Shorey v Hansford

[2003] NSWSC 889

CITATION:	Shorey v Hansford [2003] NSWSC 889
HEARING DATE(S):	10, 11 September 2003
JUDGMENT DATE:	1 October 2003
JURISDICTION:	Equity Division
JUDGMENT OF:	Windeyer J at 1
DECISION:	Order that provision be made.
CATCHWORDS:	FAMILY PROVISION AND MAINTENANCE - no provision made by will of mother for adult daughter - no competing claim of sole beneficiary - statement in will as to reason for omission - provision made by father for daughter - whether provision ought to be made - factors taken into account
LEGISLATION CITED:	Family Provision Act 1982, s7, s9(2)
PARTIES :	Annette Leonie Shorey (Plaintiff) Richard Clive Hansford and Ian Stuart Goddard (Defendants)
FILE NUMBER(S):	SC 5850/01
COUNSEL:	L Ellison (Plaintiff) A M Colefax (Defendants)
SOLICITORS:	E H Tebbutt & Sons (Plaintiff) McCoy, Grove & Atkinson (Defendants)

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IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

WINDEYER J

WEDNESDAY 1 OCTOBER 2003.

5850/01 ANNETTE LEONIE SHOREY V RICHARD CLIVE HANSFORD AND ANOR RE THE ESTATE OF THE LATE EILEEN VIOLET HURDIS

JUDGMENT

1 The plaintiff seeks an order under s7 of the Family Provision Act 1982 for provision out of the estate of her mother, Eileen Violet Hurdis.

2 Mrs Hurdis died on 11 September 2000. She left a will dated 27 October 1995 probate of which was granted to the defendants on 7 December 2000. Under that will the deceased left her whole estate to her son, John Philip Hurdis. If he had not survived then there was a gift over to the two sons of the plaintiff.

3 Paragraph 7 of the will of Mrs Hurdis is as follows:

7. I have not made any provision directly in favour of my daughter ANNETTE LEONIE SHOREY because of the attitude adopted to me by her since my husband's death and also because of the provision which has been made for her under my husband’s will and through the family company and Trust.

4 Mrs Hurdis was a widow. Her husband, William Hurdis, died in 1990. There were children of the marriage, namely the plaintiff and John Hurdis. Mr John Hurdis has never married. He always lived in his parents’ home in Highlands Avenue, Gordon. He was born in 1943 and the plaintiff in 1944. Their father carried on for most of his working life a successful timber business.

5 The deceased’s estate consisted of a home unit Epping, money on deposit and shareholdings in listed and unlisted companies. It is not necessary to consider this in detail as attention should be directed to the assets and their value at the present time, there having been no distribution. Those assets, together with their estimated values are as follows:

Real Estate property 9/9 Ray Road, Epping $ 350,000.00
Shares in public companies $ 65,660.00
Shares in H & W Hurdis Pty Limited $ 196,693.00
Moneys on deposit $ 144,600.00
$ 756,953.00

6 It is estimated that the costs of this hearing for both sides will come to a total of about $50,000, leaving an estate available for distribution of $700,000.00 not taking into account the claim of the executors for commission.

7 Although they were married for nearly fifty years the evidence is that the marriage of the deceased and her husband was not particularly close or happy. Mr Hurdis Snr, died in 1990 and by his will gave legacies of $20,000 to each of his wife, son, daughter and two grandchildren, being the plaintiff’s sons, Benjamin and Carlin. He gave another legacy of $10,000.00 to a niece and after some gifts of jewellery and furniture to his son and daughter, he gave the property 27 Highlands Avenue, Gordon and its contents to his widow for life with the remainder to the plaintiff and her brother in equal shares. He gave the residue of his estate as to one-fifth to his wife and as to the balance to his son and daughter in equal shares so that that they took two-fifths of residue each. The share of residue of the plaintiff amounted to about $268,000.00 including the value of 395 shares in H&W Hurdis Pty Limited worth about $226,000.00.

8 The plaintiff, Mrs Shorey, trained and qualified as a veterinary surgeon in 1968. She married for the first time in 1981. Benjamin was born in 1982 and Carlin in 1986. The plaintiff ceased employment as a veterinary surgeon in 1982. Her first marriage was not successful and was dissolved in 1988 and in 1990 she married her present husband.

