Joyce Kathleen Burgess v Public Trustee of New South Wales
[2011] NSWSC 1070
•23 August 2011
Supreme Court
New South Wales
Medium Neutral Citation: Joyce Kathleen Burgess v Public Trustee of New South Wales [2011] NSWSC 1070 Hearing dates: 22 and 23 August 2011 Decision date: 23 August 2011 Jurisdiction: Equity Division Before: Brereton J Decision: Plaintiff retains equitable life estate in Dora Creek property given under will.
Upon plaintiff giving notice to trustee of wish that trustee do so, trustee to sell property and apply the proceeds of sale 50% to the plaintiff beneficially and 50% to the purchase of alternative accommodation selected by the plaintiff for her use and occupation during lifetime and thereafter to fall into residue.
Catchwords: SUCCESSION LAW - Family provision - Plaintiff de facto spouse of deceased - will leaves plaintiff equitable life interest and half remainder in home - obligations of testator to surviving spouse - moral obligation of testator to provide for security in home for remainder of spouse's life, capacity for spouse to change home, income sufficient for reasonable degree of comfort and fund for modest luxuries and contingencies - deceased had competing moral obligations to children from prior relationship - testator failed to permit spouse to change accommodation and fund necessary contingencies - further provision in nature of Crisp order as to half estate granted. Legislation Cited: (NSW) Family Provision Act 1982, s 9 Cases Cited: Court v Hunt (Supreme Court of New South Wales, Young J, 29 October 1987, unreported)
Elliott v Elliott (Supreme Court of New South Wales, Powell J, 18 May 1984, unreported)
Elliot v Elliot (Court of Appeal, Kirby P, Glass and McHugh JJA, 24 April 1986, unreported)
Golosky v Golosky (Court of Appeal, 5 October 1993, unreported)
Luciano v Rosenblum (1985) 2 NSWLR 65
O'Loughlin v O'Loughlin [2003] NSWCA 99
Salmon v Blackford (Court of Appeal, Sheller, Powell and Cole JJA, 18 February 1997, unreported)Category: Principal judgment Parties: Joyce Kathleen Burgess (plaintiff)
Public Trustee of New South Wales (defendant)Representation: Counsel:
Mr M. Condon (plaintiff)
Mr J.E. Armfield (defendant)
Solicitors:
ERA Legal (plaintiff)
New South Wales Trustee and Guardian (defendant)
File Number(s): 2010/290921
Judgment (ex tempore)
HIS HONOUR: By summons filed on 3 November 2009, the plaintiff Joyce Kathleen Burgess claims further provision pursuant to (NSW) Family Provision Act 1982, s 9, out of the estate of her late de facto husband Kenneth Reginald Brush, who died at the age of 75 years on 19 October 2008, leaving a will dated 10 August 1988 probate of which was granted on 23 September 2009 to the defendant the Public Trustee of New South Wales.
The estate comprises the deceased's home at Dora Creek which is worth about $400,000, furniture, some effects to which no value was ascribed, and the proceeds of three bank accounts originally amounting to some $79,000 but after discharge of various debts and outgoings now amounting to some $53,500. Liabilities for rates of about $1,900 and the defendant's statutory commission of about $9,400 will reduce that sum to about $42,000. The defendant estimates its unpaid costs on an indemnity basis to be $30,000, while the plaintiff's are said to be $78,000.
By the will, the deceased gave his household chattels to the plaintiff. He gave a motor vehicle and all accessories thereto and tools of trade to his son Garry Kenneth Brush if he survived him, but as Garry Kenneth predeceased the deceased, this gift lapsed. He gave the Dora Creek home to his trustees upon trust for the plaintiff until her death or until she gave notice of no longer desiring to reside there, she to bear the outgoings in the meantime, and thereafter as to 50 per cent to the plaintiff and 50 per cent to be divided equally between such of his children Garry Kenneth, Kim and Julie, and his grandson Garry James, who survived him and attained 25 years of age. His son Garry Kenneth having predeceased him, the result is that there are three shares: one each to Kim, Julie and Garry James. The rest and residue of the estate was left to Garry Kenneth, Kim, Julie and Garry James, or such of them as survived, in equal shares; again, the consequence of Garry Kenneth predeceasing the deceased is that there are three equal shares in the residue.
The deceased was born on 16 December 1932. He had a prior de facto relationship with one Claire Nicol, to which relationship were born three children: Garry Kenneth born 1955, Kim born 1957 and Julie born 1959. The deceased lived with Claire and their children in his mother's home at Kihilla Road, Auburn. The deceased's health appears to have been affected by overindulgence in alcohol and tobacco. Partly at least as a result of such indulgences his de facto relationship with Claire broke down; it is not clear exactly when this occurred, but it would seem to have been some time in the late 1960s or thereabouts.
