Olsen v Olsen

This is a claim by a 61 year old solicitor for provision from the estate of his father Colin Olsen (the testator) who died at the age of 87 years. The plaintiff was brought up by his mother. She married the testator in 1957 and they separated in 1959 when the plaintiff was nine months old. The testator went on to marry again and have three more children by his second wife (Beverley). He did not ignore the plaintiff and paid the maintenance that he was required to pay but their contact was sporadic. It is a relatively common story. At the end of his life, the testator left the whole of his estate to Beverley to whom he had been married for 56 years. He stipulated that if she predeceased him, his estate was to go to their three children. He made no provision for the plaintiff.

At the hearing, the plaintiff’s counsel limited the claim to a sum of $250,000 to carry out repairs to one or both of two adjoining properties in Waratah near Newcastle. No claim was put forward for any other sum that could be said to be necessary for the plaintiff’s maintenance or advancement in life. The properties are owned by the plaintiff’s wife. She and the plaintiff live in one property and operate a legal practice from the other. The evidence that all of the repairs were essential was not convincing. At the conclusion of the hearing, I announced that I proposed to dismiss the summons. These are my reasons.

Claims by adult sons for provision from a parent’s estate often present difficulties. Dixon CJ explained the problem in Pontifical Society for the Propagation of the Faith v Scales (1962) 107 CLR 9 at 19-20; [1962] HCA 19. In doing so, he approved the following statement of principle by Fullager J in In re Sinnott (1948) VLR 279 at 280:

To the same effect was Windeyer J in Stott v Cook (1960) 33 ALJR 447 at 455, who said:

Each case depends on its own facts, but courts are often unwilling to override the wishes of a father who has made an apparently rational judgment about an adult, able-bodied son who has made his own way independently in life, established his own career and created his own family. The ties that bind naturally lessen and any moral obligation diminishes. It may be common for parents to leave their estates to their adult children – some of whom receive a happy windfall in middle age – but absent special circumstances, there is no legal or moral justification for an able-bodied adult son clinging to a sense of entitlement that he will necessarily benefit from his parent’s estate. The same will usually apply to adult daughters but it is unnecessary for me to deal with their position on the facts of this case.

There have been numerous decisions of this court in recent years dismissing claims by adult sons and daughters. Many of these cases, like this one, are conducted on a speculative basis pursuant to a conditional costs agreement. Such cases sometimes unnecessarily fuel the expectations of claimants, ultimately causing more hardship and heartache. Too often they waste the resources of the court and the money of the litigants. The growing frequency of these cases, and the speculative basis on which many are conducted, is a cause for concern. White JA adverted to the issue in Sgro v Thompson [2017] NSWCA 326 at [88]:

The court’s task in these cases is not to decide what is reasonable or fair but to apply the statutory formula relevantly specified in Section 59(c) of the Succession Act 2006 (NSW), giving due recognition to the importance of the testator’s freedom of testamentary disposition. The statutory precondition for the exercise of the court’s discretion to make a family provision order is that the court be satisfied that ‘adequate provision for the proper maintenance, education or advancement in life’ of the claimant has not been made by the will of the deceased person.

The words ‘proper’ and ‘adequate’ are of course relative concepts. In Pontifical Society, Dixon CJ explained at 19:

The presentation of the plaintiff’s case never made it clear how a claim for the cost of repairs to his wife’s property was supposed to meet the statutory criteria. No attention was specifically directed to why the sum of $250,000 was necessary for his ‘proper maintenance’ or ‘proper advancement in life’. The case seemed to be framed in a different way. The focus of the plaintiff’s affidavits, which he substantially drafted himself, and the focus of much of the submissions on his behalf, were more concerned to address the material circumstances of the plaintiff’s half-siblings – as if the hearing was fundamentally an exercise in comparing his material wealth and advantages with theirs, rather than demonstrating that the testator’s freedom of testamentary disposition should be interfered with because of a failure to make adequate provision for the plaintiff’s ‘proper maintenance’ or ‘proper advancement in life’.

