Reddie v Cornock

[2005] NSWSC 187

CITATION:	Reddie v Cornock [2005] NSWSC 187
HEARING DATE(S):	7, 8, 9 February 2005
JUDGMENT DATE :	10 March 2005
JURISDICTION:	Equity Division
JUDGMENT OF:	Young CJ in Eq
DECISION:	Widow takes whole estate except for $100,000 for the sons.

CATCHWORDS:	SUCCESSION [217]- What property passes by will- Asset bequeathed actually owned in partnership- Effect. SUCCESSION [273]- Administration- Business debt charged on matrimonial home- Effect of Locke King's Act. SUCCESSION [314]- FPA- Four claimants (ex-wife, two sons, widow)- Modest estate- Widow's claim to be preferred.
LEGISLATION CITED:	Conveyancing Act 1919, s 145 Family Provision Act 1982, ss 7, 9, 10
CASES CITED:	Associated Alloys Pty Ltd v ACN 001 452 106 Pty Ltd (2000) 202 CLR 588 Barns v Barns (2003) 214 CLR 169 Calcino v Fletcher [1969] Qd R 8 Calverley v Green (1984) 155 CLR 242 Cameron v Hills (Needham J, 26.10.1989, unreported) Charles Marshall Pty Ltd v Grimsley (1956) 95 CLR 353 Commissioner of Stamp Duties (Queensland) v Jolliffe (1920) 28 CLR 178 Connell v Bond Corp Pty Ltd (1992) WAR 352 Cope v Keene (1968) 118 CLR 1 Corin v Patton (1990) 169 CLR 540 Farquhar v Hadden (1871) LR 7 Ch App 1 Hardy v Lane (1994) 6 BPR 13,968 Hendry v The Perpetual Executors and Trustees Association of Australia Ltd (1961) 106 CLR 256 Hyhonie Holdings Pty Ltd v Leroy [2003] NSWSC 624 Hyhonie Holdings pty Ltd v Leroy [2004] NSWCA 72 In re Dicey [1956] Ch 357 In re Dicey; Julian v Dicey [1957] Ch 145 Kauter v Hilton (1953) 90 CLR 86 Luciano v Rosenblum (1985) 2 NSWLR 65 Murless v Franklin (1818) 1 Swans 13; 36 ER 278 Padbury v Clark (1850) 2 Mac & G 298; 42 ER 115 Re Holland [1907] 2 Ch 88 Re Keene (1967) 86 WN (Pt 1) (NSW) 317 Re Lamshed [1970] SASR 224 Rushton (Qld) Pty Ltd v Rushton (NSW) Pty Ltd [2003] 1 Qd R 320 Shaw v Lambert (Young J, 9.10.1987, unreported) Wade v Harding (1987) 11 NSWLR 551 Watson v Ralph (1982) 148 CLR 646 Wilkinson v Dent (1871) 6 LR Ch App 339
PARTIES:	5565/03 Kerrie Maree Reddie (P) Peter Berkeley Cornock (D) 5822/03 Cameron William Reddie (P) Peter Berkeley Cornock (D) 5833/03 Matthew Douglas Reddie (P) Peter Berkeley Cornock (D) 1808/04 Domenica Reddie (P) Peter Berkeley Cornock (D)
FILE NUMBER(S):	SC 5565/03; 5822/03; 5833/03; 1808/04
COUNSEL:	5565/03 C Cominos (P) R E Quickenden (D) 5822/03 B Sharpe (P) R E Quickenden (D) 5833/03 B Sharpe (P) R E Quickenden (D) 1808/04 D E Grieve QC and D M Coulton (P) R E Quickenden (D)
SOLICITORS:	5565/03 Vizzone Ruggero & Associates (P) Clive Smoker (D) 5822/03 Gary Cleary & Associates (P) Clive Smoker (D) 5833/03 Gary Cleary & Associates (P) Clive Smoker (D) 1808/04 Haylen McKenzie (P) Clive Smoker (D)

LOWER COURT JURISDICTION:

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

YOUNG CJ in EQ

Thursday 10 March 2005

5565/03 – REDDIE (KM) v CORNOCK
5822/03 – REDDIE (CW) v CORNOCK
5833/03 – REDDIE (MD) v CORNOCK
1808/04 – REDDIE (D) v CORNOCK

JUDGMENT

1 HIS HONOUR: I am currently hearing four sets of proceedings in connection with the estate of the late Ian Douglas Reddie.

2 Ian Douglas Reddie (the deceased) died on 20 June 2003 aged 56. He had been married twice. He married Kerrie Maree on 28 November 1970. The decree nisi for dissolution of the marriage was pronounced on 22 May 2000. The parties in fact separated in August 1998.

3 There were two children of that marriage, Matthew born on 28 September 1972 now 32 years of age, and Cameron, born on 23 July 1974 now aged 30.

4 As all these persons have the same surname I will, without intending any disrespect, refer to them each by their first names.

5 Each of Kerrie, Matthew and Cameron have made, within time, an application for provision under s 7 of the Family Provision Act 1982 out of the deceased's estate.

6 The deceased married a second time on 21 October 2000. He married Domenica. Domenica has made claims against the estate:

(1) that real estate in the deceased's name at 311 Lillian Road, Annangrove was held in equity by the deceased and herself as joint tenants;

(2) a declaration that there was partnership between the deceased and Domenica in respect of a fishing business; and

(3) alternatively an order for provision under the Family Provision Act.

7 The deceased left a will dated 10 July 2002, probate whereof was granted to the defendant, the deceased's solicitor, on 21 August 2003.

