Lawrence v Lawlor

[2001] NSWSC 442

CITATION:	Lawrence v Lawlor [2001] NSWSC 442
CURRENT JURISDICTION:	Equity Division
FILE NUMBER(S):	SC 3371/2000
HEARING DATE(S):	23, 24 May 2001
JUDGMENT DATE:	11 September 2001
PARTIES :	Antoinette Lawrence v Robin Kay Lawlor
JUDGMENT OF:	Master Macready at 1

COUNSEL :	B. Townsend for plaintiff P. Blackburn-Hart for defendant
SOLICITORS:	Gordon & Johnstone for plaintiff Murphy & Moloney for defendant
CATCHWORDS:	Family Provision. Application by a daughter. Majority of estate left to one child. Order for a legacy in favour of plaintiff. No matter of principle.
DECISION:	Paragraph 33

- 1 -

This is an application under the Family Provision Act in respect of the estate of the late James Arthur Lawlor who died on 29 January 1999 aged 89 years. He was survived by his four daughters. One daughter is the plaintiff and another daughter is the defendant. No claim is made by the other two daughters as they do not wish to make a claim.

2   The deceased left a will made on 10 November 1997 under which the defendant was appointed executor. Under that will eight grandchildren and a niece were each given a legacy of $2,000. The defendant received the furniture and the residence which was then occupied by her and the deceased being units 7 and 8 at 456 Edgecliff Road, Edgecliff. The residue was divided equally between the four children of the deceased.

3   The estate at the date of date of death included the following:-

(a) Unit at 7 & 8 - 456 Edgecliff Road, Edgecliff. There is a dispute about the valuation of that unit which is capable of being separated into two units. I will come back to this later.
(b) There was also furniture estimated at $5,000.
(c) Cash of $169,818.

(d) NRMA shares of $480 and a car of $3,000.

4   The estate has been distributed and administration expenses paid. The distributions which were made appear to provide for more payments to the plaintiff than the other three daughters. The plaintiff received $49,165 and the other daughters $29,750 each. In addition the other three daughters made a gift of $10,000 from the estate, in other words from their share, to the plaintiff so that she could install a kitchen in her home. I will first deal with a chronology of the matter.

5   The deceased was born on 21 May 1909. He married on 20 October 1934. The defendant, the eldest child, was born on 30 April 1937 and the plaintiff, the second eldest was born on 17 May 1939. Christina, known as Tina, born 1947 and the child, Victoria, known as Vicki, was born in 1951.

6   The deceased and his wife ran a successful shoe business and the children worked in that business. The defendant herself commenced part time work in the family business in 1949. The defendant left school in 1952 aged 15 years on completion of the Intermediate Certificate. She then continued work in the family business. She remained at home where she lived with her mother and father until their respective deaths and she has continued to occupy the unit to which I have referred.

7   In 1954 the plaintiff left school on completion of the Intermediate Certificate. She went away to a residential nursing college to do nursing and, apart from a short period, she has always lived away from home. The plaintiff’s son, Andrew, was born in 1960 and she married Michael Basa in 1965. She separated in 1967 having the previous year returned to her parents’ home for a year or two. In 1970 the plaintiff married Robert Lawrence. In 1971 the plaintiff’s second son, Robert was born and the family travelled to England. The deceased apparently paid for the ticket for this trip. In 1972 the deceased, who had lived in a large home at Coogee, purchased a home at Rose Bay. At this stage the plaintiff, the defendant, Tina and Vicki were each given $3,000 by their parents as a result of this sale. In 1974 the plaintiff’s daughter, Amanda, was born and in 1981 her daughter, Shelley, was born. In 1985 the parties’ mother, Phyllis Lawlor, was diagnosed with lymph cancer. She died in 1987. After her death the Rose Bay home was sold and the deceased and the defendant moved into rented accommodation at Randwick.

8   In 1998 the deceased purchased a house at 466 Old South Head Road, Rose Bay. It required extensions to accommodate both him and his daughter. In the period from 1991 to 1995 the defendant worked part time. In 1995 she gave up work to become a full time carer for the deceased.

