Forsythe v Rae

[2005] NSWSC 979

CITATION:	Forsythe v Rae [2005] NSWSC 979
HEARING DATE(S):	27/09/05
JUDGMENT DATE :	28 September 2005
JURISDICTION:	Equity Division
JUDGMENT OF:	Associate Justice Macready at 1
DECISION:	Paragraph 66

CATCHWORDS:	Family Provision. Application by three children of deceased's first marriage. Estate passes to de facto partner of 16 years. Orders for legacies in favour of plaintiffs.
PARTIES:	Danielle Julie Forsythe & 2 Ors v Rebecca Ruth Rae (Estate of Daniel John Maher)
FILE NUMBER(S):	SC 5705 of 2004
COUNSEL:	Mr B. Kinsella for plaintiffs Mr P. O'Loughlin for defendant
SOLICITORS:	B.L. Crane & Associates for plaintiff John B. Gray for defendant

LOWER COURT JURISDICTION:

- 1 -

THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

ASSOCIATE JUSTICE MACREADY

WEDNESDAY 28 SEPTEMBER 2005

5705/04 - DANIELLE J FORSYTHE & ORS v REBECCA RUTH RAE
(ESTATE OF LATE DANIEL JOHN MAHER)

JUDGMENT

1 HIS HONOUR: This is an application under the Family Provision Act in respect of the estate of the late Daniel John Maher who died on 18 September 2003. He was survived by his partner, the defendant, his former wife, and his three children of his first marriage who are the plaintiffs in the action.

2 Notice of the proceedings has been given, inter alia, to his former wife and she makes no claim.

LAST WILL OF THE DECEASED

3 The deceased made his last will on 26 February 2002. In the events which have happened the whole estate passes to the defendant, Rebecca Rae, and she was appointed executor and trustee.

ASSETS IN THE ESTATE

4 The main asset of the deceased was seventy-five shares in a company called Noramas Pty Limited which owned the freehold of the Australian Hotel in Redfern Street, Cowra. That hotel is leased to 2007 and at the moment produces an income stream from that lease. The deceased’s interest in respect of that hotel is valued at $1,125,000. He also owned a Nissan Pulsar motor car which has been sold for $9,300.

5 The deceased also owned jointly with his partner the following properties:

(a) 226 Ellesmere Avenue, Gymea Bay valued at the date of death at $850,000.
(b) Contents of the Gymea property $20,000.
(c) Joint savings in the sum of $24,480.
(d) A Nissan Patrol motor vehicle valued at $30,000.

6 These jointly owned assets have been transferred to Rebecca Rae and the property at Gymea Bay is now worth $750,000.

7 Costs have been incurred in the matter, the plaintiff in the sum of $39,031 and those of the defendant in the sum of $57,542.

FAMILY HISTORY

8 The defendant, Rebecca Rae, was born on 3 August 1946. The evidence does not disclose when the deceased and his first wife Kerry were married but they had three children, Danielle who was born on 29 March 1971, Kylie born on 22 April 1972 and Matthew born on 8 April 1974.

9 On 14 February 1981 the deceased, Kerry, his then wife, Rebecca and her then husband settled the purchase of the Australian Hotel at Cowra. The purchase price was $177,500 for the business and each apparently contributed $88,750. Unfortunately in August 1982 Rebecca and her husband separated and her husband’s share was purchased by the deceased and his then wife, Kerry, for about $40,000.

10 In 1983 the evidence suggests that the deceased and Rebecca commenced a relationship, although all three parties were then working in the hotel. In February 1987 the company Noramas Pty Limited was incorporated. The deceased had seventy-five shares and, shortly thereafter, twenty-five shares were allotted to Rebecca Rae. At this time the deceased and his wife separated.

11 The purpose of incorporating the company was to enable it to acquire the freehold of the property on which the hotel stood in July 1987. It was purchased for $490,000 plus $13,500 for some adjoining land. The company then leased this to the partnership that was carrying on the hotel.

