Fillingham v Harrison and Carrette
[2012] NSWSC 1145
•05 October 2012
Supreme Court
New South Wales
Medium Neutral Citation: FILLINGHAM v HARRISON & CARRETTE [2012] NSWSC 1145 Hearing dates: 19 September 2012 Decision date: 05 October 2012 Jurisdiction: Equity Division Before: Associate Justice Macready Decision: (1)That the plaintiff receive a legacy out of the estate of the deceased in the sum of $125,000.00;
(2)The plaintiff's costs on the ordinary basis and the defendants' costs on the indemnity basis be paid or retained out of the estate of the deceased;
(3)Interest is to run at the rate provided for under the Probate and Administration Act from one month from the date of these orders;
(4)Exhibits may be returned subject to the solicitors' undertaking to retain them for the appeal period.
Catchwords: WILLS AND ESTATES - family provision claim - competing claims or interests - contributions by the plaintiff - obligations owed by the deceased - relationship with the deceased - deceased's children joint beneficiaries - deceased and plaintiff separated for some years - whether informal property settlement at time of separation - whether deceased had a moral obligation towards the plaintiff Legislation Cited: Succession Act 2006 NSW
Family Provision Act 1982 NSWCases Cited: D'Albora v D'Albora [1999] NSWSC 468
Scott v Scott [2009] NSWSC 567
Singer v Berghouse [1994] HCA 40; (1994) 181 CLR 201
Bosch v Perpetual Trustee Co Limited [1938] AC 463
Ellis v Leeder [1951] HCA 44; (1951) 82 CLR 645
O'Shaughnessy v Mantle (1986) 7 NSWLR 142
Andrew v Andrew [2012] NSWCA 308Category: Principal judgment Parties: Lisa Louise FILLINGHAM (Plaintiff)
Jodie-Ann HARRISON (1st Defendant)
Henriette CARRETTE (2nd Defendant)Representation: L Ellison SC (Plaintiff)
R D Wilson (Defendants)
Butlers Will Dispute Lawyers (Plaintiff)
Brazel Moore Lawyers (Defendants)
File Number(s): 2011/340055
Judgment
This is a hearing for an application pursuant to the Succession Act 2006 NSW in respect of the Estate of the late Peter Stanley Carrette, who died between 20 and 22 November 2010 aged 63 years. He was survived by his widow, who is the plaintiff, two children, and former wives.
The reading of the last will and testament of the deceased
The deceased made his last will on 20 August 2007 and under that will he appoint the defendants, who are his second and third wives as the executrixes. He gave his estate to his two children, David Moar and Madison Carrette in equal shares. He made no provision for the plaintiff.
Assets in the estate
The deceased was a well known professional photographer and a substantial part of his estate was his photographic collection, which was sold for $425,000.00. The amount of the estate was, disregarding distributions that have been made a sum of $522,487.00. There have been interim distributions made to David Moar in the sum of $10,100.00 and to Madison Carrette in the sum of $243,484.00. The remaining balance of the estate is the sum of $268,903.
The defendants' costs are $86,900.00, which $26,637.00 has been paid leaving $60,263.00 unpaid. The plaintiff's costs are $85,000 on an indemnity basis or $64,000.00 on the ordinary basis.
Family History
The deceased was born in August 1947. He was first married to Mary Moar and from that relationship they had a son, David Moar, who was born in January 1966. The deceased divorced Mary Moar during the 1960s. The deceased was next married to Henriette Carrette, the second defendant, on 10 July 1983 and they were divorced on 16 June 1990. The deceased next married Jodie-Ann Harrison, the first defendant, on 24 December 1991 and they had a daughter, Madison Carrette, who was born in June 1992. The deceased and Jodie-Ann Harrison were divorced in 1995.
The plaintiff, Lisa Fillingham, came to Australia from England in September 1997 and met the deceased. They were married on 18 November 1998 and they separated in May 2004. The reasons for separation included the deceased's drinking and drug taking causing friction between them. After separation apprehended violence orders were taken out by the plaintiff against the deceased in September 2004 and January 2005. As I have mentioned, the deceased made his will on 20 August 2007. In October 2008, the plaintiff went to Barbados and remained there until 2010.
Although the deceased signed a divorce application on 4 April 2010, it was not filed before his death between 20 and 22 November 2010.
Eligibility
As the plaintiff was still married to the deceased at the date of his death, she is an eligible person. It was suggested that the arrangement made at the time of the separation amounted to an informal property settlement and as a result, the submission was that the plaintiff was not owed any moral duty having regard to that property settlement.
