Bradshaw, Re [1992] QSC 68

TRANSCRIPT OF PROCEEDINGS State Rep:::>rting Bureau, 4th Floor, The Law Courts, George Street, BRJSBANE. 0. 4000 Tel. (07) 227.4360 (Copyright in this transcript is vested in the Crovm. Copies thereof must not be made or sold without the written authority of the Director, State Reporting Bureau.) OS No 533 of 1989 IN THE MATTER OF Part IV of the Succession Act 1981 (as amended) and IN THE MATTER OF Samual Thomas Bradshaw BRISBANE .. DATE 18/3/92 JUDGMENT 1 -- 1 of 17 -- 180392 JUDGMENT HIS HONOUR: In this matter I dismiss the application and I publish my reasons. I make no order as to costs. 10 10 20 2C 30 30 40 50 ! 60! 1 . -------. 60 2 i !i -- 2 of 17 -- IN THE SUPREME COURT OF QUEENSLAND O.S. No. 533 of 1989 Before the Hon. Mr. Justice B.W. Ambrose AND: Counsel Solicitors Hearing date IN THE MATTER of Part IV of the Succession Act 1981 (as amended) IN THE MATTER of SAMUEL THOMAS BRADS HAW late of 2 0 Burke Street, Toowoomba, in the State of Queensland,retired Manager. REASONS FOR JUDGMENT - B.W. AMBROSE J Mr. K.R. Geraghty for the Applicant. Mr. S.D. Rapoport for the Respondent. Grasso Searles & Romano t/a for Cleary and Lee for the Applicant. Bain Gasteen Smith t/a for Davidson & Sullivan. 12th March 1992 -- 3 of 17 -- A..o \ IN THE SUPREME COURT OF QUEENSLAND AND: O.S. No. 533 of 1989 IN THE MATTER of Part IV of the Succession Act 1981 (as amended) IN THE MATTER of SAMUEL THOMAS BRADSHAW late of 20 Burke Street, Toowoomba, in the State of Queensland, retired Manager. REASONS FOR JUDGMENT- B.W. AMBROSE J. Delivered the 18th day of March 1992. This is an application by Marjorie Rita Bradshaw the widow of Samual Thomas Bradshaw, deceased, for provision out of his estate pursuant to s. 41 of the Succession Act 1981 as amended. When this matter was called on for hearing counsel for the applicant and counsel for the respondent Executrix informed me that in an effort to save time and keep the costs of the application at a minimum they had agreed to place before me a statement of agreed facts and they requested that the application be determined having regard only to those facts and to what appeared upon the copy of the Probate and a Schedule of Investments placed in evidence. They specifically requested that I not have regard to the content of any of the affidavit material that had been filed on behalf of both applicant and respondent. It emerged that there are matters of contention arising on the affidavits which, if litigated, would involve the incurring of costs to such an extent -- 4 of 17 -- 2 that much of the estate would be consumed in the payment of those costs. I raised with counsel the question as to whether I could be given jurisdiction under the Act by agreement rather than upon being satisfied by admissible evidence that I had jurisdiction. It was contented that both the applicant and respondent wished to establish jurisdiction by admission of facts so that I might consider both jurisdiction and the merits of the application upon facts so established. I was to make a decision on the merits of the application having regard only to those matters to which I have already referred. With some hesitation I embark upon a consideration of the application referring only to the statement of agreed facts which is ex. 1 upon the hearing. I do so on the basis that jurisdiction is not merely "conceded" but proved upon facts established by admission of both parties. The size of the estate is not large. There is no evidence as to the value of the estate assets as at the date of death of the Testator. However it is agreed that the value of those assets at 1Oth March 1992 was $209,866. 15. Of this sum $174,201.31 comprises the value of various investments which are listed fn ex. 2. The balance of the assets comprise various sums of money owed to the estate upon which apparently no interest is payable. I infer these sums were lent or advanced by reason of family connection between the debtors and the Testator. It is estimated that the costs of the administration of the estate will be $8,000 and the legal costs of the applicant and the Executrix will together amount to $24,000. -- 5 of 17 -- 3 There is a good deal of material on the court file to which, at the request of both counsel, I have not referred. There is a sufficient volume however to indicate that significant legal costs have probably already been incurred to reach hearing stage. I was asked by both counsel to order by consent that the costs of preparation of the affidavits and other material filed in the application be taxed and that those taxed costs be recovered pursuant to any order for costs that I might make upon determination of the application. The Testator and the applicant married in 1964. The Testator was then 38 years of age. He was a divorced man with three sons of his first marriage, aged 9, 12 and 13 years. The applicant at the time of her marriage was 37 years of age. She was a widow with three sons aged 6, 9 and 11. At the time of marriage the applicant and the Testator each owned a home and contents and in the statement of agreed facts it is asserted that each of them brought "a home and contents into the marriage". The applicant's house was rented out and later sold; what happened to the proceeds of sale is unknown. The Testator and the applicant lived in the Testator's home. This home was in Toowoomba. Seven years after the marriage there was a matrimonial dispute apparently and the Testator and the applicant separated for a time but became reconciled after six weeks. The Testator and the applicant and one of the applicant's sons then moved into a house purchased in joint names at 20 Burke Street, Toowoomba. Upon the death of the Testator the applicant became