9   In 1992 the plaintiff separated from her husband. In 1993 the deceased made a new will leaving the house to the defendant. In 1993 the plaintiff was divorced. In 1994 the deceased had a fall at home and from 1995, as I have mentioned, the defendant gave up work so that she could care for the deceased. The plaintiff, who had been living at Coogee, in a property which had been purchased with a view to resuming her marriage, sold that property. When there was no reconciliation she moved to live at Wentworth Falls where she purchased a block of land in1996. In 1997 the deceased sold the family home at Rose Bay and in November of that year he purchased units 7 and 8 456 Edgecliff Road, Edgecliff. The deceased’s last will was made on 10 November 1997. On 18 December 1997 the deceased gave the plaintiff $10,000 so that she could gyprock the ceiling in her home Wentworth Falls. There is a codicil dated 14 January 1998 which took account of the fact that units 7 and 8 were held under company title. The deceased died on 29 January 1999. The proceedings were brought within time. In January 1999 the plaintiff was diagnosed with bowel cancer and underwent surgery that same month. The proceedings were expedited in March 2001 and the matter came on before me for hearing.

10   Because the estate has been distributed there is a claim for notional estate in respect of the shares which give rise to the right of occupation to units 7 and 8 at 456 Edgecliff Road, Edgecliff. Orders in favour of the plaintiff, if they are made, will need to accommodate the situation of that property as it is effectively the only asset available to be declared as notional estate. There are costs which have been incurred in these proceedings which are substantial. Costs incurred on the plaintiff’s part to the end of the hearing amounted to $89,142 and those of the defendant $51,306 a total of $140,448. I turn to the question of the value of units 7 and 8.

11   As can be seen from its description this is a combination of the two units and with a little work it can be converted back into two separate units. Accordingly, the valuation evidence has addressed both the value of the units sold in their present condition, as a combined unit, and the value of unit 7 and unit 8 on the basis that relevant expenditure is made to convert the combined unit back to two units. There is a car space attached which would normally be attached to unit 8 which is the larger of the two units. Evidence was given by valuers Mr Mark O’Neill for the plaintiff and Mr Walter Dobrow for the defendant. Their valuation evidence was updated during the course of the trial as a result of some additional information which became available. Accordingly, the positions taken by the valuers at the trial can be summarised as follows:-

12   For a sale as combined unit Mr O’ Neill valued the units at $725,000 and Mr Dobrow at $550,000. Mr O’Neill valued the unit 7 at $311,000 which after costs of alterations, brought the figure back to $305,000, while Mr Dobrow valued the unit at $310,000, which after costs of alterations, would bring it back to approximately $300,000.

13   Mr O’Neill valued unit 8 at $425,000 (after costs $385,000) and Mr Dobrow $350,000 (after costs $310,000). The updating of the valuation evidence was necessary because unit 1 in the building which was situated immediately under unit 8 sold at the end of April 2001 for $431,000. That information on the sale was not available when the initial reports were prepared.

14   It can be seen that there is virtually no difference between the valuers in respect of their revised valuations of unit 7. Mr O’Neill valued it at $311,000 and Mr Dobrow at $310,000. Given the closeness and passage of time since the matter was reserved I will adopt the value of $311,000 for the sale of unit 7. After allowing for the costs of sale the amount of the proceeds of unit 7 would be $298,158. It is to be noted, of course, that this does not take account of $6,000 which would need to be spent to separate this unit from unit 8.

15   So far as unit 8 is concerned, Mr O’Neill valued it at $425,000 and Mr Dobrow valued it at $350,000. The matters that were referred to by Mr Dobrow about the difference in respect of the sale of lot 1 which sold in April 2001 for $431,000 and unit 8 was that lot 1 had a tandem car space and a garden aspect. It was interesting to see that in the course of cross-examination of Mr Dobrow, evidence emerged of other sales in the building and particular there was a sale of unit 4 in February 1999 for $400,000. Apparently that was below unit 8 at ground level. It had a car parking space but no water views. In his evidence Mr O’Neill indicated there had been 15 % increase in the area in that part of the market since 1999. Mr Dobrow grudgingly agreed that there was some increase in the area although he would not commit himself to the precise figure. Any such increase which in any event must have happened would certainly indicate the reality of the sale of unit 1 at $431,000. Having regard to the reality of that sale it is hard to understand how Mr Dobrow can still maintain a value of $350,000. I was not persuaded that his figure was correct. It seem to me that probably the most important comparables are ones in the same building with small differences such as view and outlook, polished floors and slightly larger car parking spaces. In these circumstances I am satisfied that Mr O’Neill’s valuation of $425,000 for the value of unit 8 is correct. This is, of course, on the assumption that it has been altered to incorporate a kitchen.

