Roberts v McFadden

[2002] NSWSC 602

CITATION:	Roberts v McFadden [2002] NSWSC 602
CURRENT JURISDICTION:	Equity Division
FILE NUMBER(S):	SC 1689/2001
HEARING DATE(S):	2 and 3 July 2002
JUDGMENT DATE:	5 July 2002
PARTIES :	Richard Bryan Roberts v Malcolm Matthew McFadden (Estate of Florance Mary Roberts)
JUDGMENT OF:	Master Macready at 1

COUNSEL :	Mr J. Wilson for plaintiff Mr P. O'Loughlin for defendant
SOLICITORS:	Pigott Stinson Ratner Thom for plaintiff Bartier Perry for defendant
CATCHWORDS:	Family Provision. - Application by adult son who received almost one half of the estate. Balance of estate left to his sister. Application dismissed. No matter of principle.
DECISION:	Paragraph 43

- 1 -

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

Master Macready

Friday 5 July 2002

1689/2001 Richard Bryan Roberts v Malcolm Matthew McFadden (Estate of Florence Mary Roberts)

JUDGMENT

1 MASTER: This is an application under the Family Provision Act in respect of the estate of the late Florence Mary Roberts who died on 2 October 1998. She was survived by two of her three children. The plaintiff is the deceased’s son and the defendant, her executor, is the husband of the deceased’s surviving daughter Janne Mary McFadden.

The will of the deceased

2 The deceased made her last will on 28 November 1990. Under the will she appointed her son-in-law as executor and made a number of minor bequests in respect of certain items. She gave the residue of her estate to be shared equally between her three children Janne Mary McFadden, Kym Margaret Muradian and the plaintiff. She also provided that if her daughter Kim Margaret Muradian predeceased her then her estate would not take that share but instead Kim's two children, Vanessa and Kate would each receive a legacy of $10,000. Kym did predecease the deceased and, accordingly, the estate is principally to be divided between the plaintiff and his sister Janne.

The estate of the deceased

3 The principal asset in the estate of the deceased is a property at 2 Tenilba Road, Northbridge. The property was subdivided some years ago into two strata lots. The deceased resided in lot 2 and the plaintiff with his wife and children resided for some years in lot 1. There are different valuations of the property which have been tendered in evidence. The defendant’s valuation in February of this year values lot 1 at $450,000 and lot 2 at $400,000. The plaintiff’s valuer who made his valuation in April estimated the value of a lot 1 at between $380,000 and $410,000, and he estimated the value of lot 2 at between $360,000 and $390,000. Both valuations were walk by inspections and they did not refer to comparative sales to enable one to compare the valuations. There was no cross-examination of the valuers in an endeavour by the parties to save the costs. The plaintiff’s valuation is more recent and is somewhat more conservative. For the purposes of this case I will adopt a value for a lot 1 of $410,000 and for lot 2 of $390,000.

4 Apart from the said property there is cash in the estate amounting to $2558. The present liabilities that have to be met are as follows: --

Legacies and accrued interest $23,000
Costs on sale of property $10,000
Income tax liability $ 1,000
Capital gains tax liability on sale of
Both properties $57,880

Unpaid portion of the defendant's costs $25,000
Plaintiff's costs if successful $45,000
Total liabilities $165,665

5 The defendant had indicated that he proposed to claim commission. However, in cross-examination he agreed that whichever way the case went he would not be charging commission.

6 I will deal with a little of the chronology of the family. The plaintiff was born on 22 February 1959. Shortly after this the deceased and her husband Richard Thomas Roberts purchased the property at 2 Tenilba Road, Northbridge. In 1972 Janne, who had been born in 1953, married the defendant. In 1976 the plaintiff left school and attended a club manager’s course and subsequently he obtained employment in that industry. In 1978 the deceased’s daughter, Kym, married Ardashes Muradian.

7 As I have mentioned, the plaintiff obtained work in the club industry after completing his course. He obtained employment as a sub-assistant manager of the Lakemba Returned Services Club in November 1981. He obtained a position as a sub-manager at the Bowlers Club in Sydney in 1983. He became the assistant general manager of the North Sydney Anzac Club in 1984. In 1988 he was employed as the operations manager at the Kirribilli Ex-Services Club. He retained that position until he was retrenched in October 2000. Thereafter he has not worked in such a position but has only had casual work.

