Channell v Channell
[2011] NSWSC 1144
•26 September 2011
Supreme Court
New South Wales
Medium Neutral Citation: Channell v Channell [2011] NSWSC 1144 Hearing dates: 30/05/2011, 31/05/2011, 01/06/2011 Decision date: 26 September 2011 Before: Associate Justice Macready Decision: Plaintiff to receive a legacy of $500,000
Catchwords: WILLS AND ESTATES - family provision claim - nature and extent of estate - charges on property - potential notional estate subject to options to purchase - relationship with the deceased - applicant and deceased had a poor relationship and there was a period of estrangement. Legislation Cited: Family Provision Act 1982
Succession Act 2006Cases Cited: Foley v Ellis [2008] NSWCA 288
Kay v Archbold [2008] NSWSC 254
McGrath v Eves [2005] NSWSC 1006
Wheatley v Wheatley [2006] NSWCA 262Category: Principal judgment Parties: Stephen Bruce Channell (plaintiff)
Dorothy Elizabeth Channell (defendant)Representation: Counsel:
Mr P Livingstone (for the plaintiff)
Mr D Maddox (for the defendant)
Solicitors:
Wyatt Attorneys
File Number(s): 2010/137077
Judgment
This is an application under the Succession Act 2006 in respect of the estate of the late Mervyn Bruce Channell who died on 3 June 2009 aged 66 years. The deceased was survived by his wife, the defendant, and his three children, Leanne Mary Riley, Stephen Bruce Channell and Jodie Channell. Leanne and Stephen have brought an application and both proceedings have been heard together with the evidence in one evidence in the other.
Last will of the deceased
By his will dated 2 December 1991, the deceased appointed his wife, the defendant, as his executor and gave her his whole estate. In the event that she had not survived, his will provided that his estate was to be divided between his three children in equal shares.
Assets in the estate
The only asset in the estate at the date of death was cash in the sum of $74,909 and a 1925 Essex motor vehicle valued at $10,000. The deceased held substantial assets as joint tenant with his wife, the defendant.
There were three adjoining properties at Mount Hunter and the total value of these properties was $3,650,000. With his wife he was also a joint owner of a property at Shell Harbour, valued at $1,450,000. There was some other jointly owned property, mainly equipment and stock, with a value of $4,610 and some miscellaneous items at a value of about $600, making a total of the joint assets $5,146,100. The deceased's one-half share of this amounted to $2,573,050.
The deceased also had superannuation which passed to the defendant, amounting to $745,823.
Costs have been incurred in the matter which are somewhat extensive. The plaintiff Stephen's costs are estimated at $125,000; those of Leanne at about $90,000; and the defendant's costs at approximately $100,000: a total of $315,000.
Family history
The deceased was born on 17 July 1942 and his wife was born in 1946. They married in 1965 and had two children, Stephen, born in October 1968, Leanne, born in June 1970 and Jodie was born in October 1975.
From 1965 until 1998 or 1999, they resided at a property at Camden, which the deceased owned. From about 1970 to the date of his death the deceased operated an earth moving equipment business known as "Merv Channell Bobcat Hire". Subsequently, a company called Dorlea Transport was incorporated in 1974, with the deceased and his wife as shareholders.
In 1974, the deceased and the defendant purchased the first of their properties at Mount Hunter.
In 1979, the deceased and the defendant purchased the property at Shell Harbour which they owned at the time of the deceased's death.
In 1980, they purchased another property at Mount Hunter and the following year they purchased another in the area.
In 1985, Stephen left school aged 17 but was unable to read and write.
In 1998, Stephen moved to a property at Mount Hunter.
In 1991, the deceased made his will as I have mentioned above.
In 1992, the plaintiff Stephen purchased an investment unit at Liverpool and the deceased and the defendant paid for the deposit on this unit.
In 1998, Stephen married his wife, Hayley and they remained at the property. In the same year, the deceased indicated to his son Stephen and his daughter Leanne that he intended to give them a property at Mount Hunter for them to build a home on such property. This did not happen.
