Horwood v Ah Shay

[2014] QDC 199

DISTRICT COURT OF QUEENSLAND

CITATION:

Horwood v Ah Shay [2014] QDC 199

PARTIES:

Peter James Horwood

(applicant)

And

Robert Leslie Ah Shay

(respondent)

FILE NO:

DC 10 of 2012

DIVISION:

District Court

PROCEEDING:

Originating application  

DELIVERED ON:

12 September 2014

DELIVERED AT:

Cairns

HEARING DATE:

11 August 2014

JUDGE:

Harrison DCJ

ORDER:

1. That there be further provision from the estate of the deceased in the sum of $30,000.00.
2. That the parties be further heard on the form of the orders and on costs.

CATCHWORDS:

SUCCESSION – FAMILY PROVISION AND MAINTENANCE – APPLICATION BY ADULT STEP-CHILD where testator died in 2011 leaving an estate worth approximately $260,000.00 - where applicant left legacy worth $15,000.00 plus motor vehicle – where rest and residue of estate left to adult son – whether testator left applicant without adequate provision for his proper maintenance and support – whether further provision should be made for him out of the estate

Succession Act 1981(Qld) s 40 and 41(1)
Singer v Berghouse (1994) 181 CLR 201
Hughes v National Trustees Executors and Agency Company of Australasia Ltd. (1979) 143 C.L.R 134
R v Sinnott (1948) VLR 279
Vigolo v Austin (2005) 22 CLR 191 at 205

COUNSEL:

J Sheridan (instructed by Vandeleur & Todd Solicitors) for applicant
M Jonsonn (instructed by Vince Martin & Co Solicitors) for respondent

1.This is an application pursuant to s 41 of the Succession Act 1981 (“the Act”) seeking adequate provision for maintenance and support from the estate of Leslie Ernest Ah Shay (“the Deceased”) who died on 27 December 2011, aged 86 years.

2.The applicant, Peter James Horwood, who was born on 30 July 1953, is a step-child of the deceased. The deceased married the applicant’s mother, Evelyn Lillian Horwood, in 1962 when the applicant was 9 years of age. There were also 2 older children of her former marriage, namely Anthony Horwood (who is 3 years older than the applicant) and Ivy Ann Gidding (who is 2 years older than the applicant).

3.The respondent, Robert Leslie Ah Shay, was born on 14 June 1963. He is the only child of the marriage of the deceased and Evelyn Lillian Horwood and is also the executor of the deceased’s will.

4.Evelyn Lillian Horwood died on 8 June 1991.

Provisions of the will

5.In his last will and testament dated 1 November 2011, the deceased provided for a legacy of $15,000.00 to be paid to the applicant from the proceeds of the sale of the deceased’s house at 389 Palmerston Highway, Innisfail together with a motor vehicle.

6.He specifically made no provision for his other two step-children, Anthony Horwood and Ivy Giddings, stating “as I have had no relationship with either of them for many years and no contact with them at all for a period of twenty years”.

7.He left the rest and residue of his estate to the respondent and made him sole executor of the will.

8.It was accepted for the purposes of these proceedings that both Anthony Horwood and Ivy Giddings were estranged from the deceased after the death of their mother in 1991, and neither made any claim against the estate.

Assets of the estate

9.The estate consisted, essentially, of the home at 389 Palmerston Highway, Innisfail which is more particularly described as Lot 8 on registered plan number 865387, County of Nares, Parish of Johnstone containing an area of 1,169 square metres. It is a three bedroom home located about five kilometres west of the Innisfail central business district.

10.The only valuation I have as to the home is an estimate from a real estate agent John Robert Hartley Moyle in his affidavit filed on behalf of the respondent on 22 April 2014. He assesses the home as having a fair market value of $260,000.00 and notes that the relevant commission on any sale would be $7,645.00.

11.I have had regard to an affidavit of Vincent Joseph Martin, the solicitor for the respondent filed on 6 August 2014, and he confirms that the only other assets of the estate were the proceeds of a Westpac bank account in the sum of $1,070.22 and two motor vehicles which were valued as at the date of death at $9,500.00.

