Montague v Montague

[2002] NSWSC 328

CITATION:	Montague v Montague [2002] NSWSC 328
CURRENT JURISDICTION:	Equity
FILE NUMBER(S):	SC 5602/01
HEARING DATE(S):	16, 17 & 18 April 2002
JUDGMENT DATE:	22 April 2002
PARTIES :	Beryl Phyllis Montague (P) Bruce Vincent Montague (D)
JUDGMENT OF:	Austin J

COUNSEL :	Mr J Wilson (P) Mr P Hallen SC (D)
SOLICITORS:	Barkus Edwards Doolan (P) Heazlewoods (D)
CATCHWORDS:	SUCCESSION - Family Provision - widow's application - widow and deceased both had substantial pre-marriage assets - widow's claim based on security of accommodation - whether security of accommodation requires accommodation in residence that has become unsuitable - whether estate's share of residence should be transferred to widow - court's discretion to make orders for security of accommodation of a kind not sought by widow
LEGISLATION CITED:	Family Provision Act 1982 (NSW) ss 7, 9
CASES CITED:	Golosky v Golosky (Court of Appeal of New South Wales, unreported, 5 October 1993) Goodman v Windeyer (1980) 144 CLR 490 Luciano v Rosenblum (1985) 2 NSWLR 65 O'Loughlin v Low [2002] NSWSC 222 (6 March 2002) Permanent Trustee Co Ltd v Fraser (1995) 36 NSWLR 25 Pontifical Society for the Propagation of the Faith v Scales (1962) 107 CLR 9 Singer v Berghouse (1994) 181 CLR 201 White v Barron (1979) 144 CLR 431
DECISION:	See under 'Conclusions'

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

AUSTIN J

MONDAY 22 APRIL 2002

5602/01 BERYL PHYLLIS MONTAGUE V BRUCE VINCENT MONTAGUE

HIS HONOUR:

The proceedings

1 The plaintiff is the widow of the late Paul Montague, who died on 13 May 2001. In these proceedings, commenced by a summons filed on 21 November 2001, she seeks relief under the Family Provision Act 1982 (NSW), in the form of an order making provision for her maintenance and advancement in life out of the estate of the deceased. The plaintiff seeks an order transferring to her the absolute ownership of a house and land at 2 Loblay Avenue, Bilgola Plateau ("the Residence"). The proceedings have been brought on for expedited hearing in view of her poor health.

2 At the commencement of the hearing on 16 April 2002, counsel for the plaintiff sought leave to amend the summons by extending the claim to the deceased's notional estate, in view of evidence disclosing the existence of some valuable overseas joint bank accounts, the proceeds of which have been brought into New South Wales. Counsel for the defendant foreshadowed that if leave was granted, his client would find it necessary to apply for an adjournment so as to put on some evidence with respect to the notional estate. I indicated that I would be inclined to grant leave to file the amended summons on the basis that an adjournment would be granted and the present hearing days would be vacated, perhaps with an order for costs against plaintiff. After a short adjournment, counsel for the plaintiff informed me that he had instructions to withdraw the application to amend the summons. Consequently the case has proceeded as a claim out of the estate of the deceased, but not out of the notional estate.

Facts

3 The plaintiff is aged 71 years. She met the deceased in England in 1985. At that time they were both living in England. He was a widower with three adult sons, living in a house owned by him in Harrow. Two of his sons had already migrated to Australia, and the third would shortly do so. She was a widow with two adult sons, both of whom were then, and are now, living in England. She had sold the four-bedroom home in which she had lived with her first husband prior to his death, using part of the proceeds of sale to purchase an apartment in Watford. She was living in the Watford apartment when she met the deceased.

4 The plaintiff and the deceased formed a relationship and decided, at his suggestion, to move to Australia. There was some conflicting evidence as to whether they commenced to live together in England. The plaintiff said she commenced living with the deceased in about 1985. John Montague, one of the deceased's sons, gave evidence that the home at Harrow was his home until he migrated to Australia, although in 1985 he was boarding at university. He said that the plaintiff was not living there prior to his departure for Australia on about 23 October 1985. In cross-examination Mr Montague said that the plaintiff did not move into the Harrow home after he left in October 1985, but he admitted that he had no personal knowledge of this and that his evidence was based on the affidavit of a neighbour, Vincent Manzi. Mr Manzi said he did not observe the plaintiff moving in with the deceased before the deceased's departure for Australia. On balance, it seems to me probable that the plaintiff commenced to reside with the deceased in 1985 but after John Montague's departure in October 1985, although the arrangement was probably informal and she maintained her flat at Watford as well.

5 The plaintiff gave unchallenged evidence that she took up full-time employment as a secretary after her first husband's death, and continued working until she commenced living with the deceased. She gave up her employment at his request, to care for him and to become his wife.

6 They moved from England to Australia in April 1986. The plaintiff left her two sons and her elderly parents in England. The plaintiff and the deceased lived together in Australia until May 1986 when the plaintiff returned to England to visit her mother, who was ill. She returned to Australia in October 1986. During the period while the plaintiff was in England visiting her mother, the deceased completed the purchase of the Residence, which they had selected together. The Residence is a two-storey home on a large sloping block of land, with three bedrooms on the upper floor, and an office and rumpus room on the lower floor. The deceased paid the full purchase price without any financial contribution by the plaintiff, although the residence was acquired by the deceased and the plaintiff as tenants in common, he holding a two-thirds interest and she holding a one-third interest.

