Perry v Harris

[2001] NSWSC 992

CITATION:	Perry v Harris [2001] NSWSC 992
CURRENT JURISDICTION:	Equity Division
FILE NUMBER(S):	SC 5083/1999
HEARING DATE(S):	31/05/01, 1/06/01 and 2/11/01
JUDGMENT DATE:	2 November 2001
PARTIES :	Lynette Anne Perry - as next friend for Martene Louise Perry and Blake Stuart Perry v Michelle Nadine Harris - Estate of Denis Sydney Perry
JUDGMENT OF:	Master Macready at 1

COUNSEL :	Mr B. Slowgrove for the plaintiff Mr J.D. Shaw for the defendant
SOLICITORS:	Coyne & Whittemore for the plaintiff Denis M. Anderson for the defendant
CATCHWORDS:	Family Provision. Claim by children of deceased's first wife. Consideration of competing claim by defendant who had been living in a de facto relationship with the deceased for 12 years. Order for small legacies.
DECISION:	Paragraph 47

- 1 -

1   MASTER: This is an application under the Family Provision Act in respect of the estate of the late Denis Sydney Perry who died on 7 July 1998 aged fifty-three years. The deceased was survived by his two children, his former wife and the defendant, with whom the deceased had lived since 1986.

2   The deceased's last will was made on 30 September 1992. He left the whole of his estate to the defendant and appointed her executrix. The application is brought by the deceased's two children. The estate consisted of the deceased's half share in the property 3 Langshaw Place, Connells's Point and some superannuation and wages which were due to him.

3   The estate's half share in the property has been transferred to the defendant and she has got in the other assets, and out of that paid the deceased's debts. Ultimately she received $19,023.35. The property at Connells's Point is now valued at $570,000.

4   Costs have been incurred in this matter in quite substantial sums and after making allowances for the fact that the second round of hearings only went for one day rather than two days, the plaintiff's costs are estimated at $41,000, the defendant's costs at $41,000. These are on a solicitor and client basis and would be somewhat less on a taxation. The defendant has not yet paid her costs.

5   I will just deal with a short amount of the history in order to put the matter in context: the deceased was born on 24 March 1945. The defendant was born on 3 November 1954. The deceased married for the first time on 10 December 1977. His daughter, Martene Louise Perry, was born on 31 January 1982 and his son, Blake Stuart Perry, was born on 28 December 1983. The deceased and his wife separated in June 1986 and in October 1986 the deceased and the defendant commenced living together. From that time onwards the deceased starting paying child maintenance at the rate of $25 per week for each child. The deceased was divorced in 1989 and on 12 October 1989 there were consent orders disposing of his property matters with his wife.

6   The orders provided for the sale of the former matrimonial home at 64 Durham Street, Hurstville and the division of the net proceeds which were in the proportion sixty per cent to his wife and forty per cent to the deceased subject to there being a payment for the deceased in the sum of $4800.

7   The consent orders provided for the deceased to pay child maintenance in the sum of $42.50 per week for each of the two children until they attained eighteen years. The children lived with their mother, who had custody, and the deceased had access.

8   It was in 1992 that the deceased made his will to which I have already referred. In December 1992 orders increased the maintenance to $56 per week per child, such provision to increase in accordance with the movements in the CPI.

9   On 7 July 1998 the deceased died, aged fifty-three years. Following upon the deceased's death, the defendant continued to pay child maintenance in a total sum of $120 per week. This was done notwithstanding that Martene attained eighteen years on 21 January. The reason for this was that she had been asked to continue to make the child payments by the deceased while the children needed educating. The defendant had no obligation to continue those payments; the obligation ceased on the death of the deceased. The defendant, in fact, was given advice at the time of the deceased's death that she did not have to make the payments. However, she did do so and did this on a voluntary basis for some three years. To date she has paid $19,920 towards the maintenance of the children.

