McCarthy v Murphy

[2002] NSWSC 494

CITATION:	McCarthy v Murphy [2002] NSWSC 494
CURRENT JURISDICTION:	Equity Division
FILE NUMBER(S):	SC 1913/1999
HEARING DATE(S):	29/05/02
JUDGMENT DATE:	4 June 2002
PARTIES :	Miranda McCarthy and Allannah Colleen Wooloughan v Peter Robert Murphy
JUDGMENT OF:	Master Macready at 1

COUNSEL :	Mr C.J. Bevan for plaintiffs Mr G.A. Sirtes for defendant
SOLICITORS:	Turner Freeman for plaintiffs Peter R. Murphy & Co. for defendant
CATCHWORDS:	Family Provision. Application under the Family Provision Act by two adult daughters. Order for legacies. No matter of principle.
DECISION:	Paragraph 40

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

Master Macready

Tuesday 4 June 2002

1913/99 Miranda McCarthy and Allannah Colleen Wooloughan v Peter Robert Murphy

JUDGMENT

1 MASTER: This is an application under the Family Provision Act 1982 in respect of the late Edna Clare McCarthy who died on 19 June 1998 aged 83 years. The deceased was survived by her son and three daughters. Two of the daughters are plaintiffs in the proceedings.

The deceased’s will.

2 The deceased made her last will on 1 May 1989 and under that will she appointed her solicitor the defendant as executor and trustee. In the events which have happened she left her estate to be divided between her son, Martin, and her daughter, Belinda McCarthy.

The estate of the deceased.

3 The deceased’s estate consisted of unit No 4, 7-9 Lewis Street, Cronulla. The evidence shows that it has a present value of $380,000. She also left various term deposits and bank accounts. These have been realised. Rent from the property has been accumulated and expenses in the estate have been paid. Those expenses included funeral expenses, administration expenses accounting fees and other like matters. The balance presently held by the defendant is the sum of $100,088.81. Both parties have incurred costs in this matter. The defendant's costs are estimated at $40,720.08 and those of the plaintiffs are estimated at $63,466.26. It can be seen that costs will substantially consume the cash available in the estate and that the distributable estate will consist of the deceased’s unit which has not yet been realised. The figure for the defendant’s costs may be reduced by $5,600 but the evidence is not clear in this regard.

Chronology of the family.

4 The deceased was born on 10 March 1915 and she married her husband on 20 September 1941. They had four children Martin born in 1943, the plaintiff, Miranda, in 1946, the plaintiff, Allannah, in 1950 and Belinda in 1951.

5 Miranda McCarthy was in hospital as a young child in 1953 with Rheumatic Fever. This reoccurred in 1958 and when she was aged eight she was again hospitalised some 12 months in a convalescent hospital. This illness limited her education and in 1987 her father purchased an art gallery for her to operate with a friend. In 1969 Miranda McCarthy married John Lindsay and in 1973 they moved to London to live. On 1 April 1987 Miranda and John were divorced.

6 The deceased made her last will, as I have indicated above, on 1 May 1989 and in that year Miranda McCarthy suffered a nervous breakdown in London. At the request of her parents she returned to Sydney and she lived there with them for two years. In 1991 she was admitted to hospital after a suicide attempt. Later in 1991 she moved into a flat for which her father paid rent in order to assist her to overcome the depression from which she was suffering.

7 In 1992 the deceased’s husband moved into a nursing home. In that same year Belinda and her husband separated. Their marriage was dissolved in 1993. That year the deceased also started to suffer from heart trouble. On 4 June 1995 the deceased’s husband died. The deceased thereupon took over paying the rent for Miranda’s flat. That year Miranda was also diagnosed with major chronic depression. The deceased had some admissions to hospital with her heart problems and ultimately she died on 19 June 1998. Probate was granted on 1 September 1998.

