Fairbrother v Fairbrother
[2013] NSWSC 461
•03 May 2013
Supreme Court
New South Wales
Medium Neutral Citation: Fairbrother v Fairbrother [2013] NSWSC 461 Hearing dates: 15 & 16 April 2013 Decision date: 03 May 2013 Jurisdiction: Equity Division Before: Windeyer AJ Decision: Proceedings dismissed
Catchwords: SUCCESSION - family provision and maintenance - whether life insurance policy on life of deceased owned by deceased's former wife should be designated as notional estate - definition of "relevant property transaction" in s 75 of the Succession Act 2006 - whether deceased entered into "relevant property transaction" by failing to ask owner of life insurance policy to transfer it to deceased - time at which a transaction occurs pursuant to ss 77 and 80 - whether estate of deceased "disadvantaged" by payment of insurance premiums pursuant to s 83 - considerations relevant to making notional estate order pursuant to s 87 Legislation Cited: Succession Act 2006
Family Provision Act 1982Cases Cited: Kavalee v Burbidge (1998) 43 NSWLR 422
Gosper & Ors v Vivienne Lorraine Gosper; Estate of the late James Murray Marsden Gosper (unreported, Bryson J, 22 October 1990, BC9001829)Category: Principal judgment Parties: Kari Lynn Fairbrother (Plaintiff)
Karen Fairbrother (Defendant)Representation: Counsel:
P Blackburn-Hart SC with R Quickenden (Plaintiff)
J Needham SC (Defendant)
Solicitors:
John Ryan, solicitor (Plaintiff)
Stephen Doyle & Associates (Defendant)
File Number(s): 2011/300338
Judgment
HIS HONOUR: The main question for decision is whether the proceeds of a term insurance policy on the life of a deceased person owned by his former wife and taken out 16 years before the date of death can be designated as notional estate for the purpose of making provision for the widow of the deceased.
Facts
Jeffory Fairbrother died on 29 September 2011 aged 55 years. It is likely that he died intestate, but this is not established. His assets at death amounted to less than $4,000 and any assets which he had have been paid to the plaintiff.
The deceased was married three times. The first marriage was in 1979 and lasted only a short time before divorce. The second marriage was to the defendant, Karen Fairbrother, on 8 December 1984. This was dissolved by order of the Federal Magistrates Court in 2006. There are three children of that marriage, namely Jeffory, Joshua and Jessica born respectively in 1985, 1987 and 1990. Joshua was injured in an accident in the United States. His mother has been appointed by the Guardianship Tribunal to be his financial manager. The third marriage of the deceased was to the plaintiff, Kari Lynn Fairbrother in 2007. There are no children of that marriage.
As there would otherwise be some confusion with names I will refer to the plaintiff as Kari and the defendant as Karen. I will refer to the deceased as Mr Fairbrother or "the deceased".
Mr Fairbrother made a will on 9 February 2009 giving 40 per cent of his estate to Kari, and 60 per cent of his estate to his parents. He made a further will in November 2009 giving the whole of his estate to his three children in equal shares. This will has not been found. This is not a probate action; however, as this last document was last seen in the hands of Mr Fairbrother, the presumption would be that he revoked it. It would follow if that were the case that he died intestate. This has no bearing on this case in view of the size of the estate. If he did die intestate, then Kari would take all the estate which amounted to only about $3,000. There has been no grant of representation but an order has been made that the defendant, Karen, represent the estate for the purpose of these proceedings. It is thus I think quite unnecessary to decide at this stage whether or not an order can be made without a grant of representation.
Kari seeks an order under the Succession Act 2006 (the Act) that provision be made for her out of notional estate of Mr Fairbrother. The important question then to be decided in this action is whether or not there is property capable of being designated as notional estate of Mr Fairbrother and I turn to that.
Term Life Policy
In 1994 a policy of term life insurance no. 80034723 was issued by Sun Alliance Life Assurance Limited naming Karen as owner of the policy and Mr Fairbrother as the life assured. The policy provided among other things for a lump sum to be paid on the death of Mr Fairbrother subject to the yearly premiums being paid. This benefit had an expiry date of 15 August 2036. If the premiums were not paid then after notice the insurer had the right to cancel the policy.