Among other things, the plaintiff’s case ignored the dysfunction and tribulations of the testator’s other three children while failing to acknowledge adequately his own stable, happy and moderately successful circumstances. The plaintiff’s counsel even objected to the evidence of the needs and financial circumstances of the testator’s other three children. In reality, and in many important respects, including non-material respects, the circumstances of the plaintiff, his wife and their two adult sons are more fortunate than those of his half-siblings. It is understandable that the testator directed his attention to his widow and their three troubled children. I have no doubt that the testator regarded the plaintiff as having been more successful in life than his other progeny.

The testator’s will was informal but neither party suggested that it should not be held to constitute his last will for the purpose of Section 8 of the Succession Act. The terms of the will demonstrate the competing demands which the testator felt bound to satisfy – ‘what the testator regarded as superior claims or preferable dispositions’ in the language of Dixon CJ.

After leaving his whole estate to Beverley, the will provided that in the event of her prior death – which has not occurred – the family assets should be divided as follows: The family home at Manly and its contents were to be given to the three children of Beverley and the testator (Marc, Micheline and Dean). A holiday house at Bonnell’s Bay was to be given to Marc and Dean. If these properties were rented, the rent was to go equally to Marc, Dean and Micheline. The Manly home was owned in a joint tenancy between the testator and Beverley and the Bonnell’s Bay house is and was owned by a company known as Richard Castle Pty Ltd, in which the testator and Beverley were equal shareholders.

The will recognised that the position of Micheline was somewhat different. A property at Endeavour Drive, Beacon Hill had been purchased some years earlier in three equal shares (testator, Beverley and Micheline) in order to provide a permanent home for Micheline following her divorce. The testator clearly wanted it to continue to be a permanent home for Micheline and her sons. He then provided that ‘on the passing of the proprietors’ and the sale of the property, the proceeds of sale should go in equal shares to Micheline’s two sons (Hayden and Liam) and Chloe, the daughter of Dean. If rented, the three grandchildren were to share equally in the net proceeds. The testator then dealt with a boat and a motor vehicle, which give rise to no issue.

Having regard to all of the circumstances, I am satisfied that the testator’s will is apparently rational and explicable. He appears to have made a judgment ‘apparently conscientiously’. Others may possibly have been more generous to an adult son born from an earlier brief marriage many years ago, but I am far from certain about that. The basis for the testator’s exercise of judgment is explicable and understandable. I do not think his will is perverse or that it represents an abdication of responsibility. His counsel did not suggest so. It represents a choice made conscientiously by an elderly father, doing what he thought was best for his family. I have concluded that in this case, the testator’s judgment should be respected.

The actual estate of the testator is modest. Its net realisable value is only approximately $265,000, excluding the legal costs of $125,000 incurred in this proceeding. The estate consists of one share in Richard Castle Pty Ltd plus an old motor vehicle that I will leave out of consideration. The assets of the company comprise the Bonnell’s Bay property and some cash on deposit, which is being rapidly diminished. The approximate net realisable value of the former is $500,000 and the amount of the latter is currently $29,579. The value of the net estate after deduction of the legal costs is therefore approximately $140,000. The only way that the plaintiff’s claim can be realistically satisfied is if the company is required to sell the Bonnell’s Bay property. The value of the family home at Manly, now owned by Beverley by survivorship, is approximately $5 million.

It is not difficult to understand the reasons why the testator’s will focussed on his wife and their three children, to the exclusion of the plaintiff. Beverley gave evidence and was cross-examined. She had lived a long life with the testator and they had made a successful partnership together. The last thing the testator would have wanted was to disturb her continued occupation of their home at Manly, which they owned as joint tenants. Neither had any superannuation, life insurance, private health insurance or funeral insurance. The testator’s intended provision for his wife’s future was dependent on Richard Castle Pty Ltd, the company through which he used to carry on his real estate business and which owns the Bonnell’s Bay property and holds limited cash on deposit.

