Dalton v Ellis

[2005] NSWSC 1252

Reported Decision: 65 NSWLR 134

New South Wales

Supreme Court

CITATION:	Dalton v Ellis; Estate of Bristow [2005] NSWSC 1252
HEARING DATE(S):	16, 17 August 2005 [then written submissions]
JUDGMENT DATE :	8 December 2005
JURISDICTION:	Equity Division Probate List
JUDGMENT OF:	Young CJ in Eq
DECISION:	Defendant entitled to whole of deceased's estate.

CATCHWORDS:	CONTRACTS [45]- Deed- Promise by father to mother that he would name unborn child in will- Will not made- Whether deed sham- Whether requisite common intention between father and mother that deed does not confer benefits it appeared to. CONTRACTS [45]- Deed- Testamentary contract between mother and father- Promise to name daughter as beneficiary in father's will- Daughter not party to deed and en ventre sa mere at time delivered- Whether daughter able to sue on deed- Discussion on application of Conveyancing Act, s 36C. FAMILY LAW & CHILD WELFARE [132]- Paternity- Mother in relationship with man for three years prior to child's birth- Mother and child assert man is father- Mother married to another man at time of child's birth- Supposed father had close relationship with child for some time after birth- Supposed father acknowledged child as such in statutory declaration and deed- Child and other man have incompatible blood types- Whether child is supposed father's daughter. SUCCESSION [301]- Testatmentary contract- Promise to name daughter as beneficiary in father's will- Will not made- Daughter has claim for breach- Whether contract void as against Family Provision Act- Whether claim subject to operation of Family Provison Act- Discussion of nature of testamentary contracts. SUCCESSION [315]- Family provision- Claim by surviving long-term de facto spouse- Limited funds in estate- Competing claims- Deceased has primary duty to long-term surviving spouse- Spouse's claim has priority in circumstances. TRUSTS [115]- Third party beneficiary rule- Deed contained promise that third party be named in promisor's will- Whether sufficient intent by promisee that she be trustee of promise for third party's benefit.
LEGISLATION CITED:	Births, Deaths and Marriages Registration Act 1995, s 10(2) Contracts (Rights of Third Parties) Act 1999 (Eng) Conveyancing Act 1919, s 36C Family Provision Act 1982, ss 6, 16 Law of Property Act 1925 (Eng), s 56 Real Property Amendment Act 1845 (Eng), s 5 Status of Children Act 1996, ss 9, 11, 13
CASES CITED:	Australian Mortgage & Properties Pty Ltd v Baclon Pty Ltd (2001) 10 BPR 19,227 Barns v Barns (2003) 214 CLR 169 Beswick v Beswick [1968] AC 58 Bird v Trustees Executors and Agency Co Ltd [1957] VR 619 Bohn v Miller Brothers Pty Ltd [1953] VLR 355 Dillon v Public Trustee [1939] NZLR 550 (NZCA) Dillon v Public Trustee of New Zealand [1941] AC 294 Doe d Clarke v Clarke (1794) 2 H Black 399; 126 ER 617 Doe d Lancashire v Lancashire (1792) 5 TR 49; 101 ER 28 Doyle v Phillips (No 1) (1997) 8 BPR 15,523 Gibson v Gibson (1698) 2 Freeman 223; 22 ER 1173 Jervis v Wolferstan (1874) LR 18 Eq 18 Lamb v Vice (1840) 6 M & W 467; 151 ER 495 Lieberman v Morris (1944) 69 CLR 69 Lim v Permanent Trustee Co Ltd (M McLelland J, 26.3.1981, unreported) Lloyd's v Harper (1880) 16 Ch D 290 Long v Blackall (1797) 7 TR 100; 101 ER 875 McDonald v McDonald (1935) 35 SR (NSW) 173 Nowell v Palmer (1993) 32 NSWLR 574 Paul v Paul (1882) 20 Ch D 742 Re Caroline Chisholm Village Pty Ltd (1980) 1 BPR 9507 Re Schebsman [1944] Ch 83 Re Seery (1969) 90 WN (Pt 1) (NSW) 400 Reddie v Cornock [2005] NSWSC 187 Ryder v Taylor (1935) 36 SR (NSW) 31 Sacher Investments Pty Ltd v Forma Stereo Consultants Pty Ltd [1976] 1 NSWLR 5 Schaefer v Schuhmann [1972] AC 572 Sharrment Pty Ltd v Official Trustee in Bankruptcy (1988) 18 FCR 449 Snook v London and West Riding Investments Ltd [1967] 2 QB 786 Standing v Bowring (1885) 31 Ch D 282 Swain v Law Society [1983] 1 AC 598 Trident General Insurance Co Ltd v McNiece Bros Pty Ltd (1988) 165 CLR 107 Tweddle v Atkinson (1861) 1 B & S 393; 121 ER 762 Vandepitte v Preferred Accident Insurance Corporation of New York [1933] AC 70 White v Bijou Mansions Ltd [1937] Ch 610
PARTIES:	Maris Stella Yvette Nevville Dalton (P1) Isis Josephine Georgina Alice Aline Bristow Dalton (P2) Suzanne Ellis (D)
FILE NUMBER(S):	SC 118099/03
COUNSEL:	G A Sirtes and F A Sinclair (P) M Gorrick and L Goodchild (D)
SOLICITORS:	Access Legal (P) F J Smith & Co (D)

LOWER COURT JURISDICTION:

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
PROBATE LIST

YOUNG CJ in EQ

Thursday 8 December 2005

118099/03 – DALTON v ELLIS; ESTATE OF BRISTOW

JUDGMENT

1 HIS HONOUR: The first plaintiff is the mother of the second plaintiff. The plaintiffs say that the second plaintiff is the daughter of the late Charles John Bristow (known as Tim Bristow) who died intestate on 13 February 2003. Letters of administration were granted to the defendant on 21 July 2003.