8 Basically, the deceased's will gave his sons his motor vehicles and the other contents of his shed. Seventy percent of 311 Lillian Road, Annangrove was given to Domenica, and the other 30% to the sons equally. Domenica also was to receive the contents of the house at Annangrove and proceeds from any personal bank account with all other investments to be shared between Domenica and the sons equally. He left what he called "my fishing vessel Kaylee Ann" including all fishing permits to his sons.

9 It is necessary to set out clauses 3B and 3G of the will:

"3. I GIVE DEVISE AND BEQUEATH my Estate after payment thereout of my debts funeral and testamentary expenses and of all taxes and duties payable in respect of my death, my estate or the administration of my estate as follows:
…
B. I direct the property at Lot 311 Lillian Road, Annangrove be sold, and after payment of all costs and expenses relating thereto the proceeds shall be distributed as follows:
1. 70% to my Wife Domenica Reddie. Should my Wife predecease me I give 50% of the proceeds of sale of Lot 311 Lillian Road, Annangrove to the surviving unmarried brothers, nieces and nephews of my said Wife and if more than one as equal shares as tenants in common.
2. I give the balance of the proceeds of sale to my surviving children and if more than one in equal shares as tenants in common.
…
G. I give my Fishing Vessel 'Kaylee Ann' (including all fishing permits including AFMA permits 403250A and 26809, and all bank accounts relating thereto) to my surviving children and if more than one in equal shares as tenants in common."

10 It seems quite clear that the Kaylee Ann and the permits were not the deceased's sole property but were the property of a partnership between the deceased and Domenica, the partnership agreement being made on 1 July 1999. The principal business of the partnership was as fishermen: the partnership was a partnership at will which terminated on the deceased's death.

11 In fact, before the deceased's death much of the day to day work in the partnership was done by Matthew and Cameron. The executor, together with Matthew and Cameron continued to trade with the partnership assets after the deceased's death. However, after the present set of proceedings were commenced, Domenica sought appointment as receiver of the partnership and an order was duly made in her favour. She sold the Kaylee Ann for $627,000 in 2003.

12 The four proceedings have been heard together and, unless with respect to particular evidence, a special direction was made, I directed that evidence in one proceeding be evidence in all others.

13 I heard the proceedings on 7, 8, 9 and 10 February 2005. Mrs C Cominos appeared for Kerrie, Mr B Sharpe for Cameron and Matthew, Mr D E Grieve QC and Ms D M Coulton appeared for Domenica and Mr R E Quickenden appeared for the defendant.

14 I should also note at this stage, because it will be relevant to the question of costs as the will did not contain a charging clause, that the defendant is a solicitor who filed some documents in his own name and some per medium of a solicitor, Mr Smoker.

15 Some difficult problems arise in connection with the applications and I believe that it is helpful to approach the problem by considering them under the following headings:

16 A. What was the nature of the estate and how does it pass under the will?

(1) The partnership.

(2) The Annangrove property.

(3) How does the estate pass under the will?

B. The result of the claims .

(4) The claim of Domenica.

(5) The claim of Kerrie.

(6) The claim of Cameron.

(7) The claim of Matthew.

C. What orders should be made.

(8) The result.

A. What was the nature of the estate and how does it pass under the will?

17 (1) The Partnership. It seems quite clear that the Kaylee Ann and the fishing licences were partnership property. The receiver (Domenica) will produce accounts, and the capital share due to the estate and to Domenica will in due course be ascertained. That has not yet happened.

18 As at today, the best I can do is to take the partnership assets and liabilities which seem to be in the order of $160,000. I arrive at this figure as follows:

Half share of sale price of boat $313,500
Half share of licences $100,000
$413,500

Half share of secured debts $215,000
Half share of other debts $38,500 $253,500
$160,000

19 This $160,000 is not only a rubbery figure (though the best I can do on the current evidence), but also assumes that the secured debt on the Annangrove property which financed the purchase of the Kaylee Ann is properly a liability of the partnership. I will return to this matter under head A(3).

20 This doubtless will appear in the partnership accounts when they are finally available.

21 The question as to whether the gift in the will in clause 3G takes effect where those assets were partnership property and the question as to whether the debt is charged on the partnership assets is considered under head A(3).

22 (2) The Annangrove property. In early November 1998, Domenica said that the deceased said to her, "I found a block of land that's going to auction and I want to buy it and build a house on it. It's expected to sell for about $425,000. Do you think you could lend me money for the purchase of the land? I'll be able to repay you the monies when my Glenhaven home has been sold." Domenica replied, "I can lend you the money, I suppose it will be about 10% for the deposit, so that will be about $42,500 and probably some stamp duty if necessary. I was going to use these monies to purchase another property, but if you are going to repay me soon then I can wait." The deceased replied, referring to his former matrimonial home, "The Glenhaven house is on the market. I expect to be able to pay you back in a few months." Domenica paid him $42,500 and later $14,619 for stamp duty. Neither of these sums was repaid. Domenica said in February 1999 that she and the deceased agreed that, instead of the deceased repaying those monies, she would contribute more monies to the building of the house on the property and become a joint owner.

23 She said the conversation was:

The deceased: "Let's build the house together on the land and live
there."
Domenica: "Yes that will be great. That's what I want. I'll sell my house at St Clair and put that money into reducing the mortgage on the property."
The deceased: "That would be great. This house is yours and mine and if I die it will be yours anyway."
Domenica: "Do you think we should change the title of Annangrove and put it in both your and my name."

The deceased: "It's yours if I were to die anyway. It costs money to change the title of the owner of the land into joint names. It's yours."

