Phillips v Hunt

[2005] NSWSC 978

CITATION:	Phillips v Hunt [2005] NSWSC 978
HEARING DATE(S):	27/09/05
JUDGMENT DATE :	28 September 2005
JURISDICTION:	Equity Division
JUDGMENT OF:	Associate Justice Macready at 1
DECISION:	Paragraph 45

CATCHWORDS:	Family Provision. Application by a widow left a life interest in family home. Remainder interest to charities. Order for sale and legacy to plaintiff in lieu ofd life estate.
PARTIES:	Eileen Veronica Phillips v John Richard Hunt
FILE NUMBER(S):	SC 2557/05
COUNSEL:	J. Drummond for plaintiff M. Meek for defendant
SOLICITORS:	Miller Noyce for plaintiff Carroll & O'Dea for defendant

LOWER COURT JURISDICTION:

- 1 -

THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

ASSOCIATE JUSTICE MACREADY

WEDNESDAY 28 SEPTEMBER 2005

2557/05 - EILEEN VERONICA PHILLIPS v JOHN RICHARD HUNT

JUDGMENT

1 HIS HONOUR: This is an application under the Family Provision Act in respect of the estate of the late Leslie Joseph Phillips who died on 13 July 1991 aged seventy-five years. He was survived by his widow of thirty-two years, the plaintiff. They had no children.

2 The last will of the deceased was made on 25 July 1972. It gave a right of occupancy in their home to his wife for her life. The remainder of the interest in respect of the house was given to three charities. The first was the Trustees of the Sisters of Mercy (North Sydney) for the purposes of Our Lady’s Home at Waitara. The second was to St Gabriel’s School for Deaf Boys at Castle Hill conducted by the Christian Brothers. The third was to the Trustees of the Sisters of Charity for the purposes of the Sacred Heart Hospice at Darlinghurst. The residue of the estate was given to the plaintiff.

3 Apparently the first charity mentioned no longer operates and there may be some question of intestacy or some question as to what should happen to its entitlement.

Assets

4 The deceased had a house at 18 Norfolk Avenue, Beverly Hills. Although at the date of death it was worth substantially less, the evidence shows its present value is $575,000. There was cash, furniture, a car and investments totalling about $124,000 odd, which, less costs, brought it down to approximately $120,000. The transfer to the plaintiff was under the residuary bequest in the will of the deceased.

Family History

5 The plaintiff was born on 18 February 1916. She and the deceased married on 19 September 1959 and lived at 18 Norfolk Avenue, Beverly Hills. The deceased was a postman and at times he worked at the GPO. The plaintiff did not work and she was a homemaker.

6 It was on 25 July 1972 the deceased made his will in the manner in which I have described. He retired in 1979 and, as I have mentioned earlier, he died on 13 July 1991. He was then aged seventy-five years and they had had no children.

7 The plaintiff, of course, continued to reside in the house so there was no need for her to move out, she having been given a life estate, and she continued to meet all the expenses, rates and insurances, on the house.

8 On 13 January 1993 the eighteen month time limit under the Family Provision Act for making a claim expired. It was in September 1992 that probate was granted to the defendant solicitors who acted for the deceased. In due course the residuary estate was distributed.

9 In October 2003 the plaintiff had a fall at her home and she was transferred firstly to hospital and then to a nursing home where she still resides. She has not been allowed to return home because she needs twenty-four hour supervision and there is no one available to do it. Clearly she would love to do so and dislikes the lack of privacy and the other intrusions in the nursing home.

10 It was on 23 February 2005 the plaintiff saw a solicitor and learned of the rights she may have under the Family Provision Act. On 21 April 2005 the summons was filed some twelve plus years out of time.