12.The assets of the estate are, therefore:

- Home at 389 Palmerston Highway, Innisfail (after allowance of commission)   $252,355.00

- Wespac bank account   $1,070.22

- Motor vehicles   $9,500.00

Total         $262,925.22.

13.It appears as though the cars have remained idle and have deteriorated ever since this dispute arose and, it seems to me, that there would now be little point in having any regard to the motor vehicles, so I have adopted a figure as to the worth of the estate of $253,425.22.

14.There have been some expenses incurred on behalf of the estate and these are dealt with in the affidavit of Mr Martin. These expenses which include the funeral expenses and legal expenses total $42,799.13.

15.Mr Martin swears, however, that that includes legal costs totalling $14,655.20 and only $3,600.00 of those costs can be attributed to estate administration, meaning that the balance relates to the respondent’s costs in relation to this application.

16.For those reasons, I have deducted $11,055.20 from the list of expenses which was not disputed on trial and then deducted the balance, namely $31,743.93 from the original starting point, making the net worth of the estate prior to the consideration of legal fees associated with this application $221,681.29.

17.As is so often the case in matters such as this, the matter has been complicated by the costs expended by both sides with the matter having proceeded all the way to trial.

18.The respondent has already incurred $11,055.20 in costs associated with this action and the estimate provided in the affidavit of Mr Martin to the conclusion of the matter is for a further $30,000.00.

19.The estimate provided to me on behalf of the applicant at the conclusion of the trial was $45,000.00.

20.If I eventually decided (and it will not be possible to determine costs in the interim), that the costs should be paid out of the estate on an indemnity basis the then net worth of the estate would reduce to $135,626.09.

The application

21.The application is made pursuant to the provisions of s 41 of the Act which provides

41 Estate of deceased person liable for maintenance

(1)if any person (the deceased person) dies whether testate or intestate and in the terms of the will or as a result of the maintenance and support of the deceased person’s spouse, child or dependant, the court may, in its discretion, on application by or on            behalf of the said spouse, child or dependant, order that such provision as the courts thinks fit shall be made out of the estate of the deceased person for such spouse, child or dependant.

22.Pursuant to the provisions of s 40 of the Act, a step-child is a child for these purposes.

23.The applicant contends that there has not been adequate provision for his maintenance and support from the estate and the respondent contends that adequate provision has been made for the applicant having regard to the circumstances pertaining as at the date of the deceased’s death.

24.It is well accepted that the determination of their applications by the courts is a two step process. This was explained by the majority in the High Court in Singer v Berghouse[1] as follows:

[1] (1994) 181 C.L.R 201, 209-211.

“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. [2] The determination of the first state in the two-stage process calls for an assessment of whether the provision (if any) made was inadequate for what, in all 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 applicant and 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 state of the process, the courts 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 state 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[3], where thee were no assets from which an order could reasonably be made and making an order could disturb the testator’s arrangements to pay creditors.

[2] [1938] AC, 476.

[3] (1951) 82 CLR 645.

The nature of the two-stage inquiry

Although the precise nature of the jurisdictional question has been the subject of some debate, the correct view is that the question is strictly one of fact, notwithstanding that it involves the exercise of value judgements[4]. The evaluative character of the decision stems from the fact that the court must determine whether the applicant has been left without adequate provision for his or her proper maintenance, education and advancement in life.

In White v. Barron[5], although Mason J held that the question does not involve the exercise of discretion, his Honour observed:

‘There is an element of the artificial in saying that it is only after jurisdiction is established that the exercise of discretion begins, for the twin tasks which face the primary judge are similar.’

In Goodman v. Windeyer[6], Gibbs J (with whom Stephen J and Mason J agreed) expressly agreed with this comment and held that the nature of the inquiry is such that the court is called upon to exercise discretion. Gibbs J said:

‘[T]he words ‘adequate’ and ‘proper’ are always relative. There are no fixed standards, and the court is left to form opinions upon the basis of its own general knowledge and experience of current social conditions and standards.’

