Davis v Davis
[2014] NSWSC 234
•14 March 2014
Supreme Court
New South Wales
Medium Neutral Citation: Davis v Davis [2014] NSWSC 234 Hearing dates: 13 and 14 February Decision date: 14 March 2014 Jurisdiction: Equity Division Before: Nicholas AJ Decision: See para 31.
Catchwords: SUCCESSION - Family provision - Where one of two daughters benefited almost to the exclusion of the other - Where accepted that order should be made - Succession Act 2006 ss 59, 60 - No question of principle Legislation Cited: Succession Act 2006 (NSW) Cases Cited: Vidler v Ivimey [2013] NSWSC 1605
West v Mann [2013] NSWSC 1852Category: Principal judgment Parties: Sally Davis (Plaintiff)
Alison Anne Davis (Defendant)Representation: Counsel:
N T C Bilinsky (Plaintiff)
M Southwick (Defendant)
Solicitors:
Uther Webster & Evans (Plaintiff)
O'Shannassy Lawyers (Defendant)
File Number(s): 2012/372828 Publication restriction: Nil
Judgment
The plaintiff and the defendant are the daughters and only children of the late Phyllis Marjorie Davis (Mrs Davis). Mrs Davis died on 8 December 2011, aged 99 years. She made her last will on 3 March 2006, probate of which was granted in common form on 15 February 2012. The defendant is the executrix of the estate of Mrs Davis.
Without disrespect, I shall refer to the plaintiff and the defendant as Sally and Alison respectively. There are no other eligible persons under s 57 of the Succession Act 2006 (the Act).
By summons filed on 30 November 2012, Sally seeks an order for provision out of her mother's estate pursuant to s 59 of the Act.
Sally is now 71 years of age. She has been married twice, each marriage was dissolved, the second in 1988. She has two children from each marriage. Between 1989 and 1994 she managed a bookshop. Between 1996 and 2011 she owned and ran a business as an agent for suppliers to retail shops. She does not have any tertiary qualifications, although she is a trained radiographer.
Alison is now 76 years of age. She has never married, and has no issue. She worked as a registered nurse until her retirement at 60 years of age to care for her mother, and other members of her extended family.
Relevantly, the will provided:
5. I GIVE my diamond engagement ring and both of my aquamarine rings to my daughter SALLY DAVIS with my love especially as she owns her own home and has no need of my home as inheritance.
6. I GIVE the rest and residue of my estate to my said daughter ALISON ANNE DAVIS for her sole use and benefit absolutely BUT if my said daughter predeceases me then I GIVE the rest and residue of my estate to my said daughter SALLY DAVIS for her sole use and benefit absolutely BUT if she should also predecease me leaving children who survive me then those children shall take equally the share which they mother would otherwise have taken.
The only substantial asset of the estate is the house at Mowbray Road, Lane Cove. For the purpose of these proceedings its value was agreed in the amount of $980,000. There was some jewellery which comprised the rings left to Sally valued at $2,650, and rings which were included in the residue, valued at $5,750.
In these proceedings Alison accepted that there had been a close lifelong relationship between Sally and her mother. It was also accepted, with regard to s 59(1)(c) of the Act, that no adequate provision for the proper maintenance, or advancement in life, of Sally had been made by the will. With regard to s 59(2), it was accepted that the evidence established that an order for provision out of the estate in favour of Sally ought to be made.
The issues left for determination were the nature and quantum of the appropriate order to be made. In undertaking this task the court may have regard to the matters set out in s 60(2) of the Act which, relevantly, include:
(a) any family or other relationship between the applicant and the deceased person, including the nature and duration of the relationship,
(b) the nature and extent of any obligations or responsibilities owed by the deceased person to the applicant, to any other person in respect of whom an application has been made for a family provision order or to any beneficiary of the deceased person's estate,
(c) the nature and extent of the deceased person's estate (including any property that is, or could be, designated as notional estate of the deceased person) and of any liabilities or charges to which the estate is subject, as in existence when the application is being considered,
(d) the financial resources (including earning capacity) and financial needs, both present and future, of the applicant, of any other person in respect of whom an application has been made for a family provision order or of any beneficiary of the deceased person's estate,
...
