Clifford v Mayr and Anor

[2009] NSWSC 16

CITATION:	Clifford v Mayr and Anor [2009] NSWSC 16
HEARING DATE(S):	12 August 2008
JUDGMENT DATE :	4 February 2009
JUDGMENT OF:	McLaughlin AsJ
DECISION:	1. I order that the summons be dismissed. 2. I order that the Plaintiff pay the costs of the Defendants, such costs to be on the party and party basis. 3. I order that the Defendants be entitled to retain from the estate of the late Helmut Mayr (“the Deceased”) the difference between the foregoing costs which they may recover from the Plaintiff and the costs of the Defendants on the indemnity basis. 4. The exhibits may be returned.
CATCHWORDS:	SUCCESSION - family provision - claim by de facto widow - entire estate, other than family home, was left to Plaintiff - family home was left to the three children of Plaintiff and Deceased, being infants of tender years - financial and material circumstances of Plaintiff - whether Plaintiff has been left without adequate provision for her proper maintenance - Defendants recognise right of Plaintiff to reside with her infant children in family home - Plaintiff claims family home absolutely - Court must be scrupulous and zealous in protecting the interests of those persons who are not capable of protecting their own interests.
LEGISLATION CITED:	Family Provision Act 1982
CATEGORY:	Principal judgment
CASES CITED:	Singer v Berghouse [1994] HCA 40; (1994) 181 CLR 201 Vigolo v Bostin [2005] HCA 11; (2005) 221 CLR 19
PARTIES:	Sondra Louise Clifford (Plaintiff) Peter Mayr (First Defendant) Joseph Donnelly (Second Defendant)
FILE NUMBER(S):	SC 4084 of 2007
COUNSEL:	Mr Raoul Wilson (Plaintiff) Mr E. Gramelis (Defendants)
SOLICITORS:	Teece Hodgson and Ward (Plaintiff) N. C. Coombes & Co (Defendants)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

ASSOCIATE JUSTICE McLAUGHLIN

Wednesday, 4 February 2009

4084 of 2007 SONDRA LOUISE CLIFFORD –v- PETER MAYR and ANOR

JUDGMENT

1 HIS HONOUR: These are proceedings under the Family Provision Act 1982.

2 By summons filed on 17 August 2007 Sondra Louise Clifford claims an order for provision for her maintenance, education and advancement in life out of the estate and or notional estate of the late Helmut Mayr (to whom I shall refer as “the Deceased”).

3 The Deceased died on 11 December 2006, aged 46 years. He left a will dated 8 December 2006, probate whereof was on 5 July 2007 granted to Peter Mayr and Joseph Donnelly, the executors named in such will (who are the Defendants to the present proceedings).

4 The First Defendant is the only brother of the Deceased, and the Second Defendant is the de facto partner of the mother of the Deceased and the First Defendant. The Deceased and the First Defendant had no other siblings.

5 The Plaintiff, who was the de facto partner of the Deceased at the time of his death, had been living as such with the Deceased from November 1999 (although they separated for a period of one year, from July 2001 to July 2002, during which period the Plaintiff resided with her sister).

6 There were born to the Plaintiff and the Deceased three children, being Lachlan MacKenzie Clifford (born August 2000), who is presently aged 8; Noah Marshall Clifford (born October 2002), who is presently aged 6; and Georgia Rose Clifford (born November 2004), who is presently aged 4.

7 By his will the Deceased gave the house property at 2 Pinaroo Place, Lane Cove (“the Pinaroo Place property”) to his three children in equal shares as tenants in common upon the youngest of them attaining the age of 21 years. The Deceased gave the rest and residue of his estate to the Plaintiff.

8 The will contained a power of advancement in respect to the benefits given to the infant beneficiaries.

9 The assets of the Deceased at the time of his death included three pieces of real estate, being (a) the Pinaroo Place property, to which a value of $900,000 is presently ascribed, and which is subject to a mortgage presently in an amount of about $18,000; (b) a home unit situate at and known as 1 /34 Centennial Avenue, Lane Cove (which was sold by the Defendants in 2008 for $330,000, the net proceeds of sale, in an amount of about $318,000, being presently held by the Defendants as an asset in the estate); and (c) a residential property at 27 Rawson Street, Lidcombe, which was sold by the Defendants in October 2007, for $420,000 (and after the allocation of the proceeds of sale of that property, which was fully mortgaged, about $30,000 was owed to the mortgagee; that shortfall has been paid personally by the Defendants).