By 2001, relations between the various parties were not good and the defendant threatened to obtain an apprehended violence order to prevent Stephen from coming onto part of the Mount Hunter land.
In 2002, Stephen sold his investment property and made a $75,000 profit.
In 2004, when the deceased was trying to assist Stephen to set up a business, he provided him with an eight-tonne Ford truck and a bobcat until Stephen had enough work to pay for them. This became a matter of dispute between them and it resulted in litigation by the deceased and the defendant against Stephen. The deceased and the defendant obtained a judgment against Stephen in respect of the unpaid purchase price of the equipment.
Also in 2004, Leanne Riley took out an apprehended violence order against Stephen as a result of disputes between them. These disputes caused severe distress to the deceased.
By 2005, the defendant concedes that she started to sleep in a separate room from the deceased due to his ill health. She had for many years spent time living in the Shell Harbour house so that she could manage the properties there, owned by her and the deceased and her daughter, Leanne.
In the same year the deceased caused a bankruptcy notice to be issued to Stephen Channell as a result of litigation over the sale of the truck.
In 2006, the defendant and the deceased sold some units at Windang near Wollongong, which they had held as investments. In 2007, Stephen and Hayley sold their home at Peppercorn Avenue and in the same year the defendant sold some units and the property at South Camden.
In January 2007, the deceased gave a binding death nomination in respect of his superannuation in favour of the defendant.
In January 2009, Stephen and his wife Hayley separated for a short period but they are now back together living with their five children.
In late 2010 the defendant, who is now the deceased's executor, granted options to purchase in respect of the three properties at Mount Hunter. One of the options has expired; one has to be exercised by 1 October this year; another by 1 October 2012; and the final option will expire in October 2013.
During the course of the hearing the second plaintiff, Leanne settled her claim with the defendant for payment of the sum of $485,000 plus costs.
Eligibility
The plaintiff is an eligible person, being the son of the deceased. In applications under the earlier Family Provision Act 1982, the High Court in Singer v Berghouse (1994) 181 CLR 201 set out the two stage approach that a Court must take. This approach applies to applications under the Succession Act . At page 209 the Court 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' and 'proper' and the interrelationship which exists 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."
Situation in life of Stephen Channell
Stephen is 42, married with five children. He presently lives rent-free in his wife's grandmother's home.
His income as a driver is said by him to be $571.56 net per week, although it should be noted his income for the year ended 30 June 2010 was $67,206 or about $1,292 gross per week. The income of his wife Hayley is made up of CentreLink and carer's benefits totalling $1,771 per fortnight.
Stephen and his wife allege that their average weekly household expenses are estimated at $3,355, many of the expenses are not substantiated.
So far as assets are concerned, Stephen seems to now have a motorcycle, a utility and a box trailer. Hayley has a boat worth about $10,000 and a Toyota Landcruiser bought with a loan for $56,900 in 2007.
Hayley entered into a Part X agreement under the Bankruptcy Act but, due to her failure to pay, that agreement was revoked. Accordingly, she presently owes debts of $104,357.76 in respect of that arrangement. She has other debts in the order of about $7,000 and is continuing to pay off a Toyota finance debt that enabled her to purchase her vehicle. Hayley is now subject to litigation by parties that were part of the Part X arrangement and are now seeking to recover their debts, for example, $22,047 is owed to Macarthur Anglican School.
Stephen's relationship with his father is a matter that was given considerable attention in the evidence, as was the extent of the relationship between the defendant and the deceased in the last ten years of the deceased's life. Stephen suggested that in fact his parents were separated from 1999 onwards.
Stephen conceded that for three months an AVO prevented him from coming onto the property. There were suggestions made that, between 2004 and 2007, his father told him he did not want to have anything to do with him. Certainly, in that time in 2005 there was litigation between the deceased and the defendant. It was against Stephen to recover the funds due on the purchase of the truck and bobcat. There was also execution issued in respect of the judgment which they obtained and that led to the sale of Stephen's property.
Stephen was not a good witness. He obviously had difficulties reading and writing but, notwithstanding this, throughout his evidence he advocated his cause at every possible opportunity and did not address questions put to him. For example, in cross-examination the plaintiff insisted that he visited the deceased every night while he was in hospital:
"Q. ... Your father was admitted to the Campbelltown Hospital on or about 24 May 2009, is that right?
