Scott v Scott

[2009] NSWSC 567

CITATION:	Scott v Scott [2009] NSWSC 567
HEARING DATE(S):	27 and 28 May and 1 June 2009
JUDGMENT DATE :	19 June 2009
JURISDICTION:	Equity Division Family Provision Act List
JUDGMENT OF:	Ward J
DECISION:	Plaintiff and defendant/cross-claimant each succeed in part. Order for provision made in favour of defendant/cross-claimant.
CATCHWORDS:	EQUITY – trusts and trustees – resulting trusts – wife provided entire purchase price for matrimonial home acquired in names of husband and wife as tenants in common in unequal shares – whether presumption of resulting trust rebutted – held that presumption rebutted. - REAL PROPERTY – joint tenancy and tenancy in common – property held by husband and wife as joint tenants – whether joint tenancy severed by conduct or agreement in course of separation and informal division of property – held that joint tenancy severed by conduct. - SUCCESSION – family provision and maintenance – failure by testator to make sufficient provision for applicant – whether inadequate provision made for deceased’s wife – entire estate left to minor grandchild – relevance of separation and informal division of property shortly before death – considerations finely balanced – held that inadequate provision made – modest legacy ordered.
LEGISLATION CITED:	Conveyancing Act 1919 Family Law Act 1975 Family Provision Act 1982 Uniform Civil Procedure Rules
CATEGORY:	Principal judgment
CASES CITED:	Abela v Public Trustee [1983] 1 NSWLR 308 Armstrong v Sloan [2002] VSC 229 Black v Black (2008) Fam LR 503 Bladwell v Davis [2004] NSWSC 170 Buffery v Buffery & Anor [2006] NSWSC 1349 Burgess v Rawnsley [1975] 2 Ch 449 Calverley v Green (1984) 155 CLR 242 Churton v Christian (1988) 13 NSWLR 241 Corin v Patton (1990) 169 CLR 540 Cropley v Cropley [2002] NSWSC 349 Damberg v Damberg [2001] NSWCA 87 Dijkhuijs (formerly Coney) v Barclay (1988) 13 NSWLR 639 Drever v Drever [1936] ALR 446 Ernst v Mowbray [2004] NSWSC 1140 Fenato v Antonello [2006] NSWSC 763 Foley v Ellis [2008] NSWCA 288 Grey v Harrison [1997] 2 VR 359 Groom v De Vandes (1805) 11 Ves Jun 330; 32 ER 1115 Kalmar v Kalmar [2006] NSWSC 437 Magill v Magill (1993) NSW Conv R 55-663 Minter v Minter (2000) 10 BPR 18,133 Mulcahy v Weldon [2001] NSWSC 474 Nicholls v Hall [2007] NSWCA 356 Nielson-Jones v Feddon [1935] 1 Ch R 222 O’Loughlin v Low [2002] NSWSC 222 O’Shaughnessy v Mantle (1986) 7 NSWLR 142 On v On [2002] NTSC 18 Palmer v Dolman [2004] NSWCA 361 Permanent Trustee Co Limited v Fraser (1995) 36 NSWLR 24 Pfeiffle v Pfeiffle (1989) 13 Fam LR 692 Prentice v Cummins (No 6) (2003) 134 FCR 449 Price v Roberts [1992] NSWCA 191 Public Trustee v Pfeiffle [1991] 1 VR 19 Re Allingham [1932] VLR 469 Re Clissold (deceased) [1970] 2 NSWR 619 Re Commonwealth Bank [2009] NSWSC 81 Re Debney [1960] SR (NSW) 471 Re Fulop deceased (1987) 8 NSWLR 679 Re Gilbert (1946) 46 SR (NSW) 318 Re Mercer deceased [1977] 1 NZLR 469 Saleeba v Wilke [2007] QSC 298 Shepherd v Doolan [2005] NSWSC 42 Simons v Permanent Trustee [2005] NSWSC 223 Singer v Berghouse (No 2) (1994) 181 CLR 201 Slater v Slater (1987) 12 Fam LR 1 Smith v Smith (1986) 161 CLR 217 Sprott v Harper [2000] QCA 391 Vanvalen v Neaves [2005] NSWSC 593 Vigolo v Bostin (2005) 221 CLR 191 Worsley v Solomon [2008] NSWSC 444
TEXTS CITED:	Jacob’s Law of Trust
PARTIES:	Neil Christopher Scott (Plaintiff/Cross Defendant) Rhonda Eileen Scott (Defendant/Cross Claimant)
FILE NUMBER(S):	SC 3439 of 2008
COUNSEL:	R Marshall with him Ms D Bamford (Plaintiff/Cross Defendant) J A Armfield (Defendant/Cross-Claimant)
SOLICITORS:	Nash Allen Williams & Wotton (Plaintiff/Cross-Defendant) Kingston Swift Solicitors (Defendant/Cross-Claimant)

- 56 -

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
FAMILY PROVISION ACT LIST

WARD J

FRIDAY 19 JUNE 2009

3439/08 NEIL CHRISTOPHER SCOTT V RHONDA EILEEN SCOTT

JUDGMENT

1 This matter commenced in the Common Law Division as an application by the executor of the estate of the late Julian Christopher Eason Scott (“the deceased”) for possession of premises at Salamander Bay (“Salamander Bay property”) which were owned by the deceased as sole registered proprietor at the date of his death. A claim for damages in trespass was brought against the defendant, Mrs Scott.

2 Mrs Scott is the deceased’s widow who, as at the time of the deceased’s death on 19 December 2007, had been living separately from the deceased for about two and a half years. The executor is one of the deceased’s two sons from a former marriage. A grant of probate was obtained by the executor on 23 April 2008 in respect of the deceased’s final will which was made on 10 August 2007. Under the deceased’s will, the whole of his estate is left to one of Mrs Scott’s grandchildren, a minor, to whom I will refer (for privacy reasons and without any disrespect) simply as the beneficiary.

3 By consent, on 25 June 2008, orders were made which have the effect that if Mrs Scott is found not to have been entitled to assume possession of the Salamander Bay property (which she did the day after the deceased’s death), then she is obliged to pay to the executor an amount by way of an occupation fee of $300 per week for the period from 1 January 2008 in which she has occupied the premises.

4 By way of cross-claim (the final iteration of which was a Further Amended Statement of Cross-Claim filed by leave during the course of the hearing), Mrs Scott seeks a declaration that the deceased left all of his right title and interest in certain other land (the “Long Jetty property”) on trust for her; that the executor holds the Salamander Bay property on trust for her; and consequential orders for her to become the registered proprietor in fee simple of the Salamander Bay property and to receive any amount as the court may determine she is entitled to receive from the deceased’s estate.

5 A further or alternative claim is made for an order pursuant to the Family Provision Act 1982 that provision be made for Mrs Scott’s proper maintenance out of the deceased’s estate.

Issues

6 The issues to be determined are as follows:

(i) Whether the deceased held his interest in the Long Jetty property (and any proceeds of sale obtained from the sale of the Long Jetty property) on a resulting trust for Mrs Scott (by reason of her undisputed contribution of the whole of the purchase price for the acquisition of that property).

(ii) Whether the sale and any division of the proceeds of sale of a property at Soldiers Point (“the Soldiers Point property”) (being a unit acquired by the deceased and Mrs Scott as joint tenants but sold before the deceased’s death) severed the joint tenancy in respect of the Soldiers Point property.

