Ogburn v Ogburn; Ogburn v Ogburn
[2012] NSWSC 79
•05 March 2012
Supreme Court
New South Wales
Medium Neutral Citation: John Xavier Ogburn v Marita Beresford Ogburn; Dominic Ogburn v Marita Beresford Ogburn [2012] NSWSC 79 Hearing dates: 13 to 16 February 2012 Decision date: 05 March 2012 Jurisdiction: Equity Division Before: Ball J Decision: See paragraphs 92 to 96 of this judgment.
Catchwords: SUCCESSION - family provision and maintenance - position of adult children - position of widow - legitimate expectation of widow to maintain way of life shared with deceased - where married to deceased for approximately 30 years and contributed to purchase of property which forms part of estate - where property forms important part of widow's and deceased's shared lives. SUCCESSION - family provision and maintenance - notional estate - interrelation of question whether a notional estate order should be made and whether family provision order should be made - moral obligation to make adequate provision held not to outweigh moral obligation to widow -order made in relation to property acquired only for investment purposes. Legislation Cited: Family Provisions Act 1982 (NSW)
Succession Act 2006 (NSW)Cases Cited: Bladwell v Davis [2004] NSWCA 170
Cropley v Cropley [2002] NSWSC 349
Singer v Berghouse [1994] HCA 40; (1994) 181 CLR 201
Young & Grainger v Outtrim [2011] NSWSC 291Category: Principal judgment Parties: John Xavier Ogburn (Plaintiff - 2010/421264)
Dominic Ogburn (Plaintiff - 2010/422223)
Marita Beresford Ogburn (Defendant)Representation: Mr J Priestley (Plaintiff: John Xavier Ogburn)
Mr J E Armfield (Plaintiff: Dominic Ogburn)
Mr S Hughes (Defendant)
Susan Green (Plaintiff: John Xavier Ogburn)
Theece, Hodgson & Ward (Plaintiff: Dominic Ogburn)
Verekers (Defendant)
File Number(s): 2010/421264 and 2010/422223
Judgment
This judgment concerns proceedings brought by each of John Xavier Ogburn ( John ) and Dominic John Ogburn ( Dominic ) for family provision orders under chapter 3 of the Succession Act 2006 (NSW) (the Act ) in relation to the estate of their late father, John Armstrong Ogburn, who died in January 2010 at the age of 84. By his will, the deceased appointed his second wife, the defendant, his executor and left the whole of his estate to her.
The deceased and the defendant
In 1953, the deceased married his first wife, Moira Abotomey. They had 5 children, including the plaintiffs. The oldest of their children died at the age of 17.
The deceased separated from his first wife in 1971 and commenced a relationship with the defendant in mid-1972, although they had first met in 1966. The deceased was an artist. In about 1962, he founded the John Ogburn Studio in Lower George Street, Sydney, where he taught students painting and drawing. The defendant was one of his students between 1966 and mid-1968. She is currently 64 years old.
At the time the deceased and defendant commenced their relationship, the deceased lived outside of Sydney. However, from early 1973 he spent most of his time living at the defendant's apartment in North Sydney. At that time, the defendant commenced working as an art teacher at Loreto Kirribilli high school, where she remained employed until 1983.
The deceased divorced his first wife in 1973 and, in 1974, he and the defendant began to look for a home to buy. Eventually, in late 1974, they found a property in Boyce Street, Glebe. The purchase price for the property was $42,000. The deceased contributed $27,000 to its purchase price and the defendant $3,000. The balance of the purchase price was financed by a mortgage. The property was bought in the deceased's name.
The mortgage repayments in respect of the Boyce Street property were paid from the deceased's income and he also used his income to purchase materials used in connection with his profession as an artist. One of the rooms in the Boyce Street property was used by him as a studio. The defendant says that the Boyce Street property was originally put in the deceased's sole name to enable him to claim a tax deduction in respect of the mortgage repayments, since he used the house in connection with his work as an artist. I accept that evidence. The defendant's income was used to pay their general living expenses including food, household provisions, health insurance, entertainment and home decorations. The deceased and the defendant both bought furniture for their home.
During his life, the deceased earned income from the sale of paintings and from conducting art classes. Each year, he held an exhibition at the Harrington Street Artist Cooperative Gallery, which was a gallery established by him. The defendant was actively involved in the deceased's career as an artist for the whole of their relationship. She assisted the deceased to manage the John Ogburn Studio and she attended one of his classes each week to support him. She also assisted in preparing for each of his independent exhibitions. In their earlier years, they regularly went on landscape painting camps around Australia.
The defendant and the deceased married in March 1979 and remained married at the date of the deceased's death. They did not have any children.
In addition to the income the defendant received from teaching, she also received over a number of years substantial distributions from trusts established by her uncle and great uncle. In 1981, the defendant used some of that money to build a breakfast room attached to the kitchen at the house in Boyce Street. The costs of those renovations were approximately $10,000. The deceased also did work on the renovations.
In about mid-1983 the defendant commenced employment as an art teacher at Our Lady of the Sacred Heart Kensington, where she remained until her retirement in 2006. The defendant has also regularly held exhibitions of her own work at the Harrington Street Artists Cooperative Gallery.
In about 1984, the deceased and the defendant purchased a property in Reuss Street, Glebe as joint tenants and from that time until now those premises have been used as the John Ogburn Studio. The purchase price of that property was $75,000. There is a dispute about how that purchase price was financed. Originally, the defendant said that she contributed the sum of approximately $52,000 to $56,000 to the purchase price which had come from distributions from the trusts established by her uncle and great uncle and money she raised from the sale of shares. In a later affidavit, the defendant gives evidence that, as a result of discovering additional documents, the amount she contributed to the purchase of the Reuss Street property was approximately $50,000. I accept that evidence. The balance of the purchase price, or at least most of it, was raised from an increase in the mortgage over the Boyce Street property. Following the purchase of the Ruess Street property, the defendant and the deceased renovated the shed on it to be used as an art studio. The defendant paid approximately $12,000 towards the costs of those renovations. Others helped with the renovations, including an architect friend, Mr Swetik Korzeniewski, and Dominic. The deceased also made some contributions towards the costs of the renovations, although the amount is not known.
In October 1989, the defendant gave the deceased $20,000 towards the purchase of a Toyota Troop Carrier for the transport of paintings.
The deceased and defendant undertook substantial renovations to the Boyce Street property in 1991. The evidence is that the defendant contributed $41,710 towards those renovations and that the deceased contributed approximately $1,800.