A. I don't know the day, I'm not sure. But anyway.
...
Q. And you tried to visit him, didn't you, on one or two occasions during his admission in that hospital?
A. Well, I visited him every night, so not one or two occasions. It was every night.
Q. I suggest to you that in fact he told you that he did not want you to visit him?
A. He definitely didn't say that. That's a lie.
Q. And that he asked you to leave when you were there?
A. That's - no.
Q. And that a nurse told you to leave when you arrived to see him on a later occasion shortly prior to his death on 3 June?
A. No, I don't - no.
Q. You deny all of that, do you?
A. I do, yes."
However, the Campbelltown Hospital clinical notes from 27 May 2009 state:
"Pt verbalised that he doesn't want his son to visit him as he just makes him stressed and more sick. Indicating would like to talk to the treating team and to all concern [sic] to ban his son seeing him."
Clinical notes from 31 May 2009 note:
" SOCIAL : V/B son + family at pt's request (phoned earlier). During visit pt noted to verbally abuse son. Phone call from pt's wife - lives in fear of abusive outbursts. Will come in am to seek social worker support v possible medical assessment of severe mood swings"
In a police statement dated 2 July 2004 the deceased detailed a visit Stephen had made to the Mount Hunter property to collect a bucket. It seems that some kind of an incident then occurred between Leanne and her husband with Stephen. The deceased stated:
"4. ... Later that night maybe 8pm I rang Stephen up and said, 'You know you are not supposed to drive the truck down the back. If you keep this up you won't be able to come onto the property any more. If you keep this up you will end up with an AVO on you. Wake up to yourself.
5. My wife and I own the property at 40 Fosters Lane Mount Hunter. We have decided that it would be nest for the family situation that Stephen and Hayley do not come near the property any more. If he needs any equipment ... he can ring me and I will bring it out to him."
Under cross-examination Stephen stated that he did not remember receiving a telephone call from his father on the day of the event in question (Transcript 31 May 2011, page 85). It seems that the deceased made a phone call earlier in the day in which he told Stephen to stay off the Mount Hunter land. The deceased's diary contains an entry written on the day of the event that resulted in the police statement being made:
"Rang Stephen Channell
Not to come in ... with truck or car lease vehicles + on ... outside gate.
If he doesn't they'll have A.V.O. on him"
A diary entry from 9 November 2004 states:
"I said to Steven & Hayley
I hope when you are 60 years old that your children give heeps [sic] like you give me."
On 11 November 2004, the deceased wrote:
"Steven at front house 4-35pm wanted ute.
I said you have got enough things of mine to pay for you go to Tasmania or N.Z ... the way you an Hayley talk to me like that"
On 16 February 2005, Doherty Partners, Barristers & Solicitors, sent a letter to Stephen and Hayley stating:
"As you are aware we act for Mrs Beth Channell and Mr Mervyn Channell.
We write to advise that under no circumstances are you or either of you permitted to enter the property...
...The prohibition includes your children and any other persons who may be associated with you.
If you or either of you at any time enter onto any of our clients' properties, then proceedings will be commenced against you ... and Police assistance will be requested.
Please take note accordingly."
The question of estrangement or a poor relationship, or both, between the deceased and a plaintiff has been dealt with in many cases. In Foley v Ellis [2008] NSWCA 288 the Court of Appeal referred to this kind of problem in these terms:
"101. The more recent authorities have held that a state of estrangement or even hostility between a testator or testatrix and a claimant does not terminate the obligation of that testator or testatrix to provide for the claimant. In Palmer v Dolman Ipp JA, after a review of the cases, observed (at [110]) that:
'... The mere fact of estrangement between parent and child should not ordinarily result, on its own, in the child not being able to satisfy the jurisdictional requirement under the Act.'
See also Wheatley v Wheatley [2006] NSWCA 262 AT [22] - [23] per Bryson JA (with whom Santow and McColl JJA agreed, addressing the second stage of the process required by Singer v Berghouse .