The plaintiff was born on 1 September 1920. She first married David Allen Burgess on 13 May 1944. They had four children: Donald David born 1944, Michael Allen born 1946, Davina Kathleen born 1954 and Stephen John Peter born 1957. Her husband David Allen Burgess died in 1962.
The parties met in 1971, following which a close personal relationship developed between them. They commenced to cohabit in 1973, at the plaintiff's home at Simpson Street, Auburn. When they commenced to cohabit, the plaintiff owned Simpson Street subject to a mortgage, which was ultimately discharged in 1975. She was in receipt of a widow's pension, and had some part-time employment with a florist for the equivalent of 1 to 2 days a week. The deceased had some interest, the precise nature of which is not clear, in his mother's property at Kihilla Road, which was ultimately transferred to him in 1989. He was employed as a panel beater.
In 1975, the parties found and purchased, in the name of the deceased, the property at Dora Creek. In 1979 the deceased found employment with Woolworths at Cardiff near Dora Creek, and in 1979 the deceased and the plaintiff moved permanently to Dora Creek. The plaintiff sold her Simpson Street, Auburn property, the net proceeds of which were applied to renovations to the Dora Creek property, which the parties effected between 1975 and 1979. The plaintiff remained in receipt of a widow's pension and subsequently an aged pension. The deceased and the plaintiff maintained separate bank accounts throughout their relationship. In 1980 they travelled together to England and shared the expenses.
The deceased's health began to deteriorate from about 1988. Indeed, he made his will in 1988 shortly before undergoing cardiac surgery. In 1989 the Kihilla Road property formerly owned by his mother was transferred into his name. During 1990, he suffered three strokes.
In 1991 the mortgage which secured the loan with which Dora Creek had been purchased was discharged, using the deceased's superannuation. In 1993, he retired on a veteran's pension. He sold the Kihilla Road property in 1997 for $112,000. So far as the evidence goes, it is probable that the proceeds were shared between him and his former de facto wife Claire Nicol. He used his share, presumably about $55,000, to acquire shares, which he later sold in 1999, the proceeds being invested in term deposits. In turn, these were the bank accounts which formed part of his residuary estate.
The plaintiff is now 90 years old. She is legally blind with vision of about 3/20. She is profoundly deaf in one ear. She suffers from cardiac problems. Her personal assets are limited, amounting to Telstra shares worth about $1,900, furniture and household effects said to be worth about $10,000, and cash of $22,800. It seems that she has had the benefit of about $10,000 from the estate applied to costs, and a further $5,000 which she says she retains in the home. Her income comprises the aged pension and a small amount of interest, amounting in all to about $1,643 per month, while her expenses are about $1,760 per month. On the life tables, it is agreed that she has a life expectancy of approximately 4.8 years.
The plaintiff lived with the deceased in a continuous de facto relationship for a period of about 35 years. It is not in dispute that she was a person eligible to apply for family provision under the Family Provision Act, being the deceased's de facto spouse. By all accounts the relationship was a harmonious one; at least there is no suggestion to the contrary. She looked after the deceased in sickness and in health, and for substantial parts of the relationship there were periods of sickness. During his extensive hospitalisations, she attended on him in hospital. She provided support for him in the early years of the relationship when, following the breakdown of his previous relationship, he fell upon times of hardship.
The Dora Creek home is the only home she has known since 1979, and she and the deceased shared it exclusively. It is plainly her wish to remain in the Dora Creek property for so long as she can. On the other hand, it is likely that it will not be possible for her to remain there forever. Both its current state of repair - which is, to put it mildly, suboptimal - and her health position, makes it likely that sooner or later she will require alternative aged care accommodation.
The beneficiaries named in the will are (in the light of the events which have occurred), the deceased's two daughters Kim and Julie, his grandson, Garry. Kim is in part-time employment. She owns a property worth $400,000, subject to a mortgage of about $40,000. Julie owns a property, jointly with her former partner, worth about $450,000. While on their evidence their expenditure may exceed their income, they are in immeasurably stronger financial positions than the plaintiff. Notwithstanding their obligations to support their own children, in terms of need, their position could not begin to compete with that of the plaintiff. So far as the grandson Garry is concerned, he has undoubtedly fallen on hard times; but he is young, his claim as a grandson is more remote, and his moral claim on the deceased's bounty is slight when compared with that of the plaintiff.