In about 1994, the deceased and the defendant decided to renovate an upstairs bathroom at the Boyce Street property. Some time in the early 1990s, Dominic had been retrenched and at that time the defendant made an interest free loan to him of $12,000. By 1994, Dominic had repaid $4,000 of that loan. The deceased and the defendant suggested that Dominic undertake the renovation work and the defendant suggested that his costs of doing so could be offset against his outstanding loan, which is what happened. The defendant also paid some additional costs of approximately $2,000 towards that renovation.
In November 1994, the deceased and defendant purchased a property in Reids Flat for the sum of $34,000. It is unclear who paid the deposit of $3,400. However, the balance of the purchase price was paid by the defendant. Subsequently, in September 1998, the deceased and defendant purchased the adjoining block for $4,500. The evidence of the defendant is that she paid the purchase price for that block. I accept that evidence. The defendant and the deceased visited that property approximately four times per year to paint landscapes.
The deceased's health began to deteriorate in August 2002. In 2003, he developed a Parkinson like syndrome which involved a weakness of his muscles. From about 2004, he reduced the classes he taught to two per week and continued to teach those classes until 2009. At that stage, he had approximately 12 remaining students, including the defendant.
In mid 2006, the defendant took early retirement at the age of 58 in order to care for the deceased. She continued to do so until his death in January 2010.
In about April 2008, the deceased transferred the sum of $300,000 from his Macquarie Cash Management Trust Account into the defendant's Catholic Superannuation Retirement Fund Allocated Pension Plan. From that time, an allocated pension was paid monthly into the deceased's and defendant's joint bank account with the Commonwealth Bank and the money was then used to pay for most of their general living expenses, including the deceased's medical and home care expenses.
On 1 October 2009, the deceased made his last will leaving the whole of his estate to the defendant. The deceased's previous will, which was made in 1988, also left the whole of the deceased's estate to the defendant. At the same time as the deceased made his last will, he transferred the property at Boyce Street to himself and the defendant as joint tenants.
Following the deceased's death, the defendant organised a Memorial Exhibition of the deceased's work at the Harrington Street Artists Cooperative Gallery. Seven works were sold at that exhibition for the sum of $33,775. The purchasers of those works were four of the deceased's former students, a neighbour, and a friend of one of the deceased's former students. In addition, three additional paintings were sold to the daughter of a former member of the John Ogburn Studio for the sum of $16,400.
The deceased left approximately 600 works of art which are stored at the Reuss Street property together with notes and recordings. The defendant describes the most important aspect of her life now as conserving, organising, cleaning, authenticating and cataloguing those works with the intention of making them available to a wider public through an illustrated catalogue. The defendant has also commenced conducting her own art classes at the Reuss Street property and she currently has a number of students. In addition, she continues to paint and draw at the Reuss Street property and a studio at home. Her most recent exhibition was at the Harrington Street Artists Cooperative Gallery in the middle of 2011.
On the deceased's death, the defendant became entitled to the following assets by reason of rights of survivorship:
(a) The house at Boyce Street, Glebe;
(b) The studio at Reuss Street, Glebe;
(c) The properties at Reids Flat;
(d) A portfolio investment service account held in their joint names which in April 2011 had a balance of $179,813.47;
(e) 2,400 shares in Telstra Corporation Limited which were bought by the defendant, but were put into their joint names.
The inventory of property prepared for the purposes of probate disclosed that the deceased's estate consisted of the following assets at the time of his death:
| Half share of furniture at Boyce Street | $30,000.00 |
| Half share of furniture at Reids Flat | $5,000.00 |
| Macquarie Investment Cash Management Trust | $68,491.85 |
| Commonwealth Bank Streamline account | $58,769.00 |
| Various shares | $12,954.96 |
| AMP Flexible Lifetime Allocated Pension death benefit | $119,202.09 |
| AMP Life Plan Policy | $6,235.00 |
| Paintings and drawings of the deceased | $50,000.00 |
| Total | $350,652.90 |
In the defendant's most recent affidavit sworn 10 February 2012, the defendant gives evidence that the net assets of the estate are now approximately $127,000.00. The five principal changes from the inventory prepared for the purposes of probate are:
(a) The AMP Flexible Lifetime Allocated Pension now valued at $145,219.56 has been excluded. The trustees of the relevant pension plan have paid that amount to the defendant ;
(b) The Estate has paid legal fees totalling approximately $80,000;
(c) A number of the deceased's paintings were sold for an amount of approximately $50,000. However, Lawsons have valued the paintings held by the estate at $23,000;
(d) The deceased's furniture and effects are now valued at approximately $8,000;
(e) The estate has an estimated tax liability for 2011 of $6,670.
In the same affidavit, the defendant lists her own assets and liabilities as at 10 February 2012 (including assets that became hers by survivorship) as follows:
Assets
| Boyce Street, Glebe | $2,000,000.00 |
| Reuss Street, Glebe | $785,000.00 |
| Reids Flat | $70,000.00 |
| Australian Catholic Superannuation pension including additional superannuation account amount of $795.50 | $752,320.47 |
| Shareholding | $223,943.20 |
| Portfoliocare Investment Services Account | $175,129.44 |
| Amount received for death benefit from AMP | $145,219.56 |
| Macquarie Bank Account | $28,610.51 |
| Commonwealth Bank Account | $21,885.00 |
| Commonwealth Bank Visa Card | $296.20 |
| Telstra shares | $7,920.00 |
| 2002 Subaru Forrester station wagon | $8,400.00 |
| Amount owed by Estate to M Ogburn for funeral expenses and other expenses | $15,842.03 |
| Furniture and effects (current estimated value) | $18,780.00 |
| Total | $4,253,402.41 |
The defendant's current liabilities are approximately $1,000.
The only values about which there is some dispute are the value of the property at Boyce Street and the value of the deceased's art collection.
According to a valuation obtained by the plaintiffs, the Boyce Street property is valued at $2,250,000. The difference between the valuation obtained by the defendant and the valuation obtained by the plaintiffs is only slightly greater than 10 percent. There is no reason for preferring one valuation over the other. In those circumstances, for the purpose of these proceedings, I think it is appropriate to treat the Boyce Street property as having a value of $2,125,000.
