Manley v Anderson
[2011] NSWSC 1013
•05 September 2011
Supreme Court
New South Wales
Medium Neutral Citation: Manley v Anderson [2011] NSWSC 1013 Hearing dates: 29 June 2011 Decision date: 05 September 2011 Jurisdiction: Equity Division Before: Associate Justice Macready Decision: Parties to bring in short minutes.
Catchwords: WILLS AND ESTATES - family provision claim Legislation Cited: Family Provision Act 1982 Cases Cited: Banks v Hourigan (NSWSC, Waddell CJ in Eq, 2 March 1989, unreported)
Bladwell v Davis [2004] NSWCA 170
Bonnici, In the Marriage of A M and J A (1991) 15 Fam LR 138
Cameron v Hills (NSWSC, Needham J, 26 October 1989, unreported).
Crisp v Burns Philp Trustee Co Ltd (NSWSC, Holland J, 18 December 1979, unreported)
Court v Hunt (NSWSC, 14 September 1987, unreported)
Elliott v Elliott (NSWCA, 24 April 1986, unreported)
Farmer v Bramley [2000] FamCA 1615
Fowler v Fowler [2011] FAMCA 273
Golosky v Golosky (NSWCA, 5 October 1993, unreported)
Hayton v Bendel [2010] FamCA 592
Hertzberg v Hertzberg [2003] NSWCA 311
Luciano v Rosenblum (1985) 2 NSWLR 65
Marshall v Carruthers [2002] NSWCA 47
Permanent Trustee v Fraser (1995) 36 NSWLR 24
Rickard v Griffin [2010] FAMCA 1199
Salmon v Blackford [1997] NSWCA 274
Singer v Berghouse [1994] HCA 40
White v Barron (1980) 144 CLR 431)
Worladge v Doddridge (1957) 97 CLR 1Category: Principal judgment Parties: Ross Daniel Manley (Plaintiff)
Sharon Lisa Anderson (Defendant)Representation: Counsel:
TJ Morahan (for the plaintiff)
MS Willmott SC and TT Bors (for the defendant)
Solicitors:
Sean Patrick Wilkins for Sean Wilkins & Company (for the plaintiff)
Mary-Ellen Bard for Paul Bard Lawyers (for the defendant)
File Number(s): 2010/32466
Judgment
This is an application under the Family Provision Act 1982 in respect of the estate of the late Fay Lorraine Anderson who died 10 August 2008 aged 78 years.
The deceased's two children, Sharon and Erica survive her. The deceased's de facto partner, Ross Manley, is the plaintiff in these proceedings. Sharon is the defendant.
The deceased made her last will on 24 January 2008 and she appointed Sharon as executor. The terms of the will provided:
(a) Ross with a right of residence in the home that he had shared with the deceased subject to his payment of outgoings. The home was to be held on trust for Sharon.
(b) An annuity of $600 per month to Ross;
(c) Erica Moore Parzani was to receive $200,000, a diamond brooch and diamond cluster earrings;
(d) Sharon was to receive 70 per cent of the residue (valued at approximately $2,600,000);
(e) the remaining 30 per cent of the residue was to be divided in five equal shares (valued at approximately $225,000 each) to be held in trust for the deceased's grandchildren, who comprise:
(i) Jabari Phillips, born 7 December 1991;
(ii) Kade Phillips, born 28 August 1993;
(iii) Tennyson Phillips, born 9 July 1996;
(iv) Shikia Phillips, born 21 December 1998; and
(v) Quinn Phillips, born 18 September 2003.
Assets in the Estate
The assets of in the estate comprise:
(a) A 90 per cent share in the property at Bishops Avenue, Randwick. It has an agreed present market value of $950,000. A 90 per cent share thus has a value of $855,000.
(b) Six further residential properties, having an agreed total present market value of $4,135,000.
(c) A notional 50 per cent share in the property at Bent Street, Neutral Bay. It has an agreed present market value of $720,000. A 50 per cent share thus has a value of $360,000.