2 The principal and only asset of any real value in the estate is a property at Newport, worth approximately $1.5m as at the date of the grant. There are also some shares of nominal value and a Mercedes motor vehicle valued at $15,000.

3 There are three aspects of this case: (a) an action on a deed delivered by the deceased on 21 December 1973; (b) a claim under the Family Provision Act 1982 by the second plaintiff; and (c) a claim under the same Act by the defendant.

4 The principal factual issue that is raised is whether the second plaintiff is indeed the deceased’s daughter. The principal legal issues are: (1) Whether the plaintiffs can sue on the deed; (2) If they can sue, what relief can they be given; and (3) What impact would a successful claim under the deed have on rights under the Family Provision Act.

5 I heard the proceedings on 16 and 17 August 2005, when Mr G A Sirtes and Ms F A Sinclair appeared for the plaintiffs and Mr M Gorrick and Ms L Goodchild appeared for the defendant. At the end of argument, it became clear that counsel needed to consider more fully some of the issues and make further submissions. This they did and the final written submissions were received in early November 2005.

6 I propose to consider the problems that are raised by the parties as follows:

1. The claim under the deed.

This raises sub-issues, viz:

(a) should the deed be regarded as a sham?

(b) is there a problem with the deed’s bona fides?

(c) is the deed void as against public policy?

(d) may the second plaintiff sue on the deed?

(e) does the Third Party Beneficiary Rule assist the plaintiffs?

(f) what, if anything, is the significance of the fact that the first plaintiff has suffered no damage by breach of the deed?
(g) what claims do the plaintiffs make under the deed?

(h) what, if anything, is the effect of delay in suing on the deed?
(i) when did any cause of action for compensation for breach of the deed arise?
(j) are there any ancillary equitable claims associated with the deed?

(k) should a claim on or associated with the deed succeed?

2. Is the second plaintiff the deceased’s daughter?

3. The second plaintiff’s claim under the Family Provision Act .

4. The defendant’s claim under the Family Provision Act .

5. Costs.

6. The overall result of the case.

7 Before dealing with the sub-issues that arise under heading 1, I must sketch the facts surrounding the deed, which are essentially not in contest.

8 The deceased and the first plaintiff had been friends for some time. The first plaintiff said they were in a relationship from 1970 to January 1977. She and the second plaintiff lived together with the deceased on and off for about four years once the second plaintiff was born. Indeed, it is quite clear that the deceased played a significant parenting role early in the second plaintiff’s life, although he was absent for some time during this period.

9 On 21 December 1973 the deceased executed a deed. The deed was expressed to be between the deceased of the one part and Dr Dalton of the other part.

10 The key clauses of the deed are as follows:

“1. Mr Bristow acknowledges and agrees that he is the father of the female child due to be born to Dr Dalton on 25 February 1974.

5. Mr Bristow covenants and agrees that forthwith after the execution of this Deed he will make and will thereafter at all times keep in force a valid and effective Will under and pursuant to the terms of which the said child is entitled to receive upon Mr Bristow’s death an interest in Mr Bristow’s estate which shall be not less than that fraction of the value of the assets owned by Mr Bristow at the date of his death the numerator of which is one (1) and the denominator of which is the number of children of which Mr Bristow is the father including the said child.

6. It being the intention, wish and desire of the parties that the said child should be entitled to the benefits conferred on her under the terms of this Deed as though she were a party hereto even though she is not such a party IT IS HEREBY AGREED AND DECLARED that Dr Dalton should and she hereby does hold the benefits conferred upon the said child under this Deed as Trustee for the said child to the intent that the child should be able to and can enforce the sum as covenants entered into with her in a Deed which she is party.”

11 Isis Dalton, the second plaintiff, was born two months prematurely on 29 December 1973.

12 On 19 December 1973, the first plaintiff married a Dr Dorman. However, the first plaintiff swore, and I accept, that her marriage with Dr Dorman was never consummated.

13 It was common ground that at the date of his death, the deceased had no more than two children, having fathered a son Stephen in his first marriage. Thus, the second plaintiff says that she would be entitled under the deed to half of the deceased’s estate.

1(a) Is the deed a sham?

14 In Sharrment Pty Ltd v Official Trustee In Bankruptcy (1988) 18 FCR 449 at 454, Lockhart J said:

“A ‘sham’ is … for the purposes of Australian law, something that is intended to be mistaken for something else or that is not really what it purports to be. It is a spurious imitation, a counterfeit, a disguise or a false front.”

15 A transaction will only gain the description of a sham if all the parties to it share a common intention that it will not create the legal rights and obligations that it appears to: Snook v London and West Riding Investments Ltd [1967] 2 QB 786 at 802.