(iii) For the purposes of the Family Provision Act application, whether (having regard to the circumstances existing at the date of the hearing) there was, as a matter of fact, inadequate provision made for Mrs Scott’s maintenance and advancement in life under the deceased’s will and, if so, as a matter of discretion what (if any) should be the proper provision for Mrs Scott’s maintenance and advancement in life. (There is no doubt that Mrs Scott is an eligible person within the definition in s 6 of the Family Provision Act .)

Facts

7 There is no dispute as to a number of the matters relevant by way of factual background to Mrs Scott’s claims, which I summarise as follows.

8 Mrs Scott married the deceased on 29 September 1981. It was for each of them a second marriage, Mrs Scott’s first husband having died in October 1980 and Mr Scott having divorced his first wife in 1981. Mr Scott had two sons from his first marriage (the elder being the executor). Mrs Scott had two children from her first marriage. During their marriage the couple also fostered a daughter whom the deceased treated as one of the family, something which Mrs Scott says caused “a good deal of animosity between the young people in the family” (T 40.19). In a “To Whom It May Concern” letter written by Mrs Scott, annexed at p 49 to the affidavit of Tamara Tunnicliff sworn 8 May 2008 (to which I will refer in more detail later) Mrs Scott apparently acknowledges that the deceased distributed funds to their foster daughter before he died.

9 The deceased and Mrs Scott were married for 16 years. With the exception of a period between July 1998 and January 2000, when they were separated for the first time, they lived together until May 2005 when Mrs Scott moved into a property acquired (with the assistance of the deceased) solely in her name (“the Nelson Bay property”).

10 The first matrimonial home of the deceased and Mrs Scott was the Long Jetty property purchased in March 1982 for the sum of $63,000. The property was transferred to them as tenants in common in unequal shares, Mrs Scott having a three quarter share and the deceased having a one quarter share in the property. The whole of the purchase price was paid by Mrs Scott, using part of the proceeds received by her, after her first husband’s death, from his superannuation proceeds and a life assurance policy. The house on the Long Jetty property was demolished and a new home was built on the property, in which the deceased and Mrs Scott lived until May 2000. That development of the Long Jetty property was funded by two loans, taken out jointly by the deceased and Mrs Scott (totalling $70,000). (In passing, I note that if the proportionate contribution to the development of the property is taken into account with the parties’ initial contributions to the purchase price, then, on my calculations, Mrs Scott contributed just under 75% of the total funds and the deceased 25%.)

11 Various other properties were acquired and sold from time to time by the deceased and Mrs Scott over the course of their marriage. The deceased was a licensed real estate agent and held licences or interests in various real estate agency businesses over the course of their marriage, the last being a real estate agency in Port Stephens run through a company (Wanda Beach Realty Pty Limited). The evidence was that the deceased established this business at Mrs Scott’s behest and Mrs Scott accepted that he had not been happy running the business (“he would have rather been at the coastal patrol than at the business I have to tell you, yes” (T 42.36) and “Christopher would have preferred me to be working for someone else and bringing in an income than using our savings to support our business, in that way he was unhappy” (T 43.7)).

12 At least in relation to the Soldiers Point property, the evidence suggests that its acquisition (at a time when the couple already owned another unit in the development) was the subject of some unhappiness between the couple or at least that this was the deceased’s perception – the deceased apparently blaming financial losses (said to be of over $150,000 on the acquisition of this property and another $100,000 on his involvement in Wanda Beach Realty) on, and referring to there having been “considerable friction over”, decisions made or instigated by his wife in relation thereto. The deceased ascribed the cause of friction to the fact that the moneys had to come out of the couple’s superannuation fund. Mrs Scott did not accept that there was friction between them over this (T 42.24; T 43.12-17).

13 At the time of their separation in May 2005, the major assets of the deceased and Mrs Scott were the Long Jetty property (the title to which was held by them as tenants in common in the ratio three quarters/one quarter noted above); the Soldiers Point property (which they owned as joint tenants); and a joint bank account. The deceased at that stage also owned a boat (“Flawless”) which was apparently registered in his name alone. Mrs Scott’s description was that they were “asset rich and cash poor” (T 42.46).

14 There is a dispute as to the characterisation of the parties’ relationship after, and the circumstances in which, Mrs Scott left the Soldiers Point property then shared by the couple in May 2005.

15 The deceased’s “Notes of Explanation” to his last will and testament, annexed to a statutory declaration made by him before a solicitor on 10 August 2007 (annexed to pp 44-46 of Ms Tunnicliff’s affidavit), in which he had referred to the friction between the couple noted above, stated:

Rhonda decided that she would prefer to live without me in the latter half of 2004 and announced her intention to separate on 31 December 2004.

16 Mrs Scott was not prepared to accept that the deceased had accurately reported in his Notes of Explanation that she “decided that she would prefer to live without me in the latter half of 2004”, only accepting that the situation, as the deceased had described it, was correct if the words “would prefer to live without me” meant that she wanted to live under a different roof. Her evidence was that she wanted to live “not without him but under a different roof (T 40.30) … in a place where I could be separately locked” (T 40.40). (Earlier she had referred to wanting to live in a “safer” place (T 29.46) and in her affidavit sworn 24 October 2008 she swore that she had left the deceased because of his “chronic alcoholism” and that he was “becoming abusive”.)

17 Mrs Scott also resisted the proposition that she had “announced” to the deceased on 31 December 2004 that she was going to leave him but nevertheless accepted that on 31 December 2004 she had informed (or announced to) her son-in-law (Mr Mark Nash) that she could no longer live with the deceased. Nevertheless, she says she asked Mr Nash to take the beneficiary home because she did not want the beneficiary to be there with “any” unhappiness (T 41.2-14)) which is consistent with Mrs Scott informing or planning to inform the deceased on or about that time of her intention to move out of their then home.

18 Mrs Scott became very upset in the witness box at various times during the course of her evidence. She was clearly reluctant to accept that there had been a separation as such from the deceased. However, Mrs Scott readily accepted that she had decided by 31 December 2004 that she could no longer live under the same roof as the deceased (although later asserting that the deceased could have lived with her at the Nelson Bay property provided that she was able to lock herself away from him). In cross-examination Mrs Scott said that she had told the deceased on or around New Year’s Eve 2004 that she had to find somewhere to live other than with him, that she wanted “a place not under his roof”, but she would still look after him (T 30.15).

19 Mrs Scott’s somewhat contradictory evidence in this regard appeared to be motivated by a concern to emphasise that there was no final settlement (such as might preclude her present claim). The distinction between living in separate houses and living “apart” (which Mrs Scott makes in her To Whom it May Concern letter) is otherwise inexplicable. Although Mrs Scott, in more than one affidavit, said that she and the deceased had never discussed divorce, Mrs Scott did in that letter concede that “No doubt because Chris and I live in separate houses we were considered divorced”, which seems to me to be an acceptance by Mrs Scott of what the family and (and community) perception could reasonably have been of the finality of the matrimonial bond (in spirit if not in name) between her and the deceased (ie that, whether or not the Family Court had so declared, their marriage was effectively over).

20 In later cross-examination, Mrs Scott was emphatic that neither she nor the deceased “considered we had separated” (T 46.37) until 27 June 2007 (a date the significance of which was not made clear to me). Nevertheless, she was adamant that, had she known the deceased was changing his will, she would have divorced the deceased (T 53). Therein, in my view, lies the nub of Mrs Scott’s understanding of the situation prior to the deceased’s death and her complaint at what the deceased had done.

