McCarthy v McCarthy
[2010] NSWCA 103
•3 May 2010
New South Wales
Court of Appeal
CITATION: McCarthy v McCarthy [2010] NSWCA 103 HEARING DATE(S): 3 May 2010 JUDGMENT OF: Young JA at [1]; Tobias JA at [40], [48]; Macfarlan JA at [47] EX TEMPORE JUDGMENT DATE: 3 May 2010 DECISION: The appeal is dismissed with costs. CATCHWORDS: SUCCESSION- family provision- appeal- whether provision excessive- large estate- respondent is a relatively wealthy stepson- factual errors insufficient to set aside discretionary judgment on quantum- no error in considering desire of respondent to provide for education of deceased's grandchildren- relevance of wills made without testamentary capacity. LEGISLATION CITED: Family Provision Act 1982 CATEGORY: Principal judgment CASES CITED: Anasson v Phillips (Young J, 4 March 1988, unreported) BC880247
Clifford v Mayr [2010] NSWCA 6
Goodman v Windeyer [1980] HCA 31; 144 CLR 490
In re Park dec'd; Park v Park [1984] P 112
Lloyd-Williams v Mayfield [2005] NSWCA 189; 63 NSWLR 1
Re Buckland, deceased [1966] VR 404
Singer v Berghouse [1994] HCA 40; 181 CLR 201
Taylor v Farrugia [2009] NSWSC 801PARTIES: Kim William McCarthy (Appellant)
Gregory John McCarthy (Respondent)FILE NUMBER(S): CA 2009/00298437 COUNSEL: P Hallen SC (Appellant)
P M Jeffriess (Respondent)SOLICITORS: Horowitz & Bilinsky (Appellant)
Everingham Solomons (Respondent)LOWER COURT JURISDICTION: Supreme Court - Equity Division LOWER COURT FILE NUMBER(S): SC 2712/06 LOWER COURT JUDICIAL OFFICER: Macready AsJ LOWER COURT DATE OF DECISION: 14 August 2009 LOWER COURT MEDIUM NEUTRAL CITATION: McCarthy v McCarthy [2009] NSWSC 774
CA 2009/00298437
Monday 3 May 2010TOBIAS JA
MACFARLAN JA
YOUNG JA
1 YOUNG JA: This is an appeal from a decision of Associate Justice Macready who made an order for provision under the Family Provision Act 1982 in favour of the respondent, granting him a legacy of $400,000.
2 The deceased, William Charles McCarthy, died on 14 November 2004, aged eighty-seven years, though the primary judge erroneously said seventy-seven. The deceased who had been incapable of making a will from at least 2002, died intestate, his whole estate passing to the appellant, his only biological son. The appellant obtained a grant of letters of administration unopposed, on 6 March 2007.
3 The respondent is a stepson of the deceased. His mother, Evelyn, married the deceased in March 1973. It was the deceased’s third marriage. The respondent had been born in April 1967 so that at the time of the marriage he was about six years old. The marriage broke down in 1981 and the spouses separated and the respondent departed from the deceased’s home where he had lived for eight years and went to live with his mother.
4 The respondent successfully completed an apprenticeship in the automotive mechanics and boiler making profession. When he became twenty-one in 1988 he received a cash sum of $20,000 from the “Gregory’s Trust”, which the deceased had set up for his benefit.
5 The respondent married in 2000. He is now forty-three, though the primary judge noted that he was fifty-four. He and his wife have twins, a boy and a girl aged eight. I will note his assets later. The deceased died with an estate whose value is estimated at about $3 million, though the primary judge made no precise finding on that subject.
6 The costs of a three day hearing at first instance was said to have amounted to $450,000. It would not necessarily be a safe assumption that costs of that magnitude in a relatively simple case would be allowed by a cost assessor; I merely note the figure.
7 The appellant says that the primary judge ought to have made a more modest order, perhaps a nil order, on the basis that the respondent is a rich man himself. He was only financially dependant on the deceased for eight years as a child, almost thirty years ago. He also says that factual errors made by the primary judge also provide reasons for setting aside the order that was made.
8 The respondent says that while there were factual errors in the judgment, they were really typographical or minor and did not effect the result. He also says that where there is, like the present case, a large estate with a limited number of claimants, the court is entitled to apply the legislation with a more broad brush approach, than it might, in cases where the assets are small and the claimant’s many.