Premiums for the years 1994, 1995 and 1996 were paid. In paragraph 215 of her affidavit of 31 March 2012 Karen said:
"I understood that the payment of the premiums for the three (3) years before the parents commenced making payments (in 1997) that Denise Keen attended to the payments. I do not know the source of these payments."
However, Karen said in cross-examination that she had separate moneys, that Denise Keen was employed to look after the private financial affairs of Karen and Mr Fairbrother and made payments for them from their separate moneys. The following appears at page 66 of the transcript:
"Q. And you have no way of knowing whether or not she drew a cheque in favour of the insurance company from your money or from your former husband's money, do you?
A. I believe she paid it out of my money. We never had our bills mixed up, Jeffory and I or the building company. It was all separate. We had three separate things."
Kari's evidence was that the deceased told her he had made the payments.
Mr Fairbrother was in 1994 managing director of a then successful building company. No doubt he had substantially more resources than his wife, but that does not establish payment by him of the premiums. It is for Kari to prove her claim here. I do not think her evidence of what the deceased said to her is compelling. The deceased told people, including Kari, many things which were not in fact true and this was years after the event. At the very least, I find that the plaintiff has not satisfied the onus on her to establish the premiums for these three years were paid by Mr Fairbrother.
In the years from 1997 to 2005, the premiums were paid by the parents of Mr Fairbrother. The plaintiff's claim is that these payments were on behalf of Mr Fairbrother by way of loan to him and that Mr Fairbrother intended to repay them together with other moneys paid by his parents on his behalf. His financial position had worsened by then. A note made in 1999 given to his father at least shows an intention to refund payments to that date to his parents. There was no loan agreement; I consider there was an expectation that some payments made by the parents would be refunded: I do not considere it has been established that the premium payments were by way of loan to Mr Fairbrother, but paid direct by his parents. At some stage, probably no later than 2002, the parents realised no repayments or refunds would be made, but they continued to pay the premiums. Their evidence was they did so for the protection of Karen and the children if their son died in an accident. At some stage either the insurer changed its name to, or the insurance business of Sun Alliance was transferred to, Asteron Life Limited. Nothing turns on that. The policy number remained the same.
From 2006 to 2010 the premiums were paid by Karen. The parents had written to her saying that they expected her to pay. They thought she would be able to do so. That is what happened. Mr Fairbrother senior said in affidavit evidence that he had told Karen it was vital for her to continue to pay the premiums. After Mr Fairbrother died, the policy moneys, amounting in all to $1,613,978 were paid to Karen as owner. She has used these moneys as follows:
(a) to purchase a property at Pennant Hills as tenant in common with Joshua, she as to 75 per cent, and Joshua as to 25 per cent. The purchase price was $1,200,000. Karen put in $900,000 and she as manager of Joshua's estate with the approval of the NSW Trustee and Guardian put in $300,000 of his money.
(b) to place $445,000 into a superannuation fund, this being a course open to her at that particular time.
(c) to place $100,000 into a term deposit.
It is this property which now represents the proceeds of the policy which Kari seeks to have designated as notional estate and that provision be made for her out of property so designated. In practice, it is the real estate that would need to be designated as notional estate as there is no evidence that superannuation moneys can be called in and the term deposit moneys have gone largely on costs.
The particular policy subject of the proceedings here was one which was taken out in substitution for two other policies, but I do not think anything turns on that. The application or proposal for the policy was signed by Karen as the intended owner. It was also signed by Mr Fairbrother as the life to be insured under that policy. He was required only to make a declaration as to his smoking habits and he did so. The policy provided for some benefits other than death benefits, but that does not matter here. It was a policy which had no value unless the events insured against happened, namely death or permanent type disabilities. It was expressed to be in force until 2036 for death benefits, but subject to the condition that the premiums on the policy be paid.
Notional estate requirements
There are particular requirements under the Act for property to be declared or designated as notional property of the deceased. I will deal with these in turn. No order can be made unless there is a relevant property transaction under s 75(1) which is as follows:
"75 Transactions that are relevant property transactions
(cf FPA 22 (1), (3) and (7))
(1) A person enters into a relevant property transaction if the person does, directly or indirectly, or does not do, any act that (immediately or at some later time) results in property being:
(a) held by another person (whether or not as trustee), or
(b) subject to a trust,
and full valuable consideration is not given to the person for doing or not doing the act."
