Farrow v Reilly, Estate of Laurence Albert Reilly
[2012] NSWSC 1191
•15 October 2012
Supreme Court
New South Wales
Medium Neutral Citation: Farrow v Reilly, Estate of Laurence Albert Reilly [2012] NSWSC 1191 Hearing dates: 3 October 2012 Decision date: 15 October 2012 Jurisdiction: Equity Division Before: Associate Justice Macready Decision: (1) dismiss the motion of 15 August 2012 with costs
Catchwords: SUCCESSION - family provision and maintenance - extension of time for making claim - whether claim likely to succeed - prejudice to other beneficiaries Legislation Cited: Family Provision Act 1982
Testators Family Maintenance and Guardianship of Infants Act 1916Cases Cited: Basto v Basto (NSWSC, Hodgson J, 8 September 1989, unreported)
De Winter v Johnstone (NSWCA, 23 August 1995, unreported)
Fancett v Ware (NSWSC, Needham J, 3 June 1986, unreported)
Guskett (deceased), Re (1947) VLR 212
Massie v Laundy (NSWSC, Young J, 7 February 1986, unreported)
Phillips v Quinton (NSWSC, Powell J, 31 March 1988, unreported)Category: Principal judgment Parties: Kerry Ann Reilly (applicant)
Graeme Douglas Reilly (defendant)
Debra Jan Farrow (defendant)
Anjala Devi Reilly, Administrator of the Estate of Laurence Albert Reilly (defendant)Representation: D C Price (applicant)
R S Bell (defendant)
M Lawson (defendant)
M Southwick (defendant)
Carters Law Firm (applicant)
F W Ewart & Ewart Solicitors (defendant)
McNamara & Associates (defendant)
Grahame W Howe & Co (defendant)
File Number(s): 2010 / 137238
Judgment
There are two proceedings concerning the Estate of the Late Laurence Albert Reilly, who died on 12 December 2008 at age 74. The deceased died intestate. He was survived by three children and a widow.
Two of the children, namely Debra Jan Farrow and Graeme Douglas Reilly, are each a plaintiff in their proceedings seeking provisions from the estate of the deceased.
What concerns me today is a notice of motion filed by Kerry Ann Reilly on 15 August 2012 in the proceedings by Debra Jan Farrow, seeking that she be joined as a party to the proceedings and seeking leave to make a claim on the estate out of time. The applicant in the notice of motion is Kerry Ann Reilly, one of the three children of the deceased. The procedure adopted to raise these issues is probably inappropriate and perhaps proceedings should have been commenced by Kerry Ann Reilly to seek provision pursuant to the Family Provision Act 1982 and also an extension of time for the making of her claim. In any event, the matter can be dealt with on a notice of motion and if time is extended, the appropriate orders could be made in respect to proceedings to be commenced by Kerry Ann Reilly.
Background of the proceedings
The deceased was first married in 1957 to Wendy Reilly (nee Gordon) and they had four children, one of whom died before the deceased. The deceased's first wife died in 1994, the deceased then married Anjali Devi in December 1994.The remaining children are Kerry Ann Reilly born in March 1958, Debra Jan Farrow born in March 1961, and Graeme Douglas Reilly born in May 1962.
The deceased died on 12 December 2008 and on 11 December 2009 a summons was filed in the proceedings brought by Graeme. In May 2010, notices of that claim in accordance with the rules were served inter alia on Kerry Ann Reilly.
On 2 June 2010, Debra Jan Farrow commenced her proceedings by filing a summons and in March 2011 notice of her claim was served on Kerry Ann Reilly.