9 On this appeal Mr P Hallen SC appeared for the appellant and Mr P M Jeffriess of counsel for the respondent.
10 There is no doubt at all, and indeed it is conceded there was a bond of affection between the deceased and the respondent. During the time they lived together the respondent called the deceased “Father”. The relationship continued after the respondent’s parents separated, as shown by the greeting and birthday cards in evidence. Furthermore, in recent years the respondent has spent time caring for his stepfather. As the judge found, the deceased and the respondent treated each other as father and son throughout their life. However, on the other hand, it is also clear that the respondent did nothing or virtually nothing to contribute to building up the deceased’s estate.
11 The affection of the deceased to the respondent is further shown from the fact that in 2002 the deceased made three wills, each prepared by a solicitor. It is common ground that the deceased did not have testamentary capacity at the time. Each of the wills provided for the respondent to take at least one-third of the estate.
12 Mr Hallen says that these wills must be completely disregarded. The respondent says that even though they were made by an incapable person, they at least show that the deceased wished to benefit the respondent and that the deceased should not be classed as a person who wished to die intestate with the statutory consequences.
13 I would agree with that submission. It seems to me that cases like In re Park dec’d; Park v Park [1954] P 112 show that even though a person may not have testamentary capacity, one does not completely consider that person as a person who is deprived of willpower up to a certain point. In my view the fact that the wills were made does assist in putting together the relationship between the parties and the claims that the respondent has on the deceased’s estate. This is reinforced by the deceased’s unchallenged statement in the 1990s, that he intended to leave his two sons equal shares with something going to charity. Again, one does not look at that as some sort of testamentary promise but it reinforces the other evidence. However as this point was not really debated below, I do not think it would be proper to make it a key plank in my judgment, and I do not do so.
14 The notice of appeal contains thirteen grounds of appeal, grounds two, three and six have now been abandoned. Ground one complains of various errors, however the most significant error appears to be that if the primary judge really based his decision on the respondent being fifty-four, he may have become confused when considering whether the respondent had adequate superannuation.
15 There is no doubt at all, and indeed it is conceded, that the respondent is an eligible person and that ultimately it was conceded that there were factors warranting the making of an application. Originally it would seem that the appellant sought to say that there was no jurisdiction to make an order at all, however, in oral submissions, Mr Hallen properly conceded that the appeal was really an appeal on the quantum of the award.
16 The appellant says that when one looks at the assets one can see that this was a case of a relatively wealthy plaintiff whose needs were relatively small because of his own assets.
17 Again, it is difficult to see exactly what value to place on the assets of the parties involved. Although the appellant says that the primary judge should have found a greater figure, he found that the respondent had assets of about $1,700,000, he had a steady job with an income, as at 2007, of $1,433 per week. In addition he then earned, and probably still does, $49 per week as a union delegate and had rents of $240 a week and only had minor health issues. He had one debt of $231,083. He asked the primary judge to award him a legacy of $450,000 to repay this debt and principally to renovate his house.
18 The respondent is his mother’s only child. The mother has a grazing property at Quirindi, which she owns as joint tenant with the respondent. She also holds half the shares in a company, Damileaton Pty Limited, which owns a grazing property at Singleton. Again, the respondent owns the other one half of the company. The mother works as an account’s clerk. The properties have been carried on at a loss in the recent past.
19 The respondent’s mother is now sixty-seven, though the primary judge said that she was fifty-six. That, as I will say later on, is a matter that causes some concern because when evaluating what are the respondent’s financial prospects, the likelihood is that he will some day succeed to his mother’s assets and indeed, where he holds those assets as joint tenants with mother, that is assured.
20 The appellant also is a successful man. He is now retired and caring for a sick wife and his own health is not good. His assets are about $1.9 million and his income, as at 2007, much the same as that of the respondent. However, in this sort of case the assets of the appellant are of lesser significance. So long as he complies with community expectations and what is sometimes called “moral duty”, the deceased is able to leave his property as he wishes.
21 Mr Hallen says that the primary judge made a series of errors. Unfortunately it is true that there are errors in the judgment. However, it seems to me that only two are significant and that is the ages of the respondent and his mother. The respondent says that the errors are really in the nature of typographical errors and do not really affect the way in which the judge decided the case and points out, that although he does misstate the ages, it is clear that he was fully aware of when the respondent was born, so that it may just be that it is typographical.
22 So far as the respondent’s age is concerned, the significance is that the primary judge focused on it in para 49 of the judgment when talking about the respondent’s needs as to his superannuation, then in para 55 of the judgment said that that superannuation was not substantial, having regard to his age. Again there is a bit of doubt here because in neither paras 49 nor 55 did the judge state the age and one does not know whether he is referring back to his mistake as to fifty-four or as to the birthday, which was noted earlier.
23 As far as the mother’s age is concerned, the only significance is that the primary judge may have thought that the respondent would succeed to her assets eleven years later, than was in fact the case.
