Hayes -v- O'Shannessy

[2008] NSWSC 507

CITATION:	Hayes -v- O'Shannessy [2008] NSWSC 507
HEARING DATE(S):	3 and 4 March 2008
JUDGMENT DATE :	27 May 2008
JUDGMENT OF:	McLaughlin AsJ
DECISION:	1. I order that the summons be dismissed. 2. I stand the matter over to a date to be fixed by arrangement with my Associate for argument as to costs. 3. The exhibits may be returned.
CATCHWORDS:	SUCCESSSION - family provision - claim by de facto partner - relationship of short duration - financial and material circumstances of Plaintiff - significant benefits received by the Plaintiff during lifetime of the Deceased and under his will - whether Plaintiff has been left without adequate provision for her proper maintenance - no principle of general primacy of a claim of a widow - competing claims of beneficiaries.
LEGISLATION CITED:	Family Provision Act 1982 Property (Relationships) Act 1984
CATEGORY:	Principal judgment
CASES CITED:	Singer v Berghouse [1994] HCA 40; (1994) 181 CLR 201 Marshall v Carruthers [2002] NSWCA 47 Bladwell v Davis [2004] NSWCA Vigolo v Bostin [2005] HCA 11; (2005) 221 CLR 19
PARTIES:	Maggie Frances Hayes (Plaintiff) Craig Phillip O'Shannessy (First Defendant) Claire Susan O'Shannessy (Second Defendant)
FILE NUMBER(S):	SC 2843 of 2007
COUNSEL:	Mr J. Wilson SC (Plaintiff) Mr J. Armfield (Defendants)
SOLICITORS:	Paul Wells & Co. (Plaintiff) Maunder & Jeffrey (Defendants)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

ASSOCIATE JUSTICE McLAUGHLIN

Tuesday, 27 May 2008

2843 of 2007 MAGGIE FRANCES HAYES –v- CRAIG PHILLIP O’SHANNESSY

JUDGMENT

1 HIS HONOUR: These are proceedings under the Family Provision Act 1982.

2 By summons filed on 23 May 2007 Maggie Frances Hayes claims an order for provision for her maintenance and advancement in life out of the estate of the late Rex Charles O’Shannessy (to whom I shall refer as “the Deceased”).

3 The Deceased died on 17 November 2006, aged 64 years. He left a will dated 15 September 2006, probate whereof was on 11 January 2007 granted Craig Phillip O’Shannessy and Claire Susan O’Shannessy, the executors named in such will (who are the Defendants to the present proceedings).

4 The Plaintiff was the de facto partner of the Deceased at the time of his death. They had been in a de facto relationship since June 2004.

5 The inventory of property discloses only one asset, being a home unit situate at and known as 15/7 Clifford Street, Mosman (to which an estimated value of $1,400,000 was ascribed). Subsequently, the Defendants provided an affidavit of additional assets, disclosing the following additional assets, having values totalling $729,378,

Westpac Banking Corporation $6,390
ING (Australia) Bank $43,264
Furniture and personal effects $30,000
Shares in companies $101
Debts due to Deceased $116,663
Superannuation $523,958

6 That affidavit also disclosed the following property owned jointly by the Deceased and the Plaintiff:

BMW motor vehicle 1998 model, to which a value of $19,500 was ascribed
Furniture and contents, to which a value of $20,000 was ascribed.

7 Up-to-date information concerning the assets and the liabilities of the estate was provided by the Defendants in exhibit 4, which disclosed that, after payment of various liabilities totalling $144,547, the estate has a present value either in an amount of $1,984,831 or (if an advance to the Plaintiff of $50,000, to which further reference will be made, be treated as a gift, rather than as a loan) in an amount of $1,934,831.

8 In calculating the value of the estate available for distribution the costs of the present proceedings should be taken into consideration, since the Plaintiff, if successful in her claim, will normally be entitled to an order that her costs be paid out of the estate, whilst the Defendants, irrespective of the outcome of the proceedings, will normally be entitled to an order that their costs be paid out of the estate. It was estimated on behalf of the Plaintiff that her costs will total $51,189, whilst it was estimated on behalf of the Defendants that their costs will total $101,325 (of which amount the sum of $72,182 has already been paid).