7 The plaintiff and the deceased married in Australia on 30 November 1986. They lived together in the Residence from that time until the deceased died, apart from occasional trips overseas. There is no issue about the relationship of the plaintiff and the deceased in these proceedings. The plaintiff looked after the deceased as his wife, caring for him during his bouts of ill health and attending to all the domestic tasks and to the garden. She sold her apartment at Watford in the United Kingdom, and some of the furniture in it, approximately two years after immigrating to Australia, and she retained for herself the proceeds of sale. She received an inheritance when her parents died about 1991, which she retained for herself.

8 The plaintiff and the deceased had each been previously married. Each of them had grown-up families, and they came together with separate assets. This is not a case of a husband and wife working together to establish themselves in life. The plaintiff's evidence is that she and her husband had a clear understanding that the assets each of them had accumulated prior to their marriage were to be retained for the benefit of their respective children, to the exclusion of the other spouse's children. They kept their finances separate and were "secretive" about their finances, and did not disclose details to one another.

9 Household finances were arranged on the basis that the deceased paid the bills and attended to all financial matters. On most occasions he paid for food and other shopping. In the early part of the marriage he encouraged her to provide him with receipts when she purchased food from her own money, so that he could reimburse her. As time passed she used her own money, her pension income, to purchase food and household supplies, and did not bother with obtaining reimbursement. Thus, she made a financial contribution to the running of the house, although it appears that the bulk of the expenses were paid by the deceased.

10 It appears that the plaintiff and the deceased enjoyed a comfortable lifestyle, with regular overseas travel. They sometimes travelled overseas together, but the plaintiff from time to time went to England alone, to visit her sons and parents. The deceased provided her with economy airfares but on her last trip before he died, she decided to fly business class, paying the difference in the fare from her own money.

11 The plaintiff and the deceased intended that they would leave their separate assets to their respective children. The plaintiff gave evidence that their understanding was that she would have a life estate with respect to his two-thirds share in the Residence, but the evidence of the deceased's sons is that the deceased made it plain more than once that he intended his estate to go to his sons to the exclusion of the plaintiff. I prefer the evidence of the deceased's sons to the plaintiff's evidence on this point. The plaintiff did not say in any of her affidavits that she had an arrangement with the deceased that he would leave her life estate. In cross-examination she said at first that the understanding between her and the deceased was that the deceased would leave his two-thirds share to his three sons, and she made no mention of a life estate. Later she changed that evidence and claimed that she had understood that her husband would leave her a life estate.

12 The deceased had no knowledge of the amount of the plaintiff's overseas investments until 1994, when he accidentally opened an envelope addressed to her and discovered that she had assets of about $1 million. She had previously led him to believe that her separate assets were limited, and when he found out the truth he told his son Nicholas that it was like being "kicked in the stomach by an elephant". At some time after 1994 the deceased told Nicholas that, whilst the deceased's funds were diminishing over the course of the marriage since he was paying for living expenses and the upkeep and maintenance of the Residence, the plaintiff's funds were increasing. He said he had not spoken with the plaintiff about the subject, because he did not want to have an argument about contributions to outgoings. In her evidence the plaintiff confirmed that she had managed her investments astutely and that she was able to roll over income from her investments.

13 It appears that in about 1994 the relationship between the deceased and the plaintiff had become strained, because they had a serious disagreement about one of the plaintiff's sons, who was ill in England. While there, the plaintiff consulted a solicitor about her marriage. She was contemplating leaving her husband, but she did not do so.

14 It is unnecessary for me to make findings about the quality of the relationship between the plaintiff and the deceased, because that subject has not been placed in issue. There is a substantial amount of evidence about the relationship between the plaintiff and the deceased's sons and their families. Whatever the relationship may have been in earlier times, it is plain from the evidence that there now exists very considerable animosity between the plaintiff and the sons. Allegations were made against the plaintiff that she referred to the sons and their families as "the enemy"; that she did not attend Bruce Montague's wedding although she had ample notice of it, choosing to go overseas instead; that she was unco-operative with respect to the arrangements for a memorial plaque for the deceased; and that she refused the sons access to the Residence after their father died. In her evidence the plaintiff for the most part denied those allegations, although to a degree she offered justifications. She made many allegations against the sons, including the allegations that Bruce Montague told her to "hang in there" and did not come to the hospital, when she rang him from the hospital to say that his father was in a critical condition.

15 It seems to me unnecessary to make findings of fact on these matters, although the conduct of the plaintiff before and after the deceased's death is a matter that I may take into account under s 9 (3) (b) of the Family Provision Act. If I were to accept the plaintiff's account in its entirety, or conversely the defendant's account in its entirety, these matters would not affect the exercise of my discretion under the Family Provision Act. I regard them as separate incidents which, in the circumstances of animosity between the parties that these proceedings have engendered, have been given a significance in the evidence beyond what they reasonably bear. Neither the plaintiff's account nor the defendant's account establishes such a systematic and intentional course of hurtful conduct by the sons or the plaintiff, respectively, as to have an effect on the exercise of my discretion.