16 There is just no material from which the court could conclude the document was a sham. It was prepared by solicitors and duly signed and delivered. The first defendant always appears to have regarded it as important; the document has been preserved for many years. It is difficult to see what the deed was meant to be disguising, who was intended to be deceived by it or what purpose such a deception could have.

17 Mr Gorrick says that the facts set out in 1(b) below taken together mean that the deed was being proffered to give an appearance that was contrary to the parties’ real intentions.

18 I do not consider that the balance of the evidence enables me to make that finding. Even if I could, the rights of the second plaintiff may, on the authorities prevent the finding that the deed was a sham.

19 I do not consider that it is useful to develop this part of the case further: the essential argument is better considered under heads 1(b) and 1(i).

1(b) Bona fides and the deed

20 Mr Gorrick put that it was very significant that, under cross-examination of Dr Dalton, the following facts emerged:

(a) That she instructed her solicitors to prepare a number of legal documents for her in December 1973, of which the deed was one such document;

(b) She instructed her lawyers to prepare a pre-nuptial agreement with Dr Dorman;


(c) The deed was amended by Rev Mr Noffs on 19 December 1973, the day he married Dr Dalton to Dr Dorman;

(d) The deceased knew about the marriage, but he and Dr Dalton thought it inappropriate for him to attend;

(e) The deed was part of the negotiations between Dr Dalton and the deceased;

(f) Dr Dalton could not recall how she came to have copies of the deed;

(g) She did not know how her solicitors came to possess the original deed, although it was in their possession when she retrieved it from them after the deceased’s death;

(h) She never once enquired of the deceased as to whether he had made a will. She assumed he had done so, but could proffer no basis for that assumption;

(i) She did not understand the purport of clause 5 of the deed;

(j) Her solicitors did not prepare a will to implement clause 5 of the deed;

(k) She disavowed the suggestion that the real purpose of the deed was to provide evidence of paternity;

(l) She did not police the deed during the deceased’s lifetime.

21 I must confess that I do not find anything in the combined effect of these matters which would cast aspersions on the plaintiff’s claim. In particular, it is not uncommon to find that women do not strictly enforce legal obligations against men towards whom they have kindly emotional feelings.

22 Mr Gorrick said that I should make adverse findings on the first plaintiff’s credit and therefore be suspicious about certain peculiarities in the circumstances surrounding the deed’s creation. He suggested that the real purpose of the deed was simply to establish the second plaintiff’s parentage. I can see no rhyme or reason why anyone, whose real purpose was as suggested, would have this deed executed. If the deceased only wished to acknowledge the second plaintiff as his daughter he could easily have done so without also purporting to confer on her the other benefits contained in the deed.

23 Because I take this view of the facts, it is unnecessary for me to consider what legal significance would attach if I had found some lack of bona fides.

1(c) Is the deed against public policy?

24 There is no doubt that a person may enter a binding contract to make a will: McDonald v McDonald (1935) 35 SR (NSW) 173. However, Mr Gorrick submitted that there were a number of circumstances which suggest that the deed is contrary to public policy because it seeks to leave the Family Provision Act with no work to do.

25 In Barns v Barns (2003) 214 CLR 169 at 185-186, Gleeson CJ commented that while a deliberate attempt by a potential claimant to contract out of Family Provision legislation, as occurred in Lieberman v Morris (1944) 69 CLR 69, would be ineffective, a deed which merely has the consequence of leaving no estate on which the legislation can act would, other things aside, be enforceable.

26 Although Gleeson CJ’s observations were made with the equivalent South Australian legislation in mind, legislation which, unlike the NSW Act, does not cover notional estate, it is clear that in this case, the deed does not attempt to contract out of the Family Provision Act, whether with respect to primary estate or notional estate. It simply required the deceased to make a will that left a portion of his estate to the second plaintiff. While it would have been obvious to the parties to the deed at the time of its making that it could very well lead to competing claims being made on the estate, there is nothing in it which suggests that it deliberately attempted to prevent any eligible person bringing a claim under the Act.

27 The fact that parliament has seen the need to insert the notional estate provisions in the Act suggests that the effect of the Act is not to render a testamentary contract of this kind, the legitimacy of which has never seriously been doubted, completely void, but merely make such a contract subject to it. Indeed, in cases where there were competing claims between a testamentary contract and family provision legislation, such as Dillon v Public Trustee of New Zealand [1941] AC 294 at 303-304; Schaefer v Schuhmann [1972] AC 572 at 598 and Barns v Barns, courts have not held such contracts to be void as against public policy, rather merely subject to the legislation. This will have further relevance for the latter part of these reasons.

1(d) May the second plaintiff sue on the deed?

28 Clearly, the second plaintiff is not an actual party to the deed. The deed itself says so. Can she, however, sue on it?

29 The general rule in contract law is that unless a person is a party to a contract, she cannot sue on it. This is known as the doctrine of privity of contract; see Tweddle v Atkinson (1861) 1 B & S 393; 121 ER 762.

