Estate of the Late Carney and Carney - [2019] FamCAFC 166

FAMILY COURT OF AUSTRALIA

ESTATE OF THE LATE CARNEY & CARNEY

[2019] FamCAFC 166

FAMILY LAW – APPEAL – PROPERTY – Appeal by the estate of the deceased husband against property settlement orders – Where the primary judge found that contributions of the husband and the wife to their property and to the welfare of the family were equal – Whether the primary judge erred by making a 10 per cent adjustment in favour of the wife – Whether the amount of the adjustment made by the primary judge was out of all proportion to the wife’s needs – Where the adjustment made was not out of all proportionality to the likely expenses of the wife – Where the adjustment made by the primary judge was within the ambit of a reasonable exercise of discretion – Whether the primary judge engaged with and made relevant findings in relation to disputed issues as to contributions – Where the premises on which the estate’s contentions are based cannot be made out and the grounds fail – Whether the primary judge was obliged to take into account the terms of the husband’s will – Where a testator’s intentions in relation to the disposition of their property on their death should not override the considerations mandated by the Court in s 79(4) and s 75(2) of the Family Law Act 1975 (Cth) – Where no grounds of appeal succeed – Appeal dismissed – The estate to pay the wife’s costs of the appeal, as agreed, or in default of agreement, as assessed.

Family Law Act 1975 (Cth) 75, 79, 94AAA

De Winter & De Winter (1979) FLC 90-605
Grace v Grace [2012] NSWSC 976
Gronow v Gronow (1979) 144 CLR 513; [1979] HCA 63
House v King (1936) 55 CLR 499; [1936] HCA 40
Metwallyv University of Wollongong (1985) 60 ALR 68; [1985] HCA 28
Multicon Engineering Pty Ltd v Federal Airports Corporation (1997) 47 NSWLR 631
Stanford v Stanford (2012) 247 CLR 108; [2012] HCA 52
Suttor v Gundowla Pty Ltd (1950) 81 CLR 418; [1950] HCA 35

APPELLANT:

Estate of the late Mr Carney (by his executors Ms Howard and Ms Norman)

RESPONDENT:

Ms Carney

FILE NUMBER:

NCC

774

2018

APPEAL NUMBER:

2019

DATE DELIVERED:

4 October 2019

PLACE DELIVERED:

Sydney

PLACE HEARD:

Sydney

JUDGMENT OF:

Aldridge J

HEARING DATE:

19 September 2019

LOWER COURT JURISDICTION:

Federal Circuit Court of Australia

LOWER COURT JUDGMENT DATE:

16 May 2019

LOWER COURT MNC:

[2019] FCCA 1275

REPRESENTATION

COUNSEL FOR THE APPELLANT:

Ms Christie SC

SOLICITOR FOR THE APPELLANT:

Lea Smith Solicitor

COUNSEL FOR THE RESPONDENT:

Mr Othen with Ms Carty

SOLICITOR FOR THE RESPONDENT:

Berryman Partners Lawyers

Orders

The appeal be dismissed.
The appellant to pay the respondent’s costs of the appeal, as agreed, or in default of agreement, as assessed.

Note: The form of the order is subject to the entry of the order in the Court’s records.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Estate of the late Carney and Carney has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

THE APPELLATE JURISDICTION OF THE FAMILY COURT OF AUSTRALIA AT SYDNEY

Appeal Number: EA 52 of 2019
File Number: NCC 774 of 2018

Estate of the late Mr Carney

Appellant

and

Ms Carney

Respondent

REASONS FOR JUDGMENT

Introduction

This is an appeal by the estate of the late Mr Carney (“the estate”) against property settlement orders made by a judge of the Federal Circuit Court of Australia on 16 May 2019. The proceedings before the primary judge were between the estate of the deceased Mr Carney and his widow, Ms Carney, who was represented by a case guardian.
For convenience and without intending any disrespect, I shall refer to Mr Carney and Ms Carney as “the husband” and “the wife” respectively or collectively as “the parties”.
The primary judge identified net assets of $1,288,267 were held by the parties or the estate and were available for division. The parties’ contributions to their property and to the welfare of the family were found to be equal and a 10 per cent adjustment was made in favour of the wife due to her ill health. The result was that the wife received 60 per cent of the net assets and the estate received 40 per cent.
This appeal is being heard by a single judge pursuant to the provisions of

subsection 94AAA(3) of the Family Law Act 1975 (Cth) (“the Act”) being a direction given by the Chief Justice.