8 So far as Allannah is concerned she left school in 1966 having obtained her Leaving Certificate and undertook a secretarial course at Randwick Technical College. She left home to flat aged 18 and obtained employment as a typist. Allannah married John McKelvie in 1970 and their child, Christopher, was born in 1971. He is now aged 31 and lives in New Zealand. Allannah and her husband, John, moved to New Zealand in 1975 and in 1977 they were visited by the deceased and her husband. Over the years between 1978 and 1982 their son, Christopher, would travel to Australia to stay at times with the deceased and her husband. On one occasion in 1986 Allannah took her annual leave to stay with the deceased and her husband in Sydney. Unfortunately the marriage between Allannah and John McKelvie broke down in 1989 and she returned to Sydney to live with her parents. Their marriage was dissolved in 1992. In the meantime Allannah had met Shaun Wooloughan and their daughter, Erin, was born on 12 January 1993. Allannah went to live in Victoria in a small town in that State.

9 At the time the deceased’s husband was seriously ill, Allannah came to stay with her mother and helped her for three weeks over this period. After her father’s death Allannah’s family made visits to Sydney to help the deceased with matters concerning the apartment. Unfortunately their daughter, Erin, has severe learning difficulties and in July 2001 at the age of 8-1/2 years she was diagnosed as having a development age of only 4-1/2 years. Further evidence was tendered which suggests that Erin may have a life long need for support to manage her daily life.

A consideration of the plaintiffs’ claim.

10 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."

11 I turn to consider the position of the plaintiff, Miranda McCarthy. She is single, aged 56 years and has no dependents. She has no assets other than clothing and personal items and she has cash in her bank account of $300.62. She has no liabilities. She is on a disability support pension and she presently receives $360 per fortnight. She lives in a Housing Commission flat in Darlinghurst which is in fact leased by her former husband. She pays $40 per week to contribute to the rent of that flat. Her husband is presently residing in his mother's house which will have to be sold shortly as his mother has died. It is then his intention to move back to his own premises in Darlinghurst and this will mean that the plaintiff will have to vacate the premises.

12 The plaintiff has had an extremely irregular work history because of the difficulties caused by interruptions to her education and the problems she has had with depression and her personality disorders. Her problems commenced in about 1987 when she was first admitted to the Brompton Road Psychiatric Hospital as an in patient for three weeks. On her return to Sydney she was treated for depression by Dr Bartle at the Sydney Clinic at Clovelly. Her case history has been reviewed by Dr Shand who has given evidence by affidavit in this matter. In August 2001 he was of the view that the patient had been suffering from at least recurrent intermittent depression probably associated with a long-standing personality disorder and she also has some physical disorders. Dr Shand stated that he could not classify the depression as either Dysthymyc or major. In a later report of 24 January 2002, after reviewing other records, he suggested that there might be a possible addition of chronic anxiety disorder to the diagnosis. In his report in August 2001 Dr Shand commented that she was apparently chronically unfit for employment, from a physical and psychiatric point of view. In submissions it was pointed out that this is a slightly more guarded prognosis than simply saying she should be unfit for work in the future.

13 The evidence is not clear about her employment history but it is obvious that the interruptions to her schooling have affected her. After she left school in 1967 at the age of 17 years her father set her up in a small Art Gallery. There are references in the psychiatric reports to her employment being irregular and sporadic. The affidavit evidence indicated her involvement in many different projects some of which did not come to fruition. The most recent example of any work-related activity was in 1997 when she took a lease of premises in order to set up a centre for tarot card readers. That venture turned out to not be successful and was terminated after some three months.

14 The plaintiff has been receiving a pension for some time and it is clear, given her medical condition, her age and her employment history that she will be unlikely to return to the workforce.

15 It also important to consider the relationship between the plaintiff, Miranda, and the deceased. It is clear that her parents supported her extensively throughout her life. The fact that this continued throughout their lives bespeaks a relationship that was able to continue notwithstanding her problems. It is clear that the plaintiff’s medical condition did cause problems at home and hence the evidence of arguments in 1988. There was evidence that her father said she was to move out because the plaintiff was upsetting the deceased. Even though this may have happened the point I make is that the relationship may have been difficult and it was probably better for the plaintiff to move out from home. The relationship continued with the support from her parents for the rest of their lives. I would not be critical of the plaintiff for her failure to attend the funeral of her mother as she was overseas at the time. Her actions, which I accept, in not telling her mother that she was going overseas because she knew it would worry her mother, showed some concern for her mother. I also accept that while she was living in Sydney she only rarely visited her mother in contrast, for instance, to her sister, Belinda.