It is clear from this passage that his Honour was conveying that the primary judge was in essence making a value judgment in much the same way as a primary judge makes a sound discretionary judgment in personal injury cases when he or she assesses the quantum of damages say for pain and suffering, and for loss of amenities of life.

Strictly speaking, however, the jurisdictional question, though it involves the making of value judgments, is a question of objective fact to be determined by the judge at the date of hearing. This conclusion may have consequences in terms of what an appellant needs to demonstrate on appeal, an issue that will be considered shortly.

The decision made at the second stage, by contrast, does involve an exercise of discretion in the accepted sense[7]. This is evident from the term “may” in s 7, and this conclusion is not affected by the fact that this section, unlike s.3 of the Testator’s Family Maintenance and Guardianship of Infants Act 1916 (N.S.W), the predecessor to the present Act, does not contain as express reference to the court’s discretion under s.7 means that, as stated above, it may refuse to make an order even though the jurisdictional question has been answered in the applicant’s favour[8].”

[4] White v Barron (1980) 144 CLR.

[5] (1980) 144 CLR, 443.

[6] (1980) 144 CLR.

[7] White v Barron (1980) 144 CLR, 422.

[8] Pontifical Society for Propagation of Faith v Scales (1962) 107 CLR 9, 19.

25.It is, therefore, well accepted that the determination of the first stage is one of objective fact, though it necessarily involves making value judgments. Whilst, the second stage involves similar considerations, the decision is discretionary in nature.

26.In Hughes v National Trustees Executors and Agency Company of Australasia Ltd.[9] the majority of the High Court approved what had been said by Fullagar J in the Supreme Court of Victoria in R v Sinnott[10]:

[9] (1979) 143 CLR 134, 147.

[10] (1948) VLR 279, 280.

“No special principle is to be applied in the case of an adult son. But the approach of the court must be different. In the case of a widow or an infant child, the court is dealing with one who is prima facie dependant on the testator and prima facie has a claim to be maintained and supported. But an adult son is, I think, prima facie ‘maintain and support’ himself, and some special need or some special claim must, generally speaking, be shown to justify intervention by the court under the act.”

27.The claim in this case is analogous to one of an adult son.

28.In Vigolo v Austin[11], Gleeson CJ when referring to the passage from Sinnott (supra) cited in Hughes ( supra) said

[11] (2005) 22 CLR 191, 205.

“It is obvious that, in the passage cited in Hughes, Fullagar J was referring to a special need or a special moral claim. If, for ‘moral’ one were to substitute ‘natural’, or ‘legitimate’, the meaning would not be different.”

The applicant and his financial position

29.The applicant is now 61 years of age. He was 58 years of age as at the date of death of the deceased. He is married and his wife, Karen Rita Horwood, is now 59 years of age. They were married on 31 May 1975. They have two adult children, although the only one referred to in their affidavit material is their youngest son, Scott. I have no evidence as to their ages.

30.The applicant commenced living with the deceased when he was 9 years of age. When he was 16 years of age he entered into a plumbing apprenticeship and later became a qualified plumber and has worked as a plumber throughout his adult life.

31.I accept that from when he was 13 years to 16 years of age he worked unpaid on a cane farm operated by the deceased on 82 acres of land, working on weekends and on school holidays.

32.I accept that he assisted the deceased as a son from when he commenced his apprenticeship up until his mother’s death in 1991, attending as and when required to do plumbing jobs or other odd jobs.

33.I accept that this assistance increased after the death of his mother in 1991, and that assistance extended to general repairs on and about the home sometimes with the assistance of his younger son, Scott, who was a qualified electrician and who would do some electrical work.

34.I accept that the applicant’s wife assisted in terms of the provisions of curtains and the installation of same and to repairs for clothing and assisted, from time to time, with cooking for the deceased.

35.I accept that the applicant kept in regular contact with the deceased in the 20 years after his mother’s death, even when his two eldest siblings became estranged from their step-father.

36.I accept that the applicant and his wife assisted in terms of taking him to medical appointments, as and when required, and that this increased as his health deteriorated.