(d) $29,783.60 cash in bank accounts (as at 30 May 2011) and an entitlement to a tax refund of $1,029.
(e) Motor vehicles and personal property valued at $102,300.
(f) 170 ordinary Commonwealth Bank shares, valued at $8,651
This totals a sum of $5,491,763.60.
The present debts and liabilities amount to $569,178. These debts include an amount that has to be paid to complete the settlement of a claim brought in this estate by Erica. Her claim was settled for a total of $451,000. This leaves a balance of about $4,922,585.60 before costs.
Ross' costs are estimated at $61,898, and Sharon's at $91,991. These estimates are for a two-day hearing but, as the matter was completed in one day, that will be somewhat less. The approximate balance remaining will therefore be $4,760,696.60.
There will have to be one property sold to meet the debts, so there will be a capital gains tax liability of about $40,000 on that sale leaving $4,720,696.60. As the jointly owned property at Neutral Bay has already passed to Sharon.
This leaves a total of $4,360,696.60 still to be distributed.
Family History
The deceased was born in April 1930. Ross was born in February of 1931. The deceased married Frederick Anderson and they had two children, John and Sharon. They also informally adopted Erica.
In 1984, Sharon moved to the United States of America where she made her life, she returned at Christmas of that year to marry Harry Hughes. While Sharon and Harry were in Sydney, in January 1985, the deceased's husband, Frederick, died.
In March 1985, the deceased met Ross. Ross was separated from his wife at that stage.
At this time the deceased owned a business that had various community markets at Caringbah and Waterloo with another person.
In 1989, Ross moved into the deceased's house in South Coogee where they lived together in an intimate de facto relationship. In that year Sharon's marriage broke up and she returned to Australia to live with the deceased between June and September. She returned to the USA to complete a masters degree.
The following year in June, after graduating from university, Sharon returned to live with her mother until September, when she left for the USA and married her second husband, Malcolm Phillips in October of that year.
During this period John, the deceased's child, was diagnosed with chronic schizophrenia. The relationship between the deceased and the son broke down as a result of his behaviour and constant demands for money. It was the deceased's attempts to support her son that led to her losing her business in the community markets at Caringbah and Waterloo.
In 1991, the deceased was diagnosed and treated for breast cancer. Also, in the middle of the year John's condition became worse and he threatened to kill Ross and his psychiatrist. He was admitted to Gladesville hospital.
Sharon returned to live in Australia from June 1991 to December 2000, and then she and her family returned to the United States. In 1998, they had purchased a home at Beacon Hill.
At about this time that Ross and the deceased bought a unit at Bishops Avenue, Randwick. The deceased owned a 9/10 share of the unit and Ross owned a 1/10 share. The evidence satisfies me that Ross contributed the money necessary for his share. The deceased sold her former home at about this time.
In 1992, Ross obtained an apprehended violence order against John following an abusive episode.
By 1998, Sharon had returned with Malcolm, her husband, and they moved into a home at Beacon Hill that they had purchased.
In 1999, Ross had a major operation for prostate cancer. In October of that year, Ross made a will in which he gave his share of the Bishops Avenue property to the deceased, together with any jointly owned items. The residue of his estate went to his sons. This was later repeated in a slightly different form in a will made in 2006.
Sharon and Malcolm returned to the United States in 2000 and rented out their home at Beacon Hill. Sharon visited Australia between December 2001 and March 2001. Sharon returned to Australia periodically after this time.
In 2004, there was once again another apprehended violence order taken out against John. Ultimately, in 2007, he passed away as a result of a heart attack apparently arising from a drug overdose.
During 2006, the deceased fractured her left ankle in a fall and she was incapacitated for some time. She also contracted a shingles virus and was looked after by Ross.
The deceased became seriously ill with a pulmonary embolism in August of 2007 and was admitted to hospital. She was released in September and was cared for by Ross. She was a frequent outpatient.
