John Patrick Hay v Public Trustee of Queensland and Anors
[2014] QDC 107
•18 MARCH 2014
[2014] QDC 107
DISTRICT COURT OF QUEENSLAND
CIVIL JURISDICTION
JUDGE BAULCH SC
No. 165 of 2011
No. 166 of 2011JOHN PATRICK HAY Applicant
and
PUBLIC TRUSTEE OF QUEENSLAND Respondents
and ANOTHERTOWNSVILLE
10.27 AM, TUESDAY, 18 MARCH 2014
JUDGMENT
HIS HONOUR: John Patrick Hay and Katie Mary McKaig seek further and better provision from the estate of Patricia Clark, their late mother. Patricia Clark died at Townsville on the 17th of May of 2010.
Patricia Clark left an estate comprising a house in which she had resided with her husband for many years and a car, some jewellery and an amount of cash. By the time the matter had come on for trial, the cash had been eaten up in the payment of liabilities and some legal expenses on behalf of the second respondent and the value of the house, I was told, had reduced from $315,000 to $300,000.
By her will, the deceased left her entire estate to the second respondent, a 70 year old cabinet maker with whom she had lived since 1986. At the commencement of the relationship, her children were quite young, the applicant John being about 10 years of age, the applicant Katie about six years of age. There was a third child, Sally, who was about eight at the time the relationship began who has not made an application in respect of the estate.
There was a significant in the evidence between the applicants and the second respondent. The applicants described their mother as an alcoholic who drank all day everyday and the second respondent as a violent man who would regularly beat the children with his belt. They said the beatings were of such a nature that they would, on occasions, go to school wearing clothing chosen to hide the marks that resulted from those beatings. The second respondent denied that anything of the sort occurred although he conceded that he did smack the children on one occasion.
It was not without significance that an affidavit was filed on behalf of the second respondent sworn by the child Sally who contradicted the applicants’ assertions as to those beatings. Sally was not cross-examined. In that circumstance, it seemed to me that, unless some special reason was shown, I should accept what is said in her affidavit. Counsel for the applicants submitted that because Sally was a beneficiary of the second respondent’s will, I should disregard her evidence. Further, it was said that she should not be relied upon because she could not have been always present and may not have observed the beatings.
While as counsel submits the fact that she stood to benefit from the second respondent’s will might give her a motive to side with him in the litigation and tell untruths, it seems to me to be quite against first principles to draw such a conclusion without the witness having had the opportunity to respond to that serious suggestion.
Further, I formed the view that the applicants probably exaggerated their evidence about their mother’s drinking as it is clear on the material that, over the relevant period, she completed two university degrees – one a Masters Degree – and worked in a responsible position in a government agency. Whilst it may be that she did drink to excess on occasions, it seems to me that the decision given by the applicants could not sit comfortably with her life’s achievements.
Accordingly, where there is a conflict between the applicants’ evidence and that of the second respondent, I’d prefer the evidence of the second respondent.
I turn to the second respondent’s relationship with the deceased.
Although I acknowledge it is not for the second respondent to justify the bequest made in his favour, it seems to me to be appropriate to say something about the nature of his relationship with the deceased and the moral claim which resulted from it so far as her estate was concerned.
During the mid-1980s, the second respondent was the proprietor of a business called Supreme Antiques, a furniture restoration business. During the time that he was operating that business, he met the deceased and her then husband, James Welsh Hay. At the time, the second respondent wished to engage a secretary and it was suggested that the deceased would be available on a part-time basis.
The deceased’s relationship with her husband broke down and because she was without funds, the second respondent permitted her and the children to sleep on antique beds in his workshop for a time. At that time, the second respondent was in the habit of sleeping in an office at the back of his workshop and it seems that the deceased and her three children lived in a separate part of the workshop where there were cooking and bathroom facilities available.