Background

In order to understand some of the submissions made on the appeal it is necessary to set out some relevant context.
The parties were married in 1989. This was the second marriage for each of the parties and each had children from their previous marriages.
In September 2017 the husband was admitted to a nursing home.
The wife commenced these proceedings on 12 March 2018.
Orders were made appointing a litigation guardian for the husband on 16 April 2018 and for the wife on 25 September 2018. The husband died at the age of 93 in 2018. Subsequently, his estate was substituted as a party to the proceedings for him. At the time of the hearing the wife was also aged 93.
At the commencement of the marriage, each of the parties owned a property. The parties lived in the wife’s property for two or three years whilst the husband’s property was being renovated. Thereafter, they lived in the husband’s property.
In early 1992 the wife sold her property to her son. There was a dispute as to whether the wife’s son paid $50,000 or $110,000 for it and that dispute is the subject of one of the grounds of appeal.
In 1993 the husband received an inheritance of $49,500.
In 2009 the wife received a gift of $30,000 from her brother and on his death in 2013 she received a further sum of $208,081. Of that further sum, $142,500 was placed into a term deposit where it stayed until it was used by the wife to purchase residential care accommodation at the Town L Serviced Apartments in May 2018.
On 2 March 2019 the husband’s property was sold for the sum of $935,000.

The appeal

Ground 1 of the Amended Notice of Appeal filed on 25 July 2019 was not pressed. The remaining five grounds of appeal were dealt with by senior counsel for the estate in three categories and it is convenient to follow the same course.

Did the primary judge err by making a 10 per cent adjustment in favour of the wife (Grounds 2 and 5)?