In January 2008, the deceased went into the Prince of Wales Private Hospital to have a pacemaker operation to improve a serious heart condition. It was in that month that she made the will to which I have made reference.
The deceased went back into hospital in February 2008 and Ross rang Sharon to tell her of the serious position in respect of her mother. Sharon and her husband and children came back from the United States in March of that year and lived with Ross for some four weeks.
Thereafter the deceased was transferred to Wolper Convalescent Hospital in Woollahra and in April of 2008, the deceased was transferred again to the Montefiore Nursing Home at Randwick as a result of advice from a specialist. In June of that year Sharon took the deceased to her home for an overnight stay and kept her there. She remained there and was not returned to the nursing home.
There was then a somewhat unpleasant period between Ross and Sharon that related to the care of the deceased. Sharon wanted the deceased to stay at home with her and Home Care was engaged to look after the deceased there. The difficulties at this time were not such that they are important for the resolution of this matter.
Eventually, on 6 August, the Home Care services were withdrawn from Sharon's house at Beacon Hill because the company providing the services was not prepared to continue with the situation that existed. Four days later the deceased died.
Eligibility
Ross is an eligible person. In applications under the Family Provision Act , the High Court in Singer v Berghouse (1994) 181 CLR 201 has 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."
Ross' situation in life
Ross is 80 years of age, single, and has no dependents. His life expectancy is 8 years and he is in reasonable health. He has his interest in Bishops Avenue worth $95,000 and at present the benefits granted under the will. He owns two investment properties having an agreed combined present market value of $520,000. He also owns shares to the value of some $25,000, and has some $22,000 cash in bank accounts. He has some $240,000 invested in the Colonial First State Pension fund, and he has liabilities totalling $3,500.
Ross' taxable income for the year ended 30 June 2010 was $56,007 and he received a tax-free war pension of $6,000. He had a tax liability for the 2010 year of $5,800, which left him with a net income of $56,207. His expenses are normally in the order of $42,000 per annum but he is worried about the prospect of a need to contribute to a fund relating to the replacement or repair of a lift in the strata block where he lives. The outgoings on the Bishops Avenue property are approximately $10,300 per annum.
So far as the relationship between the deceased and Ross is concerned, there was mutual support during times of illnesses and during the difficult times they had with the deceased's son John.
Ross did not contribute to the estate assets as they were acquired before the relationship commenced. He paid for his share of the Bishops Avenue property. His own assets were acquired from his funds before the relationship and thus are capital gains tax free. Both he and the deceased shared living expenses but kept their finances separate.
After the deceased's death, Ross spent $8,500 on magnetite (a substitute for double glazing) for the windows at Bishops Avenue in order to assist with sound proofing the apartment and with the aim of reducing its heating and cooling costs. In November 2010, the hot water system was replaced at a cost of $1,400. Ross deposes that the carpets are threadbare and need replacement and the kitchen needs to be refurbished and a new stove obtained. Ross did not provide any quotations for the cost of carrying out that work.
The situation in life of Sharon
Sharon is 46 years of age and recently separated from her husband. She has the care of their five children aged between seven and 19 years. She is presently living in rented accommodation. Her assets consist of a property owned jointly with her husband through a company at Beacon Hill, which is worth $1,100,000. That property is subject to a mortgage of $300,000. She also now wholly owns an investment unit at Bent Street, Neutral Bay which is worth $720,000 and which is unencumbered. Sharon had previously owned this with the deceased as a joint tenant.
Sharon's liabilities are as follows:
NAB Gold Banking account $1,958.44
Woolworths Everyday Master Card $6,951.85
US Internal Revenue Service $39,826.00 USD
US credit card $40,293.16
NSW land tax $36,949.20
Household items $11,384.17
David Jones Amex $4,096.00
GE Credit Card $2,156.00
Bond and rent $7,500.00
Total $151,114.82
The present assets of Sharon and her husband are $1,368,886. She also has her interest in the estate, which without allowing for Ross' claim is in the order of $4,360,696.60. However, that includes the 90 per cent share in Bishop's Avenue worth $855,000 which is subject to the life interest and Ross' claim.