30 In Trident General Insurance Co Ltd v McNiece Bros Pty Ltd (1988) 165 CLR 107, the High Court reviewed the law with respect to third party contracts. The court adjusted the law with respect to insurance contracts. However, the remainder of the law of privity was left virtually intact despite comments that it was unsatisfactory in some respects particularly that the exception of trust of a promise did not adequately cover the field (see Mason CJ and Wilson J at 121 and Deane J at 147).

31 Section 36C of the Conveyancing Act 1919 is as follows:

“(1) A person may take an immediate or other interest in land or other property, or the benefit of any condition, right of entry, covenant or agreement over or respecting land or other property, although the person may not be named as a party to the assurance or other instrument.

(2) Such person may sue, and be entitled to all rights and remedies in respect thereof as if he or she had been named as a party to the assurance or other instrument.”

32 In Bohn v Miller Brothers Pty Ltd [1953] VLR 355, approved and applied in Bird v Trustees Executors and Agency Co Ltd [1957] VR 619, single judges of the Victorian Supreme Court held that s 36C or its interstate equivalents do not assist persons who are not in existence and identifiable at the time the instrument conferring benefits on them is executed.

33 Is a person en ventre sa mere to be considered a person in existence for the purpose of fulfilling this test?

34 The rule of the common law is plain. As long ago as in Doe d Clarke v Clarke (1794) 2 H Black 399 at 401; 126 ER 617 at 618, the Court of Common Pleas held, following the then recent work, “Watkins’s Law of Descents”, “It is now laid down as a fixed principle, that wherever such consideration would be for his benefit, a child en ventre sa mere shall be considered as absolutely born.”(See per Buller J).

35 This principle had been taken over from the Roman Law see Justinian, Institutes, Book 2 Title 13 and Book 3 Title 1 though the early Roman Jurist Gaius had classified postumi as incerta. As was said in Gibson v Gibson (1698) 2 Freeman 223; 22 ER 1173, “by the civil law, posthumus pro nato habetur”, colloquially translated as “it is to be the posthumous child’s on birth”.

36 The principle has been applied in many cases; see eg Doe d Lancashire v Lancashire (1792) 5 TR 49; 101 ER 28 where examples from the authorities to that point are digested and Long v Blackall (1797) 7 TR 100; 101 ER 875.

37 Thus, I consider that a posthumous child (at least one who has quickened and is later born alive, as the second plaintiff in this case) is to be considered as a person identifiable and in existence for the purpose of the application of s 36C.

38 Simonds J in White v Bijou Mansions Ltd [1937] Ch 610 at 623 et seq, traced the background of the English equivalent of s 36C (s 56 of the Law of Property Act 1925 (Eng)).

39 His Lordship commenced with reference to s 5 of the Real Property Amendment Act 1845 (Eng) which provided that a person to whom a deed purported to grant an interest in land could take that interest even though he or she were not a party to the deed.

40 His Lordship then said of s 56 of the Law of Property Act at p 625:

“Just as under s 5 of the Act of 1845 only that person could call it in aid who, although not a party, yet was a grantee or covenantee, so under s. 56 of this Act only that person can call it in aid who, although not named as a party to the conveyance or other instrument, is yet a person to whom that conveyance or other instrument purports to grant some thing or with which some agreement or covenant is purported to be made.”

41 The position in England has now been affected by the Contracts (Rights of Third Parties) Act 1999 which has not been adopted in NSW. However, Chitty on Contracts, 29th ed (Sweet & Maxwell, London, 2004) paras [18-114] et seq, indicates that, after Beswick v Beswick [1968] AC 58 the following limitations apply to s 36C (my summary):

(1) it applies only to real property;

(2) to covenants running with the land;

(3) to cases where the instrument is not merely for the benefit of the third party but purports to contain a grant to or covenant with him;

(4) to deeds inter partes;

(5) where the third party is in existence and identifiable at the time when it was made.

See also Carter on Contract Law in Australia (Butterworths, 2002 [914]).

42 Beswick v Beswick would appear to be good law in Australia; see eg Sacher Investments Pty Ltd v Forma Stereo Consultants Pty Ltd [1976] 1 NSWLR 5 at 12. See also Re Caroline Chisholm Village Pty Ltd (1980) 1 BPR 9507 at 9512 and my decision in Doyle v Phillips (No 1) (1997) 8 BPR 15,523 at 15,525. See, however, Stuckey, The Conveyancing Act (Law Book Co, Sydney, 1970) 2nd ed [238] and Carter op cit [914].

43 Section 36C has received more recent attention in Australian Mortgage & Properties Pty Ltd v Baclon Pty Ltd (2001) 10 BPR 19,227. In that case a licence to occupy a property was conferred on a company and permitted that company’s sole director to reside there. It also permitted two of the director’s family members to reside there as well, although they were not named in the licence. When executing the document, the plaintiff’s principals did not identify who those family members were, after being requested to do so. Subsequently, the director’s mother sought to rely on s 36C to enforce the provisions of the licence (amongst other things). Austin J held that s 36C did not apply because she was not a person with whom an agreement or covenant was purportedly made, even though she indirectly benefited from it.

44 It thus appears to me that the second plaintiff is unable to rely on s 36C to enforce cl 5 in the deed.

45 I should add, for completeness, that there appear to be some cases of executed contracts where A has paid money to B to be paid to C that C may sue B for money had and received; see my article “Third Party Contract Rights” (1992) 9 Aust Bar Rev 39 at 41. None of those exceptional cases could be relevant in the instant case.