24 There are other errors admittedly made in the reasons for judgment of the primary judge such as the value of a motor vehicle, but to my mind there is no point in dwelling further on these as they make no difference to the result.
25 I should say at this stage that the court would expect that when a judgment is produced, probably because of the stresses of a busy list, which contains obvious errors, it is the duty of the lawyers involved to go back to the judge within the time for appealing and point out the problems and get them rectified rather than having them used on appeal because it is far cheaper, and so in the interest of the parties, to have such errors corrected at first instance.
26 Passing on to the appeal, Mr Hallen says that the respondent should have received close to nil, but, in any case, not more than the $231,083 necessary to repay his debt.
27 Mr Hallen says that it is to be observed that in this case, as distinct from other cases involving stepchildren:
(a) the deceased’s assets did not derive from the respondent’s ancestor, as is often the case in this type of situation;
(b) the respondent did not build up the deceased’s estate except perhaps to a minimal extent;
(d) The respondent is himself now financially independent.(c) the respondent was not financially dependant on the deceased in recent years;
28 When one considers these matters and their significance, when one looks at the number of errors of fact in the judgment, it must be concluded that the primary judge omitted to consider a number of relevant matters and indeed considered also some irrelevant matters, so that his discretion, based on these errors, must be reviewed by this Court.
29 The core of the learned judge’s judgment is in paras 48 to 52 and he there reviews the respondent’s situation. He notes that it would assist the respondent if he could repay his current debt and an amount for his children would be of assistance. Then he says a contentious matter is the provision for a larger home and he considers that matter, but virtually rejects it. He then works out the position of the plaintiff and the defendant, considers that special rules apply to larger estates, though the basic principles are the same, then in his discretion, says in para 57 that the appropriate provision for the plaintiff would be a legacy of $400,000.
30 In coming to that view the learned primary judge applied the approved standard test as laid down by the High Court in Singer v Berghouse [1994] HCA 40; 181 CLR 201 at 209 and he considered the relevant factors, though, as is clear, he made some factual errors. The estate, as I have said earlier, was not precisely quantified in the evidence nor in the judgment, but it is accepted that it is approximately $3 million and whilst that is not an overlarge estate in the 21st century it is certainly on the wealthy side of the barometer.
31 The learned judge took that factor into account. He took into account the probability of succession of the mother’s estate, though perhaps accelerated that a little. He looked at the cases which say that where there is a large estate and limited claimants the court may have a more liberal approach to the order it makes than in other cases such as Re Buckland, deceased [1966] VR 404 at 412. Indeed, the learned primary judge quoted what I had said back in 1988 about large estates in Anasson v Phillips (4 March 1988, unreported, BC 880247) and there is virtually nothing said contrary to that nor could there be.
32 The evidence here shows that the deceased was on good terms with the respondent up until his death. Everything indicates that his desire would have been to give a substantial benefit to his stepson. As things have turned out, he died intestate and the whole of the property in the estate passes to the biological son, the appellant.
33 If it be relevant to compare what the respondent receives with what the appellant receives flowing from the deceased (and I am not at all sure that it is relevant) then one can see that the respondent has assets of about $1.6 million and the appellant about $1.12 million. Then if one adds to those figures, the $400,000 which would flow to the respondent from the primary judge’s order, one gets about $2 million for the respondent and if one adds the balance of the estate, then one gets to about $2.7 million for the appellant. As I say, that is not a particularly relevant matter but it does give a rough indication that the result reached by the learned primary judge was not too far out of kilter, if at all.
34 Mr Hallen complains that the primary judge did not give sufficient reasons for coming to his $400,000 legacy. He says that the respondent had asked for $450,000 which included renovations or enlargement of his house. The primary judge did not allow this, yet inexplicably, made the award he did. It is true that the reasons are not as detailed as some others in this area but it is not expected that in a broad brush judgment one will get the same degree of detail as one would where there are critical amounts involved in the case of a small estate.
35 Here the award gives $231,083 to discharge the debt. If the $400,000 award stands this will leave a capital sum, assuming all the respondent’s costs on the solicitor and client basis (about $170,000) are otherwise covered. If this were invested at seven per cent it would produce about $12,000 per year. On the 2008 figures that are in the appeal books this would fall just short of the current annual school fees for eight year olds at the Hunter Valley Grammar School where the respondent desires to send his twins for a good education.
36 Mr Hallen made much of the fact that there was no evidence that the deceased ever met the respondent’s twins and particularly in view of the fact that the deceased was an incapable person from at least 2002 and the twins were only born on 25 April 2002. There is really very little significance in this fact.