Shortly after the deceased commenced living in the workshop with her children, she engaged a solicitor and commenced proceedings in the Family Court. In 1986, a maintenance agreement was entered into whereby her former husband transferred to the deceased all of his right, title and interest in the house which now makes up, virtually, all of the estate. I note that the deceased’s former husband says that he was misled by the solicitor who prepared the maintenance agreement as to its true meaning and effect, I also note he was not cross-examined about that but I, nonetheless, reject that evidence as the document is a very straightforward one which is quite clear in its terms and his account is so improbable as, in my view, to be ludicrous.
The deceased divorced her former husband in November 1987. The second respondent commenced living with the deceased in the house shortly after her father’s funeral in 1988. They were married in the year 2000. They lived together in the house for 22 years until the deceased passed away on the 17th of May 2010. The second respondent has continued to live in the house since that time.
The second respondent sold his antique business in 1986 and then commenced to operate an art and craft business. The second respondent did not earn large amounts of money but what he did earn was contributed to the household from time to time from the time that he commenced to live with the deceased and her children.
During the relationship, the deceased handled all household finances and personal finances, the second respondent would work and give her money to pay into the bank accounts. The deceased did the shopping and paid school fees from joint accounts maintained by the second respondent and the deceased.
The deceased commenced social work studies at the James Cook University at about 1986 when, I think, Sally was the only child still living at home. She studied over a period of about eight years and completed a Bachelors Degree and, later, a Masters Degree in social science. While studying, she received Austudy payments.
The second respondent says the couple never argued about money and that they shared all living expenses and mortgage repayments in respect of the house. He says they always had enough money to get by on but there would be occasions when he did not earn any money for weeks at a time and the deceased would support the whole of the family. When the second respondent did receive income, he would contribute that to the family expenses.
The deceased worked full time as a social worker at the Department of Families while she was undertaking the Masters course part-time over a period of about four years from 2001. The second respondent did some improvements to the house during the course of the relationship. He says that was funded by loans that were taken out under a mortgage secured over the house. There’s some confusion in the material about the amount of money that was borrowed and the applicants had sought to advance a case that some of the money borrowed, at least, was not spent on the house and must have been spent for some other purpose. The applicants sought to advance that case on the basis of inferences said to arise from material filed by them on the 10th of March 2014 some six months after the case had been certified to be ready for hearing.
I refuse to admit the evidence on the basis that it came too late. I was also of the view that the inference sought to be advanced on behalf of the applicants was one that could not be supported having regard to the applicant’s lack of knowledge of what happened during the course of the relationship between the second respondent and the deceased.
Further, it seemed to me that the parties, having agree that the public trustee need not take part in this proceeding until judgment was given and costs going to be assessed, it was entirely inappropriate to embark upon a hearing in which it would be suggested that the value of the estate was other than that to which the public trustee had deposed.
Thus, it is seen that the deceased and the second respondent enjoyed a happy relationship in the house for a little short of a quarter of a century before the deceased passed away. Since the deceased passed away, the second respondent has received life insurance and superannuation payments which were paid directly to him in consequence of the death of the deceased. Those payments have been largely dissipated in settling the liabilities of the estate and paying legal costs incurred by the second respondent in resisting these claims.
I should say something about the course of the proceedings. For reasons not known to me – not explained by counsel for the applicants and, in my view, inexplicable – two separate proceedings were instituted by the applicants. It’s well known that one application can be made and joined in by any other interested party and, in the absence of any other explanation, it seems to me that the only motivation for instituting two separate proceedings could be to increase the cost returns from the litigation. An enormous amount of material has been duplicated and it seems to me that the only effort made to minimise the cost was a somewhat late agreement that the two applications should be heard and determined together.
The consequence of the way in which the matter has been pursued is that there is a huge liability and costs. The official solicitor for the public trustee says his legal costs and outlays are estimated at $48,500 of which $3,891.53 is being paid in outlays from the estate. The official solicitor estimates that further costs up to $5,000 might be incurred depending upon the work that is required to be done to completion of the administration of the estate. As at the 8th of March 2014, the second respondent’s solicitors advised that some $30,700 had been paid to them in November 2011 and, since that time, a further $3,750 approximately, including mediators fees, have been paid.