24 The parties needed to borrow money to erect the house. They knew a Mr Neil Baudinet who had earlier made their acquaintance as an officer of the State Government Employees' Union, but now worked for the Commonwealth Bank. He interviewed the parties at the Richmond branch of the Bank. Mr Baudinet remembered that the deceased said that he and Domenica wished to build a house on land that was encumbered in his name. The couple had brought paperwork with them and that paperwork included a rates notice and he could see that the property was in the deceased's name alone. He remembered that the deceased said he wanted the existing loan to be refinanced and that Domenica had money to go towards the property from the sale of her property. Mr Baudinet said to the couple that he believed the loan would be able to be approved and suggested that because Domenica was putting in a large sum of money towards the building, they should consider whether the title should be transferred into both names. The deceased said that that was what their intentions were.

25 Mr Baudinet's file note is in evidence, PX33: it contains the following statement:

"Existing property is only in Ian's name and will change to both names when loan is refinanced."

26 Domenica was, naturally enough, cross-examined on her evidence. It was put that when the deceased said that it would be great if the "house is yours and mine and if I die it will be yours anyway" that he meant that he was going to leave his interest to her by will. She replied that that was not the impression she had from her conversation. Mr Sharpe asked:

"Q. Was there any mention in that conversation of the words 'joint tenants'?

A. Yes.

Q. There was? But there is nothing in this affidavit about the words joint tenants?"

27 Although the transcript says "question withdrawn" it was answered, "I took joint names and joint tenants as meaning the same thing." Mr Sharpe then asked Domenica if she knew the difference between the two and she said she did. He later said:

"Q. In other words, the words used were 'joint names' but you can't recall the words 'joint tenancy' being mentioned by your late husband?

A. No."

28 It was very significant that Domenica and the deceased went to see the defendant, who was the deceased's solicitor, for the purpose of making the deceased's will. This occurred on 10 July 2002. It will be remembered that the will provided in clause 3B that Annangrove was to be sold and after the payment of all costs and expenses relating thereto, the proceeds were to be distributed 70% to Domenica and the remainder to the children.

29 Domenica says in her affidavit, para 49, that the defendant said, "So that means if the house is valued at one million dollars $700,000 goes to Domenica solely and the boys share $300,000 equally?" to which the deceased said, "That's right." The defendant printed out the will on his computer and the deceased signed it. Domenica also made her own will at the same time. The solicitor did not charge any fee.

30 Domenica said in para 53 of her affidavit, "Although, as I have stated in paragraph 17 above, I believed as a consequence of the conversations referred to in paragraphs 11, 14 and 15 that I was the joint owner with Ian of the Annangrove property, I did not object to the way in which after the discussions between Ian and the defendant Ian chose to make his will for the following reasons:

(1) I loved him and believed that he believed that he was acting fairly and properly to me as his wife and to his sons;
(2) He was very sick and it would have been quite inappropriate for me to have expressed any misgivings about the will. That is, I was taken aback that Ian was not giving me the whole of the house and giving his sons 30% after the mortgage had been paid out and seemingly not recognising that I had a half interest in the house and that I was to be left all of the house if anything happened to him. I relied upon his conversations to form this opinion. However I didn't say anything because he was very ill and dying at the time even though he led me to believe that I owned half the house and that he would give it all to me if he were to die."

31 In addition to what happened on 10 July 2002, the defendant was sent a fax which bore a printed signature "Ian and Domenica" which again contained a provision that the house and land at Annangrove was to pass 70% of the net value to Domenica and the net balance equally between Matthew and Cameron. Domenica was asked about that fax and agreed that it had been sent from the home fax machine after discussions with the deceased.

32 Domenica had also given evidence that when the deceased initially became ill he had said to her, "I want to sell the boat to take the second mortgage over [Annangrove] off the house so that when I die you will be able to sell the house with the first mortgage only remaining. I don't want the house sold with the two mortgages remaining on the house because there will not be enough for you to buy another house." Mr Sharpe asked about that conversation:

"Q. So what you have gleaned from that conversation was that the house wasn't going to you totally was it?

A. From our conversations, I was to get 70% even though Ian and I had initial conversations previously that if anything was to happen to him I would get the house.

Q. The situation is, regardless of what you understood the legal position between you and your late husband, you agreed with him having regard to this conversation … that you were not going to retain the entire house. You had agreed with him that you will only retain 70% and that meant that his children, the two boys, Matthew and Cameron, were going to get 30%; isn't that correct?

A. Yes, at that stage, it was correct.

Q. And you didn't say anything to your late husband up until his death that was contrary to that did you?

A. No he was ill at the time. He would have been insensitive of me to have said anything about that and I was quite prepared, even after Ian passed away, to accept 70%, but since these claims have been brought upon us and the legal costs are escalating the position I'm in at the moment is you know it is just … ".

33 There is no defence of acquiescence. Accordingly all that I need consider is whether on the whole of the material, Domenica has made out a trust in her favour of the whole of the property as surviving equitable joint tenant.

34 There is a back-up claim of 53.3% of the value of the property as equitable tenant in common. I will just put that aside for the moment.

35 Mr Grieve QC and Ms Coulton for Domenica said that once there had been an established trust for the deceased and Domenica as joint tenants, then anything else that happened was immaterial. Especially in the absence of any plea of acquiescence there was no agreement after the trust was formed to surrender the beneficial interest as joint tenant.