12 In July 1989 there were consent orders in the Family Court in respect of the property arrangement between the deceased and his former wife, Kerry, and she was paid $85,000 in exchange for her interest in the lease and the partnership.

13 The hotel business continued on being run by the deceased and Rebecca and on 13 February 1990 the company sold the business to a company by the name of Essich Pty Limited for $445,000 plus stock of $25,000. At the same time a lease for 16 years was granted over the hotel.

14 At about this time the deceased and Rebecca Rae moved to Sydney and in August 1990 the deceased and Rebecca in their joint names purchased the Town & Country Hotel at St Peters, the purchase price being $803,000 plus stock and the total borrowings were $580,000. Naturally the deceased and Rebecca Rae gave personal guarantees.

15 In 1992 an investment unit as purchased at Manly for $230,000 but that was sold the following year at a profit of some $80,000. In April 1993 there was a falling out and a violent incident between Matthew and Rebecca following Kylie’s 21st birthday party. That soured relations between them.

16 In May 1993 the deceased and Rebecca in joint names purchased a property at 149 Arcadia Avenue, Gymea for $335,000, of which they borrowed $250,000. In September 1993 the hotel at St Peters was sold for $980,000. A month or so later in November 1993 the deceased was diagnosed with cancer from which he continued to suffer for the next ten years.

17 In October 1994 the deceased and Rebecca bought a paper shop at Botany for $650,000 of which $500,000 was borrowed. The deceased had an operation for his cancer in 1995 and took no part in the newsagency thereafter.

18 In 1995, somewhat fortunately for the parties, there was a default in respect of the lease of the Cowra hotel. A sum of $581,538.84 was received as a result of that default, which was substantially used to pay off the borrowings of the company when it purchased land.

19 A new lease was entered into in August 1995 for twelve years to another operator of the hotel.

20 At about this time Kylie commenced working at the newsagency which had been purchased and she had in fact at one stage contributed $30,000 to that purchase. These funds were in due course repaid.

21 In May 1997 the property at Arcadia Avenue, Gymea was sold for $420,000 and in June the present property of the defendant at 266 Ellesmere Road, Gymea Bay was purchased for $365,000 but there were borrowings of $380,000.

22 Kylie married her husband Dean in April 1999 and in October she ceased to work at the newsagency after the birth of a child. The newsagency was sold in April 2001 for $600,000. At that stage the deceased paid to Kylie $150,000 which she used as a deposit on the purchase of a property.

23 In March 2002 the deceased and Rebecca commenced a trip around Australia but unfortunately the deceased’s illness prevented that being completed and they returned home and the deceased died, as I have said, on 18 September 2003.

24 Probate was granted in due course and the proceedings were commenced in time.

25 It is plain that all the plaintiffs are eligible persons.

26 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. At p 209 the Court said:

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

27 I turn to consider the situation in life of each of the plaintiffs as indicated by the High Court.

DANIELLE FORSYTHE

28 Danielle is thirty-four years of age and married. She is expecting a child in November. She has a child from a previous relationship who lives with its father, for which she pays child support of $21 a week. She and her husband live at Pimlico, a town some fifteen kilometres out of Lismore, on a property she and her husband bought in 2001 for $155,000. They currently owe $99,057 on their mortgage over the property. They each own a motor car the value of which does not appear in the evidence and they have credit card debts.

29 Danielle’s husband is a construction worker by occupation and he receives a net wage of about $750 per week. Danielle receives Austudy of $107 per week and some income from the Greyhound Racing Board of $75 per week. This is a total of $932 per week.

30 Their expenses, including mortgage payments, are estimated at $490 per week. This estimate does not cover items such as rates utilities and other charges, car expenses, other than petrol.

31 Danielle will be returning to complete her studies in the racing industry next year after the pregnancy. She previously obtained qualification as a para-legal but can find no useful employment in that area. Her qualifications also include child care but she has stopped that for the time being pending the birth of her child. Plainly she has some qualifications and will be able to return to productive employment in due course. At the present moment she and her husband face the prospect of further expenses with the arrival of the child.