Beverley is 82 years of age and apparently healthy – she certainly appeared to be vigorous – and wishes to continue living in the marital home at Manly. Age will eventually creep up on her and she will probably need care. She may be forced to move to an aged care facility or she may stay at home. The evidence, at least from one recognised care provider, indicated that the cost of in-home care ranged from $434,772 to $578,448 per annum for 24 hour care, depending on whether the carer sleeps over or there are three carers doing eight hour shifts. The cost of eight hours of flexible direct care within a 24 hour period was said to be $226,200 per annum.

The three children of Beverley and the testator have not made a success of their lives. Their circumstances are disheartening. The eldest son, Marc completed his schooling at St Joseph’s College, Hunters Hill. He is aged fifty-seven years, has a ‘Category IV HIV’ infection’ and lives alone in a one bedroom public housing unit with a cat and two love birds. He works one day a week in retail. He has few friends, no partner and rarely travels outside his local area. He has no significant assets and receives a disability support pension.

Micheline completed her schooling at Presbyterian Ladies College, Pymble. She is aged fifty-six years and is a divorced, unemployed mother of two sons, one of whom has serious health issues. From 2001 to 2016 she received a single parent’s pension. She now receives a Centrelink pension, the amount of which varies each fortnight depending on how much casual work she is able to undertake at a local children’s day care centre. She has no partner, a weight problem, takes anti-depressants, suffers from a long history of reflux esophagitis and has had gastric banding and three major hiatus hernias.

One of Micheline’s sons also has serious health issues. He has been diagnosed with Acute Idiopathic Thrombocytopenia Purpura and Kleinfelters Syndrome. He suffers from seizures and is prone to respiratory infections and extensive fatigue. His health is managed by a neurologist, a haematologist and an endocrinologist. Micheline’s other son has ongoing physical problems stemming from his posture and weak back. Micheline cannot afford private health insurance.

The youngest son, Dean, is aged fifty years. He left high school in Year 10 and is currently unemployed. He married in 2014 and his daughter was born in 2015. His wife was made redundant from her employment in 2015 while she was on maternity leave. As a result of Micheline’s divorce, Dean and his wife (then his partner) were able to purchase Micheline’s former matrimonial home at Frenchs Forest for a substantial discount. Dean derives his only current income from renting out a room in his mother’s house. The income is below the tax threshold. His wife expects to return to the workforce. It is not clear if Dean will do so; it appeared unlikely to me. He provided significant support to his parents and was his father’s first point of call whenever he needed assistance. He moved in to his parents’ home in 2016 prior to his father’s death, cooked the meals and did all the house maintenance. He is named as the executor in the will.

The plaintiff had less childhood advantages than his half-siblings but he has made more of his life. His mother naturally struggled while he was young, as a separated then divorced single mother. But the plaintiff succeeded. And his mother remarried. In 1976 the plaintiff completed his higher school certificate at St Pius X High School at Adamstown near Newcastle. He then joined the public service and became a clerk in the courthouse in Newcastle. He bought his first property at the age of twenty. He lived at home until about 1985 and shortly afterwards, was briefly married. The testator provided him and his first wife with return tickets to Greece for their honeymoon.

During the 1980s, the plaintiff studied part-time at the University of Newcastle and obtained a BA degree with a major in history. In 1991, he commenced Legal Studies at Macquarie University and subsequently graduated with an LL.B degree. In December 1993, he was admitted to practise as a solicitor of this court. His father, a former merchant seaman, who had no such education, no such advantages and probably never expected to have a solicitor for a son, attended his admission. The photographs indicate that he was a justly-proud parent. They celebrated with Moët & Chandon.