36 With respect, I cannot agree with this submission. In Kauter v Hilton (1953) 90 CLR 86, the High Court considered the evidence necessary to be satisfied with the establishment of a trust. In Associated Alloys Pty Ltd v ACN 001 452 106 Pty Ltd (2000) 202 CLR 588 at 605, four Justices said:

"In Kauter v Hilton, the Court treated Jolliffe as deciding, for the purposes of the legislation there in question that 'all the relevant circumstances must be examined in order to determine whether the depositor really intended to create a trust.' "

37 The reference to Jolliffe is, of course, to Commissioner of Stamp Duties (Queensland) v Jolliffe (1920) 28 CLR 178. I dealt with those cases in Hyhonie Holdings Pty Ltd v Leroy [2003] NSWSC 624, which decision was affirmed as Hyhonie Holdings Pty Ltd v Leroy [2004] NSWCA 72. In the latter case Hodgson JA, with whom Mason P and Handley JA agreed, at para [43] accepted the statement of the position by Bray CJ in Re Lamshed [1970] SASR 224 at 239, that despite the unambiguous words of the declaration the trust apparently created by them can be rebutted by evidence of a contrary intention … . But the onus is on those who seek to prove such an intention and strong evidence is required for the purpose."

38 As the Court of Appeal pointed out in Hyhonie at [45], the onus is an evidentiary onus. The ultimate onus still remains on the people who allege that there was a trust to prove the creation of a trust.

39 I accept that Domenica was reluctant to cause problems about the disposition of Annangrove close to her husband's probable decease from his illness. However, I do not consider that her reluctance is sufficient to prevent a woman who is apparently as well versed in the activities of the commercial community as Domenica, not to assert that the whole property was held in trust for her if she had come to the view at that stage that the conversations amounted to her having an aliquot share as joint tenant. Indeed, the ready acceptance by her and which would have continued had there not been claims made against her by the other claimants, was that she was content with a 70% interest. It seems to me that having regard to all the conduct that the case for there being a trust of the whole of the property as joint tenants for the deceased and Domenica is not established on the balance of probabilities.

40 Because I have come to that view, it is unnecessary to consider the arguments that were presented under s 23C of the Conveyancing Act 1919. It is also unnecessary to consider whether there is any transaction which would make the Annangrove property notional estate for the purpose of the Family Provision Act. However, I should note in this connection two sets of matters.

41 First, because of the decision of Hardie J in Re Keene (1967) 86 WN (Pt 1) (NSW) 317, affirmed by the High Court as Cope v Keene (1968) 118 CLR 1 and reinforced by the recent decision of the High Court in Barns v Barns (2003) 214 CLR 169, even if the deceased held property on trust, that property is included in the deceased's estate for the purpose of the application of the Family Provision Act and the property may be resorted to as actual estate, not notional estate.

42 Secondly, there was discussion as to whether my decision in Wade v Harding (1987) 11 NSWLR 551, or that of Needham J in Cameron v Hills 26 October 1989, unreported, BC8901539, was correct. Some counsel suggested one or other was correct, Mrs Cominos submitted that both were correct, but were distinguishable from each other on their separate facts. I think Mr Grieve QC at one stage was putting that neither was correct because neither of the Judges appreciated that the holder of an aliquot share as joint tenant in law "owns" the whole fee simple, so that as Professor Butt puts it in his Land Law 4th ed (LBC, Sydney, 2001) [1410]:

" … When one joint tenant dies, the whole of the land remains with the surviving joint tenants … for they have always been seised of the whole. The totality of their seisin is not affected by the death of one of their number. Strictly speaking, the survivors do not succeed to the deceased's interest, because they have had it all along. On the death of one, the interests of the survivors may be said to be 'enlarged' or 'expanded'; but in truth, all that happens is that the property is freed from the control of one of its owners. … "

The words "enlarged" and "expanded" quoted above are from the High Court's decision in Corin v Patton (1990) 169 CLR 540 per Brennan J at 565 and Deane J at 575 respectively.

43 These interesting questions can await another day.

44 I now must turn to the question I postponed, that is, whether in equity Domenica was entitled to a 53.3% interest as tenant in common.

45 The same problems exist in some respects with this trust as with the alleged trust of an aliquot share as joint tenant. The difference, however, is that we are here dealing with a resulting trust which, if it exists, comes about because of unequal contributions of people who were intended to hold the property in equity in two names.

46 Mrs Cominos for Kerrie is content to accept that Domenica made a contribution of $187,119, but says that she received for this a half share in the boat worth $37,650 and a half share in the fishing licence worth $150,000 (in each case I have valued the half share, so that she received property worth $187,650 for her $187,119 contribution. Mrs Cominos said it would be double-dipping to allow that contribution also to be put against the value of the Annangrove property.

47 Mr Grieve QC and Ms Coulton submitted that Mrs Cominos' hypothesis lacked any evidentiary support and it was put to Domenica in cross-examination and emphatically rejected. Indeed, it was always contemplated between the deceased and Domenica that the fishing enterprise would in due course pass to the sons and that any equity that Domenica had in it would be subsumed to this principal purpose.

48 In this connection I should accept the submissions of Mr Grieve and Ms Coulton. The suggestion about the boat was put to Domenica. It was emphatically rejected by her and I accept her evidence, particularly as it fits in with what can be seen from the will and elsewhere to be the deceased's general intentions as to his property.

49 Accordingly, if it had not been for the circumstances of the making of the wills and the facts which preceded it, one would have concluded that there was an equitable tenancy in common with Domenica holding 53.3%. Do these circumstances that I have mentioned affect the resulting trust that would otherwise exist, and if they do, is Domenica entitled to an equitable charge against the Annangrove property for her contribution plus interest?

50 One starts an examination of this problem with the decision of the High Court in Calverley v Green (1984) 155 CLR 242. At 246 Gibbs CJ said:

"Where a person purchases property in the name of another, or in the name of himself and another jointly, the question whether the other person, who provided none of the purchase money, acquires a beneficial interest in the property depends on the intention of the purchaser. … Consistently … it has been held that if two persons have contributed the purchase money in unequal shares, and the property is purchased in their joint names, there is, again in the absence of a relationship that gives rise to a presumption of advancement, a presumption that the property is held by the purchasers in trust for themselves as tenants in common in the proportions in which they contributed the purchase money. …"

His Honour categorises the trust as a resulting trust. At 251 his Honour said that where one person has provided the purchase money that person's intention alone is material; where two people have contributed, then the intentions of both are material.

