Carruthers v MarshallCarruthers v Marshall and Marshall v Marshall

[2001] NSWSC 665

CITATION:	Carruthers v MarshallCarruthers v Marshall and Marshall v Marshall [2001] NSWSC 665 revised - 19/10/2001
CURRENT JURISDICTION:	EQUITY DIVISION
FILE NUMBER(S):	SC 5141/00; 2839/01
HEARING DATE(S):	30 July - 3 August 2001
JUDGMENT DATE:	3 August 2001
PARTIES :	LINDA HOPE CARRUTHERS v MARGARET LESLEY MARSHALL KIM MARSHALL v MARGARET LESLEY MARSHLL
JUDGMENT OF:	Master Macready at 1

COUNSEL :	Mr L. Ellison for plaintiff Mr C. Bevan for defendant Mr Kim Marshall in person
SOLICITORS:	Teece Hodgson & Ward Turner Freeman for defendant
CATCHWORDS:	Family Provision by a defacto partner and a son. Estate passes to wife from whom deceased had been separated for some years. Small estate. Orders made for provision with specific orders in respect of costs to cater for variations in the estate.
DECISION:	Paragraph 71

- 1 -

5141/00 - LINDA HOPE CARRUTHERS v MARGARET LESLEY MARSHALL

2837/01 - KIM NEIL MARSHALL v MARGARET LESLEY MARSHALL

JUDGMENT

1 MASTER: This is a hearing of two applications under the Family Provision Act in respect of the estate of the late Neil Marshall who died on 31 May 2000 in a plane accident near Whyalla in South Australia. The deceased was survived by his wife, the plaintiff Linda Carruthers, with whom the deceased had been living in a defacto relationship for some years prior to this death, and his son, Kim Marshall.

2   Proceedings have been brought by both Linda Carruthers and Kim Marshall and both matters have been heard together, with the evidence in one being evidence in the other.

3   The deceased's last will was made on 23 December 1992. Under the will the deceased left the whole of his estate to his wife, the defendant, and appointed her executrix. Before moving to the estate it is useful to look at some of the history of the family and the events surrounding this matter.

4   The deceased was born in the UK on 11 June 1943 and the plaintiff Linda Carruthers was born on 13 April 1952. On 23 September 1967 the deceased and the defendant married. They both worked and ultimately on 17 January 1980 their child, Kim Marshall, the plaintiff, was born. He started at school and had his ordinary schooling, although he in fact did not complete the HSC.

5   The plaintiff Linda Carruthers' early life is not of great importance but it was in 1986 that she purchased a property at Petersham for $119,500, her co-owners being Dianne Blackman and Margaret Penson. Apparently she and Ms Blackman in 1989 paid out Ms Penson's interest and the plaintiff and Ms Blackman continued to live at the premises.

6   Having lived elsewhere for some time the deceased and the defendant purchased a home at Herbert Street, Newtown as joint tenants in December 1990.

7   It was in 1992 that the plaintiff first met the deceased at work. Both were involved in the union movement and had positions which brought them into contact.

8   On 12 December 1992 the deceased's last will was made and I have already referred to its terms.

9   In mid 1994 there was further contact between the plaintiff Linda Carruthers and the deceased and the deceased introduced her to the defendant as a workmate. By December 1994 the deceased's marriage to the defendant was suffering from a number of problems. Although they continued to live together until June 1995, problems emerged in 1994.

10   In June 1995 there was a change. It is apparent that the plaintiff, Ms Carruthers, stopped living with Ms Blackman at Petersham. She took a lease on a property at 80 Australia Street, Camperdown, still retaining her ownership in the Petersham property.

11   In June 1995 the deceased left the matrimonial home at Herbert Street, taking a single bed with him. He went to live at Australia Street, Camperdown. It was at this point that the plaintiff Linda Carruthers says that a defacto relationship commenced. She says that in fact it was in late 1994 that they first had an intimate relationship. The deceased paid $125 per week to the plaintiff as a contribution and I will come back in due course to whether in fact the defacto relationship commenced at that time.

12   During 1996 the deceased and the defendant settled their property affairs. They had a property settlement and the defendant received $175,600, being half the value of the home and a holiday house at Cannon's Creek in Victoria. The deceased and the defendant remained married. No application was made for dissolution and this is why the deceased's will still takes effect.