10 The estate also included a death benefit arising from a superannuation policy in an amount of $64,763. That amount has been paid to the Plaintiff, as the Deceased’s surviving spouse. (It is somewhat unclear whether that amount, strictly, constituted an asset in the estate, or whether it was paid directly to the Plaintiff without becoming such an asset. However, whichever be the case, the Plaintiff has received the benefit of the payment of that amount in consequence of the death of the Deceased.) In addition, the Deceased held 5000 shares in Telstra (which have a present value of about $22,800), and an amount in a bank account, which includes the proceeds of sale of other shares, in an amount of $6,700.

11 According to the Defendants, the assets of the estate presently consist of:

Pinaroo Place property $900,000
(subject to a mortgage of $18,000)
Proceeds of sale of Centennial Avenue property $318,155
Westpac estate account $10,000
Telstra shares $22,800
Total $350,955

12 In addition, the estate has received a Land Tax refund of about $3,000 (which amount includes $1,550 paid by the Plaintiff, the balance of $1,465 having been paid from the Deceased’s bank account). Further, the Centennial Avenue property had been tenanted from the death of the Deceased until June 2008, shortly before it was sold. In that period it generated a gross rental income of a little under $20,000. It is somewhat unclear whether that rental income and that part of the Land Tax refund paid from the Deceased’s bank account have been included in the foregoing list of assets of the estate.

13 Further, the Lidcombe property was also generating rental income until it was sold. I assume, however, that that rental income was appropriated towards the mortgage debt on that property.

14 The Deceased also at the time of his death was the sole shareholder of Mayr & Company Pty Limited, which was the trustee of a family trust set up by the Deceased in, according to the Plaintiff, January 2006. The beneficiaries under that trust were the Deceased, the Plaintiff and each of their three children.

15 The Deceased at the time of his death possessed two motor vehicles. Apparently, those two motor vehicles were held by him in the name of the foregoing company. One of those motor vehicles, a Peugeot, which was held under a leasing arrangement, has been disposed of, the outstanding lease amount having been paid. That vehicle was sold in March 2007 by the Plaintiff for $12,000. The amount outstanding on the leasing debt was $6,500. The balance of $5,500 was, according to the Plaintiff, retained by the company.

16 The other motor vehicle, a Volvo, has been retained by the Plaintiff. According to the Plaintiff, she paid $13,500 to the company for that vehicle. However, it would appear from the Plaintiff’s oral evidence that she did not, in fact, pay any actual cash for that motor vehicle, the price of which was offset against a wage of $14,000 which the Plaintiff regarded herself as being owed by the company. The result, as I understand it, is that, although no payment was actually made by the Plaintiff to the company, she is now the legal owner of the Volvo motor vehicle, to which a value of $13,500 has been attributed. That Volvo is used by the Plaintiff as the family vehicle for herself and the three children.

17 The executors’ administration expenses are expected to total $96,557 and the commission which they propose to claim will total $17,500. In addition, the First Defendant, Peter Mayr, proposes to claim interest on the amount of $25,000 of his own funds which he has advanced towards the administration of the estate (and, presumably, towards meeting the shortfall on the mortgage over the Lidcombe property). The amount of that interest being claimed by the First Defendant will be at least $1,500. The Second Defendant, Joseph Donnelly, has advanced about $71,000 towards those costs and expenses. However, it would appear that he does not propose to claim interest on that amount.

18 In calculating the value of the estate available for distribution the costs of the present proceedings must be taken into consideration, since the Plaintiff, if successful in her claim, will be entitled to an order that her costs be paid out of the estate, whilst the Defendants, irrespective of the outcome of the proceedings, will be entitled to an order that their costs be paid out of the estate.

19 It has been estimated on behalf of the Plaintiff that her costs will total $64,482 (of which amount the Plaintiff has already paid $28,182). It has been estimated on behalf of the Defendants that their costs of the present proceedings will total about $40,000. Each of those estimations was grounded upon the assumption that the hearing would occupy two days.

20 That is, it has been estimated on behalf of the Plaintiff and of the Defendants that the total costs of the proceedings for a two day hearing would be in excess of $104,000. In this regard, it should be observed, first, that the hearing occupied only one day, and not two days, and that, in consequence, the costs will be less than the foregoing estimations. Further, that, even if the hearing had occupied two days, I consider costs totalling in excess of $104,000, for a case which is in no way exceptional or out of the ordinary, to be excessive.