Sharon's income is presently $547.76 per fortnight and her husband Malcolm is apparently earning between $150,000 and $200,000 a year. Her monthly expenses are as follows:
Rental expenditure
$3,000.00
Nature care college
$421.00
Children's school and Jabari's massage course fees and computer costs approximately
$596.00
Children's medical expenses
$715.27
Sharon Anderson medical and dental expenses
$900.00
Food for family
$2,400.00
Alcohol
$180.00
Clothing and shoes for family
$520.00
Private health insurance
$273.90
Gas, electricity and water
$287.66
Foxtel
$99.00
Internet/phone
$109.00
Mobile phone/Optus for SA and family
$199.00
Hairdresser
$150.00
Car insurance/petrol and maintenance
$1,407.66
Sydney football stadium gold membership annual renewal by month
$94.41
TOTAL
$11,352.90
These expenses reflected the medical problems of both Sharon and her children.
Sharon has a number of health problems. She was born with a congenital heart condition called Tetralogy of Fallot. This presents itself with narrowing of the pulmonary arteries and she has had bypass operations to repair her heart. These have not been completely successful and she suffers from chest pains and shortness of breath. Sharon has to see her cardiologist to see if she might have to have further surgery in respect of this condition. Apart from some dental issues, she has some arthritis and scoliosis, which require regular osteopathic treatment.
In addition, Sharon suffers from acute stress disorder and has received counselling and is seeing a psychologist. Fortunately, Medicare covers the costs of this treatment. She currently has osteopathic treatment for neck stiffness.
Her children's health is a matter of some concern for her. Jabari, her 19-year-old son, suffers from depression and also needs osteopathic treatment for lower back pain. He has partly finished the Higher School Certificate but has left school and has been looking for casual work. He has not been able to obtain such work and is presently commencing a massage course paid for by his mother. He lives with her and is entirely dependent upon her for his support.
Sharon's son Kade suffers from a sinus condition. He also has some osteopathic treatment for some pains in his right knee. At the moment he is sitting the Higher School Certificate at Davidson High School. He lives at home and is dependent upon Sharon.
Sharon's son Tennyson is age 14 and suffers from many problems. He was diagnosed as suffering from Aspergers Syndrome and he has been treated for quite some time. Recently he was in hospital for some months being treated and ultimately, he had to be scheduled. He has now returned home but he will need substantial support. He needs speech therapy, special teaching to help him socialise, and he also has extensive medication requirements. It seems as though he will probably have to reside at home into the indefinite future.
The two younger children Shakiya, a daughter aged 12 and Quinn a son aged seven, suffers from asthma and treatment is given to them accordingly.
Discussion
It is necessary to see how Ross says that he has been left without adequate and proper provision for his maintenance, education and advancement in life. In this case the problems that he identifies relate to his independence and accommodation and they can be summarised as:
(a) A need to bear the outgoing and expenses in connection with the Bishops Avenue property and the inadequacy of the annuity coupled with his present income to meet those expenses
(b) A need for greater for greater flexibility in respect of his accommodation, noting that he may need to be moved to aged-care accommodation; and
(c) A need to preserve his present asset portfolio in order to maintain his present income as well as a buffer for contingencies.
Ross has asked for the estate's interest in the unit to be transferred to him absolutely so that he may decide what steps to take in the future should he need to go into nursing home accommodation. He also asks for a small fund of $200,000 for contingencies.
Sharon's response to this is to suggest that it would be appropriate for Ross to receive a Crisp order in respect of the estate's 9/10 share of the Bishops Avenue property. It was also suggested that further provision should be made by increasing the annuity of $600 a month to $1,000 a month as from 10 August 2009. It was suggested that the CPI for the weighted average of six capital states, compared to the index currently as at 8 August 2008, could index the annuity.
