Kiem-Eather v Eather

[2010] NSWSC 621

CITATION:	Kiem-Eather v Eather [2010] NSWSC 621
HEARING DATE(S):	28 May 2010
JUDGMENT DATE :	11 June 2010
JUDGMENT OF:	McLaughlin AsJ
DECISION:	1. I order that, in lieu of the benefit given to her by clauses 3.1, 3.2 and 3.3 of the will and codicil of the late Sidney Francis Eather (“the Deceased”), the Plaintiff receive absolutely the interest of the Deceased in the Warners Bay property. 2. I order that the Plaintiff receive from the notional estate of the Deceased a legacy in the sum of $50,000, such legacy not to bear interest if paid on or before 11 July 2010, and if not so paid to bear interest at the rates prescribed for unpaid legacies by the Probate and Administration Act 1898. 3. I order that the costs of the Plaintiff on the party and party basis and the costs of the Defendant on the indemnity basis be paid out of the notional estate of the Deceased. 4. I make a declaration as in prayer 2A in the amended summons. 5. I make an order designating as notional estate of the Deceased so much of each distribution of $38,133.36 made on 30 March 2009 to the said residuary beneficiaries as may be necessary to meet. (a) the foregoing legacy of $50,000, and (b) the foregoing costs of the Plaintiff and of the Defendant. 7. I reserve to the parties liberty to apply in respect to the implementation of order 5 and the payment from the notional estate of the aforesaid legacy and the aforesaid costs. 6. The exhibit may be returned.
CATCHWORDS:	SUCCESSION - family provision - claim by widow - financial and material circumstances of Plaintiff- whether Plaintiff has been left without adequate provision of her proper maintenance - life intereset in Deceased's interest in matrimonial home is not adequate provision for a widow in situation of Plaintiff - contribution of Plaintiff towards acquisition of matrimonial home.
LEGISLATION CITED:	Family Provision Act 1982
CATEGORY:	Principal judgment
CASES CITED:	Singer v Berghouse [1994] HCA 40; (1994) 181 CLR 201 Vigolo v Bostin [2005] HCA 11; (2005) 221 CLR 19 Lloyd-Williams v Mayfield [2005] NSWCA 189; (2005) 63 NSWLR 1 McCarthy v McCarthy [2010] NSWCA 103
PARTIES:	Patricia Kathleen Kiem-Eather (Plaintiff) Kelvin James Thomas Eather (Defendant)
FILE NUMBER(S):	SC 2009/290250
COUNSEL:	Mr L. Ellison, SC (Plaintiff) Mr C. Locke (Defendant)
SOLICITORS:	Adrian Holmes Lawyer (Plaintiff) Kilmurray Lawyers (Defendant)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

ASSOCIATE JUSTICE McLAUGHLIN

Friday, 11 June 2010

2009/290250 PATRICIA KATHLEEN KIEM-EATHER –v- KELVIN JAMES THOMAS EATHER

JUDGMENT

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

2 By summons filed on 24 August 2009 Patricia Kathleen Kiem-Eather claims an order for provision for her maintenance, education and advancement in life out of the estate or notional estate of her late husband, Sidney Francis Eather (to whom I shall refer as “the Deceased”).

3 Subsequently, at the outset of the hearing on 28 May 2010 the Plaintiff filed an amended summons (which sought additional relief appropriate to accommodate the fact that a partial distribution of the estate had been effected before the institution of the present proceedings).

4 The Deceased died on 11 July 2008, aged 84. He left a will dated 28 February 1995 and a codicil thereto dated 7 May 1996, probate whereof was on 7 November 2008, granted to Kelvin James Thomas Eather, the executor named in such will (who is the Defendant to the present proceedings).

5 The inventory of property discloses the following assets:

One half share of property at Warners Bay, as tenant in common in equal shares, with Patricia Kathleen Kiem-Eather, $212,500
Moneys in building society accounts and bank account, totalling $155,720.