In 1991, the plaintiff started work with the NSW Director of Public Prosecutions, first as a clerk and after his admission, as a solicitor. He left the DPP in March 2005 with an indexed pension, 60% of which is payable to his wife if he predeceases her. The current annual pension amount is approximately $58,000. The fortnightly amount is $2,189.34 and tax is no longer payable on it. Counsel for the plaintiff was unwilling to agree to a reasonable estimate of the net present value of the pension, but it is considerable. In 2005, the plaintiff started his own legal practice. The firm is known as AMC Lawyers. The business expanded and he soon employed four professional staff. He had trouble, he says, with unproductive and overpaid staff and has since changed his business model. The business has settled down. His wife now does all the conveyancing, under the plaintiff’s supervision, and he does all other legal work. The plaintiff is clearly diligent, with a tendency to over-work.

I was not impressed by the plaintiff’s affidavit evidence. Not only did it consist of a rambling and unhelpful historical account of childhood minutiae, with much unreliable and largely irrelevant assertion about his father’s past property dealings, but it was notable for the number of relevant matters that were omitted, especially relating to the financial affairs of himself and his wife. Some matters emerged only during his cross-examination and the evidentiary picture remains incomplete and unsatisfactory, including in relation to a family trust known as the Lensie Trust. I did not think that the plaintiff was forthcoming. And it seemed obvious to me that he was overstating the ailments from which he has suffered. He retired from the DPP on medical grounds in March 2005 because of stress related to over-work. In November that year he started his own legal practice, which has prospered.

The plaintiff’s business and family affairs are organised around a company and a trust. The evidence suggested that he and his wife are well-advised and that they have a level of financial sophistication that the plaintiff’s half-siblings do not. The legal practice is conducted by AMC Lawyers Pty Ltd (AMC). The plaintiff is a director. His wife – who is clearly capable and efficient – is the primary financial manager. She is ten years younger. I infer that the plaintiff and his wife are equal shareholders. The family trust plays a role in their financial arrangements, although that role was not fully explored in the evidence. The financial report of the company for the year ended 30 June 2017 reveals that in both the 2016 and 2017 years the company’s revenue from professional fees was approximately $370,000.

The company funds the lifestyle of the plaintiff and his family. It has lent $400,000 to the plaintiff and his wife. It pays rent to the plaintiff’s wife for her property at 20 Queen Street, Waratah. It pays the rates and taxes. It pays their wages and superannuation contributions. It funds directly or indirectly four motor vehicles and their expenses – one for the plaintiff, another for his wife, and two for their sons who attend university. It pays ‘management fees’ presumably to the Lensie Trust, although the evidence did not make it clear. In the 2017 year, the amount of the management fees was $95,000. The Lensie Trust presumably also makes distributions to family members, although once again, the evidence did not make this clear.

In recent years the income from the legal practice, or borrowings from AMC, appear to have facilitated a number of overseas family holidays. Those holidays have included a month in Europe in the northern summer of 2011; three months in the United States in 2012; Europe again in September 2014 during the boys’ school holidays; and two weeks in London in 2018. The plaintiff and his wife are thinking of going on a ten day trip to France in June this year for the 75th anniversary of the D-Day landings.

The family assets include real estate. The plaintiff’s wife is the owner, or part-owner with her sister, of five properties. She owns the two adjoining properties in Queen Street, Waratah and land on Magnetic Island in Queensland. She also jointly owns with her sister properties at Carrington and Aberglasslyn in New South Wales. They purchased the property at 18 Queen Street in 1998; chose to put the property in her name; built their family home on the land; and moved in in September 1999. In 2004, they purchased the property at 20 Queen Street for $255,000 and put it in her name. In 2005, they purchased the Magnetic Island land. The Carrington property has been in the family of the plaintiff’s wife since the 1930s. In 1998, it was transferred into the names of the two sisters. There is an unused line of credit of $155,000 secured over the property. The Aberglasslyn land was not fully explored in the evidence. The two sisters appear to have owned two properties at Aberglasslyn – one at 19 Cockatoo Ridge and the other at 1 Oystercatcher Street. The latter was sold in 2015. The former was purchased in 2011, subdivided in 2014 and two houses were constructed on it in 2015.

