Kemlo v Kemlo

[2010] NSWSC 1331

CITATION:	Kemlo v Kemlo [2010] NSWSC 1331
HEARING DATE(S):	27/10/2010 and 28/10/2010
JUDGMENT DATE :	22 November 2010
JURISDICTION:	Equity Division
JUDGMENT OF:	Macready AsJ at 1
DECISION:	1. In addition to the provision for the plaintiff provided in the will of the deceased the plaintiff is to receive an additional legacy of $275,000. 2.To the extent necessary to meet the provision of these orders I declare the assets of the Kemlo superannuation fund as notional estate. 3. The plaintiff’s costs on an ordinary basis and the defendant’s costs on an indemnity basis are to be paid or retained out of the estate of the deceased. 4. Interest is to run at the rate provided for under the Probate and Administration Act 1898 if the legacy is not paid within 3 months from today’s date to commence from the expiration of the period of 3 months.
CATCHWORDS:	Family provision. Application by son who was left inadequate legacy. Consideration of specail circumstances under s 28 (1) (b) to designate notional estate. Increased legacy ordered and orders for designation of notional estate.
PARTIES:	Tod Warren Kemlo v Bunsom Kemlo (Estate of the Warren Frank Kemlo)
FILE NUMBER(S):	SC 2008/281681
COUNSEL:	Mr A Lakeman for plaintiff Mr C Carter for defendant
SOLICITORS:	Priest McCarron Lawyers for plaintiff McKenzie & Company Lawyers for defendant

- 1 -

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

Associate Justice Macready

Monday 22 November 2010

2008/281681 TOD WARREN KEMLO v BUNSOM KEMLO

(ESTATE OF THE LATE WARREN FRANK KEMLO)

JUDGMENT

1 His Honour: This is an application under the Family Provision Act 1987 (‘the Act’) in respect of the late Warren Frank Kemlo who died on 22 May 2007 aged 74 years. His first wife predeceased him and after her death he had a de facto relationship which lasted for some years. That partner has been given notice of the proceedings and she makes no claim.

2 The deceased met the defendant, Bunsom Kemlo, in Thailand in 1989. The defendant moved to Australia and she and the deceased were married on 3 November 1989. The plaintiff, Tod Kemlo, his son from his first marriage survived the deceased.

Will of the deceased

3 By his will dated 23 March 2007 the deceased left a legacy of $10,000 to his son, Tod, $1,000 to his sister, Dawn Masters, and the rest of his estate to the defendant, his second wife. The estate had paid the legacies to Dawn Masters and Tod.

Estate of the deceased

4 The two principle assets in the estate are the matrimonial home at Oxley Street, Swansea and the deceased’s business premises at Union Street Wickham. The parties are agreed that at the time of the hearing the Union Street premises property was valued at $612,500. There is a dispute as to the value of the matrimonial home at Oxley. There was tendered in evidence without objection three valuations of the Oxley property. Mr SP Owens, a valuer, valued the property at $490,000 and Mr Harrison, a valuer, valued the property at $360,000. There was also a kerb side valuation by Mr Elms who valued the property between $460,000 to $470,000.

5 The Court did not have the benefit of any cross-examination of the valuers and it has been left to the parties’ submissions to deal with the matter. In those circumstances and, as there is nothing to support the valuation of the Mr Elms, I will have no regard to his valuation.

6 Mr Harrison’s valuation lists four comparable properties within a range of sale prices between $362,000 and $425,000. The most comparable he considered was a property at Pelican Street, Swansea which sold for $383,000 on 9 December 2009. He described the property as being in a superior condition to the subject property. In his observations on valuation he noted that the value of the subject property was reduced by unauthorised construction and other matters.

7 Mr Owens relied on three comparable properties, which were different from those of Mr Harrison’s comparables and ranged from $380,000 to $442,500. Mr Owens did not refer to the unauthorised construction and he did not give reasons for his valuations. In these circumstances I prefer Mr Harrison’s valuations and I determine the value of the Oxley Street property at $360,000.

8 In 1996 the Kemlo superannuation fund was established. Both the deceased and the defendant were members of the fund. The superannuation fund owns a property at Wickham Street, Wickham which is currently occupied on a month-to-month tenancy by Composites and Chemicals Pty Ltd. The Wickham Street property was the subject of valuation evidence before me. Mr Owens valued the property at $475,000 and Mr Harrison valued the property at $350,000. The was also a kerbside valuation by Mr Smith of between $540,000 and $580,000 but given that he gave no basis for his valuation I will have no regard to his valuation.

