Estrangement from parents and family provision

Estrangement from parents and family provision

PARKER  & ORS v AUSTRALIAN EXECUTOR TRUSTEES LIMITED [2016] SASC 64 

The following is annotated.

Summary:

Claim by five adult children of testator – majority of estate left to defendant for charitable purposes – no competing claims – whether children left without adequate provision – weight to be given to estrangement.

Held: Allowing the applications. All children have been left without adequate provision for their proper maintenance, education or advancement in life.

Overview

1. On 28 January 2013 the testator (Alec Arnold Veit) died aged 83 years. He was survived by his five adult children who are the plaintiffs. The testator and his wife separated in 1976 and were divorced in 1980; he never remarried.
2. By his will made on 30 March 2012, the testator left a farming property at Sherlock to his son, Alec and a gift of $100,000 to his daughter, Vicky. No provision was made for the testator’s other three children, Julie, David and Sandra. As of 21 January 2016, his net estate was valued at $1,692,250.17. A number of relatively small monetary gifts were left to some of the testator’s grandchildren, siblings, relatives and friends. These particular gifts are not contested. The residue of his estate was left to The Alec Veit Charitable Trust. The testator appointed the defendant, the Australian Executor Trustees Limited (“the AET”) as his executor and trustee. No challenge was made regarding testamentary capacity. All five children have made an application pursuant to section 7 of the Inheritance (Family Provision) Act 1972 (SA) (“the Act”) seeking provision out of the estate. There are no competing claims.

The will

3. The testator gave the majority of his estate to his executor. He bequeathed some gifts, which appear in broad terms, in the following order in the will;
   1. $100,000 to his daughter Vicky Carolyn  Parker ;
   2. $1000 to each of his six grandchildren;
   3. $1000 to each of his two sisters and one brother;
   4. $1000 to each of his two nieces and three nephews;
   5. $1000 to his friend Ingrid Veit;
   6. $10,000 to his friend Dianne Joy Callagher;
   7. The farm at Sherlock to his son Alec Jeffrey Veit.

Separation of parents

10. In 1976 the testator’s wife left him. It occurred while the testator and Alec were at a football game. David, the eldest son, received a phone call from his mother saying that she and his sister Sandra wanted to leave the farm. At the time David was living and working in Victoria. David went over to the farm and picked them up. He later called in on the way through to the football game and told Alec that “Mum and Sandra are leaving home”.^[2] All three went to live with their auntie in Irymple, Victoria.

Estrangement of Sandra, David and Julie

11. The issue of the estrangement of Sandra and David from the testator, and to some extent Julie, was raised during the course of the trial.
12. Since 1976 Sandra and David maintained contact with the testator at family events. Sandra and David would speak to him at family events as would Julie. They did so without rancour or hostility. They still acknowledged the fact that he was their father. Despite this contact, the testator claimed he had “no contact with David and Sandra since [the] divorce in 1978.”^[3] The circumstances of the marital separation may explain why he refused to provide for them in his will. To the testator “they left him”.^[4]
13. Julie had some contact with him outside of family events. In 1976 Julie was living with her then husband (“the Bubners”) away from the family farm when her mother left the testator. She maintained contact with her father up until 1987 when she moved to Victoria with her husband. In the early 1980s, the Bubners leased some farming land off the testator. The lease was terminated after about three years. The testator claimed Julie still owed him some money in relation to the lease. Julie denied she owed this money. She felt the testator never approved of her husband. He told her the relationship would not last.^[5] Since 1987 Julie had contact with the testator only at family gatherings. On 8 February 2012, when instructions were taken for the making of his will, the testator claimed that he had “no contact with daughter Julie for 25 years”.^[6] He made no provision for Julie in his will.

Vicky and Alec

14. There are no estrangement issues in relation to Vicky and Alec. Both kept in regular contact with the testator in particular Alec. Both were provided for in the will.