51 Calverley v Green cites a number of authorities for the proposition that one starts with the presumption of a resulting trust so that the co-owners hold the property on trust for themselves in the proportion they paid the purchase money. The same applies where the title is in one name. One has got to ask, was there the intention of Domenica to make a gift to the deceased of her interest? The evidence shows no intention; therefore the presumption applies.

52 However, do the circumstances which I have held to be relevant in the case of the joint tenancy situation, bring about a different result? Whilst at first blush it might be thought to be contrary to what I have already said, the answer is "No". Five Justices of the High Court in Charles Marshall Pty Ltd v Grimsley (1956) 95 CLR 353 at 365 said:

" … Apart from admissions the only evidence that is relevant and admissible comprises the acts and declarations of the parties before or at the time of purchase … or so immediately thereafter as to constitute a part of a transaction. If that evidence is insufficient to rebut the presumption the beneficial gift … is complete and no subsequent changes of mind or dealings with the property inconsistent with the trust by the donor can as between himself and the donees alter the beneficial interest. …"

See also Murless v Franklin (1818) 1 Swans 13; 36 ER 278.

53 A recent example is found in Hardy v Lane (1994) 6 BPR 13,968. There the plaintiffs paid 90% of the costs of the property which the registered owner had promised to leave them by will. Later the owner changed her mind. Hodgson J held that there was a prima facie presumption that the parties would acquire the property in shares proportional to their contributions. This was the original intention of the registered owner and her change of mind later did not rebut the presumption.

54 Accordingly, Domenica is entitled in equity to 53.3% of the property at Annangrove.

55 What then happens to the deceased's benefaction in his will of 70% of the property? Does this mean that Domenica's interest is increased from 53.3% to 70% or that she is entitled to 70% of 46.7% or does some doctrine of election apply or is the gift adeemed?

56 Basically the doctrine of election can operate where a person has two inconsistent rights. He or she must elect for one or the other. This is a common law rule, rather than the technical doctrine of election in equity.

57 This point was not argued and it is of little moment because whether or not Domenica held 53.3% as tenant in common in equity the property would still be part of the estate of the deceased which would be available to meet any proper order under the Family Provision Act, see Re Keene and Barns v Barns supra.

58 However, in order to dot every "i" and across every "t", an aspect of the doctrine of election applies so that Domenica would have to elect between taking the 70% interest under the will, or 53.3% under the resulting trust. If the latter, then she could "top up" by an order under the Act. However, election was not pleaded, nor are there any facts to enable me to say that by continuing to live in the house she has elected one way or the other.

59 The cases suggest that when one makes a devise in the form of para 3B of the will in the present case, prima facie one is purporting to devise the whole property and not merely one's undivided share in it; see Padbury v Clark (1850) 2 Mac & G 298; 42 ER 115. Accordingly, if there is a devise of the whole or part to a co-owner, the co-owner must ordinarily elect as to whether she will take the benefaction under the will or her interest at law or equity apart from the will. In other words, she must elect either in favour of the will or against it.

See also Wilkinson v Dent (1871) 6 LR Ch App 339 and In re Dicey [1956] Ch 357 (affirmed on appeal In re Dicey; Julian v Dicey [1957] Ch 145). See in general Pomeroy's Equity Jurisprudence 5th ed (Lawyers Co-operative Publishing Co, New York, 1941) para 489 on p 379 of vol 2.

60 Accordingly, I need to treat Annangrove as an asset of the estate because no sensible person would elect to take a 53.3% interest as opposed to a 70% interest.

61 (3) How does the estate pass under the will? I first have to deal with the fishing enterprise. As I have said, this was a partnership. The principal question is whether the gift in clause 3G of the will passes the interest in the partnership referable to the fishing vessel and licences.

62 The general rule is that a partner owns a beneficial interest in each and every asset of the partnership; see eg Connell v Bond Corp Pty Ltd (1992) 8 WAR 352. As between the deceased and his partner, the deceased's interest would be considered a chose in action being the ultimate product of taking of accounts between the parties. Where a partnership is solvent and the other partnership property is more than enough to clear the partnership debts, then a court can often construe a will phrased in the way 3G is as carrying the asset even though it is a partnership asset: Re Holland [1907] 2 Ch 88 at 91; Calcino v Fletcher [1969] Qd R 8 at 19; Rushton (Qld) Pty Ltd v Rushton (NSW) Pty Ltd [2003] 1 Qd R 320 at 326-7 (CA).

63 However, where the partnership is not in such a solvent state as to be able to free the assets given by the will from all debts, a different rule applies as was considered by the Lord Justices in Chancery in Farquhar v Hadden (1871) LR 7 Ch App 1 at 5. In such cases one must construe the will and the words that are actually used will be of some importance, but ordinarily a person who gives his property which he owns as partner with one other person passes "… a right to a moiety, subject to the application of the assets of the partnership in payment of the partnership debts. …" See also Hendry v The Perpetual Executors and Trustees Association of Australia Ltd (1961) 106 CLR 256.

64 However, that is not always the case. In Watson v Ralph (1982) 148 CLR 646, the testatrix's will read:

" … if at the date of my death I shall be the owner of the freehold property situate at Whittlesea … owned at the date hereof jointly by my said husband and myself"

The High Court held that those words could not pass an interest in a partnership in which the Whittlesea land was an asset. Indeed, in Farquhar's case itself the words of the will were, "all my share of the leased premises … and … of the office furniture, books … ", the person benefited being the partner, and the Lord Justices held that the testator's share in the partnership which owned those assets passed to his partner.

