Ellis v Ellis

[2001] NSWSC 289

CITATION:	ELLIS v ELLIS [2001] NSWSC 289
CURRENT JURISDICTION:	Equity Division
FILE NUMBER(S):	SC 2056/99
HEARING DATE(S):	5, 6 April 2001
JUDGMENT DATE:	6 April 2001
PARTIES :	ELIZABETH ANNE ELLIS v GRANT MARTIN ELLIS
JUDGMENT OF:	Master Macready at 1

COUNSEL :	M. Meek for plaintiff C.J. Bevan & G. Pesce for defendant
SOLICITORS:	D.A. Patterson Partners for plaintiff Nikola Velcic & Associates for defendant
CATCHWORDS:	Family Provision - Widow's claim. Order for legacy made. No matter of principle
CASES CITED:	Singer v Berghouse (1944) 181 CLR 201 Elliott v Elliott 2 NSWLR 65
DECISION:	Paragraph 29

- 1 -

1 MASTER: This is an application under the Family Provision Act in respect of the estate of the late Raymond George Ellis who died on 15 January 1998, aged 63 years. His widow who is the plaintiff in the proceedings survived the deceased. She is now aged 55. His three children, a son and two daughters also survived the deceased. His son is a defendant. The deceased left a will made on 15 June 1996 and he appointed the plaintiff and the two defendants as his executors.

2   Under the will the deceased left to his brother two properties in Western Australia. He gave legacies of $5,000 to each of his children and two other persons one of whom cannot be found. A bequest was made to his former wife of some paintings. She has refused the bequest and makes no claim in these proceedings. The residue of the estate was to be held for the plaintiff for life and upon her death to the three children in equal shares. In these proceedings the plaintiff does not seek to disturb the bequest to the deceased's brother. Those two properties have a present value of some $315,000 in total.

3   The present assets in the estate leaving aside these properties in Western Australia would appear to be the following: -

1. Properties (see valuations).
a. Carlingford $290.000
b. Belmont $100.000
c. Victoria Park $195.000
d. Lot B Gunderman $115.000
e. Fairlight $280.000

$980.000

2. Personality

a. MG Sports $ 7,000
b. 1983 Camry $15,000
c. Oil Paintings. $400 $22,400

3. Colonial Stater ( as at 21.9.99) $42,787.93

4. Commonwealth Bank Term $15,000 $15,000

a. interest 1.7.99-30.6.00 $732.82
b. interest 1.7.00-29.12.00 $426.53

5. Commonwealth Bank a/c 2009-306869. This account receives rental from Belmont and Victoria Park since about August 1998. The balance as at 2 March 2001 $34,020.27

6. Commonwealth Bank a/c2300.5003824 $63.197

7. Advance bank accounts

a. A/c 144 284 954 $6,658.61
b. A/c 019 161 120 $137.75
c. A/c 334 100 378 $40,237.39

Proceeds were amalgamated & the sum of $49,168.50 was reinvested with St George Controlled Moneys account on 3 March 1999 - current balance $8,828.59
8. Endeavour Credit Union $1,060.23

9. St George A/c 002828477 $6,801.96

This sum was paid into the Estate trust account on 29 February 1999.

10. FAI Insurance claim $8,065.61.

This sum is made up of 2 amounts.

a. $1,805.40 paid into Symonds & B Trust a/c on 27.5.98.
b. $6,260.21 paid into St George a/c 130130129 on 27.5.98 the proceeds of which account were eventually paid into the S & B trust account on 15.1.99.

11. Trust account (opened on 27 May 1998) current balance
$810.23


Total (moneys net of properties and personality $101,970.44

TOTAL $1,081,970.44

4   From this there are costs in the proceedings which have to be paid and probably given the estimates that I have been provided with they would be in the order of $130,000. In addition there have been a number of estate properties which have been rented since the date of death and that income has been accumulated and used to meet expenses from time to time. It seems clear given the estimates that have been provided that the amount of income which would be due to the plaintiff as a life tenant from the date of death up until the time of hearing is in the order of $63,500.

5   I have described the plaintiff as the widow of the deceased. In the deceased's death certificate his first marriage is shown at aged 25 to Moya Rank. His second was shown in Fiji but his age is not stated. It was to a lady called Pauline. The third was to the plaintiff. There is no evidence about what happened to the marriage to the person in Fiji. It may well have terminated and it is clear that the plaintiff has gone through a ceremony of marriage with the deceased after he came back from Fiji. I would have thought on the evidence before me it would be sufficient for me to infer an appropriate marriage. I just mention for completeness that in the event that is not the case, I am satisfied that the plaintiff was living in a de facto relationship with the deceased at the time of death and accordingly she would be an eligible person.