the sole proprietor of that dwelling house. -- 6 of 17 -- 4 The applicant resided with the Testator until his death in 1989. In 1981 the Testator suffered from a stroke and spent 12 months away from work as a result. He returned to work on a part-time basis, retiring in 1984. Upon his retirement the Testator received a payment by way of superannuation in the sum of $155,770 and holiday pay in the sum of $19,985. These sums the Testator invested in a company called "Bradshaw Holdings Pty. Ltd." I assume this company was a family company. The shareholders in that company at the date of the Testator's death were as follows - The Testator David Bradshaw (son of the Testator) Peter Bradshaw (son of the Testator) Bruce Bradshaw (son of the Testator) Beryl Ann Bradshaw (wife of Bruce Bradshaw) Judith Letisha Bradshaw (daughterof Bruce Bradshaw) George Eric Hess (brother-in-law of theTestator) Ellen Cassandra Hess (sister-in-law of theTestator) Shares 10,008 3,330 3,330 2,530 400 400 1 1 The family company operated a garage until it was destroyed by fire and a dairy farm at Tambo, Queensland. The Testator and his sons, Bruce and David, contributed towards the running of these businesses over the years and his son, Peter, looked after some of the company's records. The applicant contributed to the running of these businesses for no financial reward from the family company. In 1978 moneys were lent to Bradshaw Holdings Pty. Ltd. which were secured by way of mortgage over the property jointly owned by the Testator and the applicant. This debt was subsequently paid out by the company. The applicant cared for the Testator on a full-time basis from 30th March 1981 until February 1982 following his stroke. -- 7 of 17 -- 5 The applicant helped the Testator with speech therapy and various other hea-lth care requirements. She cared for the Testator during the final months of his life. Under cl. 3 of his Will the Testator bequeathed to the applicant his household and personal effects. Under cl. 3(c) he charged upon the whole of his estate payment to the applicant while she remained his widow the sum of $1,300 per calendar month to be varied in the future by the percentage variation in the Consumer Price Index for the preceding 12 months and on the death or remarriage of the applicant, the income and capital then remaining of his estate was to go to his three surviving sons to whose names I have referred in equal shares. under cl. 3(d) of the Will that if any son It is provided of his should predecease him leaving issue then that issue upon attaining the age of 18 years should take by substitution (if more than one equally between them) the share and interest to which his parent would have been entitled had that parent survived. Under cl. 4 of the Will the Testator directed that his Trustees "shall cause the company Bradshaw Holdings Pty. Ltd." to grant an option to his son, Bruce, to purchase its freehold and leasehold properties in the Tambo district (the dairying property) at a price of one half the market value thereof to be determined by a registered valuer such price being payable by five annual instalments free of interest. At the time of the Testator's death the jointly owned matrimonial home of the Testator and the applicant had an estimated value of $1 05, 000. The applicant had $12, 000 in -- 8 of 17 -- 6 personal savings from which she received interest amounting to between $1,200 and $1,440 per ·annum. The statement of agreed facts records that the applicant at the time of the Testator's death had annual commitments to the extent of $14,220. It is stated that the respondent is unable to concede the accuracy of such commitments claimed by the applicant. It appears that the applicant had a motor vehicle which cost something in excess of $3,500 per year to keep on the road. Subsequent to the death of the Testator, she purchased another motor vehicle for $10,000. Income tax was payable upon the annuity - at least before it was increased - in the sum of $2,670. On 1st November 1990 the Executrix of the Testator's will and the other shareholders in Bradshaw Holdings Pty. Ltd. agreed to sell their shares in Bradshaw Holdings Pty. Ltd. to Bruce Bradshaw, the son of the Testator, in lieu of him exercising his option under cl. 4 of the Will to purchase the dairy farm for half its market value. One of the assets of the estate it will be remembered was a liability of Bruce Bradshaw of $10,016.17. There is nothing in the admissions as to the value of the assets of the company, Bradshaw Holdings Pty. Ltd., and I feel unable to determine with any satisfaction the extent to which Bruce Bradshaw has in fact benefited under cl. 4 of the Will. The way the case was argued however probably makes it unnecessary to make such a determination. Neither counsel arguing the matter referred to any benefit that Bruce Bradshaw may have directly or indirectly obtained as a result of the content of cl. 4 of the -- 9 of 17 -- 7 Will as a matter relevant for the determination of this application. The applicant is now 65 years of age and having had heart surgery in 1985 she presently enjoys good health. At the present time she owns the home in which she resides which is valued at $110,000, and the contents of that home valued at $4,000; she has a motor vehicle the current value of which is $6,000 and she has a bank account which contains $6,000. Having regard to the terms of cl. 3 (c) of the Will the applicant is presently paid an annuity of $1,539.65 per calendar month. For the year ended 30th June 1991 she received a gross taxable income of approximately $27,000 from her annuity, interest on her bank account, and from earnings doing casual child minding at $20.00 per week. She did not earn money as