These grounds are concerned with the 10 per cent adjustment made by her Honour in favour of the wife in consideration of the matters raised by s 79(4)and s (75)(2) of the Family Law Act 1975 (Cth) (“the Act”). The essence of the complaint is that the amount of the adjustment made by the primary judge was out of all proportion to the wife’s needs.
The submissions focused on the following paragraphs of her Honour’s reasons:
125.The Wife receives an aged pension of $365 per week of which 87% is paid directly to [Town L] Retirement Village by way of a daily care fee. The daily care fee is in addition to the lump sum. It covers the Wife’s nursing needs and her meals. It does not cover equipment, clothing, medical expenses or personal needs of the Wife.
…
128.It is not possible to estimate with any particularity the likely cost of the Wife’s extra services which she currently receives as a resident of the nursing home over and above her pension entitlement, or know how many years of life she has before her. The Wife says that she will need $26,000 per annum. The evidence of [Ms Howard] was that the Husband’s daily living expenses were an additional $28,000 per annum.
There is no dispute that some of the figures in these paragraphs are wrong.
The wife’s pension was in fact $458 per week and her payment of rent to the Town L Retirement Village was $365 per week. Therefore, the payment of rent was approximately 79 per cent of the wife’s pension and not 87 per cent as recorded by the primary judge.
Further, the wife’s likely expenses were recorded by the primary judge to be $26,000 per annum and not $28,000 per annum as submitted by counsel for the wife. However, that was a figure that was provided to her Honour in the course of submissions and it cannot readily be derived from the evidence.
The evidence as to the amount by which the husband’s expenses exceeded his income when in a nursing home was not entirely consistent. One of the executors of his estate said that it was about $26,000 for the whole period that he was in hospital which was approximately thirteen months (Transcript 9 April 2019, p.143 lines 41–42). She gave further evidence that the shortfall was met by $2,888 being paid to the nursing home each month from the husband’s savings (Transcript 9 April 2019, p.160 line 44). The husband’s expenses were therefore not $28,000 per annum.
On either version of the evidence, the husband’s expenses in a nursing home exceeded his pension by a considerable amount.
When regard is had to the wife’s Updated Financial Statement filed on 3 April 2019, her expenses exceeded her income by $82 per week, or if regard is had to her affidavit filed on 3 April 2019, her expenses exceeded her income by $87 per week. It is to be recalled that at the time that the wife prepared her financial statement she was in residential care accommodation and not in a nursing home.
As I understand it, senior counsel for the estate did not draw attention to these errors so as to rely on them to vitiate her Honour’s reasons. Indeed, she accepted that due to the ill health of the wife a generous adjustment in her favour could be made. However, these matters were relied on to highlight her submission that the adjustment that was made was out of all proportion to the wife’s needs. That was a sound approach because the errors themselves are so small as to be immaterial to the amount of the adjustment (De Winter & De Winter (1979) FLC 90-605).
It is necessary now to turn again to her Honour’s reasons.
At [118] her Honour recorded that the wife was aged 93 years old and had multiple health issues including congestive cardiac failure with atrial fibrillation, peripheral vascular disease and greatly impaired mobility. Her doctor had recommended that she should be moved from a residential care facility into an aged care facility (at [119]).
After referring to the absence of any evidence as to the life expectancy of the wife, her Honour said:
124.The Wife says that she will require a lump sum of $450,000 to enter in to the aged care section of the [Town L] Retirement Village which provides higher level of care than she currently receives in the serviced apartments. The [estate] say that the costings for the accommodation at [Town L] Retirement Village which appear at Annexure S in the Wife’s Tender Bundle, range in price from $300,000 to $450,000. They submit there was no evidence to suggest that the cheaper priced accommodation would not meet the needs of the Wife and in view of the ‘modest’ asset pool the sum of $300,000 proposed by the [estate] by way of loan from the Estate was appropriate. I disagree. The Wife is entitled to the best level of care and comfort that she can reasonably afford and the position adopted by the [estate] is both uncharitable and parsimonious.
(Footnotes omitted)
Finally her Honour explained the effect of the proposed orders in the following terms:
133.As can be seen, the Estate would need to pay $415,283 to the Wife and the Wife would retain her bank accounts, motor vehicle, household contents and RAD.
134.This would mean that the Wife after payment of $307,000 ($450,000 - $143,000) for accommodation in the aged care facility would have savings of approximately $202,628 ($415,283 - $307,000 = $108,283) + $47,578 + $46,767) to meet expenses over and above her daily care fee which is paid from her age pension.
These paragraphs needs some explanation. The last two figures at [134] were funds held in bank accounts by the wife. The amount of $143,000 referred to at [134] is the refundable accommodation deposit paid by the wife for her residential care accommodation. The total cost of her transition to the aged care facility was found by her Honour to be $450,000, but her refundable accommodation deposit for her residential care accommodation could be used as part of that payment. Therefore, her Honour found that the order she proposed to make would give the wife savings of $202,628 after transitioning to the aged care facility.
This leads to the crux of the estate’s submissions which is that the sum of $202,628 is said to meet the wife’s expenses (as identified in the evidence) over and above her pension for 47 and a half years. The estate submitted that is plainly unreasonable.
However, as mentioned above, those expenses identified in the evidence were the expenses of the wife whilst she was in residential care accommodation. There was no evidence as to her likely expenses in the aged care facility into which she was about to move.
The only evidence that directly bore upon the likely cost of the wife’s expenses while she was in the aged care facility was the evidence of the husband’s expenses that he incurred over and above his pension when he was in an aged care facility, which were said to be either $26,000 over thirteen months (which is $2,000 per month or $24,000 per year) or $2,888 per month (which is $34,656 per year).
If one then returns to [128] of her Honour’s reasons, which I have already quoted above, it can be seen that when determining the percentage for the adjustment to be made, her Honour did have regard to the likelihood of the wife’s expenses being in the order of $26,000 to $28,000 per annum and not $82 or $87 as identified by the evidence. It is true that the figures between the husband and the wife were transposed and it emerged that the figure for the wife came from the submissions at the hearing (and in all probability were based on the husband’s expenses) but the husband’s expenses themselves are a basis upon which her Honour can act.
I consider that [128] is in fact a finding to that effect, although it is expressed in terms of reference to the evidence. It is clear from its terms and where it appears in the context of her Honour’s reasons that it is a finding by her Honour and not merely a recitation of the evidence. Thus, I do not accept the estate’s submission that no findings were made as to the wife’s likely expenses in aged care.
When that is coupled with her Honour’s finding that the wife “is entitled to the best level of care and comfort that she can reasonably afford” (at [124]) one can understand the basis on which the finding was made. Such an adjustment is not limited to taking into account any present shortfall between the income and expenses of a party. It cannot be said, in my opinion, that the adjustment made was out of all proportionality to the likely expenses of the wife as found by the primary judge.
It then remains to consider whether the adjustment is on its face plainly unreasonable or plainly unjust (House v King (1936) 55 CLR 499).
The Court is slow to intervene in the exercise of such a broad discretion (Gronow v Gronow (1979) 144 CLR 513).
I am not satisfied, having regard to the matters found by her Honour, that the adjustment of ten per cent was unreasonable or plainly unjust. It fell within the ambit of a reasonable exercise of discretion. The wife’s needs justified significant adjustment in her favour.