21 I note that the Defendants in the course of the hearing submitted that the estimation of the Plaintiff’s costs totalling in excess of $64,000 for a two day hearing was excessive, and submitted that the Plaintiff’s costs should ultimately be the subject of assessment.

22 Upon the foregoing calculations, however, it was estimated on behalf of the Defendants that the value of the estate available for distribution was about $211,400. Since, as I have already observed, the hearing occupied only one day, and not two days, in consequence the value of the distributable estate will, in any event, be somewhat greater. Further, that estimation does not appear to take into account the rental income derived from the Lane Cove home unit. Neither does it appear to take into account the value of the Volvo motor vehicle ($13,500), or the superannuation payment of almost $65,000 which the Plaintiff has already received.

23 The Plaintiff is presently aged 37 years. She has tertiary qualifications from the University of Queensland, and is a certified practising accountant. In that profession, in which she has been practising for the past ten years, she currently works part time. At the hearing she estimated that her income from her accountancy work for the current financial year would be $55,000 (gross) and that her total annual income for the year would be $72,500.

24 The Plaintiff gave evidence of her expenditure and outgoings in respect to herself and her three children, in a total annual amount of almost $104,000.

25 Apart from the Volvo motor vehicle, the Plaintiff’s assets consist of an account with ING, having a credit balance of $45,000, and another account with ING (which the Plaintiff maintains to provide for her income tax), currently having a credit balance of $38,000. The Plaintiff has a superannuation entitlement of $30,000. She owns jewellery, to which she ascribes an estimated value of $30,000. (Some of that jewellery was purchased by the Plaintiff with the benefit of a borrowing of $10,000 from her parents in 2006, with the intention that she should be able to pass that jewellery on to her daughter Georgia. The arrangement between the Plaintiff and her parents was that she should repay that loan when she is enabled to do so.) The Plaintiff also maintains a bank account in her own name, but which she holds as trustee for her three infant children, which currently has a credit balance of $98,000. In addition, the Plaintiff maintains a current account with the St George Bank, which presently has a credit balance of $800. The Plaintiff’s debts total $25,000 (representing credit card ($4000), balance of debt to parents ($6500), taxation liability for 2007 – 2008 ($14,500)).

26 The Plaintiff has resided in the Pinaroo Place property since it was purchased by the Deceased in 2004. Of the purchase price of $835,000 an amount of $500,000 was provided by loan secured by mortgage, and the balance of $335,000 was provided by the Deceased himself from his own funds. That property was the family home of the Plaintiff, the Deceased and their three infant children. The Plaintiff and the three children continue to reside in that house property. The Plaintiff did not make any monetary contribution towards the purchase price of that property.

27 During his lifetime the Deceased (who was a qualified chartered accountant, but whose occupation was described by the Plaintiff as being that of a “day trader”) paid all the outgoings on the house property and paid for all the significant items of household and family expenditure. Those payments included the mortgage payments, electricity, telephone, gas, insurance, groceries, clothing for the Deceased himself and most of the clothing for the children, expenses for weekend outings for the family. The Plaintiff paid for the children’s extracurricular activities, for her own clothes and for Christmas and birthday presents for the children, and for their friends and family members, as well as trips to Brisbane to visit the Plaintiff’s family. In addition, the Plaintiff in December 2005 made a one off payment of $30,000 in reduction of the outstanding mortgage debt on the Pinaroo Place property.

28 The Plaintiff in mid-2002, during the period while she and the Deceased were living separately, purchased an investment property in Brisbane for $200,000. That purchase was funded by a mortgage loan of $180,000, the balance being provided by the Plaintiff from her own savings. The rental income generated by that property was not sufficient to meet the entirety of the mortgage payments, and the Plaintiff from her own funds met that shortfall. The Plaintiff said that when the Deceased fell ill the ownership of that property became a burden to her and she decided to sell it. That would probably put the date of sale in 2006. The Plaintiff did not provide precise details of the sale price. However, in her affidavit of 18 September 2007, she that her then savings of $160,000 represented the balance of the net proceeds of sale of that property.