The plaintiffs did not obtain their own valuation of the deceased's art works. However, they challenged the valuation obtained by the defendant from Lawsons of $23,000 as at September 2010 on the basis that, since that time, the estate has sold paintings by the deceased for an amount in excess of $80,000. Those subsequent sales are said to demonstrate that the values of the deceased's paintings as at September 2010 was in excess of $23,000. But, in the absence of any further evidence, I am not prepared to infer that the remaining paintings are worth substantially more than $23,000. The paintings that were sold were sold largely to friends and former students. They were sold in special circumstances, where it might be expected that the persons who acquired them did so for sentimental reasons or to show support for the defendant. There is no reason to expect that those sales will be repeated in the future. If the defendant is successful in her endeavours to promote the deceased's work by the publication of an illustrated catalogue, it may be that there will be renewed interest in the deceased's work and that the value of his works will increase. But that is merely a speculative possibility at this stage, and if it happens it will come about as a result of the defendant's efforts. It does not provide a reason for rejecting the Lawsons valuation. There is no dispute that the value of the paintings actually sold have been taken into account in determining the value of the estate.
John Ogburn
John was born in 1961 and is currently 50 years old. He lived with his parents on a property in Exeter until they separated. He then, with his siblings, lived with his mother in Ryde. However, he remained on very good terms with the deceased, saw him frequently and regularly went on holidays with the deceased and the defendant.
In 1978, John moved into the Boyce Street property. He lived there until 1983. There is an issue about the contribution he made to the household during that time. Nothing, however, turns on the resolution of that dispute. John enjoyed good relations with the deceased and the defendant during that time and, indeed, until the time of the deceased's death. While living at Boyce Street, he helped around the house, as might have been expected of a son of his age.
John trained as a landscape gardener and assisted the deceased and the defendant on occasions with landscaping work at the Reuss Street, Boyce Street and Reids Flat properties. He was paid for some of that work.
John married in 1994 in Ireland and at that time the deceased gave him a wedding present of $5,000. In 1995, John and his wife moved to Eastwood and, in 2000, they purchased a property at Karangi near Coffs Harbour. The property has a small cottage on it of 105 square metres. They moved there in April 2001. The deceased gave them $8,000 to assist with that move. In 2007, the deceased also gave John the Toyota Troop Carrier that he had purchased with the defendant's assistance in 1989.
John and his wife have two children, a son who was born in 1997 and a daughter who was born in 2001. John remained in contact with the deceased following his move to Coffs Harbour and, when the deceased became ill, he visited the deceased on at least 3 occasions. Again, there is a dispute concerning the precise degree of contact John had with his father, but again, nothing turns on the resolution of that dispute. John had his own family and had an independent life, but, as I have said, he remained on good terms and had a close personal relationship with the deceased up until the time of the deceased's death.
John works part time for Coffs Harbour Bush Regeneration Pty Ltd, which is funded by the Government and which is involved in the regeneration of the Australian bush. He has also established a small wholesale nursery to supplement his part time job. John's tax return for the year ended 30 June 2010 discloses that his gross income was $29,659 and his taxable income $26,843. The principal deduction related to motor vehicle expenses. John has not provided any material from which it is possible to determine his income since 30 June 2010. In the absence of any material, in my opinion, it is reasonable to infer that John's income since then has remained much the same. There has been no significant change in the nature of his employment and no reason to think that his income has increased substantially since 30 June 2010.
John describes his health as "fairly good" apart from two matters. One of those is that he is currently experiencing hip problems which cause him regular pain especially when he has had a big day out planting trees. The other problem is carpal tunnel syndrome in his left hand. He has had that problem for over 10 years. It will eventually necessitate surgery which means that he will be off work for 6 to 8 weeks. Having regard to the physical nature of his work and his hip problems, he does not expect to be able to continue with his work with Coffs Harbour Bush Regeneration Pty Ltd until normal retirement age. On the other hand, he says that if he had funds to expand his wholesale horticultural business, his "financial future would be secured".
John's wife, Ita, works 4 days per week as a legal secretary. Her taxation return for the year ended 30 June 2011 indicates that she earned a gross income for that year of $28,090.
John's daughter, Isobel, suffered a seizure on 15 June 2011. Her health issues have not been resolved and, as a result, she requires more supervision than most children of her age. That, in turn, limits Ita's capacity to work.
The following is a summary of John and his wife's assets and liabilities:
Assets
| Coromba Road, Karangi | $490,000.00 |
| Toyota Land Cruiser | $5,000.00 |
| Toyota Camry | $9,600.00 |
| Motor bike | $5,000.00 |
| Farm equipment | $8,000.00 |
| NRMA shares | $2,000.00 |
| Bank account Seal Rocks | $4,000.00 |
| House contents | $5,000.00 |
| Total | $528,600.00 |
Superannuation
| Ita Ogburn | $51,731.00 |
| John Ogburn | $16,740.00 |
| Total | $68,471.00 |
Liabilities
| Mortgage | $238,500.00 |
| Credit cards | $5,000.00 |
| ATO income tax liabilities (2010) Est | $5,000.00 |
| Loan from John Cunningham (Ita's brother) | $20,000.00 |
| Legal Costs of these proceedings | $52,500.00 |
| Total | $320,500.00 |
The reference to "bank account Seal Rocks" is a reference to what remains of an amount of $82,500 received by John in 2008 from the sale of a property at Seal Rocks he owned with his siblings.
John and his wife also receive Centrelink payments of approximately $500 per month.
John identifies his needs as follows:
| Pay out mortgage | $242,743.00 |
| Nursery expansion | $55,000.00 |
| Nursery work vehicle | $55,000.00 |
| Extending modest family home | $125,000.00 |
| Replacement of septic system | $13,000.00 |
| Renovating bathroom | $10,000.00 |
| Children's education | $55,000.00 |
| Children's university fees | $224,200.00 |
| Holiday | $13,000.00 |
| Contingencies (including income protection) | $100,000.00 |
| Total | $891,000.00 |
Without resiling from that claim, the order for provisions sought by John is in an amount of $655,000 plus interest and costs.
Dominic Ogburn
Dominic was born in 1960 and is currently 51 years old. Like John, he went to live with his mother in Ryde following their parents' separation, and like John he remained on very good terms with the deceased, saw him frequently and regularly went on holidays with his brother, the deceased and the defendant.
Dominic trained as a builder. He remained on good terms with the deceased up until the time of the deceased's death. He assisted the deceased and the defendant with various renovations and building works at both the Reuss Street and Boyce Street properties. In his evidence, he gives four particular examples. First, he assisted in the initial renovation and improvement of the Reuss Street property after it was purchased by the deceased and the defendant in 1984. Second, in around 1992 he assisted in the renovation of the main roof and the design and construction of the new rear ground floor addition to the Boyce Street property. Third, in around 1996 he assisted in the investigation of a termite infestation at the Boyce Street property. Fourth, in 2008 he assisted in determining disabled access arrangements for the deceased at the Boyce Street property.