16   The next matter that falls for consideration is the determination of the value of the property as a sale in its present state. There is an enormous disparity in the valuers’ views on this matter. Mr O’Neill valued the sale of them as a combined unit at $725,000 while Mr Dobrow valued them at $550,000.

17   Although I was quite impressed by both valuers in the way the gave their evidence it is apparent that Mr Dobrow has had substantially more experience in development of properties. It is not surprising therefore that he looked at the matter of the combined units by considering a purchaser who would purchase them for the purpose of developing them by converting them into two units and selling the two units. This exercise involved the application of construction costs, profit elements for the development and the ultimate result being the sale price as a result of selling two two bedroom units. Initially he fixed this figure at $510,000 but later once there was a move in the value of one of the units being lot 1 which sold for $431,000 he revised it upwards to $550,000. There is a real problem with his methodology which tends to focus on the matter of a particular type of purchaser rather than someone who would buy a larger unit which originally comprised two units merely for the space. There were a number of comparables dealt with in the evidence which were three bedroom units some of which Mr Dobrow described as superior to the present units. See, for example, 24/442 Edgecliff Road, Edgecliff which sold for $660,000 in November 2000. There were also two units in a property at 422 Edgecliff Road, Edgecliff. One of these which was unrenovated sold for $550,000 in May 2001 and one that was renovated sold for $650,000 in April of that year. These were without parking and certainly appeared to be well inferior in terms of the building to the subject property. Both these units were three bedroom units. That there might be a market for such a unit is probably clearly demonstrated by the course of the present unit, namely, the combined 7 and 8. That was originally purchased by the Turtles in 1995 for $500,000 and was sold to the deceased in 1997 for $725,000. That price, according to the defendant, was one paid after the vendor sought $750,000. To my mind this demonstrates that there may well be a particular market for such a property and to adopt the analysis which Mr Dobrow has adopted of a developer looking at doing a development might be an overly restrictive approach. Taking a practical approach to the facts of the present case the defendant has planned to split the units and sell one of them. She has the approval of the company. The cost of splitting the units is $46,000. The combined sale price, based upon the values I have determined, is $736,000. If one does not allow a profit, the defendant will receive a sum of $690,000 from the exercise less selling costs. In the circumstances this gives a sufficient indication of the funds that will be available to the defendant. If it were necessary to determine the value of the combined unit I would adopt Mr O’Neill’s valuation of $725,000 for the reasons I have expressed.

18   In applications under the Family Provision Act the High Court in Singer v Berghouse (1994) 181 CLR 201 set out the two stage approach that a Court must take. At page 209 it said the following:-

"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 Limited . The determination of the first stage in the two-stage process calls for an assessment of whether the provision (if any) made was inadequate or 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 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."

19   I turn to the plaintiff’s situation. The plaintiff is aged 62 years and divorced. She has 4 children only one of whom, Shelley, aged 20 years, is dependent upon her. The plaintiff has had a very unhappy life with her children some of whom were involved with drugs and Shelley herself in addition to having had drugs problems in the past has severe psychiatric problems which require assistance. The plaintiff herself had an operation for bowel cancer in February 1999 and there is evidence from the surgeon that her chance of relapse is some 20% to 30%. She presently lives in her home at 32 Railway Parade, Wentworth Falls. Originally there was a dispute in the evidence about its value but ultimately the defendant is prepared to accept the plaintiff’s value as $240,000 in its present condition. It is not finished although it is liveable. It requires $41,000 to complete this task. When it is finished it will be worth nearer $300,000. Apart from the house the plaintiff has a Mazda 121 motor vehicle recently purchased for her by her brother-in-law worth $15,000 and furniture worth $3,000. Her debts are as follows:-

(a) Bank loan $59,000
(b) Debt due to her daughter as a result of the
daughter paying her mortgage for the last two
years at $75 per week $18,000

(c) Debt to her brother-in-law for purchase of car $16,000

(d) Consumer debt $12,000

TOTAL $105,000

20   There is no evidence of contributions made by the plaintiff to build up the estate of the deceased other than the work in the shop which she did as a child as did her elder sister. This was not substantial. She has received provision from the deceased during her lifetime. There was $3,000 in 1972 and $10,000 in 1997.