10   Probate was granted on 8 September 1998 and in October 1998 the estate was distributed to the defendant.

11   In September 1999 some amounts were paid from a superannuation fund. The defendant received $15,067.96 and the mother of the two plaintiffs, as trustee for them, received $14,532.92.

12   In applications under the Family Provision Act the High Court has, in Singer v Berghouse (1994) 181 CLR 201, set out a two-stage approach that the Court must take. At p 209 it said the following:

"The first question is, was the provision, if an, made for the applicant 'inadequate (for his or her) proper maintenance, education and advancement in life'? The difference between 'adequate' and 'proper' and the interrelationship which exists between 'adequate provision' and 'proper maintenance' et cetera were explained in Bosch v Perpetual Trustee Company Limited. The determination of the first stage in the two-stage process calls for an assessment of whether the provisions, if any, made was inadequate or what, in all the circumstances, was the proper level of maintenance, et cetera, 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 has been 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."

13   I turn to consider the situation of the two plaintiffs: Martene Perry is aged nineteen years. She is single. She presently has a car, which was given to her by her mother, worth about $5000. She has a half-interest in the $16,000 which is now the amount of the fund which was invested by her mother for herself and her brother. She has been studying a Bachelor of Arts degree majoring in education. That is a four-year course and it was interrupted for some months this year when she went on exchange to the United States. She has now returned and will continue that course at Wollongong. She has done eighteen months of the course already and so, accordingly, she has another two and a half years to study. In order to enable her to undertake that course, her mother has also purchased a computer worth $5500 and she has the use of that computer.

14   So far as the relationships between Martene and her father are concerned, they were unexceptional. The relationship, obviously, would have been wished to be better on Martene's part after the separation of her parents but at least for my purposes there is nothing which I need to take into account which would in any way affect Martene's entitlement. I will come back to her needs in due course.

15   The plaintiff, Blake Perry, turns eighteen on 28 December this year. He is single without any dependants. He has also been provided with a car by his mother; she bought him a utility worth about $3000. He has the interest in the fund of $16,000. At the moment he has a job. He is working for an employer who makes trailers and he earns $204 a week. He has held that job for about six weeks. Last year he did two courses at technical college, one panel beating and one a preliminary mechanics course in order to fit in with the sort of work he hoped to achieve. He had some work experience but that was unsatisfactory because he was obviously taken advantage of by his employers. He was promised apprenticeships, was engaged and then the job only lasted a few weeks. Blake has some difficulties ahead of him in terms of making his way in the world. He has suffered from attention deficit disorder. There is some medical evidence before me dealing with his difficulties in this regard and apparently he also has what is described as a mild minimal brain dysfunction which affects his hand/eye co-ordination. His intelligence is in the average range, however, he does have problem with hand/eye co-ordination and his memory. He has had problems in the past with writing and he has had some special assistance in order to deal with that problem which probably still affects him to some extent. So far as his relationships with his father are concerned, there is nothing unusual to take into account.

16   The defendant is forty-six years of age. She is single. She is presently living in the house and she has her twenty-nine-year-old daughter, who is unemployed, living with her. That person receives an income of $147 per week. She also has her other daughter and child and that daughter's husband living with her. They previously had a business but that, unfortunately, failed. The defendant herself lost $10,000 she put into that business for her daughter. Although they are living at home, the daughter's husband has a job and they are meeting their household expenses. Accordingly, the position of the defendant is that she has a house worth $570,000; she has a present debt to a bank of some $33,000 which is as a result of her consolidating a number of different credit debts that she had. There is a potential liability of some $25,648 if she needed to do some work on a problem she has at her house. That problem concerns the fact that there is a retaining wall and other structures built over an easement. The council does not want them rectified and is prepared to allow the encroachments to remain there at their pleasure. She also has, of course, the costs of these proceedings.