65 As I understand the evidence in the instant case, as at the date of death there was the debt incurred to buy the Kaylee Ann which was charged on the Annangrove property and there were also trading debts. The trading debts would be deducted from the moiety interest but otherwise it would seem to me that on the authorities the gift in 3G would pass the net interest in the deceased's partnership share in the fishing business to his sons.

66 If one were looking at the situation on first principles apart from Locke King's Act 1854, one would say that taking a security for a debt does not affect the fact of the existence of the debt. If money is borrowed for a fishing vessel and security is given over real property, the debt is the debt on the fishing vessel. The mere fact that it is secured over the real property is only relevant to the creditor. It is a partnership asset, the monies were borrowed to purchase the partnership asset and in my view the debt which was repaid when the boat was sold was a partnership debt.

67 I now have to consider whether Locke King's Act applies. Locke King's Act is re-enacted in a modified form and appears as s 145 of the Conveyancing Act 1919. It provides that where a person disposes of property which at the time of his death is charged with a payment of money, then unless the deceased has signified a contrary or other intention the property so charged shall, as between the different persons claiming through the deceased, be primarily liable for the payment of the charge.

68 I cannot see any legitimate reason for not applying s 145. The charge was on the land and there is nothing in the will to require the debt to acquire the fishing boat to be paid otherwise.

69 However, the evidence seems clear that the partnership is liable to pay the estate the debt which the estate has had to clear out of the land. Accordingly, as I have said under heading A(1), the effect is that when valuing the partnership one must take into account the debt owed to the estate.

70 Having now gone through the tortuous exercise set out above, it is necessary to list the assets in the estate and how they pass under the will. Before I do so, however, I should note that the will is not by any means the best example of the drafter's art. For one thing it omits a residue clause which is the most elementary mistake of a will drafter. It does not deal with the Locke King's Act problem. Part of this is explained by the fact that the solicitor who drew it was not given enough information, but on the other hand he does not seem to have asked many questions.

71 It is also regrettable that although the Registrar in Probate, when granting probate made a requirement that accounts be filed, this order was disobeyed. The defendant said that he was in contact with the Probate Office about this default and thought he had, at least pro tem, satisfied their requisitions, but the fact remains there was an order for accounts which has not been complied with. Indeed it has taken me quite a considerable time to put together what the accounts might be and even then it is difficult to be sure that the figures are accurate.

72 Doing the best I can, and assuming that my analysis of the legal position is correct and assuming that the worst scenario figures are accepted, I calculate the estate as being a net $810,000. Of this, in round figures, $433,000 passes to Domenica, $189,000 to Matthew and $188,000 to Cameron. Essentially this is arrived at by taking Annangrove at $1.2 million, deducting the two mortgages and $40,000 costs of realization, a total of $858,908, giving one $341,092 which passes 70% to Domenica ($238,765) and 15% each to Matthew and Cameron giving them each $51,164. The partnership assets seem to be $124,405. One gets this by taking the boat at $627,000, the licences etc at $110,000 and the debt owing by Matthew and Cameron $31,625 and then deducting the debts owing including the amount on the second mortgage and others of $544,220. The deceased's half share is thus worth $62,202. Each of Matthew and Cameron are entitled to half of this, less their respective debts to the partnership which means $15,497 to Matthew and $15,080 to Cameron.

73 The partnership has to reimburse the estate for the $438,908 second mortgage and this means that as there is no residue clause, there is a partial intestacy. These assets are first used to take out the estate's income tax debt of $65,000 leaving a balance of approximately $374,000 which would pass as to $187,000 to Domenica and $93,500 to each of Matthew and Cameron. The $31,625 debt owing to the partnership by Matthew and Cameron passes as to a half to Domenica in her own right as partner and half to the estate. This also falls into residue and is split between Domenica as to a moiety and a quarter each to Matthew and Cameron.

74 I will consider the four claims that are made against the estate on the basis that the benefaction under the will is as I have set out.

B. The result of the claims

75 (4) The claim of Domenica. Domenica, under the will, would receive slightly more than half the estate. The only other property she has is from superannuation, furniture and a motor vehicle, about $53,000 in all. She contributed to the deceased's fortune, in particular she contributed 53.3% of the purchase money. Were it not for the benefaction under the will she would have received, in her own right, $181,800, but it may be fairer to look at the $438,906 second mortgage as being part of the value of Annangrove in which case her interest under general equity would be worth $415,737. It would seem to me almost axiomatic that she should not receive less than that sum from the estate. The marriage was a relatively short one. They were only married for two years nine months and were only in a relationship for four years nine months.

76 Domenica is still only 39 and has worked all her adult life and is still working. She earns $1,341 a week. She says her expenses are $1,339 per week but this includes $694 a week for the mortgage on Annangrove and rates on that property, so that if she had no mortgage she would have ample income. I assume that the Annangrove place will have to be sold. She says, and she was not cross-examined on this, that she would like to continue to live in the Castle Hill area and because that place is so far from the CBD she would probably seek employment closer to her home. She says that houses in the Castle Hill area would cost approximately $900,000.

77 It was odd that there was little evidentiary material presented to the Court as to what sort of accommodation would be reasonably thought by a testator to provide a suitable residence for a single woman without dependants, or the cost of such accommodation.

