Guthrie v Hoy
[2004] NSWSC 361
•4 May 2004
CITATION: Guthrie & Anor v Hoy [2004] NSWSC 361 HEARING DATE(S): 27 April 2004 JUDGMENT DATE:
4 May 2004JUDGMENT OF: McDougall J at 1 DECISION: See para [40] of judgment CATCHWORDS: FAMILY PROVISION ACT - adult daughters' claim - no other eligible persons - no issue of principle LEGISLATION CITED: Family Provision Act 1982 PARTIES :
Denise Guthrie and Diana Graham (Plaintiffs)
Grant John Hoy (Defendant)FILE NUMBER(S): SC 2279/03 COUNSEL: M W Young (Plaintiffs)
A J Enright (Defendant)SOLICITORS: Lyons & Lyons (Plaintiffs)
Harris Hyde Page (Defendant)
IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
McDOUGALL J
4 May 2004
- GRANT JOHN HOY
(Estate of the late Ethel Evelyn Strickland)
JUDGMENT
HIS HONOUR:
Introduction
1 The plaintiffs (respectively “Mrs Guthrie” and “Mrs Graham”) are the daughters of the late Ethel Evelyn Strickland (“the deceased”). Mrs Guthrie is now aged 67 and Mrs Graham is now aged 72.
2 The deceased died on 12 January 2002. Probate of her will, dated 16 March 1999, was granted to the defendant on 10 December 2002.
3 The defendant is the youngest son of Mrs Guthrie’s first marriage (to Alan John Hoy).
4 The distributable estate of the deceased, allowing for the cost of these proceedings, is agreed to be approximately $825,000.
5 The deceased left the whole of her estate, after payment of debts, duties and expenses, upon trust “for such of the children of my grandchildren GRANT JOHN HOY, SCOTT CAMPBELL HOY, PAUL McCLOSKEY [sic: the correct spelling appears to be “McLoskey”] and DEBORAH EVELYN nee McCLOSKEY [sic] as shall survive me and shall have attained or shall thereafter attain the age of twenty-five (25) years and if more than one in equal shares … ”.
6 Each of the plaintiffs claims provision for her maintenance, education and advancement in life out of the deceased’s estate, pursuant to s 7 of the Family Provision Act 1982 (“the Act”).
7 The defendant acknowledges that the plaintiffs should receive some provision out of the estate of the deceased. Two of the beneficiaries, namely Aaron David McLoskey (now aged 24) and Christopher Ryan McLoskey (now aged 22), have stated that the plaintiffs should receive the whole of the deceased’s estate.
Mrs Guthrie’s circumstances
8 Mrs Guthrie, as I have said, is aged 67. She has been twice married. Each marriage has ended in divorce.
9 Mrs Guthrie works as a receptionist. Her net income is $760 per week. Her outgoings (including mortgage repayments of $312.50 per week) are $624.50 per week. Her assets are a home unit valued at $650,000, with a current mortgage liability of $116,000; superannuation entitlements of $26,000; cash at bank of $6,700; some shares in Telstra valued at $870; a motor vehicle valued at $9,520; and furniture valued at $10,000. Her liabilities are a mortgage debt of $116,000 and a credit card debt of $6,530.
10 Mrs Guthrie suffers from severe osteoarthritis of both hands. In the opinion of Dr Jeni Saunders, Mrs Guthrie “is hampered in most activities of daily living” although she “has accommodated her living practices to be within the limits that her condition imposes”. Further, in Dr Saunders’ opinion, it is likely that Mrs Guthrie’s condition “will deteriorate in the forthcoming future”. In a separate report, Dr Saunders quantified the disability at 54% loss of function of the right hand (equating to a 49% right upper limb impairment) and 59% loss of function of the left hand (equating to a 53% left upper limb impairment).
11 Mrs Guthrie has had joint replacement surgery and steroid injections. She takes medication daily. Nonetheless, her osteoarthritis is becoming increasingly worse. She says, and I accept, that it is unlikely that she will be able to continue working full time for much longer.
12 Mrs Guthrie’s superannuation is insufficient to maintain her and she will, if she retires, need to apply for the appropriate pension. It is unlikely that, in those circumstances, she could continue to meet mortgage repayments.
13 Both Mrs Guthrie and Mrs Graham appear to have enjoyed a good filial relationship with the deceased. There is no suggestion other than they were good and caring daughters. For example: their parents were from time to time short of money, and Mrs Guthrie or Mrs Graham would assist them financially on these occasions. They lent money (which they themselves had to borrow) to their parents to assist them with the purchase of a property, 116 Elizabeth Drive, Vincentia (the loan was repaid). They assisted the deceased with shopping, cooking, cleaning and showering from about 1995 on. Mrs Guthrie gave her used motor vehicle to her parents for them to use. In 1994 she used her frequent flyer points to take her mother on a holiday to the Caribbean. In 1998, after the deceased broke her pelvis, she lived with Mrs Graham for some weeks and then with Mrs Guthrie for some months.
