Anderson v Pepper
[2014] NSWSC 1036
•31 July 2014
Supreme Court
New South Wales
Medium Neutral Citation: Anderson v Pepper [2014] NSWSC 1036 Hearing dates: 23 July 2014 Decision date: 31 July 2014 Jurisdiction: Equity Division Before: Stevenson J Decision: Leave granted to apply for provision out of time; provision granted in the sum of $80,000
Catchwords: SUCCESSION - family provision - provision sought by de facto spouse under Family Provision Act 1982 - application out of time - whether "sufficient cause" shown for delay in application - de facto spouse received no provision in will - whether inadequate provision made for de facto spouse and, if so, what provision ought to be made Legislation Cited: Family Provision Act 1982
Property (Relationships) Act 1984
Succession Act 2006
Probate and Administration Act 1898Cases Cited: Gersbach v Blake [2011] NSWSC 368
Gorton v Parks (1989) 17 NSWLR 1
Lajcarova v Todorov [2011] NSWSC 522
Manuel v Lane [2013] NSWCA 61
McKenzie v Topp [2004] VSC 90
Pontifical Society for the Propagation of the Faith v Scales (1962) 107 CLR 9; HCA 19
Taylor v Farrugia [2009] NSWSC 801
Vasconelos v Bonetig [2011] NSWSC 1029Category: Principal judgment Parties: Lawrence Edward Anderson (Plaintiff)
Lee Pepper (Defendant)Representation: Counsel:
R E Quickenden (Plaintiff)
A Power (Defendant)
Solicitors:
Ryan & Seton Lawyers (Plaintiff)
Leverage Group (Defendant)
File Number(s): SC 2013/166823
Judgment
Introduction
This is an application made by Mr Lawrence Anderson for provision out of the estate of the late Mrs Janet Ann Nicholls. The defendant, Mr Lee Pepper, is Mrs Nicholls only surviving child and is the administrator of her estate. For convenience, and without any intending any disrespect, I shall refer to the deceased and the parties by their given names. In that regard, Mr Anderson was known as "Lou" and I shall refer to him by that name in these reasons.
Janet died on 6 November 2004. Accordingly, Lou's application for provision is to be determined under the Family Provision Act 1982 ("the Act"), rather than the Succession Act 2006.
It is common ground that Lou was Janet's de facto spouse from about 1989 until her death; that is for some 15 years. Lou is thus eligible to make application for provision.
For some time after Janet died, it was thought that she left no will. Accordingly, on 9 May 2005, Letters of Administration were granted to Lou and Lee.
Subsequently, in August 2006, a will that Janet made on 21 January 1976 was located ("the Will").
The Will was made more than a decade before Lou and Janet met. At the time she made the Will, Janet was married to a Mr Harold Nicholls (who was her second husband). Janet had divorced Lee's father, her first husband, several years earlier.
By the Will, Janet left her estate to Mr Nicholls and provided that if, as happened, he predeceased her, the estate would be distributed equally to Lee and to Mr Nicholls' children, Lynette and Geoffrey. Lynette and Geoffrey have renounced any interest in Janet's estate. Lee is thus, in effect, Janet's sole beneficiary.
Under the Will, Janet appointed Mr Nicholls and if, as happened, Mr Nicholls predeceased her, Lynette and Geoffrey as executors. Lynette and Geoffrey have renounced probate.
In all those circumstances, it was common ground before me that the Letters of Administration of 9 May 2005 should be revoked, and that Lee be appointed administrator of Janet's estate, with the Will annexed. I made orders to that effect at the outset of the hearing on 23 July 2014.
Lou made this application for provision on 29 May 2013; some nine and a half years after Janet's death. The application is thus made some eight years out of time, and can only proceed with leave (s 16(3) of the Act).
The estate
Janet's undistributed estate comprises a property at Kanwal, with an estimated value of $300,000, the furniture and fittings at Kanwal, and $50,256.03 in the trust account of Mr John Ryan, the solicitor acting for Lou in these proceedings.
The Kanwal property was purchased by Janet in the following circumstances.
In 1992, several years after she and Lou commenced living together, Janet purchased a home unit at Queenscliff. Janet used the proceeds of a property settlement with Mr Nicholls to pay the deposit. Lou contends that he and Janet contributed equally to the payment of the "mortgage instalments" and "outgoings" for the Queenscliff property and that he later gave Janet some $46,000 from a workers compensation payment "to pay the deceased one half of the deposit she had paid for the Queenscliff unit".