The question of what is an appropriate provision and whether a life estate should be awarded to persons in the situation of either a widow or a long standing de facto partner has been dealt with in a number of cases.
In the 1970s and 1980s there were a number of decisions of single judges of this Court where they have held that a life interest with particular attributes was appropriate. (See, for instance, Crisp v Burns Philp Trustee Co Ltd (NSWSC, Holland J, 18 December 1979, unreported); Banks v Hourigan (NSWSC, Waddell CJ in Eq, 2 March 1989, unreported); Cameron v Hills (NSWSC, Needham J, 26 October 1989, unreported). This perhaps is reflected in matters mentioned by the High Court in White v Barron (1980) 144 CLR 431 where at p 444 Mason J said:
" A capital provision should only be awarded to a widow when it appears that this is the fairest means of securing her proper maintenance. However, the provision of a large capital sum for a widow who is not young, may, in the event of her early death, result in a substantial benefit to her relatives, contrary to the wishes of the testator, when a benefit of another kind would have afforded an adequate safeguard to her personally, without leaving her in a position in which she could benefit her relatives from the proceeds of the legacy"
He appears to be the only member of the Court to have adverted to this aspect.
A change in the High Court's attitude to the provision for widows, no doubt in response to changes in community expectations, is illustrated by the fact that in this case it disapproved of observations made in Worladge v Doddridge (1957) 97 CLR 1 that as a general rule an order for provision in favour of a widow should be confined to widowhood. Stephen J, who was one of the majority in White v Barron ( 1980) 144 CLR 431 ) at pp 438-440, went to some lengths to point out that the jurisdiction was one which should not be unduly confined by judge-made rules of purportedly general application.
In Elliott v Elliott (NSWCA, 24 April 1986, unreported), Glass JA said in reference to the above quoted statement:
"The statement there was made in an evidentiary context where the provision was made at the expense of the children of a previous marriage who had some claim on the testamentary bounty of the deceased. The residuary beneficiaries here have none and it seems to me that no fairness is owed to them."
McHugh JA agreed with his judgment and the President agreed substantially with the reasons given by Glass JA. He added nothing on this aspect. I do not think that it can be said that the Court of Appeal has adopted the statement of Mason J in White v Barron. All that can be said is that they distinguished the situation before them.
By the late 1980s the Judges in this Division were taking a slightly different view. For instance, in Court v Hunt (NSWSC, 14 September 1987, unreported) Young J said:
"Old age is a growing problem in our community and judges who sit in Family Provision Act applications get experience, as well as their own experience in the community, as to what happens when people reach the age when they can no longer look after themselves and one Judges the evidence in these sorts of proceedings against that background knowledge.
His Honour then went on to talk about the assumptions one could make about the fact that frequently people, once they pass fifty five, had to change their accommodation and locate themselves either in retirement villages or nursing homes, which have different requirements for capital contribution.
After talking about the evidence necessary, his Honour went on to say:
"In many cases these days a life estate will not be sufficient because it does not cover the situation of the plaintiff moving from her own home to retirement village to nursing home to hospital. Sometimes it is possible for a Court to alter a life estate to a more flexible noncapital provision, such as was done by Holland J in Crisp v Burns Philp Trustee Co Ltd , 18 December 1979, unreported, but noted in Mason & Handler Probate Service at page 13206. Other times the proper provision is for a fee simple gift, realising that this property will be sold and will be turned over into the appropriate property to maintain the widow for the rest of her life. Care also has to be given by those administering the plaintiff's property to ensure that there is sufficient income being raised after tax that will provide for maintenance levies and the other payments that have had to be made by the widow."