13   In the middle of 1996 during the course of those property settlement negotiations there were some discussions between the deceased and the defendant to the effect that he intended to leave his will unrevoked so that the defendant could hold the estate for the son, Kim, who at that stage of course was only about 16.

14   In late 1996 the plaintiff actually advanced $35,000 to the deceased to assist him to pay the first instalment of his property settlement with the defendant.

15   In November 1996 the plaintiff and her sister sold a home unit at Darlinghurst which they had inherited from their father. The plaintiff received $126,819 from that sale.

16   In February 1997 the sum of $150,000 was paid by the deceased to the defendant to complete the property settlement. The actual funds for this were provided by the plaintiff Linda Carruthers and they were provided as to $126,819 from the share of the father's estate and $23,282 lent to the plaintiff by family.

17   By July 1997 the plaintiff had resolved her property interests with Dianne Blackman. She sold her share and received $127,142.

18   In August 1999 there was a transfer pursuant to the arrangements for the property settlement between the deceased and the defendant. There was firstly a transfer from the defendant to the deceased pursuant to that property settlement. Thereafter the deceased transferred the property to himself and the plaintiff Linda Carruthers as tenants in common. Clearly he did this intentionally. He would know the difference, having previously owned a property as joint tenant.

19   Over the course of the next few years the plaintiff Linda Carruthers and the deceased lived at Herbert Street, they having moved there probably in about February after the completion of the property settlement between the deceased and his wife. Thereafter there were a number of improvements to the property and the loan on the property was renegotiated to allow a substantial upgrading of the house.

20   It was on 31 May 2000 that the deceased was killed in an aircraft accident in the Spencer Gulf near Whyalla.

21   In July 2000 the plaintiff completed an application for payment to her of the deceased's death benefit entitlement under his superannuation policy with the Superannuation Trust of Australia. The amount of the benefit was $205,000 and she sought the whole of that amount. The son, Kim, also made a claim on it on 25 October 2000. Late in 2000 the plaintiff Kim also filed a death benefit claim with the Compensation Court in which the plaintiff Linda Carruthers was also joined. The defendant was also made a party in due course.

22   Probate was granted in November 2000 and on 24 November the Superannuation Trust of Australia approved a payment of 80 percent of the benefit to the plaintiff Linda Carruthers and 20 percent to the son, Kim.

23   Proceedings were commenced in this matter on 21 December 2000.

24   On 27 March 2000 Kim received two cheques totalling $41,153.22, being his share. On 30 March the plaintiff received two payments totalling $164,612, being her share.

25   The property in Herbert Street has now been valued at $525,000.

26   Between June and July the plaintiff lent $10,493 to the deceased's estate to assist it to pay its share of the mortgage payments for Herbert Street. In mid 2001 the defendant borrowed $8,631 from her son, Kim, which was provided out of the superannuation share to continue to make mortgage payments.

27 On 26 July 2001 Judge Maguire in the Compensation Court awarded $200,000 in death benefit under the Workers' Compensation Act to the plaintiff. Nothing was awarded to either Kim or the defendant.

28   The hearing of the matter commenced before me on Monday of this week, namely 30 July. The matter was initially set down for two days. However, it ran for four days. We are now into the fifth day on which I am giving judgment.

29   It is necessary to look and see what are the present estate assets. There is first the one half share of the Herbert Street property, that half share having a value of $262,500. There is the property at Cannon's Creek in Victoria which has a vandalised holiday home on it and the evidence shows that that is worth $55,000. There is also a possible claim under an insurance policy for $100,000. There is a claim for a Mercantile Mutual life policy of $28,679.

30   At the present time the estate has a liability for the mortgage on the Herbert Street property of $109,174. There is a mortgage on the holiday home of $37,680.

31   There are some other liabilities. There is firstly $37,360 said to be due to Ms Carruthers by the estate as a result of her advance of $35,000 and advances for some dental work. There is the $10,493 advanced by Ms Carruthers to meet mortgages. There is a liability to Kim Marshall for $8,631.

32   It is necessary that I refer in some detail to the ACE Insurance death benefit policy. That is a policy which is issued by American Express or one of its associated companies. The insurers have at this stage declined to pay the policy until an inquest is held following upon the crash of the aircraft near Whyalla. The reason for it is that the policy contains the following exception:

“Injury occurring at a time when the insured person is flying, or engaging in aerial activities otherwise than as a passenger in an aircraft that is authorised to fly under a law that relates to the safety of an aircraft."