Janet purchased the Kanwal property in 1999 for $123,500. Lou gave evidence that this purchase was funded, at least in part, from a "refinance" of the Queenscliff property. Janet sold the Queenscliff property in 2001 and she and Lou moved into the Kanwal property where they remained until Janet's death on 6 November 2004. Lou has continued to live at the Kanwal property since then.
The Kanwal property is presently registered in the joint names of Lou and Lee as administrators. Evidently, this occurred at a time when it was thought Janet had died intestate and after the Letters of Administration were granted to Lou and Lee. It is common ground that neither has a beneficial interest in the Kanwal property, and because Lee has now been appointed administrator of Janet's estate, the legal title in the Kanwal title must be transferred to him.
Lou gave unchallenged evidence that he and Janet shared all finances and household chores, but did not otherwise assert any further financial contribution to the purchase or maintenance of the Kanwal property.
The provenance of the $50,256.03 in Mr Ryan's trust account is unclear. Some evidence suggests it was the proceeds of Janet's superannuation. Other evidence suggests it was the proceeds of an amount that Janet had on deposit with Colonial First State Investments Pty Limited. It is common ground, however, that this sum forms part of Janet's estate, and must now be transferred to Lee as administrator of Janet's estate.
Part of Janet's estate has, in effect, been distributed.
On 22 September 2005, a sum of $69,483.09, being the balance (after payment of Janet's funeral expenses) in an account maintained by Janet with the Commonwealth Bank of Australia was paid to Lou. That sum has been dissipated.
Shares owned by Janet in Insurance Australia Group Limited, valued in the inventory annexed to the Letters of Administration of 9 May 2005 at $4,826 have been sold and the proceeds divided equally between Lou and Lee.
Finally, in about March 2005, Lou sold a car belonging to Janet and retained the proceeds; something in the order of $5,000.
The Gorokan property
At the time of Janet's death, she and Lou were joint tenants of a property at Gorokan. Janet and Lou purchased that property as an investment in November 2001 for $168,000. Lou said he used part of his superannuation entitlements to fund part of the deposit. Lou has taken Janet's interest in that property by survivorship. He sold the property for $245,000 in February 2008 and received the net proceeds of $186,743. This sum has also been dissipated.
Issues
Three issues arise. First whether Lou should be granted leave under s 16(2) of the Act to bring these proceedings and, in that regard, whether "sufficient cause" has been shown for the purpose of s 16(3) of the Act for not having made his application within 18 months of Janet's death. Second, assuming leave is granted, whether the provision made by Janet in the Will for Lou is "inadequate" for Lou's "proper maintenance, education and advancement in life" for the purposes of s 9(2)(b) of the Act. Third, assuming such provision was "inadequate", what provision ought to be made in Lou's favour out of Janet's estate.
The witnesses
Both Lou and Lee gave evidence before me, and were cross-examined.
In his affidavit evidence Lou said:
"My health has declined. I am forgetful about much detail of my life. I see Dr Reneke Neurologist of Gosford concerning this problem. I can keep appointments, I can travel by bus and do my own shopping. I keep notes to aid my memory."
and:
"I continue to make notes for myself everyday needs and appointments."
Lou is now 66 years of age and has been diagnosed as suffering from Alzheimer's disease. On 5 March 2013, Lou's general practitioner stated that "he clearly has Alzheimer's disease" and in a note made on 11 June 2014 recorded "memory seems to be stable. He can forget what he was doing."
Most recently, Dr Iftikhar Hussein recorded:
"Mr Anderson has been a patient of this medical practice for 16 months. He suffers from hypertension and more recently with cognitive symptoms. "
I observed Lou closely as he gave evidence before me. It was clear to me that Lou has a limited ability to recall past events. He accepted that his memory of events was poor and that many of the statements that he had in his affidavit evidence (such as where Janet worked) were incorrect. He said he could not recall what use he had made of the $69,483.09 from the CBA deposit referred to at [19] above or the $186,743 proceeds of sale of the Gorokan property (see [22] above). As to the CBA deposit, Lou said in cross-examination that he thought he had used the money to buy a car and make an investment "that went broke". However, in his affidavit evidence he said that was how he used the proceeds of Gorokan. Lou was not able to give an explanation for why he had not disclosed his receipt of the $69,483.09 in his original affidavit (made on 16 August 2013) and why he had only acknowledged receipt of that sum in an affidavit sworn on 12 June 2014. I did not get the impression that Lou was dissembling. It appeared to me that Lou now has very little recollection, if any, of what use he has made of the funds from Janet's CBA deposit, or the proceeds of sale of the Gorokan property.