32 Danielle remained with her father after her parents separated. She lived at the hotel in Cowra until she had almost completed schooling when she moved out to live with a friend. She says that she helped with cleaning the hotel for a year but this is denied by Rebecca. She moved away from Cowra but still kept in touch with her father who provided her with books for her studies, and purchased her a Mini-Minor motor car. Danielle takes anti-depressants but otherwise is in good health.

KYLIE NEWLOVE

33 Kylie Newlove is thirty-three years of age, married with three children aged five to fourteen years. Her husband has a child aged ten who occasionally spends time with them. Kylie and her husband own their home at Engadine, which was purchased in 2001 for $372,500. It is subject to a mortgage of $329,000.

34 Kylie is a social educator who has recently changed her employment at a handicapped centre from full time to part time twice a week. She earns $187 per week. Her husband is a truck driver who earns $500 a week. They receive a family allowance of $200 per week making their income $887 per week. They give no evidence of their expenditure over their mortgage payments of $500 per week. Clearly, life would be a struggle having regard to the children they have to support.

35 Initially, after her parents’ separated, Kylie lived with her mother but returned to Cowra where she lived with her father until he and Rebecca moved to Sydney. In due course she moved to the hotel at St Peters where she remained for one year and helped around the hotel.

36 She moved away when she had her first child but after that relationship failed she moved back to Sydney at the time the deceased and Rebecca purchased the newsagency. She initially lent them $30,000 to assist in that process and this was paid back in due course.

37 She lived with her baby in a unit above the newsagency. In 1999 she married her husband and he also lived at the unit. This accommodation, apart from the initial few payments, was provided without charge but Kylie also worked in the newsagency business and she was paid $250 a week initially and later $350 a week. It is to be noted she worked some long hours.

38 The work started early in the morning and she and Rebecca shared the work between them. The deceased was too ill at the time to do much work in the business.

39 The deceased had promised to give her something for her work and in due course, after the newsagency was sold, he gave her $150,000 which she used as a deposit on the purchase of a home. Kylie has some problems with blood pressure and depression but these are being adequately treated by medication. Otherwise she is in good health.

MATTHEW MAHER

40 Matthew is thirty-one years of age, single with no dependants. He lives at Broome in Western Australia where he works in pearl farming activities. He earns around about $600 a week after tax and lives in a backpackers hotel for which he pays $150 a week. Apart from $800 in the bank, he has no assets. He seems to have regular employment, which has been mainly as a labourer over the years.

41 He has done two years of his apprenticeship as a carpenter and joiner and needs to do a further year of study at TAFE to complete his qualification. He also has qualifications as a scaffolder and excavator. He lost his licence for a while but will regain it next year.

42 After his parents’ separation he moved away with his mother, mainly living in the north coast area. After leaving school he came to St Peters and lived there for a few years. He and Rebecca had a serious falling out. He then moved back north and the deceased did not see him very often. It seems he did see his father, particularly during the later years of his life. He apparently is in good health.

43 It is also necessary to consider the situation in life of others having a bounty on the deceased’s estate. The only person is Rebecca Rae.

REBECCA RAE

44 Rebecca Rae is fifty-nine years of age and recently has commenced a relationship with a friend who is now living with her in her home. They keep their finances separate. She has no responsibility for any dependant children, her children having grown up and moved away. She owns the following property:

(1) 266 Ellesmere Road, Gymea $750,000.
(2) Household contents $20,000.
(3) Her interest in Noramas Pty Limited $375,000.
(4) Bank accounts $43,500.
(5) A Nissan four wheel drive.

45 She has no liabilities.

46 Her income is from her part time work at the newsagency of $180 per week and income from Noramas Pty Limited of $800 per week. Her expenses she estimates at $855 per week.

47 Her partner owns his own unit and is now retired. He supports himself from his investments.

48 As is plain from the chronology, Rebecca and the deceased had a committed relationship together for sixteen years. She was jointly involved in all the deceased’s projects. In respect of the Australia Hotel she had her own one quarter share and worked equally with the deceased in that venture. She and the deceased were both involved in the purchase of the St Peters Hotel, the two properties at Gymea Bay, the investment unit at Manly and the newsagency.