33   There has been a draft accident investigation report which has been released on a confidential basis to interested parties and relatives of those who were killed in the accident. That is very much a draft report and the Bureau of Air Safety Investigation will be revising it, no doubt, before the inquest. In due course the inquest will be held which will no doubt further probe matters relating to the accident. The accident has received some publicity in the press.

34   The importance from the point of view of the insurance policy is whether or not the aircraft was authorised to fly under a law that relates to the safety of an aircraft. I have received the draft accident report as a confidential exhibit and it is restricted to the Court, the legal advisors and the parties. The type of matters which might lead to an exclusion under the policy are matters which would go to the legalities of the flight of the aircraft. It would not go to whether or not the aircraft had some pre-existing fault or was being operated in some inappropriate manner. It is plain that the aircraft suffered a double engine failure as a result of problems with the operation of the aircraft. It was at night and the aircraft did not survive, nor did the people in it survive the impact with the water.

35   Leaving aside the factual matters, the report is useful in that it does look at the legalities of the operation. Under the appropriate regulations these involve a number of different areas. First there are the pilot licensing requirements. There are, secondly, the requirements for the appropriate airline or charter licence and, thirdly, the appropriate certifications for the maintenance of the aircraft. Breaches of some of those provisions might indicate that the aircraft legally was not able to fly.

36   However, the usefulness of the report is that it does identify that there was appropriate compliance with those matters. The pilot was properly licensed. He had not exceeded his duty flight times. The company operating it had the appropriate licence and a maintenance release had been properly issued shortly before the aircraft went on its flight. The actual maintenance release no doubt was lost in the accident, it having been required to be carried on board the aircraft.

37   The reason for looking at this is to see whether in fact it is likely that the estate will receive the extra $100,000 and I would have thought that there is a good chance that the estate will receive it. The importance of it relates to the question of the costs that have been incurred. As is usual in these matters, the costs have been quantified. Those of the plaintiff, Ms Carruthers, were estimated at $47,000 for a two day hearing. Mr Marshall has received a bill for some $26,259 from solicitors who acted for him up until about a week before these proceedings. He had also paid them $4,500 on account. Mr Marshall has terminated their retainer and appeared himself. Fortunately the solicitors had prepared an affidavit for him so that was read on the application.

38   The defendant's costs estimated on a two day basis were $64,592. On a party and party basis that would be $48,445 but leaving that aside for the moment it is clear that the costs of all the parties - if, of course, it is appropriate for the costs to come out of the estate - amount to $147,000 plus costs for the extra two days which were not included in those estimates.

39   Effectively there is $43,000 in cash in the estate. With the $100,000 for the insurance policy that will come up to $143,000. There is then also the interest in the real estate which, after taking off the estate's mortgage liability, is an asset of only $160,000. Accordingly, there is very little left in the estate. Costs possibly will dispose of a substantial amount of it and it is important that the matter be finally dealt with.

40   One of the matters that took a substantial amount of time is determining whether or not there was a defacto relationship between the deceased and Ms Carruthers from June 1995 until the date of death. From the commencement of the hearing before me it is plain that the defendant accepted on advice that there was a relationship from February 1997 until the date of death, a period of some three years. The defendant did not accept that it existed before 1997, particularly as she did not have information to indicate to her that that was the case. Her husband had indicated quite a contrary situation to her.

41   It is not the place of this Court to go into the rights and wrongs of the perhaps misleading conduct of the deceased for those first two years between 1995 and 1997. He was clearly living at Australia Street and the question is as to whether the defacto relationship had commenced when he moved there. I make it clear that he certainly told his wife, the defendant, that he went there as a boarder and was just going to share the house. There is no reason not to accept Ms Carruther's evidence that there was an intimate relationship which commenced in 1994. Neither she nor the deceased, as I have said, disclosed their relationship to the defendant. Perhaps that in one sense tells against it.