8 In 1985 the plaintiff and his future wife, Maureen, lived at the deceased’s property at Northbridge. The plaintiff's eldest child, Emma, was born on 24 March 1986. In April of that year the plaintiff, Maureen and their child, Emma, moved into rental accommodation. Late in 1986 the plaintiff, Maureen and Emma returned to 2 Tenilba Road, Northbridge. In November 1987 the plaintiff and Maureen were married. They have remained living at that address up until the present time. Their child, Thomas, was born on 7 May 1990 and he also resides with them.

9 The deceased, who had attained a fairly senior position at TAFE, retired in 1989. She used her superannuation money to make an extension to the Northbridge property and converted it into two strata title units. On completion of the extensions she and her husband moved into the upstairs unit No 2 and the plaintiff and his family lived in unit No 1. In August 1995 the deceased’s husband died after a stroke. In December 1995 the deceased's daughter, Kym, died. After retiring from TAFE in 1989 the deceased had obtained employment at John Fairfax & Sons. After the death of her husband she retired from employment with John Fairfax in 1996. It was in the following year, 1997, that the property was finally divided into two strata lots.

10 After her retirement the deceased commenced to drink to excess and she had a lot of difficulties as result of this problem. She spent some time at St Edmunds Private Hospital in 1998 and on 2 October 1998 she died. The summons was filed in this matter on 7 March 2001 some 11 months after the time limit for making applications under the Act.

11 As the application is out of time it is necessary for the court to consider section 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 has in several cases dealt with the principles governing application to extend time under this Act. In Massie v Laundry (unreported 7 February 1986) he indicated that when looking at “sufficient cause” under S16(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 conduct on either side which would enter into the equation?

13 He also accepts apparently a view that was expressed by his Honour Needham J in Fancett v Ware (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 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 8 September 1989).

14 In De Winter v Johnstone, a decision of the Court of Appeal on 23 August 1995 his Honour Powell J 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 page 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 application 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 Mr Justice Sheller considered that it was only necessary to show that the application was not bound to fail. His Honour Mr Justice Cole seems to have adopted the parties’ approach of looking at the strength of the plaintiff’s case.

16 The defendants did not submit that an extension of time should not be granted and the affidavit evidence states that the delay was due to negotiations for settlement of the matter over a number of years. In the circumstances I am satisfied that there has been an adequate explanation and accordingly it is appropriate to extend time.

Consideration of the plaintiff’s claim

17 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."

18 I turn to consider the situation of the plaintiff. The plaintiff is 43 years of age, is married and has two children, Emma aged 16 years and Thomas aged 12 years. I have earlier referred to the work history of the plaintiff. He was retrenched in October 2000 and received a redundancy payment at that stage of $75,000 dollars. His income at retrenchment was a net figure of $60,000 per annum. He now is working on a casual basis for Barwillow Catering for about five hours a day. He earns approximately $375 per week. His wife Maureen works two part-time jobs and earns in the order of $463 per week net.

19 The plaintiff gave evidence that during his period of unemployment from October 2000 to December 2001 he was unable to obtain any part-time work and did not receive any Social Security benefits. He lived on his redundancy payment and he now has cash reserves of only $2,262. He has tried to obtain positions and has made some twenty job applications. He has only been granted two interviews. He is of the age where it is difficult to get back into the workforce and although he has good training and a good employment record I think I must accept that he may have some difficulty in achieving the same level of remuneration that he enjoyed with the Kirribilli Ex-Services Club.

20 The plaintiff and his wife own no real estate and they have a 1994 Holden Commodore worth $9,000. They have modest personal possessions, clothing, personal effects and some furniture. Of importance, the plaintiff has an interest in a superannuation fund of $126,332.

21 The lifestyle lived by the plaintiff was criticised in submissions and reference was made to his cross examination when he admitted to spending $14 a day on alcohol and $40 per week on poker machines. There was also criticism of his failure to explain what has happened to his redundancy payment. It seems to me that this is probably explained by the fact that over a year he received no Social Security payments but lived on that payment.

22 The plaintiff led evidence in his case from a mortgage and financial consultant who indicated that the plaintiff with the use of the security of the property at Northbridge could borrow amounts up to $350,000. If the plaintiff is not successful in this case it is likely that he will receive out of the estate after both properties are sold something in the order of $317,000. That sum together with his potential to borrow would give him the ability to purchase a property.

23 It is necessary to consider what contributions have been made to the estate by the plaintiff. The plaintiff has not made any direct contributions to the purchase of the property or the alterations which were made in 1990. It is clear, however, that he has made a number of indirect contributions. Since the date of death of the deceased he has worked in the gardens and carried out repairs to the property. Before the date of death he also did gardening work. There is no doubt that during the period the plaintiff lived in the joint household up until 1990 and, indeed, thereafter that there was a benefit to the deceased. There is evidence of the supply of meals to the deceased in the later years although towards the end of the deceased’s life this produced difficulty and strain between the parties as a result of the deceased’s drinking.