9 In addition to the foregoing amounts, the estate of the Deceased has paid, or has a liability to pay, further amounts, totalling $50,668 (which sum includes income tax payable by the estate in an estimated amount of $18,500).

10 Accordingly, it is appropriate that I should proceed upon the basis that the value of the distributable estate is in the order of $1,926,000.

11 It should also here be recorded that at the time of his death the Deceased was the sole member of the O’Shannessy Family Superannuation Fund. The trustee of that fund is O’Shannessy Holdings Pty Limited, a company of which the two defendants are the sole shareholders and sole directors. At the present time the value of the fund is $411,174. The Defendants, in their capacity as directors of O’Shannessy Holdings Pty Limited, had not yet determined to whom the fund should be paid. They had been advised by their accountant that, in the event that the fund were distributed equally between each Defendant, there would be a tax liability in a total sum of $61,676, leaving an amount of $349,497 to be shared equally between the two Defendants (each thus receiving $174,748). The Defendants had also been advised that the Superannuation Fund, whilst not forming part of the estate of the Deceased, is or may be the subject of a prescribed transaction.

12 By his will the Deceased gave a legacy of $350,000 to the Plaintiff, gave several other legacies, in small amounts, to his sisters and a friend (totalling $35,000), and gave the residue of his estate to the Defendants as tenants in common in equal shares.

13 The Deceased (who was born on 2 February 1942) was married only once, to Lynda Cord. Of that marriage were born two children, Craig Phillip (who was born on 14 November 1970, and is presently aged 37) and Claire Susan (who was born on 6 December 1972, and is presently aged 35). The Deceased and his wife were divorced in 1987.

14 The Plaintiff was born on 14 September 1949, and is presently aged 58. She has been married and divorced three times; and has one child, a son, Martin, who was born of her first marriage, on 20 August 1973 (and who is now aged 34).

15 The Plaintiff in 1971 graduated with a Bachelor of Arts and a Diploma in Education from the University of New South Wales. From 1976 to 2001, she was employed by the Education Department of Victoria. From that position she took leave in 2001, in order to study law at Griffith University in Queensland, from which she graduated Bachelor of Laws in 2003. In the meantime the Plaintiff had resigned from the Victorian Education Department in February 2002. From 2001 to 2003, the Plaintiff worked as a casual teacher and as a research assistant.

16 The Plaintiff met the Deceased in 2004, and removed from Brisbane, where she was then residing, to Sydney, where she lived with the Deceased in his residence at Mosman from that time until his death, some two and a half years later. The Plaintiff leased out her house in Brisbane when she removed to Sydney. During the second half of 2004 the Plaintiff attended the College of Law for about eight months. In 2005 the Plaintiff (who was admitted as a solicitor on 26 August 2005) was employed in the office of the Crown Solicitor of New South Wales. For the first half of 2005, the Plaintiff also did voluntary work at the Redfern Legal Centre. Subsequently, from May 2006, she has been employed as a solicitor with the Students Representative Council of the University of Sydney.

17 At the time when the Plaintiff removed from Brisbane to Sydney and commenced to reside with the Deceased, her assets were:

House property in Brisbane, having an estimated value of $400,000
Superannuation account with State Super Victoria $283,845
Money in an investment account $30,000
Suzuki Vitara motor vehicle, having estimated value of $6,000

18 At that time the Plaintiff had no liabilities.

19 From July 2004, the Plaintiff and the Deceased conducted a joint account with the MECU credit union (of which the Plaintiff had become a member while she was teaching), and it was from that joint account that they paid their household expenses.