21 It is not disputed that from early January 2005 the deceased and Mrs Scott commenced searching for a property in which Mrs Scott could live separately from her husband. In late April 2005, Mrs Scott purchased a property in Nelson Bay (“the Nelson Bay property”) in her sole name for the sum of $400,000 (the purchase financed by a bridging loan guaranteed by the deceased and/or secured over the Soldiers Point property). The deceased continued to live in the Soldiers Point property until it was sold in December 2006 for the sum of $735,000, the net proceeds of which being $659,721.65.

22 On 21 December 2006, the deceased purchased the Salamander Bay property in his own name for $370,000. There does not appear to be any dispute that the Salamander Bay property was acquired with part of the proceeds of sale of the Soldiers Point property.

23 On 29 December 2006, the Long Jetty property was sold for the sum of $535,000 (the net proceeds of sale being $523,104.56), almost all the proceeds of which were used to discharge the mortgage over the Nelson Bay property (or perhaps to discharge most of the mortgage, there being a small residual amount owing on the mortgage of about $17,000, although it is not clear whether this was from the original borrowing or a later addition to the mortgage).

24 In October 2006, the deceased’s boat “Flawless” (bought, it was said, with joint funds) was sold for $110,000. In late 2006, the real estate business (which had been established by the deceased towards the end of 2002) (Wanda Beach Realty) ceased to trade and the company seems to have been wound up around that time.

25 Proceeds of sale of the two properties which were sold in December 2006 (the Long Jetty and Soldiers Point properties) totalled $1,239,509.71, of which Mrs Scott accepts that she received sums totalling $494,253.45 and $56,683.50 (paragraphs 2 and 4 of Mrs Scott’s affidavit of 6 March 2009). Mrs Scott also received the sum of $50,000 in December 2006 (see para 6 of affidavit of 6 March 2009) from the joint bank account she still held with the deceased at the time of his death.

26 The deceased received, out of the proceeds of sale of the two properties, the sum of $377,352.11 which he applied to the purchase of the Salamander Bay property and the sum of $311,220.70 which was deposited in the bank account held in the joint names of the deceased and Mrs Scott.

27 It is not disputed that Mrs Scott continued to provide care to the deceased during their separation at least up until June 2007 – for example, she did his ironing, she took him to the doctor, she assisted him when he was admitted to hospital on a medical emergency, and (until June 2007) she attended various family functions at which the deceased was also present. Mrs Scott’s evidence was that she always expected to be looking after the deceased and did so until his birthday in June 2007 (para 13, affidavit 24 October 2008).

28 In or about May 2007, an issue arose when the deceased became aware that Mrs Scott was to be accompanied to a family birthday party by a male friend (“James”) whom she says she met in March 2007 (T 50.8). Mrs Scott says he is a friend who runs a book stall at the local markets and that he is “everybody’s friend at the markets” (T 50.31). There is no evidence as to the precise nature of the friendship or relationship between Mrs Scott and James (other than that the deceased was not happy when Mrs Scott told him whatever it was that she in fact told him about James (T 50.14) and the deceased seems to have believed that Mrs Scott was in a sexual relationship with someone towards the end of 2007 (see email in October 2007, Annexure H to Mrs Scott’s affidavit of 12 August 2008)).

29 It seems not to be in dispute that the deceased (who I would infer, from evidence produced by Mrs Scott of email communications between the deceased and various people, was himself seeking female companionship at the time) was very upset at the news that Mrs Scott was to attend a family birthday party accompanied by James in May 2007 and that he did not himself attend the function for that reason. Whether that precipitated the realization that the marriage was truly over on 27 June 2007 (to which Mrs Scott seems to have referred obliquely in her evidence that until that date the couple had not considered themselves “separated”) is a matter for conjecture and, in my view, irrelevant to the issues before me; the relevant fact being that at least by the end of June 2007 both Mrs Scott and the deceased (perhaps for different reasons) appear to have considered the marriage was at an end.

30 Nevertheless, Mrs Scott placed emphasis both in her affidavit and oral evidence on the fact that they were not divorced and said that she considered herself his wife “he was my spouse until he died” (T 57.25), “I won’t let anybody call me Ms. I worked very hard for my Mrs and I kept it” (T 57.35).

31 On 10 August 2007, the deceased made his final will, appointing his son Neil as executor and leaving the whole of his estate to the beneficiary or, if she predeceased him, in equal shares to his grandchildren, expressly including the children of his stepson and his foster daughter (thus evidencing that the deceased drew no distinction between his own biological children/grandchildren and those of his wife nor indeed between the couple’s respective biological children and their foster daughter).

32 The deceased’s reasons for his testamentary disposition were carefully recorded in the Notes of Explanation annexed to a statutory declaration affirmed by him on 10 August 2007 and witnessed by his solicitor, from which it is clear that the deceased considered that each of his natural children and stepchildren had been adequately provided for during his or her lifetime (and would be likely to “inherit from other sources”) and that his foster child had also received financial assistance from him.

33 The Notes of Explanation also made it clear that the deceased considered that he and Mrs Scott had “divided our assets by mutual agreement” (something Mrs Scott vehemently denies).

34 The deceased’s intentions and understanding of the position as it then stood between himself and Mrs Scott are also evident from his 9 August 2007 email communication with the executor, his son Neil, in which the deceased refers to the arrangements he had made “in case anything should go wrong with me” and asserts that Mrs Scott has no interest in the Salamander Bay property. (Perhaps, optimistically, the deceased expressed the belief that the explanatory notes he had made would avoid challenges, something about which he was much mistaken.)

35 Indicative, perhaps, of the deceased’s perception of his relationship with Mrs Scott at that time, is that the Notes of Explanation contained his wish to have his ashes scattered at sea with the only family representatives to be the beneficiary, Mr Nash, the executor and the executor’s wife.

36 The deceased died on 19 December 2007. On 20 December 2007, Mrs Scott took possession of the Salamander Bay property and she has since then refused to vacate that property. Her Nelson Bay property remains vacant. She has not sought to tenant that property.

37 The contents of the deceased’s Notes of Explanation were the subject of response by Mrs Scott in the form of her “To Whom It May Concern” letter. Mrs Scott found the Notes by accessing a computer in the deceased’s Salamander Bay property (which Mrs Scott said was hers (T 39.21) or linked with hers but which the deceased was obviously using for his own personal correspondence) sometime shortly after his death (T39.39), before she became aware of the contents of his will.

Principal claims by Mrs Scott

38 Leaving aside, for the moment, the Family Provision Act claim, there were a number of scenarios put forward on behalf of Mrs Scott, as to the amounts claimed to be owing to her, dependent on the court’s findings as to her principal resulting trust/joint tenancy claims.

39 The first scenario assumed that the Long Jetty property was held on a resulting trust and that there was no severance of the joint tenancy in respect of the Soldiers Point property (or the joint bank account), in which case it was said that Mrs Scott was entitled to the sum of $292,660.67 (tracing the joint funds into the Salamander Bay property (notionally valued at $370,000) and the balance of the joint account at the date of the deceased’s death).

40 Scenario two assumed that there was a resulting trust in respect of the Long Jetty property but that the joint tenancy was severed (in which case Mrs Scott again claimed the balance of the net proceeds of sale of the Long Jetty property but only half of the net proceeds of sale of the Soldiers Point property and the balance of the joint bank account at the date of the deceased’s death (totalling $280,863.24).