Those proceedings were mediated and ultimately set down for a three (3) day hearing before Justice Gzell on 7 May 2012. At the commencement of the hearing, the two proceedings settled on the basis that approximately one-third share after costs would be taken by each, the widow and two plaintiffs. At the request of His Honour a further notice was given to Kerry Ann Reilly dated 16 July 2012, which advised her of the settlement of the proceedings and pointed out that she would not receive any benefits from the estate. It also notified that the matter was back before His Honour for approval on 28 August 2012. Accordingly, Kerry Ann Reilly filed a notice of motion on 15 August 2012 and that motion has been listed before me for hearing. The filing of this notice of motion was the first time in the history of the proceedings that Kerry Ann Reilly had responded to any of the documents served upon her. The date by which the application should have been made pursuant to the Family Provision Act 1982 was 12 June 2010.
Section 16 of the Family Provision Act allows an application to be made notwithstanding it is out of time. There are a number of cases which refer to the principles to be applied in an application for an extension of time. In Re Guskett (deceased) (1947) VLR 212 the following was said:
"It is necessary for the applicant to make out a case that will justify the grant of the indulgence sought. He is to show reasons why his failure to apply within the time allowed should be excused. Every case will have to be dealt with on its own facts but it would seem necessary for the applicant to satisfy the court that the circumstances are such as to make it unjust for him to be penalised for being out of time. As moreover he is seeking an indulgence he should apply promptly for an extension of time."
His Honour Young J in several cases has dealt with the principles governing application to extend time under this Act. In Massie v Laundy (NSWSC, 7 February 1986, unreported) he indicated that when looking at "sufficient cause" pursuant to 16(3) of the Family Provision Act the factors which one looks at include the following:-
(a) is the reason for making a late claim sufficient?
(b) will the beneficiaries under the will be unacceptably prejudiced if the time were extended?
(c) has there been any unconscionable conduct on either side which would enter into the equation?
Apparently he also accepts a view which was expressed by his Honour Needham J in Fancett v Ware (NSWSC, 3 June 1986, unreported) that there is no purpose in extending the time with respect to a claim which must fail. In Phillips v Quinton (NSWSC, 31 March 1988, unreported) Powell J, when considering the matter at the substantive hearing, leant to the view that a plaintiff seeking an extension of time under the Testators Family Maintenance and Guardianship of Infants Act 1916 must now demonstrate not merely a reasonable prospect but at least a strong probability of obtaining substantive relief. That view was not accepted by his Honour Hodgson J in Basto v Basto (NSWSC, 8 September 1989, unreported).
In De Winter v Johnstone, a unreported decision of the Court of Appeal on 23 August 1995, His Honour Powell J referred to this matter and, in particular, the fact that nowadays the application for extension of time is invariably dealt with at the time of the application for substantive relief. He said at p 23:
"In such a case, so it seems to me no extension of time ought to be granted unless it be established (inter alia) that the applicant for an extension of time would, in the event of that extension being granted, be entitled to an order for substantive relief."
His Honour Mr Justice Sheller considered that it was only necessary to show that the application was not bound to fail. His Honour Mr Justice Cole seems to have adopted the approach of looking at the strength of the plaintiff's case.
The question of unconscionable conduct does not arise in this case, but all the other matters are in issue.
The reason for making a late claim
Evidence was given by Kerry Ann Reilly about her failure to do anything when she was served with notice of claims. There is inconsistency between the different affidavits as to when she was served, but it seems that the first was served in May 2010 and again in March 2011. Her explanation was that she suffers from short term memory loss. If she reads a document, unless she deals with it immediately, she forgets about it. She said this happened with both of these notices.
In May 2011, she met an old friend again and in August of that year he came to live with her. As he was going through litigation, her friend suggested that she go and see a lawyer recommended by him. As a result, she went and saw Mr David Hansen, a solicitor with Carters Law Firm at Auburn. She cannot recall when it was, but accepts Mr Hansen's suggestion that the date was 27 October 2011.