9 Mr Harrison’s valuation had regard to four comparable sales which varied between $290,000 and $750,000. He did not give reasons for the basis of these valuations but he valued the Wickham Street property using forty local sales, details of which were not supplied. He valued the Wickham Street property on a per square metre basis and deducted 25 per cent for a reason he did not specify, although it could have been due to the uncertainty which he referred to in his market comments as part of the valuation.

10 In contrast Mr Owens determined the valuation by two comparable methods. One method was by a capitalisation of rental value and the other by comparable building summation method. On the first method he obtained $472,200 and the second $480,000. His valuation does not give a basis for his comparable building summation method but he does give a basis for the rental values. His calculations in respect of the capitalisation of rental value are based on a rental value of the site and includes outgoings for water, council, insurance and land tax. His comparable example that gives him the rental figures is also rent plus outgoings. The fact that the Kemlo superannuation fund is presently paying the outgoings is not relevant to this determination of value based on comparables. His methodology is therefore correct and it seems to me that his capitalisation method having regard to the rental value is appropriate. His conclusion on this basis that the property has a value of $472,200 is appropriate and I adopt his valuation.

11 The other assets in the Kemlo superannuation fund at the date of the hearing were shares valued at $103,000 and cash at bank of $83,000.

12 The plaintiff’s costs, including the hearing and GST amount to $72,000 and the defendant’s costs including administration costs amount to $55,000.

History

13 The deceased was born in February 1933. He died on 22 May 2007 at the age of 74 years. His son, Tod, the plaintiff was born in February 1959 during the deceased's first marriage and he is 51 years old. His de facto partner Gaile Finch was born in February 1953.

14 The deceased and his first wife lived in Newcastle. In 1967 the deceased’s first wife left the deceased and took the plaintiff to live with her in Punchbowl in Sydney. Approximately nine months after he had moved to Punchbowl, his father arrived and took the plaintiff with him back to Newcastle. The plaintiff never saw his mother again and she died when he was 12 years of age.

15 When he was about 12 years of age the plaintiff suffered a number of injuries when he was involved in a motor vehicle accident. The plaintiff and the deceased moved to Boolaroo and at around that time Carol Jobson became the deceased’s de facto wife. This relationship lasted for some 15 years.

16 Between the ages of twelve and fifteen, the plaintiff resided with his father and Carol at Boolaroo. This was not a happy period in his life. When he was fifteen he ran away from home and caught the train down to Sydney. After about eight months in Sydney he went to the Northern Territory where he stayed for about four years until 1978. During this time he worked and supported himself. He grew up fairly quickly.

17 Some time in the seventies the deceased established a business known as Forklift and General Equipment Pty Ltd, now Kemlo Holdings Pty Ltd, which undertook mechanical repairs, sold and hired second hand forklift trucks.

18 In 1980 the deceased purchased the house in Oxley Street, Swansea.

19 In 1981 the plaintiff left the Northern Territory and returned to Newcastle where he remained for two years. He stayed with his father and Carol for a few months where he lived in a caravan at the Oxley Street home. During this time the plaintiff met his future de facto partner Gaile and they moved to Kurri Kurri where they lived for some time.

20 The deceased met the defendant, Bunsom, in Thailand in 1989 when she was 22 years of age. She was born in January 1967.

21 At that time the defendant had a three year old son who still lives Thailand and is currently aged 24 years. She arrived in Australia in April 1989, married the deceased in November of that year and remained living with him until his death.

22 In December 1989, the deceased purchased property at Wickham Street, Wickham which was subsequently owned by the superannuation fund.

23 In 1993 the plaintiff and Gaile purchased 130 acres of land at Eight Mile Creek, Wittitrin, situated approximately 40 kilometres from Kempsey.

24 In 1995 the deceased incorporated Forklift and General Equipment Pty Ltd which took over the Forklift and General business. The deceased and the defendant held one share each in that company. In 1996 he established the Kemlo superannuation fund and transferred the Wickham Street property into the fund.

25 As the deceased aged he had difficulty managing his business and it was obvious to him he should plan for the future. He contacted a former business associate, Mr Allen Daggar who agreed to join him in running the business. A new company, Forklift & General (Newcastle) Pty Ltd was established. Mr Daggar and the defendant held equal shares in the company.