In submissions, Mr Quickenden, who appeared for Lou, accepted that Lou has "cognitive problems".
Lou accepted that, in times past, he has been a heavy drinker and gambler, although he asserted that he has put these issues behind him.
In cross-examination, Lou was shown an extract from his account at the Greater Building Society in Hamilton for April and May 2011. That statement showed a deposit of $17,415.16 from "AMP Life" (evidently part of Lou's superannuation). The statement also displayed withdrawals described as "ATM Charges", almost on a daily basis, totalling some $11,200, from various hotels and clubs in the Wyong area. That evidence suggests that, at least during that period, Lou was spending much of his time in hotels and clubs gambling and drinking. That conduct may well explain the cognitive challenges that Lou presently has.
In these circumstances I must approach Lou's evidence as to past events with caution as it appears clear to me that he no longer has the ability to recall past events reliably.
On the other hand, Lee gave his evidence clearly, openly and responsively. Lee was prepared to give evidence which was adverse to his interests as the sole beneficiary of Janet's will, particularly so far as concerns Janet's stated wish that Lou be permitted to occupy the Kanwal property (the detail of which I will set out below). I found Lee to be an impressive, honest witness.
To the extent that Lou's evidence conflicts with that of Lee, I have no hesitation in finding Lee to be the more reliable informant.
Janet's statements on Christmas Day 2003
Lee gave the following evidence of a conversation that took place on Christmas Day 2003 between Janet, Lee and Lou, and in the presence of Lee's former wife, Nicole.
Lee's evidence was the conversation was as follows:
"[Janet]: 'When I die, you and [Lou] will both be looked after. There are two houses: I want [Lou] to have [the Gorokan property] so that he can ... live off the rent and I want you [Lee] to have [the Kanwal property], as long as you allow [Lou] to live there until he dies or becomes unable to maintain the house. Of course Lou will be responsible for the rates, utilities and any other expenses to keep the house in perfect condition ...
[Lee]: 'Okay Mum, fine by me, whatever you want. Are you fine with this, [Lou]?'
[Lou]: 'Fine by me'."
In his affidavit evidence, Lou denied such a conversation took place. However, Lee gave clear evidence about the conversation and, for the reasons I have set out above, I consider Lee to be the more reliable witness. Nicole swore an affidavit in these proceedings that was not read. I must therefore assume that Nicole was not able to give any evidence of this conversation that would have assisted Lee's case. Nonetheless, I accept Lee's evidence.
In any event, Lou gave evidence of conversations with Janet that were, at least up to a point, to similar effect.
Thus Lou deposed:
"The deceased ... often said to me at the Kanwal house, 'I want you to have this house. You have worked hard; you now own half of everything. I want to see that you are right for the future. I want you to stay here.' She also said 'I had better make will'. To the best of my knowledge she did not make a will while we were together."
The words thus attributed by Lou to Janet go somewhat further than those of Christmas Day 2003 to which Lee deposed. According to Lou, Janet told him that she not only wanted him to have the right to occupy the Kanwal property but that he now owned "half of everything". In circumstances where Janet and Lou lived together for some fifteen years, and shared all of their financial resources, I do not see it as inherently improbable that Janet would say this. Nor do I see these words as necessarily irreconcilable with those Lee recalled from Christmas Day 2003. Janet's reported statement that "you now own half of everything" is arguably consistent with Lee's evidence that Janet said Lou "should have Gorokan" and that Lee "should have Kanwal", albeit subject to Lou's occupation. And Janet's reported statement that she wanted Lou to "stay here" (at Kanwal) is arguably consistent with her statement to Lee about allowing Lou to remain at Kanwal. In these circumstances, I think it probable that Janet did say to Lou something to the effect as set out at [39]. I will return to this when considering the question of what provision should be made for Lou (see [96] below).
After Janet died, and notwithstanding the discovery of the Will in 2006, Lee made no attempt to disturb Lou's occupation of the Kanwal property.