16 Counsel for the plaintiff put to each of the sons the proposition that they had intentionally sought to increase the plaintiff's costs in this litigation. They were cross-examined on two e-mails which became exhibits P4 and P5. In one of the e-mails, John Montague purportedly put to his brothers a number of propositions and questions, including the following:

"We should try to increase her legal expenses where possible?"

17 The evidence of the brothers was remarkably uniform and, as far as I could see, spontaneous. Each of them said that far from seeking to increase the plaintiff's costs they had done what they could to minimise legal costs, in the interests of preserving the estate, in various ways including proposals for mediation and settlement. The effect of their evidence was that they could not recollect the e-mails, and although some of the subject matter was in discussion amongst them, various parts of the documents (including the question set out above) would not have been written by the purported authors. If the plaintiff had proved that the e-mails had been properly transmitted, I would have had to choose between the evidence of the documents themselves and the consistent oral evidence of the three brothers. But the plaintiff adduced no evidence as to the provenance of the e-mails. In answer to a question from me, counsel for the plaintiff said they had been made available to his client by a person who received them, but he gave no further particulars. In the circumstances I am not prepared to treat the e-mails as authentic documents. I accept the evidence of the three brothers about them.

The deceased's will and his estate

18 The deceased's last will was made on 24 June 1994. He appointed one of his sons, the defendant Bruce Montague, as his executor. He left his estate after payment of debts, funeral and testamentary expenses to his three sons. He made no provision for the plaintiff. Probate of the will was granted on 26 July 2001.

19 Under the will, therefore, the three sons have taken the deceased's two-thirds interest in the Residence. Since the property is held in co-ownership, the sons are in the position that they can insist (unless the plaintiff is successful in these proceedings or she reaches an agreement with them to the contrary) on the sale of the Residence, having regard to s 66G of the Conveyancing Act 1919 (NSW). If they do so, the plaintiff will be required to leave the accommodation in which she lived with her husband for nearly 15 years.

20 According to the schedule of assets prepared for probate purposes, the deceased left the following assets in Australia:

· A two-thirds share in the Residence, valued for probate purposes at $500,000

· Westpac Banking Corporation account $3615

· NRMA Insurance Group Ltd shares $786

· Motor vehicle $20,000

· Total assets $524,401.

21 There were very few debts of the estate, so that the net value of the assets of the estate was approximately $520,000. The present value of the Residence is $860,000, and so the present value of the estate's two-thirds interest is approximately $573,000. The deceased's household and personal effects have been valued at about $15,200. Prior to the hearing there was a dispute between the parties as to household and personal effects, but in the course of the hearing an agreement was reached and it is now unnecessary for me to deal with these items. The evidence indicates that the executor has transferred title to the motor vehicle to the plaintiff at her request, and I was informed from the bar table that there is now no contest between the parties that the motor vehicle belongs to the plaintiff. The only asset in contest, by far the most substantial one in the estate, is the Residence.

22 During his lifetime the deceased received an Australian age pension. There is some evidence indicating that he did not disclose his overseas assets when he applied for it. There is a prospect that the estate will be required to refund pension payments made, but the evidence does not enable me to assess the likelihood of that prospect or the amount that may be required to be refunded. Therefore, the estate has a contingent liability in an uncertain amount.

23 There is some evidence indicating that the deceased may have had a claim for compensation, in an amount of about $7000, from an Austrian provincial authority, arising out of his dispossession from his family house prior to the commencement of World War II. The claim is now being pursued by the beneficiaries but no assessment of it had been made at the date of the deceased's death.

24 The schedule of assets prepared for probate purposes also disclosed some overseas bank accounts, while not disclosing the amounts held in those accounts. Subsequently, by his affidavit made on 25 February 2002, the executor stated that all except one of the overseas accounts (the exception being a German account into which the deceased's Austrian pension was paid) were held by the deceased as a joint tenant with one or other of his sons, and consequently the money standing to the credit of those accounts did not form part of the estate. There was some cross-examination about the executor's claim that the accounts were held in joint tenancy, but on the state of the evidence it appears that the claim is correct.

25 According to the executor's affidavit of 25 February 2002, there were three joint accounts as follows:

· HSBC Midland Bank plc account held jointly by the deceased with his son John;

· Grindlays Private Bank account held jointly by the deceased and his son Nicholas;

· Halifax International St Helier Jersey Account held jointly by the deceased and his son Bruce.

26 Distributions have been made from these accounts to the three sons, partly by a solicitor collecting the proceeds and distributing them in three equal shares, and partly by direct distributions out of the foreign accounts to the three sons in equal shares. Each son has received $94,329.89.

Plaintiff's financial and material circumstances

27 The plaintiff is in poor health. She has spinal problems, is in constant pain, and has a blood disorder. She suffers from a number of life-threatening illnesses. She gave evidence that she has difficulty moving, walking upstairs, and walking up sloping ground. They are disabilities and illnesses which affect her ability to maintain the Residence, especially given that it is a large two-storey home on a sloping block. She now has assistance for maintenance tasks that she and her late husband were able to perform themselves in past years. She acknowledges that the Residence exceeds her needs, but she is emotionally attached to it, as it was the matrimonial home. When asked whether she was prepared to purchase the estate's interest in the Residence she said she was not, and she said (Transcript page 32 line 39):

"How can I put this into simple words? It was my home I shared with my husband. It is like buying my own home back."