26 In relation to entitlements to participate in the surplus, the defendant and Mr Daggar each had a half share of the company but the defendant had no voting rights. Mr Daggar held these.

27 On 31 March 2007, the assets of Forklift and General Equipment Pty Ltd were sold to the new company for $360,000. The purchase price was left owing and was secured by a charge given by the purchaser over its assets. The agreement for sale provided for the loan to be repaid by instalments of over a period of 59 months.

28 At the present time there is approximately $115.932.11 to be paid under that charge.

29 In April 2007, for the first time in their relationship the deceased visited the plaintiff at his home at Wittitrin. He brought gifts with him. There was a difference of opinion between father and son and I will refer to this later.

30 In June 2007, Forklift and General Equipment Pty Ltd changed its name to Kemlo Holdings Pty Ltd. The only asset after the sale of that company was effectively the debt due to the company in respect of the sale of the business to the new company.

31 The deceased died on 22 May 2007 and probate was granted in September 2008. The summons was filed in time on 20 November 2008.

32 A matter to note is that in respect of the superannuation fund, the deceased nominated the defendant in respect of his share (which was the most substantial share). This meant that the total fund passed to the defendant on his death rather than the deceased’s share passing to his estate.

Eligibility

33 The plaintiff is an eligible person.

34 In Singer v Berghouse [1994] HCA 40; (1994) 181 CLR 201 at 208-210, the High Court has set out the two stage approach to be followed:

“The first stage calls for a determination of whether the applicant has been left without adequate provision for his or her proper maintenance, education and advancement in life. The second stage, which only arises if that determination be made in favour of the applicant, requires the court to decide what provision ought to be made out of the deceased's estate for the applicant. The first stage has been described as the "jurisdictional question". ….

….

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 [1938] AC, at p 476. The determination of the first stage in the two-stage process 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.

The determination of the second stage, should it arise, involves similar considerations. Indeed, in the first stage of the process, the court 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 stage 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 (1951) 82 CLR 645, where there were no assets from which an order could reasonably be made and making an order could disturb the testator's arrangements to pay creditors.”

The plaintiff Tod Kemo

35 The plaintiff is 51 years of age and lives with his de facto partner, Gaile Finch, who is on a disability pension. Due to Gaile’s health he is not able to seek employment and in mid 2007 he was placed on a carer’s pension by the Department of Social Security. The plaintiff has worked as a labourer for much of his working life. However he also suffers from a number of health problems. He suffers from macular degeneration. He has arthritis in his left shoulder and left knee which cause him pain. He has sciatica in his lower back and a recent x-ray found evidence of emphysema. At the present time he is not working as he cares for Gaile on a full time basis.

36 Gaile’s disabilities are severe and she suffers from a lot of pain. She has a lot of trouble walking. She has to throw her leg out straight as she does not have a kneecap in one knee. She struggles to hang out clothes because of problems with her shoulders.

37 The plaintiff and Gaile live in a dwelling on the 130 acre property. There are no farming activities carried out on the property and no income derived from it. The dwelling is of a very low standard with an outside toilet, shower and laundry and it can only be described as being in a pitiful state. White ants have been discovered in the dwelling and it is nothing more than a bush shack which is about to fall down. The plaintiff and Gaile have to sleep in their car when there are strong winds.

38 The assets owned by the plaintiff and Gaile consist of the 130 acres of land worth $200,000 which has a mortgage of $48,000. They have a motor vehicle worth $5,000 and general equipment worth $5,000. They have a Mastercard debt of $1,300, council rates of $400 per anum and Protection Board Rates of $100 per annum which are currently in arrears. Gaile has a $67 deduction from her pension to cover electricity charges and a $50 deduction to cover council services. Their combined pension is approximately $920 per fortnight.

39 The plaintiff’s relationship with his father was criticised by the defendant at the hearing. As I mentioned he ran away from home when he was fifteen. However, when he returned to Newcastle from Sydney he resumed his relationship with his father. The plaintiff agrees that it is plain he and his father had a relationship where they were both independent yet similar to each other and time spent together would often end up with an argument. On one occasion when the plaintiff needed funds to repair his car he worked for his father to pay for the repairs. His father told him to leave, presumably with his car, but refused to give him any money to return to Wittirin. However, one of the employees took money from out of the till to give him money for petrol to enable him to return home.

40 The plaintiff has lived for many years in the Kempsey area distant from Newcastle. He gave evidence that he would telephone his father two or three times a year and he would try and phone him on his birthday, Father’s Day and Christmas.