Consideration of the issues

Threshold

99. Each of the plaintiff’s claims is to be assessed independently. I have discussed their background and financial situation earlier in these reasons. All of the plaintiffs were good witnesses and I have accepted their evidence. I do not intend to repeat my findings.
100. I am satisfied that each of the plaintiffs has been left without adequate provision for their proper maintenance, education or advancement in life. The estate is relatively large. There are no competing claims. The only evidence led and submission made in opposition to the plaintiffs’ claim was the issue of testamentary freedom. The moral obligation owed by the testator to his children in disposing of his estate arises, in part, from his own conduct towards them during their childhood.
101. Clearly Alec has the strongest moral claim of the children followed by Vicky. The question of estrangement arises in relation to the other three children but in my view that was largely a product of the testator’s own behaviour. He did little for them during his life and less on his death. That they maintained any relationship with him is to their credit. They did not demonstrate any hostility towards him. They accepted that he was just a difficult man.
102. For all of the plaintiffs there was a moral and financial basis for their claims although the weight to be given to those factors varied between the plaintiffs.
103. The testator made no attempt to ascertain the financial position of any of his children. He clearly gave minimal thought about any obligation he may have to his children. He gave no thought to provision for their adequate and proper maintenance, education or advancement in life. He quite simply cared little about his children in life or at death.
104. He had no relationship with any particular charity.

What provision is to be made?

105. I accept that the provision which the Court may properly make in default of testamentary provision is that which a just and wise father would have thought it his moral duty to make in the interests of his children had he been fully aware of all the relevant circumstances.
106. In exercising my discretion I must have regard to all of the circumstances including amongst other things each applicant’s financial position, the size and nature of the deceased’s estate, the totality of the relationship between each applicant and the deceased, and the relationship between the deceased and other persons who have legitimate claims upon his bounty. In this sense similar considerations are relevant to this issue as are relevant to the first stage of the inquiry and the assessment of what is a proper level of maintenance and what is adequate provision, largely determines the order to be made.^[75]

Vicky

107. Vicky is in the strongest financial position. She has also been bequeathed $100,000 from the estate. The  Parkers  own two properties. Doug has savings in the vicinity of $150,000. They run a profitable farming business. Both wool and cattle prices have been fairly stable for the last couple of years.^[76] The farm should continue to be a reliable income for them. They also have livestock assets; namely cattle, sheep and goats. Despite this, in my view, the provision made to Vicky did not leave her with adequate provision for her proper maintenance, education or advancement in life.
108. Her financial position, while better than that of her siblings, is based on the continued success of the farm which can and has fluctuated depending upon the seasons. They have savings but no super and will rely on selling assets to live on retirement. Combined with the moral duty owed by the testator and taking into account all of the circumstances I consider that a further provision of $75,000 is appropriate in the circumstances.

David

109. This is not a case where the estrangement constitutes disentitling conduct. It is however a factor to be taken into account.
110. David owns no property. His income and savings are modest. He has no financial buffer for future contingencies should his current living arrangements dissolve. He is supporting his partner who is unemployed. In these circumstances, I consider that provision of $175,000 is appropriate.

Sandra

111. Like David this is not a case where the estrangement constitutes disentitling conduct. It is however a factor to be taken into account.
112. Sandra has a property, but it is highly mortgaged. She has modest superannuation. She has little by way of assets and also no financial buffer for future contingencies. I consider that provision of $150,000 is appropriate.

Julie

113. Again this is not a case where the estrangement constitutes disentitling conduct. It is however a factor to be taken into account.
114. The financial position of Julie, particularly Gejurama, cannot be accurately ascertained. However, her financial position could only be described as modest. Like her siblings she has no financial buffer for future negative contingencies. I consider a provision of $150,000 is appropriate.

Alec

115. In my view, Alec has the strongest moral claim to the estate. He worked the family farm since a child. Since 1980 he has lived and worked the farm at Sherlock with his wife. He has had a difficult life. He lived on the farm not knowing whether he was going to be kicked out by the testator. He worked and lived on the farm under suboptimal conditions. Alec was never in a position to put money into the house or farm to improve the conditions because he did not know what his father was going to do. The testator refused to spend the money required to repair the property. Alec used his own funds to keep the farm going. He was never compensated for this by the testator. There is no hot water system in the house. The farm is still in poor condition and the house needs to be updated. I have had regard to the estimates made by Alec as to the total cost of repairs. I consider that provision of $185,000 is appropriate.

Order

116. Pursuant to section 7 of the Act I order that provision be made out of the estate of Alec Arnold Veit to the following persons in the amounts indicated: