Potter v Koester
[2011] NSWSC 601
•26 May 2011
Supreme Court
New South Wales
Medium Neutral Citation: Potter v Koester [2011] NSWSC 601 Hearing dates: Thursday 26 May 2011 Decision date: 26 May 2011 Jurisdiction: Equity Division Before: Associate Justice Macready Decision: 1. Order that the plaintiff received a legacy out of the estate of the deceased in the sum of $30,000.
2. His Honour fixes the plaintiffs costs in the sum of $30,000.
3. I order the defendants costs on an indemnity basis be paid out of the estate of the deceased.
Legislation Cited: Family Provision Act 1982
Liquor Act 1912Cases Cited: Aafjes v Kearney (1976) 50 ALJR 454; 8 ALR 455
Ball v Newey (1988) 13 NSWLR 489
Churton v Christian (1988) 13 NSWLR 241
Leahey v Trescowthick [1999] VSC 409
Lee v Munro (1928) LJKB 49; 21 BWCC 401
MacEwan Shaw v Shaw [2003] VSC 318
O'Dea v O'Dea [2005] NSWSC 46
Pearson v Jones [2000] NSWSC 799
Petrohilos v Hunter (1991) 25 NSWLR 343
Re Fullop (1987) 8 NSWLR 679
Re Fulop Deceased (1987) 8 NSWLR 679
Sayer v Sayer (1999) NSWCA 340
Sherborne Estate: Vanvalen and Anor v Neaves & Anor [2005] NSWSC 593
Simons v Permanent Trustee Co Ltd [2005] NSWSC 223
Singer v Berghouse (1994) 181 CLR 201
Toohey v Taylor (1983) 1 NSWLF 743
Tsivinsky v Tsivinsky (unreported, Kirby P, NSWCA, 5 December 1991)Category: Principal judgment Parties: (Plaintiff) David John Potter
(Defendant) Janice Koester - Estate Of The Late Cherie Elaine Valencia PotterRepresentation: Counsel:
(Plaintiff) Mr R Wilson
Solicitors:
(Plaintiff) Brazel Moore Lawyers
File Number(s): 2010/00211162
Judgment
HIS HONOUR: This is an application under the Family Provision Act 1982 in respect of the estate of the late Cherie Elaine Valencia Potter who died on 17 July 2009 aged 80 years. She was survived by the plaintiff, her stepson, and also her two children.
The deceased's last will was made on 10 December 2006 and in that Wilt she appointed her friend, the defendant, as executor and gave the whole of her estate to be divided between her two children, Janet Potter and Lester Potter.
The deceased had made an earlier will on 13 June 2009 which effectively had the same positive provisions but instead appointed her daughter as executor.
Estate of the deceased
The deceased's estate unfortunately is a small one. The only substantial asset was a home, and there was a small amount of cash, something in excess of $12,000, which was distributed to each of the beneficiaries. The present estate amounts to $272,235.50. At this stage the plaintiff's costs are estimated at $43,764 and the defendants at $35,000. If orders were made for those costs then the estate would be in the order of $193,467.
Family History
The deceased was born in September 1928. Her future husband to be, Gordon Potter, married in December 1939 and he had three children, Robert Potter born in September 1940, Barry Potter born in May 1942 and the plaintiff David born in January 1946. Their mother died on 9 April 1948.
At that stage Mr Potter could not manage the whole family to so the two older boys went to the Bexley Boys Home and the plaintiff himself went to live with family friends.
A year later in June of 1949 Gordon Potter married the deceased, who was then aged 20 years. They then, after the marriage, lived at a property at Anne Street, Enfield. The children of Mr Potter, namely the plaintiff, Robert and Barry, commenced to live there. Thereafter Mr Potter and the deceased had two children, Janet born in January 1950 and Lester born in January 1952.
By 1962 the plaintiff had finished his schooling and commenced an apprenticeship with the New South Wales Government Railways.
The house by that stage was owned by, I think, the maternal grandparents and by 1965 it was transferred to Mr Gordon Potter. That remained the case until 6 May 1968 when Mr Potter sold the Anne Street, Enfield property.
The family then moved to a property at Villawood. At that stage the family consisted of the five children. The property, the evidence shows, was owned in the name of both the deceased and her husband Gordon.
By 1969 the plaintiff left home at Villawood, then aged 22 years, and he commenced his working career in Bowral where he had gone because a girlfriend of his was living there.
On 12 July 1973 the plaintiff's father, Mr Gordon Potter, made his will. He left all his property to his wife, the deceased, but in default he gave it to both Janet and Lester in equal shares. He declared in that will:
"I make no provision for my son's Robert Potter, Percy Potter and David Potter because they are otherwise provided for".
From what little has appeared in the evidence there seems to be some belief that those three boys had received sufficient from the distribution of their late mother's estate and their grandmother's estate.
There seems also to be some suggestion that the three boys were to have received the property at Enfield. What happened after the family moved was the property at Villawood was purchased using the proceeds of the Enfield house but one of the sons continued to live there for a while.
There is no evidence to suggest that there was a distribution to the three boys of the proceeds of sale. Certainly it is denied by the plaintiff. In those circumstances, absent any other evidence, I can only conclude that it was applied perhaps in reduction of the mortgage of the new property which may, as things tend to do, became more expensive than the older property.
In 1979 the plaintiff had a serious motor vehicle accident which still gives him some problems. However, in 1983 he received the sum of $72,000 in compensation payments, presumably as a result of an accident.
One other curious and very lucky thing that happened in the family's history is the plaintiff bought a $5 lottery ticket for his brother Lester who won the sum of $175,000. Sensibly he used the whole of the sum to buy himself a house, where he lives.
On 28 April 1991 Gordon Potter died suddenly of a brain haemorrhage. Thereafter the deceased, being a joint tenant, sold the property and bought the property at Davies Avenue, Springwood which remained in her ownership until she died.
Robert Potter, the plaintiff's brother, died in December 2005. Other things which happened at that stage were the deceased gave a Power of Attorney to Janet and Lester and a year later she made her last will, to which I have already referred.
The deceased needed a lot of care in her later years. From 2003 she started to dement and she required a lot of care from Janet and Lester until March of 2009 when she was admitted to the Endeavour Nursing Home in the Blue Mountains. It was on 17 July that year she died.
The summons in this matter was filed within time.
Eligibility
The plaintiff claims to be an eligible person in that he was part of the household of the deceased. He was also at some stage partly dependent on the deceased. There is no doubt of that, having regard to the fact that he was between the ages of two and three years when he came to join the household, which included his now stepmother that he was certainly part of the household.
The question of dependency is a matter which has been debated before. In this respect in Ball v Newey (1988) 13 NSWLR 489 the Court of Appeal his Honour Samuels JA at page 490 said:
" Is not concluded that 'dependent"' meant financially dependent, a proposition which has not been challenged in the appeal. It may be that there are other forms of dependence analogous to but distinct from financial dependence which would be capable of satisfying the requirements of section 6 (1) the definition of 'eligible person', par (d) (i).
In the present case, however, only financial dependence is relied on and I approach the matter on that basis. 'Dependent' in the ordinary sense of the word, it means the condition of depending on something or on someone for what is needed. In determining whether that relationship exists, it is relevant to bear in mind what was said by Sankey LJ in Lee v Munro (1928) LJKB 49 at 53; 21 BWCC 401 at 408, that in 'deciding whether or not there is dependency the factors to be considered are passed to the events and future probabilities'. While it is true that here we are concerned with financial dependence and not emotional dependence, the whole relationship between the appellant and the deceased must be examined in the light of that statement in order to exclude situations which might present the simulacrum but not the substance of dependency."
His Honour analysed the facts in the case and particularly referred to the fact that the parties had jointly decided to pool their income for the purpose of purchasing property together. He referred to the submission that each of them in the case of a joint mortgage could have only received a partial benefit. At page 492 he addressed these arguments in these terms:
"Counsel then suggested, as I understood him, that these circumstances produced no dependency because each of them was separately financially capable of acquiring somewhere to live, so that their decision to live together and finance their purchase jointly was, in some sense, an indulgence which the law should not countenance. I see no substance in this argument. I assume that dependency involves the total or partial satisfaction of need. But the need is not restricted to the requirements of basic necessity or sustenance: cf, in a different context certainly, the meaning of 'needs' in the Liquor Act 1912 as 'reasonable demands or expectations': Toohey v Taylor (1983) 1 NSWLF 743 at 749. Whether dependency, total or partial, exists is a question of fact: Aafjes v Kearney (1976) 50 ALJR 454; 8 ALR 455."