Again, there is a dispute about the degree of assistance Dominic provided and, in my opinion, he was inclined to exaggerate that assistance or the significance of it. For example, in relation to the Reuss Street works, he says that he "personally undertook very significant renovations and improvements to the property" and that he was only "partially reimbursed an amount of approximately $1,000 for my significant time including research and providing advice to the deceased on how to undertake the project without need to obtain a Council DA and convert it to a Studio". It is clear, however, that Mr Korzeniewski played a large role in the renovations and the likelihood is that much of the work was undertaken by him and contractors engaged by the defendant and the deceased. Similarly, Dominic said that he provided "consultancy advice" in relation to an investigation of a termite infestation at the Boyce Street premises. That "consultancy advice" appears to have involved one or more conversations with the deceased concerning a possible termite infestation and arranging for an expert to inspect the property. Similarly, he said that he assisted the defendant with work to improve access for the deceased to their home at Boyce Street and that he "sourced a suitable contractor and spent significant time chasing him up to commence and project managed the reconfiguration of the at [sic] main entry path of the Boyce Street Property ...". But even on his own account, the total amount of time he spent was between "5 and 8 hours" and the evidence is that the defendant had Government paid occupational therapists look at the site and made arrangements for Government paid modifications to the property.
Once again, however, I do not think anything turns on the resolution of the dispute concerning the precise amount of assistance Dominic provided or that he sought to exaggerate that assistance in his affidavit evidence. It is clear from the evidence - which the defendant did not seek to deny - that Dominic had a close personal relationship with his father. An aspect of that relationship was that Dominic provided assistance to the deceased (and the defendant) in various ways and remained in contact with the deceased up until the time of his death, and was in close contact with the deceased during the time of the deceased's illness. Dominic also bought one of the deceased paintings for $4,500 at a retrospective that was held of the deceased's work in 2009.
Dominic married in 1987. The deceased contributed $500 towards the wedding expenses. Dominic and his wife bought a house in 1999 and the deceased gave him $5,000 at that time to assist with the deposit. In 1991, the deceased also lent Dominic $7,000 interest free to enable his wife to buy a car. That loan has been repaid.
Dominic and his wife have two sons, one aged 14 and the other 11. The older son suffers from Asperger's Syndrome.
Dominic separated from his wife in 2004 and has been in a relationship since 2008 with Ms Helen Rowland. He reached a property settlement with his wife in 2008. Under the terms of that settlement, the family home was sold and Dominic received approximately $435,000 on 4 February 2009 from the proceeds of sale. Later that year, his superannuation fund received approximately $100,000 from the sale of a shop that was owned jointly by him and his wife. Dominic also received $82,500 in March 2009 from the sale of the Seal Rocks property, although he has a capital gains tax liability of approximately $13,000 in respect of that sale which he has not yet paid. Dominic currently lives in a two bedroom house at Summer Hill, which he rents for $37,000 per annum. Dominic has custody of his children approximately 35 percent of the time.
Dominic is the sole shareholder of ABE Education Pty Ltd and the sole shareholder of Access Services Pty Ltd which is the trustee of the Access (Discretionary) Trust of which he and his two sons are the beneficiaries. He carries on two businesses through those entities. One is as a builder, building consultant and author. The other is as a provider of web-based education courses for owner builders. He conducts those businesses from his home at Summer Hill.
As at 30 January 2012, Dominic's assets were as follows:
Cash $298,009.00 Superannuation $137,594.00 Interest in the Access (Discretionary) Trust (as at June 2011) $100.00 Loan owed by the Access (Discretionary) Trust (as at 25 December 2011) $3,312.00 Interest in ABE Education Pty Ltd (as at 25 December 2011) $15,002.00 Loan to ABE Education Pty Ltd (as at 25 December 2011) $21,145.00 House contents $11,600.00 Total $486,762.00
Dominic's liabilities are as follows:
| Credit card | $1,950.00 |
| Child support payment | $530.00 |
| Tax for year ending 30 June 2011 (estimated) | $3,000.00 |
| Orthodontic treatment for one of his sons | $3,200.00 |
| Future costs of these proceedings (estimated) | $35,000.00 |
| Accountant's costs | $2,850.00 |
| CGT on sale of Seal Rocks property (estimated) | $13,000.00 |
| Total | $60,160.00 |
It is not entirely easy to determine Dominic's annual income. In an affidavit sworn on 30 January 2012, he lists it as follows:
| Salary (gross) | $50,000.00 |
| Intereset on cash | $11,000.00 |
| Centrelink | $2,000.00 |
| Distribution from the Access (Discretionary) Trust | $4,000.00 |
| Total | $67,000.00 |
He estimates his annual expenditure at $90,436.00.
The estimate of Dominic's income is consistent with his 2010 tax return. However, the accounts for ABE Education Pty Ltd and the trust have not been prepared for the year ended 30 June 2011. The accounts for ABE Education Pty Ltd indicate that the company made a profit of approximately $11,000 in 2010, which was retained. The accounts for the trust show that the trust earned a gross income in 2009 of approximately $51,000 and in 2010 a gross income of approximately $106,000. It earned net profits of approximately $12,000 and $13,000 in 2009 and 2010 respectively. Although part of that income was distributed to Dominic's two sons and the balance to him, the evidence is that Dominic received the whole of that income. More significantly, in the 2010 financial statements for the trust "client expenses" were said to be approximately $31,000, but no amount in respect of that item was incurred in 2009. Dominic could not give a satisfactory explanation of that item in cross-examination. He said that he regularly bought wine for clients and attended lunch and dinners "with a lot of my staff where lots of people are potential clients". The cross-examination continued:
Q. We have wine and dinner for clients, dinner and lunches for staff, what else is there? Please give a complete answer.
A. I am unable to.
Later Dominic said:
I don't believe that figure covers just clients' expenses, a term that correctly covers what those accounts were for.
In addition, according to the 2010 accounts, the trust paid approximately $11,000 towards rent of the premises where Dominic lives and ABE Education paid half of the rent. On the other hand, Dominic claims half of the rent as part of his personal expenses.