(f) any physical, intellectual or mental disability of the applicant, any other person in respect of whom an application has been made for a family provision order or any beneficiary of the deceased person's estate that is in existence when the application is being considered or that may reasonably be anticipated,
(g) the age of the applicant when the application is being considered,
(h) any contribution (whether financial or otherwise) by the applicant to the acquisition, conservation and improvement of the estate of the deceased person or to the welfare of the deceased person or the deceased person's family, whether made before or after the deceased person's death, for which adequate consideration (not including any pension or other benefit) was not received, by the applicant,
...
(m) the character and conduct of the applicant before and after the date of the death of the deceased person,
(n) the conduct of any other person before and after the date of the death of the deceased person,
...
(p) any other matter the Court considers relevant, including matters in existence at the time of the deceased person's death or at the time the application is being considered.
As to the application of these provisions, I respectfully adopt the following observations of Kunc J in West v Mann [2013] NSWSC 1852 at [12]:
(10) Section 60(2) provides a helpful checklist but it is no more than that. The Court is not obliged to take those matters into account. The extent to which it does (if at all) will depend upon the facts of each particular case.
(11) Section 60(2)(p) confirms the breadth of matters the Court can take into account. Once enlivened, the Discretion is expressly fettered only by the requirement in s 59(2) that if an order is made, it must be such order "as the Court thinks ought to be made for the maintenance, education or advancement in life of the eligible person, having regard to the facts known to the Court at the time the order is made". The Discretion is otherwise unconfined, which means that in answering question (9) the Court is otherwise constrained only by the need to act judicially, that is to say "not arbitrarily, capriciously or so as to frustrate the legislative intent": Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 at [22] per Gaudron and Gummow JJ. The Court must act rationally and exercise the Discretion for the purpose for which it was conferred.
Further, in Vidler v Ivimey [2013] NSWSC 1605, Hallen J provided a comprehensive summary of the principles which includes:
105. Bryson J noted in Gorton v Parks (1989) 17 NSWLR 1, at 6, that it is not appropriate to endeavour to achieve "an overall fair" disposition of the deceased's estate. It is not part of the Court's function to achieve some kind of equity between the various claimants. The Court's role is not to reward an applicant, or to distribute the deceased's estate according to notions of fairness or equity. Nor is the purpose of the jurisdiction conferred by the Act to correct the hurt feelings, or sense of wrong, felt by an applicant. Rather, the Court's role is of a specific type and goes no further than the making of "adequate" provision in all the circumstances for the "proper" maintenance, education and advancement in life of an applicant.
106. In Cooper v Dungan (1976) 50 ALJR 539, Stephen J, at 542, reminded the Court to be vigilant in guarding "against a natural tendency to reform the testator's will according to what it regards as a proper total distribution of the estate rather than to restrict itself to its proper function of ensuring that adequate provision has been made for the proper maintenance and support of an applicant". Freedom of testamentary disposition is not to have "only a prima facie effect, the real dispositive power being vested in the court": Pontifical Society for the Propagation of the Faith v Scales [1962] HCA 19; (1962) 107 CLR 9, at 19.
107. In Stott v Cook (1960) 33 ALJR 447, Taylor J, although dissenting in his determination of the case, observed, at 453-4, that the Court did not have a mandate to rework a Will according to its own notions of fairness. His Honour added:
"There is, in my opinion, no reason for thinking that justice is better served by the application of abstract principles of fairness than by acceptance of the judgment of a competent testator whose knowledge of the virtues and failings of the members of his family equips him for the responsibility of disposing of his estate in far better measure than can be afforded to a Court by a few pages of affidavits sworn after his death and which only too frequently provide but an incomplete and shallow reflection of family relations and characteristics. All this is, of course, subject to the proviso that an order may be made if it appears that the testator has failed to discharge a duty to make provision for the maintenance, education or advancement of his widow or children. But it must appear, firstly, that such a duty existed and, secondly, that it has not been discharged."
...
111. Yet, in considering the question, the nature and content of what is adequate provision for the proper maintenance, education and advancement in life of an applicant, is not fixed or static. Rather, it is a flexible concept, the measure of which should be adapted to conform with what is considered to be right and proper according to contemporary accepted community standards: Pontifical Society for the Propagation of the Faith v Scales at 19; Walker v Walker (NSWSC, 17 May 1996, unreported); Stern v Sekers; Sekers v Sekers [2010] NSWSC 59.