Did the primary judge err by not giving adequate reasons or by failing to make findings about disputed issues on the question of contributions (Grounds 6 and 7)?

As I have said above, the primary judge found that the parties’ contributions were equal.
The estate raises two main issues under these grounds. The first is whether the primary judge engaged with the estate’s contention that the separate manner in which the parties conducted their financial affairs coupled with the status of the parties’ marriage as being intact at the time of the hearing was relevant to the assessment of contributions.
The second issue was that the primary judge did not make relevant findings in relation to the transfer by the wife of her property to one of her children.

The separate financial affairs of the parties

The first premise upon which this contention is based is that the parties kept their financial affairs separate. It is certainly the case, as emerges from her Honour’s reasons, that the respective properties held by the parties remained registered in their own names throughout the relationship. Other than that, it is not possible to derive from her Honour’s reasons that the parties kept their financial affairs separate.
At [94] the primary judge recorded the wife’s evidence that after the parties married, the wife supported the husband and paid all the household bills. The wife deposed that the proceeds of sale of her property were used by her and the husband for general household expenses including the purchase of a motor vehicle, furniture, carpet, linoleum and curtains for the husband’s home which was renovated prior to the parties moving to live in it (at [97]). Her Honour continued:
99.The Wife deposes:
‘Our pensions were deposited to our joint account and we paid household expenses such as land and water rates, utility bills, insurance and food and household supplies.’
100.During the marriage the Wife says she paid for holidays for her and the Husband to various locations including [Country T] and around Australia.
101.She deposes to having made significant financial contributions towards the maintenance of the former matrimonial home including payment of half the Council and Water Rates, half of all electricity, home insurance accounts and lawn maintenance (until December 2016).
(Footnotes omitted)
Her Honour then discussed the issue of the wife’s contributions to the renovation costs of the bathroom in 2015 which was disputed by the estate. Her Honour recorded that during the course of cross-examination one of the executors was “reluctantly prepared to concede the possibility that the cheques drawn on the [w]ife’s account may have been paid” for the renovations (at [102]).
In any event her Honour concluded:
104.It is clear that by the time of separation the bulk of the parties’ wealth comes from the former matrimonial home. The Husband owned that property at the date of cohabitation and it was unencumbered. The Wife also owned a property which she sold to her son and the proceeds of sale were used to renovate the Husband’s property and for the parties’ living expenses, as was a part of the Wife’s inheritance that she received towards the end of the marriage.
The parties also operated a joint bank account as well as their own separate accounts. None of these matters point to the parties intentionally keeping their financial affairs separate. Indeed, their funds appear to have been considerably intermingled.
The estate also submitted that this contention is supported by the husband’s will. It is correct to say that he took care to ensure that his property, or the proceeds of sale of his property, would pass into the hands of his children and not the wife. The wife was only given a limited life estate in the event that she survived him. If the property was required to be sold to enable the wife to move to a nursing home, any amounts to be refunded on her death were to be received by his children.
The fact that the husband intended, as best he could, that his home be retained by his children does not, in my opinion, establish that there was little intermingling of the funds and that they largely conducted their financial affairs separately. The evidence as recorded by the primary judge speaks against this.
The second premise of this contention is that the relationship of the parties at the time of the hearing was that they were in an intact marriage.