6 The will of the Deceased makes no provision for the Plaintiff.

7 The effect of the codicil is to give to the Plaintiff for her life the Deceased’s interest in the Warners Bay property, which property had been the matrimonial home of the Plaintiff and the Deceased during almost the entirety of their married life, and in which the Plaintiff continues to reside.

8 The effect of the codicil is to require the Plaintiff to be responsible for certain specified outgoings, and to maintain the property in a good and tenantable state of repair.

9 The life estate for the Plaintiff is subject to termination upon the happening of certain events, including the failure of the Plaintiff to pay the foregoing outgoings, or to maintain the property in the foregoing fashion, as well as upon the remarriage of the Plaintiff or upon her entering into a de facto relationship. The codicil also makes provision for the acquisition of a substitutionary residence (subject to the Plaintiff making an equal contribution to the purchase thereof).

10 The interest in remainder in the Warners Bay property, as well as the residue of the estate is given equally among the four children of the Deceased.

11 Within the 18 month prescribed period, and before the institution of the present proceedings, the Defendant distributed the assets of the estate, other than the interest of the Deceased in the Warners Bay property, among himself and his three siblings, being the four children of the Deceased.

12 At the outset of the hearing, it was noted that it was agreed between the parties that the present value of the estate realty (being one half share in the Warners Bay property) is $222,500.

13 In calculating the value of the estate available for distribution, the costs of the present proceedings must be taken into consideration, since the Plaintiff, if successful, will normally be entitled to an order that her costs be paid out of the estate of the Deceased, whilst the Defendant, irrespective of the outcome of the proceedings, will normally be entitled to an order that his costs be paid out of the estate.

14 It was estimated on behalf of the Plaintiff that her costs will total $28,000, whilst it was estimated on behalf of the Defendant that his costs will total about $40,000. That is, the totality of the costs of the proceedings will be in the order of $68,000. Accordingly, it is prudent for the Court to proceed upon the basis that the distributable estate will have a value of about $310,000. That is, apart from the interest of the Deceased in the Warners Bay property, the assets available for distribution would total about $87,000. In this regard, I recognise that the totality of the moneys held by the Deceased has already been distributed among the four children of the Deceased, without any regard to the possibility (which, in any event, became an actuality) of the institution of the present proceedings by the Plaintiff.

15 The Plaintiff (who was born in 1933 and is presently aged 76) married the Deceased on 22 January 1995. Each had previously been married and widowed.

16 The Deceased had four children by his first marriage; the Plaintiff had two children by her first marriage.

17 Before her marriage to the Deceased the Plaintiff was in receipt of a full aged pension, upon which she said she was able to live comfortably. She received a full pensioner rebate for the municipal rates upon her residence. However, when she married the Deceased the Plaintiff was assessed as part of a couple for pension purposes, and as a direct result her own pension payment diminished to about $150 a fortnight.

18 Shortly before their marriage, the Deceased sold his previous residence at Cooks Hill. The parties resided in the Plaintiff’s newly constructed house at Raymond Terrace for about a year after their marriage. In March 1995, the Deceased purchased land at Warners Bay for $70,000. He arranged for the construction of what was to become the matrimonial home of himself and the Plaintiff upon that land, for $107,400. It was, however, the Plaintiff’s evidence that the total cost of the land and the building work was about $200,000. The residence upon the Warners Bay land was completed towards the end of 1995, and the Plaintiff and the Deceased thereupon entered into occupation of that residence.

19 On 22 April 1996 the Plaintiff gave to the Deceased the sum of $100,000, towards the costs of the construction of the Warners Bay residence. When the Warners Bay house was completed and the Plaintiff and the Deceased moved into residence, the Plaintiff sold her previous home at Raymond Terrace (for $10,000 less than it cost her). The foregoing sum of $100,000 came from the proceeds of that sale. The Plaintiff provided most of the furniture and furnishings for their new home at Warners Bay.