a child minder prior to the death of the Testator. There has been placed before me a long list of annual financial outgoings which total $19,404.68. The largest of these outgoings is for food at $3,800 per annum with income tax and Medicare levy of $3,441 .50, coming a close second. On my brief perusal of the commitments I gained the impression that they are inflated in some respects. At least I rather take the view that some of them might be paid less attention than others in determining whether they ought be considered as very material to answering the question whether inadequate provision has been made for her proper maintenance and support. However in the light of the way the case was argued I propose simply to treat the list of commitments on pp. 4 and 5 of ex. 1 as indicating what she in fact is spending and I keep in mind that it was not contended on -- 10 of 17 -- 8 behalf of the respondent that any of those items of expenditure are irrelevant for my consideration. Exhibit 2 is a Schedule of Investments which the respondent has apparently made upon realisation of all the capital assets of the estate of the Testator. That Schedule of Investments totals $174,201.33. As well as that however I keep in mind the existence of interest free debts owed to the estate to the value of a little over $35,000. I assume that for practical purposes the value of those debts outstanding to the estate will be taken up largely by the costs of administration and the costs of this application. In any event when the case was argued before me both counsel approached the questions in issue on the basis that the value of the assets of the estate available to meet the annuity enjoyed by the applicant charged on it is for practical purposes the sum of approximately $174,000 described in the Schedule of Investments. A number of mathematical calculations were placed before me to demonstrate that the assets of the estate if invested to return about 8 per cent per annum will suffice or nearly suffice to provide an annuity in the terms of cl. 3(c) of the Will for the applicant until she reaches an age which statistically will be her life expectancy. I have certain reservations about applying average life expectancy tables to a 65 year old lady who has already undergone heart surgery (in 1985). However, the statement of agreed facts asserts that she is now in good health and both counsel accepted the proposition that the estate assets if carefully invested will -- 11 of 17 -- 9 meet the annuity charged on them by cl. 3(c) of the Will for the duration-of the applicant's statistical life expectancy at the moment. It is clear having regard to the Schedule of Investments that many of the investments are currently returning a somewhat higher interest rate than might be obtained should they be re-invested immediately. On the other hand of course although interest rates may have fallen to some extent at the moment, the purchasing power of the dollar is not depreciating at the rate at which it has depreciated in times of higher inflation. It is stated in the Schedule of Investments, and I act upon that statement that upon the Esanda Finance Corporation debentures of the sort in which the estate money is presently invested, interest is currently payable at 9 per cent per annum for a two year investment and 9.25 per cent per annum for a three year investment. All the current investments with Esanda attract significantly higher interest rates than this except for one investment where the money is on 24 hour call where the rate of interest payable is 7.25 per cent. It is unnecessary I think to consider in detail this investment portfolio. Both counsel agree that the annuity which is payable to the applicant pursuant to cl. 3(c) of the Will is a very high one having regard to the asset value of the estate. Indeed whether by accident or design it seems that should that annuity be paid for a period of the applicant's statistical life expectancy, by the end of that period the assets of the estate will have been completely expended in meeting payments of the annuity. -- 12 of 17 -- 10 The real question which was debated before me is whether pursuant to s. 41 of the Succession Act the applicant should be given a lump sum out of the estate. The applicant contends that having regard to her financial position and the value of the estate I should order that she receive the whole of the estate in lieu of the annuity. It is contended that there may be some unexpected financial contingency which she must meet and that she will be unable to do so if she has to rely only upon what she is able to save out of the annuity that she receives and the income she earns from child minding. It is contended that the Testator failed palpably in the provision he made for the applicant and that this failure can be remedied only by ordering that she receive the whole of the estate. In the alternative it is argued that she should receive a substantial capital sum out of the estate as a legacy. It is clear that if she be given a significant capital sum out of the estate assets without any variation as to the quantum of the annuity payable under cl. 3(c) of the Will, the whole of the estate will be eaten up more quickly. Should this happen there would not be any capital left in the estate upon which the annuity charged could operate long before the period of the applicant's life expectancy expired. For the respondent it is contended that the Testator having been involved in insurance matters must as a just and wise husband have calculated carefully the capacity of his estate to provide adequate and proper support for the applicant. It is clear that the Testator wished to make as generous a provision for the applicant as was