42   There are a number of other matters in the evidence that were pointed to by the defendant which might tend to indicate that it had not commenced. There is a reference to the psychologist's report and notes made on the first attendance. Those were that she had been a close friend for six years, romantically involved from October 1994. We do not have the benefit of any oral evidence from the psychologist. We have Ms Stott's notes. In her first affidavit the plaintiff, Ms Carruthers, spoke of discussions with the deceased throughout 1996 to "establish our life together" when they were negotiating a resolution of the property dispute. That I think, read fairly, would indicate a reference to establishing their future property relationship. I do not think it would point to whether or not there was in fact a defacto relationship. It was said that the fact that Ms Carruthers did not sell her share of the house that she had with her former partner for some years pointed to there being no defacto relationship. There were explanations that there was conciliation attempts in that matter and no doubt it took time to appropriately undo those arrangements.

43   Another piece of evidence was that in November 1994 Ms Carruthers had nominated her mother as the sole beneficiary of her superannuation entitlements in the event of her death. This was at the same time that she said she had just become a lover of the deceased. Both the deceased and Ms Carruthers were of mature years and I would have thought that would not be indicative. They might well have still wished to maintain their separate property interests notwithstanding their attraction for each other.

44   Importantly in this case there is some other separate evidence. There is the evidence given by Mr Walsh and Ms Hall, who are friends of the plaintiff and the deceased. They used to frequently visit them at the Australia Street address. They gave evidence of the nature of the bedrooms, one having a double bed and being occupied as a bedroom, the other being used as a study. They also observed the interaction between the plaintiff and the deceased and were clearly of the view that they were living together in the house. They were entertained there.

45   In contrast, the defendant herself did not go into the house. The son, Kim, was there and stayed overnight on one occasion when Ms Carruthers was not there.

46   It seems to me fairly clear based on that evidence that in fact there was a relationship from June 1995. I do not, in making this finding, in any way want to be critical of the defendant because quite clearly she was not informed and she was entitled to test the matter.

47 In applications under the Family Provision Act the High Court has recently in Singer v Berghouse (1994) 181 CLR 201 set out the two stage approach that a Court must take. At page 209 it said the following:

"The first question is, was the provision (if any) made for the applicant 'inadequate for (his or her) proper maintenance, education and advancement in life'? The difference between 'adequate provision' and 'proper maintenance' etc were explained in Bosch v Perpetual Trustee Co Limited . The determination of the first stage in the two-stage process calls for an assessment of whether the provision (if any) made was inadequate or what, in all the circumstances, was the proper level of maintenance etc appropriate for the applicant having regard, amongst other things, to the applicant's financial position, the size and nature of the deceased's estate, the totality of the relationship between the applicant and the deceased, and the relationship between the deceased and other persons who have legitimate claims upon his or her bounty.

The determination of the second stage, should it arise, involves similar considerations. Indeed, in the first stage of the process, the court may need to arrive at an assessment of what is the proper level of maintenance and what is adequate provision, in which event, if it becomes necessary to embark upon the second stage of the process, that assessment will largely determine the order which should be made in favour of the applicant. In saying that, we are mindful that there may be some circumstances in which a court could refuse to make an order notwithstanding that the applicant is found to have been left without adequate provision for proper maintenance. Take, for example, a case like Ellis v Leeder where there were no assets from which an order could reasonably be made and making an order could disturb the testator's arrangements to pay creditors."

48   I turn to the situation, first, of the plaintiff, Linda Carruthers. She is 49 and single. She is employed as a research assistant and industrial advocate with a union State branch and presently has a salary of about $61,000 per annum. She has some fairly substantial assets. These have certainly suddenly been increased as a result of the matters that have happened in the last few days. First she has a half share of the Herbert Street property in the sum of $266,500. She has monies on deposit of $176,754. She has $39,653 in a form of roll over fund from some previous superannuation. She has her own entitlement which she will receive very shortly of $200,000 under the Workers' Compensation order. She has a superannuation interest of $243,319, a car worth $10,000 and the debts to which I have referred in dealing with the estate. This is a total of $980,349.

49   Her liability under the mortgage over the house is $48,478. She is in reasonable health. She has suffered through her tragic loss of her partner. There is a report from Dr Shand who saw her very recently. After dealing with her history at length he concluded his report, saying:

"I consider that as she presented on consultation the diagnosis is now one of bereavement reaction rather than clinical depression and it is certainly not major depression and stress from the process of the litigation which she has instigated herself. The reservation of this diagnosis arises from a history of continuing anti depressant drug treatment."