Before addressing this point I think it is important to record that senior counsel for the plaintiff said that no reliance was placed by him upon s 76(2)(d) of the Act which deals with particular acts or omissions relating to a life assurance policy on the life of a deceased. It is s 75(1) which is relied upon.
The first argument of counsel was that it is not necessary under s 75(1) that the person said to enter into a relevant property transaction actually has power to do, bring about, or omit to do that which is required to bring about the result of property being held by another person or subject to a trust.
There was evidence in this action that during the marriage of Mr Fairbrother and Karen, Mr Fairbrother looked after all the financial affairs of the family and Karen looked after the house and the children. There is no real dispute about that, other than the evidence of Karen that Denise Keen was employed solely for the purpose of looking after the private affairs of Mr Fairbrother and Karen. But this does not really matter. The evidence showed that Mr Fairbrother was the one who made decisions as to purchase of matrimonial homes, sale of homes, borrowings against such homes and such like and that Karen was, on occasions, not even consulted about these decisions; and even if she was, Mr Fairbrother went ahead as he wished to make those arrangements. On that evidence counsel argued that had Mr Fairbrother asked his wife to transfer the insurance policy on his life which she owned to him then she would have done so. That question was in fact put to Karen when she was recalled for further cross-examination on the second day of the trial and she denied it. The argument is that the omission of Mr Fairbrother to ask his wife to transfer the term life policy to him was a relevant property transaction. This seems to me to be an impossible argument. It would lead to a conclusion that there was a relevant property transaction in circumstances similar to those in this case where a husband was in charge of the financial affairs of himself and his wife and the wife for the most part looked after the domestic affairs of the household. In such circumstances the argument would be that if the wife was accustomed to do what her husband wished and had a bank account of $100,000 in it and if the husband, having died, had failed or omitted to ask her to transfer that bank account to him that would be a relevant property transaction. It seems to me that that only needs to be stated to show that the argument cannot be correct. In my view it is clear that for s 75(1) to operate there must be power or authority to bring about the transaction. It may be the power arises by implication, but as was made clear in Kavalee v Burbidge (1998) 43 NSWLR 422 by Mason P at 447, and by Handley JA at 460, it does not arise in the situation put forward here. This argument fails.
Succession Act, s 77
The next submission on behalf of the plaintiff is made under s 77 of the Act. Subsections (2) and (3) of that section are not relied upon. Section 77(1) and (4) are as follows:
"77 When relevant property transactions take effect
(cf FPA 22 (2), (5) and (6))
(1) For the purposes of this Chapter, a relevant property transaction is taken to have effect when the property concerned becomes held by another person or subject to a trust or as otherwise provided by this section.
...
(4) A relevant property transaction that involves any kind of contract for which valuable consideration, though not full valuable consideration, is given for the person to enter into the transaction is taken to be entered into and take effect when the contract is entered into."
For this section to assist the plaintiff it would be necessary to show that the property referred to was the proceeds of the insurance policy and not the policy itself. I will have to deal with this again when dealing with s 80 of the Act. I consider the position to be clear and that the property referred to is the policy and the rights under it which would go on an assignment. It would follow that the relevant property transaction in respect of the policy must take place on assignment or other dealing with that policy, not when the moneys under it became payable. In the present case the property became held by Karen when the policy issued.
Succession Act, s 80
This section is as follows:
"80 Notional estate order may be made where estate affected by relevant property transaction
(cf FPA 23)
(1) The Court may, on application by an applicant for a family provision order or on its own motion, make a notional estate order designating property specified in the order as notional estate of a deceased person if the Court is satisfied that the deceased person entered into a relevant property transaction before his or her death and that the transaction is a transaction to which this section applies.
Note. The kinds of transactions that constitute relevant property transactions are set out in sections 75 and 76.