In cross-examination Lee gave evidence, which I accept, that this was because he wanted to give effect to his mother's intentions, as revealed by her on Christmas Day 2003.
Lee gave evidence, which I also accept, that the first conversation he had with Lou after his mother's death concerning Lou's occupation of the Kanwal property was in about August 2011 in the following circumstances:
"In late 2010 or early 2011, [Lou] disconnected his landline and mobile telephone lines and I could no longer contact him. I went to the house in [Kanwal], as I was concerned that something was wrong.
[Lou] was okay and we had a cup of tea together. I wanted to make sure that the house was being maintained and that Lawrence still understood and agreed with my mother's wishes as set out above. We had the following conversation:
[Lee]: 'Okay Lawrence [Lou], I'm just trying to go through this in my head mate, just to clarify it because it's got to be sorted out.'
[Lou]: 'Yes it's bloody been going on since 2003.'
[Lee]: 'Yep. So when Mum talked to us that Christmas Day, she said that her funeral would be covered by that IAG policy.'
[Lou]: 'Yep, I remember.'
[Lee]: 'She said there'd be a house for you, there'd be a house for me, and that the money would be divided up between you and me and the kids [that is, Lee,s children].'
[Lou]: I'm not sure if [Gorokan] was sold before your mum died or not.'
[Lee]: 'No....No, I know that for a fact it hadn't.'
[Lou]: 'It had the same tenant there for 13 years.'
[Lee]: 'Yes because basically the agreement was [the Gorokan property] was yours...'
[Lou]: 'Yep'.
[Lee]: 'And that's fine. And this house [the Kanwal property] is mine, agreed?'
[Lou]: 'Yep'.
[Lee]: 'And that you got to live in this house for as long as you needed to, and I'm cool with that, and that's fine, but as I said, this house belongs to me and I need to know that you understand that'.
[Lou]: 'Yeah that's one thing that was stated and I know that. Some things I still remember and some things I don't but I remember that'."
Again, Lou denied that this conversation took place. However, again, I accept Lee's evidence.
Shortly prior to that meeting, on 15 July 2011, Lou's solicitor, Mr Ryan, had written to Lee "proposing a course of action". Lee was shown that letter in cross-examination, although it was not tendered. Lee agreed that after he received that letter he consulted his then solicitors, Messrs Lees & Givney.
Mr Ryan gave the following evidence in his affidavit as to what happened then:
"From August 2011 correspondence and negotiations were exchanged with Lees & Givney Solicitors for [Lee]. After [Lee] ceased instructing that firm correspondence was sent directly to [Lee] until March of 2012 when Thomas Booler & Co were instructed [by Lee]...
Correspondence and negotiations with the solicitors for [Lee] continued in 2012.
Proceedings were commenced on or about 22 May 2013. The delay of [Lou] in commencing proceedings subsequent to [Janet's death] on 6 November 2004 appears to be due to the late finding of the Will dated 21 January 1976 and negotiations between the parties."
That material was received into evidence without objection.
Has Lou shown "sufficient cause" under s 16 of the Act?
As I have mentioned, as Lou has brought these proceedings more than 18 months after Janet's death (indeed, more than nine years after her death) I may not make an order for provision unless satisfied that Lou has shown "sufficient cause" for not having made his application in time.
As Ms Power, who appeared for Lee, submitted, it is necessary that there be an explanation for the delay. Factors that are relevant include the sufficiency of the explanation for delay, any prejudice that has been occasioned to any beneficiary by the delay or any unconscionable conduct on the part of the applicant. A mere change of mind on the part of the applicant is ordinarily not a sufficient cause to grant an extension (per Brereton J in Taylor v Farrugia [2009] NSWSC 801).
Ms Power also drew attention to the observations of White J in Vasconelos v Bonetig [2011] NSWSC 1029 as follows:
"...[T]he time stipulations for commencing proceedings under the Act are there for a good purpose. The length of time that has now elapsed since the deceased's death would inevitably affect the quality of evidence a party might wish to give in the proceedings in relation to family matters occurring prior to the deceased's death. Memories fade over time. The policy behind s 16(2) would be put at nought if an applicant could decide at his or [her] own choosing how long he or she should wait before plucking up the strength to institute proceedings." (at [20]).