Justice Ward summarised some of the authorities in this area in Scott v Scott [2009] NSWSC 567. At paragraphs 130 to 141, she said the following:
"130 In Dijkhuijs (formerly Coney) v Barclay (1988) 13 NSWLR 639, Kirby P noted the public policy underlying the finality of settlements of property disputes and agreed with what had been said by Young J (as his Honour then was) in O'Shaughnessy v Mantle (1986) 7 NSWLR 142 (at 149) that in most cases the achievement of a final property settlement in the Family Court would be seen by the parties, in current social circumstances, as terminating any moral claim of a former spouse to provision in the will of the other. Kirby P noted (at 652) nevertheless that:
[P]ublic policy, important though it is, must adapt itself to the new provisions of the Act, with its reforming inclusion of a specific entitlement of a former spouse to claim. That provision contemplates there will be cases where such a claim will succeed, notwithstanding the public policy [of finality of property settlement].
131 Similarly, in Dijkhuijs' case, Mahoney JA said that it was inherent in the Family Provision legislation that, special cases apart, an order was only to be made if the deceased had defaulted in the performance of a duty which he owed to the particular plaintiff. His Honour said (at 657):
That does not mean that, if the plaintiff establishes a financial need within the section and if on taking into account the consideration referred to in s 9(2) (the discretionary considerations) there be nothing to the contrary, an order must be made. The statute assumes that the deceased, in what he has done during his life and by his will, has failed to discharge a duty which he owed to the plaintiff (the moral duty). Thus, a plaintiff may be a former spouse who, on dissolution of the marriage, received what on any view she was entitled to have and there may have been no further relationship between them so that none of the factors in s 9(3)(a) to s 9(3)(c), are of relevance. But, at the deceased's death, she may have a financial need. In such circumstances, the fact that the plaintiff has established that she was a former spouse and has a financial need would not, as such, entitle her to an order. It would be necessary for her to establish that, in some way or because of circumstances within s 9(3)(d), the deceased had a duty to her which involved that he should have provided for her financial need (my emphasis).
132 In Smith v Smith [1986] HCA 36; (1986) 161 CLR 217, however, the High Court pointed out that there was a very real difference between settling financial affairs between living persons under the Family Law Act and the position of persons entitled to make an application under a statute such as the Family Provision Act.
133 Bryson J in Mulcahy v Weldon [2001] NSWSC 474 noted (at [22]), "According to general community standards a former spouse who has been accorded all rights under a property settlement and does not have any continuing entitlement to maintenance, adjudicated or not, is not generally regarded as a natural object of testamentary recognition. Although such testamentary recognition does occur, it is, in my understanding, regarded as altogether exceptional and remarkable when it occurs".
134 In Ernst v Mowbray [2004] NSWSC 1140, Young CJ in Eq (as his Honour then was) considered what he had said in O'Shaughnessy v Mantle in relation to the effect of the Family Law Act on an application by a divorced spouse. His Honour noted (at [32]) that the ex-spouse might obtain an order under "limited circumstances" under the Family Provision Act such as where the parties had not finally settled all their property dealings at the time of the divorce or where there was continued financial dependency after the divorce.
135 Here, no final property settlement orders were made, nor was there a binding financial agreement for the purposes of the Family Law Act. The parties were not divorced. Nevertheless, accepting that financial need of some degree is established by Mrs Scott, the question still remains what would be regarded as adequate provision for her in all the circumstances. Those circumstances must take into account both the fact of her separation from the deceased and the fact that, as between themselves, a division of their assets appears to have already been effected (albeit predicated on a 50:50 basis for all assets, as opposed to the 75:25 split required (in the absence of particular agreement) for the Long Jetty property).
136 What then is the position of a spouse, separated from her husband, in circumstances where an informal division of assets has taken place and where it would seem the marital relationship is to all intents and purposes at an end?
137 Considering the above authorities, it seems to me that, while Mrs Scott remained the deceased's wife even after their separation, and hence was a person for whom the community might expect the deceased to have made some provision for her continued support and maintenance in life (in recognition of the long marriage and her contribution to the building up of their joint assets and to his welfare in life), the community might also consider that a testator in the deceased's position had done "the right thing" by effecting an amicable division of their assets prior to his death and had limited, if any, further moral duty to support his widow.