Mr Hughes, who appeared for the defendant, pointed to two other matters which he submitted should lead the court not to accept Dominic's evidence. First, Mr Hughes submitted that the evidence demonstrates that Dominic went on a number of holidays between mid-2008 and January 2012 and incurred costs of approximately $112,500 to $118,000 in connection with those holidays but failed to give any plausible explanation of how he funded those holidays in circumstances where he also claimed that there was a significant shortfall between his income and expenses. Second, Mr Hughes submitted that Dominic claimed that he was not in a de facto relationship with Ms Hayward in circumstances where the evidence suggested the contrary.
As to Mr Hughes' first point, I do not think that the evidence concerning Dominic's holidays establishes that Dominic has substantially understated his income. In early 2009, Dominic received approximately $518,000 from the sale of the family home and the property at Seal Rocks. Before doing so, he spent $20,000 to $25,000 on an overseas trip. It is unclear what was the source of the funds for that trip. In the three years since early 2009, Dominic has, in addition to his normal living expenses, spent approximately $93,000 on holidays, paid legal costs of $41,000 and lent ABE Education Pty Ltd approximately $25,000 so that it could make a balloon payment in relation to the lease of a Lexus motor vehicle that he uses - making a total of $159,000. Over the same period of time, the cash he had has reduced from $518,000 to $298,000 - a reduction of $220,000. As I have said, Dominic says that his living expenses are approximately $90,000 a year. However, that includes an amount of $12,500 per year for holidays and rent of $18,200, of which it appears the trust paid $4,400 in the year ending 30 June 2008, $7,500 in the year ending 30 June 2009, and $11,000 in the year ending 30 June 2010 at least. Consequently, these figures suggest that Dominic has not accounted for all his expenses over the past three years. They do not shed any light on whether he has accounted for all of his income.
As to Mr Hughes's second point, Dominic gave evidence that he is not in a de facto relationship with Ms Rowland because Ms Rowland has her own home and their financial affairs are separate. The defendant sought to challenge that evidence on the basis of evidence that Dominic had told the insurer of his Lexus motor vehicle that his marital status was "Cohabitating/Partnered" and that the vehicle was garaged at the address where Ms Rowland lives. Dominic sought to explain this material on the basis that he does not have a garage at home and that he was able to obtain a lower insurance premium by claiming that the vehicle was garaged at Ms Rowland's address. Although it does him no credit, I accept Dominic's explanation. There is no evidence to suggest that Dominic and Ms Rowland share expenses. They clearly live in different houses.
Dominic says that his main need is assistance to acquire his own home. He says that the average cost of a 2-3 bedroom house in the Summer Hill area is more than $1,000,000. Having regard to his current income he cannot afford a large mortgage. He submits that it would be appropriate to make a provision out of the deceased's estate in an amount which taken together with his borrowing capacity and savings would be sufficient to enable him to buy a house and to provide for his sons' secondary and tertiary education. He says that, in those circumstances, he should receive a legacy in the sum of $600,000 plus costs.
The issues
These proceedings involve two broad issues. The first is whether a family provision order should be made in John's and Dominic's favour under Part 3.2 of the Act. The second is whether the court should make a notional estate order under s 80 of the Act.
Section 59 of the Act relevantly provides:
(1) The Court may, on application under Division 1, make a family provision order in relation to the estate of a deceased person, if the Court is satisfied that:
(a) the person in whose favour the order is to be made is an eligible person, and
(b) ...
(c) at the time when the Court is considering the application, adequate provision for the proper maintenance, education or advancement in life of the person in whose favour the order is to be made has not been made by the will of the deceased person ...
(2) The Court may make such order for provision out of the estate of the deceased person as the Court thinks ought to be made for the maintenance, education or advancement in life of the eligible person, having regard to the facts known to the Court at the time the order is made.
There is no question that John and Dominic are eligible persons within the meaning of s 59(1)(a). The question is whether they satisfy the other requirements of s 59.
Section 60 sets out a wide range of matters the court may consider in determining whether to make a family provision order and the nature of any such order. It is not necessary to set out all those matters. However, it is relevant to observe that they include "any other matter the Court considers relevant": s 60(2)(p). I will refer to the matters I consider of particular significance below.
It is well established that ss 59(1) and (2) and their predecessors, ss 7 and 9(2) of the Family Provisions Act 1982 (NSW), require the court to adopt a two stage process. That process was explained by Mason CJ, Deane and McHugh JJ in Singer v Berghouse [1994] HCA 40; (1994) 181 CLR 201 at 208-210 in these terms:
It is clear that, under these provisions, 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 ought to be made out of the deceased's estate for the applicant.
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The determination of the first stage in the two-stage process calls for an assessment of whether the provision (if any) made was inadequate for 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. [Footnote omitted]
Section 63(5) of the Act provides:
A family provision order may be made in relation to property that is not part of the estate of a deceased person, or that has been distributed, if it is designated as notional estate of the deceased person by an order under Part 3.3.
Section 78 permits the court to make an order designating property as notional estate, but only for the purposes of a family provision order to be made under Part 3.2 or for the purposes of a costs order, but in the latter case only if a family provision order is made in favour of the applicant: s 78.
Section 80 of the Act relevantly provides:
(1) The Court may, on application by an applicant for a family provision order or on its own motion, make a notional estate order designating property specified in the order as notional estate of a deceased person if the Court is satisfied that the deceased person entered into a relevant property transaction before his or her death and that the transaction is a transaction to which this section applies.
(2) This section applies to the following relevant property transactions:
(a) a transaction that took effect within 3 years before the date of the death of the deceased person and was entered into with the intention, wholly or partly, of denying or limiting provision being made out of the estate of the deceased person for the maintenance, education or advancement in life of any person who is entitled to apply for a family provision order,
(b) a transaction that took effect within one year before the date of the death of the deceased person and was entered into when the deceased person had a moral obligation to make adequate provision, by will or otherwise, for the proper maintenance, education or advancement in life of any person who is entitled to apply for a family provision order which was substantially greater than any moral obligation of the deceased person to enter into the transaction,
(c) a transaction that took effect or is to take effect on or after the deceased person's death.
The expression "relevant property transaction" is defined in ss 75 and 76. There is no dispute in this case that it includes the payment of $300,000.00 from the deceased's Macquarie Cash Management Trust Account in 2008, the transfer of the Boyce Street property into the joint names of the deceased and the defendant, the transfer of joint property to the defendant on the deceased's death as a result of the law of survivorship and the payment of the AMP death benefit to the defendant.