Mrs Graham’s circumstances
14 Mrs Graham, as I have said, is aged 72. She lives by herself (the evidence does not reveal her marital status.) She is unemployed and receives the aged pension. Her pension entitlement is currently $229 per week. Her expenses are currently $240 per week.
15 Mrs Graham owns a home unit in Vincentia valued at $240,000. Her other assets are a motor vehicle, valued at $8,500 (which apparently requires expense of about $1,400 to make it serviceable); furniture valued at $1,500; and cash at bank of $2,200.
16 Mrs Graham’s liabilities are $3,000 owed to a cousin and $2,000 owed to her local council for arrears of rates.
17 Mrs Graham’s health is not good. She suffers from non insulin dependent diabetes with macrovascular and microvascular complications, including silent myocardial infarction and peripheral neuropathy, hyperlipidaemia and hypertension. She also suffers from severe degeneration of the spine, including spondylosis, kyphosis, scoliosis and osteophyte formation at all levels of the spine. She is dependent on chiropractic treatment to relieve her spinal conditions and takes medications for her other conditions. She says, and I accept, that she has no capacity to obtain paid employment.
18 Mrs Graham wishes to move to be nearer to her son, Paul McLoskey, his wife and their children (being Aaron David McLoskey and Christopher Ryan McLoskey, to whom I have already referred). They live at Gwynneville in the Wollongong region. Mrs Graham wishes to move to Gwynneville or its neighbouring suburb, Keiraville. The “changeover” cost is estimated to be from $130,000-$155,000. In addition, there would be removalist’s expenses estimated at $3,000. Mrs Graham says that her current appliances are not in good order and need to be replaced, at a cost of about $6,000.
19 Mrs Graham presently does not have private health cover. She wishes to obtain private health cover because her condition is worsening and it is likely that her need of medication and treatment will increase over the years. She has received a quotation for health cover at the rate of $3,148.80 per annum.
20 Mrs Graham has not had a holiday in 20 years. She would like to have a holiday (in Greece if possible). She has been quoted a cost of about $10,000 for this.
Other relevant circumstances
21 There are no other eligible persons.
22 In the events that have happened, the beneficiaries under the deceased’s will are Georgia Jane and Hannah Grace Hoy (children of the defendant and his wife, Karen), aged 6 and 3; Tahla Scott Hoy (the child of Scott Hoy and his wife, Fatima), aged 6; Aaron David McLoskey and Christopher Ryan McLoskey, already referred to (both of whom are adults); and Gwyn Daniel Evelyn (the child of Deborah Evelyn), aged 17.
23 There is no evidence that any of the beneficiaries had a particular claim on the bounty of the deceased. The defendant and his wife are in a position to support and educate their children, Georgia and Hannah. There is no evidence as to the ability of Scott Hoy to support and educate his child, Tahla. Deborah Evelyn, the mother of Gwyn Daniel Evelyn, is a single mother. She is a teacher. She supports her son, who is at school and who would like to go to university. There is no doubt that the deceased’s bounty would provide significant assistance in this regard; equally, there is no evidence that the deceased took particular account of Gwyn’s needs (or those of any other great grandchild whom she favoured in her will) in making the provision that she did.
Analysis
24 I am satisfied that each of Mrs Guthrie and Mrs Graham has a legitimate claim upon the bounty of the deceased; that each of them had needs that the deceased should have recognised in her will; and that (self evidently, having regard to what I have just said) each of them was left with inadequate provision for, in particular, her proper maintenance. As I have noted, the defendant accepts that this is so.
25 The question then is, what provision is appropriate?
26 In Mrs Guthrie’s case, adequate provision would start with the recognition that her liabilities should be discharged. However, in my view, adequate provision should also recognise the fact that it is unlikely that Mrs Guthrie will continue to work for much longer; that it is likely that (absent further provision out of the will) she would be dependent on the pension for her subsistence; and recognition that the pension would be inadequate for her needs.
27 This last point may be explained simply. The pension is (using Mrs Graham’s example) currently $229 per week. Mrs Guthrie’s outgoings, even deducting the weekly amount of her mortgage repayment, are $312. It cannot be said that those weekly expenses are excessive or extravagant, nor can it be said that they are readily susceptible of reduction.
28 The shortfall between the pension income that Mrs Guthrie could expect to receive and her weekly expenses (not including her mortgage repayment) is of the order of $89 per week. Mr Enright, Counsel for the defendant, submitted that Mrs Guthrie’s life expectancy was (in round figures) 19 years; and Mr M W Young (Counsel for the plaintiffs) did not demur. Without discounting, the total income deficit over the next 19 years is approximately $89,000.
29 In my view, it is appropriate that Mrs Guthrie should receive provision in an amount that:
§ discharges her liabilities;
§ provides, in effect, an income supplement; and
§ provides a buffer or reserve for contingencies.