1(e) The Third Party Beneficiary Rule

46 As Chitty says (29th ed 18-074), Equity developed an exception to the doctrine of privity which has long since been universally recognized that:

“where A made a promise to B for the benefit of C, the promise could be enforced by C against A if B had constituted himself trustee of A’s promise for C.”

47 The rule has, at least in the days before Trident, been sparingly applied. It is clear that a promisee will not be taken to be a trustee of the promise merely because there is a benefit to a third party. The promisee must have an intention to create a trust: Swain v Law Society [1983] 1 AC 598 at 620. The intention to create the trust may be found in conduct, but it must be made abundantly clear and not be necessary to resort to inferences to find the requisite intent: Vandepitte v Preferred Accident Insurance Corporation of New York [1933] AC 70 at 79-80 and Re Schebsman [1944] Ch 83 at 104.

48 The intention must be to create a trust, and not just an intention to benefit a third party (Re Schebsman at 89 and Ryder v Taylor (1935) 36 SR (NSW) 31 at 48), but provided that that intention appears from the language of the contract construed in its context, such a trust will, at least prima facie, arise.

49 Clause 6 of the deed is clearly expressed so as to show an intent that the first plaintiff was to hold the benefits conferred on the second plaintiff under the deed, that is, the right to be named in the deceased’s will, as trustee for the benefit of the second plaintiff. The clause goes even further by expressly purporting to entitle the second plaintiff to the benefit of the deed as though she were a party to it and with the intent that she be able to enforce it. This further supports the existence of the necessary intent: per Deane J in Trident at 147.

50 Mr Gorrick said that the surrounding circumstances of the deed indicated that it and any trust created under it had been revoked in the time between its execution and the deceased’s death. He pointed to the fact that there had been no attempt by the plaintiffs to find out whether the deceased had made a will, the absence of any evidence of a will and the failure of either plaintiff to enforce clause 5 of the deed prior to the deceased’s death, as factors indicating a revocation.

51 However, as there was no express power of revocation in the deed, once settled, the trust that it established could not be revoked, (Paul v Paul (1882) 20 Ch D 742 and Standing v Bowring (1885) 31 Ch D 282), even if some of the above circumstances point to revocation or variation (which is in any case doubtful).

52 Accordingly, the second plaintiff is the beneficiary of a chose in action, specifically a right to sue on a contract requiring the deceased to have named her in his will.

1(f) What, if anything, is the significance of the fact that the first plaintiff has suffered no damage by breach of the deed?

53 It is clear law that where a person is trustee for another on a deed or bond, she may sue on the deed and it matters not that the trustee is herself not damnified: Lamb v Vice (1840) 6 M & W 467; 151 ER 495; Lloyd’s v Harper (1880) 16 Ch D 290 at 309.

54 Thus, the second plaintiff may sue to enforce the deed in the name of the trustee or in her own name.

1(g) What claims do the plaintiffs make under the deed?

55 Paragraph 9 of the statement of claim seeks an order that one-half of the deceased’s estate is held on trust for the second plaintiff and an order that the value of that interest be paid to her. However, it also claims damages and interest.

56 All this leaves it delightfully vague as to whether the plaintiffs’ claim is at law or in equity, for a declaration of trust or damages for breach. The submissions of counsel did not make matters any clearer. This is not casting aspersions on counsel: they tried to get the best of all possible worlds for their client and the law in this area is far from clear.

57 In order to endeavour to classify the plaintiffs’ claim, it is necessary to analyse three leading cases and learned articles written about them. The three cases are Dillon v Public Trustee [1939] NZLR 550 (NZCA) reversed [1941] AC 294 (in which Viscount (John) Simon LC gave the judgment of the Board); Re Seery (1969) 90 WN (Pt 1) (NSW) 400 reversed sub nom Schaefer v Schuhmann [1972] AC 572 and Barns v Barns (2003) 214 CLR 169.

58 Schaefer v Schuhmann was a decision of the Privy Council in which Lord (Jocelyn) Simon of Glaisdale dissented. In Barns, Gleeson CJ, Gummow, Hayne & Kirby JJ agreed with Lord Simon’s dissent: Callinan J gave a dissenting judgment.

59 In his article “Schaefer v Schuhmann: Promisee v Dependant” (1971) 10 Uni WA Law Rev 115, Professor Ian Hardingham noted that there were two approaches to the question as to the sort of interest that resulted from a contract such as the present. He termed these the ‘beneficiary theory’ and the ‘creditor theory’. In his article, “The Problem in Schaefer v Schuhmann – A Simple Answer” (1975) 49 ALJ 223, Sundberg J, then at the bar, again analysed the problem highlighting those two theories.

60 Sundberg J noted at p 226 that under the beneficiary theory, the promisee “has nothing more than a right to be named as a beneficiary in the promisor’s will”. Under the creditor theory, the promisee “obtains a right to the effectual transfer of the relevant asset under the promisor’s will”.

61 The vital difference between the application of the two theories is that, under the beneficiary theory, the claimant must take her place with all other beneficiaries and applicants under the Family Provision Act. Under the creditor theory, the relevant asset is removed from the assets available for beneficiaries and the claim of the promisee is dealt with as a debt.

