Druce v Druce

[2005] NSWSC 986

CITATION:	Druce v Druce [2005] NSWSC 986
HEARING DATE(S):	6 June 2005
JUDGMENT DATE :	30 September 2005
JURISDICTION:	Equity Division
JUDGMENT OF:	Associate Justice McLaughlin at 1
DECISION:	In addition to the benefits given to her by the will of the Deceased, the Plaintiff should receive: (a) the Ingleburn property, and for this purpose the Ingleburn property should be designated notional estate of the Deceased; (b) a legacy of $120,000, such legacy not to bear interest if paid within 28 days of the date hereof, and if not so paid to bear interest at the rate prescribed for unpaid legacies under the Wills, Probate and Administration Act 1898. The costs associated with the transfer to the Plaintiff of the Ingleburn property should be paid by the estate of the Deceased. I note that each party is desirous that I should receive submissions concerning the costs of the present proceedings. Accordingly, I stand the matter over to a date to be fixed by arrangement with my Associate for the bringing in of short minutes to reflect my foregoing conclusions, and for argument as to costs.

CATCHWORDS:	Succession. Family Provision. Claim by widow. Marriage lasted nine years. Financial and material circumstances of Plaintiff. Defendants acknowledge that Plaintiff has been left without adequate provision for her proper maintenance. A beneficiary who asserts a competing claim has a duty to place before the Court as fully and and as frankly as possible all information concerning his financial and material circumstances.
LEGISLATION CITED:	Family Provision Act 1982
CASES CITED:	Luciano v Rosenblum (1985) 2 NSWLR 65 Marshall v Carruthers [2002] NSWCA 47
PARTIES:	Margaret Annie Druce (Plaintiff) Michael Christopher Druce (first Defendant) John Russell Druce (second Defendant)
FILE NUMBER(S):	SC 3124 of 2004
COUNSEL:	Ms. J. Needham SC / Ms. S. Hill (Plaintiff) Mr. C. Bevan (Defendants)
SOLICITORS:	Cridlands (Plaintiff) Alvaro Edwards (Defendants)

LOWER COURT JURISDICTION:

- 1 -

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

ASSOCIATE JUSTICE McLAUGHLIN

Friday, 30 September 2005

3124/04 - MARGARET ANNIE DRUCE –v- MICHAEL

CHRISTOPHER DRUCE and ANOR

JUDGMENT

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

2 By summons filed on 27 May 2004 Margaret Annie Druce claims an order for provision for her education, maintenance and advancement in life out of the estate of her late husband, Christopher George Druce (to whom I shall refer as “the Deceased”), as well as an order that certain property situate at and known as 1/7-11 King Road, Ingleburn be declared notional estate of the Deceased and that such property be transferred to the Plaintiff.

3 The Deceased died on 8 July 2003, aged 78 (having been born on 11 November 1925). He left a will dated 7 November 2001, probate whereof was on 4 September 2003 granted to Michael Christopher Druce, the executor named in such will (who is the first Defendant to the present proceedings).

4 The inventory of property disclosed the following assets of the Deceased at the time of his death:

Real property situate at and known as 34 Vale Street, Canley Vale, having an estimated value of $330,000
Real property situate at and known as 200 Tenth Avenue, Austral, having an estimated value of $750,000
Account with Commonwealth Bank of Australia, having a credit balance of $14,721
Term deposit with Commonwealth Bank of Australia, in an amount of $25,828
Clothing, jewellery, furniture and other personal effects, to which no value is ascribed

5 The total value of the foregoing assets was shown as $1,129,550.

6 The only significant liability of the estate of the Deceased upon his death was funeral expenses totalling $8,226.

7 By his will the Deceased gave to the Plaintiff the proceeds in any account of the Deceased with any bank, credit union, building society or an approved deposit taking institution, and gave his properties situate at and known respectively as 200 Tenth Avenue, Austral and 34 Vale Street, Canley Vale to his sons Michael Christopher Druce and John Russell Druce as tenants in common in equal shares.

8 The Plaintiff and the Deceased married on 22 June 1994. Each had previously been married and had children. No children were born of the marriage of the Plaintiff and the Deceased. At the time of their marriage the Deceased was a widower, his first wife, Mrs. Doreen Druce, having died on 5 August 1992. The marriage of the Plaintiff and the Deceased lasted for about nine years, from 22 June 1994 until the death of the Deceased on 8 July 2003.