17   The defendant is employed by the National Australia Bank and her income tax return for the year ended 30 June 2000 showed her taxable income of $54,163. There is, however, uncertainty in respect of her job in respect of two areas. On 7 August 2001 she was given a letter in which she was informed her position as sales and service officer at the Law Courts branch was surplus to requirements and she was made redundant. As an interim arrangement, she has been transferred to reserve staff. The likelihood is, having regard to the bank's published literature, that the bank will endeavour to relocate her within the next 12 months. If it does not, she has the prospect of either taking a job at a reduced salary or being made redundant, and that is a matter which is quite some matter of uncertainty for her. What her redundancy pay would be is not dealt with in the evidence. She has used the whole of her long service leave in coping with the problems she has had after the death of the deceased.

18   There is medical evidence which has been filed dealing with the defendant. The defendant's treating psychiatrist suggested because of the difficulties she has had he thinks it is unlikely she will be able to work more than four years. Doctor Shand, called for the plaintiffs, thought that there was some uncertainty but did not agree that she was likely to be unable to work after four years. The doctors were not cross-examined before me, which is, in one sense, sensible because it saves costs but I think, having regard to the notice of redundancy, I must look at the defendant's situation as one which is subject to some doubt in the future.

19   She will be forty-seven years next year and if she is made redundant she will have the problems which people of that age bracket have in trying to seek further employment.

20   The other matter to take into account is the contributions to the home. The home, which was bought by the deceased and the defendant, originally cost $380,000. The defendant herself put in one-half of that amount. The deceased was to put in the other half but he was short some $25,000. A mortgage was taken out and the defendant herself paid out of her salary all of the payments to pay for that mortgage, which was paid off. Apart from this contribution there has been the other contribution, which the defendant was not obliged to make, which was for the maintenance of the children, some $19,920 after the date of death.

21   It is necessary to see how the plaintiffs say they have been left without adequate and proper provision for their maintenance, education and advancement in life. The Court can only make an order which deals with these particular matters. It is important that the parties realise its jurisdiction is not one which is exercised by doing what might be thought to be fair.

22   The needs were put on several bases: the first one was the need for education. As far as Martene is concerned, it is apparent from the evidence that she will need fees for her course. There is $3800 per annum which is necessary for her Arts course and she has another eighteen months of that, totalling $5700. There will be $4000 for the final year of her course which is the equivalent of a Diploma of Education and there will be the cost of $2500 for books, a total of $12,200. She will have car expenses in getting from Bomaderry to Wollongong and the precise amount of those is not quantified.

23   It seems presently she is planning to live at home and she is able to do that and travel using the car which she has to go to university.

24   So far as Blake is concerned, he has done two courses and these I have referred to earlier. There has been no course which he has identified that he might wish to undertake in the future. As I have said there is some uncertainty about his work future and I will come back to this. Certainly, the work that he is probably fitted for is probably the type of work that he is doing now or the type of work which he did when previously promised an apprenticeship.

25   So far as maintenance is concerned, it would seem in respect of Martene that she will have another two and a half years at home before she becomes fully self-sufficient. No doubt she will go on in her life. She seems to be a capable young lady and would be able to look after herself thereafter.

26   Blake, as I have said, has had a varied employment history. There is a worry in respect of his ability to obtain work in the future. There have been the two occasions when his work did not result in continuous employment and in the circumstances something should be provided for his maintenance. He is now working building trailers and has been in that job for some six weeks. Clearly, he could continue to live at home on his wage of $200 per week, pay a contribution to home and, accordingly, would not, in the ordinary sense, have need for further support. However, I think the likelihood is he may need support in the future as his job prospects are certainly more uncertain than his sister's. The difficulty about the whole matter is identifying the quantum of the appropriate support.

27   Annexure B to Mrs Perry's affidavit of 15 December set out listings of the children's expenses. Without going into the details, it seems in some sense to be a general claim and it was also predicated at a time when the children were somewhat younger and there were different alternatives as to how Martene would be educated. There seem to be a number of internal inconsistencies: for example, the difference in the living expenses between those of Blake and those of Martene which are not really explainable.