According to Kerry Ann Reilly, she instructed him to attend to the proceedings and he accepted her instructions. She then recounted attempts to speak to Mr Hansen on six or seven occasions over two or three months without any appropriate response. She then approached another solicitor who is her present solicitor and had an initial conference with him on 25 July 2012, obviously prompted by the letter of 16 July 2012 advising her of the settlement and the proposal to have it approved on 28 August 2012. Her solicitor sent a letter dated 14 August 2012 to Mr Hansen in these terms:
We refer to our letter to you of 25 July 2012 and thank you for providing the documents which you held on behalf of Ms Reilly.
The writer has attempted to discuss this matter with your Mr Hansen and has left three telephone messages each requesting a return call. None of these calls have been returned. Hence the necessity for this letter.
We are now filing a Motion to join our client to the proceedings instituted by her siblings against the Executor of her late father's estate and for leave to bring a family provision claim out of time.
In so doing, it will be necessary for our client to explain the delay which has occurred to date.
Ms Reilly has informed us that in January or February 2012, she consulted Mr Hansen of your firm, having been referred to your firm by a friend.
She says that she informed Mr Hansen that she wished to make a claim against her father's estate and handed him a copy of a letter from Grahame Howe & Co dated 1 March 2011 and Notices of Claim referred to in that letter.
Ms Reilly has informed us that Mr Hansen indicated that he was willing to accept her instructions to act for her in the matter, that he wrote down her address and telephone number and told her he would contact the Solicitors for the estate to obtain further information and get back to her.
Ms Reilly informs us that Mr Hansen said words to the effect: "I will appear for you in Court."
We are instructed that:
1.since that initial conference Ms Reilly has spoken to Mr Hansen on three or four occasions and he has said words to the effect: "the matter is coming up to Court. I will attend. There is no need for you to go."
2.arrangements were made during June 2012 by Mr Hansen's secretary for Mr Hansen to have a telephone conference with Ms Reilly at 3pm on a particular Thursday but she did not receive a call. About two days later, our client telephoned your office to speak to Mr Hansen. The receptionist told her that Mr Hansen had been too busy to call her at the appointed time and said she would ask him to call her.
3.Ms Reilly has attempted to speak to Mr Hansen by telephone on at least six or seven occasions during the past two or three months and has left messages with your firm's receptionist requesting that her call be returned but has not heard from Mr Hansen.
The writer has been informed by Mr Grahame Howe, the Solicitor for the Administrator of the estate that he has had no dealings with Mr Hansen regarding this matter and that, to his knowledge, Mr Hansen has filed an Appearance and has not attended any directions hearings.
Mr Hansen's alleged failure to return Ms Reilly's calls seem consistent with his failure to return calls made by the writer.
However, as a matter of professional courtesy, in the interests of fairness and to avoid providing information to the Court which may prove to be inaccurate, we invite you to provide us with Mr Hansen's version of his dealings with Ms Reilly and this matter as a matter of urgency.
The reply that was received was as follows:
We refer to your letter of 14 August 2012.
We note your Don Shaddick left a message for our David Hansen on 9 August 2012. That telephone call was returned by Mr Hansen on that day and a message was left for Mr Shaddick.
Please be advised Ms Reilly first approached our firm on 27 October 2011. On that occasion Mr Hansen was handed the bundle of documents a copy of which we have forwarded to you. Ms Reilly requested that Mr Hansen consider the papers and give her a call.
On 28 October 2011, Mr Hansen telephoned Ms Reilly to discuss the matter. On 31 October 2011, in accordance with Ms Reilly's instructions, Mr Hansen telephoned Elizabeth Fleming and Associates and R & M Legal.
On 31 October 2011, Mr Hansen telephoned Ms Reilly again. On that occasion Ms Reilly instructed Mr Hansen that she did not wish to take any action and did not require our firm to act further on her behalf.
Since 31 October 2011, Mr Hansen has spoken with Ms Reilly on one occasion. This was a brief conversation on 26 June 2012 when Mr Hansen returned Ms Reilly's call.
Mr Hansen denies the words attributed to him.