41 The third scenario, which for the reasons set out below I consider to be the correct one, is on the basis that the presumption of resulting trust is rebutted (such that the beneficial ownership in the Long Jetty property equated to the legal ownership) and that there was a severance by conduct of the joint tenancy (so that Mrs Scott was not entitled by way of survivorship to the whole of the balance of proceeds of sale of the Soldiers Point property after the deceased’s death). In this scenario, the claim put was for $150,087.09 plus interest (which has been calculated by Mrs Scott’s legal representatives from the date of settlement of the Soldiers Point property at $36,724.05 up to a date said in the Schedule of Interest to be 06/09/2009, which I read as being 9 June 2009).

(i) Resulting Trust

42 As noted above, the Long Jetty property was acquired solely out of moneys provided by Mrs Scott. Accordingly, there is a presumption, arising from the fact that the legal title does not reflect all of her contribution to the purchase price, that the beneficial ownership of the property (unlike the legal title) is held solely by her. In Calverley v Green (1984) 155 CLR 242, it was recognised that such a resulting trust arises at the time of acquisition of the property.

43 It is clear that, absent agreement between the parties, the beneficial interest arising under such a resulting trust is not changed by later contributions to the property (Shepherd v Doolan [2005] NSWSC 42; see also Buffery v Buffery & Anor [2006] NSWSC 1349). As there is no presumption of resulting trust from the making of capital contributions to the improvement of the property, the fact that the deceased had borne a proportion of the cost of the improvement of the Long Jetty would not of itself have affected a resulting trust which had earlier arisen on the payment of the purchase price.

44 There is no presumption of advancement arising from a contribution from wife to husband in these circumstances (para 12.17 Jacob’s Law of Trust).

45 Therefore, the fact that Mrs Scott paid the whole of the purchase price means that her husband’s interest in the Long Jetty property will have been held on resulting trust for her unless either the presumption of a resulting trust is rebutted (by evidence of an intention on Mrs Scott’s part that the beneficial interest should lie in accordance with the legal title) or there was a later agreement (of which there is no evidence) to alter the equitable interest in the property so acquired. The onus of rebutting such a presumption lies on the executor. It is clear that it is Mrs Scott’s intention alone which is to be ascertained (Calverley v Green).

46 As to the standard of proof in this regard, there are cases in which it has been suggested that the presumption of a resulting trust is not lightly displaced. (See Buffery v Buffery (supra), but see Prentice v Cummins (No 6) (2003) 134 FCR 449 at [61], where it was suggested that relatively slight evidence may be sufficient to displace a presumption of resulting trust where a married couple purchases in their joint names what is to be their matrimonial home having both made substantial, albeit unequal contributions to the acquisition.) Here, it is said that the evidence goes beyond what was sufficient to displace a resulting trust in Prentice (though, clearly, in relation to some matters there considered relevant by Sackville J (such as contribution to acquisition) this cannot be the case).

47 Nevertheless, in Damberg v Damberg [2001] NSWCA 87 Heydon JA (as his Honour then was) was of the view that such statements do not alter the standard of proof, that being on the balance of probabilities. There (admittedly when considering the presumption of advancement) his Honour noted that rebuttal of the presumption called for proof of a “definite intention” not, citing the words of Dixon J in Drever v Drever [1936] ALR 446 at 450, a “nebulous intention [to rely upon the … relationship as a source of control of the property]”. Matters such as those discussed by Sackville J in Prentice may well be relevant to consideration of the probability that a particular intention existed, but they do not shift the substantive standard of proof. I have approached the question as to whether the presumption of resulting trust has been rebutted on this basis.

48 Mrs Scott was cross-examined as to her intention at the time of acquisition of the Long Jetty property and as to the circumstances in which title to the property came to be held in the proportions that it was.

49 Mrs Scott gave evidence that she knew, when she signed the title document for the Long Jetty property, that it was to be held as a tenancy in common three quarters to her and one quarter to the deceased (T 28.33; 49); when asked whether she was saying she did not want to agree to that, she said, somewhat confusingly, “I didn’t know, the money was [mine] … And I thought it would be all my property” (T 28.27; 30). Nevertheless she knew when she signed the documents that they said, “tenants in common” (T 28.34) and said, “I knew that it was as tenants in common – three quarters to me and one quarter to Chris”.

50 Mrs Scott agreed that the plan when the Long Jetty property was bought was that the whole house was to be removed and a new home built; and that the deceased was going to be spending money (with her) on the new building (T 34.15; 24; 39). Mrs Scott said she believed that that [from which I understood her to be referring to the fact that the deceased would be spending money on the land] was why the solicitor said the deceased was to be on the title and she did not argue with that (T 34.45; 50) even though she said, “At the time we bought it, it didn’t seem fair because we hadn’t done the development for another 12 months or whatever …” (T 35.2). Nevertheless, she says she trusted the deceased, “and I saw the reasoning why he had to be on the title, so we could borrow in joint names, both names into the property. I couldn’t expect Chris to borrow money and, in something that he didn’t, he wasn’t protected for the bit that he put in” (T 35.35) (my emphasis).

51 It was submitted that objectively it was unlikely that there was an intention to make such a gift at the time the parties were only just married, given that the amount paid for property was not an insignificant sum of money at the time. However, it does not seem to me implausible that, on their marriage, Mrs Scott would have intended her contribution of the whole of the purchase price to be treated as a contribution by her to the planned overall development of the property for the purposes of their marriage (something to which the deceased was also financially to contribute through the mortgage funds to be procured) and that they should hold the title to the property in shares consistent with their respective contemplated contributions to both the acquisition and development.

52 While Mrs Scott said that, as to her understanding as to what it meant for the title to be shown as a tenancy in common three quarters/one quarter, “What I thought it was because we were going to redevelop the property and that we would, then, jointly borrow moneys to build a home, and that Chris needed it on the title to do that” (T 29), I did not understand Mrs Scott’s evidence to be that the deceased’s name was put on the title as a formality solely in order to make it possible for there to be a borrowing in both names in respect of the property given her acceptance that the deceased should be “protected for the bit he put in”.

53 Mrs Scott accepted that she and the deceased had a plan to buy the property, knock it down and rebuild so that it would be their family home (T 35) and she accepted that she signed the transfer knowing that the land would be transferred into both names in the shares specified to protect the deceased’s contribution to the property. What Mrs Scott resisted was not the fact that there was a common “plan” to develop and own the property together (with the deceased to be on the title for one quarter of the property) but rather the notion that there had been an “agreement” as such (T 35.45). In this respect it would seem that what Mrs Scott was denying was that there was any formal signed written agreement (“I would have said to him I’ll buy the land and I knew that when we built that we would be borrowing the money. But whether, I didn’t say an agreement. I’m not understanding” (T 36.12)), rather as she later took issue with the suggestion by the deceased that there had been a settlement or division of the couple’s assets seemingly by reference to, or at least with emphasis on, the fact that there had been no final settlement approved by the court.

54 Although somewhat confusing in the way she gave her evidence on this question, I conclude from the evidence that, at the time Mrs Scott and the deceased acquired the Long Jetty property, they had a mutual understanding or plan that the existing house on the property would be demolished and a new family home built on the property, in respect of the costs of which the deceased would contribute, and that while her initial contribution was of the whole of the purchase price and not matched by a contribution from the deceased, nevertheless it was anticipated that in 12 months or so when the development was carried out the deceased would have made his (admittedly lesser) monetary contribution. Significantly, in my view, Mrs Scott said she accepted that it would only be fair in those circumstances for the deceased to own a portion of the land and I note that the “bit” the deceased in fact put in, represented about a quarter of the overall acquisition/development costs.