28   There was also tendered in evidence some tables from the CCH practice relating to the cost of maintaining children which, under the Family Law Act can be taken into account. The basket of goods approach adopted was one which was referred to and that showed teenage children cost $7630.26 per year, based on the updates of the CPIs to the June 2001 quarter. It should be noted that includes costs for schooling but not fees. There is another table which is based on a 1989 expenditure survey. That dealt with children who were somewhat younger than those which I am considering.

29   If one uses as a rough guide the amount of maintenance paid on the basis that it represents half the costs of maintaining the children, then the cost would be $6140 per annum per child.

30   Perhaps the best guide is the basket of goods approach but reduced to $7000 per annum per child. That has to be applied for two and a half years to Martene. So far as Blake is concerned, I would have thought perhaps a year and a half would allow some provision for uncertainties in the future.

31   The difficulty with all this and the way it falls out is there is no precise evidence as to the appropriate quantification of a lump sum to be awarded. In Singer v Berghouse on 23 April 1992 in the Court of Appeal, his Honour Mr Justice Sheller had this to say about this problem:

"I must say that I find it extraordinary that the appellant presented scant or no evidence as to her present income and outgoings or as to her intentions or needs for the future or as to what lump sum provision, applying appropriate discount tables, would be required to meet these claims or needs, if they existed. In my opinion, in the circumstance of this case, for the Court, in the absence of any such evidence, to make an order for the payment to the appellant of a lump sum is to do no more than act on speculation and, contrary to the prohibition contained in section 9(2) of the Act, to alter the deceased's disposition of his property in the absence of proof that he has inadequately provided for the appellant."

32   Here there has been no evidence of capitalisation of the amounts, which are admittedly only for short periods so I will discount Martene's amount to take account of the fact that she will receive a lump sum to cover her expenses which are not yet incurred.

33   The other area in which it is said there was some need was the need for advancement in life. There were some submissions of a somewhat vague and general nature that the children would need something to set them up in life in the future. Nothing was articulated in detail in this regard other than the suggestion they might have to acquire a property in the future. However, the children are too young at this stage to know of any particular matter that they should point to. It is not as though there are the costs associated with setting up a business or other proposal. The $8000 received in respect of the payments would be quite sufficient to cover this aspect. They each own a car given to them by their mother.

34   The claims which are made by the plaintiffs were quantified in submissions and on the plaintiffs' part it was submitted that Martene should have a legacy of $40,000 and Blake $60,000.

35   The defendant, on her part, suggested that the appropriate legacies would be $12,500 for Martene and Blake should have a legacy of between $5000 and $7500. The defendant's approach to the case was a very reasonable one. She, in effect, conceded some amount should be payable on the basis it would replace any future payments.

36   There was no submission that no order should be made.

37   One must stand back and look at these claims by the children in the proper context. Part of that context is the situation of the defendant. She is, effectively, the deceased's widow. Widows' claims are frequently the subject of applications in this Court.

38   The Court of Appeal in Goloski v Goloski unreported 5 October 1993 has referred to formulations of this standard to be expected in respect of a widow in terms which refer to the decision of Powell J in Luciano v Rosenblum (1985) 2 NSWLR 65 and Elliott v Elliott, which was approved by the Court of Appeal on 24 April 1986. There his Honour said:

"Where the marriage of a deceased and his widow has been long and harmonious, where the widow has loyally supported her husband and assisted him to build up and maintain his estate, the duty which a deceased owes to his widow can be no less than to the extent to which his assets permit him to achieve that result; first, to ensure that his widow be secure in her home for the rest of her life and that if either the need arises or the whim strikes her she have the capacity to change her home; secondly, that she have available to her an income sufficient to enable her to live in a reasonable degree of comfort and free from any financial worry; and, third, that she have available to her a fund to which she might have resort in order to provide herself with such modest luxuries as she might choose and which would provide her with a hedge against any unforeseen contingency or disaster that life might bring."