In respect of grandchildren and stepchildren, a question often arises as to whether they are dependent upon the deceased or their parent who is also staying with the deceased. The matter has been considered in several cases. For example: In Sherborne Estate: Vanvalen and Anor v Neaves & Anor [2005] NSWSC 593 Palmer J referred to the authorities dealing with grandchildren. At paragraph 41 he said:
"The following is a convenient summary of the principles which I understand to be applicable to determination whether a grandchild is an eligible person.
The authorities make it clear that a grandchild is not normally regarded as to be shown to bring a grandchild into the category of persons for whom the testator ought to have made provision. These additional factors usually show that the testator has come to assume, for some significant time in a grandchild's life, a position more attuned to that of a parent than a grandparent, with direct responsibility for the grandchild's support and welfare, or else that the testator has undertaken a continuing and substantial responsibility to support the plaintiff financially: see eg Tsivinsky v Tsivinsky (unrep) NSWCA 5 December 1991 per Kirby P; Sayer v Sayer (1999) NSWCA 340; MacEwan Shaw v Shaw [2003] VSC 318; O'Dea v O'Dea [2005] NSWSC 46.
The authorities are equally clear that the grandchild's dependence, whether whole or partial, on the grandparent must be direct and immediate; it is not sufficient that the grandchild's dependence is the indirect result of the testator providing support and maintenance for his or her own adult child and thereby incidentally benefiting the testator's grandchildren who are directly dependent on the child: see eg Petrohilos v Hunter (1991) 25 NSWLR 343, at 346; Re Fullop (1987) 8 NSWLR 679, at 682; Pearson v Jones [2000] NSWSC 799; MacEwan Shaw v Shaw (above).
Further, the fact that the testator occasionally or even frequently made gifts to or for the benefit of the grandchild does not in itself make the grandchild wholly or partially dependent on the testator for the purposes of section 6 (1) (d). To qualify the grandchild as a dependant, the gifts or benefits provided by the testator must be of such regularity and significance that one can say that the testator had clearly assumed a continuing and substantial responsibility for the grandchild's support and welfare: see eg Leahey v Trescowthick [1999] VSC 409; MacEwan Shaw v Shaw (above); Pearson v Jones (above); Simons v Permanent Trustee Co Ltd [2005] NSWSC 223."
The situation in the present matter is that as a young child the plaintiff was part of the household and cared for by his stepmother, whom he described as the only mother he ever knew. She prepared the meals, made school lunches for him, did washing and ironing, cleaned the bedroom, bought birthday and Christmas presents, and occasionally provided pocket money until he started a paper run when he was aged 14 years. He also said he had been nursed and comforted by her. In other words, there was nothing different to the way the deceased treated the plaintiff to the way the deceased treated her own natural children.
It is plain once the plaintiff left school he received an income, firstly as an apprentice, probably very minor, and then for the last two years when he was working before he left home. At the time he was at the Villawood property he was earning $350 a week and paying $100 a week board.
The attempt to describe what the board covered was expanded from time to time in the evidence but I think it is best left to what one infers boards are normally for, namely, the provision of a room and services, probably variable, providing meals and other household services.
The critical things to note are, of course, that it was from a very young age that the plaintiff became a part of the household and, importantly, the deceased played an important part in providing material benefits for him, as well as emotional benefits.
The deceased did not own the property which they lived in until they moved to Villawood, and he was only there to 6 months. She was a joint owner of the property along with the plaintiff's father.
I think the more important part of dependency is at the time when he was a child and, in my view, he was partly dependent upon the deceased at that stage. He is thus an eligible person.
However, it is also necessary under the Act that the Court should first determine whether there are factors warranting the making of the application.