Until the time of the husband’s death the proceedings certainly involved an issue of the kind discussed and resolved in Stanford v Stanford (2012) 247 CLR 108. However, that issue disappeared on the death of the husband. At that time, it became appropriate to consider whether the basis on which the parties had held their property remained appropriate in the light of the changed circumstances.
Neither of the two premises on which this contention is based can be made out and it follows that it cannot succeed.
It is therefore not necessary to consider whether the fact that the parties intended to keep their finances separate should “sound when the [j]udge conducted the contribution based analysis” (The estate’s Summary of Argument filed on 5 September 2019, paragraph 15). No authority was cited in support of that proposition and I have reservations about it or the weight that it could be given against the genuine needs of the wife relating to her care and health. In the circumstances, however, I shall not address it further.

The transfer of the wife’s property to one of her children

The issue raised by this aspect of the ground was succinctly described in the Estate’s Summary of Argument filed on 5 September 2019 as follows:
18.The wife’s evidence was that the property was sold to her son [Mr F] in 1992 for $110,000. She said she received an initial deposit of $60,000 and instalments of the remaining $50,000 between 3 February 1992 and 13 January 2002.
19.The evidence adduced in the case of the Husband’s Estate indicated that the wife received only $50,000. Annexure D to the affidavit refers to the transfer on 13 January 1992 for a sale price of $50,000.
(Footnotes omitted)
The submission is that the primary judge did not resolve this dispute but merely recited the evidence.
The primary judge recorded the issue in the following way:
95.In January 1992 the Wife says that she sold [Street A1, Suburb B] to her son [Mr F] for $110,000. She deposes that the initial deposit of $60,000 was paid into her bank account and the balance of $50,000 which was secured by way of mortgage over the property, was paid by instalments over the following ten years. The final payment was made on 13 January 2002. She says that the proceeds of sale were used by her and the Husband during the course of their marriage for general household expenses.
96.The [estate] say [Street A1, Suburb B] was sold to [Mr F] in January 2012 and produce a copy of the transfer evidencing that stamp duty was paid on a value of $122,000. They also produce a printout from a website RP Data which they say indicates a sale price of only $50,000. The affidavit evidence of [Ms Howard] was that the Wife told her on many occasions that she had ‘only got $50,000 for the house.’
97.The Wife says that the $60,000 deposit was applied to the purchase of a motor vehicle for $14,373, custom made furniture, carpet, linoleum and curtains for the former matrimonial home which was in the process of being renovated.
(Footnotes omitted)
It follows that if the $60,000 deposit was in fact spent as the wife says it was (as recorded at [97]) and $50,000 was paid by way of instalments that were used for general household expenses (as recorded in [95]) then the purchase price of the property could not have been $50,000.
After some further discussion about the payment of rates and renovation costs her Honour said:
104.It is clear that by the time of separation the bulk of the parties’ wealth comes from the former matrimonial home. The Husband owned that property at the date of cohabitation and it was unencumbered. The Wife also owned a property which she sold to her son and the proceeds of sale were used to renovate the Husband’s property and for the parties’ living expenses, as was a part of the Wife’s inheritance that she received towards the end of the marriage.
I consider this to be her Honour’s conclusion in relation to the issues that she had discussed in the earlier paragraphs because it marks the end of the discussion as to financial contributions. Her Honour accepts that the proceeds of sale of the wife’s property were used to renovate the husband’s property and for part of their living expenses. Paragraph [104] is consistent with the wife’s evidence and can only be read as an acceptance of the wife’s case because it is consistent with it and inconsistent with the estate’s case.
The fact that a transfer existed with a consideration expressed in the sum of $50,000 does not conclusively establish that it was the only consideration paid. This is especially so in a transaction between family members.
Thus, the finding was open to her Honour on the evidence and this aspect of the challenge does not succeed.