Those solicitors estimated that a further sum slightly in excess of $90,000 remains outstanding and that a further $6,600 would be required for the conduct of a one day hearing. Counsel for the applicants advised me from the bar table without objection that the applicants costs up to and including the one day hearing amounted to approximately $176,000.
Thus, it appears that the total of the costs will exceed the value of the estate. This, in my opinion, is an appalling situation. The only light that exists at the end of the tunnel is that the solicitors for the second respondent indicated they have reached an agreement with the second respondent that the unpaid fees can only be rendered in the event that the second respondent is successful in the proceeding, success being defined as the second respondent receiving the sole title to the house that I have referred to.
I turn to the case advanced for John Patrick Hay. John Patrick Hay was born on the 24th of July 1978. He had suffered injuries at work and received compensation in respect of those injuries. He currently resides in an unencumbered unit at West End which is said to have a value of $160,000 or thereabouts. In response to the affidavit of the second respondent, which is document 12 in the court documents index, he asserts that he did not enjoy a good relationship with the second respondent and accuses him of abusing him physically in a serious way. I have already said that I reject that evidence.
John Patrick Hay moved out of the property the subject of this proceeding in about 1994 when he was 16 years of age. He went to live with his father. He rarely spoke to his mother after he moved out of the property. He says that there were several years when he didn’t speak to her at all. He said that he lived with his father primarily from the time that he moved out of the property until he purchased his current residence in West End. He says that after a number of years in about 2008 or 2009 he began to re-establish a relationship with his mother. He said they would speak on the telephone every month or so and that, fairly regularly after he purchased his residence, she would visit and bring him things like linen and crockery to help him establish his new home. He further says that he would maintain contact with her by occasionally stopping by the house at Mount Low.
After a time he moved to Brisbane to live with a girlfriend there, but separated from her in 2009 and returned to Townsville. He says that the deceased provided him with some funding to pay for the transportation of his dogs to Townville. He suffered a back injury in 2009, and had to take time off work and seek medical treatment and have some bed rest. He says that the deceased assisted him from time to time by taking him to and from work, and, on occasions, to and from his doctors. He says that after the deceased became ill in 2010 he stayed with her on occasions, at the hospital, to keep her company. He asserts that the second respondent did not do that. He says that after the deceased was released from hospital he continued to visit her at her residence, in respect of birthdays and special events.
He claims to have had discussions with the deceased in respect of her. He says that she told him that she proposed to appoint him as the executor of her will, and leave the property, presumably the house, as to 40 per cent to each of Sally and himself and 20 per cent to Katie. He says the reduced amount to be left to Katie was because the deceased held the view that Katie had a husband and children and a house already established. He says that those percentages were spoken of on a number of occasions.
On the 10th of March 2014, he filed a further affidavit updating his financial circumstances. In that affidavit he said, and I quote, “I have been unable to obtain Centrelink benefits because of the payout from my workplace injury”, unquote. He went on to say that he had used the funds from the payout to clear the mortgage over his unit and pay other debts, and that those funds were now exhausted and he had no spare cash. It emerged in the course of his cross-examination that he is now entitled to receive Centrelink benefits, and has been so entitled since some time in February, although he has not yet received the money.
His failure to disclose that causes me to doubt his evidence, generally, concerning his financial position. Having said that, it is clear that he is not in a sound position, financially.
However that may be, his relationship with his mother can only be described as an intermittent one during the last 14 years, or thereabouts, of her life. It is not asserted that he made any contribution to the building up of her estate; his claim is based, as I see it, purely on the sense of entitlement because he is a natural child of the deceased.
I turn to the case for Katie Mary McKaig. Katie left home at about 1996 when she was aged 14. She moved out of the house at Mount Low and moved in with her father and his then girlfriend, and she remained in that house for about one year until she was about 15 years of age.
Between 1996 and 2002 she lived at a number of different residences around the country, including spending time in Brisbane, Sydney and on the Sunshine Coast.
For several years after moving out of the deceased’s residence she rarely had any contact with the deceased. She says that when they did have contact it was usually by telephone, and she recalls one occasion, in about 2006, when she says she provided $600 or $700 towards the purchase of a hot water system for the Mount Low house.