24 The plaintiff and his family have received some benefits from the deceased. These relate to the accommodation provided to him in the joint household from the middle of the 1980s up until the house was constructed in 1990 and thereafter in lot 1. For the period up to the date of death the plaintiff had an arrangement with the deceased that he would pay $100 per week as a contribution to the expenses. These payments were made sometimes irregularly up until the last year of the deceased's life when the plaintiff ceased making the payments. He did this for a good reason, namely, not to make available funds to his mother which she could use to drink to excess. He did this on the advice of health professionals. Since the date of death he has paid no rates except excess water rates. He has met electricity and household expenses. The plaintiff has certainly received a substantial benefit over the years as a result of his accommodation being provided for by the deceased and the estate. The rental value of lot 1 in 1998 was $300 per week, in 1999 $330 per week, in 2000 and 2001 $370 per week and this year at $320 per week. The extent of the benefit since the date of death is certainly in excess of $55,000 and was quite substantial before the date of death of the deceased.

25 The relationship between the deceased and the plaintiff is an important matter which I have touched upon in part. There is no doubt that in the last year there was a very unhappy situation in the house mostly because of the deceased. Complaints against the plaintiff as to his treatment of his mother in 1988 have to be discounted because of the fact that the plaintiff was endeavouring to look after his mother in accordance with advice he had received. There is no doubt that the deceased in the year before she died indicated that she wanted the plaintiff to have lot 1. A friend of the family gave evidence of the deceased saying: --

“I want my property and money shared equally between Janne and Richard. I want Richard to live downstairs as he has never had any experience with buying property or even having a loan. I want to ensure that things are made easy for him so that he has a home for his children.”

26 Even the defendant deposes to the conversations which she had with the deceased when the deceased talked about her will. Just before she went into hospital she said: --

“The bequest to Kim's children are to stay and Richard is to get downstairs.”

27 Out of fairness I should mention that there were times in this period when the deceased also made statements saying that she wanted Richard out of her will and that he had been cruel to her.

28 It is also necessary to consider the situation of others having a claim on the bounty of the deceased. Neither party suggested that the legacies to Kym's children should not be paid although the plaintiff's attitude appeared to be that those legacies should be borne by his sister’s share. Leaving these two children aside the main person to be considered is the deceased’s daughter, Janne. She is married and is aged 49 years. Her husband, the defendant, is 23 years older than Janne and is still working as a sole practitioner. They have four children two of whom are still at home and who are dependent upon their parents. Amanda, the oldest daughter, is now living in Port Douglas and is self-sufficient. Their son, Lachlan, is 26 years of age and has casual employment for three days a week. There is apparently little prospect of him leaving home given the problems which he has. Their daughter Ursula is 25 years old and at present is completing her College of Law studies. At this stage she is still living at home. Their son, Spencer, is 23 years of age and although he is overseas at the moment they expect him to return home shortly.

29 Janne and her husband have a number of jointly owned assets. These are as follows: -

-

1. Their home at 54 Crows Nest Road, Waverton, jointly owned and valued at $1 million.
2. A rented home next door jointly owned worth $1 million
3. An investment property at Waverton jointly owned worth $580,000.
3. An investment property jointly owned at Waverton having an estimated valued at $580,000 dollars

30 Janne and her husband have mortgages over their properties which total $670,984.

31 There are a number of other assets owned by Janne, namely, shares, cash at bank and jewellery totalling some $16,000. She also owns a car worth $17,500 and has superannuation of $23,207. A matter of concern to Janne is that her husband, now aged 72 years, has no superannuation.

32 Janne is a property writer employed by John Fairfax & Sons and receives a gross salary of $2,322 per fortnight. The defendant’s gross income from his practice last year was $59,700. After allowing for expenses his net income from his practice is usually about $20,000 per annum. They receive income from rented properties and have to meet their liabilities to the bank in respect of their mortgages. They have other one-off expenses incurred from time to time. The evidence is that as a result of this there is a general deficiency in their income.

33 Janne has not contributed to build up the estate and on occasions she and her husband have received some assistance from the deceased. There is evidence of loans by the deceased of $8,000 and $11,000. However, these have been repaid or adjusted between the parties.

34 There was a good relationship between Janne and her husband with the deceased although the quality of that deteriorated after 1995 following the death of the deceased’s husband. Having regard to the situation of the deceased I do not think that in this case that in respect of the plaintiff or his sister, Janne, there is anything in their conduct which needs to be taken into account adversely to their claim or entitlement.