39   Here, in this case, we are dealing with a relationship which was one of twelve years. It is not short but then again it does not qualify for a long relationship, which was referred to by the Court. She does have a home but she has debts. She has no fund for contingencies and, in fact, she has the uncertainty that her job may become redundant. She certainly has no funds which would provide her with income. Normally in those circumstances a claim by a child would rank after the appropriate provisions have been made for the deceased's widow. This is more particularly so in the present case where there have been contributions to the property by the defendant and she has responsibilities in respect of her children. If at all possible she should not have to sell her home. She has enquired of the bank and arranged a facility for an overdraft of $100,000. This has been used already as to $33,000. There was some other evidence of what she might be able to borrow but, given her present employment situation, I think the most likely situation is what she has in fact already arranged with her employer.

40   The other matter of context which has to be considered is the background in which the children have been brought up. It was implicit in the way that the children's claims were presented that they expected the estate to bear the whole of the cost of their future support and education.

41   The relevant background is that the deceased and his first wife shared in the cost of raising the children. The deceased continued doing this after separation by paying maintenance. The defendant has continued it by making payments of $120 per week.

42   The children live with their mother who has remarried. She and her husband are in full employment. She is employed at the local hospital in a clerical capacity earning around $848 per fortnight net. Her husband is an ambulance officer earning somewhat more. Mrs Perry received some funds from her parents' estate which allowed her to purchase the cars for the children and the computer for Martene. Clearly, there is a happy stable environment which is likely to continue. In these circumstances, it seems to me that the estate should look to provide one-half of the identified maintenance and education expenses.

43 In the present case the estate has been fully distributed. The only asset which now remains is the house which is in the name of the defendant. Under s 24 of the Family Provision Act if the Court is satisfied that an order for provision ought to be made on the application, the Court may, where there has been a distribution, designate as notional estate such property. I am satisfied, bearing in mind the way the defendant has approached the matter of agreeing to some order for a lump sum which will replace future weekly payments, that a small legacy is appropriate.

44 Section 27 of the Family Provision Act is as follows:

"(1) On an application in relation to a deceased person, the Court shall not make an order designating property as notional estate of the deceased person unless it has considered:

(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; and

(c) any other matter which it considers relevant in the circumstances.
(2) In determining what property should be designated as notional estate of a deceased person, the Court shall have regard to:

(a) the value and nature of the property the subject of any relevant prescribed transaction or distribution from the estate of the deceased person:

(b) where, in relation to any such prescribed transaction, consideration was given, the value and nature of the consideration;

(c) any changes over the time which has elapsed since any such prescribed transaction was entered into, any such distribution was made or any such consideration was given in the value of property of the same nature as the property the subject of the prescribed transaction, the distribution or the consideration, as the case may be;

(d) with a property of the same nature as the property the subject of any such prescribed transaction, any such distribution or any such consideration could, during the time which has elapsed since the prescribed transaction was entered into, the distribution was made or the consideration was given, as the case may be, have been applied so as to produce income; and

(e) any other matter which it considers relevant in the circumstances."

45 Under s 27(1)(a) I have to consider the importance of not interfering with the reasonable expectations in relation to the property. There is no evidence of any particular promises concerning the property which I have to take into account. Clearly, it was the home which the defendant and the deceased expected to live in for the rest of their days. It was a major purchase by them.

46 Under s 27(1)(b) I have to consider the substantial justice and merits involved. Critical to this is, of course, the defendant's financial situation and whether this application should be the mechanism to force her to sell her home. She has spent money on the house and, no doubt, that was in the context of her still maintaining the children by making the payments.

47   In the circumstances, the orders that I make are as follows:

1. The property 3 Langshaw Place, Connells's Point be designated as notional estate to the extent necessary to meet the legacies and any costs order made herein.
2. I order that -
(a) the plaintiff, Martene Louise Perry, receive a legacy of $12,500 and
(b) the plaintiff, Blake Stuart Perry, receive a legacy of $5000.
3. I give liberty to apply for implementation or further enforcement of these orders.
(Submissions on costs.)
4. I will order the plaintiff's costs on a party/party basis be paid out of the notional estate. I order that the exhibits be returned.
oOo

Last Modified: 11/09/2001