62 The plaintiffs submit that I should apply the creditor theory and that such an approach is justified by the authorities.

63 The result in Schaefer v Schuhmann, that the contract was not subject to the application of family provision legislation, effectively adopted the creditor theory. However, the High Court in Barns has chosen not to follow the majority in Schaefer, instead preferring the dissent of Lord Simon in that case and the approach taken in the earlier, contrary Privy Council decision of Dillon; see the judgments of Gleeson CJ at [34], Gummow and Hayne JJ at [95] et seq and esp [105-110] and Kirby J at [123].

64 Mr Sirtes submitted that Barns is distinguishable from the present case because it concerned a case of performance, rather than breach, of a contract to make mutual wills. Certainly the factual basis for this submission is present, but there would seem no reason in principle for distinguishing between cases of breach and performance. As Viscount Simon LC said in Dillon at 305 (quoted in Barns at [109]):

“Their Lordships cannot entertain any doubt that, in principle, the Family Protection Act affects the unqualified operation of a contract to make a will in a particular form, whether the contract is fulfilled or whether it is broken.”

65 As to the fact that Barns involved a contract to make mutual wills, it was still a case of a promise to make a will in a particular form. Thus the promisee, just like the second plaintiff in this case, only obtained a right to be named accordingly in the promisor’s will (and vice versa) and nothing more. The nature of the contract in question was essentially the same as in this case.

66 Mr Sirtes conceded that to adopt the creditor theory would be to create a paradox because the promisee would be better of by breach of the promise than by its performance. Thus, if the deceased had complied with cl 5, the second plaintiff would simply be named as a beneficiary in the will and her interest would be subject to all the usual burdens on the estate, such as a potential family provision claim. If he had not complied with cl 5, so the theory goes, the second plaintiff’s damages claim would achieve a favoured status, beyond the reach of a claimant under the Family Provision Act.

67 Although, as Mr Sirtes submitted, the High Court did not advert explicitly to the two theories, in my view it is implicit in the majority’s rejection of Schaefer and their reasons for doing so, that the beneficiary principle should be adopted; see Gleeson CJ at [30]-[32] and Gummow and Hayne JJ’s adoption at [115] of Street J’s statement of principle at first instance in Schaeffer, reported sub nom Re Seery (1969) 90(1) WN at 407 and a similar statement by M McLelland J in Lim v Permanent Trustee Co Ltd (26 March 1981, unreported).

68 This approach is consistent with the approach of the older cases such as the decision of Jessel MR in Jervis v Wolferstan (1874) LR 18 Eq 18 referred to with approval by the High Court in Barns at [66].

69 Furthermore, if one merely approached the matter on the wording of cl 5, the intention of the parties was that the second plaintiff was to receive exactly the kind of right contemplated by the beneficiary principle without giving her a legal or beneficial interest in the deceased’s property during his life.

70 Accordingly, the second plaintiff is entitled to receive half of the deceased’s estate subject to the payment of claims under the Family Provision Act or damages of an equivalent amount.

1(h) What, if anything, is the effect of delay in suing on the deed?

71 Insofar as the action on the deed is at law, unless there is a Limitation Act problem, delay is irrelevant. I deal with limitation issues under 1(j).

72 Insofar as the proceedings are in equity, I need to consider questions of laches and acquiescence.

73 Mr Gorrick says that the defendant knew nothing of the deed or circumstances giving rise to it until after the commencement of these proceedings. At no time during the deceased’s life, at least so far as the evidence goes, did anyone allude to the existence of the deed. The fact that the deed provided in clause 4 that the deceased could be requested by the first plaintiff to pay maintenance makes this an a fortiori case for expecting someone to mention the deed. Now, and only now, when the deceased has passed away and his evidence is unavailable, is a claim made.

74 I do not consider that these matters give rise to a valid defence of laches. The case on the deed is unlikely to be affected by any evidence of the deceased.

75 Again, there is no sufficient material to show acquiescence or abandonment of the rights under the deed. Certainly the failure to enforce cl 4 would not amount to abandonment of the succession rights.

1(i) When did any cause of action for compensation for breach of the deed arise?

76 There was some evidence from a Mr Stephen Smith, a solicitor who acted for the deceased in various matters from before 1973 until about 1992, who indicated there was a file record of a will made by the deceased at some stage. However, the will, if it ever existed, has never been located. In any case, both sides agree that the deceased died intestate and is taken to have never made a will.

77 Under clause 5, the deceased covenanted to make a will and keep it in force. Accordingly, the deceased breached the deed soon after executing it, in 1973 or early 1974. The breach was a continuing one up until his death, at which point performance became impossible.

78 I agree with Mr Sirtes’ submission that the deceased’s death did not crystallise the breach. It had already occurred and continued to occur right up until that time. However, I do not agree with him when he says that death “confirmed” the breach, whatever that means. No doubt the plaintiffs could have sued the deceased during his lifetime for not complying with cl 5 right up until the moment before his death, or for some time prior to making a will if he had made one late in his life.

79 However, it would be difficult to point to any resultant loss at any time prior to intestacy because the contract did not give the plaintiffs any legal or beneficial interest in any of the deceased’s property before that time; see Nowell v Palmer (1993) 32 NSWLR 574 at 578 and Barns at 183.