28 At the date of commencement of the hearing, the total value of the plaintiff's investment assets was approximately $1 million, comprising:

Commonwealth Bank account $4185
Term deposit HSBC Jersey Channel Islands £Stg140,108.35
HSBC Jersey Channel Islands cheque account £Stg7944.37
Halifax International account £Stg42,611.29
Barclays Bank account £Stg158,546.59
Austrian Bank account €2172.80

29 The plaintiff has not given any evidence that she needs these capital investments for any particular purpose.

30 She is also entitled to a one-third interest in the Residence, the present value of which is approximately $287,000, and she is entitled to a UK pension and an Austrian pension. Prior to the hearing the executor transferred into the plaintiff's name the motor vehicle owned by the deceased.

31 The plaintiff's monthly income is approximately as follows:

· UK pension $530

· Austrian pension $450

· Income from UK investments $2760 (£Stg12,300 per annum)

32 The plaintiff's evidence does not make it clear whether the income from investments was before or after tax. In her affidavit made on 20 November 2001, she said she "receives" £12,300 per annum from her UK investments. That suggests that the figure is given on an after tax basis. Similarly, she has not made it plain whether the amounts she receives from her UK and Austrian pensions are before or after tax, but she speaks in terms of what she "receives". She was required to produce her income tax returns but failed to do so. In the circumstances, I think the correct approach is to infer that the figures are after tax.

33 She has also been receiving an Australian age pension of about $180 per week, since she turned 60. However, her solicitors have recently written to Centrelink on her behalf, asking for a review of her eligibility for an Australian pension. It appears that her application for an Australian pension did not disclose her overseas assets.

34 Evidence has been adduced of the general rules concerning Australian pension entitlements, sufficient to enable me to conclude that in view of her assets, she will no longer receive the Australian age pension. However, there is no direct evidence as to whether Centrelink will require her to refund any pension payments already made and if so, the amount of her liability. Counsel for the plaintiff submitted that I should infer that she will be obliged to repay that to which she was not entitled. But there is no evidence as to Centrelink's practices, and in particular, whether their practice is to require any, or all, or partial return of overpaid pensions. In the absence of such evidence, the only available conclusion is that there is a risk that she will have a substantial refund liability of a presently unquantifiable amount, falling due at some time in the future.

35 Given that she will no longer be entitled to receive an Australian pension, the deceased's monthly income will in the immediate future be approximately $3740, after tax. According to her evidence, her outgoings are about $2540 per month. Therefore her gross income exceeds her expenditure by about $1200 per month. Some of her outgoings appear to be related to the cost of maintaining a large house with a garden and swimming pool, so if she moved to a residential unit or retirement village it seems likely that her outgoings would be lower. On the other hand, it is probable that as she grows older, other expenses will increase. If seems to me that, even when one takes into account in some fashion the depletion of investment income that may result if she is required to refund pension payments from capital, her income is likely to be enough to cover her outgoings if she remains in occupation of the Residence; and if she moves to some form of apartment or unit accommodation where the outgoings are lower, she will have an additional buffer.

36 The plaintiff's costs of the proceedings, calculated on an indemnity basis, have been estimated to be $79,149 for a four-day hearing. The hearing has fortunately only been a three-day hearing. Therefore the plaintiff's costs should in fact be less than this estimate, and less again if they are assessed on a party/party basis rather than on an indemnity basis. She has paid about $41,000 of these costs.

37 The defendant's costs, calculated on the indemnity basis, have been estimated to be $59,475 based on a three-day hearing.

The financial circumstances of the deceased's sons

38 The defendant, Bruce Montague, is employed for a moderate income by the corporate trustee of his family trust, which operates the franchise of Kwikkopy Printing Centre at West Ryde. He has some limited superannuation entitlements, bank accounts and shareholdings. He and his wife jointly own a home with the approximate value of $600,000, secured for debts of about $340,000. They have a car, and access to another through their company. I think it is fair to say that he is a person of comfortable but moderate means.

39 Nicholas Montague is a person a moderate means. He does not own a house but he has control of the trustee of a substantial trust fund. He pays maintenance to his ex-wife and leases a car.

40 The third beneficiary of the estate, John Montague, appears to be rather better off than his brothers. He has a substantial residence in Darwin and an investment property, substantial superannuation, shares, a car and household effects. He has a senior position as General Manager of the Northern Territory Treasury Corporation, at a substantial salary. Even so, the value of his net assets is only about two-thirds of the value of the plaintiff's assets.

Statutory provisions

41 The plaintiff's application is made under s 7 of the Family Provision Act, under which the Court may order that such provision be made out of the estate of the deceased as in the opinion of the Court, ought, having regard to the circumstances at the time the order is made, to be made for the maintenance, education or advancement in life of the applicant. Before making the order, the Court must be satisfied that the applicant is an eligible person. Here the applicant is an eligible person within the definition in s 6 of the Act because she was the wife of the deceased at the time of his death. The application was made well within the time limit of 18 months after the deceased's death set by s 16.