It is apparent that there is an issue between Kerry Ann Reilly and David Hansen about whether or not she said she did not want him to take any action on 31 October 2011. I have not had the benefit of Mr Hansen giving evidence or being cross-examined about his response.
There is in evidence a report from a Dr Osman Qadri, a general practitioner, who indicates that Kerry Ann Reilly suffers from short-term memory loss (due to head trauma) and severe right knee chronic pain after a motor vehicle accident in 1981. The evidence shows that she did have the accident and unfortunately in that accident her daughter was killed. There is thus support for the claim regarding the applicant's inability to deal with matters.
There is also a discussion between the applicant and her brother Graeme Douglas Reilly at the deceased's funeral, which Kerry Ann Reilly attended.
Absent the medical evidence, I would have difficulty accepting Kerry Ann Reilly's evidence about the reasons why she did nothing in the face of all the documents with which she was served.
The medical evidence is specific and fully supports her claim. In these circumstances there is an explanation for the failure to make a claim.
Whether the applicant's claim is likely to succeed
This requires some discussion of the nature of the estate and claims made by the existing applicants for provisions. The estate consisted of the following:
Property at Blacktown valued at $330,000.00
Money in the bank $161,947.00
Property at Booral, Qld valued at $500,000.00
It should be noted that in Graeme's claim, he also makes a claim that the property in Queensland in which he has lived and improved since 1992 was held on trust by the estate of the deceased for him. If he succeeds in that claim then the estate will be reduced by at least $500,000.00.
The defendant in Graeme's proceedings was Anjala Devi Reilly, who was the deceased's widow. Apparently, she married the deceased on 29 December 1994, but this fact was never communicated by the deceased to Graeme Reilly.
Anjala has a Newstart pension of $590.00 per fortnight. She has a small amount of cash and lives in her son's unit. She pays him a $100.00 a week rent when she can afford it; otherwise, her expenses consume all her income from her pension. Anjala worked for most of the time when she was married to the deceased.
I turn to the situation of Graeme. Graeme is 50 years of age and married with two children, who are dependant upon him. His wife does not work and he has been working as a casual draftsman for the last three years. His income in 2007 was $21,868.00 and in 2008 was $14,058.00. He says that their current income per month is $1,620.00 and that his expenses use all this income.
He of course lives in the Queensland property of the deceased, which was constructed by the deceased from his own resources. Apparently, there are outstanding rates and electricity charges for the property of $16,000.00.
Debra Jan Farrow is 49 years old and married and lives in rented accommodation at Ulladulla. She and her husband have little assets being furniture and household equipment, jewellery, and money in the bank totalling $4,570.00. Their superannuation is $32,000.00 and they have a car worth $4,000.00. They have liabilities of $7,542.82. Debra receives a disability pension of $348.00 per week and her husband normally receives $600.00 per week as an excavator operator, but recently this has dropped to $450.00 gross per week. They can barely meet their expenses.
Debra is a very unwell woman, she has the following conditions:
a) The Auto-immune disease, mesentic panniculitis;
b) She has had four (4) heart attacks since 2005;
c) She has osteonecrosis in both knees requiring both knees to be replaced;
d) She has a 1.5 cm fast growing cancer on her left leg;
e) She has a chronic lung disease, chronic obstructive pulmonary disease (COPD); and
f) Investigation to be carried out at Shoalhaven District Memorial Hospital on 4 June 2012 in relation to suspected growths on her bowel and stomach.