37.I note that the respondent and his wife moved from the Innisfail area to the Gladstone area in about 2003 and that it was the applicant and his immediate family that were on hand to attend to the deceased’s short term needs as and when required up until he moved to the Rockhampton hospital shortly before his death.

38.The applicant’s more recent financial circumstances are deposed to in his affidavit filed on 23 July 2014, namely

Assets

- House at Etty Bay Road   $400,000.00

- Net investment   $70,800.00

- Superannuation   $358,113.64

- Joint bank account   $1,510.44

- Bank account (wife)   $513.92

- 2010 Honda CRV   $18,000.00

- 2010 Honda Rodeo   $10,000.00

Total   $858,938.00

39.His liabilities are described as follows:

Liabilities

- Mortgage   $330,093.00

- Credit card   $1,722.07

Total   $331,815.07

40.His net assets, as deposed, are therefore $527,122.93. His wife is in excellent health and is working as a teacher’s aid and earns approximately $35,000.00 per annum.

41.The applicant is employed as a plumber with the Cassowary Coast Regional Council and is earning $59,350.00 gross per annum.

42.He has had a number of difficulties with a shoulder injury which was sustained in October 2012. This resulted in his being off work and in receipt of workers compensation benefits for some time and is the subject of an ongoing personal injuries claim.

43.In evidence he accepted that he will probably continue on as a plumber until normal retirement age in his current position. Whilst he may have a viable claim it would not appear to me to be a very substantial one. Invariably, the most substantial component is the future economic loss component and that would not be particularly high in his case. General damages are also limited under the scales which now apply in matters such as this.

44.The applicant deposes that, in 1975, his mother won $80,000.00 in the Golden Casket. I accept that she used some of those proceeds to purchase a block of land adjoining where the family was residing at the time.

45.The applicant deposed that she gave each of the children $2,000.00 at the time, but the respondent says that he was only 12 years of age and did not receive any such monies.

46.The applicant deposes that part of the win was used to fund a trip overseas to Japan and Indonesia by the deceased and his mother, but the respondent deposes to the fact that they went only to Indonesia. The applicant says that motor vehicles were purchased from the win and the respondent denies this.

47.These are difficult matters to resolve thirty-nine years after the event but it does seem to me that there would have been some benefit back to the family generally from the win over and above what was used to purchase the adjoining land.

48.The applicant deposes that the adjoining land was sold after his mother’s death and each of the four children received about $15,000.00. The respondent accepts this, but says that his $15,000.00 was given back to his father. There is no evidence to the contrary.

The respondent and his financial circumstances

49.The respondent is now 51 years of age. His wife, Deborah Louise Ah Shay, was born on 12 November 1968, and is now 45 years of age.

50.They were married on 7 January 1995, and, prior to the marriage, they spent some time residing with the deceased in his home before they purchased their own first home in April 1994.

51.The applicant, therefore, actually resided with his father, the deceased, from birth until he was about 31 years of age.

52.They have one daughter who is 17 years of age and is currently in grade 12 at Rockhampton Girls Grammar. She is hopeful of attending university in Brisbane next year to study a combined degree in law and creative arts.

53.His wife is employed as a business services manager with the Department of Education and gave evidence that she is currently receiving about $59,000.00 gross in that position.

54.In his affidavit sworn on 12 November 2012, the respondent deposed to the fact that his base wage in his position as a unit controller in Gladstone was $84,000.00. In paragraph 13 of that same affidavit on page 27 he said “mine and my wife’s current weekly income is approximately $2,660.00”.

55.This paragraph was misleading. Whilst his base wage may well have been $84,000.00, he conceded in cross-examination that his actual wage for the last two years had in fact exceeded $120,000.00 in each year. If that were the correct figures, his and his wife’s then current weekly income would have been more in the region of $3,365.00. No attempt was made to rectify that discrepancy prior to the trial and I find that disappointing.