The claim for provision by the plaintiff

35 It is necessary to see how the plaintiff says that he has been left without adequate and proper provision for his maintenance, education and advancement in life. Nothing was advanced in his affidavit evidence in this respect but submissions made it clear that the claim he wished to advance was that he should receive a specific bequest of lot 1 so that he may continue to live there with his family. He also sought a sum to allow him to make some repairs to the property. No evidence of the cost of such repairs was given in evidence. Implicit in the submissions made by the plaintiff was the assumption that the only other remaining asset, namely, lot 2 could be sold and that those proceeds bear the burden of the legacies and the other expenses in the estate in the order of $160,000. In final submissions after debate as to the appropriateness of the plaintiff's claim there was also expressed an alternative claim that the plaintiff should receive lot 1 with some provision being made for him to pay some amount towards these expenses.

36 It plainly would be in the interests of all the parties for the matter to be resolved in some way which gave the plaintiff lot 1 with some adjustment to his sister. The savings would be the absence of any sale expenses in respect of lot 1 and a reduction of the capital gains tax liability. A transfer of lot 1 to the plaintiff would mean that there would be no capital gains tax on that transfer and the likely capital gains tax payable on the sale of lot 2 would be somewhere in the order of $31,525. Unfortunately, however, I must first consider whether or not the plaintiff has been left without adequate and proper provision. If he has been left with adequate provision by the provision of half the estate then his claim should be dismissed. If he has not been left with adequate provision then the orders of the court can be fashioned to take into account the matters that I have referred to because there is no doubt on the evidence before me that the plaintiff could borrow sufficient to pay an amount to his sister.

37 I return to the principal question namely whether or not the plaintiff has been left without adequate and proper provision. The case put on the plaintiff's behalf involved the notion that as the plaintiff had been provided with accommodation by the deceased for all his married life it was appropriate for him to receive the unit. Although not quite expressed in these terms the submissions incorporated the notion that the lifestyle enjoyed by the plaintiff, namely, almost free accommodation, led to a duty to provide that to him after the death of the deceased.

38 In ordinary circumstances there is no general view that it is a duty of testator to provide a child with accommodation. In Shearer v The Public Trustee and Hawke v The Public Trustee, Young J, (unreported, NSWSC, 29 March 1998), his Honour had this to say:-

"The community's attitude is not to be judged by a feeling as to whether it is morally wrong for a person to leave property otherwise than to her spouse or children. One must really look at the obligations to provide for persons who have some dependants.
Where the applicant is a spouse it is nowadays usually thought that to leave a spouse with a mere right of residence is insufficient provision. However, that is not the case with children, and as far as I am aware it has never been said by any court that it is an obligation that the community expects that a mother will leave her child in a position where the child has a house of his or her own. "

39 There is no doubt that the plaintiff is in need of accommodation. He has not placed before the court evidence of what the cost of the accommodation might be in an area in which he wishes to live. There is however the very obvious evidence of the value of lot 1 which he now occupies and which he regards as suitable for himself and his family. That unit is valued at $410,000. Allowing for the defendant’s costs, but not the plaintiff's costs, the likely amount to be realised if both properties were sold is $629,335. One half of that amount is $339,667. Clearly the plaintiff would be able to borrow the difference between the amount he will receive and the amount necessary for him to purchase that accommodation. Such borrowings would be modest and could be serviced by him. He has in reserve his superannuation which can be accessed in due course to pay off the sum borrowed.

40 It is also necessary to take into account the situation of his sister, Janne, before finally coming to some conclusion on this aspect of the matter. She is fortunate in that the area where she has real estate is rapidly increasing in value and she has no doubt benefited by wisely investing. However, she expresses worries for the future, considering the age of her husband and the need to support at least one, if not more, of her adult children into the future. At some stage she will have to sell some real estate in order to reduce the substantial mortgages. The receipt by her from the estate of a sum of $339,667 will substantially alleviate her problems. Her mortgage and that of her husband will be reduced from $670,987 to $331,317.

41 In these circumstances her situation is satisfactory and does not really intrude into a consideration of the plaintiff’s claim.

42 In my view, the plaintiff has been fortunate in the past and has received substantial benefits from the deceased and the estate. That does not translate into an entitlement to a continuation of that state of affairs after the death of the deceased. Having regard to all the circumstances, all the evidence in the case, most of which I have referred to in these reasons, I am not satisfied that the plaintiff has been left without adequate and proper provision.

43 I dismiss the summons and will hear submissions on costs.

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Last Modified: 07/11/2002