49 The involvement was both as joint owner, joint borrower as well as being fully engaged in the enterprises themselves. Indeed, in respect of the newsagency it seemed Rebecca and Kylie bore the brunt of the necessary work. Importantly, Rebecca was the primary carer for the deceased over the years he was affected by his cancer. Rebecca appears to be in good health.

50 It is necessary to see how the plaintiffs say they have been left without adequate and proper provision for their maintenance, education and advancement in life. It is important that the plaintiffs appreciate in this case that the Court cannot make a judgment about what might be considered a fair provision or a just provision for a child who has been left out of a will by a deceased. The Statute does not allow that. It is only where they demonstrate they have been left without adequate and proper provision for their maintenance, education and advancement in life that the Court has power to make such a provision.

51 As has been pointed out in submissions, this is a matter which was not directly advanced in the plaintiffs’ affidavit evidence in any way. The Court is left with the task of drawing inferences from their circumstances as they appear in the evidence.

52 In this regard I am reminded by what was said by Sheller JA in the Court of Appeal on 25 July 2002 in Singer v. Berghouse:

“I must say that I find it extraordinary that the appellant presented scant or no evidence as to the present income and outgoings or as to her intentions or needs for the future, or as to what lump sump provision applying appropriate discount tables would be required to meet these claims or needs, if they existed. In my opinion, in the circumstances of this case, for the Court, in the absence of any such evidence, to make an order for the payment to the appellant of a lump sum is to do no more than act on speculation and, contrary to the prohibition contained in section 92(2) of the Act, to alter the deceased’s disposition of his property in the absence of proof that he has inadequately provided for the appellant.”

53 The evidence discloses that perhaps Danielle may need in the same way what her father used to provide in the past, some modest assistance for materials for further study. The amount of that, of course, is not quantified. She presents no evidence of income shortfall, but it is plain her expenses will increase with the birth of her child. Her husband’s income is not likely to increase substantially given his occupation. She will be out of the work force for sometime.

54 In those circumstances, if the estate were large enough, some provision would assist her in meeting these difficulties over the next few years. Once again, if it was appropriate in the case of this estate some provision for advancement in life would be appropriate in an effort to provide for a reduction in the mortgage which affects her day to day living.

55 So far as Kyle is concerned, her income will pick up in the future but the Court is in the dark as to what are the details of the difficulties which they face.

56 So far as advancement in life is concerned, they have an obvious need to reduce their mortgage and provide some relief for the very expensive process which is before them of bringing up a family of teenagers. She has had benefits in the past, the provision of accommodation, but that seems to have substantially been recognised by the deceased by his provision of the $150,000 which he did provide to her during his life time.

57 Matthew is a particular example of not suggesting any way in which he has been left without adequate provision. However, the circumstances of his life remind me in some way of the comments made by Bryson J in Martin v Parkes (1989) 7 NSWLR at 117. His Honour was talking there about the children, which the deceased had little to do with during their upbringing.

“The testator’s best opportunities to help them are past and cannot be recovered; those were his opportunities during their years of education and trade training. It cannot really be known what benefits they would have obtained from a few more years of schooling or more support during apprenticeships; but it is obvious ordinary human experience that even small assistance at early stages in life can transform a person’s economic opportunities later. None of the testator’s children had such assistance and none of them tormented himself with hopes of futile attempts to embark on academic study or anything but the most practical of training; as a result none of them can point to any specific schemes or hopes defeated by penury; it would have been pointless even to form such hopes. Although the best opportunities to help them in a fatherly way have long passed, each stands in need of provision which can serve to augment incomes and in a modest way to advance them in life, in three cases in their positions as social welfare recipients”.