56.In that same affidavit, he deposes to his assets as follows:

- House at Rainer Court, Benaraby   $550,000.00

- Investments   $18,000.00

- Unit in Cairns   $225,000.00

- Superannuation   $240,000.00

- Joint bank account   $7,000.00

- Nissan Ex trail  $15,000.00

- Nissan Navarra   $4,000.00

- Motorbike   $7,500.00

Total   $1,066,500.00

57.He deposes to the following liabilities

- Mortgage   $202,000.00

- Unit in Cairns  $295,000.00

- Body corp and rates on Unit   $8,000.00

- Repair and upkeep of unit   $4,000.00

- Boarding school fees   $55,000.00

- University – 6 years   $180,000.00

- Incidentals relating to dependants until 18               $65,000.00

- Medication for himself   $1,000.00

- Credit card per month   $5,000.00

Total   $815,000.00

58.Again, this is somewhat misleading because he has included what he claims to be future expenses in relation to his daughter, claims which he would well be capable of meeting out of the very substantial income that he eventually conceded that he had.

59.It seems to me more realistic that his overall liabilities as at the time that the affidavit was sworn were $497,000.00 being the mortgage commitment on the home and the mortgage commitment on the unit in Cairns. His then net worth was, therefore, $569,500.00.

60.He also conceded in evidence that he was able to derive some taxation benefits from the fact that the liability, in respect of the Cairns unit exceeded the value.

61.Clearly, he would have had ongoing commitments in relation to his daughter, but again, I fail to see why they were included in his assets and liabilities such as to give a misleading indication as to his real financial position.

62.I have no doubt that he fully intends to assist his daughter with her studies, but I would imagine, that like most children, she will offset that to some extent by obtaining some part time work as and when she does commence her studies in Brisbane next year.

63.The respondent did experience some health problems after what he described as a major breakdown in 2009 following a workplace conflict in an earlier position. A number of reports were presented in relation to his having suffered from major depression. I note, however, that he has continued to maintain his current position there is no suggestion that he has missed any work for a considerable period of time.

64.Certainly, Professor Whiteford, a psychiatrist, in a report exhibited to the affidavit of the applicant sworn on 12 November 2012, was confident as at 3 December 2010, that there would be improvement, such that he would be left with mild residual symptoms although he would have an increased vulnerability to redevelop depression at times of stress in his life.

65.The respondent gave evidence that he had, in fact, investigated making a personal injuries claim in relation to that condition, but did not proceed with that on advice.

66.I have no doubt that the respondent was a loving son and was very supportive of his father, but I did find his overall attitude to these proceedings as evidenced in his affidavit material and in court most disappointing. This was also illustrated by his approach to the sale of the deceased’s home.

67.It is clear from the wording of the will that the deceased contemplated the sale of the home because he provided that the legacy to the applicant be paid out of such sale.

68.For reasons that have not been adequately explained, the respondent does not appear to have made a realistic effort to sell the home ever since the deceased’s death. It is now over 3 years and 8 months since the deceased died. The evidence discloses that he originally listed the property for sale at $405,000.00 and that that was subsequently reduced to $355,000.00 and was reduced only to $325,000.00 the day before this matter was heard before me on 11 August 2014. His only explanation for this, when questioned about the matter on trial, was that he thought he may have realised as much as $280,000.00 for it. The valuation of $260,000.00 from Mr Moyle was provided on 19 July 2013, yet he continued to list it at $95,000.00 above that for the next thirteen months.

69.My real concern in this case is that he has made no effort to sell it, yet at the same time has claimed a substantial amount for the ongoing upkeep of the property as evidenced by the list of expenses exhibited to the affidavit of Mr Martin which I referred to earlier.

70.If he made a genuine effort to sell the property earlier it may well be that what was preserved by way of an asset pool would be much more than what is now available even before the substantial costs were incurred in relation to these proceedings.

71.It does appear that the respondent and his wife were of considerable assistance to his father from when they commenced their relationship up until they moved to Gladstone in 2003. The contact was much more limited from 2003 onwards until he became very ill prior to his death and it is obvious that they played a very significant role in the last months of his life.