9 In view of the provisions of Clause 7 of the will it is necessary to set out some details of the real estate properties owned by the plaintiff from time to time to indicate the assistance that she received from her father and from various trusts which it seems clear he controlled. In 1966 the plaintiff’s father gave her a home unit property in Ray Street, Turramurra. He gave a similar property to his son. The plaintiff sold her Ray Street unit in 1996 for $180,000, but she had had the benefit of it or the income from it for thirty years. Prior to this Mr Hurdis, Snr had purchased for the plaintiff and her brother a block of land at Wentworth Falls which was sold in 1988 for $15,000.00.

10 In 1976 the plaintiff purchased property 9 Bundarra Avenue, Wahroonga. This was sold in 1986 for about $175,000.00 and the plaintiff and her first husband and children moved to 41 Braeside Street, Wahroonga which she had purchased for about $400,000.00. Of that sum, her father paid the deposit of $34,000.00 and it seems that he provided for her a further sum of $210,000.00 probably from the trust and it seems likely that he also provided from that or another trust the sum of $96,000.00. The evidence of all this is quite unsatisfactory. While the plaintiff considered the $210,000.00 to be a gift it became clear later that her father did not necessarily think so. In 1990 the plaintiff sold the Braeside Street property and she and her husband purchased their present property at 25 Billyard Avenue, Wahroonga as tenants in common, he as to a one-fifth share and she as to a four-fifths share. The sale price of the Braeside Street property was somewhere between $490,000.00 and $500,000.00. The purchase price of the Billyard Avenue property was $940,000.00. Quite how the purchase price was financed is not quite clear. There was a bank mortgage for part. The trust appears to have contributed a further sum of $300,000.00. Both the plaintiff and her husband gave a mortgage to the trust to secure the sum of $510,000, which mortgage was registered on the title. As far as it was possible to glean from the plaintiff’s evidence the $150,000 comprised the $210,000 advanced for Braeside Street and an additional $300,000 advanced for Billyard Avenue.

11 The plaintiff’s father died in 1990. At this stage her brother became aware of the mortgage and this seems to have created some antagonism between the plaintiff and her brother, and the plaintiff and her mother.

12 In 1995 the plaintiff and her husband took proceedings in equity against Abalsand Pty Limited, the trustee of the family trust, seeking a declaration that of the sum of $510,000 subject to mortgage, the sum of $210,000 had in fact been the subject of a gift. Abalsand Pty Limited cross-claimed for the amount claimed due under the mortgage, namely $510,000.00 plus interest. The proceedings were settled on terms that Mrs Shorey and her husband paid to Abalsand Pty Limited the sum of $531,341.00 in satisfaction of the mortgage debt and interest; that they surrendered or disclaimed any further interest as beneficiaries under the trust; and that the plaintiff resigned as a director of H&W Hurdis Pty Limited and sold her shares in that company to the trust for the sum of $534,923.00. If that last figure was agreed to be their value it is clear that there had been a considerable increase in value, at least so far as estimated values were concerned between the date of her father’s death five years earlier and the date when the settlement was arranged.

13 After her mother’s death the plaintiff sold her then one half absolute interest in the Highlands Avenue property to her brother for $350,000.00.

14 On the very unsatisfactory state of the evidence I arrive at the following benefits received by the plaintiff from her father or from trusts controlled by him as a result of the matters to which I have referred:

One half share of Wentworth Falls
Ray Street Turramurra unit – value on sale $180,000 plus
rent received for thirty years
Braeside Street, Wahroonga property $34,000 deposit
plus $210,000 apparently interest free from the date
of purchase until 1990 and probably a further $96,000

Billyard Avenue property, $300,000 by way of loan
at favourable interest with the loan also taking in the
$210,000

From the estate of her father pursuant to the will
Including the remainder interest realised on the death
of the life tenant, $ 618,000

I note that by 1995 the value of the private company shares had increased by about $150,000 and that increase is not included in the $618,000.00.

15 There is further evidence from the accountant for the late Mr Hurdis, who is also an executor of his will, that the plaintiff received from the Hurdis and Abalsand trusts from 1984 until 1995 a total of $235,263.00. This probably includes the sum of $96,000.00 referred to already and may include payments made on behalf of the plaintiff for income tax. The plaintiff’s husband also received benefits from the trust, probably totalling $104,000.00 during the same period.

