Banks v Seemann [2008] QSC 202

SUPREME COURT OF QUEENSLAND CITATION: Banks v Seemann [2008] QSC 202 PARTIES: KEVIN FREDRICK BANKS (applicant) v LORRAINE RITA SEEMANN as Executrix and Trustee of the estate of NORMA BANKS (deceased) (respondent) FILE NO: BS5294 of 2008 DIVISION: Trial Division PROCEEDING: Application DELIVERED ON: 2 September 2008 DELIVERED AT: Brisbane HEARING DATE: 21 July 2008 JUDGE: Mullins J ORDER: Application filed on 9 July 2008 is dismissed CATCHWORDS: SUCCESSION – FAMILY PROVISION AND MAINTENANCE – PRACTICE – PROCEDURE – ORDERS AND MATTERS – where application made to dismiss summarily claim for family provision – whether applicant’s affidavits establish a prima facie case Succession Act 1981, s 41 Higgins v Higgins [2005] 2 Qd R 502, considered Hughes v National Trustees, Executors and Agency Co of Australasia Ltd (1979) 143 CLR 134, followed Singer v Berghouse (1994) 181 CLR 201, followed Vigolo v Bostin (2004) 221 CLR 191, considered COUNSEL: PD Tucker for the applicant DR Cooper SC for the respondent SOLICITORS: SR Wallace & Wallace for the applicant MacGillivrays for the respondent [1] MULLINS J: The applicant and the respondent are the children of the late Norma Banks (the deceased). The deceased died on 14 September 2007. Probate of the deceased’s will made on 7 October 2005 was granted to the respondent on 17 December 2007 as executor named in the will. Under the will the applicant receives a bequest in the sum of $200,000 and the residue of the estate is given to the respondent. -- 1 of 6 -- 2 [2] By originating application filed on 6 June 2008 the applicant seeks further provision out of the deceased’s estate pursuant to s 41 of the Succession Act 1981 (the Act). By application filed on 9 July 2008, the respondent seeks an order that the applicant’s claim be summarily dismissed, on the basis that the material that he relies on does not establish a prima facie case. Background [3] The applicant was born in 1942. At that time his parents resided with his mother’s parents. In 1947 the applicant’s parents moved to their own home at Coorparoo, but the applicant continued to live with his mother’s parents. The respondent was born in 1950. When the respondent was three years old, the applicant moved to his parents’ house to live. The applicant lived with his parents until he was 19 years old, when he married. [4] The applicant had left school at age 15 years to commence a five year apprenticeship as a panel beater. At that stage his parents owned the business Buranda Motor Garage which was a mechanical business that did engine repairs and like jobs. The applicant’s parents owned the freehold on which the business was located. [5] The applicant and his father discussed changing the nature of his father’s business (which was declining) to one of panel beating and spray painting. When the applicant completed his apprenticeship, he went to work in his father’s business. The name of the business was changed to Buranda Motor Body Works. The applicant worked with his father in expanding the business to undertake repair work on vehicles for insurance companies and the business flourished. The applicant’s mother did the books for the business. [6] The applicant’s father died in 1969. The applicant states that he was promised by his father on a number of occasions that the business and the majority of the land on which the business was situated would go to the applicant, after his mother died, on the basis that his father would be leaving the business and the land to his wife. On the day that the applicant’s father died, the applicant says that he made the applicant promise that he would continue to run the business for his mother’s benefit for three years. The applicant did not receive anything from his father’s estate. [7] The applicant continued to be employed in the business as its manager until 1974. At that stage he was looking to commence his own business in panel beating and spray painting. He reached an arrangement with his mother, where he received both wages and a profit share arrangement and decided to stay in the business. The applicant worked up to 70 hours per week in the business (and had done so since 1969). The business continued to flourish. The applicant’s mother continued working in the business between 1969 and 1983. [8] From about 1971 the applicant’s mother formed a relationship with one Mr O’Sullivan. That relationship came to an end about 1987. [9] In 1983 the applicant bought the business (but not the land on which it was situated) from his mother at a price that was determined by his mother’s lawyers and accountants. The applicant says that he paid whatever he was asked to pay, he does not know what amount he paid and does not consider that he received favourable treatment. -- 2 of 6 -- 3 [10] From 1983 until 1992 the applicant paid rent to his mother for the business premises which increased by 10% each year. [11] The applicant was diagnosed with bipolar depression in November 1991 by his general practitioner Dr Patel. [12] In about 1992 the applicant sold the business to his daughter and her partner. The applicant retired because of ill health, as he was suffering from significant depression and bipolar disease. In 1995 the applicant had quadruple bypass open heart surgery. The applicant also suffers from type 2 diabetes. He takes a large number of prescription medications to treat his medical conditions. [13] The applicant’s wife is retired. She has had health difficulties. The adult children of the applicant’s marriage are self-supporting. [14] When the deceased made a will in 1993, she made a statutory declaration on 16 April 