16 One of the important things that has to be taken into account is the extent of any provision which has already been made for the plaintiff, Miranda, during her lifetime. The evidence discloses that the deceased’s father, and subsequently the deceased, supported her by paying rent for premises when she moved out of home in 1990 and thereafter. The evidence also shows support for the plaintiff during the period she lived in England. On these occasions support was not as regular but clearly from time to time whenever the plaintiff and her husband, or later, the plaintiff herself, was in difficulty, her parents would meet the difficulties by sending funds to the plaintiff and her husband.

17 The details of the benefits provided seem to indicate that at least between 1991 and 1996 her rent of $150 per week was paid for by her parents. This is a sum of approximately $46,800. She had a further apartment paid for her in 1988 for a period of six months when she returned to Sydney from England. In the years between 1977 and 1988 her parents paid for her return air fares from the United Kingdom to Australia every two or three years. There was the overseas support to which I have already referred and the cheque butts showed payments of other expenses such as telephone, dental bills and other miscellaneous cash payments.

18 I turned to consider the position of Allannah. She is 52 years of age, married and has a daughter, Erin, who is nine years old. Allannah and her husband live at Rye in Victoria in a house which is apparently subject to a life estate in favour of her husband's mother. The mother resides with them in the house. Her husband is 65 years of age. Their assets consist of a car worth $4,000, some shares and cash worth approximately $1,000. They have no liabilities. Neither Allannah nor her husband work and they receive their supporting parenting payments and Newstart benefits which total $382.85 per week. Not surprisingly this is totally consumed by their expenses.

19 The plaintiff, Allannah, had a good relationship with her parents. She had obviously put herself out to come and support the deceased on the death of her husband. She does not seem to have received any assistance apart from living with the deceased when she had split up with her first husband. There is no contribution by her, as is also the case with her sister, to build up the assets in the estate.

20 Allannah is in good health and appears well adjusted and able to cope with bringing up her child who has developmental problems. She puts her case forward on the basis of a need which arises from the difficulties with her daughter, Erin. It is thus necessary to consider the situation of Erin. Dr Blair, a Consultant Paediatrician reported in September 2001 that Erin had had a long history of intellectual difficulties, that she would need a great deal of support throughout her life and may never become socially independent. He points to the need for special education and support for a long time. A speech pathologist reports that she has impaired speaking and listening skills for her age. She is however intelligible in conversation with careful listening and the speech pathologist has recommended that she have further speech therapy to maximise her language skills. Her hearing will also need to be monitored.

21 Is also necessary to consider the position of others having claims on the estate of the deceased and in this case these are Martin and Belinda. Martin is aged 59, married and has no dependent children. He lives in his home at Bondi Junction with his wife which is worth about $450,000. He previously worked in stockbroking for many years but was retrenched in 1990. He had savings at that stage of $112,000 but no superannuation. He has lived on capital and now has only $4,000 left out of the original sum. He has shares worth approximately $3,000. He himself has a Newstart allowance of $364.60 per fortnight. His wife does not receive income but she has received a compensation payout of $100,000 recently and she has been contributing to meet their expenses. She also has a further sum of $60,000 in savings.

22 There is nothing of substance to suggest that the relationship between Martin and his mother was not satisfactory and appropriate. He assisted his parents from time to time in looking for houses when they wanted to move and he lived nearby. The evidence does not indicate how often he visited his parents over the years. He does not appear to have contributed to the estate of the deceased.

23 Belinda McCarthy is aged 50 years and is single. She has four dependent children aged from 10 to 20 years of age. She lives in a property at Woolooware in which she has some unspecified interest. She has a mortgage on the property amounting to $35,000 and she owns a 1995 car valued at $7,000. She has a debt due to her from her mother-in-law which she claims amounts to $74,000. The amount was the subject of some dispute in the evidence as there was a written agreement acknowledging a loan between the plaintiff and her mother-in-law only in respect of $12,000. I am satisfied that additional funds amounting to $62,000 were paid to the plaintiff by her mother-in-law. The question which has to be determined is whether they were loans or whether they were gifts. The plaintiff insisted that they were loans but no evidence was called by her from her mother-in-law although she was available to give evidence to confirm that they were loans. Given that the parties in question were careful to document one of the loans it seems to me that the evidence of her mother-in-law would not assist the claim that the other amounts were loans. The plaintiff did however say that the mother-in-law had suggested to her that if she was not successful in her case before me that she might have to sell the house in order to repay the amounts the plaintiff claims are due to her. Accordingly, I will accept the evidence of Belinda that she is obliged to repay all the amounts advanced.