102. The authorities indicated that where the claimant has been estranged from the testator or testatrix, the application of section 7 of the Family Provision Act requires that the estrangement be appraised and its causes considered: Wentworth v Wentworth, estate of G M Wentworth (Bryson) quoted in Wheatley v Wheatley at [22]. In addition, section 9 (3) (b) expressly requires the character and conduct of the eligible person to be taken into account at the second stage of the process. Care should be taken, however, not to over simplify the complex and nuanced relationships within a family by yielding to the temptation to condemn categorically the behaviour of one party or the other. Events viewed years later through the cold prism of a courtroom may give a different impression than when the events are set in the context of raw emotions experienced at the time. The ' wise and just' testator or testatrix ( Bosch v Perpetual Trustee Co Ltd [1938[ AC 463 AT 478-479 per Lord Romer) must be taken to understand this."
In Wheatley v Wheatley [2006] NSWCA 262 Bryson J had the following to say:
"37. The poor state of the relationship between Mr Wheatley and the testatrix, illustrated by the absence of visits during the last 13 years of her life, operates to restrain amplitude in the provision to be ordered. However, Mr Wheatley is an eligible person, the testatrix's only son and one of only two children, and his needs are severe and go far beyond the needs for renovation of his flat and dental treatment which the Trial Judge's order provided for. Amplitude would not be appropriate in ordering provision for him, but it must be observed that provision for him, even the full amount nominated by his counsel, would not produce any hardship for in Ms Wheatley, who would still be provided for on a scale according full and appropriate recognition to her claims."
The matter was further discussed recently by White J in Kay v Archbold [2008] NSWSC 254 in these terms:
"94. Senior counsel for the defendant submitted by reference to observations of Bryson JA (with whom Santow and McColl JJA agreed) in Wheatley v Wheatley [2006] NSWCA 262 at [37] that the poor state of the relationship between the deceased and the plaintiff, illustrated by their lack of communication between 1999 and 2006, even when the plaintiff was aware that her mother was ill and seriously so, operated to ' restrain amplitude in the provision to be ordered".
95. Their estrangement is certainly a factor to be taken into account in determining what provision should be ordered. However, cases are infinitely various. There is no rule that irrespective of a claimant's need, the size of the estate, and the existence or absence of other claims on the estate, a claimant is not entitled to 'ample' provision if he or she has been estranged from the testator. Bryson JA was making observations appropriate to the facts in Wheatley v Wheatley . He was not espousing any general principle as to the relevance of amplitude. The very general directions in sections 7 and 9 of the Family Provision Act require close attention to the facts of individual cases. It is an error to seek to extract statements of general principle from observations directed to the facts of specific case.
96. The present is not a case of 'bare paternity' or 'bare maternity'. But even in such cases, the fact of parenthood is highly material to the existence of a duty to make provision. In this case some provision was made. The question is as to its adequacy."
The evidence indicates to me that there was a turbulent relationship between the deceased and Stephen in the last five or six years of the life of the deceased and that this caused unhappiness to the deceased. However, the relationship did not break down completely and Stephen was still seeing his father in hospital up until the time he died.
The plaintiff gave evidence of how much he helped his father during his younger days and particularly how he gave up other opportunities in order to do so. However, it is apparent that the plaintiff was employed in various jobs most of his earlier life and the claims that he made about the extensive work he did to help his father were not backed up by any other witnesses. Having regard to the plaintiff's method of giving evidence and what appears to be an exaggeration of his claims, I think the plaintiff probably did no more than any other child would do in the circumstances.
Dorothy Channell's situation in life
The defendant is 66 years of age, single and has no dependants. She lives at the property at Shell Harbour and she retains the jointly owned assets, being the real estate at Mount Hunter and also the Shell Harbour property.
The defendant's superannuation provided her with an amount of about $745,00 and she has about $99,000 in various bank accounts. Therefore, it appears there is about $844,000 available. The amount due to Leanne under the settlement is $485,000 and there are legal costs of some $90,000. This will leave $269,000.