55 Such an understanding or intention (namely that the land would be bought with moneys provided solely by Mrs Scott, but that the title would reflect proportionate shares on the part of Mrs Scott and the deceased because it was intended that the deceased would contribute to the planned improvement of the property and was therefore to have a share in the property), is sufficient (as was conceded by Mr Armfield, though he did not concede the existence of such an intention) to rebut the presumption of a resulting trust.

56 Accordingly, I find that the presumption of resulting trust has been rebutted and that the deceased’s interest in the Long Jetty property up to the time it was sold was in accordance with the legal title, namely as a tenant in common as to 25%. On that basis, of the proceeds of sale of the Long Jetty property ($523,104.56) it appears that Mrs Scott in fact received more than a 75% share ($494,253.45 being applied to discharge the Nelson Bay borrowings). The deceased’s share on a 75:25 division would have been $130,775.14, (which would have meant that, subject to their other property dealings, Mrs Scott was accountable to him for the sum of $101,925.03).

57 If I had found a resulting trust in respect of the one quarter share of the Long Jetty property in respect of which Mrs Scott did not hold legal title, this would mean that Mrs Scott should have had all of the net proceeds of sale (namely $523,104.56). In fact, the acquisition of the Nelson Bay property seems to have accounted for the bulk, if not all, of that amount (there being a small shortfall of about $28,000).

(ii) Severance of joint tenancy in respect of Soldiers Point property

58 It is common ground that the Soldiers Point property was purchased by the deceased and Mrs Scott as joint tenants. The second issue is whether that joint tenancy was severed prior to the deceased’s death. The net proceeds of sale of that property were $716,405.15, of which $377,352.11 was used for the purchase of the Salamander Bay property.

59 In Abela v Public Trustee [1983] 1 NSWLR 308 at 314, Rath J considered the ways in which a joint tenancy may be terminated, those including by agreement between the joint tenants and by a course of conduct unequivocally evincing an intention to treat their interests as severed. The mere sale to a third party of their joint interest in the land does not itself sever the joint tenancy. Rather, it is converted into a joint interest in the sale proceeds.

60 Reliance was placed in this regard by Counsel for Mrs Scott (Mr Armfield) on the decision of Myers J in Re Debney [1960] SR (NSW) 471 and Young CJ in Eq as he then was, in Re Commonwealth Bank [2009] NSWSC 81. In Re Debney, Myers J held that the making of an order under s 66G of the Conveyancing Act 1919 did not sever the parties’ joint tenancy. Similarly, in Re Commonwealth Bank, a mortgagee sale did not sever the joint interest in the sale proceeds. In order to effect such a severance, there must have been either an agreement to sever (such as an agreement to sell and to divide the proceeds) or unequivocal conduct referable to a mutual intention of the parties not to continue the joint tenancy). Mr Armfield also referred to Nielson-Jones v Feddon [1935] 1 Ch R 222 as illustration of the proposition that mere sale, not accompanied either by actual agreement or by conduct of an unequivocal nature by both parties, does not lead to severance.

61 Accordingly, absent proof of an agreement or conduct evincing a common intention to sever their joint tenancy, on the sale of the Soldiers Point property the joint interest of the deceased and Mrs Scott in the land would have been converted into a joint interest in the sale proceeds (see, for example, Re Allingham [1932] VLR 469 where the unilateral conduct of the husband in paying the whole of the deposit into a separate bank account did not sever the joint tenancy).

62 In Fenato v Antonello [2006] NSWSC 763, Campbell J considered the question whether in that case there had been effective severance of a joint tenancy (also in the context of a Family Provision Act application). There, his Honour considered that the execution of a severance document had amounted to an effective severance of the joint tenancy in equity, noting what was said by Rath J in Abela v Public Trustee:

(i) Severance is effected by agreement to sever the joint tenancy;

(ii) The agreement need not be specifically enforceable or even binding as a contract at law;

(iii) Subsequent repudiation of the agreement does not affect its operation as severance.

(iv) Severance may be effected by conduct of the joint tenants not evidenced in an agreement to sever but showing a common intention that the joint tenancy shall be severed.

63 In Abela, Rath J held that a consent order agreed between husband and wife, after inconclusive negotiations and applications for distribution of property, evidenced the parties’ agreement that they no longer intended the tenancy to operate as a joint one so that it automatically effected a severance whether or not that agreement was binding.

Severance by agreement

64 As to severance in equity by agreement, what is necessary is that the joint tenants agree that the property is thenceforth to be held as tenants in common, ie that the joint tenants’ interests are to be treated as distinct. Professor Butt notes that it is not necessary for such an agreement to be specifically enforceable, provided “it serves as an indication of a common intention to sever” (citing, for those propositions, among others Burgess v Rawnsley [1975] 2 Ch 449 and Magill v Magill (1993) NSW Conv R 55-663 at 59-795). (The fact that a binding agreement is not necessary to sever the joint tenancy is relevant in this case, where it is submitted for Mrs Scott that any agreement to divide up assets would not have been enforceable as a “financial agreement” under the Family Law Act 1975 (something I discuss later).) An understanding of the concept of joint tenancy is also not necessary. Professor Butt notes that:

Whether the joint tenants have turned their mind to the actual concept of severance is not important. What is required is that the parties have acted “in such a manner as to require an inference of severance to be drawn”, for co-owners may sever a joint tenancy without knowing what a “joint tenancy” is or what “severance” is. ( Land Law para 1478, citing Sprott v Harper [2000] QCA 391).

65 So, for example, in Fenato the fact that the plaintiff may not have appreciated all the implications of the severance of a joint tenancy was not to the point, nor was the fact that he was doing it for the “sake of peace”. In that case, from the time a document was signed by the parties purporting on its face to effect a severance of the joint tenancy in the property, his Honour held that it was so severed in equity.

66 In Saleeba v Wilke [2007] QSC 298, Chesterman J noted that reported cases of severance by mutual agreement were not common, (most of the reported cases being concerned with whether one could either infer or imply an agreement for severance from a contract between the joint tenants to sell the property and divide the proceeds), these occurring most frequently in the realm of failure of marriages and attempts by spouses to readjust their property interests.

67 Chesterman J noted also (at [19]) that:

There is a discernable trend in Australian authorities that an agreement between joint owners to sell their property and divide the proceeds, whether equally or unequally, gives rise to an inference that there was a further agreement that the joint tenancy be severed immediately on the making of the agreement to sell. The cases, of course, turn upon their own facts and each is concerned with its particular circumstances that there is, I think, a general inclination, demonstrated by the decisions, to reach the result I mentioned …

68 Chesterman J referred to Public Trustee v Pfeiffle [1991] 1 VR 19, which had considered a line of cases including. Chesterman J noted (at [25]):

What seems to underlie the reasoning in these cases is that the right of survivorship is an essential incident of joint ownership. A sale of the jointly owned property and a division of the proceeds destroys the possibility of a survivorship. After the sale none of the co-owners can succeed to the interests of any other who might die. Accordingly, an intention to sell has implicit within it an intention to destroy the co-owners’ right to survivorship which is essential to joint ownership. The agreement to sell is a manifestation of the intention to bring the joint tenancy to an end.

69 There, what Chesterman J was looking to see was whether the evidence established an intention not only to sell the home unit but also to divide the proceeds. His Honour said, “I do not overlook the point that one does not need a binding contract, or indeed any contract, to support the requisite intention. However, one must have evidence of a mutual intention to sever the joint tenancy.”