Ms Power submitted that Lou "has not given any explanation for the delay, far less a sufficient explanation, to justify the granting of an extension of time".
Ms Power accepted that the location of the Will in August 2006 "changed [Lou's] position with respect to [Janet's] estate" but pointed out that shortly thereafter, on 24 August 2006 the solicitor then acting for the estate, Mr Keith Allen from JJ Lees & Associates, wrote to Lou informing him of the location of the Will and stating:
"It occurs to us that there will have to be a Revocation of the Grant of Letters of Administration and that an Application for Probate of the Will dated 1976 and at the same time, an Application by you for Leave to commence Family Provision Act proceedings as a result of the defacto relationship. The Statute of Limitation provides that you have only eighteen months from the date of [Janet's] death and we note that was 6th November 2004 and that the time to lodge the Application expired on 5th May 2006."
On 17 December 2007, Mr Allen wrote to Lou and Lee stating:
"We can confirm that you should each obtain your own legal advice either jointly or severally and that if there is an Application for Probate of the Will of 21 January 1976 it may be that [Lou] can seek leave to take proceedings under the Family Provision Act as we understand that he was the de facto of the deceased for many years."
A short time later, on 8 January 2008, Lou telephoned Mr Allen's office. The person taking Lou's call made a note:
"Lou Anderson phoning. Received our letter stating we will no longer be acting for him and wants to know what he has to do from here.
Wants to know whether we would be able to represent him if he was to take Family Provision Act proceedings if Probate was granted to the will."
Mr Allen made a note the following day, 9 January 2008:
"Rang Lou he will speak to Lee."
Lou has given no explanation as to why, in these circumstances, he did not commence these proceedings until May 2013.
However, when regard is had to all the circumstances, I am satisfied that sufficient cause has been shown for the delay.
There is no suggestion in the evidence that, prior to the commencement of these proceedings, Lee, or anyone else, suggested to Lou that his occupation of the Kanwal property would be disturbed. On the contrary, Lee was very clear in cross-examination that he understood that his mother wished Lou to have the right to occupy the Kanwal property so long as he was able to maintain it, and paid for rates, utilities and other expenses necessary to keep the house in good condition. Lee said that he wished to honour his mother's wishes. In cross-examination he emphasised that:
"I didn't want to cause [Lou] to be turfed out of the house".
Lee made no contact with Lou concerning Lou's occupation of the Kanwal property between the time of Janet's death in 2004, and Lee's August 2009 visit to Lou referred to at [43] above. And on that occasion, Lee confirmed that, so far as he was concerned, Lou could remain in occupation of the property.
In these circumstances, it is not surprising that Lou did not see the need to commence proceedings under the Act.
It is true that Mr Allen had drawn Lou's attention to the Act, although, on the first occasion he did so, it was to inform Lou that he was already out of time to commence proceedings (see [52] above).
In those circumstances, it is not clear what prompted Lou to bring these proceedings; although his decision to do so was made after the "negotiations" to which Mr Ryan referred (see [46] above) took place.
The inference that I draw is that although Lee was making no threat to Lou's occupation of the Kanwal property, following or during the "negotiations" to which Mr Ryan referred, Lou received advice that the informal arrangements he had with Lee (as confirmed in their August 2009 meeting) were insufficient to protect Lou's position and that, accordingly, proceedings should be commenced. I do not see this situation as being one where Lou, for no good reason, simply changed his mind and eventually plucked up the courage to bring the application.
I see no evidence of any prejudice caused to Lee by the delay. As I have said, Lee has at all times been anxious to give effect to his mother's wish that Lou remain in occupation of the Kanwal property.
Ms Power pointed to Lou's failure to reveal, in his first affidavit, his receipt and dissipation of the $69,483.09 from Janet's CBA deposit and submitted that this was "unconscionable" behaviour inconsistent with a finding of "sufficient cause". However, in view of Lou's inability now to remember the relevant circumstances, I am not prepared to make such a finding.
I am satisfied that there is "sufficient cause" to allow Lou's claim to proceed.
Is the provision made in the Will for Lou adequate?
This a jurisdictional question; unless I come to the conclusion that the provision made in the Will for Lou is not adequate, I have no power to make any award for provision. As Hallen AsJ (as his Honour then was) said in Lajcarovav Todorov [2011] NSWSC 522 at [79]:
"This is commonly referred to as 'the jurisdictional question'. At this stage, the court will consider whether it can make an order for provision for the maintenance, education and advancement in life of a particular applicant." (emphasis in original)
What is involved is a comparison between the provision actually made in the Will (here none) on the one hand and the reasonable requirements for the maintenance, education and advancement in life of Lou on the other.