78 Domenica's counsel referred to the well-known statement of Powell J in Luciano v Rosenblum (1985) 2 NSWLR 65 at 69, that normally the duty of a testator to his widow is, to the extent to which his assets permit him to do so, to ensure that she is secure in her home and has sufficient income to permit her to live in the lifestyle to which she is accustomed. Subsequent cases have watered down that statement but it still remains essentially true. One has to, of course, evaluate the other claims, but with an estate worth a mere $810,000 of which she would have been entitled in equity to $415,000 in any event, there is a fairly strong case for her receiving the whole of the estate. I will thus return to this claim in heading (8) after analysing the other claims.

79 (5) The claim of Kerrie. Kerrie is 54 years of age. She commenced work at 16, was engaged to the deceased at 18 and married him when she was 20 in 1970. She and the deceased were married for 30 years. She says that during the marriage the deceased left it to her to bring up the children and he was either studying for further qualifications or out the majority of nights. She currently works in the gaming industry as a self-employed person.

80 There is material to suggest that by 1998 Kerrie was dissatisfied with the marriage and that it was she who initiated the separation. However, the separation was, it would seem, relatively friendly, and the parties drew up a document (which was initiated by the deceased) in which they agreed to a split of their property.

81 Kerrie now says she realises that she only received about 32% of the assets and she should have received somewhere closer to 50%. She commenced proceedings for property adjustment in the Family Court in 2002, but never served the proceedings before the deceased died. She said that she did this because she did not want to upset him by serving the application and trusted him to make provision for her. The proceedings were served after the deceased's death and were transferred to this Court under the cross vesting legislation, and by consent I dismissed them on the first day of the hearing before me.

82 I should note that under the Family Provision Act, Kerrie is an applicant within class (c) of the definition of eligible person, and under s 9(1) the Court is first to determine whether in regard to all the circumstances of the case, there are factors which warrant the making of the application. I should state, in case the matter goes elsewhere that I do find such factors principally because the Family Law property relations of the parties were not finalised at the time of the deceased's death and there had been a very long marriage.

83 It was put to Kerrie in cross-examination that she was a person who had a gambling problem and that she was closely involved with a Mr Pearson, another person with a gambling problem.

84 There is no doubt at all that Kerrie is working in "the gaming industry", though she would have it thought that she is merely a sales person on commission. There is also no doubt that she is associated with Mr Pearson, though the evidence does not enable me to find that there is any close relationship or that Mr Pearson encourages her to gamble.

85 In her affidavit she says of her association with Mr Pearson at various clubs in January 1999, "We have been in a relationship in that we socialised together and spent odd weekends together. I do not regard him as involved in my life. I receive no financial support from him." Kerrie was cross-examined about Mr Pearson. Some of the evidence she gave was very hard to accept. While she denied that she had a gambling problem or was an habitual gambler, she did acknowledge she spent substantial amounts of money on poker machines on the speculation she would get dividends. She would also lend Mr Pearson money so he could make the same "investments". On one day she drew out four sets of $200 from her bank account for the poker machines. She said that she gave this to Mr Pearson for him to "invest" and that he would have repaid her, but I was not shown any record of the money coming back into her bank account.

86 Kerrie says that she would like to retire at 55; she feels very tired and she and the deceased always intended that they would retire at 55.

87 Mrs Cominos who appeared for Kerrie put that this was not a case where there had been a complete break on the dissolution of the marriage as the Family Court proceedings were still in the air. In one sense this is true. It may also be true that Kerrie did not receive as much as she could have received from her husband on the separation, but notwithstanding this she did receive, on any view of the evidence, over $300,000. Of course, she had to house herself with this, but it was a substantial amount. However, even though Kerrie was a wife for 30 years as opposed to Domenica for two and three-quarter years, and Kerrie was responsible for bringing up the children, it seems to me that her claim in the light of the fact that the estate is only $810,000 and she has already received what she agreed to accept on the split with the deceased hers is not to be considered the paramount claim.

88 (6) The claim of Cameron. Cameron is now aged 30. He has no dependants. As I have said, under the will he receives, on my calculations $188,000. He is an able-bodied man. He has done little to improve himself. He was apprenticed in the air conditioning industry for six or seven years but never received his ticket. He said he couldn't handle the paperwork side of it, but was good at tools. He worked in the air conditioning industry until about 1996 at perhaps $700 a week. Since 1996 he has never had a regular job, but he was involved with the deceased's fishing business. He has now left the fishing industry. He describes himself as a self-employed arborist. That really means he is lopping or felling trees for a living in casual employment.

89 I would have thought that an able-bodied son of 30 without dependants being left $188,000 in a will was being properly provided for and that what must happen is that that amount must be decreased rather than Cameron's share increased.

90 However, this $188,000 is rather illusory because Domenica's claim will severely diminish it.

91 It would be unjust to leave Cameron without anything. He is a son of the deceased who was recognised by him as worthy of benefaction.

92 Where the Court makes an order for provision under the Family Provision Act, s 10 of the Act allows the Court to make another order for provision in favour of any other eligible person, where the Court thinks it necessary to adjust all the interests concerned and to do justice in all the circumstances; see eg Shaw v Lambert, Young J, 9 October 1987, unreported.

93 In view of the probable size of the net estate, I would consider that the community would expect a wise and just testator to give Cameron a legacy of $50,000 to advance him in life.

94 The figure is rather arbitrary. It would be more if the estate were richer. However, he needs a fund to enable him to qualify himself for some better employment and as a safety net.

95 Accordingly, for the reasons stated above, I would apply s 10 so that Cameron should receive $50,000 from the estate.

96 (7) The claim of Matthew. Matthew is now aged 32 without dependants. He again has not done much since leaving school. He said he did various unskilled jobs such as storeman and labouring and he is still looking for what he wants to do. The week before the hearing he obtained a job (with a company called Maritime Defence Services) on the strength of the fact that he had a skipper's ticket. He is single; he has virtually no assets. He also was involved with the deceased's fishing business.