41 The defendant, to her credit, tried to get the deceased and his son together and she asked the deceased why he did not talk to his son. The deceased’s reply was simply, “He (Tod) knows where we live”. She confirmed that there were telephone conversations between the deceased and his son.

42 The plaintiff missed his father’s sixtieth birthday celebration and his grandfather’s funeral because he did not want to be in a situation where he would be in a crowd of people.

43 Approximately six weeks before the deceased died, the deceased visited the plaintiff without notice at his home in Wittitrin. The deceased brought with him some items including a television, stereo set and other farm items to give to the plaintiff. The plaintiff told words to the effect of, “I don’t want your charity” to which the deceased responded in words to the effect of, “Right, where’s the local tip. I’m taking it all to the local tip.” This occasion was effectively resolved with the plaintiff accepting some of the items.

44 However despite his lack of funds the plaintiff did manage to see his father shortly before he died.

45 In Foley v Ellis [2008] NSWCA 288 the Court of Appeal referred to this kind of problem in these terms:

“101. The more recent authorities have held that a state of estrangement or even hostility between a testator or testatrix and a claimant does not terminate the obligation of the testator or testatrix to provide for the claimant. In Palmer v Dolman Ipp JA , after a review of the
cases,observed (at [110]) that:

‘…the mere fact of estrangement between parent and child should not ordinarily result, on its own, in the child not being able to satisfy the jurisdictional requirement under the Act.’

See also Wheatley v Wheatley [2006] NSWCA 262 at [22] - [23] per Bryson JA (with whom Santow and McColl JJA agreed), addressing the second stage of the process required by Singer v Berghouse.

102 The authorities indicate that where the claimant has been estranged from the testator or testatrix, the application of section 7 of the Family Provision Act requires that the estrangement be appraised and its causes considered: Wentworth v Wentworth, estate of G M Wentworth (Bryson J) quoted in Wheatley v Wheatley at [22]. In addition, section 9 (3) (b) expressly requires the character and conduct of the eligible person to be taken into account at the second stage of the process. Care should be taken, however, not to over simplify the complex and nuanced relationships within a family by yielding to the temptation to condemn categorically the behaviour of one party or the other. Events viewed years later through the cold prism of a courtroom may give a different impression than when the events are set in the context the raw emotions experienced at the time. The ‘ wise and just’ testator or testatrix ( Bosch v perpetual Trustee Co Ltd [1938] AC 463 at 478-479 per Lord Romer) must be taken to understand this.”

46 Although the relationship between the deceased and his son was a difficult one the plaintiff did not abandon his father and he kept in contact with him, although given his nature this was difficult for him. The deceased for his part took few steps to keep in contact with his son. I would not suggest that the plaintiff’s conduct any way affects his claim for provision.

47 The plaintiff did not contribute to the estate of the deceased.

The defendant Bunsom Kemlo

48 The defendant is forty-three years of age. She is single and has no dependents in Australia. From time to time she supports her 24 year old son who lives in Thailand and one of her brothers.

49 The defendant owns Union Street, Wickham valued at $612,500 and the matrimonial home at Oxley Street, Swansea valued at $360,000. She also has her interest in the superannuation fund to which I have referred. She will not be able to access the fund until she is 55 years of age or more likely when she is 60 years of age. The superannuation fund pays her a monthly pension of $1,500.

50 The defendant has her interest in Kemlo Holdings Pty Ltd which she effectively owns. The only asset of that company is the amount that is still owed by the purchaser of $115,932.11. The company also has a taxation liability of $47,784.38. It is unlikely that that amount will be taxable in the company’s hands. Whether or not it will be taxable in the defendant’s hands will depend upon the way in which the company deals with it.

51 The defendant also has her interest in the L class shares in Mr Dagger’s company, Forklift & General (Newcastle) Pty Ltd, from which she has now been effectively excluded. That company has continued the business which was purchased by Mr Daggar from the deceased’s company in 2007. The company has traded for years without paying rent to the defendant for the property and it only commenced paying rent of $2,000 per month in May 2010. Given the estrangement between the defendant and Mr Dagger it would seem unlikely that the defendant will receive dividends or anything of substance from his company. The defendant has the right to receive dividends but she has no voting rights so Mr Dagger controls the company.