50   It is important, of course, to realise what contributions there have been to the estate. Certainly there was the $35,000 and the other small amounts provided for dental work and I think it is preferable in this case that I deal with them on the basis that these were contributions made to the estate. I have some doubt as to whether they were loans and viewed as loans by the parties at the time they were made.

51   There are all the improvements that have been made by the deceased and the plaintiff to the house at Herbert Street. Sometimes the plaintiff contributed amounts when the deceased did not have the funds. In the latter years she seemed to earn more than the deceased. He was the one who seemed to have a large number of liabilities, all of which have been paid, to leave the net asset position in the estate that I have referred to earlier. Certainly with the extensive renovations that were carried on and the increase in the mortgage there was a commitment to the future by both the deceased and the plaintiff.

52   So far as Kim Marshall is concerned, he is 21 years of age. He is planning to return to the United Kingdom with his mother shortly. He has enrolled in a course of blacksmithing and metal welding and he wishes to go back to England to start that course in August of this year.

53   He has had a varied work history but clearly he has been able to hold down some jobs. It has not been an easy time for him since the death of his father.

54   He did receive monies from the superannuation and he presently has cash of some $27,000. He is owed $8,631 by the estate and he has purchased a motorcycle worth $4,500. He himself also assisted between 1997 and 1999 with the renovations to Herbert Street, helping his father on occasions.

55   I note that there has been some suggestion in the evidence that the deceased was disappointed with the way Kim kept in touch with him but I think that these are not matters of great substance. Probably the deceased was disappointed about his job history. The deceased supported him up until he was 18 but I do not think it meant there was anything in the evidence which would suggest that Kim should receive lesser consideration because of those matters.

56   He does have some matters which he advances as ways in which he has been left without adequate and proper provision for his maintenance, education and advancement in life. Particularly he needs airfares of some $2,500 to return to the United Kingdom and he needs the funds to undertake his course. These seem to be in the order of about 500 pounds sterling and he will need to be able to support himself while he is doing his course. He also expressed the view that he would like something behind him by way of advancement so that he can set up himself once he has completed his work. That is not a quantified claim but one that can be noted.

57   It is also necessary to consider others having a claim on the bounty of the deceased. In this case the only other person is the defendant, Margaret Lesley Marshall. She is single, aged 56 years. She is planning to return to England as soon as estate matters are finalised. There is some evidence of her financial situation although its relevance is something I will turn to in a moment.

58   She has a property in Petersham worth $270,000, cash in the bank of about $5,000, a mortgage of $14,000 and credit card debts of $3,000. She has some shares worth $11,700 and a vehicle worth $6,000. She has modest superannuation benefits.

59   The role that she has played in this case is one which has to be considered. She has made it plain in the witness box that she did not seek any consideration by a court for her to receive monies personally out of the estate. She, instead, based her claim and the stance that she has taken on some conversations which I have referred to earlier between herself and the deceased during the course of the property settlement negotiations in 1996. She referred firstly to a number of conversations where the deceased said:

“I want to make sure that if anything happens to me Kim will receive all the money I am entitled to when I die to ensure his financial security."

60   There was also a specific conversation about his will. The deceased said - and I accept the defendant's evidence:

"My will provides for my entire estate to go to you, Margaret. I won't be changing it. I want you to inherit everything and look after it for Kim until you think he is old enough to look aftger it for himeself. If anything happens to you before I go, it is all to go straight to Kim. I don't want this trouble with the marriage to affect my relationship with Kim. I want to provide for his future and financial security. Do you understand?"

61   The defendant said she did and that she would look after it for him.

62   The defendant's attitude in not wanting anything personally out of the estate is not surprising, given that she has had a property settlement and that her marriage is over, except in name. The precise nature of that trust which she has accepted is somewhat unclear. There was no probing in cross-examination about whether she thought that Kim could not look after anything that she will receive.

63   In this case the defendant opposed both claims. The opposition to Kim's claim seems to be predicated upon the fact that under the arrangement for a trust the son, Kim, will receive it through the defendant. So far as the claim of Linda Carruthers is concerned, that is opposed because it is said that she is financially independent and has received sufficient from his estate and, in particular, the $164,000 from the superannuation.