Naturally, she cannot work and gives the following evidence about her medical conditions:
a) The Auto-immune disease, mesentic panniculitis - the doctors have told me that they do not know how to treat this disease, I have been told by my doctors that the other conditions may have come about as a result of the mesentic panniculitis;
b) Heart attacks - I take medication daily for my heart. My doctors are presently monitoring my heart condition;
c) The osteonecrosis in both knees is a result of the steroids prescribed to me as treatment for the mesentic panniculitis. I will have to have both knees replaced in the near future. I take four (4) different medications on a daily basis for chronic pain. I am under the care of Professor Webster, a chronic pain specialist;
d) I am to undergo surgery in early June 2012 for the removal of the 1.5 cm fast growing cancer on my left leg. This will require at least six (6) days admission to hospital however my doctor has indicated that he anticipates that there will be a problem with the skin grafts, which will require an extended stay in hospital;
e) Chronic obstructive pulmonary disease (COPD) - I use two (2) prescription inhalers on a daily basis and a further inhaler when required. I am required to have a Pneumovax as well as a flu vaccination every year. On the occasions of moderate attacks I am required to take a course of steroids (prednisolone) and antibiotics. This disease prevents me from undertaking normal daily activities including dressing and bathing myself; and
f) Suspected growths on my bowel and stomach - I am to be admitted to Shoalhaven District Memorial Hospital in June for investigative scope of my bowel and stomach as a result of suspected growths on those organs.
I understand that I am likely to require surgery in the future, in relation to my knees within the two (2) years. I am to undergo surgery on 4 June 2012 in relation to the cancer on my leg. I am required to regularly attend on my specialists and am not able to recover all of those costs from Medicare. The annual cost to me is approximately $500.00. The costs of the surgery will be covered by Medicare. Without those costs being covered I do not know how I would be able to afford the surgery.
I turn to the situation of Kerry Ann Reilly. She is 54 years of age and lives with her partner Greg Nowland. She has little assets or liabilities, her income being a pension and carer allowance of $1,480.20 per month, which is taken up by her expenses. She lives in public housing conducted by Wentworth Housing. Apart from her short-term memory loss, she may need an operation on her right knee and she suffers from asthma.
It should be noted that both Debra and Graeme had a good relationship with their father throughout their adult lives, but in contrast Kerry left home following an argument with her father in 1987, when she was 19 years of age. She rarely saw him between then and his death.
Plainly all the potential beneficiaries being three children and the deceased's wife have potential claims against the estate of the deceased. However, one might think that the widow's claim is more likely to take a greater share of the estate. In addition, there is the chance that Kerry's claim may be reduced because of her estrangement from the deceased. It has to be appreciated that because of the previous hearing of the two matters substantial costs have been involved. These amount to $210,487.00 for the widow and the two children claimants. If one deducts this from the NSW estate and, in the event that Graeme's claim succeeds if the matter is run again, there might be very little left from the NSW estate leading only to an award in favour of the widow. If Graeme's claim fails then there is only a modest estate.
Prejudice
There is a serious risk of prejudice in these proceedings. This is because of the amount of costs incurred to date and the effect any further re-hearing of the matters will have and the additional costs thus involved. Given that there are three plaintiffs and a defendant claiming, it could be expected that the additional costs would be in the order of $150,000.00
There has been suggestions that if Kerry is allowed to bring the claim out of time then these additional costs should come from an award made in favour of Kerry Ann Reilly. Such an order may not necessarily overcome the prejudice. The reason for this is, if the estate does not include the Queensland property it would be unlikely that Kerry Ann Reilly would receive any order. If the estate includes the Queensland property it would be unlikely, given the widow's position, that she would recover an award exceeding $150,000.00. Plainly, if she does not recover that amount then there is no chance of her meeting the short-fall given her financial circumstances.
In these circumstances, it seems to me that the prejudice to the other beneficiaries is so substantial that I should refuse the extension of time.
There is also the question of whether she may have recourse against Mr Hansen. Her approach to him was probably well after the expiration of the period for making a claim, but she would have then had a far better chance of getting an extension because proceedings would have been commenced well before the expenses at the trial were incurred.
The success of a claim against Mr Hansen cannot be predicted because there is a factual dispute to be resolved. Accordingly, I would not place any weight on the claims of success in forming my view. I will therefore base my decision on the prejudice to which I have referred.
I dismiss the motion of 15 August 2012 with costs.
Decision last updated: 15 October 2012
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