(2) This section applies to the following relevant property transactions:
(a) a transaction that took effect within 3 years before the date of the death of the deceased person and was entered into with the intention, wholly or partly, of denying or limiting provision being made out of the estate of the deceased person for the maintenance, education or advancement in life of any person who is entitled to apply for a family provision order,
(b) a transaction that took effect within one year before the date of the death of the deceased person and was entered into when the deceased person had a moral obligation to make adequate provision, by will or otherwise, for the proper maintenance, education or advancement in life of any person who is entitled to apply for a family provision order which was substantially greater than any moral obligation of the deceased person to enter into the transaction,
(c) a transaction that took effect or is to take effect on or after the deceased person's death.
(3) Property may be designated as notional estate by a notional estate order under this section if it is property that is held by, or on trust for:
(a) a person by whom property became held (whether or not as trustee) as the result of a relevant property transaction, or
(b) the object of a trust for which property became held on trust as the result of a relevant property transaction,
whether or not the property was the subject of the relevant property transaction."
If the transaction relating to the insurance policy, namely its being brought into existence, took place in 1994, then it did not take place within one year or within three years of the date of death of Mr Fairbrother so that s 80(2)(a) and (b) do not apply. Section 80(2)(a) could not apply in any event as the required intention was not established. The question would remain whether subs (2)(c) would apply. As I have said, in my opinion, the transaction which took place in respect of the insurance policy took place in 1994. It was not a transaction to take effect on or after the death of Mr Fairbrother. It is entirely different from a contract to leave particular property by will to a particular person which could be caught by subs (c).
It is now necessary to deal with the decision in Gosper & Ors v Vivienne Lorraine Gosper; Estate of the late James Murray Marsden Gosper (unreported, Bryson J, 22 October 1990, BC9001829). Mr Gosper died on 6 November 1989. On 23 November 1988, a term life policy was issued by Occidental Life Insurance Company Limited for a sum insured of $1 million with his wife, Mrs Gosper, the defendant as owner, on the life of Mr Gosper. The sum insured was paid to Mrs Gosper on 16 January 1990, her husband having died on 6 November 1989. The premium for the policy was $3,002.40. This was paid on 21 November 1988 by Mr Gosper drawing a cheque for $6,522.40, which covered the premium on this particular policy and another loss of income policy issued by the same insurer. Although the cheque was drawn on a joint account Bryson J held that payment of the premium was the act of Mr Gosper, not that of Mrs Gosper, and that he was not acting as her agent in making the payment. The payment of the premium had the effect of increasing the joint overdraft on the account rather than taking money owing to the joint owners from the account. In Gosper as in the present case, Mr Gosper, the life insured under the policy, joined in the proposal to make a declaration of the truth of statements and answers in it, but he was not a party to the contract. The passages in the judgment which bear on this matter are the following:
"By the definition of 'disponee' in s21 a person is treated as a disponee where 'as a result of the prescribed transaction property becomes held by a person ...'. The dealings with the life policy relate to this definition at two points. At the first point the policy itself is property which became held by Mrs Gosper on 23 November, 1988 when the policy was issued, and at the second point the $1,000,000 paid by the insurer is property which became held by Mrs Gosper in January, 1990. Both analyses are available and correct.
Sub-22(1) provides for circumstances in which Mr Gosper should be deemed to have entered into a prescribed transaction. The question under s22 whether full valuable consideration in money or money's worth is given is a question of fact: see Wade v Harding and Anor, (1987) 11 NSWLR 551 at 554 and 555 and cases cited there. Mr Gosper did a series of acts as a result of which the policy and also the insurance money became held by Mrs Gosper. Joining in the proposal and paying the premium are the principal acts.
Mrs Gosper took no step which can be seen as her giving Mr Gosper full valuable consideration in money or money's worth for Mr Gosper's doing those acts.
I am at a loss to see how value could pass from a wife to her husband in an arrangement in which the husband joined in a proposal for insurance on his life by his wife and signed the proposal as life insured. The idea that joining in a proposal in this way could be or ever is paid for or set against money or money's worth is completely unheard of. The other act of Mr Gosper which is relevant is paying the premium. No consideration or advantage of measurable value, or of any value passed from her to him in relation to his paying the premium. Full consideration in money's worth for paying a premium would usually be some transfer of the same value as the premium itself. The circumstance that he paid the premium by a cheque on an overdraft for which she incurred joint liability with him prevents me from concluding that full consideration for his making the payment must be equated with the amount paid, but she paid and gave no consideration at all to him for his doing that and for his incurring the joint liability. It is only if what he did including his making the payment and incurring the liability is rightly thought of as having no value in money's worth that she, giving no consideration could rightly be thought of as giving full consideration. In my finding Mrs Gosper did not give Mr Gosper full valuable consideration in money or money's worth for the things which he did.