9 According to the Plaintiff, she and the Deceased were involved in what she described as “a romantic relationship” for about ten years preceding their marriage. That is, that relationship obtained from about mid-1984 until mid-1994. It will be appreciated that for about eight of those ten years the Deceased was still married to his first wife, Mrs. Doreen Druce, to whom he had been married for 44 years (from 15 May 1948), and who died on 5 August 1992.

10 The Deceased and his first wife had purchased land at Canley Vale, upon which they had erected their family home shortly after their marriage in 1948. Subsequently, in 1978, they purchased land at Austral, upon which a house property was then erected. They moved into that house property in about 1981 or 1982.

11 The Deceased, who had worked as a supervisor or foreman in earthmoving work for a period of at least ten (possibly fifteen) years retired from employment in 1986.

12 Throughout the entirety of their marriage neither the Plaintiff nor the Deceased was in employment.

13 After the death of the Deceased the Canley Vale property was sold for $345,000, the net proceeds of sale being almost $337,000; and the Austral property was sold for $790,000, the net proceeds of sale being about $772,400.

14 When those amounts are added to the moneys held in the accounts with the Commonwealth Bank of Australia (totalling $40,550) the total value of the estate was $1,149,885. I have already recorded that funeral expenses totalled $8,226. The costs of administration of the estate totalled $6,738. In consequence, therefore, the estate had a net value of $1,134,920.

15 Subsequent to the grant of probate the estate purchased, in the names of the first Defendant and the second Defendant as tenants in common in equal shares, a residential property at Ingleburn, being 1/7-11 King Road, Ingleburn (“the Ingleburn property”).

16 The purpose of that purchase was to provide a residence for the Plaintiff. It will be appreciated that, as the Ingleburn property is held in the names of both the executor and his brother, John Russell Druce, it was necessary for John Russell Druce to be named as a Defendant to the proceedings, since the Plaintiff is desirous of obtaining an order that the Ingleburn property be designated notional estate of the Deceased, and a further order that that property be transferred to her.

17 The Ingleburn property was purchased in late 2003 for $240,000 and is currently valued at $249,000. The Plaintiff has been residing in that property since December 2003. It was conceded by the Defendants that that property should be transferred to the Plaintiff absolutely.

18 At the outset of the hearing it was noted that it was conceded by the Defendants that the Plaintiff had been left without adequate provision for her maintenance, and that that concession had originally been made by the Defendants on 4 May 2005.

19 It was also noted that before the institution of the present proceedings the Defendants had agreed in March 2004 that the Ingleburn property should be transferred to the Plaintiff, and that the costs of the transfer of that property should be borne by the estate of the Deceased.

20 At the commencement of the hearing it was also recorded that the Defendants affirmed the entitlement of the Plaintiff to the gift made to her by the will of the moneys in the accounts with the Commonwealth Bank of Australia. Although those moneys total $40,550, the Plaintiff has of that amount been paid, somewhat curiously, only $36,000, and no explanation was forthcoming from the Defendants as to why she had not been paid the full amount of $40,550.

21 The only matter remaining in dispute between the parties was whether the Plaintiff should receive from the estate of the Deceased, in respect to what was described by Counsel for the Defendants as “a contingency fund”, further provision for her future maintenance, and, if so, the amount of such further provision.

22 It will be appreciated that in calculating the value of the distributable estate of the Deceased the costs of the present proceedings must be taken into account. It is estimated that the costs of the Plaintiff will total about $53,000, whilst the costs of the Defendants will total about $60,000.

23 Each of the Defendants has received a distribution of $250,000 from the estate of the Deceased. Of each such distribution the amount of $200,000 was, with the consent of the Plaintiff, paid to each Defendant on 4 March 2004. The additional amount of $50,000 had been distributed, without the consent of the Plaintiff, to each Defendant on 4 February 2004.

24 Apart from the Ingleburn property, the assets remaining in the estate, after the foregoing distributions to each Defendant, total about $380,000.

25 The first Defendant said that he had paid, but has not been reimbursed for, the following amounts on behalf of the estate:

$5,272, being for payment of costs, such as strata, council and water rates for the Ingleburn property, to November 2004;
$1,673, being for payment of costs such as strata, council and water rates for the Ingleburn property, since November 2004.

26 The first Defendant also stated that he has paid $24,000 as deposit for the Ingleburn property and $600 as legal costs in respect to that property. The first Defendant is seeking reimbursement for the foregoing moneys said to have been paid by him.

27 After allowance is made for the costs of all parties of the present proceedings (totalling about $113,000) the estate presently holds funds available for distribution to a total value of $270,000. (It is appreciated that the foregoing claims of the first Defendant for reimbursement must, if substantiated, be paid out of that sum.)