97 Matthew is slightly more established than Cameron. However he is basically in the same position and his claim should be treated in the same way – a legacy of $50,000.

C. What orders should be made

98 (8) The result. I should first deal with questions of costs though I should give the opportunity for final submissions to be made on these matters after my decision is published. However, it is necessary to look at costs for the purpose of determining the net value of the estate.

99 The defendant executor has filed an affidavit in which he assesses his costs at $131,500 inclusive of GST. The breakdown is as follows:

(a) Kerrie's Family Law application $6,000
(b) Kerrie's Family Provision application $20,000
(c) Cameron's Family Provision application $15,000
(d) Matthew's Family Provision application $15,000
(e) Domenica's Equity application $50,000
(f) Domenica's Family Provision application $15,000
(g) Administration of the estate/partnership $10,500

100 Although these figures seem very high, the case did go for four days and include fees for senior and junior counsel.

101 As I said earlier, some part of the defendant's case was filed by a Mr Clive Smoker, solicitor, and others by the executor himself. Mr Smoker's reasonable costs, of course, should be allowed out of the estate, but there is no evidence apportioning the costs between Mr Smoker and where the executor acted for himself.

102 A problem for the defendant is that he forgot or otherwise omitted to put a charging clause in the will. This means that he is not entitled to any profit costs out of the estate, but would be entitled to apply to this Court for commission. At 2½% on capital, this would produce some $20,250 to which, of course, would be added disbursements such as filing fees and counsels' fees. As the defendant has never ever filed proper accounts with the Probate Office, he will not be entitled to any commission at all until he has remedied this default. Indeed, the fact that he is in default may tell against the amount of commission. I do not know what the income commission may be because I do not know what income has been produced by the assets in the estate. Doing the best I can, I would estimate that the commission and disbursements might amount to something like $60,000.

103 Domenica's solicitor has estimated her costs at about $80,000. Kerrie's solicitor has filed a rather odd affidavit which says that her costs for all matters concerning the deceased are $62,700. It is difficult to work out what Kerrie's costs for the Family Provision Act application are. They would seem to be somewhere about $35,000.

104 Matthew and Cameron's solicitors have estimated their costs at $55,000.

105 Although their claims were unsuccessful, they were successful in the overall litigation. They economised by appearing by the same set of counsel and solicitors. I consider it appropriate that they be allowed ¾ of their costs out of the estate. This will cap their costs at about $42,000.

106 Putting aside Kerrie's costs for the moment, it would seem that one would need to reduce the estate by $140,000, at least for Domenica's costs and the executor's commission and disbursements. This makes the estate $670,000 net on the rather rubbery basis I assessed earlier.

107 This is nowhere near enough to buy a house in the price range which Domenica states, but as I have noted there was very little evidence as to what size house was in this price range, but these days in a salubrious area prices between two and four bedroom houses do not differ that markedly. There is just not enough in the estate to provide a house in this area. Domenica, however, is still a relatively young woman and should be able to raise a mortgage and pay it out of her income in the next 20 years or so.

108 The former wife has been paid a substantial amount. It may be that had she pressed harder at the time she may have received more and it is to her credit that she did not attack the deceased whilst he was very sick. In many cases such as the present, there is just not enough money to go around to meet all worthy claims.

109 In my view the claim that should have been predominant to the deceased is the claim of Domenica. As I have said, it was only a short marriage but Domenica did make significant contributions and an order that she receive the whole estate would really only give her something like $200,000 more than she might have been entitled to under the general rules of equity even if she had never been married.

110 It may be a false way of looking at things to pay overmuch attention to what Domenica would have received dehors the will. The will would have given her 70% of the net worth of Annangrove. As too little attention was paid to the influences of Locke King's Act this would have been relatively little.

111 Annangrove needs to be sold. As mentioned earlier, there is a paucity of evidence as to the cost of accommodation for a single woman in the Castle Hill area.

112 If one allows each son to keep $50,000 and have their costs of $42,000 there is $588,000 available for Domenica.

113 A house in the Castle Hill area, even a modest one, will doubtless cost more than $588,000. However, that appears to be all that is left in the estate. I do not consider, particularly in the vague way the evidence as to her housing was left, that a wise and just testator would have given her more and left his sons with nothing.

114 The probabilities are that Domenica will be able to acquire a residence with the $588,000 assisted by the fact that she is still a young woman with a good employment record who will be able to obtaining housing finance.

115 Accordingly, in my view Domenica should receive the whole of the deceased's estate, except $100,000.

116 So far as Kerrie is concerned, as a wife of 30 years who has borne the stresses of child raising it could fairly be said that if the estate were more affluent she would be deserving of an order. She may have a gambling problem as Mr Grieve QC suggests, but it does not appear to be an acute one as she seems to be able to keep herself. I regret that there is not enough money in the estate but I consider that it would be appropriate to make no order with respect to her costs. Because of s 33(2) of the Family Provision Act I am not able to make any order for costs out of the estate in respect of Kerrie's application and I do not find special circumstances which would make it just and equitable so to do. Thus, whilst I have proceeded to hear Kerrie's application, there is not enough money to go around and I dismiss it but make no order as to costs.

117 As I have said, my remarks about costs may be the subject of argument on the usual proviso that if such argument does not change my prima facie view then the costs of that argument might fall upon the unsuccessful party.

118 I will accordingly at this stage merely publish my reasons and stand the matter over to 24 March 2005 at 9.30 am for short minutes to be brought in. If dealing with the short minutes is likely to take more than 10 minutes or counsel find that date inconvenient, provided that my Associate is contacted at least the week before, some substitute date can be arranged.

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