20 Shortly after she commenced living with the Deceased, the Plaintiff converted her superannuation benefits with State Super Victoria (to which benefits she had become entitled in September 2004) to an indexed life pension, which from September 2004 (the Plaintiff’s fifty-fifth birthday) was paid into the joint account with MECU. After leaving Brisbane the Plaintiff leased her house property in that city, at first for $200 a week, that rent later increasing to $300, and then to almost $400 a week. She used that income for the payment of household expenses. After removing to Sydney, the Plaintiff sold her Suzuki Vitara motor vehicle for $5000, and contributed the proceeds of that sale towards the joint living expenses of herself and the Deceased. The Deceased’s salary was paid into the joint account of the parties.

21 At the time when the de facto relationship commenced, the Deceased conducted a business at Chatswood, which was described as a Snap Printing franchise. The Deceased conducted that business through the vehicle of a company, Help Printing Pty Limited, of which he was the sole director and shareholder.

22 In March 2005 the Deceased was diagnosed with a bone cancer known as chondrosarcoma (for which he had been treated in 2001), and he underwent surgery for that condition in April 2005.

23 In March 2006 the Deceased sold his business for about $560,000.

24 From that time until the Deceased’s death in November 2006 the Plaintiff was closely involved in caring for the Deceased, and taking him to medical appointments. During the last few weeks of his life a carer came daily to attend to the Deceased’s physical requirements, and, subsequently, a full-time nurse was engaged.

25 At the present time the Plaintiff has the following assets.

House property situate at and known as 22C Hoogley Street, Hill End, Queensland, having an estimated value of
$550,000 - $570,000
Savings account (MECU) $4,466
Bookmakers Superannuation Fund $120,922
BMW motor car $19,500
Contents of house $30,000
Total $645,966

26 The Plaintiff’s house property in Brisbane is subject to a mortgage, upon which an amount $126,000 is presently outstanding. That liability represents a mortgage guarantee given by the Plaintiff to the Commonwealth Bank, in respect to borrowings made by the Plaintiff’s son and his wife, in October 2007, after the institution of the present proceedings.

27 Apart from that mortgage debt the Plaintiff has no liabilities.

28 In October 2006 the Deceased presented the Plaintiff with a cheque for $50,000, which she subsequently deposited into her bank account. There was a dispute between the parties as to whether that amount of $50,000 constituted a gift to the Plaintiff from the Deceased or whether it was in the nature of a loan for which the Plaintiff was liable to reimburse the estate of the Deceased. I shall return to a consideration of the character of that advance.

29 On the morning of the Deceased’s death the Plaintiff transferred the sum of $10,000 from one of the Deceased’s bank accounts into the Plaintiff’s own pension account. It should also here be recorded that after the death of the Deceased amounts totalling $12,000 were transferred from one of the Deceased’s accounts into the joint account of the Plaintiff and the Deceased, the funds in that latter account passing by survivorship to the Plaintiff.

30 The Plaintiff has the following annual income:

Pension from State Super Victoria, $22,552
Rent from house property
at Hill End, Queensland $19,818
Salary from Redfern Legal Centre $48,509
Bookmakers Superannuation Fund, transitional
retirement allocated pension $12,000
Total $98,661
(that is, $1,897 a week)

31 The Plaintiff gave evidence of her outgoings, in a total amount of $1750 a week.

32 From her income the Plaintiff has the following regular deductions:

Property expenses $5,762
Undeducted purchase price, State Super $1,558
Undeducted purchase price,
Bookmakers Superannuation Fund $9,515
Total $16,835

33 The Plaintiff’s taxable income is $86,219, and tax payable on that figure is $19,332, leaving the Plaintiff with a net income after tax in an amount of $66,887. The Plaintiff’s present employment with the Redfern Legal Centre is dependent upon that position continuing to be funded by a government grant.