52 The defendant has cash assets of approximately $10,000 and some land in Thailand worth about $5,000. She received funds from joint accounts on the death of the deceased in the order of $100,000. The defendant used these funds to purchase a motor vehicle, make repairs to her home and repatriate a small amount to a brother in Thailand. She has a HECS debt of $4,861.

Discussion

53 It is necessary to see how the plaintiff has been left without adequate and proper provision for his maintenance, education and advancement in life. The plaintiff’s claim is for provision for the following:

Repayment of Mortgage	$46,000
Repayment of Mastercard	$1,300
Replacement of termite damaged home with two bedroom cottage	$250,000
Secondhand 2006 Hilux motor vehicle	$26,490
Fund for vicissitude of life	$80,000
Dental work	$6,845
Access upgrade required by Local Council	$13,000
New shed	$30,000
Septic tank	$8,000
Total	$461,635

54 There is no doubt that the home in which the plaintiff lives is so badly damaged that it will need to be replaced. There is a quotation for the erection of a timber home for $250,000. That seems to somewhat high for a 2-bedroom, single storey house. It is also clear that the plaintiff has had difficulty with his 2006 Hilux motor vehicle which was second hand when he bought it. Given the difficult access to his property a better motor vehicle would be of great assistance to him. The shed which contains his tools is under water during times of flood.

55 The other matters are self-evident. However the problem with this case is that the plaintiff’s claim has to be considered in the light of the situation of the defendant and the size of the estate.

56 Widow's claims are frequently the subject of applications in this Court. The Court of Appeal in Goloski v Goloski (5 October 1993, unreported) has referred to formulations of the standard to be expected in respect of a widow and refer to the decision of Powell J in Luciano v Rosenblum (1985) 2 NSWLR 65 and Elliott v Elliott (Supreme Court of New South Wales, 18 May 1984 unreported), which was approved by the Court of Appeal on 24 April 1986. There Powell J said:

"Where the marriage of a 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 a 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 have 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 worry; and, third, that she have available to her a fund to which she might have resort in order to provide herself with such modest luxuries as she might choose and which would provide her with a hedge against any unforeseen contingency or disaster that life might bring".

57 They have recently been reminders about the limited use of such formulations. In Marshall v Carruthers [2002] NSWCA 47 Young CJ in Equity said:

“73 It must be remembered that Powell J put his proposition as a “broad general rule”. However, there is in fact no “standard former spouse” to which one can just apply that proposition as a rule of thumb.
74 Powell J’s broad general rule may not be a good guide as to what the Court will consider as the duty of a testator towards a spouse except in the case of a financially dependent spouse where there is a history of bringing up children with the deceased or in supporting the deceased while he was amassing his fortune. The broad general rule may well be inapplicable in cases of other spouses. Indeed, the cases in the first half of the 20th century show that as far as widowers were concerned, the proposition was quite untrue.
75 I also take this opportunity to reject Mr Ellison’s submission that a person who has a claim as a class (a) eligible person ipso facto has a stronger claim than a person who comes under class (b). Indeed, in many cases, such as where there are infant children, this may not be so.”

58 Palmer JA concurred in these sentiments.

59 The matter was again dealt within more detail in Bladwell v Davis & Anor [2004] NSWCA 170. In that case Bryson JA said:

“ [12] There have been many statements in judicial decisions, including decisions in the Court of Appeal, generally to the effect that primacy of some kind is accorded to claims of widows for proper maintenance and advancement in life, including continuance of housing arrangements which they enjoyed during the lifetimes of their late husbands. These statements are not altogether uniform in expression, and should be understood as made in each case in relation to the facts under consideration; and those facts vary widely and in truth are unique to each particular case. “Widow takes all” is not a rule which has been or could be established by judicial decisions: the Court cannot resign the functions which it has under s 7 of the Family Provision Act 1982 in favour of rules of thumb. A rule which was once followed which practically prevented ordering provision for an adult son who was fit to work has been abandoned.
[13] Observations on the claims of widows were made by Powell J in Luciano v Rosenblum [1985] 2 NSWLR 65 at 69–70 in these terms:
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.
These observations were not made in the context of a competing claim or proved need by another eligible person, and were introduced by a guarded reference to a general rule and the absence of special circumstances. However they are frequently, almost universally cited in applications where provisions for widows are under consideration.
[14] In Golosky v Golosky NSWCA 5 October 1993 (unreported) the widow, second wife of the testator, was the applicant and the sons of the first marriage, the will beneficiaries whose interests were affected, were well off and did not assert financial need. The majority (Kirby P, Cripps JA concurring) ordered further provision for the widow, and Kirby P referred to Luciano v Rosenblum briefly for comparison, but also said:
Matters such as these rule out an inflexible rule that every spouse or every widow is entitled, as of right and in every case, to look to a testator to provide accommodation for life. Such inflexible rules used to exist in this area, as for example the previous rule that an “able bodied son” was disentitled to a claim under the predecessor to the Act for that reason alone. That rule has now been abandoned in this State. See [ Hunter v Hunter and Ors (1987) 8 NSWLR 573 (CA) 575f], 580f; cf Anderson v Teboneras and Anor [1990] VR 527. So should inflexible rules about spousal provision.
[15] In Hertzberg v Hertzberg [2003] NSWCA 311 provision ordered by Acting Master Berecry for a widow, second wife of the testator, out of a large estate was confirmed by the Court of Appeal. There was no competing claim or circumstance of need of any will beneficiary. McColl JA said at [35] in the context of the claim of a widow for the matrimonial home (which in this case the claimant owns):
His Honour's judgment recognised the community expectation that a testator should make provision for a widow to ensure that she can lead an independent and dignified life. That prospect is diminished when the widow does not have the benefit of the fee simple, but rather, a right of occupation of her home with a provision for expenses associated with that right being left in the hands of the executors. In this case the situation was exacerbated where, regrettably, the previously affectionate relationship between the appellants and the respondent had, as Acting Master Berecry found, completely broken down following the execution of the deed. Thus the situation in which the deceased may well have contemplated he had left the respondent appeared to have altered.
The statement in the first sentence of this passage should be understood in its context of a claim in a very large estate where there was no competing claim based on need.
[16] In Sayer v Sayer [1999] NSWCA 340 at [34] Sheller JA (with whom Davies AJA concurred) accorded primacy to the claim of a widow (of a second marriage) over the claim of a granddaughter who was an eligible person “in the circumstances and in accordance with prevailing community standards.” This does not in my opinion express any general principle of paramountcy.
[17] In Cropley v Cropley [2002] NSWSC 349 at 56 Barrett J said:
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 of Sheller JA in Sayer v Sayer [1999] NSWCA 340 (Davies AJA concurring) and Blackmore v Allen [2000] NSWCA 162 (Priestley JA and Foster AJA concurring). In the former case, Sheller JA described the relativities between the claims of the widow and those of an adult grandchild applicant (Francesca) as follows:
In my opinion, the question is whether [the grandchild] has satisfied the Court that there is, in the circumstances and in accordance with prevailing community standards ( Permanent Trustee v Fraser (1995) 36 NSWLR 24 at 46), sufficient in the estate to provide for the widow's proper maintenance and advancement in life and yet leave some amount out of which provision can be made for her.

This was accepted as an accurate statement of the law by Palmer J in Latimore v Latimore (2003) NSWSC 364 at [59]. At [57] Barrett J proceeded to approach the applications according to the two stage approach described in Singer v Berghouse (1994) 181 CLR 201.

[18] In my respectful view there is an inconsistency between an approach, in the context of competing claims, to the claims of widows as paramount, and the application to the facts and circumstance of each case of s 7 and the approach established by Singer v Berghouse . Preconceptions and predispositions are likely to be the source of inadequate consideration of the process required by the Family Provision Act 1982.

[19] In the application of the test in s 7, and of the exposition thereof in Singer v Berghouse by Mason CJ, Deane and McHugh JJ at 409–411 it would be an error to accord to widows generally primacy over all other applicants regardless of circumstances and regardless of performance of the stages of consideration described in Singer v Berghouse, in full and with reference to the instant facts. Defeat of the opponents' claims does not necessarily follow from a demonstration, which the claimant can make, that all her needs with respect to income, home renovation, and provision for contingencies cannot be met if any provision is made for the opponents; indeed she could well demonstrate that even if the provisions of the will took effect without any modification, the provision for her is not adequate. That is not a demonstration that no claim by an eligible person can succeed; the claims and circumstances of the opponents also have to be weighed, and they too have their needs and merits.”

60 Interestingly Ipp J adopted this in para 1 of his judgment and also said as follows:

[1] I agree with Bryson JA, for the reasons his Honour has stated, that “it would be an error to accord to widows generally primacy over all other applicants regardless of circumstances and regardless of performance of the stages of consideration described in Singer v Berghouse (1994) 181 CLR 201…”
[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 her 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.”