21   So far as her relationship with the deceased is concerned there is no submission that the relationship was other than a proper one and that the contact was sufficient given the circumstances of the parties living arrangements and the ability for them to get together. Unfortunate sharp divisions between the daughters have marked this case and the impact of this will be dealt with later when considering the position of the defendant. Suffice to say that I have excluded the evidence of the disagreement between the daughters except where it may have impacted on the relationship with the deceased.

22   I turn to the situation of the defendant. She is 64 years of age, single, with no dependents. She has never married and has lived at home with her parents all her life. She is in good health and actively contemplates going back into the workforce as soon as the present proceedings are behind her. At the present time her assets consist of the estate property and her furniture which furniture is worth $23,075. She has a car worth $3,000. She has recently obtained a loan from St George Bank for $50,000 to pay out her existing debts and leave her with sufficient to at least do the basic work of dividing the units. After paying out her debts she will have $11,500 which will allow her to divide the two units so that unit 7 can be sold. She would still not have enough funds to put in a kitchen in unit 8 where she wishes to stay. She presently receives the old age pension of $190 per week and her outgoings are greater than this figure. Clearly if she is to continue to live in the unit she will have to obtain part time work and discharge her mortgage.

23   I turn to her contributions to the estate.

24   The defendant helped by working in the deceased’s shop from the age of 12 and she would do this after school. She says she was not paid for the work. After she left at the age of 15 she worked full time in the shop apparently for about 21 years and no doubt was paid for that work. There was one break during this period of 21 years when the defendant spent two years employed by the Sydney Opera Company. During her life she had been involved in acting and many of her evenings were spent in rehearsals and performances in various theatrical companies such as the “Ensemble” and other organisations. After the deceased’s business closed in about 1973 the defendant obtained work in fashion boutiques working as a shop assistant and sales person. That is the work for which she is now fitted apart from acting and she intends to return to that occupation once this court case is over. No doubt it was a pleasure for the deceased to have daughter work in his shop. There is little evidence to suggest that she contributed to the business and she was remunerated for her work except perhaps in the early years when she was a child.

25   From 1995 the defendant looked after the deceased on a full time basis as his health started to fail. Her sisters do not dispute that. The work which she did in looking after the deceased was appropriate and she provided him with good meals, proper care and attention during those years. This meant that the defendant was not earning money and, accordingly, the deceased supported her. The help given by the defendant to the deceased was substantial and obviously she provided companionship.

26   I have earlier referred to the fact that there was a substantial amount of material going to disputes between, inter alia, the plaintiff and the defendant. It is necessary to see whether in fact these matters might have impacted upon the relationship between the defendant and the deceased. The plaintiff and the defendant have quite different personalities. The defendant is a highly-strung person fond of acting and perhaps with a temperament commonly associated with actors and actresses. The defendant on the other hand is a person who has lived a hard and difficult life. She started life with an unexpected pregnancy before marriage and did not fully qualify for nursing. She has had to struggle through the upbringing of her family and has had to cope with a husband who suffered from mental problems before the marriage finally broke down. She has also had enormous difficulties in raising her children because drugs have affected several of them for many years.

27   The defendant never had the responsibilities of a family nor did she ever have to provide for a home of her own. It is not surprising therefore that there were simmering tensions between the plaintiff and the defendant during the lifetime of the deceased. These erupted after the death of the deceased when the plaintiff brought her proceedings. The defendant was accused of being bossy, manipulating her father and many other matters. In the end it seems to me that the defendant may have been in some sense a difficult person but I do not think that this substantially interfered with the relationship which she had with her father, the deceased. One would have expected far more evidence to have emerged of the deceased’s unhappiness if that were the fact. There is, in fact, evidence to the contrary, namely, that the deceased was very appreciative of what the defendant had done for him. In the circumstances I do not think that it is appropriate to play down the importance of the care which the defendant gave to the deceased during his last years because of these tensions which obviously existed between the two sisters.

28   In submissions allegations were raised as to the conduct of the defendant in forcing her father to move from Rose Bay to the apartment at Edgecliff. It was suggested that this was a selfish move on the defendant’s part and was contrary to the interests of the deceased as he was forced to walk up a number of steps to the apartment. This issue was only partly ventilated in cross-examination and the evidence, such as it is, suggests that at the time of the purchase the deceased, in contrast to his vendor Mr Turtle, was able to cope with the stairs.