28 The Plaintiff’s income consists of a pension (which I assume to be an aged pension) from the Australian Government in an amount of about $470 a fortnight and a monthly pension of about $275 from the United Kingdom. Her combined income from those sources fluctuates (such fluctuation being due, at least in part, to variations in the exchange rate), but totals about $607 a fortnight. In addition, the Plaintiff until recently was receiving a monthly distribution from AMP in an amount of $87. Her investment of $9,200 with AMP has now been redeemed, and that that amount, together with the $36,000 which the Plaintiff received from the estate (or the balance thereof remaining), are the source of the bank interest which the Plaintiff receives in amounts totalling $139 a month.

29 It emerged from the Plaintiff’s oral evidence that her total income from all sources is $677 a month, and that that income exceeds her expenses by $43 a month.

30 The Plaintiff, who was born in 1939, is presently aged 66. Her only assets now consist of moneys in two bank accounts (in amounts totalling about $52,000 - $53,000), together with household furniture, furnishings and personal effects.

31 The Plaintiff has not been in paid employment for considerable time. Her health is reasonable, although she takes tablets for blood pressure, on account of high cholesterol. She experiences some difficulty walking because of a problem associated with a bone in her foot, but she is reluctant to undergo any surgical procedure in that regard. The Plaintiff wears spectacles, which have not been replaced for about five years, and also uses false teeth, which have not been replaced for about five years. The Plaintiff gave evidence concerning the condition of various items of household furnishings and equipment which she said would require replacement in the near future. She also gave evidence concerning her desire for interstate travel to visit kinsfolk and for a holiday to Fiji.

32 The Plaintiff said that should she ever need to remove into a nursing home, the establishment of her choice was a specific nursing home at Glenfield, where a friend of hers was already in residence. The costs associated with entry into and residence at that establishment were about $100,500, together with 85 percent of the occupant’s pension. In return the occupant receives accommodation and general living expenses, but is responsible for the occupant’s own medical and other expenses.

33 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.

34 The Plaintiff as the widow of the Deceased 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 two Defendants, each of whom, as a son of the Deceased, is an eligible person within paragraph (b) of that definition.

35 It was submitted on behalf of the Plaintiff that she has a clear need, in that, once the Ingleburn property has been transferred to her, she will incur further costs which will ultimately outstrip her pension and other income, and that she will suffer a continuing, and increasing, shortfall between her outgoings and her income. It was submitted that she had need for a lump sum in order to provide her with some additional income, as well as to provide a fund to meet unexpected contingencies. In addition, the Plaintiff has specific needs, to which I have already referred, relating to her health, the furniture and furnishings in her residence, and has a desire to upgrade her present, somewhat limited, lifestyle. The Plaintiff does not have private medical insurance.

36 It was submitted on behalf of the Plaintiff that appropriate provision in the circumstances would be that she should receive the balance of the net distributable estate, in a sum of about $270,000, and that the Ingleburn property should be declared notional estate of the Deceased and transferred to her.

37 The Defendants placed before the Court on affidavit detailed information concerning what they said were their respective financial and material circumstances. Those circumstances of the Defendants are relevant to a consideration of whether or not the Plaintiff has been left without adequate provision for her proper maintenance (see Luciano v Rosenblum (1985) 2 NSWLR 65 at 69 and Marshall v Carruthers [2002] NSWCA 47 at [63]-[65]).

38 The Defendants relied upon the fact that the present was not a case where there had been a long marriage between the Plaintiff and the Deceased, and, further, that the present was not a case where the Plaintiff had contributed to the acquisition of the assets which ultimately constituted the estate of the Deceased. It was the first wife of the Deceased, Mrs. Doreen Druce (the mother of the Defendants), who had had an extremely long, and apparently very happy, marriage to the Deceased, and who through her efforts, both in employment and as homemaker and parent, had significantly contributed to the acquisition and conservation of the assets which constituted the estate of the Deceased at the time of his death.

39 The Defendants disputed the statement of the Plaintiff that for about ten years before her marriage to the Deceased she and the Deceased had had “a romantic relationship”, and they complained that the Plaintiff did not offer specifics concerning the nature of that relationship. As I understand it, the Plaintiff did not, however, assert that she was in a de facto relationship with the Deceased before their marriage, or, indeed, that before their marriage there was any form of a sexual relationship between herself and the Deceased, or at least during the lifetime of Mrs. Doreen Druce.

40 Whatever may have been the nature of the relationship between the Plaintiff and the Deceased which obtained before their marriage, and which is encompassed in the phrase, “a romantic relationship” used by the Plaintiff, it does not seem to me that those matters have any significant bearing upon the present claim of the Plaintiff. She is the widow of the Deceased, and she was happily married to him for a period of nine years. In the last years of his life the Plaintiff was his constant attendant and nurse, when the Deceased’s health was in decline, both physically and mentally.