So far as her income is concerned, the defendant receives about $1,500 per month from an investment of these superannuation funds. That amount apparently is payable out of part of the superannuation mentioned above. There will therefore be a need to keep this $269,000 to produce this income for the defendant for some uncertain time into the future.
Since the deceased's death, the defendant has purchased a small block of land that was landlocked by the three Mount Hunter properties. The purchase price was $148,500.
As I have mentioned, there was a substantial attack on the defendant in respect of her claim that she still remained living with the deceased up until the date of his death. It was suggested by both children that their parents had effectively separated, perhaps as early as 2000, with the defendant living at Shell Harbour and only occasionally visiting the Mount Hunter properties.
Counsel for Stephen submitted that a number of witnesses have ventured opinions as to the date of separation and place this event as happening in the mid-1990s. These witnesses are Jack Caris, Rodney Steed and Melinda Galea. They gave affidavit evidence in support of Leanne's claim.
Jack Caris stated that he was a good friend of the deceased for about 29 years and spent a great deal of time at the deceased's Mount Hunter home in the last eight to nine years. Mr Caris states that during that time he only saw the defendant on about 6 occasions. Mr Caris also states that the deceased told him that he felt hurt by the way he felt the defendant and Stephen had treated him.
Mr Steed states that he knew the deceased for about 28 years. He states that from about 1995 it appears the defendant had moved permanently to Shell Harbour and returned to Mount Hunter on a weekly or fortnightly basis.
Melinda Galea states that the deceased was her mother's cousin. She states that during the four years prior to his death, the deceased had developed a close relationship with her family and would visit 3 to 4 times per week. Melinda states that the deceased spoke to his three children regularly and he told Melinda and her family that he had a poor relationship with his son Stephen - who was not welcome at his home and with whom he had little contact. Melinda's evidence is that in conversations with her, the deceased had told her that he had separated from his wife and had been separated for a long time. She also states that the deceased told her the defendant was living at Shell Harbour and although their lives were separate, the defendant retained control over their finances and would return to Mount Hunter on occasions.
In cross-examination the defendant's response to that evidence is as follows:
" Q. You have read all of the affidavits filed in the proceedings?
A. I have.
Q. You have read affidavits of Mrs Galea?
A. Yes.
Q. Mr Caris?
A. Yes.
Q. You agree that they were great friends of the deceased?
A. So I'm told.
Q. You wouldn't need to be told about who your husband's great friends were if you were in a marriage relationship that continued up to his death, would you?
A. He never spoke about them.
Q. He never spoke about his friends. Are you serious?
A. I just answered he never spoke about them.
Q. He never spoke to you, his loving wife of all those years, about who his friends were?
A. Not about those people.
Q. No. Would it come to you as a shock if Mr Caris is coming along to the court and describing himself as a long term friend of the deceased?
A. No, because I've read the affidavits and I know what he has said.
Q. So up until reading Mr Caris's affidavit you had no idea about that friendship?
A. I knew of him but I don't know him.
Q. And you would have read in Mr Caris's affidavit about the deceased attending auctions?
A. Yes.
Q. And until you read that in the affidavit you did not know about the deceased and Mr Caris going off and attending auctions together?
A. I know my husband attended auctions.
Q. But you didn't know that he went there with Mr Caris?
A. No.
Q. You didn't know who he went with at all?
A. No.
Q. Did you know about his visits to the home of Mrs Galea?
A. No.
Q. You didn't know about that?
A. No.
Q. Do you have any reason to doubt that he was in fact going along to see Mrs Galea and visiting with her?
A. No.
Q. And you say your relationship with the deceased was close right up to the time of his death, do you?
A. Yes, yes."
In her affidavit of 19 August 2010, the defendant stated:
"65. ...Merv had no friend(s) in the usual sense of the word. He had few if any outings with friends, and few if any friends visited on any regular basis. The only "friends" he had were people he worked for and others he knew because of the long time we were in the area."