Section 87 of the Act provides:
The Court must not make a notional estate order unless it has considered the following:
(a) the importance of not interfering with reasonable expectations in relation to property,
(b) the substantial justice and merits involved in making or refusing to make the order,
(c) any other matter it considers relevant in the circumstances.
In addition, the court must not make an order unless it is satisfied that "the deceased's person's estate is insufficient for the making of the family provision order, or any order as to costs, that the Court is of the opinion should be made": s 88; and then it may only do so to the extent necessary to satisfy the orders it makes: s 89.
As in the case of so many family provision matters, it is not easy in practice to separate the different issues that arise. As Mason CJ, Deane and McHugh JJ pointed out in Singer v Berghouse [1994] HCA 40; (1994) 181 CLR 201, each stage of the two stage process required by the legislation often involves similar considerations because the question whether adequate provision has been made depends, among other things, on the size of the estate and the merits of competing claims. Those matters are also relevant to the question of what provision, if any, should be made assuming the court reaches the conclusion that adequate provision was not made in the will. Similarly, it is not possible to divorce the question whether a notional estate order should be made from the question whether a family provision order should be made. A court can only make a notional estate order if and to the extent the order is necessary to satisfy a family provision order. However, one of the matters the court needs to take into account in deciding whether a family provision order should be made is the size of the deceased's estate, including the size of the potential notional estate.
In this case, it is convenient to begin an examination of these issues by starting with the position of the defendant, since the extent to which the deceased was entitled and, indeed, obliged to make provision for her forms an important part of the context in which the plaintiffs' claims are to be assessed. I next consider the size of the deceased's estate and the extent to which the court should be willing to make a notional estate order, since again those matters form an important part of the context in which the plaintiffs' claims are to be examined. Third, I consider the question whether the plaintiffs satisfy the requirements of s 59 of the Act - the first limb of the enquiry identified in Singer v Berghouse. Lastly, I consider what family provision and notional estate orders, if any, should be made.
The position of the defendant
The defendant, of course, is not an applicant. There is no onus on her to prove that she satisfies the requirements of s 59(1) of the Act. Her rights arise from the will and the law of survivorship. Nonetheless, as I have said, the size and nature of the deceased's estate and the extent to which she might be thought to have a legitimate claim on the estate (including any property that might be the subject of a notional estate order) is part of the context in which the court must determine whether the deceased has made adequate provision for the proper maintenance, education or advancement in life of the plaintiffs.
There are numerous statements by the court to the effect that a widow who was married to the deceased for a long time is in a strong position either as an applicant or as a defendant in family provision cases. Hallen AsJ described the position of a widow in these terms in Young & Grainger v Outtrim [2011] NSWSC 391 at [112], citing Luciano v Rosenblum (1985) 2 NSWLR 65, at 69 and O'Loughlin v O'Loughlin [2003] NSWCA 99:
In relation to the duty owed by a deceased to his widow, generally, it is to ensure, to the extent to which his assets permit him to do so, that she is secure in the matrimonial 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 contingencies.
In Cropley v Cropley [2002] NSWSC 349 at [56] Barrett J said:
When it comes to claims by adult children, it can be said at once that, if there is a competing claim by the widow and all claims cannot be fully accommodated, the widow's claim should be afforded precedence in the sense that a demonstrated requirement for the allocation of resources in aid of the widow must be satisfied before any similarly demonstrated requirement for the allocation of resources in aid of an adult child. That a widow's claim to maintenance out of the estate of her deceased husband is a claim which is "paramount" and "of a high order" is borne out by the judgments of Sheller JA in Sayer v Sayer [1999] NSWCA 340 (Davies AJA concurring) and Blackmore v Allen [2000] NSWCA 162 (Priestley JA and Foster AJA concurring).
These statements of general principle provide a useful guide to the approach that courts generally take in particular types of case. However, as Bryson JA pointed out in Bladwell v Davis [2004] NSWCA 170, the application of these general principles can at most only operate as a guide. They cannot be a substitute for the requirements of the legislation to consider the particular facts of each case. As his Honour said:
There have been many statements in judicial decisions, including decisions in the Court of Appeal, generally to the effect that primacy of some kind is accorded to claims of widows for proper maintenance and advancement in life, including continuance of housing arrangements which they enjoyed during the lifetimes of their late husbands. These statements are not altogether uniform in expression, and should be understood as made in each case in relation to the facts under consideration; and those facts vary widely and in truth are unique to each particular case. "Widow takes all" is not a rule which has been or could be established by judicial decisions: the Court cannot resign the functions which it has under s 7 of the Family Provision Act 1982 in favour of rules of thumb. A rule which was once followed which practically prevented ordering provision for an adult son who was fit to work has been abandoned (at [12]).
In my opinion, it was appropriate in this case that the deceased make sufficient provision for the defendant so that she could continue to live in the way in which she and the deceased had lived as a couple. I say that for several reasons.
First, the defendant and the deceased had been married for a period of approximately 30 years and had lived together for a period in excess of 35 years. During that time, they had shared not only their personal but also their professional lives, which had revolved around their shared love of art. During that time, the defendant provided the deceased with support and assistance in his artistic career - by, for example, assisting with his exhibitions, attending his classes, contributing to the purchase of the Reuss Street studio and going on painting trips with him. It is to be expected in those circumstances that the deceased would, to the extent that he was able, seek to ensure that the defendant would be able to continue that life following his death.
Second, the deceased gave up her job as an art teacher to look after the deceased when he became ill. There was some suggestion in the evidence that the deceased was happy to give up her job. But whether that is so or not is not important. The fact is that she did so and did so in order to look after the deceased.
Third, the defendant made very substantial contributions to the property which formed part of the deceased's estate and potential notional estate. Although she only contributed $3,000 to the purchase price of Boyce Street, she paid for most of the renovations to that property. It is difficult to compare her and the deceased's respective contributions because they were made at different times. However, her contributions were substantial. In addition, although she did not contribute to the mortgage repayments, she paid the other household expenses. It also needs to be borne in mind that the Boyce Street property has been the defendant's home for approximately 35 years.
In addition, the defendant made a disproportionate contribution to the other shared assets. She paid approximately two-thirds of the purchase price of the Reuss Street property and paid a substantial amount towards the costs of renovating that property. She paid most, if not all, of the purchase price of the properties at Reids Flat.
The plaintiffs assert that, if a provision were made in favour of the plaintiffs of $1,255,000 (which, leaving costs aside, is the total of the amounts sought by them), then that would leave the defendant with resources valued at over $3,000,000 and that that would leave her with ample resources for her proper needs. In addition, they submit that an order could be made that would permit the defendant to determine how to fund the provision that ought to be made.