29   Another area where there was criticism of the defendant was in the mismanagement of the deceased’s finances. It is clear that after 1995 the defendant became a signatory on the deceased’s accounts as well as the David Jones account to which she had been a signatory for most of her life. It was suggested in cross examination that she overspent on this account and indulged herself at the expense of her father. In particular it was pointed out that in 1990 the deceased had a house at 466 New South Head Road, Rose Bay and $420,000 invested in bank bills. It was said that by 1999 all that was left was the apartment at Edgecliff and $140,000 in cash. It is said that this demonstrated a misuse of her position in relation to her father. This is clearly incorrect. The only income the deceased had was from this investment which gave him about $160 per week. His expenses were far more and the reduction in his cash reserves over nine years was equal to an expenditure of about $31,000 per year. This is not a high lifestyle. There was no obligation on the defendant to keep accounts in managing her father’s affairs and I am satisfied that there was no mismanagement. No doubt if the deceased and the defendant wished to buy videos rather than hire them that was their choice. There was a submission that there was mismanagement in that the defendant arranged to purchase the unit at Edgecliff for $725,000 which on her case is now only worth $550,000. That is an irrelevant comparison. The question was what was it worth when it was purchased. The evidence shows that there was some bargaining and the amount paid for the unit was less than what the vendors were asking. There is no substance in this allegation.

30   It is necessary to consider with some thought what is the appropriate resolution of this matter. The plaintiff is a lady who has demonstrated fairly substantial needs. She is living under the threat of the reoccurrence of cancer and it would be very difficult for her to commence employment again. The evidence is to the effect that she cannot work and there is no suggestion that she will be able to work in the future. She has the responsibility for one daughter who requires substantial management. As I have earlier indicated her financial situation is such that unless she can reduce her debts she will not be able to ultimately stay in the home that she presently occupies. There is work to do on the home which is estimated at $41,000. Not all of that is necessary for the purpose of her living there in a comfortable way. Some of the matters are necessary such as completing painting and paving and other matters go to the final finishing touches which are not necessary for the house to be occupied. It is obvious that the plaintiff will have to repay her bank loan, her consumer debt and also the debt due to her daughter who has paid off the plaintiff’s mortgage for the last two years. She no doubt feels an obligation to pay off the debt to her brother and this may be a matter which could be accommodated. Something to stop her house deteriorating would obviously be important. It seems to me that the minimum the plaintiff needs at the moment is between $110,000 and $130,000. This leaves her in a situation where she owns her home which is worth a reasonable amount of money even in its unfinished state and subsisting on the pension.

31   The defendant for her part has had a number of advantages in life. She was provided with accommodation by the deceased for the whole of her life and has never had to provide for that expense. She did make contributions to which I have referred and these were particularly important in the last five years of the deceased’s life. At present she has a loan of little under $40,000 and if she wishes to convert the units, rather than sell them as a whole, she will have to pay $46,000 in order to do that. She will then have to go back into employment and earn sufficient for her to be able to repay her then liabilities. There are a number of ways she can solve this problem. She can sell unit 7 or she can sell unit 8 or she can sell both and buy something else. She has a degree of flexibility. However, it was during the declining years of the deceased’s life that she settled into this particular unit and if possible she should be entitled to keep a unit in surroundings where she is familiar.

32   As always, costs impact enormously on these matters. The amount of the costs will be a matter of some debate as there are some special issues to be dealt with in relation with them. However, on the estimated costs there is an amount of about $140,000 to be found.

33   In the circumstances it seems to me that reasonable provision ought to be made for the plaintiff. Accordingly, I am satisfied that it is appropriate that she receive a legacy of $130,000. This will give her some flexibility as to how she manages her future.

34   Earlier I have referred to the fact that the only available property which can be designated as notional estate are the shares for the unit held by the defendant.

35 Section 27 of the Family Provision Act is as Section 27 of the Family Provision Act is in the following terms:

"(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."

36 The defendant had known of the provisions of the deceased’s will prior to his death. She says she had informed the plaintiff of the provisions before the deceased’s death and that the plaintiff was not happy. The defendant thus well knew that there may have been a problem in relation to the provisions for the defendant. In these circumstances there is nothing to consider under s 27(1)(a) and I have already considered matters under s 27(1)(b) and s 27(2) when deciding what legacy is appropriate. I am satisfied that it is appropriate to designate the defendant’s share as notional property.

37   I direct the parties to bring in short minutes and argue the question of costs.

Last Modified: 09/14/2001