29 Lachlan attends Mowbray Public School, where he was to commence Year 3 in 2009. Noah also attends Mowbray Public School, and will presumably commence in Year 1 in 2009. Georgia attends Birahlee Preschool for two days a week, and will be commencing formal education in 2010. The Plaintiff avails herself of the services of a babysitter to look after the children on the days and at the times when she is working.

30 According to the Plaintiff, although each of the children enjoys good physical health, Lachlan, the eldest child, found it difficult to cope with the death of his father. For a period after his father died, Lachlan was receiving treatment from a psychiatrist.

31 It is in the light of the foregoing facts and circumstances that the Court must proceed to a consideration of the claim of the Plaintiff.

32 I have had the benefit of receiving a written outline of submissions and a chronology from Counsel for the respective parties, those documents will be retained in the Court file.

33 The Plaintiff, as the de facto partner of the Deceased at the time of his death, is an eligible person within paragraph (a) of the definition of that phrase contained in section 6 (1) of the Family Provision Act. As such she has the standing to bring the present proceedings. The only other eligible persons in relation to the Deceased are the three infant children of the Plaintiff and the Deceased, each of whom is an eligible person within paragraph (b) of the foregoing definition.

34 In carrying out the first stage in the two-stage process identified by the High Court of Australia in Singer v Berghouse [1994] HCA 40; (1994) 181 CLR 201 at 208 – 210 (the correctness of which test was affirmed by the High Court in Vigolo v Bostin [2005] HCA 11; (2005) 221 CLR 191) the Court must determine whether in consequence of the provisions of the will of a testator the applicant has been left without adequate provision for her proper maintenance.

35 The High Court in Singer v Berghouse (at 209 – 210) said that the determination of the first stage

calls for an assessment of whether the provision (if any) made was inadequate for 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.

36 The claim of the Plaintiff must be considered in the light of the competing claims of the three infant children of the Deceased. There is no evidence that the Plaintiff is other than a loving and caring mother to those three children (although I note that the First Defendant baulked at agreeing with the description of the Plaintiff as “a very good mother”, describing her as being only “adequate to good”). However, it will be appreciated, that the effect of any order for provision which might be made in favour of the Plaintiff will be to reduce the benefit given to the infant children by the terms of their father’s will.

37 It has often been said that the Courts must be scrupulous and zealous in protecting the interests of those persons who are not capable of protecting their own interests. In the instant case such persons are the children of the Deceased, each being an infant of tender years. It was apparent from their evidence that the Defendants, being respectively their only paternal uncle and their de facto step-grandfather, very much have the interests of those children at heart.

38 It has been submitted on behalf of the Plaintiff that her need is for a house in which she and her children can reside. She desires that any such residence should be owned by her absolutely and should not be the subject of a mortgage. In her oral evidence the Plaintiff did not discount the possibility that she might wish at some stage to relocate to Queensland, where her own family presently resides.

39 However, there is no suggestion that the infant children will live otherwise than with their mother, the Plaintiff. From a practical point of view, so long as the Pinaroo Place property is held on trust for the infant children of the Deceased, the Plaintiff will be entitled to reside therein. Indeed, each of the Defendants expressly stated in his oral evidence that he acknowledged such a right in the Plaintiff to reside in the Pinaroo Place property.

40 In support of her claim the Plaintiff asserted that the will did not accurately reflect the intentions of the Deceased regarding the Pinaroo Place property, and that the Deceased intended that that property should be held in the family trust (of which the Plaintiff, as well as the children, was a beneficiary). That assertion was denied by the Defendants. Statements asserted to have been made by the Deceased when he was in hospital, shortly before his death, were the subject of both affidavit evidence and oral evidence.

41 I am not persuaded that the evidence supports the foregoing assertion by the Plaintiff. But, in any event, it should be emphasised that in a claim under the Family Provision Act, the Court must proceed upon the basis that the will which is admitted to probate accurately sets forth the intentions and wishes of the testator.

42 The Plaintiff, apart from her own assets and her own considerable earning capacity, has an entitlement to receive under the terms of the will the entirety of the estate of the Deceased, apart from the Pinaroo Place property. That entitlement has a value in monetary terms in excess of $211,000 – probably well in excess of that figure (especially if the costs of each party are, as in my view they should be, subject to assessment).

43 I am not satisfied that the Plaintiff, entitled to the entirety of the estate of the Deceased other than the family home (which is held on trust for her children and in which they cannot reside alone without their mother and in which the Defendants expressly acknowledge the Plaintiff to be entitled to reside) has been left without adequate provision for her proper maintenance.