Lou and Janet had lived in a de facto relationship for some 15 years when Janet died. During that time they pooled their financial resources and contributed, to the extent of their financial abilities, to their joint household.
They had been living together at the Kanwal property since 2001. It was Janet's express wish that Lou continue to have the right to reside in the Kanwal property for as long as he was able.
The Will makes no such provision and is, at least to that extent, not adequate to provide for Lou's maintenance, education and advancement in life.
I find the jurisdictional threshold established.
What provision should be made?
Having concluded that the provision made by Janet in the Will for Lou was not adequate, I turn to the question of what, if any, provision should be made in Lou's favour. This is often referred to as the second stage of the two-staged process involved in these cases. As Hallen AsJ said in Lajcarova at [84]:
"At the second stage, the court determines whether it should make an order, and if so, the nature of any such order, having regard to the facts known to the court at the time the order is made. The fact that the court has a discretion means that it may refuse to make an order even though the jurisdictional question has been answered in the applicant's favour." (emphasis in original)
It is clear that determination of this second stage of the enquiry involves similar considerations to those which arise at the first stage. What is involved is "an evaluative determination of a discretionary nature, not susceptible of complete exposition" and one which is "inexact, non-scientific, not narrow or purely mathematical, and fact and circumstance specific" (per Emmett JA, with whom Meagher and Ward JJA agreed, in Manuel v Lane [2013] NSWCA 61 at [9]; speaking of the discretion to be exercised under s 20 of the Property (Relationships) Act 1984; which I see as involving, in this respect, the same considerations as arise under the Act).
The guiding "principles" were summarised by Hallen AsJ in Gersbach v Blake [2011] NSWSC 368 at [94]-[96] as follows: -
(a) it is not appropriate to endeavour to achieve a "fair" disposition of the deceased's estate;
(b) it is not part of the court's role to achieve some kind of equity between the various claimants;
(c) the court's role is not to reward an applicant, or to distribute the deceased's estate according to notions of fairness or equity;
(d) rather, the court's role is of a specific type and goes no further than a making of "adequate" provision in all the circumstances for the "proper" maintenance, education and advancement in life of an applicant (see also Bryson J in Gorton v Parks (1989) 17 NSWLR 1 at 6);
(e) the court's 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 deceased's freedom of testation (see also Pontifical Society for the Propagation of the Faith v Scales [1962] HCA 19; (1962) 107 CLR 9 at 19 per Dixon CJ and McKenzie v Topp [2004] VSC 90 at [63] per Nettle J); and
(f) freedom of testamentary disposition remains a prominent feature of the Australian legal system; see also Lajcarova v Todorov at [91].
In my opinion, the following matters are relevant to consideration of the question of what provision should be made for Lou.
First, there is evidence of what provision Janet wished to make for Lou. On Christmas Day in 2003 she said that she wanted Lou to have the Gorokan property (which, of course, he would take by survivorship in any event), and to live at the Kanwal property until he died or was not able to maintain it.
It is probable that, on other occasions, Janet said to Lou that she wanted Lou to "have this house" (Kanwal) and that he now owned "half of everything".
Second, as a practical matter, the size and nature of the estate is such that it is not now possible to give Lou a continued right to occupy the Kanwal property.
Lee, as administrator, is entitled to his costs of the proceedings from the estate on an indemnity basis. Those costs are in the order of $33,910. On the face of it, Lou should also have an order for his costs on a party-party basis from the estate. Those costs are estimated at $50,000. There is also an amount in the order of $9,500 owing to Wyong Shire Council for arrears of rates in respect of the Kanwal property. The only source of funds to pay those amounts is the $50,256.03 held in Mr Ryan's trust account (see [17] above).
In those circumstances, it appears to me that it is inevitable that the Kanwal property be sold. Accordingly, the real question is what portion of the net proceeds of sale ought, in all the circumstances, be paid to Lou.
Third, Lou's financial position is parlous.
He is in poor health, has no assets of substance and is living on a pension.