138 In Kalmar v Kalmar [2006] NSWSC 437, White J noted (at [50]) that the bond of matrimony, prima facie, gave rise to a testamentary obligation, citing Re Clissold (deceased) [1970] 2 NSWR 619 at 621, and that it could not be assumed that that obligation would come to an end on the parties separating without their being divorced at least where there had been no disentitling conduct by the claimant (again citing Re Clissold, as well as Re Mercer deceased [1977] 1 NZLR 469 at 472-473 which had been cited with approval in Palmer v Dolman [2004] NSWCA 361 at [118]).
139 In Armstrong v Sloan [2002] VSC 229, Harper J in the Supreme Court of Victoria, noted (at [43]) that:
[A]rrangements made by a husband during his lifetime which on his death leave his widow in comfortable financial circumstances would ordinarily discharge his moral duty to make in his will adequate provision for her proper maintenance and support. That would (again, generally speaking) only not be so if, although comfortable, her circumstances did not allow her as a widow to maintain a standard of living comparable to that which she enjoyed as a wife.
140 His Honour noted that a settlement reached under the Family Law Act does not necessarily preclude a claim by a former spouse for family provision but that in those circumstances different considerations come into play.
141 In Armstrong v Sloan, Harper J considered that Mrs Armstrong's position was as close to that of a divorcee as could be in the absence of a divorce. There, his Honour considered that Mrs Armstrong was not left by the deceased without adequate provision for her proper maintenance and support but that, if she was, he would have exercised his discretion against the claim for further provision stating (at [56]) that 'by giving effect to the settlement, Mr Anderson discharged his moral duty to his wife, and thereby removed the "legislative justification to abridge freedom of testation': Grey v Harrison [1997] 2 VR 359 at 365 per Callaway JA."
What was said by Young J in O'Shaughnessy v Mantle [1986] 7 NSWLR 142 at 147-8 was as follows:
"Whilst again emphasising that this list is non-exhaustive and is no more than guidelines, it would seem to me that the following cases would clearly be ones where there would be factors warranting the court considering the application:
(1) Except where the Family Court itself gives relief, cases where there has been a divorce and a spouse has died before property matters have been resolved by the Family Court;
(2) Cases where the husband and wife have not finally settled all their property dealings at the time of the divorce;
(3) Cases where maintenance was being paid to the ex-spouse as at the date of the deceased's death and the orders for maintenance were inadequate to provide for the ex-spouse after death of the paying spouse;
(4) Cases where despite the divorce there was some dependency on the deceased as at the date of death. An example of this would be where some years after the divorce the present plaintiff fell grievously ill and because of a residue of affection the now deceased spouse provided moneys for medical treatment or living expenses."
It was submitted that when the deceased and plaintiff separated in May 2004 they entered into an informal property settlement by which the deceased agreed to give to the plaintiff the following:
(a) Airfare to London$2,600
(b) A redesign of her ring$2,200
(c) From his St George Bank Account$5,000
(d) 15" Apple Laptop$5,300
(e) Nikon D 100 Camera$4,100
(f) Nikon AF 20-200 Lens$3,298
It was also noted that the deceased in correspondence at the date of separation referred to the fact that he gave the plaintiff gold, diamonds, and rubies worth $30,000.00 together with a Jaguar car during their relationship.
There is no doubt that the deceased paid for the plaintiff's airfare to return to London after the separation of $2,600.00. The payment for the redesign of her ring had actually occurred during the relationship. The payment of the $5,000.00 was a payment on account for commission due to the plaintiff. The computer referred to was given to the plaintiff, but it was not a laptop, it was a desktop model. The Nikon camera and lens were also given to the plaintiff, but they had been in use for some years and were not new.
So far as jewellery the plaintiff's position was that she did receive some rubies, which were presently with her brother, who had them appraised and valued for 800 pounds-sterling. Other than that there is no other substantial items. I accept the plaintiff's evidence on this aspect. There also seems that there was a car given during the course of the relationship, but that seems somewhat separated from what might have been a property settlement after separation.
However, in order to consider the submission it is necessary to see what was the situation with the parties and their assets as at the time of separation. The plaintiff and the deceased carried on the photography business through a company called Icon Images Pty Ltd. That company was acquired as Shelf Company in 2001. The plaintiff was appointed a director on 25 June 2002 and she remained in that position until 27 February 2006.