Sub-22(2) relating to the time at which the transaction is deemed to take effect would produce the results that if the analysis of the transaction is that as a result of the prescribed transaction property being the policy became held by that occurred on 23 November, 1988, or if the analysis is that the insurance moneys became held by her, that happened in January, 1990."
I have considered this carefully but with respect I am unable to agree that receipt of the insurance money was a relevant property transaction. Had the deceased owned Blackacre in 1994 and at that time transferred an interest in remainder in that property expectant upon his death, transfer of that interest would have taken effect in 1994, not upon his death. However wide the notional estate provisions are, as a general rule they are not intended to bear upon transactions which took effect many years before death of the principal party or donor involved in the transaction. Receipt of the insurance moneys resulted from Karen owning the policy and more importantly paying the premiums for the last four years. If there were a transaction, it took place in 1994.
When considering Gosper it is important to remember that, accepting that the joining in the proposal by Mr Gosper as life insured and the payment of the one premium by him amounted to a relevant property transaction, or under the previous Act a prescribed transaction, those actions took place within a period of one year from the date of death of the deceased. Under those circumstances there was no difficulty designating the proceeds of the policy as notional estate of the deceased. It follows that it was not necessary for his Honour to say that the $1 million paid by the insurer was property under s 21 of the Family Provision Act 1982. But in the events in the instant case, it is I think clear that if any transaction took place at all then it took place in 1994. I would myself be very reluctant to hold that the mere action of a life insured in joining in a policy owned by another person by making some declaration on it required by the insurance company was a transaction falling within s 75, at least unless the premiums were paid by the deceased. It seemed to be argued that the transaction was in some way a continuing transaction during the life of the policy. If that were the case, then at least for the last four years it was continued solely because Karen paid the premiums on it. It was not some continuing transaction of the deceased, even accepting for this purpose that he did pay some of the premiums. I appreciate the "causation" or "result" problems referred to in Kavalee, but I would not consider that joining in the proposal resulted in the insurance moneys being paid.
Before departing from the question of notional estate there are two further sections which must be considered. I will deal with one of those here.
Succession Act, s 83
"83 Disadvantage and other matters required before order can be made
(cf FPA 26)
(1) The Court must not, merely because a relevant property transaction has been entered into, make an order under section 80, 81 or 82 unless the Court is satisfied that the relevant property transaction or the holding of property resulting from the relevant property transaction:
(a) directly or indirectly disadvantaged the estate of the principal party to the transaction or a person entitled to apply for a family provision order from the estate or, if the deceased person was not the principal party to the transaction, the deceased person (whether before, on or after death),
..."
Assuming that the part the deceased played in bringing the policy into existence, namely, consenting to be the life insured under the policy and signing the declaration required by him, was a relevant property transaction the question is whether that directly or indirectly disadvantaged his estate, he, in this case, being the principal party pursuant to s 83(2) of the Act. The answer to the question seems clearly to be that it had no such result. If I were incorrect and the payment of the policy moneys was the transaction event that did not disadvantage the estate of the deceased. He never had any entitlement to those moneys.
If I had found the deceased paid the premiums and that the transaction was somehow within s 75 and that it took place within three years of death, then perhaps his estate might have been disadvantaged to the extent of the premiums paid, although I doubt it. It is far more likely the money would have been spent on something else, not saved. Section 83(1)(a) prevents the making of an order. The other relevant section is s 87, but I will deal with that later.
It follows from all of this that the claim for a designating order as to the proceeds of the policy or property into which those proceeds have been put must fail. The result of this is that the action fails and that the summons should be dismissed. In those circumstances the ordinary order would be that the costs follow the event, but I will hear any argument about that.