42 Under s 9 (2) of the Act, the Court is prohibited from making an order under s 7 in favour of an eligible person out of the estate of a deceased person unless it is satisfied that:

"the provision (if any) made in favour of the eligible person by the deceased person either during the person's lifetime or out of the person's estate … is, at the time the Court is determining whether or not to make such an order, inadequate for the proper maintenance, education and advancement in life of the eligible person."

43 In the present case, I must be satisfied, before making an order in favour of the plaintiff, that the provision made by the deceased for her when he caused a one-third interest in the Residence to be vested in her is, at the present time, inadequate for her proper maintenance and advancement.

44 Subparagraph 9 (3) (a) authorises the Court to take into consideration, in the exercise of its discretion, contributions made by the eligible person to the acquisition of property by the deceased, and to the deceased's welfare. In the present case I take into consideration the plaintiff's evidence that she attended to all the domestic tasks and the garden and cooked and cared for her husband, and that she made some financial contributions to the household expenses for food, furnishings and home maintenance (although the evidence indicates that the bulk of those payments was made by the deceased). I also take into account that the plaintiff left her employment in England in order to come to Australia with the deceased and to marry him and care for him as his wife.

45 Subparagraph 9 (3) (b) authorises the Court to take into account the character and conduct of the plaintiff before and after the death of the deceased. It is relevant to take into account loving, helpful or dutiful conduct even if it does not produce any monetary benefit, as well as any bad conduct by the eligible person: Goodman v Windeyer (1980) 144 CLR 490. As I have said, there is no issue as to the relationship between the plaintiff and the deceased, and although I have heard and considered a substantial amount of evidence concerning the plaintiff’s conduct vis-a-vis the three sons and their families, that evidence has not influenced my determination. The evidence to the effect that she cooked and did the household chores and cared for the deceased in bouts of illness, although relevant, does not have the same weight as the evidence in Goodman v Windeyer, according to which the wife cared for her husband as a qualified nurse during his prolonged period of serious illness.

46 Subparagraphs 9 (3) (c) and (d) give the Court a very wide discretion to consider the circumstances existing before and after the death of the deceased, and any other matter which the Court considers relevant in the circumstances.

Case law

47 The Court's decision in any particular case is so governed by the facts and circumstances of the case that great care must be taken to ensure that observations made in other cases, even by appellate courts, are properly applicable to the instant case.

48 The facts of cardinal importance in the present case include the fact that when the parties came together they each had substantial assets accumulated during their respective prior marriages, and the fact that nevertheless, the deceased undertook the obligation of providing a home and living expenses for the plaintiff. The first of these facts serves to distinguish numerous cases in which the widow and her deceased husband built up the matrimonial assets before he died, and also cases such as Luciano v Rosenblum (1985) 2 NSWLR 65, where it appears that the widow, who was (as here) the second wife of the deceased, had very little in the way of separate assets and had a small income. The second fact serves to distinguish cases such as White v Barron (1979) 144 CLR 431 and Singer v Berghouse (1994) 181 CLR 201. In both of those cases the widow owned a residence during the deceased’s lifetime and continued to do so subsequently, and the question for the Court related to the adequacy of her income rather than the security of her accommodation.

49 Nevertheless, some general statements of principle emerge from the cases, which are useful in the present circumstances.

The two-stage process

50 As Mason CJ, Deane and McHugh JJ pointed out in Singer v Berghouse, the Court is required to carry out a two-stage process. The first stage calls for a determination of whether the applicant has been left without adequate provision for his or her proper maintenance, education and advancement in life. The second stage, which only arises if that determination be made in favour of the applicant, requires the Court to decide what provision is to be made out of the deceased's estate for the applicant (at 208). The question at the first stage ("the jurisdictional question") is an objective question of fact, notwithstanding that it involves the exercise of value judgments (at 210).

51 The words "adequate" and "proper" are relative questions. "Proper" maintenance and support of an eligible person is relative to that person's age, sex, condition and mode of life and situation generally; what is "adequate" is relative not only to the eligible person's needs but to his or her own capacity and resources for meeting them; and these matters must be considered relative to the nature, extent and character of the estate and the other demands on it, and to what the testator regarded as superior claims: Pontifical Society for the Propagation of the Faith v Scales (1962) 107 CLR 9, 19, per Dixon CJ.

52 The decision made at the second stage, in contrast with the jurisdictional question, involves the exercise of discretion in the accepted sense, because s 7 says that the Court "may" order that a provision be made if satisfied on the jurisdictional question, and this implies that although so satisfied, the Court may decide to refuse to make an order (at 211).

53 Although analytically the two stages are distinct, there is "an element of the artificial" in saying that it is only after jurisdiction is established that the exercise of discretion begins: Singer v Berghouse at 210, quoting from the judgment of Mason J in White v Barron at 443. This is because of the breadth of the value judgment to be made at the jurisdictional stage, and the overlapping considerations relevant to each of the two-stages.

The Court should not rewrite the testator's will

54 One obvious principle is that the Court should not depart from the scheme of dispositions adopted in the testator's last will except to the extent it considers necessary. As Dixon CJ said in the Pontifical Society case (at 19):

"All authorities agree that it was never meant that the Court should re-write the will of a testator. Nor was it ever intended that the freedom of testamentary disposition should be so encroached upon that a testator's decisions expressed in his will have only a prima facie effect, the real dispositive power being vested in the Court."