11 Because the application is out of time it is necessary for the Court to consider s 16 of the Family Provision Act which allows an application to be made notwithstanding it is out of time. There are a number of cases which refer to the principles to be applied in an application for an extension of time. In Re Guskett (deceased) [1947] VLR 211 the following was said:

“It is necessary for the applicant to make out a case that will justify the grant of the indulgence sought. He is to show reasons why his failure to apply within the time allowed should be excused. Every case will have to be dealt with on its own facts but it would seem necessary for the applicant to satisfy the Court that the circumstances are such as to make it unjust for him to be penalised for being out of time. As moreover he is seeking an indulgence he should apply promptly for an extension of time.”

12 His Honour Young J in several cases has dealt with the principles governing applications to extend time under this Act. In Massie v Laundy (unreported, NSWSC, 7 February 1986) he indicated that when looking at “sufficient cause” under s 16(3) of the Act the factors which one looks at include the following:

(a) Is the reason for making a late claim sufficient?
(b) Will the beneficiaries under the will be unacceptably prejudiced if the time were extended?
(c) Has there been any unconscionable act on either side which would enter into the equation?

13 Apparently he also accepts a view which was expressed by his Honour Needham J in Fancett v Ware (unreported, NSWSC, 3 June 1986) that there is no purpose in extending the time with respect to a claim which must fail. In Phillips v Quinton (unreported, NSWSC, 31 March 1988) Powell J, when considering the matter at the substantive hearing leant to the view that a plaintiff seeking an extension of time under the Testators Family Maintenance Act must now demonstrate not merely a reasonable prospect but at least a strong probability of obtaining substantive relief. That view was not accepted by his Honour Hodgson J in Basto v Basto (unreported, NSWSC, 8 September 1989).

14 In De Winter v Johnstone, a decision of the Court of Appeal on 23 August 1995, his Honour Powell JA referred to this matter and in particular the fact that nowadays the application for extension of time is invariably dealt with at the time of the application for substantive relief. He said at p 23:

“In such a case, so it seems to me, no extension of time ought to be granted unless it be established (inter alia) that the applicant for an extension of time would, in the event of that extension being granted, be entitled to an order for substantive relief.”

15 His Honour Sheller JA considered that it was only necessary to show that the application was not bound to fail. His Honour Cole JA seems to have adopted the parties approach of looking at the strength of the plaintiff’s case.

16 The case of De Winter v Johnstone is also useful in that Sheller JA commented on the meaning of “unconscionable”. He was dealing with an appeal from Master McLaughlin and he referred to the Master’s comments to the following effect:

“Unconscionable conduct in this context, of course, relates to such matters as whether the plaintiff has made an informed decision not to make a claim against the estate and has then decided after the limitation period has expired to make such a claim on account of some change in her financial and material circumstances which has occurred after the expiry of the limitation period.”

17 With regard to the Master’s comments, his Honour observed:

“...with all respect I would not have thought this to have been unconscionable conduct. No doubt it depends on the circumstances. However, the concept of unconscionable conduct is to be directed towards a deliberate holding off designed to lull beneficiaries into a false sense of security. There is nothing to suggest anything of that sort in the present case.”

18 I turn to the various matters that have to be considered. The first is the reason for the late claim. The evidence by the plaintiff is that she had no knowledge of her right to make a claim. There was evidence from the defendant, Mr Hunt, her solicitor, of what he told her at the time the will was administered and probate granted. He concedes that clearly he did not tell her about rights to make the application under the Family Provision Act.

19 In the circumstances, I think that there is a sufficient explanation and it is plain that once she did know of her rights prompt action was taken.

Unacceptable Prejudice

20 I have mentioned one of the beneficiaries has gone out of existence. Whether or not there is any prejudice incurred because of this late application which may interfere with its entitlement has really not been investigated but it seems to me that any such prejudice would probably be balanced by countervailing factors if in fact the application had been brought in time. One could expect a far stronger case by the plaintiff because of her life expectancy.

Unconscionable Conduct

21 There is no evidence of any unconscionable conduct of the parties. They have been simply waiting for the determination of the life estate. Accordingly in the circumstances I propose to extend time up to the filing of the summons in this matter.

Eligibility

22 The plaintiff is an eligible person and, of course, it is very notable in this case, given her absence of family, that there are no other eligible persons who may make a claim or may have some claim on the bounty of the deceased.

