paola in the future.

45 There are no matters of relevance in relation to the character and conduct of the plaintiffs or any other person in this case.

46 As noted, according to law the deceased is taken as having made a will leaving his estate to cousins and possibly other relatives, some of whom have not yet been identified. The relatives who have been identified, Sybil Price and Beryl Harrison, have not given evidence. Accordingly, it can be inferred that they have no competing need.[12]

47 I am satisfied that the plaintiffs are persons for whom the deceased had a responsibility to make provision. Having said that, the deceased’s next of kin have inherited under his intestacy. They have vested property rights. Any order made for the plaintiffs in this case will have the effect of depriving the next of kin of property rights. The defendants submit that in reducing those rights the Court should be conscious of the limitation expressed by Callaway JA in Grey v Harrison,[13] of the importance of those rights and that they should not be depreciated because those next of kin may seem “undeserving” of the inheritance. The defendant submits that the only relevance of the next of kin being unascertained and not having played a part in the deceased’s life is that they cannot point to any competing need or competing responsibility which might otherwise have served the basis for the Court’s ability to deprive them of their proprietary rights which they have inherited.

48 The defendant submits that while this was not a case of estrangement between the deceased and the plaintiffs, the relationship akin to father and son was not maintained once the plaintiffs were independent adults and their mother ceased to be married to the deceased. The defendants submit that consequently the deceased’s moral responsibility for their maintenance and support progressively diminished as the years passed.

49 The evidence demonstrates that there was a diminution in the nature of the relationship between the plaintiffs and the deceased in their adult years. However, that in itself does not detract from the close nature of the relationship while the plaintiffs were young. The evidence is not that the plaintiffs became estranged from the deceased in their adult years but rather once their mother and the deceased had divorced and they moved away to Dubbo, the practicalities of keeping up contact became more difficult. Carl managed to keep in contact, albeit by email and phone, almost to the end of the deceased’s life. Wayne’s efforts to communicate with the deceased were not reciprocated. Gavin’s medical condition was such so as to make regular contact difficult. The fact of less intensity and less contact in adult years does not detract from what was for a significant period a very close relationship akin to father and son between the plaintiffs and the deceased. I consider that the relationship between the plaintiffs was close and that an obligation existed.

Whether the distribution of the deceased’s estate failed to make adequate provision for the proper maintenance and support of the plaintiffs

50 No provision was made at all for the plaintiffs. As Byrne J noted in Marshall v Spillane:[14]

The second question is whether the distribution of her estate failed to make adequate provision for the proper maintenance and support of her brother. At one level the answer to this question is obvious. Since no provision was made, it must follow that no adequate provision was made.

It may be, however, that such a response is inadequate given the provenance of the terminology in  s 91(3)  which has been the subject of extensive judicial analysis over nearly a century. These words as they appeared in the pre 1997 legislation, required the Court to ascertain what was a proper provision for the plaintiff in all the circumstances and then to compare this with the actual provision made. Where the Court concluded that the proper provision was, in the circumstances, no provision at all, a totally disinherited claimant would fail at this level.

... The question I must consider, in the circumstances of this case having regard to contemporary standards, is whether a nil benefit conferred upon [the plaintiff] under the intestacy regime is an adequate provision for his proper maintenance and support.

51 In the present circumstances, where there is no evidence of any competing need of the beneficiaries and the relationship to the plaintiff is as I have found it, some provision ought to have been made in their favour in order to satisfy the obligation which lay upon the deceased to acknowledge the plaintiffs’ claims upon him.

52 Vickery J in Robertson v Koska, referring to the decision of Nettle J in McKenzie v Topp, said:[15]

 Section 91  of the Act confers wide power to make such order as is thought fit in all the circumstances of the case. It is plain, however, as Nettle J observed in McKenzie v Topp (footnotes omitted) that the discretion is not untrammelled or to be exercised according to idiosyncratic notions of what is thought to be fair or in such a way as to transgress unnecessarily upon the testatrix’s freedom of testation, but rather carefully and conservatively according to current community perceptions of the provision which would be made by a wise and just testatrix.

It is important to recall, as Fullagar J said as long ago as 1948 in Re Sinnott (footnotes omitted) that no two cases in this area will be exactly alike: “in each the immediate and probable need and the extent of the moral claim must be carefully weighed”.

53 Having regard to the matters provided under  s 91(4)(e)  to (p) of the Act and the facts relevant to each issue, I approach the task with these principles in mind.

54 In relation to Wayne Paola, the second plaintiff in proceeding S CI 2010 0950, provision should be made out of the estate of Keith Bennett pursuant to  s 91(1)  of the Act in the sum of $100,000.

55 In relation to Carl Joseph Paola, the first plaintiff in proceeding S CI 2010 0950, provision should be made out of the estate of Keith Bennett pursuant to  s 91(1)  of the Act in the sum of $100,000.

56 In relation to Gavin James Paola, the first plaintiff in proceeding S CI 2010 1065, provision should be made out of the estate of Keith Bennett pursuant to  s 91(1)  of the Act in the sum of $200,000.

57 I consider the appropriate order as to costs is that the plaintiffs’ and defendant’s costs are paid on a solicitor client basis from the estate, in accordance with r 63.03 of the Supreme Court (General Civil Procedure) Rules 2005.

58 I invite counsel to provide a minute of an order to that effect.

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^[1] Affidavit of Katherine Ensor dated 5 April 2012 in proceeding 0950 of 2010, at [12] and [23].

^[2] Re: Russell [1970] QWN 22; cited in Iwasivka v State Trustees Ltd [2005] VSC 323, at [5].

^[3] [2004] VSCA 149, at [13].

^[4] [2004] VSCA 149, at [39]-[41].

^[5] Boyd v State Trustees Ltd [2008] VSC 18, at [48].

^[6] Schmidt v Watkins [2002] VSC 273, at [9].

^[7] [1999] 3 VR 803, at p 816. The Court of Appeal in Lee v Hearn [2005] VSCA 127, at [53] endorsed Ormiston J’s summary.

^[8] (1997) 2 VR 359, at p 366.

^[9] [2001] VSC 267.

^[10] [2010] VSC 134.

^[11] [2004] VSC 90.

^[12] Anderson v Teboneras [1990] VicRp 47; [1990] VR 527.

^[13] (1997) 2 VR 359, at p 366.

^[14] [2001] VSC 371 at [24]- [26].

^[15] [2010] VSC 134, at [120].