37 Mr Hallen then refers to a proposition from the judgment of Brereton J in Taylor v Farrugia [2009] NSWSC 801 at [57] and following which he says supports the proposition that, generally speaking, the community does not expect a parent to look after adult children for the rest of the child’s life and a fortiori does not intend that the expenses of educating grandchildren will fall on their shoulders. As to this, it is to be noted that Brereton J does use the words “generally speaking” when he makes these propositions and it would seem to me, that without evidence, there may very well be a considerable proportion of grandparents in the community in the 21st Century who need to give consideration to the education of grandchildren.
38 That observation has nothing to do really with the decision of this present case, I merely wish to make it clear that one should not accept what Justice Brereton said in that case as necessarily applying to every case. In this particular case, the need put forward by the respondent included education of his children and it would seem to me that in the circumstances of this case, where there were limited claimants, where there were sons and stepsons who were wealthy in a sense in their own right, that there is no error in principle in a discretionary judgment which makes some allowance for the education of the deceased’s grandchildren.
39 There is a heavy onus on a party who seeks to set aside a discretionary judgment, as far as quantum is concerned, this one is. The factual errors made by the primary judge are, to my mind, relatively inconsequential. The award of $400,000 is within the range and can be quite justified. In my view the appeal should be dismissed with costs.
I agree and would just add the following comments. The appellant, as Young JA has indicated, submitted that it was inappropriate for his Honour to make any allowance for the desire of the respondent to provide for the private schooling of his twins, who at the time of the hearing were aged seven years. Reliance was placed upon what Brereton J said in Taylor v Farrugia to which reference has already been made. I would, however, in that case draw attention to the following sentence in [57] of his Honour’s judgment:
- “I think, however, it can be said that ordinarily the community expects parents to raise and educate their children to the very best of their ability while they remain children.”
41 The respondent, in his submissions, also referred the court to the following passage from the judgment of Gibbs J, with whom Stephen and Mason JJ relevantly agreed, in Goodman v Windeyer (1980) 144 CLR 490 at 498 where his Honour said:
- “It was in my opinion a relevant circumstance that the appellant had a child of her own who was dependant upon her. Although the child of a claimant is not himself entitled to relief under the Act, the fact that a claimant has to support and educate a child is one of the circumstances that have a bearing on the question of what is necessary for the claimant’s proper maintenance.”
42 Notwithstanding that grandchildren may now have a right to claim under the Act, in my opinion, what Gibbs J said is still of relevance. Thus in Clifford v Mayr [2010] NSWCA 6 the following was observed by Campbell JA with the general agreement of Young JA and Handley AJA at [92]:
- “Unless the Trustees take the extreme step of selling Pinaroo Place, the Appellant would have no source of income from which to pay expenses associated with the children, other than her own earnings. To the extent that there was no other source of provision for the children than the assets and earnings of the Appellant, the Appellant’s own need for maintenance was one that extended to having enough to provide for both herself and the children. She is subject to the clearest moral duty to maintain them (which there is no hint of her not performing). The Deceased not only had a moral duty to provide for the ongoing needs of his children, he also had a moral duty to recognise that, to the extent to which he did not provide for the maintenance of the children, the Appellant would be subject to a moral duty to maintain them. To the extent that she expends her personal resources in performing that moral duty, her own need for maintenance is correspondingly increased.”
43 It was suggested by the appellant that, if anything, the moral obligation lay upon the respondent’s mother as the biological grandparent of the respondent’s twins to provide the necessary wherewithal to enable the respondent to properly educate his children. However, as at the date of the hearing, the respondent’s mother was significantly in debt and there was no indication that that was going to end soon. In particular, although she had the two grazing properties at Quirindi and Singleton, they had been running at a significant loss for many years due to the drought and would continue to do so unless and until the drought broke.
44 Her evidence was that she met those losses both from her income as an employee of the local council as well as from a line of credit which was secured upon a house that she apparently owned. Furthermore, she owed $200,000 to an uncle which she had not repaid in respect of her original purchase of the grazing properties.
45 In any event, it seems to me that the fact that there is a biological grandparent who might, in the future, be able to contribute towards the education of a claimant’s children does not militate against the legal and moral obligation of the claimant to support and educate his children, at least whilst they are in their teenage years. That is a need which the claimant has, and which bears upon the question of what is necessary for his proper maintenance.
46 For these additional reasons I agree with the orders proposed by Young JA.
47 MACFARLAN JA: I agree with Young JA and also with the additional observations of Tobias JA. I would add to the references given by Tobias JA, a reference to a decision to which this Court was taken in argument, that is to Lloyd-Williams v Mayfield [2005] NSWCA 189; (2005) 63 NSWLR 1, particularly at paras [33] to [39].
The orders of the court will be that the appeal is dismissed with costs.
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