Severance by conduct

70 As to severance by conduct (treated by Professor Butt as a ground of severance independent of severance by agreement, citing Pfeiffle v Pfeiffle (1989) 13 Fam LR 692 at 707; On v On [2002] NTSC 18 and Burgess v Rawnsley, though seen by others as a subset of severance by agreement Saleeba v Wilke per Chesterman J at [46]), there must be, at the least, “a general dealing, sufficient to manifest the intention to divide the whole” Groom v De Vandes (1805) 11 Ves Jun 330 at 332; 32 ER 1115 at 1116. It is clear that the conduct must be mutual. A course of dealing by one joint tenant is not sufficient (Minter v Minter (2000) 10 BPR 18,133), nor is one tenant’s assertion that the joint tenancy is to be severed (Corin v Patton (1990) 169 CLR 540). What is required is that the parties, by agreement or conduct, have treated themselves as if they were separate owners of their interests.

71 In Saleeba, Chesterman J approached the question by reference to what was said in Sprott “Was there a course of conduct inconsistent with a joint tenancy from which one would objectively infer an intention to hold property as tenants in common?” His Honour noted that in Slater v Slater (1987) 12 Fam LR 1, Cohen J had rejected an argument that a joint tenancy had been severed in circumstances where, in the course of negotiations between parties’ solicitors following the dissolution of a marriage there was an acceptance of the defendant’s solicitors that the joint tenancy be severed, subject to, or conditional upon agreement in relation to costs. Cohen J said (at 5):

[T]he reply took the matter no further than indicating that the defendant would, subject to costs, consent to orders being made by the court which would themselves effect a severance and the creation of a tenancy in common.
Further, the dealings must be taken as a whole, and one should look at what follows. The deceased failed to give further instructions for another three years, and when he did so, there was no assumption that the parties had agreed on severance.

72 His Honour considered, “In effect, whatever else might be required … the creation of a tenancy in common must be acknowledged as having been decided upon so that thereafter, whether the negotiations are concluded or not, the mutual attitudes of the parties on this aspect is unchanging”.

73 In noting that Burgess must be regarded with caution by courts in Australia, Chesterman J said, “In particular if a course of dealing is to be relied upon as establishing a consensus (to use the word employed by Mahoney P in Magill) it must be a course of dealing in which all co-owners participated and the intention to sever to which the course of dealings give rise must be the intention held in common by all the co-owners. The unilateral acts of one co-owner will not suffice, nor will an intention of that co-owner to bring about the severance, however forcibly expressed to the others. The course of dealing must be mutual give rise to a common intention.”

74 Although, in Pfeiffle, Ormiston J noted, “The slightest indication of the holding of separate interests has been considered to point to a tenancy in common”, this does not appear to be the approach in Fenato or Saleeba. What is necessary is a dealing by the parties with the property in a manner consistent only with their being tenants in common.

Was there a severance?

75 In each case, the onus is on the executor to show either an agreement or a course of conduct pointing unequivocally to a mutual intention to sever the joint tenancy.

76 Here, Counsel for the executor (Mr Marshall) relies upon an oral agreement said to have been reached in about 2005/6 between the deceased and Mrs Scott to divide up their assets, as effecting a severance by agreement; alternatively he relies upon the conduct said to be referable to such an agreement as effecting a severance by conduct.

77 In so doing, the executor relies on the fact that there was a clear course of conduct, commencing from the time of Mrs Scott’s announcement that she was not prepared to live under the same roof as the deceased (or, to use her words, wished to live under a different roof from the deceased), pursuant to which the couple’s joint assets were divided equally between them.

78 In this case, there certainly appears to have been a practical division of assets of some sort. It is not disputed that the deceased assisted Mrs Scott to find her own home and that it was purchased in her own name on 10 May 2005 with the assistance of a guarantee or bridging finance guaranteed by the deceased. (Mrs Scott accepted that the deceased had guaranteed the mortgage in respect of the purchase of the Nelson Bay property (T 36.42) but denied that this was part of an arrangement she had with the deceased about splitting up their joint property.) The Soldiers Point property and Long Jetty property were both put on the market and (significantly in my view since the division of assets went beyond what was necessary to secure the acquisition of separate accommodation for each) “Flawless” was sold in July 2005 and Wanda Beach Realty was closed down in late 2006.

79 Out of the respective sale proceeds, most, if not all, was applied to discharge the mortgage over the Nelson Bay property; part was applied to purchase the Salamander Bay property; amounts totalling $106,683.50 were paid into Mrs Scott’s personal Westpac account and the balance of the proceeds of sale were paid into the jointly held Westpac account from which the deceased purchased a motor vehicle and transferred a total of about $190,000 for his own benefit (Ex 5 p 23, entry numbers 399, 401, 402 and 405). This is consistent with the inventory of property showing a term deposit and other investments at a total of about $204,000 (plaintiff’s affidavit 10 November 2008 para 6). There therefore appears to have been a division of property between the couple, roughly on a 50:50 basis, if (as it would appear the deceased had assumed) the Long Jetty property had been held 50:50 rather than 75:25.

80 It is said that the payment into a joint bank account is inconsistent, in effect, with there being a division of the proceeds of sale such as to sever the joint tenancy. Nevertheless, insofar as the proceeds appear simply to have been deposited there before the subsequent division and payment out of most of the moneys to or for the respective parties, it is not clear to me that the joint nature of the account bears the significance contended for by Mr Armfield.

81 There is no evidence that Mrs Scott objected to the deceased placing the Salamander Bay property in his own name, and she cannot claim to have objected to the title being put in her own name of the Nelson Bay property, (she accepted that the deceased did not want to have anything to do with the Nelson Bay property in his own name (T 36.39/42) something she says was because “He would not buy anything because he wanted me to stay” (T 58)), but it is said that one cannot imply out of that either an agreement or an unequivocal common intention to divide the assets.

82 It is submitted by Mr Armfield that, on the Re Allingham line of authority, the conduct of the parties by reference to Mrs Scott’s acquisition of the property out of the proceeds of Long Jetty, and the deceased’s acquisition of the Salamander Bay property, with the deposit of the balance of the proceeds of sale of both properties into a joint account, is neither unequivocal nor is it mutual conduct pointing to a severance.

83 The evidence Mrs Scott herself put before the court (see the emails annexed to her affidavit of 12 August 2008) shows very clearly not only that the deceased understood that by late 2007 there had been a separation but also that the deceased considered that there had been an agreement with Mrs Scott for the division of their jointly held assets (although acknowledging the possibility that Mrs Scott might seek to challenge that in the Family Court because there had been no formal settlement approved by the Family Court). The deceased’s email on 9 August 2007 to his son Neil makes this clear. While that goes only to the question of the deceased’s intention, it is relevant that Mrs Scott also appears to have accepted that, from a practical point of view, there had been a rough division of the couple’s assets.

84 When Mrs Scott came to prepare her response to the deceased’s Notes of Explanation, her complaint as to the accuracy of what had been recorded by the deceased seemed to be not his assertion that there had been a division of their assets during his lifetime but rather that he had reneged or resiled from an agreement with her in relation to the making of mutual wills (a matter previously in issue in this proceeding but, by the commencement of the hearing, no longer pressed). There was no express dissent from the proposition in the deceased’s Notes of Explanation that the parties had decided to split up or divide their property assets. Indeed, Mrs Scott asserted in her To Whom it May Concern letter that she and the deceased had “made a deal” at or about the time of their separation; and she conceded in the witness box that by that she meant they had had an agreement (T 46.32). Under that “deal” she appears to have understood that the balance of their assets (as divided) were to come to her on the deceased’s death and she would leave her estate to the respective children, stepchildren, beneficiary and foster daughter “as in our original wills”.