The value of the properties is said to be $550,000 (18 Queen Street), $500,000 (20 Queens Street), $100,000 (Magnetic Island), $150,000 (Carrington, NSW) and $180,000 (Aberglasslyn, NSW). These values were not corroborated. The assets in the wife’s name also include an eclectic collection of military vehicles. In one affidavit, they were said to consist of ‘5 military vehicles, trailer and two motor vehicles’ with a value of $142,000. In another affidavit, they were described as ‘4 military vehicles, 1 military trailer and 1 boat trailer’.

There are borrowings of course, as you would expect, secured over 18 and 20 Queen Street and Aberglasslyn. The figures given by the plaintiff’s wife, which were also not corroborated, are $133,986 and $176,283 secured over the Queen Street properties in favour of the Commonwealth Bank of Australia, and $244,896 secured over Aberglasslyn in favour of Westpac Banking Corporation. The last figure seems questionable given the asserted value of the property, but was not explained. Naturally, there are tax liabilities for the plaintiff, his wife and AMC. It was not suggested that they were out of the ordinary. The amounts are indicative of healthy taxable incomes.

The two sons of the plaintiff and his wife live at home and attend university. They are supported by their parents. Both have been provided with motor vehicles. One is in his second year of a four year degree. The other is continuing his studies at the Newcastle University Conservatorium. They appear to be making their way in life. They are ineligible for government benefits because of the financial assistance that they receive from their parents.

There was force in the submissions of counsel for the defendants that:

I am confident that the plaintiff and his wife have the resources and the acumen to continue to live with the same modest success that they have done in the past. They have demonstrated their resourcefulness. The properties, the indexed pension, the income from the legal practice, and eventually any goodwill on its sale, should provide moderate security for their future, current borrowings notwithstanding.

Against this background, it is necessary to return to the exercise of the testator’s judgment. It is no light matter to interfere with a testator’s decision. As Dixon CJ observed in Stott v Cook at 448, when you review a man’s testamentary decisions, you must ‘place yourself so to speak, in his arm chair and consider the circumstances by which he was surrounded’. I have sought to do that. And I have borne in mind the Chief Justice’s cautionary advice in that case at 449:

It is worth recalling some further words of Sir Owen Dixon, counselling against the tendency of some courts to treat a testator’s will as having only prima facie effect. He said in Pontifical Society at 19:

Earlier in Pontifical Society, Dixon CJ referred at 19 to the importance of considering ‘what the testator regarded as superior claims or preferable dispositions’. In Friend v Brien [2014] NSWSC 613 at [62], White J (as he then was) referred to the importance of ‘respecting a capable testator’s judgment where it appears that a reasonable judgment has been made’. A reasonable judgment is usually one that it is apparently rational and explicable having regard to the circumstances. It does not necessarily mean ‘fair’. White J also referred to a testator’s judgment made ‘apparently conscientiously’. He explained at [63]:

I expressed similar views in Steinmetz v Shannon [2018] NSWSC 1090 at [8]-[11], which I will not repeat. Among other things, I referred to the significance of the fact that a ‘deceased appears to have thought carefully about what was appropriate’. And I quoted the following statement by Callaway JA in Grey v Harrison [1997] 2 VR 359 at 366:

White J also elaborated on the importance of these considerations in Slack v Rogan (2013) 85 NSWLR 253; [2013] NSWSC 522 at [127]. And he returned to the issue (as White JA) in Sgro v Thompson at [80]-[88]. In the former, he said at [127]:

I have said enough to make clear that the circumstances do not, in my view, justify the conclusion that the testator’s failure to make provision for the plaintiff should be disturbed. In my view, the testator was reasonably entitled to make no provision for his first born son who, despite adversity in his early years, has made more of his life than his other three children. The testator is unlikely to have been aware of the detail of the financial affairs of the plaintiff and his wife. But if he had been aware, I suspect he would have been proud and impressed with what his son had achieved. A legacy of a few hundred thousand dollars would have been a thoughtful gesture. But the testator was not obliged to be thoughtful.