20 The parties had in February 1995, shortly after their marriage, made wills in similar terms, each leaving his or her entire estate to his or her own children, and making no provision for the other spouse. However, on 7 May 1996 (that being only two weeks after the Plaintiff had given the Deceased the foregoing sum of $100,000) the Deceased made a codicil to his will in the terms which I have already set forth. On the same date, 22 April 1996, the Deceased, acknowledging receipt of the foregoing consideration of $100,000, transferred the Warners Bay property from himself alone to himself and the Plaintiff as tenants in common in equal shares.

21 The Deceased, who was ten years older than the Plaintiff, began to decline in health about two years before he died. During that period it was necessary for the Plaintiff to look after him and to nurse him, attending to his dressing, showering and toileting. Not only was the Deceased suffering deterioration in his physical health, but he also began to suffer from dementia. In February 2007 the Deceased moved from the Warners Bay residence into a nursing home, where he died some 16 months later, on 11 June 2008.

22 Throughout their married life the Plaintiff and the Deceased kept their finances separate. They maintained separate bank accounts. Nevertheless, it was the Plaintiff’s evidence that throughout their marriage she paid half the combined living costs of herself and the Deceased. As I have already recorded, the Plaintiff provided most of the furniture and furnishings for the Warners Bay residence. The Deceased did not own and had never driven a motor vehicle. The Plaintiff, however, owned and drove a motorcar. She drove the Deceased to his medical appointments, upon social engagements, for shopping expeditions, and the like. The Plaintiff paid all the expenses relating to the motor vehicle until, at her request, the Deceased in about 2004 began to contribute about $20 a week towards those motor vehicle costs and expenses (that sum being less than half of those running costs).

23 The Plaintiff’s present assets consist of her half share as tenant in common in the Warners Bay property, that half share having an agreed value of $222,500; furniture and furnishings, having an estimated value of $3,000; a Toyota Camry motor vehicle 1996 model, having an estimated value of $4,500; and moneys in bank accounts, totalling about $74,660.

24 At the time of the institution of the present proceedings the Plaintiff had $90,000 in her bank account. However, that amount has subsequently been reduced by payment of almost $15,500 towards the Plaintiff’s legal costs in the present proceedings, for outgoings and municipal rates upon the Warners Bay property, and for motorcar insurance.

25 The Plaintiff’s income consists of a Centrelink pension of $1,150 a month, together with interest on moneys in bank accounts, totalling $290 a month.

26 The Plaintiff gave evidence of her monthly expenses, in a total amount of $1,440 (household outgoings and motor vehicle costs, totalling $650, constituting part of the foregoing amount).

27 The Plaintiff said that she is in a fair state of health; but that she suffers from osteoarthritis in her back, as well as high blood pressure and hiatus hernia, and that she has undergone two hip replacements. The Plaintiff underwent surgery for removal of a cataract from her left eye in April 2010. It will be necessary for her to have a cataract removed from her right eye, probably towards the end of this year. The Plaintiff stated that she was not able to afford private health insurance, which she desires to obtain, at an estimated cost of up to $1500 a year.

28 The Plaintiff’s present motor vehicle is 13 years old and requires replacement. She estimated the cost of a new replacement motorcar to be $20,000.

29 The Plaintiff gave evidence concerning various renovations and alterations to the Warners Bay property which she would like to effect, but which her present financial circumstances do not permit. It was the Plaintiff’s evidence that she is very happy in the Warners Bay house where she has resided for the past fourteen and a half years, and that she does not desire to move out of that residence.

30 Before the death of the Deceased, the council rates on the Warners Bay property were subject to a pensioner rebate. However, the Plaintiff is now required to pay the full municipal rates for that residence. A request in June 2009 that the estate assist the Plaintiff in respect to the municipal rates was refused.