I do not accept that a provision in favour of the plaintiffs of $1,255,000 would leave the defendant with ample resources for her proper needs. If the defendant is to be able to carry on substantially the life she shared with the deceased, then she should be able to continue to live in the matrimonial home and to be able to use the Reuss Street studio to store the deceased's paintings and to carry on her own painting and art classes. She also needs sufficient assets to produce an income that permits her to lead the life she led during the deceased's lifetime. In order to do that, in my opinion, she needs most if not all of the investments that she has.
The plaintiffs did not seriously challenge the proposition that the deceased was entitled to continue to live in the matrimonial home. However, they maintained that, at least faced with the competing claims of the plaintiffs, there was no reason why the plaintiff needed to retain the Reuss Street property in order to live in the style to which she had become accustomed. The deceased's paintings could be stored elsewhere, and that would not prevent her from cataloguing them. She could paint at home and conduct art classes there or, alternatively, hire another space for that purpose. If she really wanted to keep the Reuss Street property, then an order could be fashioned to permit her to do so and to sell Boyce Street instead. She visited the Reids Flat properties so rarely that there was no reason why she needed to keep those properties.
There are two flaws in this submission. First, it understates the importance of the Reuss Street property to the defendant's life. That property played an important part in the defendant's and the deceased's lives for approximately 25 years. It forms part of the deceased's legacy and I accept will continue to form an important part of the defendant's life. Moreover, although it would be possible to store the deceased's paintings elsewhere, there is no evidence that that could be done in a way that would give the defendant ready access to them for the purposes she has described. The defendant says that it would not be practical to conduct art classes at home and that it would be difficult to hire alternative space for that purpose because of the equipment that is required. That evidence was not contradicted and I accept it.
Secondly, the submission necessarily involves a suggestion that, absent the defendant's willingness to have her own interest in the Reuss Street property declared part of the notional estate of the deceased, the court should declare at least part of the Boyce Street property as part of the deceased's notional estate out of which an order for provision should be made. I will say more about that submission shortly. However, it does not sit well with the proposition that, whatever other provision the deceased should have made for the defendant, he should have bequeathed her the matrimonial home.
The deceased's estate
The deceased's actual estate is worth approximately $127,000. The estate's total estimated legal fees are approximately $197,000, of which approximately $80,000 have been paid. Consequently, unless the court caps the estate's costs or unless the estate recovers part of its legal costs, the net estate is approximately $10,000.
The plaintiffs submit that the following property could potentially form part of the deceased's notional estate:
(a) the whole of the Boyce Street property or, alternatively, half of it;
(b) the $300,000 paid into the defendant's Catholic Superannuation Retirement Fund Allocated Pension Plan in April 2008;
(c) half of the Reuss Street property;
(d) half of the Reids Flat properties;
(e) half of the portfolio investment service account which currently has a balance of approximately $175,000;
(f) half of 2,400 shares in Telstra;
(g) the whole of the death benefit received from AMP of approximately $145,000.
The plaintiffs submit that the whole of the Boyce Street property potentially forms part of the deceased's notional estate because it was transferred to the defendant (as joint tenant) within one year of the deceased's death. I do not accept that submission. An order can only be made in relation to a transaction which took effect within one year before the date the deceased died if the deceased had a moral obligation to make adequate provision for the plaintiffs proper maintenance etc "which was substantially greater than any moral obligation of the deceased person to enter into the transaction": s 80(2)(b). In my opinion, that condition was not met in this case. As I have said, the Boyce Street property was the matrimonial home. The defendant contributed substantial sums of money towards its renovation and, although she did not contribute towards the mortgage repayments, she paid other household expenses instead. In my opinion, those matters gave the defendant a strong moral claim to have the property transferred into her joint name, which outweighed any moral claim of the plaintiffs.
For similar reasons, in my opinion, the court should not make a notional estate order in respect of the half interest that passed to the defendant on the deceased's death. In my opinion, the defendant had a reasonable expectation that the matrimonial home would pass to her on the deceased's death and a notional estate order should not be made in respect of that property in those circumstances.
The plaintiffs submit that a notional estate order could potentially be made in respect of the payment of $300,000 to the defendant's superannuation fund because that payment was made within three years of the deceased death and it can be inferred from the deceased's age and state of health at the time the transfer was made that it was made "with the intention, wholly or partly, of denying or limiting provision being made out of the estate of the deceased person for the maintenance, education or advancement in life of any person who is entitled to apply for a family provision order": s 80(2)(a). In my opinion, there is no merit in that submission. I accept the defendant's evidence that the transfer was made on the advice of the deceased's and defendant's accountant as a means of consolidating their superannuation and providing a pension on which they both could live. Moreover, it makes no sense for the deceased to have transferred the $300,000 at that time for the purpose of avoiding or limiting the effect of a family provision order when, for example, he did nothing about the Boyce Street property at that time.
For the reasons I have given, I would not be prepared to make a notional estate order in respect of a half interest in the Reuss Street property. That property was not acquired as an investment. Rather, it was an important part of the deceased's and the defendant's lives together. The defendant paid two thirds of its purchase price. Most of the balance was financed by an increase on the mortgage over the Boyce Street property. Although the defendant did not pay that mortgage, she paid other household expenses which permitted the deceased to make the mortgage repayments that he did. In those circumstances, I think the defendant had a reasonable expectation that the deceased's interest in the Reuss Street property would pass to her in the event of his death.
For similar reasons, I would not be prepared to make a notional estate order in respect of the deceased's half interest in the Reids Flat properties. Those properties did not play a major part in the lives of the deceased and the defendant. However, they still formed part of the defendant's and the deceased's shared life. Moreover, the defendant paid most, if not all, of the purchase price of those properties. Again, for those reasons, in my opinion, she had a reasonable expectation that the deceased's interest in those properties would pass to her in the event of his death and I do not think that the court should interfere with that expectation.
In my opinion, there is no reason why the court would not make a notional estate order in respect of the balance of the deceased's half interest of jointly held property or the death benefit paid by AMP if such an order were necessary to give effect to a family provision order. The relevant property was acquired for investment purposes. It has no value to the defendant other than its monetary value. If John or Dominic were otherwise entitled to an order in their favour, I do not see why it should not be made out of that property.
It follows from what I have said that the deceased's potential notional estate consists of the following:
| Half interest in Portfolio Investment Services Account | $87,564.72 |
| Death benefit from AMP | $145,219.56 |
| Half interest in Telstra shares (est) | $3,960.00 |
| Total | $236,744.28 |
Were John and Dominic left without adequate provision?