61 Stein AJA agreed with both judges.

62 In this matter there was some debate and time spent dealing with notional estate. The items of notional estate were the joint bank accounts, which have now been used by the defendant and the funds that she has left, which are about $10,000. Another prescribed transaction was the transfer prior to the date of death of the one share that the deceased held in Kemlo Holdings. That was conceded to be a prescribed transaction but the amount of the value of the entire company is something which I already dealt with above and considered when discussing her assets.

63 Another prescribed transaction seems to have occurred in respect of the nomination of the major part of the superannuation fund shortly before the death of the deceased and within one year prior to his death. Given the timing respect of the nomination and the lack of consideration for it, it is clear that this is a prescribed transaction and that the superannuation fund is available to be designated as notional estate.

64 The difficult question is, of course, what orders should be made for the plaintiff. Plainly the estate is insufficient to meet the plaintiff’s claim. The defendant has been endeavouring to find employment for some time and she has not been successful. She has book keeping training and her English is quite good.

65 I referred to the provisions above which normally apply in respect of widow’s claims. It is to be observed that in this case the relationship was fairly long; being for some 17 years. There is no doubt that defendant assisted the deceased and worked with him in his business. She also looked after him during his illness until he died. However, the parties did not have any children together. She did not contribute financially to the business. In these circumstances it is not appropriate that she receive the full benefit of what has been described in Luciano v Roselblum. She will have some opportunities to obtain employment in the future and she has a comfortable home in which to live.

66 I am satisfied that the plaintiff has been left without adequate provision and it is appropriate to make an order for provision.

67 One of the problems is the purchaser of the business, Forklift & General (Newcastle) Pty Ltd which occupies Union Street, Wickham. The purchaser is not paying a market rent and has to pay a further $115,932 which will not be repaid until May 2012. Any disturbance to the business may make it difficult for the defendant to recover that amount, notwithstanding that there is a charge over the businesses’ property. It would be sensible for her not to disturb the business until the loan is repaid. She could then access that capital to reinvest it in a more productive way. Her occupation of her home should not be disturbed. In my view these circumstances are special circumstances within s 28(1)(b) of the Act which would enable me to designate the assets of the superannuation fund as notional estate.

68 S 27 of the Act provides:

“27 Designation of property as notional estate—matters to be considered
(1) On an application in relation to a deceased person, the Court shall not make an order designating property as notional estate of the deceased person unless it has considered:
(a) the importance of not interfering with reasonable expectations in relation to property,
(b) the substantial justice and merits involved in making or refusing to make the order, and
(c) any other matter which it considers relevant in the circumstances.
(2) In determining what property should be designated as notional estate of a deceased person, the Court shall have regard to:
(a) the value and nature of property the subject of any relevant prescribed transaction or distribution from the estate of the deceased person,
(b) where, in relation to any such prescribed transaction, consideration was given, the value and nature of the consideration,
(c) any changes over the time which has elapsed since any such prescribed transaction was entered into, any such distribution was made or any such consideration was given in the value of property of the same nature as the property the subject of the prescribed transaction, the distribution or the consideration, as the case may be,
(d) whether property of the same nature as the property the subject of any such prescribed transaction, any such distribution or any such consideration could, during the time which has elapsed since the prescribed transaction was entered into, the distribution was made or the consideration was given, as the case may be, have been applied so as to produce income, and

(e) any other matter which it considers relevant in the circumstances.”

69 There are no matters which give rise to any reasonable expectation other than the defendant’s entitlement to inherit under the deceased’s will. I have already dealt with that aspect of the matter.

70 For the reasons I have expressed the substantial justice and merits of the matter suggest that the superannuation fund is utilised rather than the Union Street property to meet the plaintiff’s legacy. There are no other relevant matters.

71 The orders that I make are as follows:

1. In addition to the provision for the plaintiff provided in the will of the deceased the plaintiff is to receive an additional legacy of $275,000.

2. To the extent necessary to meet the provision of these orders I declare the assets of the Kemlo superannuation fund as notional estate.

3. The plaintiff’s costs on an ordinary basis and the defendant’s costs on an indemnity basis are to be paid or retained out of the estate of the deceased.

4. Interest is to run at the rate provided for under the Probate and Administration Act 1898 if the legacy is not paid within 3 months from today’s date to commence from the expiration of the period of 3 months.
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