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

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

24 I turn to the plaintiff’s situation in life. The plaintiff is single, she is eighty-nine years of age and has no dependants. She has a life expectancy of five years. At the present time she has the benefit of her right to reside in the house and savings of $104,670.00. She presently resides in a nursing home, as I have recounted, and this charges $716.10 per fortnight which is not quite covered by her total pension receipt of $668.54 per fortnight. She also receives a few hundred dollars a year by way of her investment.

25 Plainly she had a very good marriage of thirty-two years with the deceased and they enjoyed holidays overseas from time to time. They were regular churchgoers and socialised at various clubs. The home was apparently owned by the deceased at the time of the parties’ marriage.

26 It is also necessary to consider the situation of life of others having a claim on the bounty of the deceased. In this case it is the two remaining charities. There is no particular evidence of contact with the charities, although they were no doubt known to the deceased and the plaintiff through their contact with the local Roman Catholic church which they attended every Sunday. The evidence is St Gabriel’s School for the Deaf depends upon donations to the extent of between sixteen to twenty-five per cent of its income. No doubt its purposes are worthy, as of course are the well known purposes of the Sisters of Charity at Darlinghurst.

27 It is necessary to see how the plaintiff is left without adequate and proper provision for her maintenance, education and advancement in life. She finds the nursing home a distressing environment. She has no privacy, she has to share her facilities with demented patients who steal her personal items but unfortunately she needs supervision twenty-four hours a day and thus cannot go back to her home.

28 She wishes to get accommodation at Greglea Village at Pennant Hills where she can have a serviced apartment. This is near where she has lived all her life. She wants the home sold to free up cash so she can purchase such a unit. The evidence is the cost of such a unit would be $280,000 plus fees of some $1850. The service charges for such a serviced apartment would be $1215 per month.

29 The question in this case is what should happen to the present provisions in the will. The defendants have no objection to the sale of the property provided the capital sum thus invested is retained for the benefit of the remainderman.

30 The question of what is the appropriate provision and whether a life estate should be awarded to persons in the situation of either a widow or a long standing de facto partner has been dealt with in a number of cases.

31 In the 1970s and the 1980s there are a number of decisions of single Judges of this Court where they have held that a life interest with particular attributes was appropriate. (See, for instance, Crisp v Burns Philp Trustee Co Limited, Holland J, 18 December 1979; Banks v Hourigan, Waddell CJ in Eq, 2 March 1989; Cameron v Hills, Needham J, 26 October 1989.) This perhaps is reflected in matters mentioned by the High Court in White v Barron, (1979-1980) 144 CLR 431 where at page 444 Mason J said:

“A capital provision should only be awarded to a widow when it appears that this is the fairest means of securing her proper maintenance. However, the provision of a large capital sum for a widow who is not young may, in the event of her early death, result in a substantial benefit to her relatives, contrary to the wishes of the testator, when a benefit of another kind would have afforded an adequate safeguard to her personally, without leaving her in a position in which she could benefit her relatives from the proceeds of the legacy. As has been pointed out in Elliott v Elliott , that statement was made in an evidentiary context where the provision was made at the expenses of the children of a previous marriage who had some claim on the testamentary bounty of the deceased.”

32 A change in the High Court’s attitude to the provision for widows, no doubt in response to changes in community expectations, is illustrated by the fact that in this case it disapproved of observations made in Warladge v Doddridge (1957) 97 CLR 1, that as a general rule an order for provision in favour of a widow should be confined to widowhood. Stephen J, who was one of the majority in White v Barron at pp 438-440, went to some length to point out that the jurisdiction was one which should not be unduly confined by judge-made rules of purportedly general application. By the late 1980s, other judges in this Division were taking a slightly different view. For instance in Court v Hunt, 14 September 1987, unreported, Young J said:

“Old age is a growing problem in our community and judges who sit in Family Provision Act applications get experience, as well as their own experience in the community, as to what happens when people reach the age when they can no longer look after themselves and one judges the evidence in these sorts of proceedings against that background knowledge.”