1993 which set out her reasons for leaving the majority of her estate to the respondent. She referred to the support given to her by the respondent and compared that to her relationship with the applicant which she described as having become more of a “business relationship”. The deceased declared in paragraph 3: “3. At the time of the negotiations for the purchase of the business from me, my son was managing the business and I have been left with the impression that he deliberately allowed the business to run down so that he could force on me a very reduced price in its purchase and then after the price was negotiated, required me to pay long service leave and termination payments to him.” The deceased also referred to problems she foresaw if she left the Logan Road property jointly to her children and concluded that by leaving her estate in the way that she had, she had provided the respondent with equality with the applicant in the extent of the assets they had derived from both parents. [15] At the time of making the will in 2005 the deceased by written statement dated 7 October 2005 adopted the statements she had made in the declaration in 1993 and set out other reasons for being unhappy with the applicant including lack of contact and lack of gratitude for presents. Paragraph 7 of that statement provided: “7. I am of the opinion that over the years, and particularly given the favourable terms given to him by me on the sale of the family business to him, that 1 have treated him very fairly and generously.” [16] The applicant disputes the truth of many of the statements made by the deceased in the 1993 statutory declaration and the 2005 statement and, where the applicant accepts the description of events by the deceased, the applicant provides his explanation for those same matters. [17] The applicant asserts that the deceased rejected him as a child and showed him no affection. The applicant claims that his relationship with the deceased did not become a business relationship, as there had been no relationship as such between them before he commenced working in the business. He acknowledges that their relationship in connection with the business was in the nature of a business relationship. -- 3 of 6 -- 4 [18] The deceased’s statements made in 1993 and 2005 are not evidence of the truth of the statements, but merely provide some evidence of the deceased’s reasons from her perspective for the dispositions made in the will: Hughes v National Trustees, Executors and Agency Co of Australasia Ltd (1979) 143 CLR 134, 137-138, 152. [19] The affidavits show that the applicant’s relationship with his mother was not close and lacked affection. Doctor Patel expresses the opinion that the difficult and stressful relationship that the applicant had described as his relationship with his mother may have had an effect on his bipolar disorder or the state or extent of his depression. The estate [20] When the deceased died, she owned her home at Coorparoo and the business premises at Woolloongabba and had cash in the bank. Since her death, the Woolloongabba property has been sold and the net proceeds were $977,855.94. [21] The respondent set out the assets and liabilities of the deceased’s estate in her affidavit filed on 9 July 2008. At that stage there was cash in the sum of $1,032,047 (which includes the proceeds from the Woolloongabba property) plus accruing interest and the house at Coorparoo valued at $650,000. The only quantified liability of the estate is a loan in the sum of $9,650 from the respondent and her husband. The applicant’s financial position [22] The applicant and his wife are the joint owners of their home at Cleveland which the applicant values at $1.2m. It is free of encumbrance. The applicant and his wife jointly own motor vehicles, a boat, trailer and outboard motor and a caravan which in total the applicant values at about $100,000. The applicant and his wife have a superannuation fund that owns an industrial shed which the applicant values at $975,000 and an investment account that contains $370,000. The superannuation fund has an income of about $90,000 per annum. The superannuation fund also holds shares valued at approximately $142,000. The applicant and his wife have a joint account that contains about $8,000. The applicant’s wife has a separate account that contains about $205,000 which she inherited from her mother’s estate. The superannuation fund pays a combined pension to the applicant and his wife of $5,000 per month. The respondent’s financial position [23] Apart from the applicant, the respondent is the only potential claimant on the deceased’s estate. The applicant outlines in his affidavit his understanding of the respondent’s financial position: the respondent and her husband have a camera shop in the city of Brisbane which they have owned since 1985; they own a home at New Farm which is rented; they own a house at Mermaid Beach that the applicant values at a minimum of $1m; they own a house at Toowong; and they drive Lexus vehicles. The applicant believes that the respondent and her husband are in good health. The law -- 4 of 6 -- 5 [24] The application proceeded on the basis that the court has jurisdiction to strike out the application for family provision, if the material relied on by the applicant does not establish that there is a prima facie case for the applicant: Higgins v Higgins [2005] 2 Qd R 502, 506[15]. The application was summarily dismissed in that case, as White J concluded that the applicant was bound to fail on the jurisdictional issue. [25] The jurisdictional issue is the first stage of the two stage process that is applied