The obligations of a testator towards a surviving spouse have often been enunciated. In this case, the de facto as opposed to de lege status of the plaintiff makes, I think, not the slightest difference. The primacy of a testator's obligation to make provision for their surviving spouse has been expressed in the numerous cases [see Luciano v Rosenblum (1985) 2 NSWLR 65, Powell J (at 69-70); O'Loughlin v O'Loughlin [2003] NSWCA 99 and Elliott v Elliott (Supreme Court of New South Wales, Powell J, 18 May 1984, unreported), affirmed by the Court of Appeal in Elliot v Elliot (Court of Appeal, Kirby P, Glass and McHugh JJA, 24 April 1986, unreported)]. In Elliot v Elliot , the plaintiff was a widow of 79 years of age, who had had a happy marriage. Powell J gave the widow the whole of the eligible small estate, and the Court of Appeal indicated that not only was that order within his Honour's discretion, but it was really the only proper order that could be made. In a passage (later endorsed by Young J (as his Honour then was) in Court v Hunt (Supreme Court of New South Wales, Young J, 29 October 1987, unreported)), Powell J (at p 11) described a testator's duty to his widow of a long standing and harmonious marriage as requiring, as a minimum, provision of security in her home for the rest of her life and the capacity to change it, an income sufficient to enable her to live in a reasonable degree of comfort and a fund for modest luxuries and contingencies. His Honour said:
I take the view - which view I believe is, supported by the authorities - that, in a case such as this, where the marriage of the Deceased and his widow has been long and harmonious, where the widow has loyally supported her husband, and assisted him to build up and maintain his estate, the duty which the Deceased owes to his widow can be no less than (to the extent to which his assets permit him to achieve that result), first, to ensure that his widow be secure in her home for the rest of her life, and that if, either, the need arises, or the whim strikes her, she has the capacity to change her home; secondly, that she have available to her an income sufficient to enable her to live in a reasonable degree of comfort, and free from any financial worries; and, thirdly, that she has available to her a fund to which she might resort in order to provide herself with such modest luxuries as she might choose, and which would provide her with a hedge against any unforseen contingency or disaster that life might bring.
His Honour had earlier enunciated a similar description in Luciano v Rosenblum (at 69-70):
It seems to me that, as a broad general rule, and in the absence of special circumstances, the duty of a testator to his widow is, to the extent to which his assets permit him to do so, to ensure that she is secure in her home, to ensure that she has an income sufficient to permit her to live in the style to which she is accustomed, and to provide her with a fund to enable her to meet any unforeseen contingencies.
This 'broad general rule' was echoed by the Court of Appeal in Golosky v Golosky (Court of Appeal, 5 October 1993, unreported), in which Kirby P (as his Honour then was), with whom Cripps J A agreed, said (at p16) that in the absence of special circumstances, it will normally be the duty of a testator to ensure that a spouse is provided with accommodation appropriate to that to which she [or he] has become accustomed, and (to the extent that the assets available permit) a fund to meet unforeseen contingencies. The provision made by this testator in his will for the plaintiff does not meet that test, fundamentally because it does not really permit her to change her accommodation if the need arises, or to have a fund for necessary contingencies.
On the other hand, it is necessary to bear in mind the observations of Young J in Court v Hunt (NSWSC Young J 14 September 1987, BC8701115), as follows (at 4):
There is another factor here too that must not be overlooked. The plaintiff's first marriage produced three children and her second marriage (to the deceased) one daughter. That daughter has two girls and the testator provided that those two grand-daughters were to receive the whole estate after the plaintiff's demise. The plaintiff's intended testamentary provision would be that these grand-daughters only receive two-fifths of the estate. Accordingly, the court must be particularly careful against being involved in any scheme whereby the property would be sold and either maintained as cash or alternatively put into a strata title retirement unit, which would have to be sold for cash so that persons of whom the testator had no intention to benefit would receive substantial capital sums in a short period of time to the prejudice of his granddaughters, whom he did wish to benefit. The fact that this may happen is, of course, no reason in itself for not making a capital provision for the widow, but it is always something which the court must bear in mind.
The observation that the potential for such an outcome is no reason in itself for not making capital provision for the widow is reflected in the more recent observations of Sheller JA, with whom Powell and Cole JJA agreed, in Salmon v Blackford (Court of Appeal, Sheller, Powell and Cole JJA, 18 February 1997, unreported):
The principal point according to Mr Gibb was that his Honour failed to take into account that by reason of the widow's advanced years and the probability that her adopted son would be the natural object of her bounty, the effect of the order made was likely to be that the adopted son, whom the deceased had no intention to benefit, would be the beneficiary of half the estate. I have great difficulty in seeing how a submission of this sort has any weight in the circumstances of this case.
The matter that this Court must consider is whether the order that his Honour made was in such terms that one could only come to the conclusion that in some way his discretion must have miscarried. It is well established that proper provision is not to be measured solely by the need for maintenance. It should, in the case of this respondent and in the circumstances of this case, free her mind from any reasonable fear of any insufficiency as her age increases and her health and strength fails. I may say in this regard that her life expectancy, according to the tables, was something over eleven years at the time of the hearing. If one comes to the conclusion that for her proper maintenance an order such as the present is appropriate, it seems to me to matter not at all that she has an adopted son of an earlier marriage and that he may be the ultimate beneficiary of her bounty.