33 His Honour then went on to talk about the assumptions one could make about the fact that frequently people, once they pass fifty-five, have to change their accommodation and locate themselves either in retirement villages or nursing homes which have different requirements for capital contribution.

34 After talking about the evidence necessary, his Honour went on to say:

“In many cases these days a life estate will not be sufficient because it does not cover the situation of the plaintiff moving from her own home to retirement village to nursing home to hospital. Sometimes it is possible for a Court to alter a life estate to a more flexible non-capital provision, such as was done by Holland J in Crisp v Burns Philp Trustee Co Limited , 18 December 1979, unreported, but noted in Mason & Handler Probate Service at p 13206. Other times the proper provision is for fee simple gift, realising that this property will be sold and will be turned over into the appropriate property to maintain the widow for the rest of her life. Care also has to be given by those administering the plaintiff’s property to ensure that there is sufficient income being raised after tax that will provide for maintenance levies and the other payments that have to be made by the widow.”

35 More recently the Court of Appeal on a number of occasions has referred to this problem. In Golosky & Anor v Golosky, 5 October 1993, unreported, the Court summarised the proper provisions for widows (and thus the plaintiff in these proceedings) in the following terms:

“In testing the Master’s decision it is appropriate to keep in mind the principles which govern the approach which he was obliged to take to the widow’s application under the Act . Relevantly, these included:

(a) Proper respect was to be paid for the right of testamentary disposition which is the fundamental premise upon which the provisions of the Act are based. That premise requires the Court, out of respect for the continuing right of testamentary disposition, to limit its disturbance of the testator’s will to that which is necessary to achieve the purpose of the Act , and not more. See VT Pontifical Society for the Propagation of the Faith and St Charles Seminary, Perth v Scales (1962) 107 CLR 9, 19; White v Barron & Anor , above, 458; Hunter , above, 576.

(b) The purpose of the jurisdiction is not the correction of the hurt feels or sense of wrong of the competing claimants upon the estate of the testator. The Court is obliged simply to respond to the application of the eligible person who was a member of the testator’s household and to consider whether, as claimed, the provision made by the will is inadequate for that person’s proper maintenance and advancement in life. See Heyward v Fisher , Court of Appeal, unreported, 26 April 1985; (1985) NSWJB 81.

(c) Consideration of other cases must be conducted with circumspection because of the inescapable details of the factual circumstances of each case. It is in the detail that the answer to the proper application of the Act is to be discovered. No hard and fast rules can be adopted. Nevertheless, it has been said that in the absence of special circumstances, it will normally be the duty of a testator to ensure that a spouse (or spouse equivalent) is provided with a place to live appropriate to that which he or she has become accustomed to. To the extent that the assets available to the deceased will permit such a course, it is normally appropriate that the spouse (or spouse equivalent) should be provided, as well, with a fund to meet unforeseen contingencies; see Luciano (above), 69-70.

(d) A mere right of residence will usually be an unsatisfactory method of providing for a spouse’s accommodation to fulfil the foregoing normal presupposition. This is because a spouse may be compelled by sickness, age, urgent supervening necessity or otherwise, with good reason, to leave the residence. The spouse provided for will then be left without the kind of protection which is normally expected will be provided by a testator who is both wise and just. See Moore v Moore , Court of Appeal, unreported, 16 May 1984, per Hutley JA.

(e) Considering what is ‘proper’ and by inference what is ‘improper’ as a provision in a will, it is appropriate to take into account all of the circumstances of the case including such matters as the nature and quality of the relationship between the testator and the claimant; the character and conduct of the claimant; the present and reasonably anticipated future needs of the claimant; the size and nature of the estate and of any relevant dispositions which may have reduced the estate available for distribution according to the will; the nature and relative strengths of the competing claims of testamentary recognition; and any contributions of the claimant to the property or to the welfare of the deceased. See Re Fulop (deceased) (1987) 8 NSWLR 679 (SC); Churton v Christian & Ors (1988) 13 NSWLR 241 (CA) 252.”