31 It is relevant to the Plaintiff’s claim that her daughter, Dorise, who is presently aged 47, is severely physically handicapped, as a result of cerebral palsy. She is not, however, mentally disabled. Dorise has, since 1992, resided in a community home in Wallsend, provided by the Spastic Centre. Although Dorise receives a disability pension, which is largely used up in meeting her accommodation costs, the Plaintiff expends her own moneys towards Dorise’s clothing, toiletries, and outings, in amounts of about $50 a week.

32 The Plaintiff gave evidence of her desire to give further financial assistance to Dorise, in respect to her accommodation, the acquisition of a new non-electric wheelchair, provision of a new computer, and holidays and trips.

33 The claim of the Plaintiff must be approached in the context of any competing claims upon the bounty of the Deceased. The only such competing claims are those of the four children of the Deceased, whose claims were recognised by the Deceased’s testamentary provisions.

34 Evidence was given concerning the financial and material circumstances of each of the four children of the Deceased. Whilst none of those four persons is rich, none of them is in difficult or penurious circumstances. Each could be described as being in comfortable circumstances.

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

36 I have had the benefit of receiving a written outline of submissions from Counsel for the respective parties, together with a chronology from Counsel for the Plaintiff. Those documents will be retained in the Court file.

37 The Plaintiff as the widow of the Deceased is an eligible person within paragraph (a) of the definition of that phrase contained in section 6(1) of the Family Provision Act. As such she has the standing to bring the present proceedings.

38 The only other eligible persons in relation to the Deceased are his four children, each of whom is an eligible person within paragraph (b) of the foregoing definition. It should be recognised that each of those four children of the Deceased is a chosen object of the testamentary beneficence of the Deceased, being entitled to share the interest in remainder in the Deceased’s interest in the Warners Bay house, as well as to share the residue of the estate.

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

40 I have already referred to the fact that the Plaintiff contributed the sum of $100,000 towards the construction of the Warners Bay property. That sum was at least half the totality of the purchase price of the land and of the construction costs.

41 The Defendant recounted a statement made by the Deceased to the Plaintiff in the Defendant’s presence in which the Deceased said, “You gave me nothing, and your family is not getting my money”. That statement (which is admissible in evidence pursuant to section 32 of the Family Provision Act) caused the Defendant in his affidavit of 23 November 2009 (in which he said that the Deceased had a “very good memory”) to “cast doubt in my mind as to whether the Plaintiff had ever paid him [the Deceased] an amount of money to obtain a half interest in the property at … Warners Bay”.

42 The most elementary inquiry by the Defendant, by way of a Real Property Act search, would have revealed in the transfer by the Deceased to himself and the Plaintiff as tenants in common in equal shares, dated 22 April 1996, the receipt of the consideration of $100,000. The Defendant chose not to conduct that most basic inquiry. Further, if the Defendant had had any genuine doubt as to whether that payment had been made, that doubt could have been allayed by the evidence provided by the Plaintiff’s savings passbook (annexure F to her affidavit of 12 January 2010), disclosing a withdrawal of $100,000 on 22 April 1996.

43 If the Deceased in late 2006, or early 2007, made to the Plaintiff in the presence of the Defendant the statement attributed to him in paragraph 21 of the Defendant’s affidavit of 23 November 2009 (which I have already quoted), that statement was false, either deliberately so, or in consequence of the decline in the Deceased’s memory at that time.

44 Despite the evidence of the Plaintiff concerning that payment of $100,000, which was made in her primary affidavit of 19 August 2009, and of which her affidavit of 12 January 2010 provided evidence of the appropriate withdrawal from her savings account, it was not until 28 May 2010, during the course of the hearing, that the Defendant, by his Counsel (in response to a question from myself), acknowledged that that payment had been made.

45 Without taking any steps to satisfy himself concerning the Plaintiff’s asserted contribution of $100,000 towards the Warners Bay residence, the Defendant chose, instead, to distribute the entirety of the estate (apart from the Deceased’s interest in the Warners Bay property) well before the expiry of the appropriate limitation period.