55 Bearing in mind that the two-thirds interest in the Residence was far and away the estate's largest asset, and that the evidence points to the testator having made a deliberate decision that the two-thirds interest should go to his sons rather than his widow, an order that the estate transfer the two-thirds interest to the plaintiff would be a substantial encroachment on the testator's decision.

Security of accommodation

56 In Luciano v Rosenblum Powell J said (at 69):

"It seems to me that, as a broad general rule, and in the absence of special circumstances, the duty of the testator to his widow is, to the extent to which his assets permit him to do so, to ensure that she is secure in her home, to ensure that she has an income sufficient to permit her to live in the style to which she is accustomed, and to provide her with a fund to enable her to meet any unforeseen circumstances."

57 Although, as I have said, the facts of that case are distinguishable from the present case because the widow there did not have substantial separate assets or income, Powell J's "broad general rule" has a potential application to the present case. The plaintiff relies on it. She does not complain that she has been left with insufficient income or insufficient assets. She directs her claim to the proposition that the testator has not ensured that she is secure in her home, and she says that the only way that this can be achieved is to transfer the estate's two-thirds interest in the Residence to her.

May a widow be left to make a contribution towards accommodation from her own assets?

58 Counsel for the plaintiff saw this case as raising for consideration another issue of principle, namely whether it is ever appropriate for the Court to leave the deceased's widow in a position where she must draw on her own assets to ensure her security of accommodation. In White v Barron, the judge at first instance had made provision in favour of the widow, who had substantial separate assets, for a legacy of $75,000 and a provision that the estate should spend up to $65,000 on a home unit for her use for life, together with an annuity of $5,200. The main question for the High Court was whether the trial judge erred in thinking that the applicant's proper maintenance required provision of a legacy of $75,000. Wilson J said (at 457):

"Generally speaking, it may be wrong in principle for a Court to assume jurisdiction under this legislation in order to build up out of the estate of the testator the capital assets of an elderly widow. But conversely I do not think a wise and just testator would think it right for his widow to be required to draw on her capital assets in satisfaction of the need of proper maintenance, especially when he had the means to protect her from the risk of financial anxiety in the future by a provision which enabled her to conserve her own capital."

59 It seems to me that the second sentence of Wilson J's observations should be governed by the words "generally speaking", and should not be seen as laying down an inflexible rule. As Young CJ in Eq remarked in O'Loughlin v Low [2002] NSWSC 222 (6 March 2002) at paragraph 61, Wilson J was "talking in respect of what might be called the average 20th century widow, rather than a lady who was of independent means before she married the deceased …". The problem confronting the Court in White v Barron was one of inadequacy of income rather than insecurity in the home, as the widow had lived with the deceased in a house that she owned. His Honour was concerned that the widow's sole security against the uncertainties of her remaining life would be the capital sum representing the proceeds of the sale of her property at Bateman's Bay, leading him to say that "the moment she has to resort to that capital, her income is threatened, with accompanying financial anxiety" (at 459). In my opinion, the observation is not authority for the proposition that the Court should never leave the widow in a position where she must use her own separate assets towards the provision of secure accommodation for herself.

60 Stephen J generally agreed with Wilson J's reasons for judgment, and Mason J delivered a judgment agreeing with Wilson J's conclusions. Neither of them (nor Aickin J, dissenting) directly addressed the question whether the widow might be expected to use her own separate assets towards the provision of accommodation. Barwick CJ, dissenting, dealt with the matter explicitly. He expressed the view that where a widow has no dependants and it is unnecessary that she should die possessed of a capital sum, it is proper in answering the question whether she has adequate maintenance to consider whether in all the circumstances she should resort to capital to supplement her income (at 434). In his Honour's opinion, what the testator has provided in his lifetime and his widow's own resources must be taken into consideration when considering whether or not she is left without adequate maintenance. He continued (434):

"A simple, though exceptional, illustration will afford to make the point. Suppose a widow to be a millionairess in her own right and the testator to have others for whom he should or felt he should make provision. That he may prefer to provide for them rather than for her, having regard to her private fortune, would not mean, in my opinion, that he had left her without adequate maintenance."

61 Not surprisingly, the defendant relies on these passages. In my opinion Barwick CJ's observations, like the remarks of Wilson J quoted above, should not be taken as laying down any firm general rule. They are indications of the range of considerations that the Court may take into account in making its finding as to the adequacy of the testator's provision for his widow, and in exercising its discretion to make or decline to make a provision for the widow out of the testator's estate. Although Barwick CJ's judgment was a dissenting judgment, it seems to me that his observations can be used to provide some guidance as long as they are treated in this way.

62 The correct principle seems to be that there is no absolute obstacle to the Court taking into account the widow's separate assets in deciding whether the testator has made adequate provision for her security of accommodation, and in exercising its discretion to make or decline to make further provision for her out of the assets of the estate. Nevertheless, in many cases (as in White v Barron itself) it will be appropriate for the widow's security of accommodation to be provided for out of the estate without reliance on her own assets.