36 In talking of the need to provide a house and a sum for contingencies the President is clearly referring to passages in Luciano v Rosenbloom and other cases. As was pointed out by the Court of Appeal in Elliott v Elliott, unreported, 29 April 1986, such a type of provision only applies where it can be said there has been a long and happy marriage and a widow has helped build up the estate of the deceased.

37 In Permanent Trustee v Fraser 36 NSWLR 24 at p 47 Sheller JA had following to say:

“Once it is accepted that adequate provision for her proper maintenance and advancement in life required secure accommodation for life as well as a capital sum to meet exigencies, this need is not met by giving her only a life interest in the home unit. Commonly people in the community need to move from their own home into a unit in a retirement village and then into nursing accommodation and then into total care accommodation. See Young J in Christie v Christie . The need can be met if the respondent is given the home unit absolutely. She then has a greater flexibility as well as greater security.”

38 In Salmon v Blackford, 18 February 1997, the Court of Appeal was dealing with a case where the trial judge had given a fee simple to the deceased widow. Sheller JA said:

“The principal point according to Mr Gibb was that his Honour failed to take into account that by reason of the widow’s advanced years sand the probability that her adopted son would be the natural object of her bounty, the effect of the order made was likely to be that the adopted son, whom the deceased had no intention to benefit, would be the beneficiary of half the estate. I have great difficulty in seeing how a submission of this sort has any weight in the circumstances of this case.
The matter that this Court must consider is whether the order that his Honour made was in such terms that one could only come to the conclusion that in some way his discretion must have miscarried. It is well established that a proper provision is not to be measured solely by the need for maintenance. It should, in the case of this respondent and in the circumstances of this case, free her mind from any reasonable fear of any insufficiency as her age increases and her health and strength fails. I must say in this regard that her life expectancy, according to the tables, was something over eleven years at the time of the hearing. If one comes to the conclusion that for her proper maintenance an order such as the present is appropriate, it seems to me to matter not at all that she has an adopted son of an earlier marriage and that he may be the ultimate beneficiary of her bounty.”

39 This seems to indicate a different approach to that referred to by the High Court in White v Barron.

40 In the present case the cost of a necessary unit will not consume the whole of the estate. Provision of an appropriate capital sum now would accelerate the receipt by the remainderman of some share in the estate.

41 The plaintiff had the benefit of living in the family home for forty-seven years and sorely misses that way of life. For her to have the benefit of having a residence would go in some way to restoring her previous security.

42 It can be assumed that her pension would cover her day to day needs in the new premises but would not cover extras such as the service charges. Using the three per cent tables an appropriate sum to cover that cost would be $68,025.

43 The plaintiff has a fund of $104,000 and the question which arises is whether that should be used in part for the purchase. It is a sum which she has held for some twelve years now and bearing in mind the lack of any competing claims from family I think it appropriate that she retains that sum as a contingency fund for her own security.

44 The likely sale proceeds after expenses would be of the order of $553,625 and there are costs on the plaintiff’s part of $28,530 and the defendants of $20,000. This leaves a net estate of $504,095.

45 In the circumstances, the orders I propose to make are as follows:

(1) I extend the time for bringing the application up to the date of the filing of the summons.
(2) In lieu of the provision in the will of a life interest in the property at 18 Norfolk Avenue, Beverly Hills the property shall be held by the executors and trustees upon trust for sale with the plaintiff to receive a legacy from the proceeds of the sale of the property in the sum of $350,000 and that the balance of such proceeds be distributed equally between the named beneficiaries referred to in this bequest to the plaintiff.
(3) The plaintiff’s costs on a party/party basis and the defendant’s on an indemnity basis may be paid or retained out of the estate.
(4) Interest is to be payable if the legacy is not paid within three months of today’s date and interest is to run at the rate provided for under the Wills, Probate and Administration Act from such date.

46 I direct the exhibits be returned.

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