58 Plainly something to support Matthew for a year or so so that he could complete his carpentry qualifications would be appropriate. Admittedly, he is happy in the way he is doing and he frankly admitted in the witness box he was happy doing that work. The proposed advancement is something which some funds would give him an opportunity. Even some small sum for advancement to help him to acquire something such as a car in due course may be appropriate if the size of the estate and the claims upon it justify it.

59 As I have said Rebecca has been the de facto partner of the deceased for some sixteen years.

60 In Marshall v Carruthers [2002] NSW CA 47 Hodgson JA had the following to say in respect of the provisions normally made in respect of de facto partners:

“The Master found that Ms Carruthers had a strong claim and I agree with that finding. However, the strength of a claim of a surviving partner does, in my opinion, vary with circumstances. Although the Family Provision Act does, in some respects equate de facto spouses with de jure spouses, this does not, in my opinion, meet the existence or otherwise of a marriage irrelevant. In my opinion, a formal and binding commitment to mutual support through good times and bad, other factors being equal, adds strength to a legitimate claim. In my opinion also, the strength of a claim can be affected by the length of a relationship and contributions to the relationship. One factor which may be particularly important in a claim by a woman is that a woman may have, to the detriment of her own financial prospects, taken a major role in raising the children of herself and the deceased.
The Master referred to the following statement of principle which appears in Luciano v Rosenblume [1985] 2 NSWLR 65 at 69:
‘It seems to me that, as a broad general rule, and in the absence of special circumstances, the duty of a testator to his widow is, to the extent to which his assets permit him to do so, to ensure that she is secure in her home, to ensure that she has an income sufficient to commit her to live in the style to which she is accustomed, and to provide her with a fund to enable her to meet any unforgiven contingencies.’
I do not think it is to be assumed that this statement is to apply in all cases, particularly where factors such as those I have mentioned, are absent. In my opinion, it is not clear that this statement would apply to applications by widowers. The difference in attitude that the Court make take to applications by widowers is due in part, I think, to economic disadvantages which women still face. One important aspect of this is the economic disadvantage occasioned by the greater responsibility which women often take in looking after children. That factor is of course absent here.”

61 As a result of her hard work with the deceased over the years she, Rebecca Rae, now has an unencumbered home, a car, savings, and a quarter share of the hotel at Cowra. The current rental of that hotel is $118,623 per annum which is $2,281 per week. She in her right is entitled to a quarter, which is $570 a week. Precisely how she gets $800 as appears in her evidence is not clear. Plainly there is a substantial weekly income to the estate which, if the will were upheld, would pass to her. This is not only a substantial income stream but it is also a very substantial capital asset worth in excess of $1,125,000.00.

62 It is said on Rebecca’s behalf there is no asset which can bear the imposition of any legacy, and there has been no demonstration in the evidence of her ability to borrow funds to provide some small legacies for the deceased’s children. However, I would infer that with the income stream from that hotel and its asset backing she could, if she wished to, borrow some modest funds rather than selling the hotel.

63 There is no doubt their relationship is not, as has been described in the authorities, a long relationship, but is one of medium length. However, both the deceased and Rebecca have been involved in bringing up children during part of the period of that relationship.

64 In part, the present assets stem from the success of the Australia Hotel and for part of the time, namely three years, it was the defendant and Rebecca solely who carried the burden of the business.

65 Plainly enough, Rebecca has made a very substantial contribution to the assets of the estate. However, it does seem to me there should be some modest provision for the children, notwithstanding that their case has been presented in a way which makes it somewhat difficult to fully judge the extent of the provision necessary.

66 In the circumstances, the orders that I make are:

1. I order that Danielle Forsythe receive a legacy out of the estate of the deceased in the sum of $100,000.
2. I order that Kylie Newlove receive a legacy out of the estate in the sum of $100,000.
3. I order that Matthew Maher receive a legacy out of the estate of $50,000.
4. I order the plaintiff’s costs on a party party basis, and the defendant’s on an indemnity basis, be paid or retained out of the estate of the deceased.
5. I order that interest on the legacies, if not paid within three months, will run at the rate provided for in the Wills, Probate & Administration Act as and from three months from the date hereof. The exhibits can be returned.

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