In making an order, the Court should not act on speculation and in the absence of proof

63 In Singer v Berghouse the claimant presented very little evidence as to her income and outgoings, intentions or needs for the future, or as to what lump sum provision applying appropriate discount tables would be required to meet her claims and needs. Instead she argued that it was strange and unusual that the deceased had made no provision whatever in his will for his wife to whom he had been happily married. In those circumstances, Sheller JA in the Court of Appeal observed that to make an order for the payment to the claimant of a lump sum would be to do no more than act on speculation, and (contrary to the prohibition contained in s 9 (2)) to alter the deceased's disposition of his property in the absence of proof that he had inadequately provided for the claimant. In the High Court (at 213), Mason CJ, Deane and McHugh JJ agreed with Sheller JA's observations.

64 Clearly the Court must act upon the evidence in deciding the jurisdictional question. A more difficult question is whether the Court can make an order which seems to be appropriate where, in doing so, it must make estimates upon which no evidence has been adduced. In the present case, as I shall explain, the evidence indicates that the Residence is an inappropriate accommodation for the plaintiff's present and future needs, and in my view proper provision for her accommodation will involve the acquisition of another dwelling, but neither party has produced any specific evidence as to the cost of appropriate alternative accommodation. Nevertheless, it seems to me that the Court, being seized of jurisdiction, is entitled to make an order based upon its own estimate of cost, doing the best it can with the limited evidence made available to it. That, cannot be described as mere speculation.

The present case

65 In my opinion, the plaintiff has established that the provision made in her favour by the deceased during his lifetime, when he gave her a one-third interest in the Residence, is inadequate for her proper maintenance and advancement in life. There is no claim that her income is insufficient to support her maintenance. The general principle in Luciano v Rosenblum is to the effect that the deceased should ensure that his widow is secure in her home. Here the deceased and his widow had lived together for 15 years, most of that time in the Residence. They had enjoyed a very comfortable standard of living together, in a relationship that I am to treat as harmonious, in which she carried out the household chores and cooked and cared for him, and he provided the bulk of the living expenses. The deceased should have provided for the plaintiff security in her home, as well as sufficient income, and she was entitled to expect him to do so. He failed to ensure that she would have security in her home.

66 The inadequacy of the provision made by the deceased arises because he placed the plaintiff in a position where the home which she shared with him may be sold at any time at the instance of her co-owners, producing for her an amount in the order of $280,000 after her share of the costs of sale (estimated at about $20,000 in total) is deducted from the anticipated proceeds of sale. It seems to me that such an amount is inadequate to provide her with an appropriate form of accommodation for the rest of her life.

67 The defendant contends that the deceased's provision for the plaintiff is adequate in all the circumstances, when one takes into account that she has other assets in liquid form worth about $1 million. While I accept, for the reasons that I have given, that the Court is entitled to have regard to the plaintiff's own assets in deciding her application, my view is that in the present case the existence of the plaintiff's separate assets does not lead to the conclusion that she has been adequately provided for by the deceased. My analysis of the plaintiff's income has shown that the plaintiff has adequate net income, although there is a risk that her investment capital will be depleted if Centrelink claims reimbursement, and consequently that her income will be reduced. My view is that while adequate, her income is not large or excessive, and I am concerned that it could become inadequate, given the uncertainties of life and the vagaries of the financial climate, if she is required to use a substantial part of it towards the cost of accommodation. While it is true, as counsel for the defendant pointed out, that she will have the benefit of any such investment (and so will her estate when she dies), the problem is that investment of part of her capital in her accommodation is not an income-producing investment, where she needs to maintain her investment income in order to have adequate cover for present and future expenses.

68 This reasoning leads me to reject the view that $280,000 is adequate when supplemented by the plaintiff’s other assets. A fortiori, I reject the defendant’s submission that an appropriate order would be for the plaintiff to purchase the estate’s share of the Residence, although I take the view that the plaintiff should be given the opportunity to match the highest price otherwise offered for the Residence if she chooses to buy it.

69 The plaintiff says that the only appropriate way of ensuring that she is secure in her home is for the Court to make an order transferring the two-thirds interest to her. In my view, however, such an order would be unwise and unfair. It would be unwise because of the plaintiff's own evidence as to her state of health and accommodation needs. She sold the home shared with her first husband, and moved into a flat at Watford, because the home was too large. The Residence is, as I have said, a large home in which she lives alone. The fact that people may occasionally stay over does not mean that she has a present need for such a large accommodation. It also seems to be an unsuitable accommodation for a woman in her 70s, since the maintenance of such a home requires either substantial personal effort or significant expense, or both. When one adds to these considerations her evidence of her constant and debilitating illnesses, it seems to me unwise for the Court to make an order keeping her in the Residence rather than allowing her to be re-housed more suitably. She has given no other reason for wanting to remain there than that it was the home she shared with her husband. I do not disregard the significance of that emotional attachment, but it is not a strong enough reason for her to remain in unsuitable accommodation when there is an obvious and practical alternative.

70 Nor, in my view, would it be fair in all the circumstances for me to transfer to her by far the largest asset of the estate. It is true that the question for me to determine is whether a provision ought to be made for the plaintiff, rather than whether a provision ought to be made for the deceased's three sons. The three sons are not competing claimants merely as the beneficiaries of the estate selected by the testator, but they are “competing claimants” for the purposes of the exercise of my discretion on the plaintiff’s application, and it is therefore appropriate to take their circumstances into account. The financial positions of two of the three sons are moderate, as I have said, and the third son's position (while better) is on balance less comfortable than the plaintiff's. The effect of the order sought by the plaintiff would be to remove the bulk of the deceased's estate from his sons, and to enhance substantially the prospect that the plaintiff's sons would inherit that property. The order would reverse the arrangements under which the deceased and the plaintiff organised their financial affairs while they lived together, arrangements that they regarded as fair at that time; cf Singer v Berghouse at 207.