46 I am satisfied that the Plaintiff has been left without adequate provision for her proper maintenance.

47 It is quite apparent that the Plaintiff requires security and flexibility in her accommodation. Before her marriage to the Deceased the Plaintiff owned her own residence and had such security and flexibility.

48 The terms of the codicil to the Deceased’s will give to the Plaintiff neither security nor flexibility. The various proposals proffered by the Defendant to the Court during the hearing (but not proffered at any earlier stage) give to the Plaintiff neither security nor flexibility. Further, they require that the Plaintiff maintain with the Defendant a continuing relationship regarding the property, which relationship I consider to be undesirable on the part of either the Plaintiff or the children of the Deceased.

49 The Court should recognise that the Plaintiff wishes to remain in the Warners Bay property, which has been her home for the past fourteen and a half years

50 I am satisfied that the Plaintiff should receive absolutely the interest of the Deceased in the Warners Bay property, with the consequence that the Plaintiff should become the sole registered proprietor of that property.

51 I am satisfied that the Plaintiff should also receive a fund to be available for, among other purposes, the repairs, renovations and refurbishments to the Warners Bay property, of which it presently stands in need. (She gave evidence of the cost of repainting the house ($6050), and providing new carpets ($4000), gates ($2000); and said that modifications to the house to facilitate visits by Dorise would cost $20,000-$30,000.)

52 It seems to me appropriate that the Plaintiff should receive from the estate a legacy in the amount of $50,000. The sum will enable her to effect at least part of the foregoing work on the house property, as well as to go some way towards the acquisition of a new motor vehicle. The fact that the Plaintiff proposes to use part of that legacy in a way which will benefit her own physically disabled daughter (for example, by effecting modifications to the Warners Bay residence, and by direct gifts to Dorise) does not, in my conclusion preclude her from receiving such a legacy. I would in this regard refer to the decision of the Court of Appeal in McCarthy v McCarthy [2010] NSWCA 103 (3 May 2010), especially the judgment of Young JA (with whom Tobias and Macfarlan JJA agreed) and the additional comments made by Tobias JA. (See also, Lloyd-Williams v Mayfield [2005] NSWCA 189; (2005) 63 NSWLR 1, per Bryson JA at [39].)

53 A legacy in the foregoing sum of $50,000 will still leave about $37,000 to be divided among the four beneficiaries.

54 I have already recorded that the Defendant has distributed all the moneys held by the Deceased in the various building society and bank accounts. It will be for the Deceased to attempt to arrange with his siblings for the return of sufficient of those moneys to meet the foregoing legacy and also the costs of both himself and of the Plaintiff.

55 Accordingly, I make the following orders:

1. I order that, in lieu of the benefit given to her by clauses 3.1, 3.2 and 3.3 of the will and codicil of the late Sidney Francis Eather (“the Deceased”), the Plaintiff receive absolutely the interest of the Deceased in the Warners Bay property.

2. I order that the Plaintiff receive from the notional estate of the Deceased a legacy in the sum of $50,000, such legacy not to bear interest if paid on or before 11 July 2010, and if not so paid to bear interest at the rates prescribed for unpaid legacies by the Probate and Administration Act 1898.

3. I order that the costs of the Plaintiff on the party and party basis and the costs of the Defendant on the indemnity basis be paid out of the notional estate of the Deceased.

4. I make a declaration as in prayer 2A in the amended summons.

5. I make an order designating as notional estate of the Deceased so much of each distribution of $38,133.36 made on 30 March 2009 to the said residuary beneficiaries as may be necessary to meet.
(a) the foregoing legacy of $50,000, and
(b) the foregoing costs of the Plaintiff and of the Defendant.

7. I reserve to the parties liberty to apply in respect to the implementation of order 5 and the payment from the notional estate of the aforesaid legacy and the aforesaid costs.
6. The exhibit may be returned.


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