80 However the damages for such breach up to the date of death would have been affected by the inability of a court to assess the value of the estate, the number of children at death and would have to be discounted for the possibility that the second plaintiff may have predeceased the deceased, and for accelerated benefit and possible Family Provision Act claims. (See Hardingham, op cit pp 118-9. The damages probably would have been nominal. However, I need not say anymore on that question. What is certain is that the intestacy (or moments before it) was not the first time a breach of the deed occurred nor was it a “confirmation” of any earlier breach; it was merely the first (and only) time at which a breach could be said to cause any actual loss to the plaintiffs.

81 There being a continuing breach, I do not consider that there is any merit in considering this point further.

82 In view of the adoption of the beneficiary theory, it does not matter that the cause of action may have arisen before death.

1(j) Are there any ancillary equitable claims associated with the deed?

83 The answer to this question is “No”. Attempts to say that a deceased person who does not fulfil his obligations under a deed of this nature constitutes unconscionable conduct were effectively ruled out by the High Court in Barns; see eg [84] et seq.

1(k) Should a claim on or associated with the deed succeed?

84 The answer is both “Yes” and “No”. The claim on the deed succeeds, but it is subject to orders being made under the Family Provision Act.

2. Is the second plaintiff the deceased’s daughter?

85 Some background details of the deceased should be given before dealing with the parties’ contentions.

86 Although the deceased and the first plaintiff were close and intimate friends, at the date of birth of the second plaintiff, the deceased was married to Gwenda.

87 The deceased and the first plaintiff remained close, despite the fact that each were married to someone else for about four years after the second plaintiff’s birth. In that period, the deceased interacted with the second plaintiff to a considerable extent.

88 By 1976/7, the deceased had commenced living with the defendant. This fractured relations between the plaintiffs and the deceased. There was less contact and, indeed, some suggestion that the deceased had been told by the first plaintiff not to see the second plaintiff so that his Christmas presents to her had to be delivered by an intermediary.

89 Notwithstanding this, the deceased paid some of the second plaintiff’s school fees. Further, there is the oral evidence of the second plaintiff, which I accept, as to her very cordial relationship with the deceased particularly early in her life.

90 Perhaps the defendant was unaware of the extent of the contact between the deceased and the second plaintiff. The defendant says that she is not at all certain in all the circumstances that the second plaintiff is the deceased’s daughter.

91 The defendant relies on the rebuttable presumption under s 9(1) of the Status of Children Act 1996 that Dr Dorman is the second plaintiff’s father and not the deceased.

92 The defendant points out that the second plaintiff has not submitted to DNA testing. However, the latter’s riposte was that the blood grouping tests showed that she is of the rare B Blood Group and as Dr Dorman was A and the first plaintiff O, it is thus impossible for Dr Dorman to have been her father. This seems to me to be a convincing argument.

93 Apart from this, the only substantial evidence in the defendant’s camp is the defendant’s suspicions.

94 However, virtually all the material before the court indicates that the second defendant is the deceased’s daughter.

95 The strongest material is the statutory declaration made by the deceased on 19 February 1974 acknowledging paternity and requesting the Registrar-General to record him as the second plaintiff’s father on her birth certificate.

96 The second plaintiff’s birth certificate cites the deceased as her father, which raises a presumption of that fact under the Status of Children Act, section 11. As there was no evidence contradicting the correctness of that entry, the court must treat the certificate as being properly issued: Births, Deaths and Marriages Registration Act 1995, s 10(2).

97 Then there is the fact of execution of the deed of December 1973, a deed executed after legal advice. The acknowledgment in this deed is reinforced in its evidentiary effect by s 13 of the Status of Children Act.

98 There is then the blood group evidence excluding Dr Dorman as being the second plaintiff’s father.

99 I also accept the evidence of the first plaintiff that she never had a romantic relationship with Dr Dorman.

100 The fact of the first plaintiff’s relationship and marriage to Dr Dorman and the presumption under s 9 of the Status of Children Act are, to my mind, insufficient to refute the evidence to which I have referred.

101 Consideration of all these matters lead to the conclusion that the second plaintiff is the deceased’s biological daughter.

3. The second plaintiff’s claim under the Family Provision Act

102 This claim is an alternative claim to the claim under the deed.

103 The second plaintiff told the court that she is a Modern Pentathlete, one of the top three women in Australia and is in training for the Beijing Olympic Games in 2008. Until those games are concluded, she is not earning income. Her mother and a trust known as “The Dalton Family Trust” in fact are supporting her. She basically requires capital to support her for the next three years and thereafter until she can complete her training for a profession.

104 If there is no countervailing claim under the Act, the second plaintiff will receive half the net estate. As I understand her counsel’s submissions, in this eventuality, the claim is not being pursued. The second plaintiff’s claim does not exceed half the estate. I thus need say nothing further about it.

4. The defendant’s claim under the Family Provision Act

105 The deceased died on 13 February 2003. By section 16 of the Family Provision Act 1982, any application for family provision must have been brought on or before 16 August 2004.

106 In the instant case, prior to the plaintiffs filing the statement of claim in these proceedings on 30 October 2003, there was no need for the defendant to make a claim under the Act as she received virtually the whole estate under the rules of intestacy.