85 Consistent with this, in cross-examination Mrs Scott agreed that the two had agreed or had a plan as to what was to happen with (the sale of) all of their properties (T 47). Mrs Scott conceded that the two had discussed what was going to happen to all of the properties (T 47). She knew that the deceased was going to buy a place in his name, “Certainly he showed me the property that he was wanting to buy and was going to be in his name. Certainly” (T48.27).

86 Mrs Scott nevertheless denied that the couple had divided their assets (T 43.47 - “we had heaps of things, we didn’t divide, we agreed that we would find me a place.”). Mrs Scott became very upset in the witness box when recounting that, when she had bought the Nelson Bay property with a ramp to the front door, she had said to the deceased “I can wheel you up that when you lose your legs”, and went on to say, “I would never have ever left him”, (although she must clearly have been speaking in terms that would never had stopped looking after him since she had in fact already left him, in the sense of moving out of their accommodation). Again, while she said, “I would always have looked after him”, she seems to accept that the position changed in that regard in June 2007 (see her affidavit para 13, 24 October 2008).

87 Significantly, at T 51.11 Mrs Scott said, “He might have said that [that they were dividing their assets by mutual agreement]. I don’t remember it”.

88 What Mrs Scott in fact seems to have denied was not that there was a mutual intention or understanding as to division of assets but that there had been any “final settlement”; in other words she seems to have understood that their assets were to be divided and held separately during the balance of her (and the deceased’s) lifetime and then willed by one to the other on death. That is inconsistent with the continuation of a joint tenancy.

89 Mrs Scott said, “I don’t agree with what Chris says here [in the Notes of Explanation]. We didn’t agree. You see, sir, I think agreement means you write it down and it says this is what you are going to have and that is what I am going to have. If that is what you mean by agreement there was no agreement” (T 53.5). She did not agree that they had reached an agreement by talking about it “not like what Chris says. No.”. She said “We are here because he reneged his agreement with me and that honoured to him [not to change their wills] … well, I now I have been told there is nothing legally binding. I believe there was, so did Chris, until he got different advice, and that is why Chris didn’t tell me, I reckon, because he would have known I would have punched his lights out, or divorced him or had done something. But I would not have accepted that”.

90 The deal that Mrs Scott understood to have been made was an agreement for mutual wills of the kind first pleaded in these proceedings (T 48.37), “I do not dare, I am frightened to say, until either of us died [she was to have the Nelson Bay property and he was to have the Salamander Bay property], and whoever died got it first and then – so you are saying, if I had died, it would have all gone to Chris and if he died, it would have all come to me?” She seemed to suggest (T 48) that the only arrangement, agreement or understanding there was between them was that each was to have their own separate property until one of them died and that the other would then have all the property.

91 In this context the understanding that there was a “deal” for the division of their property in their lifetime is consistent with the evidence Mr Nash gave (affidavit 12 November 2008) that in about October 2006 Mrs Scott had telephoned him and said, “Chris and I are dividing up the property. Chris says that the Holden Statesman is worth about $10,000, what do you think?”

92 Mrs Scott denies that the discussion took place in these terms but admits that at some stage in 2006 (when she says she was seeking advice to complete a list of assets and liabilities for Centrelink) there was a conversation as to what the Statesman would be worth. Mr Nash was cross-examined about this conversation and was considered, and not shaken, in his responses (T 54.1 to 56.14).

93 Reliance was placed by Mr Marshall on the fact that when responding (carefully) to this paragraph in Mr Nash’s affidavit (para 53), Mrs Scott had looked up the payout figure for the Statesman prior to preparing her affidavit because she did not want to put a wrong figure in there but she nevertheless had not denied the assertion by Mr Nash in the first sentence of paragraph 53.

94 Although Mrs Scott was adamant in the witness box that she had not said to Mr Nash that she and Chris were dividing up their property (T 56.3/56.10 – “no way. … I am not saying that Mark and I did not talk about a car but, I didn’t, I didn’t discuss with him dividing up property …”), in general I would prefer Mr Nash’s evidence where it conflicts with that of Mrs Scott. I say this, having regard to the view I formed of each of the witnesses insofar as the other conflicting evidence between the two was concerned. In this regard, there was a factual dispute between Mrs Scott and Mr Nash as to a conversation which took place on the very night of the deceased’s death. It is not directly relevant for the determination of any issue before me (going to the question whether Mrs Scott was aware, before the deceased’s death, of his intention to change his will) though it would have been relevant to the estoppel claim initially brought by her.

95 Mr Nash deposed to a conversation with Mrs Scott which he had in the car driving back from the hospital (with the beneficiary in the car next to him) on the night the deceased had died, in which he says Mrs Scott asked him if the deceased had made a new will and indicated that she knew the deceased had talked about changing his will. Mrs Scott does not deny that a conversation took place on this occasion but says that she was only enquiring as to the making of funeral arrangements. I accept Mr Nash’s version of the conversation. Mr Nash who gave his evidence quietly and in a balanced way (considering what was put to him before answering, clarifying questions where he did not understand them and admitting where he was unclear of or did not recall something), was clear in his recollection of the conversation and the circumstances in which it took place. It seems to me that he had reason to recall it in detail, in that he says he was shocked at such a question on the very night the deceased had died and seems to have been upset at having to deal with such a topic while he was in a car with the beneficiary beside him at the time. Mrs Scott’s evidence on the other hand was contradictory and confusing. In general I found Mr Nash to be a more reliable witness than Mrs Scott.

96 Mr Nash’s account of the conversation on the night of the deceased’s death is supported by the fact that almost immediately after the deceased’s death Mrs Scott took possession of the deceased’s property (in circumstances where it does not seem there was any pressing need to do so) and appears shortly thereafter (since she had seen the Notes a week or so after the deceased’s death and saw her solicitor to contest the will as early as 8 January 2008 – T 45.12) to have accessed the deceased’s computer including his personal correspondence, thereby obtaining a copy of the Notes of Explanation that the deceased had prepared in relation to the will (as well as various personal emails from the deceased to third parties which Mrs Scott somewhat curiously annexed to her own affidavits, apparently to provide evidence of the deceased’s state of health at the date of his death and the thousands that she said had been spent on him during his life).

161 The matters which may be taken into account on this second (discretionary) limb of the enquiry were referred to in Singer v Berghouse.

(i) Contributions to property and welfare of deceased

162 While there was some suggestion in the affidavits for the defendant that some of Mrs Scott’s contribution over the years to the businesses of the deceased was less than she had in her affidavit evidence suggested, this was not put to Mrs Scott in cross-examination and it seems to me that the evidence shows a relatively equal contribution over the years by both parties to the marriage in a monetary sense. There seems little doubt that, even after their separation, Mrs Scott continued to contribute to the welfare of the deceased at least until around June 2007.

(ii) Conduct of the applicant

163 In Re Gilbert (1946) 46 SR (NSW) 318, Jordan CJ considered (at 321) what was disentitling conduct for the purposes of this test:

… character or conduct relevant to the purposes which the Act is intended to serve, for example, misconduct towards the testator, or character or conduct which shows that any need which an applicant may have for maintenance is due to his or her own default.

(See also the discussion of Clarke JA, with whom Handley JA agreed in Price v Roberts [1992] NSWCA 191.)