The position of adult children was usefully summarised by Hallen AsJ in Young & Grainger v Outtrim [2011] NSWSC 391 at [108]. It is not necessary to repeat all that his Honour said there. However, the following points are of particular relevance in this case:
(a) The relationship between parent and child changes when the child leaves home. However, a child does not cease to be a natural recipient of parental ties, affection or support, as the bonds of childhood are relaxed. However, where a child is adult and able-bodied, different views exist on whether such an applicant is someone for whom provision "ought" be made from the estate for his or her "maintenance, education or advancement in life" and whether there is any generally held social view as to the existence of a moral, or natural, obligation to an adult able-bodied child, sufficient to deprive a parent of the unfettered right of testamentary disposition: Hastings v Hastings [2010] NSWCA 197 at [7] and at [20].
( b ) Thus, it is impossible to describe in terms of universal application, the moral obligation, or community expectation, of a parent in respect of an adult child. 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; probably to assist them with a tertiary education, where that is feasible; where funds allow, to provide them with a start in life - such as a deposit on a home, although it might well take a different form. The community does not expect a parent, in ordinary circumstances, to provide an unencumbered house, or to set their children up in a position where he, or she, can acquire a house unencumbered, although in a particular case, where assets permit and the relationship between the parties is such as to justify it, there might be such an obligation ( McGrath v Eves [2005] NSWSC 1006; Taylor v Farrugia [2009] NSWSC 801).
(c) Generally, also, the community does not expect a parent to look after his, or her, child for the rest of the child's life and into retirement, especially when there is someone else, such a spouse, who has a prime obligation to do so. Plainly, if an adult child remains a dependent of a parent, the community usually expects the parent to make provision to fulfil that ongoing dependency after death. But where a child, even an adult child, falls on hard times and where there are assets available, then the community may expect a parent to provide a buffer against contingencies; and where a child has been unable to accumulate superannuation or make other provision for their retirement, something to assist in retirement where otherwise they would be left destitute: Taylor v Farrugia .
There can be little doubt that John is in a poor financial position. He and his wife have net assets of approximately $277,000, including superannuation of approximately $68,000. That figure does not take account of unpaid legal costs. John's total legal costs are estimated to be $65,356.10 and the costs he will recover on a party/party basis are estimated to be $55,553.60. Those estimates may be slightly low because they were given on the basis of the 3 day hearing, whereas the hearing went into a fourth day. It appears that so far John has paid none of those legal costs. Both John and his wife have low incomes. There is no realistic possibility that John's wife's income will increase in the foreseeable future. There is a real question for how much longer John will be able to continue to work in his present part time job. His ability to earn income in the future will depend on the success of his wholesale nursery business; and the evidence is that he requires additional capital, which he does not have, to develop that business. He had a good relationship with his father and, in my opinion, it is consistent with community expectations that the deceased would make some provision for him after making adequate provision for the defendant. I have already indicated that adequate provision for the defendant involved leaving her the deceased's interest in the Boyce Street and Reuss Street properties. Having regard to the defendant's own investments, I do not think that the deceased was required to do more than that. However, I have also indicated that I would not be prepared to make a notional estate order in respect of the Reids Flat properties. It follows that, in my opinion, a family provision order ought to be made in John's favour.
The position in relation to Dominic is less clear. His net assets are approximately $425,000, including his own future legal costs of these proceedings. Before his divorce and property settlement, he appears to have been in a secure financial position. That position has deteriorated substantially as a consequence of his divorce. However, another contributing factor to that deterioration has been the money he has spent on holidays. Dominic appears to be capable of running a reasonably successful business, and there is no reason to suppose that he will not be able to continue to do so until normal retirement age. He gives evidence that he will only earn approximately $54,000 from his businesses in 2012. However, for the reasons I have given, I do not accept that that figure represents all the benefits that Dominic derives from his businesses. It does not take account of trust income distributed to his sons. It does not take account of the contributions to rent made by ABE Education Pty Ltd and the trust. Nor does it take account of the accumulated profits of ABE Education Pty Ltd. No explanation was given for the substantial increase in the gross income of the trust between 2009 and 2010 and no adequate explanation was given for the $31,000 in client expenses incurred in 2010. Nor was any explanation given of why later accounts were not available for the trust and ABE Education Pty Ltd. Taking these matters into account, I am not prepared to conclude that Dominic is unable to meet his normal expenses from his income or, indeed, to finance the acquisition of a home, albeit one which is more modest than he might desire. There is a question whether Dominic will be properly provided for in his retirement. But in answering the question whether the deceased has made proper provision for that eventuality it is necessary to bear in mind the size of the estate and competing needs of the defendant and John. In my opinion, the size of the available estate and the competing demands on it means that the deceased did not fail to make adequate provision for Dominic. Consequently, the proceedings brought by him should be dismissed.
What provision should be made for John?
In my opinion, sufficient provision should be made for John to give him a reasonable chance of expanding his wholesale horticultural business so as to be able to generate an adequate income to support his family and to provide him with a buffer in the event that doing so proves to cost more than he has estimated. John estimates that he requires $55,000 to expand the nursery. However, I also think that if that business is to succeed, he should be able to buy a new vehicle to replace the Toyota Troop Carrier which is now 23 years old. It seems to me that there must be a serious question of how long he can use that vehicle in the business. In my opinion, it is also appropriate to allow a contingency of $40,000. On that basis, John should receive a legacy of $150,000. That legacy can be met by designating the death benefit paid by AMP and half the amount held in the Portfolio Investment Services Account as the notional estate of the deceased.
Costs
The plaintiffs submitted that the defendant's costs of the proceedings were excessive and that an order should therefore be made capping the defendant's costs. That submission was made to deal with the possibility that the estate was not sufficiently large to pay any judgment in favour of the plaintiffs and the costs of all the parties. That has not happened. Consequently, there is no utility in making an order capping the defendant's costs even if such an order were appropriate.
It follows that the defendant should have her costs out of the estate on an indemnity basis. I will hear the parties in relation to the plaintiffs' costs.
Orders
The parties should bring in short minutes of order to give effect to these reasons and, if agreement can be reached in relation to costs, to deal with the question of costs. If the parties cannot agree on the terms of the short minutes of order or the question of costs, the matter should be listed before me to deal with the outstanding issues.
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Decision last updated: 16 April 2012
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