The fourth matter that is relevant is Lee's financial position. Lee is now 52 and is, as I have said, the only surviving child of Janet. Lee's younger brother died in 1965 at the age of seven months. Lee had a close relationship with his mother and remained closely attached with her throughout their joint lives.
Lee was married to Nicole. They have three children who are in college or late high school. The marriage has ended. Following separation, Lee received $120,000 from the proceeds of joint assets, of which some $38,000 currently remains. Taking into account superannuation, his assets are in the order of $140,000 with liabilities in the order of $6,000. Lee expects to have to provide additional funds for the remainder of his two youngest children's high school education. Lee currently lives in rented accommodation with a friend and her children. He holds a degree in optometry and is licensed to practice optometry. He is not however therapeutically trained which, he said, is increasingly required for employment. His employment with an organisation known as "Devise Technology" ceased in November 2011 and he has not worked as an optometrist since then, but has managed to find some locum work. He regards himself as having a "limited future" in optometry. Lee, thus, also has financial need.
A final factor that is relevant is the benefit that Lou has, thus far, received from Janet's assets and those formerly owned by Lou and Janet jointly. Lou has received the $69,483.09 from Janet's CBA account, half the proceeds of the IAG shares (approximately $2,400) and the proceeds of sale of Janet's car (approximately $5,000). Lou has also taken Janet's interest in the Gorokan property by survivorship. Neither party submitted that Janet's interest in Gorokan should be regarded as part of her notional estate. Nonetheless, Lou has received, and now spent, the whole of the net proceeds of that formerly jointly owned investment.
According to the inventory attached to the Letters of Administration of 9 May 2005, Janet's assets (excluding her interest in Gorokan) were in the order of $435,000. It is common ground that the principal asset, the Kanwal property, is worth much the same now as it was in 2005 ($300,000). The other assets were either cash, or assets unlikely to be worth significantly more now than in 2005.
At the time of Janet's death, her estate had no liabilities. Now, the estate has liabilities of more than $93,000 being the estimated amounts of Lee and Lou's costs and the arrears of council rates in respect of the Kanwal property (see [80] above).
The assets which remain in the estate are the funds in Mr Ryan's trust account (around $50,000) and, in the events that must happen, the net proceeds of sale of the Kanwal property (which, assuming a sale at $300,000 are likely to be something in the order of $280,000); a total in the order of $330,000. After payment of the estate's liabilities, something in the order of $240,000 will remain.
In my opinion, the appropriate provision for Lou is something in the order of half of Janet's estate. This is consistent with the view Lou claims she expressed that he was entitled to "half of everything". I also bear in mind that he has received by survivorship the sole benefit of his and Janet's investment in Gorokan.
The starting point is thus that Lou receives provision in the order of half of the present net value of the estate; approximately $120,000
But Lou has already received, from Janet's gross estate, something in the order of $80,000 (from the CBA funds, the IAG shares and the car). He has also had the benefit of rent free accommodation at the Kanwal property since Janet's death during which time rates have been unpaid and are currently a liability of the estate.
The appropriate way to take account of that fact is, in my opinion, to attribute half of that sum as having being, as it were, received on account of the further provision that it is now appropriate for me to make for Lou.
Thus I should:
(1) notionally add back the benefit that Lou has already received from the estate (to reflect the value of the estate prior to the informal "distributions" to Lou); and
(2) divide the resultant figure divided in two (to reflect a benefit roughly equivalent to half of the estate); and
(3) bring to account the value Lou has already received.
This can be represented as follows:
Net value of estate (see [89] above)
$240,000
Add back benefit already received by Lou
$80,000
$220,000
Divide by two
$160,000
Less benefit already received by Lou
$80,000
Appropriate further provision for Lou
$80,000
In all those circumstances, the conclusion to which I have come is that the appropriate further provision that should be made for Lou is an amount of $80,000. That will result in Lou having had the benefit of rent free accommodation at Kanwal since 2004 and each of Lou and Lee receiving a benefit from the estate something in the order of $160,000 (Lee now from the net proceeds of realisation of the estate, $240,000, less what is now to be made to Lou; and Lou from the $80,000 he has already received and the further $80,000 he will now receive).
I propose to order that Lee have his costs from the estate on an indemnity basis and that Lou have his costs from the estate on a party-party basis.
I invite counsel to bring in short minutes to give effect to these reasons.
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Decision last updated: 31 July 2014
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