Counsel for Stephen, Mr Livingston, has submitted that the evidence suggests the deceased was not happy with there being an ongoing partnership arrangement. The defendant's submissions in relation to the partnership agreement are that the agreement dated from the 1970s and it was never revoked, which is a positive sign by the deceased that there was no separation in 2004. In 2007, the deceased made a binding nomination of the defendant as the beneficiary of his superannuation. The defendant submits that even if the deceased allowed the defendant to attend to all his financial matters, this is evidence that the couple had not separated in 2004 and 2007.
Mr Livingston suggests that the Stephen is unqualified to offer an opinion as to why the defendant is nominated on the deceased's superannuation and there is overwhelming evidence to suggest the marriage relationship had ceased. This evidence includes a number of unflattering diary entries the defendant made about the deceased in his diary. The deceased's explanation for the entries as that she did not recall them being made, or that they were made in response to what the deceased had said to her - in effect that she and the deceased were "sparring". In her affidavit of 19 August 2010, the defendant states in response to similar allegations made by Leanne:
"34. In relation to her paragraph 26 and her assertion that there "was certainly a lot of tension between my parents for many years prior to my father's death" I say there was no diary entry for me to read and there was no tension at all apart from the tension, if you could call it that, that attached to my efforts to get Merv to stop eating rubbish and take his medication."
The defendant submits that the diary entries are actually inconsistent with separation and that it would be extraordinary if separated couples were permitted to make entries in each other's personal diaries, as occurred here. It was suggested that the nature of the entries are consistent with the pair discussing matters rather than living separate lives.
It is impossible to tell from the diary entries whether the deceased and the defendant lived together or apart. The entries suggest the deceased and the defendant used the diary to communicate with each other. Although the diary clearly belonged to the deceased alone, as the defendant has submitted, the entries show that their lives were still intertwined. There are a number of entries that suggest that by the end of 2004 the defendant was living more and more frequently at Shell Harbour and at the very least that the deceased took note of the defendant's movements. The entries are to the following effect (the deceased referred to the defendant as Beth):
"Beth rang", (1 April 2004)
"Beth going away a few days" (22 May 2004)
"Beth left Friday night Return Tuesday 3-8-002[sic]" (30 July 2004)
"Beth left Return 10-8-2004 about midday" (5 August 2004)
"Beth away 10 days come home 1 day gone again" (7 October 2004)
"7 days aways [sic] not home Beth didn't come house [sic] Beth came home drop in gone again" (14 October 2004)
"Beth owns Shellharbour Side Show Holliday away from home" (18 October 2004)
"Beth too busy running things down at Shellharbour so go and live there" (29 October 2004)
"Beth wanted ... 15 years live at Shellharbour for last 3 years Beth said we will do a split ... (30 October 2004), Beth gone Shellharbour she must have a busy day (5 November 2004)
"[Beth] didn't ring back all day" (8 October 2004)
"Beth went down to Shellharbour about 3 years ago to away from trouble up here left to Merv Mt Hunter" (13 November 2004)
[in the defendant's handwriting] "*Merv has requested that Shellharbour be sold - he will buy elsewhere and go and I (Beth) will live at Mt. Hunter" (17 November 2004)
"Beth left Friday went to Shellharbout" (19 November 2004)
"...Beth had gone by 8 am back at 6-30 pm (22 November 2004)
"Beth came home... away about 2 weeks" (7 December 2004)
"Beth left Saturday morning come home Sunday night"(11 December 2004)
"Beth left Friday morning took off somewhere" (17 December 2004)
"one person living here this house could be rented out (18 December 2004)
"Beth comes home from Shellharbour when she likes" (22 December 2004)
The parties made submissions in relation to also a number of diary entries by both the deceased and the defendant that refer to their sexual relationship, of lack thereof. The entries show that this was a source of tension between the parties. The entries do not however evidence one way or another whether or not the deceased and the defendant had separated or whether were still in a meaningful relationship. It is common ground that there was no sexual relationship in the later years of their marriage, apparently due to the health problems associated with the deceased's advanced diabetes.
It has been suggested that it was only in cross-examination that the defendant conceded there were tensions in her relationship with the deceased. However, the defendant's earlier affidavit evidence did accept there were any tensions in the relationship in respect of the deceased's health and particularly when the deceased's condition became worse and he would not take his medication (affidavit of 19 August paragraphs 30, 33, 42 and 59). The defendant also stated that the deceased would not address difficult issues with the children and left it to her to deal with those problems (paragraph 61).