This expression has been dealt with by the courts in a number of cases. In Re Fulop Deceased (1987) 8 NSWLR 679 at 681 McLelland J described that expression in the following terms:
"Secondly, the subsection appears to be premised upon a distinction between 'factors which warrant the making of the application' on the one hand, and circumstances which would justify the making of an order granting the application, on the other; otherwise, the subsection would be pointless. This means that in a particular case Court might determine that there are 'factors which warrant the making of the application' within the meaning of the subsection, and yet go on to decide that the application should fail. Since the subsection applies only to certain classes of applicants, it suggests that those classes of applicants need to demonstrate some basis for their claims additional to that required of other classes. The difference between the two sets of classes of applicants, in broad terms, seems to be that the class is not affected by section 9 (1) (lawful and de facto spouses and children) are as such generally regarded as natural objects of testamentary recognition by a deceased (of the Wills Probate and Administration Act 1898 , section 61B), whereas the classes affected by section 9 (1) (former spouses, and some time dependent grandchildren or household members) are as such not generally so regarded. This suggests that the 'factors' referred to in the subsection are factors which when added to facts which render the applicant an 'eligible person' give him or her status of a person who would be generally regarded as a natural object of testamentary recognition by a deceased. That the subsection is directed at a plaintiff's status as applicant in some such sense as this perhaps find some support in the statutory direction to the Court, in the event that it determines the preliminary question and adversely to the plaintiff, not to go on to determine the application, but refused to proceed with the determination of the application".
In Churton v Christian (1988) 13 NSWLR 241, the Court approved this statement. Priestley JA at page 252, after setting out and approving the statement, added:
"To this I would add that although the classes affected by section 9 (1) are not necessarily generally regarded as natural objects of testamentary recognition, in some cases members of those classes may, when the circumstances of their relationship with the deceased are sent out, immediately be seen to be persons who would be regarded by most observers as, in their particular circumstances, natural objects of testamentary recognition."
In this case the treatment of the plaintiff by the deceased as though he was her own child I think clearly indicates on the traditional basis factors warranting in the present application. It is thus relevant to whether there are various prospects of success, and I will deal with those now.
In applications under the Family Provision Act the High Court in Singer v Berghouse (1994) 181 CLR 201 has set out the two stage approach that a Court must take. At page 209 it said the following:-
"The first question is, was the provision (if any) made for the applicant 'inadequate for (his or her) proper maintenance, education and advancement in life'? The difference between 'adequate' and 'proper' and the interrelationship which exists between 'adequate provision' and 'proper maintenance' etc were explained in Bosch v Perpetual Trustee Co Limited . The determination of the first stage in the two-stage process calls for an assessment of whether the provision (if any) made was inadequate or what, in all the circumstances, was the proper level of maintenance etc appropriate for the applicant having regard, amongst other things, to the applicant's financial position, the size and nature of the deceased's estate, the totality of the relationship between the applicant and the deceased, and the relationship between the deceased and other persons who have legitimate claims upon his or her bounty.
The determination of the second stage, should it arise, involves similar considerations. Indeed, in the first stage of the process, the court may need to arrive at an assessment of what is the proper level of maintenance and what is adequate provision, in which event, if it becomes necessary to embark upon the second stage of the process, that assessment will largely determine the order which should be made in favour of the applicant. In saying that, we are mindful that there may be some circumstances in which a court could refuse to make an order notwithstanding that the applicant is found to have been left without adequate provision for proper maintenance. Take, for example, a case like Ellis v Leeder where there were no assets from which an order could reasonably be made and making an order could disturb the testator's arrangements to pay creditors."
Situation in life of the plaintiff
The plaintiff is 65 years of age. He is married and lives with his wife. He does not have any dependents and he has for most of his working life worked in the automotive trade in senior management positions.
He works at the moment three days a week earning some $405 a week, and receives a part disability pension of $339.40 a fortnight. His wife also works and their total income on a weekly basis between the two of them is $986. Their expenses are somewhat less than that. They estimated them to be $275 a week but this seems pretty unlikely to me and I think there might be an error. It is only a modest income and they certainly manage within that.
I have earlier mentioned that the plaintiff has no dependents. His wife's son Jay apparently lives with them; he is aged six years and there are obviously liabilities there.
The plaintiff has very modest assets. He had a car which he recently sold and he has superannuation in the sum of $51,000. He has little else but his wife owns the home in which they and the child live and she has currently made a will which gives him the right to live in the house for life if anything should happen to her.
There is no evidence to suggest that the plaintiff himself contributed to the estate of the deceased, and there is no evidence of any breaks in the relationship between the plaintiff and the deceased. At times he lived away from Sydney and it was difficult for him to be in touch with the deceased.
One area of criticism was that in the years between 2003 and 2009 when the deceased was dementing he did little to help his step brother and sister in her care. Part of the time he was living away from Sydney but he did take time to come and see his mother and it is not as though he completely abandoned her. That, I think, is a matter which can be considered as an important aspect of the relationship between the two beneficiaries and the deceased. They were the ones who did the hard work to look after their mother in those very sad years.