64   Widow's claims are frequently the subject of applications in this court. The Court of Appeal in Goloski v Goloski (unreported 5 October 1993) has referred to formulations of this standard to be expected in respect of a widow in terms which refer to the decision of Powell J in Luciano v Rosenblum (1985) 2 NSWLR 65 and Elliott v Elliott, which was approved by the Court of Appeal on 24 April 1986. There his Honour said:

“Where the marriage of a deceased and his widow has been long and harmonious, where the widow has loyally supported her husband and assisted him to build up and maintain his estate, the duty which a deceased has to his widow can be no less than to the extent to which his assets permit him to achieve that result; first to ensure that his widow be secure in her home for the rest of her life and that if either the need arises or the whim strikes her she have the capacity to change her home; secondly that she have available to her an income sufficient to enable her to live in a reasonable degree of comfort and free from any financial worry; and, third, that she have available to her a fund to which she have might have resort in order to provide herself with such modest luxuries as she might choose and which would provide her with a hedge against any unforeseen contingency or disaster that life might bring."

65   The same principles apply to where there has been a defacto relationship between parties such as in the present case. The important matter for the Court in its consideration is that the relationship was only for some five years. The plaintiff did contribute to the estate. She paid for the share which she received but she also contributed a little in excess of $35,000. She entered into substantial commitments with the deceased to upgrade the property and repay debts.

66   It was suggested in this case that I might make an interim order under section 9(5) of the Act. There the Court may make an interim order in favour of an eligible person before it has fully considered the application for provision where it is of the opinion that no less provision than that proposed to be made by the interim order could be made in favour of the eligible person after full consideration of the application. I think it is preferable not to do that because this case has gone on too long and I think if it is possible to, it should be concluded now.

67   Importantly, one should note that I think the claim of Linda Carruthers, as the defacto partner of the deceased, is one which is superior to that of the son, providing of course that in the plaintiff, Linda's, application can be seen appropriately in the context of the small estate.

68   The other thing is that it seems to me that really the only claimants in this estate are the plaintiff, Linda Carruthers, and Kim Marshall. I do not consider the claim of the defendant now to be appropriate once Kim has brought his own claim. Kim's claim should stand or fall on its own merits and it should not be dealt with by the way the defendant approaches the matter.

69   Kim has some funds but I think that some further small increase in his funds is appropriate. In my view he should receive a legacy in the order of $20,000. It is also appropriate that Linda Carruthers receive the estate's half share of the realty upon the basis that she does not claim her debts and that she takes over the liability for the mortgage on that property. The question really is whether she should contribute something more to the estate. There is the cash of $43,000 and when the insurance payment is paid, $143,000, with costs in the order of about $170,000. There needs to be further argument on the basis of the defendant's costs. Apparently submissions are needed as to whether that should only be on a party/party rather than an indemnity basis.

70   What I propose to do is to make orders which will deal with costs which will also take into account and enable to be dealt with without further court hearings the fact that the $100,000 may or may not be paid although I would say I think it is likely that it will.

71   I say again that I think there is only a contest between the two plaintiffs and that that should govern what happens. Accordingly, the orders that I make are these:

1. That Linda Carruthers receive a specific bequest of the deceased's half interest in Herbert Street, Newtown subject to and conditional upon:

(a) her assuming liability for the mortgage over the property;

(b) her making no claim for debts against the estate or for the funeral account she has paid;

(c) her paying the estate the sum of $20,000.

2. That Linda Carruthers receive a specific bequest of any items of personality owned by the deceased which were at Herbert Street at the date of death.

3. That the plaintiff, Kim Marshall, receive a legacy of $20,000 out of the estate of the deceased, such legacy to rank for payment after the specific bequest to Linda Carruthers.

4. The costs of the defendant be paid out of the estate on a basis to be decided after hearing further argument but in priority to any costs of the plaintiff.

5. The costs of the two plaintiffs on a party and party basis to be paid after payment of the defendant's costs out of that part of the estate of the deceased which excludes the two specific bequests and the legacy in orders 1, 2 and 3 above. To the extent that there is any deficiency those costs shall be borne by that part of the estate rateably to the intent that if there is any ultimate deficiency such deficiency shall be borne by the respective plaintiffs, Linda Carruthers and Kim Marshall rateably.

Last Modified: 10/22/2001