30 The relevant contingencies include that her state of health may well deteriorate (indeed, on the medical evidence, this is likely). This would mean, firstly, that her need for medication or other treatment would increase; and, secondly, that her ability to care for herself would diminish. The contingencies also include that Mrs Guthrie may well live longer than the statistical 19 years (also, of course, she may not). If the estate were insufficient to discharge the legitimate claims of all eligible persons, then it might be necessary to assess the contingency sum on a more narrow basis. However the estate is not. I do not think that it is appropriate to assess a contingency allowance upon a basis that may well leave Mrs Guthrie in need in years to come.
31 The amount of her liabilities is $122,530. The undiscounted buffer amount, assuming that Mrs Guthrie lives for the statistical 19 years and no longer, is $89,000. In my judgment, a proper recognition of her need for provision, taking into account the factors to which I have referred, and providing a sum for contingencies, would be $325,000. In assessing the sum for contingencies, I take account of the fact that the putative income support component of $89,000 has not been, as it should be if one were attempting to derive a precise result, discounted. I have not descended to that level of detail because I do not think that an assessment of adequate provision can be built up in a formulated or arithmetical way.
32 In Mrs Graham’s case, an assessment of adequate provision would, again, start with her liabilities. In her case, the liabilities are small: $5,000.
33 The assessment should also take into account her expressed desire to move. Given her age and state of health, I think it appropriate that she should be near her son and his family. Again, the defendant did not submit otherwise. The evidence as to the changeover cost does not enable a precise calculation to be made. I see no reason to take a narrow, rather than a large, view of what was required. I think it appropriate to assess this component of the provision at the upper end of the range: $155,000. To this, there should be added the removalist’s expenses and an allowance for new appliances. It is unclear on the evidence whether the appliances that are required to be replaced are in the nature of fixtures (in which case, the appliances in the proposed new property might be satisfactory) or chattels. In those circumstances, I think that the appropriate provision should be in accordance with Mrs Graham’s estimate: a total of $9,000 for these expenses.
34 The assessment of adequate provision for Mrs Graham should also take into account her need for health cover and the circumstance that, even with her very modest lifestyle, her income is insufficient for her needs. Mr Enright submits that Mrs Graham’s life expectancy is (in round figures) 15 years; again, Mr Young did not demur. Mr Enright calculates the capitalised value of health fund costs, for 15 years and discounted at 3%, at $38,564. The undiscounted amount needed to make good the shortfall between Mrs Graham’s present income and expenses ($11 per week) for a period of 15 years is $8,580.
35 As with Mrs Guthrie, I think that there should be, in addition, an amount for contingencies. The contingencies are essentially similar in character to those referred to, in Mrs Guthrie’s case, in para [30] above. Bearing in mind Mrs Graham’s health, I do not think that the amount for contingencies should be assessed on a minimal basis.
36 As with Mrs Guthrie, I think that, overall, adequate provision for Mrs Graham should be in the sum of $325,000. It may be argued that, in Mrs Graham’s case, the contingency amount should be less than in Mrs Guthrie’s case because of the difference in their ages. Whilst that argument has some attraction, I think that the contingency sum needs to factor in also the difference in their medical conditions. Although there is no doubt that Mrs Guthrie is severely affected by the osteoarthritis in her hands and wrists, it cannot be doubted that Mrs Graham’s medical condition, overall, is worse.
Other matters
37 Provision in favour of each plaintiff in the sum of $325,000 would leave a balance in the estate (after costs) of approximately $175,000. It would mean that the monetary value of each beneficiary’s interest would be reduced to about $29,000, compared to the present approximate figure of $137,500.
38 The plaintiffs made no submission as to the way in which the incidence of provision (assuming that it was to be made) should fall. The defendant submitted that the burden of any provision should be borne equally by the beneficiaries. Whilst there is some basis for thinking that the position of the beneficiaries might not be equivalent, I do not propose to depart from what is, in essence, a common position as between the parties.
39 The defendant submitted that I should order the plaintiffs’ costs on the party and party basis, and the defendant’s costs, on the indemnity basis, should be borne by the estate. The plaintiffs did not submit otherwise.
Orders
40 I make the following orders:
(1) Order that the plaintiff, Denise Guthrie, receive provision out of the estate of Ethel Evelyn Strickland, deceased, of a legacy in the sum of $325,000.
(2) Order that the plaintiff, Diana Graham, receive provision out of the estate of Ethel Evelyn Strickland, deceased, of a legacy in the sum of $325,000.
(3) Order that interest on each of the said legacies run from 1 June 2004 at the rate prescribed for the purposes of the Wills Probate and Administration Act 1898 if the said legacies be not paid by that date.
(5) Order that the defendant’s costs on the indemnity basis be paid out of the estate of the deceased.(4) Order that the plaintiffs’ costs be paid out of the estate of the deceased;
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Last Modified: 05/06/2004
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