For the reasons that I have explained, having regard to the matters specified in Section 60(2)(a), (b), (c), (d), (e), (g), (j) and (p) of the Act, I am not satisfied that adequate provision for the plaintiff’s proper maintenance or advancement in life has not been made by the will of the testator. In the circumstances, I regard the decision by the testator to make no provision for the plaintiff as reasonable, justifiable and understandable.

I should say something about the costs of this proceeding. On the plaintiff’s side there seems to have been little or no regard to the principle of proportionality. It is possible that the fact of a conditional costs agreement has wittingly or unwittingly contributed to the inflation of the plaintiff’s costs. Not only a party, but also a party’s solicitor and counsel, have a statutory duty to assist the court to facilitate, among other things, a ‘cheap resolution of the real issues’ in dispute: Section 56(1) and (3) Civil Procedure Act 2005 (NSW). That includes doing what is reasonably necessary to ensure that ‘the cost to the parties is proportionate to the importance and complexity of the subject matter’: Section 60.

The estimate of the plaintiff’s costs from commencement to conclusion of the proceeding is $178,050. I regard that amount as discreditable. It is made up of $80,000 for the solicitor and $98,050 for counsel, including unstated disbursements that could only be minimal. The claim propounded at the hearing was for $250,000. The hearing took one day. The plaintiff himself was largely responsible for his affidavit evidence. (I will return to that issue). The case hardly justified senior counsel. It was not complex. There was no issue as to the plaintiff’s eligibility. Quite why an estimate of three hearing days was given to the Registrar is difficult to fathom – other than that it increased the potential legal fees.

There were only two witnesses in the plaintiff’s case (the plaintiff and his wife) and only two witnesses who were cross-examined in the defendants’ case (the mother and youngest son). The affidavit evidence of Marc and Micheline was simply accepted. The cross-examination of Beverley and Dean was neither particularly challenging (for them) nor particularly useful (for me). On the plaintiff’s side, there was, frankly, not a lot of work to do, particularly because the plaintiff apparently insisted on drafting his own affidavits. Counsel for the defendants had more to do, and could have done more, if the financial affairs of the plaintiff and his wife had been able to be more thoroughly examined.

When I complained about the plaintiff’s affidavit evidence being unhelpful and far more extensive that it needed to be, junior counsel disavowed responsibility. She said ‘The plaintiff insisted on drawing his own [affidavits]’. She added ‘We did not have control. It was a difficult situation’. This is, I am afraid, an abdication of the responsibility of the plaintiff’s legal representatives. No matter how determined a plaintiff may be to unburden himself of memories of real or imagined distant family events, his solicitor and counsel are duty-bound to restrain his enthusiasms.

I referred to this duty in Thomas v SMP (International) Pty Ltd [2010] NSWSC 822 at [19]:

And in Donnelly v Australia and New Zealand Banking Group Limited [2016] NSWSC 263 at [16], I drew attention to certain remarks by Sir Anthony Mason:

The summons must be dismissed. This case has achieved nothing except unnecessary cost and unwanted misery and stress: see Sung v Malaxos (No 2) [2015] NSWSC 290 at [12] and [14]. It is, unfortunately, not the only one of its type in this area of the law. The only saving grace about this case is that I confined it to one day rather than the three days that were proposed. The plaintiff has received nothing. His solicitors and counsel will receive nothing. The usual order that the plaintiff pay the defendants’ costs would be financially disastrous for the plaintiff and his wife, and undermine part of the reasoning on which I was prepared to exercise my discretion to refuse to make a family provision order.

Counsel for the defendants informed me that there was authority justifying me making no order as to costs, although that was not of course his primary submission. He presumably had in mind Singer v Berghouse (1993) 114 ALR 521 at 522 (Gaudron J). I have in fact made such an order on several past occasions. The estate is better able to absorb the defendants’ legal costs than the plaintiff is able to afford them. Reluctantly, and in all of the circumstances, I will therefore make no order as to costs.