The plaintiff after the marriage of the deceased worked within this business and took an active role in converting the deceased's business from film to digital. The plaintiff also set up appropriate systems, which would enable better sales of the deceased's collection. This involved her scanning many old photographs, which were still of value and indexing them in a library allowing them to be accessed over the Internet. Although she did not scan the whole of the deceased's library, she did scan many thousands of images and converted them to this new medium as a means of helping the business.
Although the plaintiff did all the bookkeeping for the business, it was the deceased, who controlled the money. They normally each drew about $1,400.00 each month from the business. As a result of this work and of course the deceased's photography, the business grew and between 2002 and 2004 there was sufficient money to enable the plaintiff and the deceased to have holidays to various locations around the world. The success of the business at the time before separation is borne out by a number of items of evidence. The tax return for the company 30 June 2003 shows a turnover of $375,597.00 and the taxable profit, after allowing for wages paid and depreciation of $26,718.00 was $21,768.00. In the year ended 30 June 2004 the turnover was $517,266.00 and after payment of wages and depreciation of $31,817.00 the profit was $49,422.00. In 2004 the company's bank account consistently had a balance in excess of $100,000.00 up until May that year. For the previous year 2003, the balance was normally in excess of $66,000.00.
All this indicates that the business was going well and one would anticipate that, given the role played by the plaintiff in the business, any property settlement, which might have been ordered by the court after separation would not have been minimal. One would have expected it would be in excess of $50,000.00. Putting to one-side matters that occurred during the relationship the benefits given by the deceased to the plaintiff after separation total at most $15,298.00.
Having regard to these matters, I do not think one could regard the parties as having an informal property settlement such that there is no longer any moral duty owing to the plaintiff.
In applications under the Family Provision Act the High Court in Singer v Berghouse (1994) 181 CLR 201 has set out the two-stage approach that a court must take. These comments were equally applicable to claims under the Succession Act. 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 'proper' and the interrelationship which exists between 'adequate provision' and 'proper maintenance' etc were explained in Bosch v Perpetual Trustee Co Ltd. The determination of the first stage in the two-stage process calls for an assessment of whether the provision (if any) made was inadequate for 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."
However, as a result of Andrew v Andrew [2012] NSWCA 308 the situation is, somewhat different. In that case, Barrett JA said that the two stage approach adapted under the Family Provision Act still applied to claims under the Succession Act. Basten JA held that a two stage approach was not necessary. The President thought it was an analytical question of little consequence. In the circumstances of this uncertainty, I will consider it on both bases.
The plaintiff's situation in life
The plaintiff is 37 years of age and lives with her partner, Ronald Mann, who is aged 65 years. They have no children. The plaintiff and her partner live in rented accommodation and her only assets apart from personal assets consist of superannuation of $1,007.00 and cash of a little over $11,000.00. Her partner has a bank account with some $650.00 in it and he owes his former wife a sum of $369,137.00.
The plaintiff is employed at a men's clothing shop as a cluster manager earning $22.50 per hour. This gives her an income of $33,488.00 per annum and her expenses are $49,556.00. The difference is made up by cash contributions from her partner's mother. Her partner has some causal work as a retail sales assistant and last year his taxable income was $5,954.00. He will soon receive the age pension.
The relationship between the plaintiff and the deceased initially progressed well; however, by 2004 the deceased's drinking and drug use became so great that there were constant arguments and ultimately the plaintiff left the relationship. At the time she did she formed a relationship with another photographer who was in opposition to the deceased in business. This apparently caused great hurt to the deceased.
There is evidence of the deceased's disappointment at the outcome of the marriage and there were some evidence from the deceased that he himself recognized that he had contributed to the separation by his failure as a husband.
And I have mentioned before the plaintiff did receive some benefits during the marriage, not only just the rubies to which I referred. The Jaguar car was used by her and owned by the company. The deceased had his own Chevrolet, which had been renovated at the cost of some $30,000.00. About two years before the end of the relationship, the Jaguar's engine blew up and it was sold to a panel beater. However, I previously mentioned that the plaintiff had worked in the business and helped build it up. Although she did not convert all of the deceased's photo collection, she did substantial work in this area and spent the whole of her time during the relationship working in the business.
It is necessary to see the situation in life of others having a claim on the bounty of the deceased. In this case, it is the deceased's two children as none of his former wives make any claims for benefits from his estate.