107 When the plaintiffs’ claim was filed, the necessity for a defensive cross claim should have become apparent. However, the defendant’s solicitor first advised the defendant to make a claim for provision on 22 November 2004, having herself received advice on that day from counsel of the possibility of doing so.

108 Gzell J gave leave to file the cross-claim on 24 November 2004 but for some reason it was not filed soon thereafter. This oversight only came to the solicitor’s attention earlier this year and it was subsequently then filed on 14 April 2005.

109 Although I was not given any reason for why nothing was done about bringing a family provision claim in the 3 month period between mid-August and November 2004, I can well understand that in this type of litigation involving multiple issues with people with limited liquid funds, times can sometimes pass by.

110 Any fault would appear to be in the handling of the matter by the defendant’s legal representatives rather than by her personally.

111 There is no prejudice to any person in extending the time, and I consider it proper to do so.

112 I now turn to the defendant’s substantive claim for provision from the deceased’s estate.

113 The defendant is clearly an eligible person under s 6 of the Family Provision Act, being a person with whom the deceased was living in a domestic relationship at the time of his death. In fact she had lived with the deceased almost continuously for over 26 years from the age of 22. The two shared a close relationship. In addition, the defendant bore the burden of most of the household chores and expenses and the deceased came to rely heavily on her care for a number of his final years when his health deteriorated dramatically. She continues to live in and maintain the Newport Property.

114 Her long-standing relationship with and care for the deceased establishes a strong moral claim for provision.

115 As I have said, virtually the sole asset in the estate is the deceased’s house at Newport. This has been the home of the deceased and the defendant for 29 years. She has lived in the Newport area for 35 years.

116 The defendant says that she does not want the Newport house sold.

117 The Newport house has a tennis court which the defendant paid to have installed. The defendant is a professional tennis coach and operates a coaching business in Allambie Heights which is about 15 kilometres further South. She only has rights over the Allambie Heights Tennis Centre on a year to year basis. She says that if her rights there were terminated, she would probably have to operate her business from the Newport home tennis court.

118 The defendant says that it would be difficult to acquire another house with a tennis court in the general area for anything like what would be left if, in addition to the costs of these proceedings, she was required to provide a legacy for the second plaintiff.

119 The defendant also says that the deceased said to her on two occasions when he was sick in hospital, “If anything happens to me you’ll have the house. All I ask is that you look after Stephen.” (Stephen is the deceased’s son.)

120 There was some, but not a lot of cross-examination on the defendant’s desire to keep the Newport house. That cross-examination did not weaken the defendant’s evidence that it would be appropriate for her to continue to live in the Newport house.

121 The defendant is now aged 51. Her present financial circumstances are relatively healthy as her income exceeds her outgoings by $120. However, her occupation requires her health to remain robust. There is no present indication that this will not be the case. However, a person deriving income from physical activity often has to cease working well before those in more sedentary occupations. At some point it will become much more difficult for the defendant to support herself.

122 A marriage of 27 years is these days considered to be a long marriage. A de facto relationship of the same length where, as here, the applicant has committed herself exclusively to the relationship, must in this 21st Century be considered to be in much the same plight.

123 The authorities show that the community expects a person to provide a long term spouse with a secure roof over their head and a fund to defray expenses if that is possible. Further, such obligation is considered in the ordinary case to have priority over other obligations. I need merely refer to my recent decision in Reddie v Cornock [2005] NSWSC 187 at [78].

124 In my view, the community would consider it unreasonable for the deceased not to have made provision for the defendant and so cause her to alter significantly the lifestyle she has enjoyed for a long time with the deceased or would force her to sell the Newport house that she has lived in for many years.

125 Even if the defendant received the whole estate under the Family Provision Act, there must be a question as to whether she would be able to continue to retain the Newport property.

126 The defendant has two major liabilities: the remaining mortgage payments on the Newport property, of which $44,000 was still to be paid as of June 2004 and a $23,000 car loan. The defendant says the car loan will be paid out by February 2007. Besides the $877.00 she receives in weekly income, the defendant also owns a $66,000 Mercedes motor vehicle, $1,000 in shares and she values her tennis coaching business at $20,000. There is also some superannuation which will continue to accumulate while she keeps working.

127 I just do not know whether the retention of the Newport property is economically feasible. However, on the material before the Court, retention is certainly possible and, if it is possible, it should be encouraged for the reasons I have given.

5. Costs

128 How the costs of these proceedings should be paid and borne is a very difficult matter. It could not be addressed by counsel until they saw my reasons for decision. I can think of a number of different arguments which, if successful would result in different orders being made. It is thus appropriate to consider the matter after argument.

6. The overall result of the case

129 Accordingly, although the second plaintiff has a claim under the deed, and is a person for whom the deceased, had he more assets, should have made provision, in my view, the defendant should receive the whole of the deceased’s estate.

130 All I need now do is publish these reasons and fix a day when short minutes of order (and costs) may be considered. I will provisionally fix Thursday 15 December at 10am, but I encourage counsel to confer with my Associate well before that date to arrange a time when they will all be ready if that date causes problems.

131 The case was a difficult one, involving not only the usual problems in a case where there was too little money to satisfy legitimate claims, but also difficult points of law. I thank counsel for their considerable assistance.

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