24 The income she receives is by way of sole parent pension and family allowance which amounts to $397 per week. Her former husband is irregular in making Child Support Agency payments. The plaintiff has endeavoured to try and have the payments made but she seems to have difficulties in this respect. As may be expected her expenditure equals her income.

25 In February 2000 she was hospitalised for a period of three weeks and treated for major depression. The evidence does not speak of the outlook in respect of her illness. There was frequent contact between the deceased and Belinda. Belinda would drive her mother to Franklins to help with the shopping and she would take her to the doctor when necessary as well as to the local club and on family outings. She speaks of visiting her mother three times a week.

26 It is necessary to see how both plaintiffs submit that they have been left without adequate and proper provision for their maintenance, education and advancement in life. The submissions on behalf of the plaintiffs suggested that the funds to be received from the sale of the deceased’s unit should be split 80 percent equally between each plaintiff with the remaining 20 percent to be shared equally between Martin and Belinda. This would result in the plaintiff, Miranda receiving $150,000. It was submitted that this would allow her to purchase accommodation in the Surry Hills or Darlinghurst area which is close to St Vincent's Hospital where she receives treatment. There was evidence tendered on her behalf that a one bedroom unit in the area could be obtained for prices as low as $232,000. She gave no evidence of an ability to borrow and given that she is living on a disability pension is unlikely that she would be able to borrow any funds. In these circumstances the evidence tendered has little relevance.

27 In addition this claim needs to be carefully assessed as ordinarily it would not be expected that a child will be provided with a debt free home by her parents.

28 In Shearer v The Public Trustee and Hawke v The Public Trustee, (unreported, NSWSC, 29 March 1998), his Honour Mr Justice Young had this to say:-

"The community's attitude is not to be judged by a feeling as to whether it is morally wrong for a person to leave property otherwise than to her spouse or children. One must really look at the obligations to provide for persons who have some dependants.
Where the applicant is a spouse it is nowadays usually thought that to leave a spouse with a mere right of residence is insufficient provision. However, that is not the case with children, and as far as I am aware it has never been said by any court that it is an obligation that the community expects that a mother will leave her child in a position where the child has a house of his or her own. "

29 In the present case there are other factors which have to be considered. In particular the age of Miranda, the fact that she will not be able to work and will always have a very limited income are matters which require careful consideration. That consideration will however have to take into account the other claims put forward by her sister and also the situation of the two beneficiaries.

30 In respect of the plaintiff, Allannah, it is necessary to see what might be her needs given the responsibilities towards her daughter, Erin. I have already pointed out earlier that Allannah presents her claim based upon the extra expenditure that she would incur in looking after her daughter, Erin. In claims of this kind it is necessary to carefully distinguish between what is truly the claim of the mother and what is in reality a claim which is put forward by a daughter. In Trippis v Delis [2000] NSWSC 130 I distinguished between claims advanced by a father in respect of his intellectually disabled daughter. There I allowed some claims for alterations to their home to accommodate the daughter on her visits but did not allow claims based upon the cost of her care for the periods when the plaintiff and his wife might care for her. In that case the evidence was of the cost of care at the ordinary commercial rate for carers and I disallowed the claim. This is a slightly different situation to that where a person who has a moral and legal responsibility to a disabled child will in fact herself incur costs because she has to fulfil such responsibilities. In such a case it is a claim by the parent and not a claim by a child.

31 In her affidavit of 28 February 2000 the plaintiff Allannah refers to the medical reports and assessments in respect of her daughter and indicates she has a better appreciation of her future needs in respect of her daughter's ongoing care. In paragraph 10 of that affidavit she identifies occupational therapy, swimming pool therapy, specialist coaching at $50 per week, medical expenses and speech therapy costs. Annual visits to a paediatrician are said to be $100 and costs for annual assessments of hearing, eyesight and development are not quantified. Speech therapy costs are also unknown. In paragraph 11 the plaintiff went on to estimate that she would need a fund of not less than $150,000 to cover the expenses involved in raising her child, paying for her education and specialist medical and related tuition and therapy. Her claim does not identify the period for which it is to apply and how much relates to ordinary education rather than the extra expenses which are incurred because of her daughter’s impediments. This places the Court in a somewhat difficult situation because it cannot make an accurate assessment of the costs involved. There is no evidence of the life expectancy of the daughter nor indeed that of the mother. The daughter is nine years of age and given the description of the difficulties I could safely assume that her mother will have additional expenses in supporting her for at least 20 years.