34 In consequence of the death of the Deceased the Plaintiff became the owner by survivorship of the following assets:

BMW motor vehicle, having an estimated value of $19,500
Jointly owned furniture and contents of residence,
having an estimated value of $30,000
Balance of joint credit union account $2,924

35 Shortly before his death the Deceased on 21 October 2006 signed a document headed, “My Wishes Concerning the Contents of the Residence of Myself and My Partner Maggie Hayes”, in which he stated his wishes in relation to the contents of his residence as follows:

I wish my daughter Claire, my son Craig, my sister Diedre and my partner Maggie to choose whatever items of personal significance to themselves that they would like to have.
I leave all furniture and other contents of our home to my partner Maggie.

36 Those wishes of the Deceased, have been honoured, and as a result the Plaintiff received the balance of the contents of the residence, to which she ascribed an estimated value of about $30,000.

37 The Plaintiff expressed a desire to acquire a house property, rather than a home unit, on account of her ownership of a canine pet, for the accommodation whereof a home unit would be unsuitable. She said in her affidavit evidence that she would like a house in Glebe, near the parks by the water, so that she could walk her dog there, and so that she could have easy access to the North Shore, where her father and her brothers reside. However, during the course of the hearing the Plaintiff expressed a desire to reside at Cammeray, on the lower North Shore of Sydney, in which location an appropriate house property would cost about $950,000.

38 The claim of the Plaintiff must be approached in the light of the competing claims of the Defendants, who are significant objects of the testamentary beneficence of the Deceased.

39 Craig is aged 37 years. He operates his own software development business. His annual income before tax is $79,696. He resides in rental accommodation. He values his assets (which are principally superannuation and equities) at $190,873. He said that his monthly expenses totally $6020.

40 Claire is aged 35 years. She is engaged to Archie James Hamilton. They have one child, Lola, who was born on 15 May 2007. Claire and her fiancé are in the process of establishing a business in China. Claire has assets of about $124,000. She has liabilities of about $56,000, including a loan of $50,000, from the estate of the Deceased (that amount having been lent to her by the Deceased, before his death). Mr Hamilton has assets of some $63,000, but has substantial liabilities, consisting principally of loans totalling almost $500,000 from his parents.

41 It is in the light of the foregoing facts and circumstances that the Court must proceed to a consideration of the claim of the Plaintiff.

42 I have had the benefit of receiving a written outline of submissions and a chronology from Counsel for the respective parties.

43 The Plaintiff as the de facto widow of the Deceased is an eligible person within paragraph (a) of the definition of that phrase contained in section 6 (1) of the Family Provision Act. As such she has the standing to bring the present proceedings. The only other eligible persons in relation to the Deceased are the two Defendants (each of whom is an eligible person within paragraph (b) of the foregoing definition), and the former wife of the Deceased (who is an eligible person within paragraph (c) of the foregoing definition, and who, although served with a notice of claim, has not made any claim for an order for provision out of the estate of the Deceased).

44 It was submitted on behalf of the Plaintiff that the Deceased, in making the testamentary provisions contained in his will, did not properly consider the position of the Plaintiff. It was submitted that he failed to consider her future accommodation, and that he should have realised that a legacy of $350,000 would not provide the Plaintiff with sufficient moneys to properly accommodate herself in Sydney. It was submitted on behalf of the Plaintiff that the Deceased should have provided the Plaintiff with a legacy in an amount sufficient to enable her to purchase a residential property in Sydney in an area reasonably close to her work and to the area in which she has been accustomed to living since removing from Brisbane to Sydney in 2004. It was submitted that, in addition to the legacy of $350,000 given to her by the will of the Deceased, she should receive an additional legacy of $600,000.

45 In carrying out the first stage in the two-stage process identified by the High Court of Australia in Singer v Berghouse [1994] HCA 40; (1994) 181 CLR 201 at 208 – 210 (the correctness of which test was affirmed by the High Court in Vigolo v Bostin [2005] HCA 11; (2005) 221 CLR 191) the Court must determine whether in consequence of the provisions of the will of a testator the applicant has been left without adequate provision for her proper maintenance.

46 The High Court in Singer v Berghouse (at 209 – 210) said that the determination of the first stage,

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.