71 The defendant contended that the effect of making the order sought by the plaintiff would be to pass the burden of costs onto him, as there would be insufficient assets remaining in the estate to cover costs. The plaintiff denied that this would be the necessary outcome, since the Court could charge the provision for the plaintiff with some appropriate amount of costs. I accept the plaintiff's submission that some appropriate means could be found for spreading the costs burden equitably if a transfer order were to be made, but for other reasons explained above I have decided that such an order is inappropriate.

72 I have considered whether the best way to satisfy the plaintiff's claim would be by way of a right of personal residence or a life estate. As to a right of personal residence, I am influenced by the remarks of Kirby P in Golosky v Golosky (Court of Appeal of New South Wales, unreported, 5 October 1993). His Honour said (at page 17 of the judgment):

"A mere right of residence will usually be an unsatisfactory method of providing for a spouse's accommodation …. 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 … 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."

73 A life estate is also inappropriate in the present circumstances, in my view. If supervening circumstances lead to the plaintiff moving out of the Residence, she will be entitled to obtain rental income, but her income needs are not the problem that the order should address. The problem is to provide her with security of accommodation. Moreover, a life estate would not solve the plaintiff’s accommodation problem if circumstances force her to leave the Residence. The observations of Sheller JA in Permanent Trustee Co Ltd v Fraser (1995) 36 NSWLR 25, at 47, are apt here:

"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 estate 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 per Young J in Christie v Christie (Young J, 3 December 1986, unreported) at 4. The need can be met if the respondent is given the home unit absolutely. She then has greater flexibility as well as greater security."

74 An additional consideration militating against a right of residence or life estate is that in the present case, the relationship between the plaintiff and the deceased's three sons seems to be quite bitter, and it is therefore desirable that the orders should make appropriate provisions once and for all, so that each side can get on with their lives without needing to have continuing dealings with the other.

75 I have decided, weighing up all the considerations that I have discussed, that an adequate sum to ensure the plaintiff's security of accommodation would be in the order of $350,000 to $400,000, provided that she is not required to pay her own party/party costs or the defendant's costs. For the purpose of making provision for the plaintiff out of the estate, I shall take within that range the figure of $380,000, implying a provision out of the estate of $100,000, to supplement net proceeds of sale of $280,000. Such an amount should enable her to obtain a comfortable residential unit or retirement village accommodation in a suburb of Sydney comparable to the location of the Residence. Unfortunately the plaintiff did not take up my invitation, made during the hearing, to provide me with evidence of the cost of such accommodation, and I have therefore had to do the best I can, taking into account the evidence of the value of the Residence and taking judicial notice of Sydney suburban property values as a whole. Of course, it will be open to the plaintiff to expend some of her capital in order to obtain accommodation of a higher standard, but if she chooses to do so she will reduce her investment income and hence the amount available for maintenance.

Costs

76 The usual order for costs, in a Family Provision matter where the plaintiff obtains an order, is that her costs on a party/party basis, and the defendant executor's costs on an indemnity basis, should be paid out of the assets of the estate. I see no reason for departing from the usual form of order in this case. I take into account that the relationship between the plaintiff and the deceased was in issue until the hearing, leading the plaintiff to assemble substantial evidence which, in the end, was not contested.

77 The plaintiff made allegations against the three sons that they were deliberately endeavouring to increase her costs, and I have found those allegations to be untrue. While I do not entirely approve of the way in which those allegations were made without any substantiation of the e-mails that were put into evidence, it does not seem to me that those circumstances should lead to my departing from the usual order as to costs. I have taken into account the costs outcome in making my decision as to the appropriate provision for the plaintiff.

Conclusions

78 I shall make orders to the following effect :

(1) an order under s 15 (1) (a) (vii) directing the defendant to sell and transfer the Residence by public auction, or by private treaty if sanctioned by order of the Court, in such circumstances that the plaintiff will have the opportunity to match the price otherwise obtainable;
(2) an order under ss 7 and 11 that a lump-sum provision of $100,000 be made for the plaintiff out of the estate, to be paid by the defendant to the plaintiff out of the proceeds of sale of the Residence promptly after the proceeds of sale are received by the defendant;
(3) an order that the costs of sale and transfer of the Residence be borne as to two-thirds by the estate and as to one-third by the plaintiff, with authority to the defendant to deduct the plaintiff's share of these costs from the lump sum provision referred to in order (2);
(4) the usual order for costs (having the effect that the costs of the defendant be paid by the estate on an indemnity basis, and the costs of the plaintiff be paid by the estate on a party/party basis).

79 To ensure that the parties are given the opportunity to consider the precise form of the orders, I direct the plaintiff to bring in draft short minutes orders, and I stand the proceedings over to 9:30 am on Friday 26 April 2002 for the purpose of making orders.

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Last Modified: 05/01/2002