6   It is useful to recount some of the short history of the matter. The deceased was born in 1934. The plaintiff was born in 1946 and as I have mentioned she is now aged 55. The deceased married for the first time in 1960 and he had three children of that marriage, Jennifer who was born in 1960 - 1961, Grant born 1963 or 1964 and Shauna was born 1966 or 1967.

7   The plaintiff herself had her first marriage in 1968 and had a son Sean by that marriage. She separated in 1979 and remarried one George Atkins in 1975. Between them they purchased a property in the Hawkesbury area which was used by them. Meanwhile in 1978 the deceased and his first wife, Moya, had separated. He apparently went to Fiji sometime after that and was out of communication with some of his children at that stage.

8   On the 18th August 1988 George Atkins, the plaintiff's second husband died. It was in February 1989 that the plaintiff and the deceased met on a trip to China. They fairly soon thereafter formed a somewhat deeper friendship and by October 1990 it reached the stage of contemplating the purchase of a property which was in fact purchased by the deceased under a contract made in that month. They had talked about marriage from early in the relationship and clearly it had developed well before the property was purchased in October 1990 because they in fact did move to that property as soon as the purchase was completed.

9   The property was at 728 Pennant Hills Road, Carlingford. It was purchased for $123,000. There is clear evidence that the plaintiff contributed $25,000 to that purchase. There is also some evidence that she contributed to the mortgage and thereafter although the precise details of this are not known. On 8th May 1993 the plaintiff and the deceased married. The will to which I have referred was made on the 15th June 1996 and the codicil which dealt with the bequests, or one of them to his brother was made on 8th April 1997. As I have mentioned the deceased died on 15 January 1998 and probate was taken out in due course and the summons was filed within time.

10 In applications under the Family Provision Act, the High Court has recently in Singer v Berghouse (1994) 181 CLR 201 set out the two stage approach that a court must take. At page 209 it said the following:

"The first question is, was the provision (if any) made for the applicant 'inadequate for (his or her) proper maintenance, education and advancement in life"? The difference between 'adequate' and 'roper' and the interrelationship which exists between 'adequate provision' and 'proper maintenance' etc were explained in Bosch v Perpetual Trustee Co Limited . The determination of the first stage in the two-stage process calls for an assessment of whether the provision (if any) made was inadequate or what, in all the circumstances, was the proper level of maintenance etc appropriate for the applicant having regard, amongst other things, to the applicant's financial position, the size and nature of the deceased's estate,the totality of the relationship between the applicant and the deceased, and the relationship between the deceased and other persons who have legitimate claims upon his or her bounty.
The determination of the second stage, should it arise, involves similar considerations. Indeed, in the first stage of the process, the court may need to arrive at an assessment of what is the proper level of maintenance and what is adequate provision, in which event, if it becomes necessary to embark upon the second stage of the process, that assessment will largely determine the order which should be made in favour of the applicant. In saying that, we are mindful that there may be some circumstances in which a court could refuse to make an order notwithstanding that the applicant is found to have been left without adequate provision for proper maintenance. Take, for example, a case like Ellis v Leeder where there were no assets from which an order could reasonably be made and making an order could disturb the testator's arrangements to pay creditors".

11   I turn to consider the plaintiff's position.

12   She is fifty five years of age, is single with no dependants. She has a life expectancy of some twenty nine years. She owns the property at Hawkesbury which she has used as a weekender in recent years. It is valued between $165,000 and $175,000. Something in excess of $10,000 would have to be spent by way of repairs to make that saleable. She has the income due to her in the estate of $63,500 as I have mentioned. That simply accumulated during the period that has past since the date of death of the deceased. She has very modest savings and furniture and jewellery of a modest amount. Her income consists of two pensions, one of which is indexed. They apparently appear to now be in the order of some $38,000. In her first affidavit she indicated her income was $36,000 and that her expenses were something slightly in excess of $30,000. Clearly she has been managing on that over the last few years although she has not been able to travel as she and the deceased had done during the deceased's life time. She is in reasonable health although she has had some four or five different episodes of surgery most of which have had the effect that she has to be very careful about what she can lift. Certainly she should not lift anything of any great weight, in fact anything even of a small weight. She has the possibility of a further operation in that regard.