possible having regard to the size of -- 13 of 17 -- 11 his estate although he wished also to provide for his children should the applicant meet an untimely death. In my view it could not be said that by leaving a will designed to ensure that the sons of his body rather than those of the applicant's body should enjoy that part of the benefit of his estate which was not necessary to provide adequate and proper support for his wife, he breached any obligation of the sort that s. 4 of the Succession Act is designed to remedy. Whatever the effect upon the estate of Bruce Bradshaw's right under cl. 4 of the Will and/or by reason of the agreement of 1st November 1990 between the respondent and other shareholders of Bradshaw Holdings Pty. Ltd. to sell their shares in the company to him in lieu of his exercising his option under cl. 4, I am unable to estimate what if any benefit in fact Bruce Bradshaw has received under the Will. It seems that he has agreed to purchase the shares of the Testator for a price of about $10,000 to be paid over a period of five years and apparently in consideration of this he has not exercised his rights under cl. 4. Neither counsel addressed me on this question and having regard to that I think it appropriate to assume that for the purpose of determining this application I should treat the applicant as having received potentially at least the benefit of a charge upon the whole of the Testator's estate which may well consume it. In essence if she were to receive the whole of the estate as a lump sum legacy she would then be faced with the prospect of investing it in much the same way as it is presently invested. -- 14 of 17 -- 12 It would not seem to me to improve her financial position as far as the size of the annuity that she would be able to purchase at all. The only result would be to give her the option of spending part of the funds she received to meet current capital expenses or really for any other purpose for that matter so that ultimately the capacity of the estate funds to provide her with an annuity of the sort contemplated by cl. 3(c) would be reduced or determined at an earlier stage than will occur should there be no interference with the Testator's testamentary disposition. I have given careful consideration to whether in all the circumstances it would be appropriate to direct that from the estate the applicant be paid a sum of say $15,000 or $20,000 so that she might have a capital sum which, at her election, could be invested to provide income but which would also give her a financial capacity to meet any sudden and presently unforeseeable financial outlay - whether it be for medical or hospital expenses or repairs to the house or a new motor car or an overseas holiday. The problem with making such an order without interfering with the annuity provision in cl. 3(c) of the Will is that the Testator's estate will be more quickly exhausted by payment of that annuity because of course the capital value of the estate will be reduced to the extent of any sum given directly to the applicant. I have regard to what was said by Wilson J. in White v. Barren and Anor. (1979) 144 C.L.R. 431 and by Gibbs J. in Goodman v. Windeyer & Ors. (1980) 1144 C.L.R. 490. -- 15 of 17 -- 13 I read those observations however in the light of what was said by· the majority in Boyce v. Humphreys & Ors. (1974) 48 A.L.J.R. 229. In this case at the date of the Testator's death the applicant was left with an unencumbered house property to which she is solely entitled. The value of this house property both at the date of death and at the present time is something in excess of $100,000. She then had a motor vehicle and she still has a motor vehicle although it is a different one. The Testator has given her the benefit of what seems to me to be a very generous annuity charged on the whole of his estate which will completely exhaust the resources of that estate if the applicant attains the statistical life expectancy for a woman of her age. The only restriction that the terms of the testamentary disposition imposes upon the applicant's enjoyment of the whole of the Testator's estate is that which necessary flows from her inability to deal with the estate moneys as and when she wishes. I take the view that it is clear on the whole of the material that the Testator has made a disposition in favour of the applicant which will exhaust the estate should she attain her statistical life expectancy. It is impossible really to do more than speculate as to what interest rate, inflation and changes in the Consumer Price Index will occur over the next 10 to 15 years. What is clear however is that if changes experienced over the last few years continue the natural sons of the Testator will take no benefit under his estate. It will only be if the applicant unfortunately does not achieve her statistical life expectancy that there will be -- 16 of 17 -- 14 anything left in the estate to be divided equally between the Testator's children. Should the applicant be given the whole of the estate assets or even a significant part of them and fall significantly short of achieving her statistical life expectancy, then the consequence may well be that a significant part of the Testator's estate will be enjoyed by her sons rather than his sons. In my view it cannot be said in the circumstances of this case having regard to the size of the estate left by the Testator and the comfortable position in which the applicant finds herself having regard to her ownership of a home, car etc. that the annuity charged upon the estate that the Testator has failed to make adequate provision for her proper support. I dismiss the application. I will hear argument on the question of costs. -- 17 of 17 --