41 Since the Defendants have expressly conceded that the Plaintiff, by the terms of the will of the Deceased, has been left without adequate provision for her proper maintenance, the financial and material circumstances of each Defendant can be relevant only as constituting competing claims upon the testamentary bounty of the Deceased, which should have the effect of reducing, or even extinguishing, any order for provision an entitlement to which the Plaintiff might otherwise establish.

42 In this regard it should be emphasised that a person (in the instant case each of the two Defendants) who asserts a competing claim to that of an applicant for an order for provision has an obligation to place before the Court as fully and as frankly as possible all available information concerning his financial and material circumstances. I have already observed that each of the Defendants placed before the Court affidavit evidence purporting to set forth such information. However, under cross-examination it emerged that the information concerning the circumstances of at least the second Defendant was far from accurate. Indeed, I regard the affidavit evidence of the second Defendant as being totally misleading. For example, he did not in his affidavit evidence disclose assets in a company Tovedale Pty Limited (in which he and his wife have an interest worth about $250,000), or make reference to the fact that with his wife he holds a 50 percent interest in a company Druce DP Holdings Pty Limited (which in the financial year 2003-2004 had an operating profit of $842,500), or that he and his wife held a term deposit in an amount exceeding $250,000.

43 It is abundantly obvious that each of the Defendants is in far better financial and material circumstances than those in which the Plaintiff presently finds herself, or those in which the Plaintiff will find herself after the transfer to her of the Ingleburn property.

44 I consider that it is appropriate that, in addition to the payment to her of the full amount of $40,600 (representing the contents of the two accounts with the Commonwealth Bank of Australia), together with the transfer to her of the Ingleburn property, and the costs associated with such transfer, the Plaintiff should receive an additional legacy which will enable her to acquire necessary replacements of various items of household furniture and furnishings, will enable her to enhance her somewhat modest lifestyle (for example, by visiting kinsfolk interstate or by taking a holiday to Fiji) and will provide a fund to meet unexpected contingencies.

45 An appropriate amount for such additional legacy is $120,000. The payment of such an additional legacy will still leave in the estate for distribution between the two Defendants an amount of about $150,000 (subject to the first Defendant’s claim for reimbursement of amounts allegedly paid by him). I do not consider that the financial and material circumstances of the Defendants, or either of them, are such that the proposed additional legacy to the Plaintiff of $120,000 should be reduced, let alone extinguished, by reason of such circumstances. But, in any event, Counsel for the Defendants ultimately did not rely upon any asserted competing claim of the Defendants in resisting the application of the Plaintiff.

46 I would here interpolate that, since (despite the submission of Senior Counsel for the Plaintiff) I do not consider that the Plaintiff is entitled to receive the entire balance of the undistributed net assets remaining in the estate, it is not necessary for me to express any concluded views concerning the claim of the first Defendant to be reimbursed by the estate for the amount of the deposit ($24,000) which he said he had paid for the purchase of the Ingleburn property. In this regard I would merely observe that this claim was first mentioned in the first Defendant’s affidavit of 27 May 2005, and that no supporting documentation was offered concerning this alleged payment. Neither was the alleged payment referred to in the letter of 25 March 2004 from the Solicitors for the Defendants to the Solicitors for the Plaintiff, although, if such payment had, in fact, been made by the first Defendant using his own funds, it would have been appropriate, and indeed expected, that the payment would have been referred to in that letter. Further, the allegation that the deposit was paid out of the first Defendant’s personal funds is inconsistent with the statement made by him in his affidavit of 9 November 2004 (affidavit of administrator), paragraph 13.

47 Accordingly, in addition to the benefits given to her by the will of the Deceased, the Plaintiff should receive:

(a) the Ingleburn property, and for this purpose the Ingleburn property should be designated notional estate of the Deceased;
(b) a legacy of $120,000, such legacy not to bear interest if paid within 28 days of the date hereof, and if not so paid to bear interest at the rate prescribed for unpaid legacies under the Wills, Probate and Administration Act 1898.

48 The costs associated with the transfer to the Plaintiff of the Ingleburn property should be paid by the estate of the Deceased.

49 I note that each party is desirous that I should receive submissions concerning the costs of the present proceedings.

50 Accordingly, I stand the matter over to a date to be fixed by arrangement with my Associate for the bringing in of short minutes to reflect my foregoing conclusions, and for argument as to costs.

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