In the defendant's affidavit, affirmed 18 November 2010, she states:
"234. I was married for 43 years. Neither Stephen nor Leanne have ever mentioned to me that I was being divorced.
235. Mr husband and I never discussed a divorce, a property settlement, a separation or a new will and I have never received any correspondence from anybody with any of those topics as the subject.
236. My husband and I were partners, in the emotional and commercial sense, our whole married life. When I was last with him in hospital we sat and held hands. Nor has there been any conflict between my husband and I of a kind serious enough to form a basis for wanting a divorce or a new will or a property settlement."
Counsel for Stephen tendered hospital admissions forms to support their claim that the deceased and the defendant had separated. On 2 July 2008, Dr Soji Swaraj wrote to Dr Ramana Venkatesan about the deceased and stated that "Mervyn is 65, lives alone, sees his children frequently." On a patient admission form for the Campbelltown hospital for the deceased's last stay in hospital wherein he died about 10 days later, the emergency contact is listed as Leanne Riley and next to her name is a handwritten note stating "- N.O.K" (next of kin). Also on another hospital record from that period, under the handwritten heading "social" are the entries "Lives alone" and "Daughter in contact". Also on that record is stated "Meds (need to be confirmed by daughter - pt not sure)".
On 30 May 2009 there is a clinical note that states:
"NURSING: pt's wife called, asked for pt to be referred to social work and discharge planner. Asked if she could please be called on her mobile ... prior to anybody going to see him.".
Having regard to the evidence it is plain that a large part of the time the defendant probably lived at Shell Harbour. This does not mean that she and the deceased did not continue to have a relationship, even if it became more business like. No doubt the relationship was affected by matters on the deceased's part as he became very angry as a result of the diabetes from which he was suffering. His problems were exacerbated by his refusal to take medication to control the diabetes.
In the upshot it seems to me that even if there were a reduction in the relationship between the defendant and the deceased over the last ten years, plainly there was never any divorce, property settlement or rearrangement of their financial affairs. The deceased and the defendant clearly had a lot to cope with in relation to their children and it is quite likely that their relationship may have suffered by this stage in their lives.
In the context of a long relationship of some 44 years and the substantial assets which are now owned by the defendant, the souring of the relationship over the last ten years is not a significant aspect. Frankly, a more significant aspect is the difficult relationship which Stephen had with his father, the deceased.
Discussion
It is necessary to see how the plaintiff says that he was left without adequate and proper provision for his maintenance, education and advancement in life. It is notable that the plaintiff has modified the original position he put forward, in which he asked for $1.2 million and at the end of the hearing he asked for a legacy of $980,000 in order to purchase a property in the area around Canberra to provide a rural property for his family.
The plaintiff seemed to think that it was his right to be able to obtain some acreage, rather than some residential block, because of the promises made by the deceased to give him a block of land. Hayley had a far more realistic expectation and suggested that the family ought to move out to Bargo or Buxton and find 25 acres for $700,000 so that they could continue to have something of a country lifestyle which they wished for their family.
In McGrath v Eves [2005] NSWSC 1006, Gzell J referred to the courts approach to the question of moral duty when considering claims by children to be provided with funds for a house. He said:
"67 When it comes to children, as Young J observed in Shearer v The Public Trustee , NSWSC, unreported, 23 March 1998, it has never been said by any court that the community expects a mother to leave her children in a position to have a house of their own. That observation applies equally to a father. And in Gorton v Parks (1989) 17 NSWLR 1 at 7, Bryson J pointed out that there is no special principle that able-bodied adults earning a living have no claim, his Honour pointing out that such a proposition in relation to resources of any size was quite erroneous.
68 In Barbara Mayfield v Suzy Carolyn Lloyd-Williams [2004] NSWSC 419 at [109]-[110], White J, having referred to this passage, went on to observe that there was no rule to the effect that proper provision for an adult and presently able-bodied child did not extend to providing him or her with a house or money to buy one. His Honour noted that instances in which this had occurred included Re Buckland, deceased [1966] VR 404 and Ogden v Green [2003] NSWCA 352.