It is necessary to consider the situation in life of others having a claim on the bounty of the deceased. In this case it is, of course, both Janet and Lester.
Situation in life of Janet Elaine Potter
Janet is 61 years of age and lives on her property at Katoomba. She is a single person and lives alone in her own home. She has had children but they have all left home. So far as her assets are concerned, she has her home at Katoomba which fortunately is not subject to any charge which might, if appropriately repaired, be worth $320,000. She has $4000 worth of furniture; although when she swore her affidavit she had some superannuation of $4,000, things have been difficult and she had to use that money.
Her income is a Centrelink Disability Support Pension of $16,913 per annum. She does not have a car at the moment. She would like to be able to have access to a car to transport herself. Importantly, there are a number of things which have happened to her house which indicates that it has deteriorated. There are now leaks in the back bedroom which require a bucket to be put in there to catch drips, and the plumbing for the house, particularly on the side where the laundry and the kitchen are placed, is collapsing and needs substantial work. The cost of some of the repairs is $17,450 but that plainly does not include costs for the actual plumbing, which will have to be at an hourly rate, and also repairs to the roof which might require removing two parts of the roof.
Janet has some health problems and she needs to arrange some further checks once these present matters are behind her.
Situation in life of Lester Gordon Potter
Lester is the youngest child, born in 1952, and is currently 58 years of age. He is single and lives at his property at Blaxland which he purchased, so it was earlier recounted, with the lottery win with the help of his brother, the plaintiff, David John Potter. He has a motor vehicle and a small superannuation of $12,000 and AMP shares worth about $5000. He works as a labourer and has a net income of $690 a week. He also has a problem with his house. It has been slowly deteriorating and he has not been able to get work done, this work being necessary in order to keep it in repaired. The quotation for this work is in the sum of $36,520.
Plainly he would like to have this work done and to have something to cover him during periods of unemployment, which have happened from time to time to him. The gardens are also so overgrown that he cannot do work to them himself.
As I have said earlier, both Lester and Janet played an important role in looking after their mother in the later years in her life, and that is an important matter to be borne in mind.
One has to see how it is said the plaintiff David Porter has been left without adequate and proper provision for his maintenance, education and advancement in life. He has referred to a number of things which he would like mainly concerned with his health. There is orthopaedic surgery on his right foot to help his walking, which has been interfered with by the accident, but that has not been quantified. Also, further physiotherapy in that regard. He needs calipers every six months and these are mainly a specialist fit and cost in the order of $250 a year. He has not been able to attend hydro-therapy, which has been recommended for him and that costs $80 a visit and no doubt he would wish to do something about that.
He needs the sum of $2000 for dental work and says he has some needs to help look after his sister and a capital sum for his retirement. He currently has two credit card debts of $3092 and $3093 which he obviously would wish to pay out.
This is a sad case and is somewhat common when people cannot agree on the distribution of a small estate. The estate is only in the order of $200,000 and it is plain that the deceased wished to benefit her own two children.
However, if a plaintiff has been left without adequate provision for his support then some appropriate order ought to be made.
In my view the plaintiff David John Potter has been left without appropriate provision. He has got no cash resources behind him now and he does need some small amount to provide for some additional things now that he has had surgery on his foot.
In those circumstances, I propose to make a small legacy. However I do not think, having regard to the situation in life of Janet and Lester and the care which they extended to the deceased, that it should be large.
In the circumstances, the orders I make are as follows:
1. I order that the plaintiff received a legacy out of the estate of the deceased in the sum of $30,000.
2. I will hear the parties on costs but, as presently minded, I would tend to cap the plaintiffs costs in the sum of $30,000.
3. I order the defendants costs on an indemnity basis be paid out of the estate of the deceased.
(Counsel addressed on costs)
Two letters have been tendered, one of 13 April 2011 which rejects a plaintiff's offer of settlement for $49,000 plus costs. It made no counter offer. Eventually on 6 May 2011, only a couple of weeks before the hearing, there was an offer of a legacy to the plaintiff $55,000 including costs. The result, effectively, gives the plaintiff a sum of $60,000 including costs.
I do not think that changes the result. Accordingly, I do not propose to change my orders. I fix the plaintiffs costs in the sum of $30,000.
**********
Decision last updated: 20 June 2011
4
2