44 That conclusion is of itself determinative of the claim of the Plaintiff.

45 However, even if (contrary to the conclusion which I have just expressed) I were to be satisfied that the Plaintiff had, by the terms of the will of the Deceased, been left without adequate provision for her proper maintenance, it is necessary for the Court to consider the claim of the Plaintiff for further provision out of the estate of the Deceased in the light of the competing claims of the other beneficiaries.

46 The Plaintiff submits that she should receive the Pinaroo Place property absolutely. An order to that effect would result in the infant children of the Deceased being deprived entirely of any benefit under the terms of the will of their father.

47 In support of the submission that she should receive the Pinaroo Place property absolutely, the Plaintiff appears to rely upon the fact that the will makes no express provision for the manner in which the outgoings upon that property should be met during the period while it is held in trust until the youngest infant beneficiary attains the age of 21 years – that is, during the forthcoming period of almost 17 years. But those outgoings would need to met, irrespective of whether the property is held by the Defendants in trust for the infant beneficiaries or whether it is held by the Plaintiff absolutely. In the latter event the financial and legal obligation would be upon the Plaintiff. Her income would be sufficient to meet such outgoings as municipal rates and insurances.

48 I would be reluctant to conclude, in the absence of express evidence, that the Plaintiff would be such an unnatural mother and so recreant towards the interests of her infant children, that, although she would be prepared to meet the outgoings on the family home, while residing therein, if she were absolutely entitled to the ownership thereof, she would not be prepared to meet the same outgoings if that home continued to be held on trust for the benefit of her three children.

49 It has been submitted on behalf of the Defendants that the Plaintiff is of an age and in such circumstances that the Court should not disregard the possibility that she might enter into matrimony or enter into another de facto relationship, or that she could have further children. (She herself, in cross-examination, did not discount the possibility of matrimony or such a relationship.)

50 Such a change in circumstances could well place in jeopardy any benefit which the Plaintiff might herself ultimately wish to confer upon the infant beneficiaries if she were to become absolutely entitled to the Pinaroo Place property.

51 I have already observed that the Court has a serious and weighty responsibility to protect the interests of the three infant beneficiaries. Those interests would be lost in their entirety if the Plaintiff were to receive the Pinaroo Place property absolutely.

52 It is appropriate that I should also here record that various alternative submissions were made both by the Plaintiff and also by the Defendants, in the event that (contrary to the conclusion which I have already expressed) I were to be satisfied that the Plaintiff had been left without adequate provision for her proper maintenance. One of those suggestions, made on behalf of the Plaintiff, was that whilst she should have the Pinaroo Place property absolutely, the balance of the estate should, pursuant to section 10 of the Family Provision Act, be held by the Defendants on trust for the children until each child attains the age of 18 years. Another suggestion (which appeared to find favour with at least the First Defendant) was that the Pinaroo Place property should be held on trust not only for the three children as tenants in common in equal shares, but for the three children and the Plaintiff in equal shares – that is, that the Plaintiff should have a one fourth entitlement in the Pinaroo Place property.

53 I am not satisfied that either of those suggestions would adequately protect the interests of the infant beneficiaries given to them by the terms of their father’s will.

54 Even if (contrary to the conclusion which I have already expressed) I were to be satisfied that the Plaintiff had been left without adequate provision for her proper maintenance, nevertheless, the competing claim of the children of the Deceased, still of tender years, is such that I would not, in any event, be disposed to make an order for provision in favour of the Plaintiff, by giving to her the Pinaroo Place property and by thus depriving those infant beneficiaries of the only entitlement which they receive under the terms of their father’s will.

55 It follows, therefore, that the claim of the Plaintiff will be dismissed.

56 I have not heard any submissions concerning costs. Accordingly, unless within seven days of the date hereof any party arranges with my Associate for the matter to be listed before me for argument as to costs, I make the following orders:

1. I order that the summons be dismissed.

2. I order that the Plaintiff pay the costs of the Defendants, such costs to be on the party and party basis.

3. I order that the Defendants be entitled to retain from the estate of the late Helmut Mayr (“the Deceased”) the difference between the foregoing costs which they may recover from the Plaintiff and the costs of the Defendants on the indemnity basis.

4. The exhibits may be returned.

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