She says that she returned to Townsville in about 2003, and lived in a number of different places around Townsville after that time. She says that she resumed regular contact with the deceased, and that they were friendly and comfortable with one another. But she says that because she could not bear to see the deceased in an alcoholic state, her communication was usually in the mornings, before the deceased commenced drinking. She says that she and the deceased occasionally went shopping together. She says that between January and June 2010, and prior to the deceased’s death, she visited her regularly at the Townsville General Hospital. She says that she was distraught by the death of the deceased, and developed some symptoms of depression and anxiety, and has had to have some time off work.
Katie currently lives in a de facto relationship. She is the mother of two children by an earlier relationship, and one child has been born to her present relationship. She claims to be ignorant of her current de facto’s financial position, but says that he works as a diesel fitter at a mine in north Queensland. She says she does not know what he earns, and she has not made any disclosure as to the amount of his earnings. She says simply that there is a joint account that has been set up so that she can buy groceries and fuel and pay ordinary household expenses. Her disclosure does not extend to even detailing the balance of the joint account.
She says that she has not been able to return to work because of the cost of childcare, and she has been informed by Centrelink that she is not entitled to any other benefits, due to the benefits she receives from her relationship with her de facto. I take that to mean, because of the level of earnings of her de facto. I assume that she must have been able to tell Centrelink something of the earnings of her de facto.
Absent any other information, I conclude that she is not experiencing significant financial difficulty at the present time.
I should acknowledge that I was referred to a number of cases of general significance in this area.
The principles, in respect of claims of this sort made by adult children, are well settled and need not be recited in a detailed way here. In this case, the important factors are that the estate is, in my view, a small one, and the duty to the spouse looms large.
I was referred to the case of Serle v Walsh and Others (2006) QSC 377. I found that case of significant assistance. It supports the proposition that a testator’s duty to a widow, or a widower here, is paramount, and that, if possible, the widow or widower should be left with a secure home, and income sufficient to permit him or her to live in the style to which she has become accustomed, and a fund from which to meet contingencies. I conclude from that case, that, as a broad general rule, and absent any special circumstances, the duty of the deceased to her widower was, to the extent that her assets permitted her to do so, to ensure that he was secure in his home, and to ensure that he had an income sufficient to permit him to live in the style to which they had become accustomed, and to provide him with such funds as she could to enable him to meet unforeseen contingencies.
For the applicants, it is submitted that this estate is not small, and I was urged to rely upon South Australian legislation which defines a small estate as being one of $100,000 or less. I reject that submission, because it seems to me that a small estate is one that consists wholly or substantially in the dwelling house in which a married couple have lived prior to the death of one of them. Further, it is submitted on behalf of the applicants that I should regard the house as having been substantially provided to the deceased by her first husband, and that that should lead me to find that there is a strong moral duty to the children. To do that is, in my view, inconsistent with the way in which the house came to be transferred to the deceased. It is, in my view, clear that it was transferred to the deceased in discharge, or partial discharge of her first husband’s obligation to support her and/or the children.
Further, it is said, on behalf of the applicants, that an order should be made in their favour recognising the contribution of the first husband, and it is asserted that that contribution created a moral duty to make provision for the children. The submission on behalf of the applicants is that I should vary the will by creating a life estate in favour of the second respondent, and, thereafter, a gift to the two applicants of the reversionary title. How such an order would result in security for anybody is not clear to me, having regard to what I have said about the costs that are likely to fall upon the estate in the event of an order like that being made. But I did not think it is appropriate to consider that matter in determining what order is appropriate.
My conclusion is that the applicants do not have a strong moral claim, while the second respondent does. Further, as I have said, the estate is properly regarded as a small one, and the obligation that the deceased has to make provision for the second respondent is a strong one. I note that in Bladwell v Davies [2004] NSWCA 170, Justice Ipp said at paragraph 2:
I would add, however, that where competing factors are more or less otherwise in equilibrium, the fact that one party is the elderly widow of the testator, is permanently unable to increase their income, and is never likely to be better off financially, while the other parties are materially younger and have the capacity to earn more or otherwise improve their financial position in the future, will ordinarily result in the needs of the widow being given primacy. That is simply because, in such circumstances, the widow will have no hope of improving herself economically, whereas that would not be the position of the others. In that event, the need of the widow would be greater than that of the others.