Situation in Life of David Peter Moar
David is 46 years of age and lives by himself. He has two children, who do not live with him in his rented apartment in Woolloomooloo. David's assets are savings of $6,000.00 and household contents of $15,000.00. He has no liabilities. He works as a storeman with a gross income of $48,000.00 per annum. His rent uses $14,400.00 per annum and he is in somewhat straightened circumstances on a very modest income.
David had very limited contact with his father, who lived in Europe and America for much of his early childhood. Once the deceased started living in Bondi with Jodie-Ann Harrison, he began to see him regularly and spent time with him. Although he was married, David separated from his wife in 1995. After separation, David lived with his father and was supported by him. At the deceased's initiative, David attended a TAFE photography course and he is still engaged as a part-time student. He wishes to use any funds he receives from the estate to complete those studies and possibly put a deposit on some real estate.
Situation in Life of Madison Carrette
Madison is 20 years of age and lives with her mother Jodie-Ann Harrison and her stepfather in Hampton East Victoria. This is a home purchased for $750,000.00, which is held in the joint names of Madison and her mother. Part of the distribution to Madison of $243,484.00, which I referred to earlier was used as a deposit for the purchase of this home. After purchase the home was renovated at a cost of $50,000.00 and Madison estimates her half share is worth $400,000.00. She has some personal items such as computer equipment and a small amount of savings. She also has the Chevrolet that used to be owned by her father and she now values it at $11,000.00. She has liabilities to her mother and of course, she owes the mortgage on the property a half share of, which is $200,000.00.
Madison is in good health and works in a number of casual part-time jobs, earning approximately $500.00 net per week.
Its plain that Madison had a good relationship with her father and after her parents separated in 1995 and up until 2001 she lived half the time with her father and half the time with her mother. Thereafter, she and her mother moved to Melbourne, but she still kept contact with him by phone and visited him on holidays.
Discussions
It is necessary to see how the plaintiff said she had been left without adequate and proper provision for her maintenance, education, and advancement in life. The plaintiff suggests that as her partner's car is 24 years old, she would like to buy a reliable car to last for some time. An appropriate amount would be an expenditure of $25,000.00 on a Toyota. She also wishes to get back into photography and wants to obtain some fast camera equipment suitable for taking sports photographs. The cost of such equipment would be $12,500.00. She realizes that she cannot afford to buy property at the moment because of her low income, but as she has no superannuation and very little savings, she would like to have a lump sum to cover future contingencies in life. She asked for an award of a legacy of $200,000.00.
It will be recalled that there has been a number of distributions and importantly a large distribution to Madison.
The evidence before me does not show that such distributions fall within the terms of s 94(1) of the Succession Act and would thus be protected.
Notice of the plaintiff's intention to lodge a claim pursuant to Act was given by her solicitor to the executors on 18 April 2011. The grant was made on 10 May 2011 and distribution was commenced shortly thereafter. The notice of intention to make a claim was made pursuant to s 93 of the Succession Act, in accordance with its requirements. Accordingly, there is no protection accorded in respect of the distribution by the Act. The executors will have a personal liability for any order to the extent that the estate is not sufficient. See D'Albora v D'Albora [1999] NSWSC 468. Subject to the safeguards in the Act concerning designation of notional estate, the property owned by Madison and her mother in Victoria is liable to be designated as notional estate to meet any order.
Arguably, the first question is whether she has been left with inadequate provision. The relationship between the parties was only for 6 years. The plaintiff did contribute to building up some of the estate of the deceased. She worked in his business although they both were paid a modest wage from the business. The situation of David Moar is not good. He exists on a very low wage and has little prospects before him. Madison is in a different situation as she is at the start of her life. She does have some needs although these have been substantially satisfied by the distribution to her.
Given there was no provision for the plaintiff the first stage has been satisfied. The second stage or alternatively an overall consideration of the discretionary factors leads me to the view that some provision should be made for the plaintiff.
The estate is not a large one and in my view an appropriate legacy for the plaintiff is the sum of $125,000.00. In these circumstances questions of notional estate do not arise and the adjustment between the beneficiaries will be a matter for the executors.
The orders that I make are as follows:
(1) That the plaintiff receive a legacy out of the estate of the deceased in the sum of $125,000.00;
(2) The plaintiff's costs on the ordinary basis and the defendants' costs on the indemnity basis be paid or retained out of the estate of the deceased;
(3) Interest is to run at the rate provided for under the Probate and Administration Act from one month from the date of these orders;
(4) Exhibits may be returned subject to the solicitors' undertaking to retain them for the appeal period.
Decision last updated: 05 October 2012
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