47 Despite the assertions of the Plaintiff that her relationship with the Deceased was a loving and committed one, there were a number of incidents during the relationship which were not consistent with that description. Whilst the relationship obtained for a period of only a little over two years, there was at least one occasion when the Plaintiff left the Deceased. That incident occurred in late September 2006, at a time when the Deceased was terminally ill. On other occasions the Plaintiff threatened to leave him.

48 Although it was the submission of the Plaintiff that the Deceased had not adequately or properly considered her position when making the testamentary provisions ultimately contained in his will, nevertheless, there was considerable evidence, both from the Plaintiff herself and from the Deceased’s solicitor, concerning discussions between the Deceased and the Plaintiff as to the testamentary provisions which the Deceased was contemplating making in her favour, and concerning communications between the Deceased and his solicitor regarding the precise terms of those testamentary provisions which the Deceased had in contemplation.

49 I have already referred to an advance of $50,000 made by way of a cheque signed by the Deceased (but otherwise written by the Plaintiff herself) in favour of the Plaintiff, dated 16 October 2006. It was asserted by the Plaintiff that that advance was by way of a gift to her from the Deceased, whilst it was submitted on behalf of the Defendants, that that cheque represented a loan by the Deceased to the Plaintiff, which constitutes a present asset in the estate, being a debt due by the Plaintiff to the Deceased. It will be appreciated that concerning the nature of this advance the Court is reliant upon the Plaintiff’s own uncorroborated evidence as to whether this sum of $50,000 was a gift to the Plaintiff or was merely a loan to her. Each of the parties sought that the Court should make a finding in this regard.

50 It was the Plaintiff’s evidence that this cheque was intended by the Deceased to be applied by the Plaintiff towards a deposit on the purchase of a house which the Plaintiff might select. The Plaintiff also pointed to the fact that the cheque was given to her by the Deceased at a time when the Deceased was giving to his daughter Claire, the Second Defendant, the sum of $50,000.

51 The Defendants pointed to several curious aspects concerning this transaction. They included the fact that the cheque was drawn on a form from a fresh cheque book, although the Deceased’s other cheque books had not been exhausted. Further, although it was open to the Deceased to document the purpose of the cheque (just as he had done only a few days later, when on 21 October 2006 he documented his intentions concerning the contents of his residence), nevertheless there was no statement in documentary form made by the Deceased, concerning the purpose of this cheque or his wishes or intentions in regard thereto. It is also relevant that the cheque was not presented by the Plaintiff until about four weeks later, on 14 or 15 November 2006, only two or three days before the death of the Deceased.

52 The Defendants also relied upon what they regarded as (and I here paraphrase the description) the guilty reaction of the Plaintiff when they raised with her this matter of the cheque, some time after the death of the Deceased.

53 Only the Deceased himself knew for what purpose he was advancing this sum to the Plaintiff, and whether it was a gift or a loan. In identifying the nature of the character of this advance the Court is reliant upon the uncorroborated evidence of the Plaintiff.

54 I recognise that there are several curious aspects to this transaction. Nevertheless, I consider that where the advance was made by the Deceased to his de facto partner, the Plaintiff, in circumstances where the Deceased was terminally ill and had been at that very time involved in discussions with the Plaintiff concerning the testamentary provisions which he had in contemplation making for her, I am not prepared to conclude, in the absence of some objective evidence to that effect, that the Deceased was requiring this amount of $50,000 to be repaid to him, or to his estate, by the Plaintiff. In my conclusion the Court should treat this advance of $50,000 as a gift by the Deceased to the Plaintiff.

55 The essential need asserted by the Plaintiff is to be able to acquire a house property in Sydney, located for preference at Cammeray, for a price of about $950,000. For that purpose the Plaintiff seeks, in addition to the legacy of $350,000 given to her by the will, an additional sum of $600,000.

56 It will be appreciated that the Plaintiff’s property in Brisbane has increased in value from $350,000 to its present value of upwards of $570,000. If she were to sell that property, the proceeds of sale, together with the legacy of $350,000, would probably enable her to acquire a house property of the nature which she desires at Cammeray.