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114. In all cases under the Act, what is adequate and proper provision is necessarily fact specific.
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118. The size of the estate is a significant consideration in determining an application for provision.
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127. The important consideration is whether, in all the circumstances, the community expectation of the deceased would be for greater benefaction to have been made for the adequate provision of the person seeking provision. As Gleeson CJ observed in Vigolo, at 199, the justification for interference with freedom of testation is to be found in the failure of a deceased to meet the obligations, which the community would expect in terms of maintenance, for those persons within the class of eligible persons.
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199. ... "need" in the context of the Act is not determined by reference only to minimum standards of subsistence. Nor is it limited to whether the applicant has, at the date of hearing, an immediate need for financial assistance with respect to his maintenance. It is a broader concept, which requires consideration of matters necessary to guard against unforeseen contingencies.
The Evidence
With respect to Sally's present circumstances the following is a summary of the relevant evidence.
On 18 September 1990 Sally purchased a property at Westleigh, unencumbered. She sold it in January 2007 for $590,000.
In February 2007, on professional advice, she established the Sally Davis Superannuation Fund (the Fund) in which she invested the amount of $565,000, which was most of the proceeds from the Westleigh sale.
On 1 July 2007 the Fund established a market-linked pension in accordance with applicable legislation. From late 2008, as a result of the global financial crisis, the market-linked pension account suffered substantial losses. As at 30 June 2012, the balance of this account was $306,282.28; as at 30 June 2013, the balance was $291,485.78. The market-linked pension provides an annuity payable monthly during its term, which, in this case, is a term of 27 years. Based on the current balance of the account it is expected the pension will continue until Sally reaches the age of 91 years. Access to the Fund is restricted in that the amount may only be drawn as a pension, and no lump sum withdrawals are permitted. The market-linked pension cannot be discontinued, and Sally is not permitted to access the full capital of the Fund, until she attains the age of 91 years.
The details of Sally's anticipated monthly income and expenditure until 1 July 2014 were agreed. She receives an age pension and rental assistance from Centrelink in the total amount of $1,902.20. From the Fund she receives an allocated pension in the amount of $853.25. Her total monthly income is $2,755.45. From 1 July 2014 her allocated pension will be increased to $1,817.75, providing her with a total monthly income of $3,719.95.
Her total monthly expenditure is in the amount of $4,055.79. It includes rent in the amount of $1,890.18, and general household and living expenses (including $400 for contingencies) in the amount of $2,165.61.
The evidence establishes matters for consideration under s 60(2) of the Act. Sally presently resides on her own at a rented home unit in Lane Cove. She does not have a partner or husband and there is no other person liable to support her. She received no financial support from her mother prior to her death. She is not financially dependent upon any of her adult children.
As earlier noted, it is accepted that Sally's relationship with her mother was close and loving. Unsurprisingly, Sally's children enjoyed a similar, fond, relationship with their grandmother. An example of the relationship between Sally and her mother is that on many occasions Mrs Davis accompanied Sally on country trips when Sally was visiting the customers of her business. Another is the fact that from about 2008, whilst Mrs Davis was in day care at Georgian House, Sally frequently met her and her carer at a coffee shop and would then bring them to her unit for a few hours.
Sally suffers from the following long-term medical conditions:
(1) Hypothyroidism, for which she takes medication for an under-active thyroid and requires regular blood tests;
(2) Sever osteoporosis with risk of fracture with minimal trauma;
(3) Hashimoto's disease;
(4) Chronic myeloid leukaemia resulting from a large spleen and a low platelet count. Her condition requires regular blood tests and monitoring;
(5) Ciguatera poisoning with gastrointestinal and neurological side effects;
(6) Hypersplenism.
I turn now to Alison's circumstances.
The details of Alison's assets, liabilities, income and expenses were annexed to her counsel's final written submission of 14 February 2014, to which no objection was taken. She receives, fortnightly, a pension of $722.60, and a superannuation pension of $346.15. The amount of the superannuation fund is $51,328 which is expected to last for about a further 5 years. Her total fortnightly general living and household expenses are in the amount of $1,154.58. Her assets, excluding the superannuation fund, include a motor vehicle, cash, and furniture in the total amount of about $19,000.