32 Is obvious from the discussion earlier about the asset situation of the plaintiff Allannah that she has very little income and that in a very real sense she has a need for funds to meet her moral and legal obligations to support her child. In the absence of more detailed evidence the court is faced with either refusing the claim or fixing it at a level substantially below what are likely to be the costs which can be inferred from everyday experience of raising children who have to attend doctors and specialists. In the circumstances I think it is proper to adopt the second course and subject to be claims of others I would have thought figure of $75,000 would be appropriate.

33 In respect of Martin it is clear that he will have to live in the future on the pension and no doubt his expenses will be supplemented by his wife if that is desired by her. She has done so in the past and there is no evidence to suggest that she would not do so in the future. Martin is in the fortunate position of having no mortgage on his home.

34 Belinda’s situation is far more precarious. She has dependent children and will have them for some years yet with only irregular support from their father. She has debts of $35,000 and $74,000 which need to be repaid. If she cannot repay these debts the most likely situation will be that she will have to sell her home and live in lower-level accommodation in order to raise the four children or move into rented accommodation.

35 Returning to the claim by the plaintiff, Miranda, at the moment the only evidence of what is the cost of accommodation is the evidence which has been tendered for a one bedroom unit in the order of $240,000. For a home to be provided for her at that cost the remaining claims of her sister Allannah and the obvious claim oBelina in respect of her debts would not be able to be met out of the estate. For this reason it would not be appropriate to provide Miranda with such funds even if I were to be persuaded that the circumstances were such that it was appropriate that she should have some debt free accommodation provided for her.

36 As the claims cannot be accommodated one has to look at what alternative arrangements should be made for the plaintiff, Miranda, and the evidence is silent on this except that she has asked for a sum of $100,000 to cover the contingencies in life. There are other minor claims which she puts forward amounting to $5,000 for clothing, $15,000 for furniture, $2,500 for classes for stress relief and a part-time arts and crafts course of $12,000.

37 One matter which I raised with counsel during submissions was whether it might be appropriate to provide a home for Miranda for her life and have the capital to be available for others including Allannah’s daughter, Erin, at the conclusion of the life estate. Given the respective ages of the parties and the immediate need for funds to support Erin I do not think that this is appropriate.

38 As I indicated, Miranda has put forward no alternative in respect of her accommodation. She simply says in evidence that if she does not have accommodation provided for her she will have to move a Women's Refuge. I think this accentuates the position that she would clearly be entitled to rental assistance on a disability pension. She has made no effort to put forward to the court the likelihood of her obtaining public accommodation or other rented accommodation. The receipt by Miranda of a sum of $100,000 or less will not affect her pension. It is plain that she needs some funds to set herself up in rented accommodation and it may even be that she needs some time before she can obtain cheaper public accommodation. In the circumstances a legacy of $75,000 will allow her to carefully plan her future and obtain appropriate accommodation.

39 The question to be considered is what interests taken by the residual beneficiaries should bear the burden of the orders for a legacy of $75,000 to each of the plaintiffs. The claims of the two residuary beneficiaries are to uphold the will which provides for them to share the residuary estate equally. Making no change to the arrangement would still give Belinda sufficient to make her life more secure by the repayment her debts. Accordingly I do not think it appropriate to make a special provision for the burden of the legacy.

40 The orders that I make are as follows: --

1. That the plaintiffs each receive a legacy of $75,000 out of the estate of the deceased.

2. That the plaintiffs’ costs on a party and party basis and the defendant’s costs on an indemnity basis be paid or retained out of the estate of the deceased.

3. That interest shall run on the payment of legacies at the rate provided for under the Wills Probate and Administration Act from three months from the date of these orders.

Last Modified: 06/05/2002