More recently the Court of Appeal on a number of occasions has referred to this problem. In Golosky v Golosky (NSWCA, 5 October 1993, unreported), Kirby P summarised the proper provision for widows (and thus Ross in these proceedings) in the following terms:
" 2. In testing the Master's decision it is appropriate to keep in mind the principles which governed the approach which he was obliged to take to the widow's application under the Act. Relevantly, these included:
(a) Proper respect was to be paid for the right of testamentary disposition which is the fundamental premise upon which the provisions of the Act are based. That premise requires the Court, out of respect for the continuing right of testamentary disposition, to limit its disturbance of the testator's will to that which is necessary to achieve the purposes of the Act, and not more. See The Pontifical Society for the Propagation of the Faith and St Charles Seminary, Perth v Scales (1962) 107 CLR 9, 19; White v Barron and Anor , above, 458; Hunter , above, 576;
(b) The purpose of the jurisdiction is not the correction of the hurt feelings or sense of wrong of the competing claimants upon the estate of the testator. The Court is obliged simply to respond to the application of the eligible person who was a member of the testators household and to consider whether, as claimed, the provision made by the will is inadequate for that person's proper maintenance and advancement in life. See Heyward v Fisher , Court of Appeal, unreported, 26 April 1985; (1985) NSWJB 81.
(c) Consideration of other cases must be conducted with circumspection because of the inescapable detail of the factual circumstances of each case. It is in the detail that the answer to the proper application of the Act is to be discovered. No hard and fast rules can be adopted. Nevertheless, it had been said that in the absence of special circumstances, it will normally be the duty of a testator to ensure that a spouse (or spouse equivalent) is provided with a place to live appropriate to that which he or she has become accustomed to. To the extent that the assets available to the deceased will permit such a course, it is normally appropriate that the spouse (or spouse equivalent) should be provided, as well, with a fund to meet unforeseen contingencies; see Luciano (above) 69 to 70;
(d) A mere right of residence will usually be an unsatisfactory method of providing for a spouses, accommodation to fulfil the foregoing normal presupposition. This is because a spouse may be compelled by sickness, age, urgent supervening necessity or otherwise, with good reason, to leave the residence. The spouse provided and will then be left without the kind of protection which is normally expected will be provided by a testator who is both wise and just. See Moore v Moore , Court of Appeal, unreported, 16 May 1984, per Hutley JA, 2;
(e) Considering what is "proper" and by inference what is "improper" as a provision in a will, it is appropriate to take into account all of the circumstances of the case including such matters as the nature and quality of the relationship between the testator and the claimant; the character and conduct of the claimant; the present and reasonably anticipated future needs of the claimant; the size and nature of the estate and of any relevant dispositions which may have reduced the estate available for distribution according to the will; the nature and relative strengths of the competing claims of testamentary recognition; and any contributions of the claimant to the property or to the welfare of the deceased. See Re Fulop Deceased (1987) 8 NSWLR 679 (SC); Churton v Christian and Ors (1988) 13 NSWLR 241 (CA), 252 ."
In talking of the need to provide a house and a sum for contingencies Kirby P is clearly referring to passages in Luciano v Rosenblum (1985) 2 NSWLR 65. In the judgment of Powell J at first instance in Elliott v Elliott ( 18 May 1984, unreported) his Honour said that such a type of provision only applies where it can be said there has been a long and happy marriage and a widow has helped build up the estate of the deceased. This seems to have been generally adopted over the years in many subsequent cases.
In Permanent Trustee v Fraser (1995) 36 NSWLR 24 at 47 Sheller JA had the following to say:
"Once it is accepted that adequate provision for her proper maintenance and advancement in life required secure accommodation for life as well as a capital sum to meet exigencies, this need is not met by giving her only a life interest in the home unit. Commonly people in the community need to move from their own home into a unit in a retirement village and then into nursing accommodation and then into total care accommodation. See Young J in Christie v Christie. That need can be met if the respondent is given the home unit absolutely. She then has a greater flexibility as well as greater security."
In Salmon v Blackford [1997] NSWCA 274, the Court of Appeal was dealing with the case where the trial Judge had given a fee simple to the deceased widow. Sheller JA said:
"The principal point according to Mr Gibb was that his Honour failed to take into account that by reason of the widow's advanced years and the probability that her adopted son would be the natural object of her bounty, the effect of the order made was likely to be that the adopted son, whom the deceased had no intention to benefit, would be the beneficiary of half of the estate. I have great difficulty in seeing how a submission of this sort has any weight in the circumstances of this case.