To my mind it is plain, on the one hand, that the plaintiff has a powerful moral claim - which the deceased recognised by devising the beneficial interest in half the estate to her - after a relationship of some 35 years, in which they had both made contributions in their respective fields of endeavour. Even had the relationship broken down, the plaintiff would likely have received at least half of the house. In those circumstances, her moral claim to be able to dispose of half of the house under her own will is a strong one, as the deceased recognised as long ago as 1988.
On the other hand, the deceased had competing moral claims upon him. Despite the primacy of his obligation to his widow, he also had children of his first relationship, and in a second marriage there is generally no realistic expectation that the second wife will make provision for the children of the husband's first marriage. To him alone could they look for some provision.
Those circumstances call for a balancing exercise. The deceased's undertaking of that exercise miscarried, because he did not sufficiently provide for the situation that would eventuate upon the plaintiff having to vacate - for health or other reasons - the Dora Creek property; but it does not follow that, in circumstances where her life expectancy is something less than five years, the plaintiff could receive the whole of the estate to the exclusion of the children of the deceased's first relationship. Indeed, while it is necessary to make provision for the plaintiff to have alternative accommodation, it is difficult to see how her position (as distinct from that of her own heirs) would be practically advanced by providing for that accommodation to be entirely her own beneficially. So long as she has the ability to occupy it, her need for alternative accommodation is satisfied.
There is some evidence as to the nature and cost of alternative accommodation. At Strathfield Gardens - which is rather remote from the plaintiff's present residence - studio serviced apartments are available for $98,000 and one bedroom serviced apartments for $185,000, with an ongoing monthly fee of $944.50 per month. At Valhalla Village on the Central Coast, two bedroom homes are available within the range $140,000-$232,000. The evidence chiefly relied on by the plaintiff is in respect of the Bayside retirement village at Morisset, which is close to where she currently lives and also close to her daughter, who lives in Gosford; there, a bond of $200,000 would be required.
Taking all that evidence together, one can conclude that something in the order of about $200,000, which corresponds with about half of the value of the Dora Creek property, would be required to secure appropriate aged care accommodation for the plaintiff. That would leave, from the proceeds of sale, approximately another $200,000. On the 3% tables, that $200,000 would produce an income of about $825 per week for five years. In addition, the plaintiff would presumably still have her aged pension.
It seems to me therefore, that in lieu of the provisions made for the plaintiff in the will of the deceased, she should receive from the deceased's estate: first, conformably with the provisions of the will, an equitable life estate in the Dora Creek property; secondly, upon her giving notice to the trustee of her wish that the trustee do so, that the trustee sell that property and apply the proceeds of sale 50% to the plaintiff beneficially and 50% to the purchase of alternative accommodation selected by the plaintiff for her use and occupation during her lifetime, and thereafter to fall into residue.
As there may be eventualities and complexities with this that I have not as yet had a full opportunity to consider and formulate, I propose to direct that the plaintiff bring in short minutes to give effect to that.
So far as costs are concerned, the plaintiff on 14 April this year made an offer to the defendant to the effect that in lieu of the provisions of the will, she receive a beneficial half interest in the property, that the beneficiaries named in the will remain entitled to the other half interest in the property, and that the plaintiff be entitled to require the trustee to sell the property and purchase an alternative replacement property to be held upon the same terms. In many ways, although not identical, that offer substantially reflects the conclusion to which I have come. The outcome under my order is no less favourable to the plaintiff and no more favourable to the defendant than that offer. Had that offer been accepted, the costs of the proceedings since April would have been avoided.
On first principles, it would follow that the defendant should have its costs on the indemnity basis out of the residuary estate, and that the plaintiff should have her costs on a party-party basis until 14 April and thereafter on the indemnity basis out of the residuary estate. The residuary estate will be insufficient to satisfy that costs obligation in the short term, although ultimately - after the plaintiff's demise -there should be sufficient assets in the residuary estate to meet it. The consequence may have to be that the plaintiff will have to resort to her own share of the estate to pay at least some of her solicitor/client costs, reserving to her estate the ability to enforce the costs order against the deceased's estate in due course. That is a matter which the plaintiff will have to work out with her lawyers. My intent, which ought to be reflected in the orders, is that the estate is not entitled to have recourse, while the plaintiff lives to the Dora Creek property or to the proceeds from its sale, to satisfy its own costs or its liability for the plaintiff's costs. Subject to that, the costs order will be as I have indicated.
I direct that the plaintiff bring in short minutes to give effect to this judgement.
I direct that the exhibits may be returned.
I adjourn the proceedings to Tuesday, 30 August 2011 at 9:30 AM for short minutes.
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Decision last updated: 13 September 2011
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