13   It is clear that during the period that the plaintiff and the deceased were together they used to travel together. This apparently would be on each alternative year. For instance they would go to places such as Everest and Alaska and South Africa. That is something which obviously the deceased could accommodate from his life style. As can be seen the deceased's estate is somewhat more substantial than one usually finds in these applications. The contributions to the building up of the estate by the plaintiff are of course important. I have already adverted to the fact that she paid $25,000 out of the total purchase price of $123,000 for the house. She also contributed to the mortgage.

14   It is also necessary to have regard to the situation of others having a claim on the estate of the deceased. In this case this is the three children, Grant who is thirty seven years of age is a solicitor in the employ of the New South Wales Director of Public Prosecutions. He receives a salary in the order of $70,000 per annum. They have some shares and a house at Glenbrook worth $227,000 which they own apparently free of encumbrances. They also have $60,000 in a bank account. As I have mentioned, he is married and they have two young children to support. His wife no longer works and it was her superannuation which comprises the sum of $60,000 in a bank account. They have a 1992 Ford Laser sedan and they do plan to have some other children. Obviously of course they will have substantial expenses as a result of the family and they hope to be able to educate their children well. They can anticipate the need for a further car and work to be done on the house to accommodate their growing family. Although there was some mention in the plaintiff's affidavits of matters that might go to the relationship between the children and the deceased, that matter was not pressed and accordingly it is quite clear there was a good relationship between the deceased and all of his children.

15   I turn to consider Jennifer's situation. She married in 1984 and she lives with her husband and their three children at Blaxland. The first child was born in 1988 and the last in 1994. Their present financial situation is that they have a home at Blaxland which is jointly owned worth about $220,000 which has a mortgage of some $45,000. There is an investment unit in her husband's name worth $150,000 which is mortgaged in the same amount. They have minimal savings and they have an income which is only Jennifer's husband’s income of $140,000 per annum. They have an expenditure which is fairly commensurate with the nature of the family which they have. They wish to spend money educating their children at a tertiary level, they hope to be able to travel and also there will be a need for a new car.

16   The other beneficiary is Shauna. She is married and has two children born in 1995 and 1998. They have an income in the order of just under $60,000 and between them they have a property at Blaxland having a value of some $250,000. There is a mortgage of some $85,000. That house is a somewhat older one and there are a number of things which they would like to do to that house. In particular they need to repair the bathroom, the kitchen and to deal with water seepage problems which will cost something in the order of $30,000 to $40,000. They hope to be able to acquire an extra vehicle because their children are at school age and that will become a necessity. They also hope to do some travelling to Tasmania.

17   It can be seen from the recounting of the nature of the estate that there was cash of about $100,000 available and from this would have to be paid $130,000 costs and $65,000 for income for the plaintiff. That in effect means there will be a shortfall of cash of some $100,000 which will have to come from the $980,000 which is the value of the real property remaining in the estate. In other words one is dealing with an estate in this respect worth about $880,000. There was some evidence given of what might be the value of the life estate that the plaintiff has under her existing entitlements under the will. The plaintiff called expert accounting evidence to show that that would have a value of about $311,000. The defendants called evidence to show it would have a value of about $600,000. The dispute between the two accountants related to the discount factor and the failure to take account of inflation in an appropriate way.

18   Having heard the evidence it seems to me that the plaintiff's accountant did not take adequate account of the effects of inflation and used a combination of real and nominal figures which skews the final result. I am not ultimately persuaded one way or the other about the matter relating to the right discount rate but strictly the plaintiff is probably right although the defendant seems to take a more practical approach.

19   The important part is that the discount rate only makes a difference of about $50,000 and the difference, depending upon how inflation was taken into account makes a substantial difference. It is useful in giving some perspective. I must say I commend both counsel and the parties for putting this material before the court. It is indeed very good that the parties are prepared to take some effort to have proper accounting evidence in these cases. Many cases are not dealt with and prepared this thoroughly. However, I think in the circumstances of this particular case it is more appropriate to look carefully at what the asset situation is and what the claims are on the bounty of the testator.

20   It is also perfectly apparent in this case that all the relevant parties wish to end the life estate. It is preferable that the plaintiff should have a lump sum to be able to go ahead and make her own arrangements for her future life and it is also preferable that the children themselves have access to the capital now rather than waiting. The children have taken a very proper approach if I may say so in relation to the application. They have recognised the plaintiff's needs and they have made it clear in their affidavits that they are quite happy for her to receive something in the order of $100,000 towards the extra amounts which she needs for a car and also $150,000 toward the cost of upgrading her accommodation.