The matter that this Court must consider is whether the order that his Honour made was in such terms that one could only come to the conclusion that in some way his discretion must have miscarried. It is well established that proper provision is not to be measured solely by the need for maintenance. It should, in the case of this respondent and in the circumstances of this case, free her mind from any reasonable fear of any insufficiency as her age increases and her health and strength fails. I may say in this regard that her life expectancy, according to the tables, was something over 11 years at the time of the hearing. If one comes to the conclusion that for her proper maintenance and order such as the present is appropriate, it seems to me to matter not at all that she has an adopted son of an earlier marriage and that he may be the ultimate beneficiary of her bounty."
No reference was made in either of these cases to the comments of Mason J in White v Barron . In Permanent Trustee v Fraser there were no competing claims by children of the first marriage. In Salmon v Blackford there were children of the first marriage but they appeared well off and their claims were thus minor.
Recently in Hertzberg v Hertzberg [2003] NSWCA 311 McColl JA referred with approval to Golosky v Golosky and said [34]-[35]:
"34 ....section 9 (2) of the Family Provision Act directs the Court to consider the issues of jurisdiction and the exercise of discretion at the time of the proceedings, not the time of the will, and in this case the deed, were made. In reaching his decision the Acting Master took into account community expectations. He referred to Young J's observations in Blackford v Salmon, unreported, 27 July 1994, in which his Honour said:
'It seems to that for a widow of a 30 year marriage who has lived in the house for some time and who continues to wish to live there, the expectation in the community would be that a wise and just testator would have left her the house in fee simple.'
35. His Honour's judgment recognized 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."
This also was a case where there was no competing claim. It seems to me that the comments of Mason J in White v Barron should still be given consideration when one is considering a situation of competing claims.
It is however worth noting the comments of Young CJ in Eq in Marshall v Carruthers [ 2002] NSWCA 47. His Honour agreed with the comments of Hodgson JA and added:
" [72] Mr Ellison for the respondent strongly submitted that a person who makes a claim as a spouse of a class (a) eligible person is entitled to take comfort from the words of Mr Justice Powell in Luciano v Rosenblum (1985) 2 NSWLR 65 at 69 that a spouse is more or less entitled to have a home plus income to enable her to live in the style to which she is accustomed provided out of the estate. Indeed this passage is actually a summary of a similar but longer statement made by Powell J in Elliott v Elliott 18 May 1984 unreported which was approved by the Court of Appeal on 24 April 1996 and which is set out in the learned Master's judgment.
[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."
Similarly in Bladwell v Davis [2004] NSWCA 170, Bryson JA reviewed the authorities and concluded that the adoption of any such preconceived position or formula was likely to result in error, stating at par [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."
Ipp JA added at par [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."
This case starkly illustrates the problem that arises in many of these matters where a person has been left only with a right of residence or life estate. On a factual level Sharon points to a number of factors, which may incline the Court to look towards a Crisp order.
The first of these is that Ross only has a life expectancy of another eight years; and the second is that he made no contribution to the assets in the estate. Sharon also points to a difficulty which owning that unit outright would cause him, namely if there were substantial levies in the unit block as a result of the need to replace the lift. The evidence does not address the likely amount of any such levy.
The deceased and Ross were together for 19 years and shared the problems associated with John's health. They had no children of their own. Ross also cared for the deceased when she suffered her illness in the last two years of her life.
It is important not to loose sight of the relative financial and personal situations of Ross and Sharon. The plaintiff has sufficient income to live within his means and he is thus able to keep some cash reserves and some shares.