by the court in determining an application for family provision, as explained in Singer v Berghouse (1994) 181 CLR 201, 208-209 (Singer): “The first stage calls for a determination of whether the applicant has been left without adequate provision for his or her proper maintenance, education and advancement in life. The second stage, which only arises if that determination be made in favour of the applicant, requires the court to decide what provision ought to be made out of the deceased’s estate for the applicant. The first stage has been described as the ‘jurisdictional question’.” (footnote omitted) [26] In Singer, Mason CJ and Deane and McHugh JJ described the jurisdictional question in these terms at 209-210: “The determination of the first stage in the two-stage process calls for an assessment of whether the provision (if any) made was inadequate for what, in all the circumstances, was the proper level of maintenance etc. appropriate for the applicant having regard, amongst other things, to the applicant’s financial position, the size and nature of the deceased’s estate, the totality of the relationship between the applicant and the deceased, and the relationship between the deceased and other persons who have legitimate claims upon his or her bounty.” See also Vigolo v Bostin (2004) 221 CLR 191, 197, 218, 230-231. The decision [27] The respondent submits that it is “extraordinary” that the applicant is unable to say how much he paid his mother for her share of the business in 1983, when that is a significant reason given by the applicant’s mother for disposing of her estate in the manner which she did. The respondent submits that the applicant cannot refute his mother’s statements that he obtained the business on terms which were financially disadvantageous to her. That submission proceeds wrongly on the basis that the deceased’s assertion about selling the business to her son at a reduced price is evidence of the truth of that assertion. [28] The state of the evidence on this issue for the purpose of this application is that, despite the assertion on the deceased’s belief as to the advantage that the applicant obtained in purchasing the business in 1983, the applicant did, in fact, pay money to the deceased to purchase the business. This was in the context of the applicant having worked for many years in building up the business and where the deceased was advised by accountants and solicitors in connection with the sale. [29] The respondent also relies on the lack of detail in the applicant’s affidavit about the income he received from the business between 1969 and 1993 and the failure of the applicant to provide any evidence of what he received upon its sale in 1993. The -- 5 of 6 -- 6 assets that the applicant holds jointly with his wife must reflect to a significant extent the financial benefit that the applicant obtained from working in the business and from its sale proceeds. The applicant has not deposed to any other activity that was responsible for creating growth in the applicant’s assets. In broad terms, therefore, there is not the “insufficiency” in the material put before the court by the applicant that the respondent claims. [30] It is irrelevant to the applicant’s claim for a family provision from his mother’s estate, that he says his father had promised him that the majority of the land on which the business was conducted and the whole of the business would be inherited by the applicant after his mother died. It is a relevant part of the factual background for the purpose of the family provision application, however, that the applicant’s mother succeeded to the applicant’s father’s estate and that the applicant did not receive any amount from his father’s estate. [31] Although the applicant and his wife have substantial assets and a steady income from their superannuation fund, the applicant has been suffering ill-health since 1993. This was a matter within the knowledge of the deceased. In looking at the jurisdictional question, it is not irrelevant that the respondent is in a good financial position. It is relevant that the deceased’s estate is of a significant size and the applicant’s work in the business whilst owned by his parents and then the deceased contributed to the deceased’s financial well being. The unusual nature of the relationship between the applicant and his mother is another relevant factor. [32] During the hearing of this application, I expressed a reservation about whether this was an appropriate matter for dealing with summarily, as the complicated relationships and the transactions between family members required a close consideration. That reservation has been confirmed on perusal of all the affidavits read on the application. I am satisfied on the basis of the combination of the relevant factors in this case that the applicant has shown a prima facie case for further and better provision from the deceased’s estate. [33] That does not necessarily mean that the applicant will ultimately be successful with his claim. What it means is that the applicant’s material is sufficient to enable the claim to proceed and that it is not in the category of case where the inevitable failure of the application is so clear, that the proceeding should be terminated summarily. The material that is before the court on the application to strike out the proceeding is such that it cannot be concluded that this is a case where the applicant has no realistic prospect of success. [34] It follows that the application filed on 9 July 2008 must be dismissed. I will hear submissions from the parties on the issue of the costs of the application. -- 6 of 6 --