Alison has lived in the house at Mowbray Road for the past 57 years. For many years she worked as a trained nurse. Following the death of her husband in 1981, Mrs Davis increasingly relied upon Alison for care and support. In 1998, at 60 years of age, Alison ceased work in order to care for her mother on a full time basis, and commenced receiving a carer's allowance from Centrelink.
Although Alison has lived rent-free she contributed towards household expenses and undertook usual household duties, and for many years has been responsible for the maintenance of the property. For some years from about 2001 she was involved in the restoration, repair and renovation of various parts of the house, and contributed to the cost thereof, partly from funds inherited from the estate of her uncle, the late Hector George Paul.
For the period of at least 7 years prior to her death, Mrs Davis was practically totally dependent upon Alison for all aspects of daily care, support and companionship. This included Alison taking Mrs Davis on outings, to regular visits to doctors, and to Georgian House Day Care Centre twice weekly. The evidence establishes, and I find, that the care provided by Alison enabled Mrs Davis to remain at home, and alleviated the need for her to obtain accommodation in a nursing home.
Alison has never been married, has no children, and has no other person to financially support her.
Determination
I have ascertained the likely value of the estate for the purposes of these proceedings with regard to the following items. The property is valued at $980,000 from which amount the following deductions are made, assuming it is to be sold:
(1)
Outstanding estate expenses excluding funeral costs
$11,577.00
(2)
Plaintiff's costs (ordinary basis)
$60,141.75
(3)
Defendant's costs (indemnity basis)
$72,270.00
(4)
Real estate agent's commission at 2.5%
$24,750.00
Total
$168,738.75
Accordingly, the net value of the estate is estimated to be $811,261.25.
Under s 59(2) of the Act the Court is required to determine what provision ought to be made for Sally's maintenance or advancement in life, having regard to the facts known to the Court at the time the order is made. The order should be no more than is necessary to make adequate provision for her proper maintenance and advancement in life (Vidler at para 214). In determining the proper provision to be made I have taken into account the facts and matter relating to each of Sally and Alison referred to in [12]-[26] above. In identifying those facts and matters, I have had regard to the list referred to in s 60(2) of the Act and, particularly, to those matters which fall within the subparagraphs set out in [9] above. They include the following:
(1) The estate is not large. It has a value of about $810,000 for distribution.
(2) Both Alison and Sally had a close relationship with their mother. It is open to suppose that Mrs Davis may have provided differently for them had she turned her mind to the change in Sally's circumstances after 3 March 2006 when the will was made, and the fact that Sally no longer owned her own home.
(3) Both Alison and Sally are without earning capacity and derive their incomes from pensions, allocated and otherwise. Other than from the estate both are without financial resources. They are of similar age. Sally suffers from a number of long-term medical conditions.
(4) Obvious matters of great weight, the magnitude of which is impossible to quantify in monetary terms, are the contributions made by Alison to her mother's welfare, and towards the upkeep of the property itself, over many years.
(5) In weighing up the competing interests of the parties no assistance is to be gained by speculating as to the manner in which each party will apply or invest the amount received on distribution.
In all the circumstances the appropriate order to be made is one which will provide Sally with a sum sufficient to relieve her from the tight financial position in which she finds herself, and which is likely to continue. It appears that after 1 July 2014 there will be an excess of expenditure over income of about $350 per month, taking into account that her allocated pension will be $1,817.75 per month. It is relevant to observe that as the pension is market-linked it will be subject to the uncertainties of future fluctuations.
In my opinion the circumstances justify a provision for Sally of a lump sum legacy of $220,000. With a return of 3% per annum such an amount would provide her with income of $6,600 per annum or $550 per month which would adequately overcome the present and foreseeable shortfall situation. I have not overlooked the fact that when calculating the amount of monthly expenses which presently exceed Sally's income an amount of $400 has been included for contingencies which may already be used as a necessary buffer.
Conclusion
Accordingly, I propose to order that, in addition to the provision made for her by clause 5 of the will, Sally is to receive a lump sum legacy in the amount of $220,000, and to order that her costs on the ordinary basis be paid out of the estate. I will also order that Alison's costs on an indemnity basis be paid out of the estate.
I direct the parties to bring in short minutes of order by 5.00 pm on 19 March 2014 by arrangement with my Associate.
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Decision last updated: 14 March 2014
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