21   In this regard it is necessary to see how the plaintiff says she has been left without adequate and proper provision for her maintenance education and advancement in life. It is true to say as was pointed out by the defendants that the plaintiff has increased the nature of her claim from the time these proceedings were first brought to what is now suggested is appropriate. This is not an uncommon event. She articulated her needs in this regard in the following way.

22   Accommodation - she presently lives in a property which is on the main road in Carlingford which is thirty seven years old. It has three bedroom accommodation, separate lounge and dining areas and is in a noisy location. There are a number of repairs which for one reason or another have not been done to the property and would need some thing in excess of $10,000 to have that property brought into a reasonable state. What she would prefer to do is to move to a quieter part of Carlingford and purchase a home for some $400,000 to $450,000.

23   She wishes to buy a new car for $33,940 and she has a bed and a number of household items that need replacing for some $12,375. She also points to the fact that she and the deceased had a life style which involved travel overseas every two years and that she would like a provision which would allow her to spend $10,000 biannually on such travel. She also refers to the need to spend on her weekender the sum of $15,000 to $20,000. She has some other minor needs which arise out of her medical condition because she needs help for cleaning and tidying the house including the mowing of lawns and matters of that nature.

24   Widows claims are frequently the subject of applications in this court. The Court of Appeal in Goloski.v Goloski (unreported 5 October 1993) has referred to formulations of this standard to be expected in respect of a widow in terms which refer to the decision of Powell J in Luciano v Roseblum (1985) 2 NSWLR 65 and Elliott v Elliott, which was approved by the Court of Appeal on 24 April 1986. In that case his Honour said:

"Where the marriage of a deceased and his widow has been long and harmonious, where the widow has loyally supported her husband and assisted him to build up and maintain his estate,the duty which a deceased owes to his widow can be no less than to the extent to which his assets permit him to achieve that result; first to ensure that his widow be secure in her home for the rest of her life and that if either the need arises or the whim strikes her she have the capacity to change her home; secondly that she have available to her an income sufficient to enable her to live in a reasonable degree of comfort and free from any financial worry; and, third, that she have available to her a fund to which she might have resort in order to provide herself with such modest luxuries as she might choose and which would provide her with a hedge against any unforeseen contingency or disaster that light might bring".

25   In terms of the standard which is postulated by his Honour's remarks there are a number of things that need to be noted about the relationship with the deceased. Importantly it was a happy one and obviously satisfying for both the deceased and the defendant. The defendant herself has a life expectancy of twenty nine years and accordingly has to provide for herself. She has not been in regular employment since 1988 and has little skills which would give her a prospect of good employment in the future. Fortunately she does have a pension which is partially indexed which will help her.

26   Another important matter is that although there was a developing relationship from some years earlier, the relationship commenced as a de facto one in 1990 and accordingly was one of about seven years duration. This has to be taken into account together with the fact that she has her existing assets. The weekender is something which obviously will, if she wishes to keep it she can. It will certainly provide her with a fund for contingencies and give her a buffer against the uncertainties in life to which his Honour was referring. She will also have $63,500 on which there is no dispute, that will be payable to her out of the estate. She already has a substantial amount of cash. She also of course has a reasonable income stream at this stage and what she is effectively asking for is also an improved house for the sum of $400,000 to $450,000.

27   There will as I have indicated be a fund of about $880,000 from which any additional legacy can be paid to the plaintiff. Although she has identified houses as having a purchase price of $400,000 to $450,000, that probably, having looked at the evidence before me is probably the top of the range type of accommodation.

28   It would seem to me that the provision of a legacy of $375,000 would give her the opportunity to move and still maintain her property at Hawkesbury and she would then have the cash to which she is entitled of some $63,500.

29   Accordingly the orders I make are that the plaintiff receive a legacy of $375,000 in lieu of the provision of the life estate in the estate, given that is the effect of the legacy it maybe prudent to either provide for an additional legacy of $63,500 or to otherwise provide by way of declaration that she is entitled to it.

30   I am not sure what are the tax implications or other estate implications are in respect of that amount. So I will not at this stage make formal orders in the matter.

31   I indicate that the plaintiff's costs on a party and party basis and the defendant's costs on an indemnity basis are to be paid out of the estate.

32   Accordingly I will stand the matter over for short minutes so that the parties can consider the precise form of orders. The exhibits may be returned.

Last Modified: 05/03/2001