Those sentiments are appropriate whether we speak of a widow or a widower. They have much more force in a case like this where it cannot be said that the competing factors are more or less in equilibrium. Here they are plainly not in equilibrium, because the second respondent has a very much stronger moral claim than either of the applicants.
It is generally unsatisfactory to create a life estate followed by the vesting of the property in children. Such a course does not give the widower any flexibility if he has to go into a nursing home or other aged care accommodation; see Cropley v Cropely (2002) NSWSC 349, and Cameron v Vial (2009) NSWSC 79, from which the following passages can be extracted:
When it comes to claims by adult children, it can be said at once that, if there is a competing claim by the widow and all claims cannot be fully accommodated, the widow’s claim should be afforded precedence in the sense that a demonstrated requirement for the allocation of resources in aid of the widow must be satisfied before any similarly demonstrated requirement for the allocation of resources in aid of an adult child. That a widow’s claim to maintenance out of the estate of her deceased husband is a claim which is ‘paramount’ and ‘of a high order is borne out by the judgments…
Another passage that one can extract from those cases is this:
Given her life expectancy and her need for accommodation I think it is appropriate that she have the house in lieu of her legacy. Apart from her own circumstances it is noted that the children of the deceased, although still facing difficulties with mortgages, have one advantage, that is, that being that they are still young and have years to go where they can earn to improve their situation. The plaintiff is far past that point.
I have not overlooked the fact that both of the applicants are in somewhat modest circumstances. They do, however, have the advantage of youth, while the second respondent does not. This is a case in which, in my opinion, there is insufficient resource in the estate to meet all of the claims upon it, and the second respondent’s claim on the estate is so much stronger than that of either of the applicants that his must prevail. In that case, each of the applications will be dismissed. I will hear submissions about costs.
MR MIDDLETON: On the question of costs, your Honour will be aware that there are some peculiar authorities as to how your Honour would deal with costs in an estate matter. I have discussed it with my friend. We are both of the view that it would be of greater assistance for us to consider your Honour’s judgment, in the light of the various cases, before we make submissions at some future date.
HIS HONOUR: You agree with that, Mr Greggery?
MR GREGGERY: I do, your Honour.
HIS HONOUR: Yes. Ms Bingham, did you want to say anything about that?
MS BINGHAM: No. My instructions were to ask for reasons, to study them beforehand as well.
HIS HONOUR: Very well. Well, the reasons will become available to you in the near future. What about the week of the 19th of May?
MR MIDDLETON: Yes, your Honour. That’s fine.
HIS HONOUR: That suitable, Ms Bingham?
MS BINGHAM: Yes, your Honour.
HIS HONOUR: Mr Greggery?
MR GREGGERY: Yes, your Honour.
HIS HONOUR: Well, I will deal with costs on Wednesday the 14th of May, at 10 am.
MR MIDDLETON: Wednesday, the 14th of May.
HIS HONOUR: Yes.
MR MIDDLETON: I thought your Honour said the week commencing the 19th.
HIS HONOUR: I did. I’m sorry. I did say that, didn’t I. No. I’m mistaken there. It’s the – it will be the Wednesday, the 21st, won’t it.
MR MIDDLETON: 21st.
HIS HONOUR: That’s convenient for everybody?
MR GREGGERY: It is, your Honour. Yes.
MR MIDDLETON: Yes, your Honour.
HIS HONOUR: Very well. And there’s no other order required today?
MR GREGGERY: No, your Honour.
HIS HONOUR: Thank you. And that brings me, I think, to an appeal.
MS BINGHAM: May I be excused, your Honour?
HIS HONOUR: Yes. Thank you for telephoning in. You can terminate the connection.
MS BINGHAM: Thank you. Thank you.
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