Did the primary judge fall into error when assessing the justice and equity of the orders by failing to consider the legitimate interests of the estate in making orders consistent with the deceased’s testamentary intentions (Ground 8)?

The estate submitted that the Court was obliged to take into account the terms of the husband’s will because he had a prima facie moral entitlement to dispose of his property as he saw fit, particularly in the course of an intact marriage.
I have already expressed my view that, at the time of the hearing, this was not an intact marriage.
No authority was given for the proposition that a testator’s undoubted right to dispose of their property as he or she sees fit is a matter to be taken into account in property settlement proceedings under s 79 of the Act. In the absence of such authority, I cannot see how a testator’s intentions in relation to the disposition of their property on their death should override the considerations mandated by the Court in s 79(4) and s 75(2) of the Act.
I do not need to go further than this because senior counsel for the estate properly accepted that this point was not raised before the primary judge. Counsel who appeared for the estate before the primary judge certainly referred to the will but the submission that was made on the appeal was not made to the primary judge. A party is bound by the conduct of their case (Metwallyv University of Wollongong (1985) 60 ALR 68 at 71; Suttor v Gundowla Pty Ltd (1950) 81 CLR 418 at 438).
In relation to appeals conducted by way of rehearing, as this Court does, the New South Wales Court of Appeal said in Multicon Engineering Pty Ltd v Federal Airports Corporation (1997) 47 NSWLR 631 at 645–646 that “[s]ince this is an appeal by way of re-hearing… it remains a question of whether the appellate court ‘may find it expedient and in the interests of justice to entertain the point’”.
As the issue could have been the subject of evidence, I do not consider that it is in the interests of justice for it to be raised now.
The wife submitted that notwithstanding the absence of submissions made on this point, the primary judge was nonetheless obliged to be satisfied that “in all of the circumstances” (s 75(2) of the Act), which included the testator’s intentions as to the disposition of his property on his death, the order that her Honour was making was just and equitable.
The submission is, as far as I am aware, novel. No authority has been cited in support of it. I fail to see how, in the absence of any submission made to her Honour and in the absence of clear authority, the primary judge could foresee that this was an issue that needed to be considered.
Further, it is important to note that the point that was made was not one that would require a primary judge to weigh the circumstances of the beneficiaries against those of the wife because “the claim of or against the surviving spouse is to be considered essentially as between husband and wife before the claims by other beneficiaries are taken into account” (Grace v Grace [2012] NSWSC 976 per Brereton J at [243]).
It is difficult then to see what weight could be given to the testator’s right to dispose of his property as he saw fit. My inclination is that it is subsumed by s 79 of the Act. To the extent that it could be seen to be a relevant consideration under s 75(2)(o) of the Act, and I am not satisfied that it could, it would carry little or no weight whatsoever.
This ground does not succeed.
It follows that the appeal will be dismissed.

Costs

Quite properly in all the circumstances, senior counsel for the estate accepted that if the appeal was to be dismissed, the appropriate exercise of discretion would be to order that the estate pay the wife’s costs.
There will be an order to that effect.

I certify that the preceding seventy-four (74) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Aldridge delivered on 4 October 2019.

Associate:

Date: 4 October 2019