164 I am not satisfied nor was it suggested, that that there was any disentitling conduct here.

(iii) Circumstances before and after the deceased’s death

165 I have considered above the circumstances prior to the deceased’s death and some of what happened after the death.

166 The fact that Mrs Scott has assumed occupation of the premises in Salamander Bay and refused to hand up occupation of the premises to the executor is not disentitling conduct viz-a-viz the deceased, nor it is disentitling conduct within the definition in Re Gilbert, which suggests that the disentitling conduct must be conduct which relates to the actual inadequacy or reason for the inadequacy of the maintenance.

167 However, it is a factor which I consider should be taken into account on at least one basis – Mrs Scott has had the benefit of occupation of the Salamander Bay property for 18 months. In that time the estate has not been in a position to earn rent (although there is an agreement for an occupation fee payable from June 2008 in certain circumstances). More importantly, however, Mrs Scott’s financial circumstances cannot have been such that she was in desperate need of income since she has apparently been prepared to leave the Nelson Bay property untenanted for that length of time. It might be thought that the speed with which Mrs Scott assumed possession of the property seems to have been in order to prevent the estate from exercising any rights thereto, not because of any need on her part.

168 Another factor which might potentially have been (but I think ultimately is not) relevant to take into account in this context (though which, if nothing else, supports my conclusion as to the severance of the joint tenancy, insofar as it makes clear that what Mrs Scott was, in effect, complaining of was a perceived breach by the deceased of an agreement or understanding as to mutual wills) is the tenor of Mrs Scott’s response to the exercise by the deceased of what (subject to curial intervention) was his freedom of testamentary disposition.

169 Mrs Scott says that she wrote the “To Whom it May Concern” letters (at p 49 of Ms Tunnicliff’s affidavit) in response to the deceased’s Notes of Explanation because her son had asked her to put on paper her thoughts “in the hope that we could resolve the, the things without going to court” (T 38.1). If that was the purpose of the document, it would seem at best to have been infelicitously expressed.

170 What Mrs Scott seems to have set out to do was, in effect, to play upon the perceived unfair treatment of others in the family (particularly the deceased’s sons) for whom provision was not made under the will, in putting forward her own position (which was that she should receive all the estate):

I can imagine how disillusioned, disappointed and even devastated Neil and Karen must have been when they found that Chris had left his “whole estate” to [the beneficiary]. I was delighted. Delighted because everyone can now see just how unfair it is and was for Chris to single out [the beneficiary]. No-one could love [the beneficiary] more than I do but quite apart from how special she is to us all I was continually remind Chris that [the beneficiary] was only one of our seven grandchildren. … How must Brett feel that Chris didn’t formally provide for his own biological grandchildren? … When we go to Court the whole family could well be at one end of the Bar Table and [the beneficiary] and Mark as her Guardian at the other. … What a mess Chris has created for all those of us who loved and cared for him and without whom he’d have been a very lonely man.

and, in effect, to threaten to disinherit her family:

…if I am forced to contest the Will anything the Court sees fit to award me will then be mine and if I so chose I can leave it to whomever I please, perhaps even to St Vincents Hospital for research into bone-marrow disease.

171 Whatever may be thought of the above, in Worsley v Solomon [2008] NSWSC 444, McLaughlin AsJ noted (at [38]) that an order for provision is not a reward for services and good conduct, nor is it a punishment for perceived bad conduct. Accordingly, (and accepting that the letter is likely to have been written in a state of some emotion, since from her evidence in the witness box Mrs Scott certainly feels strongly about what happened) I do not take this conduct into account on the Family Provision Act application (although, as noted, so far as it is indicative of perception that there was a “deal” in relation to mutual wills this strengthens the conclusion I have reached on the severance of the joint tenancy).

· Conclusion

172 In Bladwell v Davis [2004] NSWSC 170, Ipp JA said (at [53]):

…where competing factors are more or less otherwise in equilibrium, the fact that one party is the elderly widow of the testator, is permanently unable to increase her income, and is never likely to be better off financially, while the other parties are materially younger and have the capacity to earn more or otherwise improve their financial position in the future, would ordinarily result in the needs of the widow being given primacy.

173 However, it is also relevant to note the caution expressed in Cropley, where Barrett J said (at [53]):

It must also be borne in mind that, if the threshold is resolved in favour of intervention by the court, that intervention should only be to the minimum extent necessary to make adequate provision for the proper maintenance, education and advancement in life of an applicant. (citing Permanent Trustee Co Limited v Fraser (1995) 36 NSWLR 24; King v Foster (unreported, NSWCA, 7 December 1995).

174 Here Mrs Scott has (or will, on receipt of the sum she will recover on her principal claims, have) security of accommodation (free from her current mortgage and with the funds to carry out necessary repairs), as well as the funds to acquire a new car. Her ability to maintain her post-separation lifestyle seems likely to be significantly improved. Such a lump sum (albeit paid by reference to amounts I have found owing to her) would provide the kind of legacy which might be described as a hedge against the vicissitudes of life. The precise extent to which the current deficiency of income, having regard to her lifestyle, will thereafter be ameliorated is something I cannot assess without further information.

175 Mrs Scott’s main complaint is that her husband changed his will and did so without telling her (thus depriving her of the opportunity to divorce him and/or to seek a property settlement while he was alive). What any family law property settlement might have been, I do not know. Mrs Scott seems to have thought 75% but there was no evidence on which I could make any such conclusion. Mrs Scott abandoned her claim based on an alleged agreement to make mutual wills or any estoppel in relation thereto, it being conceded (as I understand it) that there was insufficient evidence of a binding agreement to this effect.

176 Mr Marshall submitted that at most a modest legacy (say in the order of $50,000 to $70,000) should be allowed for Mrs Scott (but that was in the circumstances where the executor also denied the principal claims). Mr Armfield submitted that this would represent a provision of somewhere in the order of 10% of the estate and that this was too low for a widow, albeit an estranged one. However, if the matter is to be approached in percentage terms, one must still take into account that the provision to be made (in light of my earlier findings) is to be made out of a reduced distributable estate (of about $315,000). I also note that the estate has been deprived by her conduct of the benefit of rent (or income from any sale) in respect of the Salamander Bay property which has been occupied by Mrs Scott effectively since the deceased’s death.

177 In the circumstances, I think the proper provision for Mrs Scott is to give her a legacy of $40,000 out of the estate but in addition to order that, as part of her provision from the estate, Mrs Scott should be relieved of the obligation to pay to the executor the occupation fee agreed last year (a benefit to her of approximately $23,000 on my calculations) provided that she vacates the Salamander Bay property within a reasonable time (as specified by the executor) to enable the property to be sold or otherwise dealt with by the executor without further delay. Effectively, then, the benefit Mrs Scott will receive out of the estate under the Family Provision Act claim is something in the order of $60,000 (or approximately 20% of the distributable estate after her principal claims and costs are met).

Relief

178 For the reasons above, I propose to order that:

1. Mrs Scott be paid the sum of $ 150,087.09 plus interest from the date of death (calculated at the rates set out in the Schedule 5 of the Uniform Civil Procedure Rules ) out of the estate in full satisfaction of her claims in respect of the balance of proceeds of sale of the Long Jetty and Soldiers Point properties and to any other assets formerly jointly owned with the deceased.

2. There be provision made out of the estate for Mrs Scott in the form of a legacy of $40,000 and the release of the obligation undertaken by her in June 2008 to pay an occupation fee for the Salamander Bay property (provided she vacates the Salamander Bay property within a reasonable time).

179 I will hear submissions from the parties as to the precise form of orders.

**********