Costs generally
I think it is necessary to say something about the costs of this matter, although I think it will be necessary for me to determine what the result would have been had a designating order been made, or perhaps more importantly had there been a relevant property transaction. It seems from the evidence filed that the plaintiff's costs in the proceedings will amount to about $126,000 and the costs of the defendant $124,000. That in itself is particularly worrying when it is borne in mind that it is accepted that any order which might be made in favour of the plaintiff would be quite unlikely to exceed $300,000. On the evidence there is no possibility whatever that the plaintiff will be able to pay her own costs, let alone costs of the defendant if those costs are ordered against her. While I understand the great reluctance of the courts to order separate trials of separate issues and there are good reasons for that reluctance, it does seem to me in a matter such as this that it would have been sensible for the parties and perhaps for the Court to give some attention to this before it was too late. Had the notional estate issue been heard first, the only evidence which would have been required would have related to the circumstances of the issue of the policy and the payment of the premiums, and perhaps so far as the plaintiff's argument was concerned, of the arrangements between husband and wife as to their particular responsibilities. None of the evidence of the financial positions of the parties, their past relationships, their relationships with the deceased would have been necessary and none of the considerable costs involved in obtaining evidence which went only to the credit of the plaintiff would have been incurred. In any event, by the time the file came to me the action was about to start and it was far too late to do anything about it because most of the costs had been incurred.
Consideration of matter if there were a relevant property transaction
It is probably wise for me to deal briefly with this in spite of the decision to which I have come. This may save further expense if any appeal is upheld, but I will not set out the facts in detail. The claim of Kari is quite modest. It is for a sum sufficient to enable her to purchase a modest one-bedroom unit on the Central Coast, to purchase a small motor vehicle and to pay some debts. It is accepted that this will involve about $227,000 for the unit with stamp duty, about $17,000 for a motor vehicle and about $28,000 to discharge debts, some of those debts were incurred through credit card drawings given to the deceased. The total is about $272,000.
Succession Act, s 87
"87 General matters that must be considered by Court
(cf FPA 27 (1))
The Court must not make a notional estate order unless it has considered the following:
(a) the importance of not interfering with reasonable expectations in relation to property,
(b) the substantial justice and merits involved in making or refusing to make the order,
(c) any other matter it considers relevant in the circumstances."
This is a strange section, but it does require separate consideration distinct from s 60 matters. So far as s 87(a) is concerned, the reasonable expectations of Karen were that the policy moneys would be paid to her as she, not without difficulty, kept the policy alive by paying the premiums for four years. She paid those expecting that result. There is no evidence that Kari had any expectations about the policy moneys. She knew her husband was not paying the premiums. It can be assumed she knew nothing about notional estate. She could have had no expectation she could receive any part of the policy moneys. If reasonable expectations of the parents should be considered which is somewhat doubtful, then as they kept the policy alive for the protection of Karen and her children, their expectations could be that Karen would benefit. The expectations of the deceased must have been that policy moneys would go to Karen. That was his expectation when the policy was taken out and remained his expectation on 24 December 2008 when he wrote a note to his solicitor about a new will stating his children would benefit from the life policy held by his wife. Section 87(a) requires the court to consider this matter. I have considered it and such consideration points against making an order. In the same way I consider that substantial justice and merits indicate either no order should be made or that any order should be modest. However, it was suggested in argument that these matters should be considered again when considering s 60 matters and that may be an appropriate way to proceed.
If the policy moneys were an asset and the only asset in the estate of Mr Fairbrother, and he had by will left those moneys to Karen and nothing to Kari, then I think it likely an order would have been made in her favour. The de facto relationship commenced in 2003 or 2004. The marriage took place in 2007. The relationship broke down in 2009, although the marriage continued. There was some degree of reconciliation towards the date of death, but the simple fact is that Kari and her husband had not lived together since 2009. When the relationship commenced, Kari owned the house in the United States where the parties lived together. The mortgagee foreclosed and she got nothing from it. Kari followed the deceased when he returned to Australia. She made some financial contributions by money payments to the deceased that he seems to have squandered. She used $12,000 to cover their living expenses in Goulburn and worked while they were there. After they separated the deceased went back to live with his parents and Kari lived in very modest accommodation on the Central Coast. She has not had a married life of any comfort at all. The relationship was a volatile one as a result, it seems, in large part of excessive drinking by the deceased and his other medical problems, but to some extent brought about by Kari's behaviour as well. In spite of all this and bearing in mind the s 60 requirements, I consider that to leave the plaintiff with nothing in those circumstances would have meant that adequate provision was not made for her maintenance and advancement. In such circumstances I consider the Court might have made an order for Kari of about $400,000. There is no point in considering this further. The policy moneys were not part of the estate and it is likely there was no will. On intestacy Kari as widow would have taken the statutory legacy and one half the balance of the estate.