16 The evidence on all this was quite unsatisfactory. Neither side made the slightest attempt to give a coherent story of the payments, whether by way of gift or loan. Figures provided by the accountant, which were not subject to challenge, cannot be reconciled with the evidence of the plaintiff, nor with the admitted amounts advanced for the real estate properties. For instance, it is accepted by the plaintiff that she received over a period of ten years from 1984 to 1995 the sum of $800.00 per month, which must have been separate from the amounts advanced in connection with the real estate property.

17 I return to the plaintiff. After her divorce her sons remained with her and she has been responsible for them, although since 1995 her first husband has made some contributions towards their maintenance of about $5,500 to $6,000 a year. Both boys attended Knox Grammar School from the age of ten. Benjamin is now in the third year of a degree in international studies but this year he is studying in Germany for twelve months. Carlin is in year 12 at school and can be expected to go to university next year. Neither son has any income. The evidence does not disclose whether either has had any employment at all.

18 As I said the plaintiff gave up practice as a veterinary surgeon in 1982. She has had some part time employment since. Her affidavit evidence was quite unclear about this but for a number of years, probably from 1998, she has been engaged with an organisation called Herbalife which organisation is involved with marketing and perhaps producing health products. It was quite impossible to glean from the oral evidence given on cross-examination what was the nature of the business of Herbalife or the plaintiff’s involvement with it. Certain it is that she published misleading advertisements about herself on the Internet dealing with her association with the company in an attempt to sign up people as distributors. She stated that this was not pyramid selling but there seemed to be levels of commission from any product sale for many people far removed from the actual sale and from the product. Whatever the position the plaintiff’s income from this business is very small. In 2002 she received $872.00; this year to August she has received $356.00.

19 The plaintiff’s husband was at the time of their marriage Professor of Anatomy in the University of Sydney. He has since retired but is engaged again in part time teaching. His income from his pension and from other places at the time the plaintiff filed her first affidavit on 20 December 2001 was $1,200.00 a week. The weekly income of the plaintiff at that time was $332.00, from investments, government payments and her own earnings from Herbalife. The present position of the plaintiff and her husband so far as assets and liabilities is concerned is as follows:

Assets
House 25 Billyard Avenue, Wahroonga, valued at $1,450,000
Two motor cars $ 44,000
Professor Shorey superannuation and shares $ 54,500
Professor Shorey household contents $ 250,000
Jewellery $ 15,000
$1,813,500
Liabilities
Mortgage $ 250,000

20 The present household income has increased to $1,840.00 a week partly because Professor Shorey is doing part time work for the University. The family outgoings per week are stated to be the following:

Mortgage $ 650
School fees for Carlin $ 300
Housekeeping $ 500
Medical benefits payments $ 240
Other expenditure for Benjamin and Carlin $ 320
$ 2,010

21 The income stated does not take into account the payments of whatever amount the plaintiff received from her first husband towards the expenses of the children which is about $120.00 per week.

22 The school fees will end this year so that although there will be some outgoings for Carlin the income and expenditure should be about equal. At least while Professor Shorey has some part time work. Once again these figures cannot be accepted as being completely accurate.

23 Even more difficult to work out is what happened to the $350,000.00 the plaintiff received on sale of her interest in the Highland Avenue property to her brother. In her affidavit of 20 December 2001 the plaintiff said that after payment of various debts she invested the balance and drew on it for some ongoing household expenses. At that time the balance which remained was $155,000.00. In her affidavit of 5 September 2003 the plaintiff said that this sum had been spent. The major item of expenditure indicated was $95,000 to reduce the mortgage debt, $5,000 for her husband to pay some of his debts, $1,000 on dental work for Benjamin and $4,000 for a medical pressure pump required to treat her medical condition.

24 The oral evidence of the plaintiff did little to clear up what happened to the $350,000.00. In her first affidavit sworn 20 December 2001, she said that she had about $155,000.00 left and that the mortgage debt was then $350,000.00 As to the expenditure of about $195,000.00 from the $350,000.00. The plaintiff in oral evidence said that she had used $100,000.00 to reduce the mortgage debt and the balance on school fees and household outgoings. The mortgage debt was reduced according to the plaintiff’s second affidavit by a further payment of $95,000 and the time of the hearing was stated to be $250,000.00. But in answer to questions from me trying unsuccessfully to elucidate this matter, the plaintiff said that only one payment had been made in reduction of the mortgage debt, that being about $100,000.00. If that were so then the plaintiff had spent $250,000.00 in about two and half years on school fees and family outgoings. It is more likely I think that she spent about $150,000.00 on those expenses.