69 White J's decision was upheld by the Court of Appeal in Lloyd-Williams v Mayfield [2005] NSWCA 189. In the course of his judgment, Bryson JA at [31] pointed out that there were features to the case that were rarely encountered in claims under the Family Provision Act 1982 and rarely encountered together. First, the value of the shares designated as notional estate was very large in comparison with the estates ordinarily encountered. Secondly, because the appellant was otherwise amply provided for, the further provision ordered by White J could have no adverse effect on her wellbeing. Thirdly, the applicant did not have any needs in terms of lack of present provision for necessities and amenities of life on an ordinary scale of needs as understood in the community generally.
70 It was submitted that Mayfield was distinguishable by the absence of these features in the instant circumstances and because the appellant in Mayfield had filed no financial evidence and put forward no competing financial or other needs for the Court to consider.
71 There are differences of fact between Mayfield and the present case. But they do not affect the central proposition that there is no rule to the effect that proper provision for an adult and presently able-bodied child does not extend to providing him or her with a house or money to buy one. That proposition was not criticised by the Court of Appeal. Indeed, at [32], Bryson JA observed that it was open to White J and altogether appropriate to look well beyond needs when interpreting and applying community standards to decide what provision the court ought to order."
Stephen has not put forward evidence of his capacity to borrow funds and given Mrs Hayley Channell's debts there may be difficulties if they both were to borrow funds. In the context of the bad relationship between Stephen and his parents, there should be no question of generosity in any provision for him.
The defendant had a long marriage with the deceased and assisted him to build up substantial assets over the period of the relationship.
The defendant has her home at Shell Harbour and her present income is sufficient for her needs. She has submitted that she does not want to sell the Shell Harbour property because she intends to live there following the sale of Mount Hunter. The defendant has stated that she might be able to obtain a loan to pay for any provision for the plaintiff, although what is not clear is her borrowing capacity.
The defendant cannot sell the Mount Hunter property until the various options expire and she has no source of income apart from the superannuation. Any provision for the plaintiff would have to be made payable after the sale of the Mount Hunter properties, unless the defendant obtains a loan.
It is plain that the defendant wishes to sell Mount Hunter. Given that the first option was not exercised and that the price for the remaining options will now increase, it is likely that the subsequent options will not be exercised. The present fall in values supports this likelihood. The option agreement is difficult to follow. It seems that the subsequent option periods require a payment of further option fees. Clause 4.3 provides:
"The Second and subsequent Options herein contained shall be granted by the Grantor to the Grantee when the Grantee (or the Grantee's solicitor) forwards a cheque for the sum of $66,000.00 (including GST) together with a letter from the Grantee (or the Grantee's solicitor) confirming the grant of an Option for a one year term."
On its face the second and subsequent options could still be activated by payment of the fee. The evidence only discloses that the first option fee has been paid. Thus if the second option fee is not paid before 1 October 2011 when the option expires, it will be gone. Does the correct construction of the deed mean that the later options fall away? I have not had the benefit of any argument on this aspect.
All that can be said is that the defendant has created a great uncertainty in respect of the realisation of the property.
I do not think it is appropriate to give Stephen a legacy to provide him with acreage and I propose that an appropriate legacy would be $500,000.
The defendant submitted that while she does not object to payment from the notional estate of Stephen's costs, those costs appeared excessive and the costs claimed should be viewed in the light of Stephen's failure to adduce certain evidence. I do not think it is appropriate to cap the costs of the proceedings in this matter, particularly considering the fact that Stephen's low level of literacy may have some part in the seemingly large fees. It is open to the defendant to have Stephen's costs assessed pursuant to the Legal Profession Act 2004.
Before designating any notional estate to bear the legacy and costs, I will reserve further consideration of that issue until the parties have determined what is the likely result of the option agreement.
I will give direction about the further evidence and submissions on this aspect.
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Decision last updated: 30 September 2011
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