57 The Defendants, in opposing the claim of the Plaintiff, pointed to the following benefits which she had already received from the Deceased:

(a) By will, a legacy of $350,000.

(b) By survivorship, the contents of the Deceased’s residence, and a BMW motor car (having an estimated value of $19,500).

(c) During his lifetime, the Plaintiff was largely supported by the Deceased. In consequence, she was enabled to make a salary sacrifice of 50 percent of her salary towards her superannuation. Further, by removing to Sydney, in order to reside with the Deceased, the Plaintiff was enabled to lease her Brisbane residence, and thus to increase her income by a present amount of almost $400 a week.

(d) The Plaintiff about four weeks before the death of the Deceased received from him an advance of $50,000, which advance, I have found to be in the nature of a gift.

58 After the death of the Deceased, the financial circumstances of the Plaintiff were such that she was enabled to spend an amount of about $15,000 on an overseas in trip December 2007 – January 2008, after the institution of the present proceedings. Further she regarded her financial situation to be sufficiently secure that she was able to provide a guarantee, supported by a mortgage on her Brisbane property, in an amount of $126,000, as recently as October 2007.

59 It is also relevant to the claim of the Plaintiff that she had no role in the building up of the assets of the estate of the Deceased.

60 I consider it also to be relevant that the relationship between the Plaintiff and the Deceased was of very short duration, being for only about two and half years.

61 The suggestion that there is some principle of general primacy of a claim of a widow (be she a legal spouse, or a de facto partner) has been rejected by the Court of Appeal in Marshall v Carruthers [2002] NSWCA 47 (22 February 2002, per Young CJ in Eq), and Bladwell v Davis [2004] NSWCA (4 June 2004 per Ipp JA and per Bryson JA.)

62 I do not consider that the Plaintiff has established an entitlement to acquire, at the expense of the estate, an unencumbered residence in Sydney, be it at Glebe or be it at Cammeray. The Plaintiff presently owns a residence in Brisbane. I recognise that, if she were to reside in her Brisbane home, or if she were to sell that property, she would be deprived of the income which she presently receives from that property. But it should not be overlooked that at the time when she met the Deceased, the Plaintiff was in fact residing in that property, and was not receiving any rental income therefrom. It was only in consequence of her removal to Sydney to live with the Deceased that the Plaintiff was enabled to have the benefit of receiving rental income from her Brisbane residence.

63 I am not persuaded that by the terms of the Deceased’s will the Plaintiff has been left without adequate provision for her proper maintenance. Indeed, it could be said that in the circumstances of this case, where there was a very short period of relationship, the legacy of $350,000, the contents of Deceased’s residence, the BMW motor vehicle, and the contents of the Deceased’s joint bank account, as well as the gift of $50,000, constituted very generous provision for the Plaintiff.

64 My foregoing conclusion is of itself sufficient to dispose of the claim of the Plaintiff.

65 I should, however, for completeness, refer to the competing claims of the Defendants. Neither Defendant is in affluent financial circumstances. Indeed, the First Defendant’s income has diminished since the institution of the present proceedings. Neither Defendant owns a residence. Each is residing in rented accommodation. The respective situations of each Defendant should be contrasted with that of the Plaintiff, who, both before her relationship with the Deceased and to the present time, has owned a residence, and who throughout the period of the relationship was supported by the Deceased. Even if (contrary to the conclusion which I have already expressed) I were persuaded that the Plaintiff had been left without adequate provision for her proper maintenance, I would not be disposed to make an order for her provision which would have the effect of significantly reducing the benefits to which each of the Defendants is entitled under the terms of the will of their father.

66 I have been requested by Counsel for the Defendants to allow the matter of costs to be dealt with in the light of my substantive decision.

67 Accordingly, I make the following orders:

1. I order that the summons be dismissed.

2. I stand the matter over to a date to be fixed by arrangement with my Associate for argument as to costs.

3. The exhibits may be returned.

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