I return to the facts here. When considering this matter, it is necessary to bear in mind the interests of the defendant. She is a former wife who had no property settlement and who maintained some contact with the deceased and who looked after the children alone after she returned from the United States in 2003. The eldest son of her marriage with Mr Fairbrother is employed as a first officer with Qantas. Although he lives at home when he is in Sydney, he flies out of Melbourne. He has shared rented accommodation there. The daughter of the deceased lives at home with her mother and she does her part in caring for Joshua. She already has one degree and is working towards another which she should finish at the end of this year. Karen has no expenses for those children which need be taken into account. As far as Joshua is concerned, suffered brain damage as a result of an injury in the United States and he obtained an award as a result of that which resulted in a payment to him of $364,000. Karen cares for him. He is not totally dependent on her in that he works a short day on Wednesdays at North St. Ives School doing somewhat menial and simple tasks. He works two days a week at Cromehurst Special School at Lindfield. He is paid for the work which he does. He has been trained so as to enable him to find his own way to Cromehurst, but his mother drives him to St. Ives on Wednesdays. A reasonably large fund is held for him, albeit that some $300,000 of it has been invested in the home. Joshua has some earnings and he is being looked after by his mother who intends to continue to look after him. It is this responsibility which must be borne in mind as it would be difficult for Karen to engage in any regular full-time work. The position is that if an order is made in favour of the plaintiff here, it seems almost certain that the Pennant Hills home of Karen and Joshua will have to be sold and a lesser property purchased unless a loan could be obtained on the security of the property. That is an outcome which could be difficult to achieve as it would not appeal to an ordinary lender, nor I think to the NSW Trustee and Guardian who would have to authorise that transaction by Karen as manager of Joshua's estate. No mortgagee would like to take the risk of having to take proceedings for possession against a disabled person.
There was some unsatisfactory and inconclusive evidence about Karen being able to draw on the superannuation moneys invested with First State Superannuation once she reaches the age of 55 and can move into what is called "transition to retirement". She is now aged 54. On the evidence as it is, that would not enable her to draw $270,000, but might enable her to draw down $30,000 to $40,000 a year. It follows the house would have to be sold and a cheaper one purchased for something between $900,000 and $1 million. It must be borne in mind however that the purchase of the existing home was entered into after Mr Ryan, the solicitor for Kari, wrote warning of the intention to bring the present claim, so I do not think any expectations of being undisturbed in ownership can be taken into account.
After considering this somewhat briefly, I think the important facts to bear in mind are the following:
(a) The relationship between Kari and the deceased had broken down after a total period of six years living together. Nevertheless they remained married and there may have been some degree of reconciliation toward the end.
(b) It was a difficult relationship with some violence.
(c) Kari is 52 years of age, has no assets of value and her income is just sufficient to cover modest outgoings.
(d) Kari had no expectation the deceased would provide a home that they or she would own.
(e) The s 87 matters I have discussed which can be considered under s 60(2)(p) as well and which if not indicating no order should be made at least point to a very modest order.
(f) the fact that Karen has for many years been responsible for the care and support of the children of her marriage to the deceased.
(g) The fact that it is only because Karen paid the substantial premiums for four years, this taking up a large part of her modest income, that the insurance moneys were received.
I conclude that as no provision was made for Kari other than perhaps the estate of around $3,000, that if a order could be made, then it should be made to enable very modest provision to be made. I have had some doubt about provision for a home, but in view of the age Kari and the modest sum sought for this, I would have made an order of a total sum of $250,000. I would not have added a sum sufficient to pay all debts or purchase a new car. I bear in mind that if Kari purchased a unit, she would no longer be paying rent.
Order
The proceedings be dismissed.
Decision last updated: 03 May 2013
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