Sharon's situation is far more difficult to predict. Assuming her husband to whom she has been married for 21 years, receives half of their assets, which would be an amount of about $684,000, Sharon will need to use some estate assets to pay this or sell her interest at Neutral Bay. Further, assets obtained by a party post-separation are not necessarily excluded from the pool of assets to be divided between separating parties in Family Court settlements as it is the Court's practice to identify and value the assets of the parties at the time of the hearing, rather than on the date of separation , see for example Farmer v Bramley [2000] FamCA 1615. Farmer v Bradley was a case in which a husband won $5 million dollars in a lottery after separation and after the wife had remarried, however that decision has been distinguished somewhat by In the Marriage of A M and J A Bonnici (1991) 15 Fam LR 138, where it was held:
"A property does not fall into a protected category merely because it is an inheritance. On the other hand, if there are ample funds from which an appropriate property settlement can be made and a just result arrived at, then the fact of a recently acquired inheritance would normally be treated as an entitlement of the party in question."
In Bonnici it was decided per curiam, that a party could not be regarded as contributing significantly to an inheritance received very late in a relationship, and certainly not after it had terminated, except in very unusual circumstances (see also Fowler v Fowler [ 2011] FAMCA 273 at [100] and Rickard v Griffin [ 2010] FAMCA 1199 at [63]; and Hayton v Bendel [2010] FamCA 592 at [90]). In these circumstances it is not likely that Sharon's husband will receive some of the estate property passing to Sharon.
Sharon has little income but has enormous expenses. There could be expected to be some modest contribution to them by her husband in respect of the younger children.
As Sharon has to look after the younger children, she cannot work and will have to rely on investment income to support the family. Assuming she receives a return of 3.5 per cent on her investments this income may just be sufficient. Any order in favour of the plaintiff as he requests will not alter this situation.
A Crisp order adds a level of complexity to the parties' arrangements because it means a surviving partner is somewhat beholden to an executor as trustee of the estate to facilitate a move to alternative accommodation.
This case highlights the difficulty in finding a balance between the deceased's freedom of testation and whether in all the circumstances the community would have expected the deceased to make a greater benefaction than she in fact did to constitute proper or adequate provision for the plaintiff: Walker v Walker per Young J (NSWSC 17 May 1996 unreported).
Leaving aside the claim by Ross for a fund of $200,000 for contingencies, any order in his favour for the fee simple in Bishop's Avenue will not alter the likely income provision for Sharon.
There is thus the question of whether that 90 per cent should, on the death of Ross, pass to his children or should it pass to Sharon and her children. Plainly the deceased intended the latter and there is no doubt that Ross did not contribute to the 90 per cent share of Bishops Avenue or the other properties of the deceased.
There is another difficulty with the Crisp order proposed and that is the prospect of a substantial levy being imposed because of the need for a new lift. Under the terms of the defendant's offer, Ross has to bear all the outgoings for the whole property. This could be disastrous for him.
If there is to be a Crisp order, I think the estate should bear 90 per cent the outgoings including levies and the same proportion in respect of any substitute accommodation. It would not be necessary to increase the assurity to Ross except to add an indexing and provide for it to continue until his death.
Having regard to the forgoing matters, I think as his cash reserves are not great, Ross may need some further funds for contingencies. Ross should therefore in addition receive a legacy of $100,000.
I direct the parties to bring in short minutes to reflect the following orders:
1. The deceased's will should be varied to provide for:
(a) A Crisp order in respect of the estate's interest in Bishops Avenue; and
(c) The defendant is to pay 90 per cent of all outgoings in relation to the Bishop's Avenue property.
2. The plaintiff is to be provided with a lump sum of $100,000 for contingencies and emergencies.
3. The annuity to the plaintiff should be indexed to continue until his death.
4. Subject to any submissions, the plaintiff's costs on the ordinary basis and the defendant's costs on the indemnity basis be paid or retained out of the estate of the deceased.
5. Interest is to run on the legacy at the rate provided in the Probate and Administration Act 1898 from one month after the date of the orders.
********
Decision last updated: 05 September 2011
0
9
1