72.Whilst the affidavit material in this case is quite substantial, there does not appear to be a great deal of dispute in terms of who did what. The matter is complicated by the fact that, on any view of the evidence, the deceased was what could only be described as a particularly hard man to deal with. The affidavit material of the respondent and his wife contained a number of criticisms of the applicant attributed to the deceased. This does not in any way detract from what the applicant did to assist the deceased over the years, but merely illustrates to me how he could be demanding and, at times, difficult.

73.This is well illustrated by what happened with his estranged step-daughter and step-son after attempts were made by the step-daughter to obtain some of her mother’s jewellery after her mother’s death. It is not uncommon for daughters, in those circumstances, to make such requests and to want to have such a memento from their mother’s jewellery. On any view of the evidence in this case, that lead to the deceased not wanting to have anything whatsoever to do with them.

Determination of first stage of process

74.It is necessary to consider the applicant’s financial position, the size and nature of the deceased estate, the totality of the relationship and the relationship between the deceased and other persons who have legitimate claims upon the estate.

75.I have summarised the applicant’s position. He does have reasonable assets, but still has substantial debt for someone of his age. He was criticised for actually increasing his debt during the course of these proceedings, but the debt was very substantial before that.

76.I have already dealt with the size and nature of the estate, but what is particularly relevant here is the fact that the estate consists almost entirely of the deceased’s former home. I have dealt at some length with the relationship between the applicant and the deceased and I accept that it was one akin to a father and son relationship and that the deceased was the only father that the applicant effectively knew.

77.As a child, he assisted in the farm that then existed and he then continued to provide ongoing support and assistance for the deceased up until he moved from Innisfail, not long before his death. It is significant in this case that he did assist considerably in relation to the maintenance and upkeep of the deceased’s home, that being the only real asset of the estate.

78.The respondent is also in a secure financial situation. I accept that he had a good relationship with the deceased and that he and his wife were of considerable assistance to the deceased throughout the course of his life, particularly in the latter stages after he moved from Innisfail. Their contact was, however, limited during that period from 2003 prior to the move by the deceased to their area in 2011.

79.It seems that the relationship between the applicant and respondent was reasonable until this dispute arose, which, unfortunately, is often the case.

80.This matter appears to me to be one of those special “moral”, “natural” or “legitimate” claims referred to by Gleeson CJ in Vigolo (supra) in dealing with the earlier passage cited from Fullagar J in Sinnott (supra). What is particularly relevant here is that he made a number of contributions to the maintenance and upkeep of what is effectively the sole asset of the estate and, in all of the circumstances, it appears to me that a just and wise step-father, in the deceased’s position, ought to have made proper provision for the maintenance and support of the applicant.

81.It is also relevant, on the question of his needs, that he still has a substantial debt (even if I ignored the extent to which he drew down further since the commencement of these proceedings) for someone who is fast approaching retirement age.

82.I do not consider that the $15,000.00 legacy plus the motor vehicle provided for in the will was such adequate provision and I am satisfied that the first stage i.e. the jurisdictional question should be determined in favour of the applicant.

Second stage

83.The estate was always a relatively modest one and has been reduced considerably by the substantial costs associated with this application. I do not consider, however, that the size of the estate is such that, even though I am satisfied as to the first stage, this is a matter where I should exercise my discretion not to make any additional allowance for the applicant. The size of the estate will, however, limit any allowance I can make to reflect the applicant’s special moral claim and his needs.  

84.The schedule of expenses exhibited to the affidavit of Mr Martin illustrates that ongoing maintenance can be quite expensive and it is significant that the applicant was particularly helpful to the deceased in that regard for a lengthy period of time.

85.In all the circumstances, particularly having regard to the size of the estate and the fact that the applicant made substantial contributions to the preservation and maintenance of the only asset in the estate, I assess the applicant’s claim at $30,000.00 over and above the provision contained in the will and I will be making the necessary orders in that regard.

86.Both motor vehicles have remained idle since the dispute began. I do not see the need to make any reference to them.  

87.I will hear the parties on the form of the orders and on the question of costs.