25 Applications under the Family Provision Act do require that there be clearly set out statements of assets, liabilities, income and expenditure of the plaintiff and usually of the family, and that where it is relevant, as it must have been here, the items on which substantial moneys, such as the $350,000.00 received from the Highlands Avenue interest were expended. The work for which solicitors charge should be directed towards a clear exposition of these matters, not to affidavit evidence leading to confusion. The plaintiff in oral evidence was quite unable or unwilling to give any real assistance, I thought probably in part because of her feelings of adversity towards her brother and her late mother.

26 I have already said that the relationship between the plaintiff’s father and mother was not a close or happy one. Her mother did not attend her father’s funeral. Neither was the relationship between the plaintiff and her mother a close one. The plaintiff said that her mother rarely visited her homes, though her father was often at those homes helping her. Her mother took no interest whatsoever in her second husband or in any of her homes or as far as I can see in her needs. Her mother refused invitations to go out to dinner with the plaintiff and her husband and her sons, except it seems on two occasions between 1990 and her death. The deceased, who was not the lender, demanded repayment of the loan of $510,000.00 seven days after the plaintiff’s father died. The plaintiff said that she regretted this poor relationship, that she tried to improve it but could get nowhere. I accept that evidence. It was not challenged.

27 The first matter to be stated after considering these rather inadequate facts, is that the plaintiff’s brother does not put forward any competing claim arising from his own financial circumstances. Thus the position is that if an order should be made for the plaintiff the court can make whatever provision is appropriate without regard to any competing claim.

28 The next matter arises from a consideration of s9(2)(a) of the Act under which the court is required to take into account provision made by the deceased’s mother for the plaintiff during her life. Apart from one matter put forward by counsel for the defendants there was no provision. There was however, significant provision by the plaintiff’s father: that is a matter which I consider to be a relevant matter under s9(2)(d) of the Act. The argument of counsel for the defendant was that the deceased had made some provision for the plaintiff by refraining from bringing a claim under the Family Provision Act for provision out of the estate of her husband. That is, I think, an impossible claim. There is no way the court can find if any such claim would have succeeded. There is no evidence that the deceased considered making a claim. There is no evidence that had a claim succeeded it would have borne upon the plaintiff’s share in her father’s estate. The argument is quite speculative and without foundation. The court should not accept the proposition that failure to make such a claim in some way confers a benefit.

29 There can be no doubt that the financial position of the plaintiff is not strong. If there were no other matters requiring consideration there would be no difficulty in determining that an order should be made nor probably the extent of that order. In this case the facts which bear on this are (1) Clause 7 of the will; (2) provision made by the plaintiff’s father for her during his lifetime and by his will; (3) the relationship between the plaintiff and her mother and (4) the standard of living of the plaintiff and her expenditure of funds she has received from the estate of her father or through the trust as a result of his influence.

30 The clause in the will and the provision made must be considered together. It is clear enough that the deceased’s estate at least to some extent came to her from her husband. It is also clear that the plaintiff’s father, through the family company and the family trusts, owned or controlled what could be described as the family assets. The plaintiff would not have had the standard of home she has had, and probably would not have been able to provide the school fees for her children, or to remain outside the work force had it not been for her father’s assistance. The lack of any close relationship between the plaintiff and her mother is also a matter to take into account in considering the claim of the plaintiff and what is or is not proper provision. While it may not have been the plaintiff’s fault, the fact that the plaintiff was far closer to her father than to her mother, and received significant benefits from her father is to be taken into account.

31 There is no suggestion that the plaintiff’s present marriage is not a happy one. There is no evidence of whether the plaintiff will be entitled to some superannuation benefit if her husband pre-deceases her. There is no evidence as to whether or not Professor Shorey had been previously married or had children. As there is no such evidence it can be expected that items such as the household contents would be left to the plaintiff if her husband pre-deceased her.

32 The quite unsatisfactory evidence did at least establish that the plaintiff has little idea about money control or household financial control. While her father was alive he seems to have provided for her needs. Without his assistance she has had difficulties, probably not helped by lack of sympathy from her mother and brother. The fact is that the family are living in circumstances they cannot afford. Whatever might have been the position during the boys’ schooling the stated reason for wishing to retain the Billyard Avenue home are that there would be costs on sale and purchase and the plaintiff and her husband agreed it is an excellent investment. It could not be thought that there are no houses in the Wahroonga area where the plaintiff seems to have lived for many years which could be purchased for $1 million or less, which would be quite satisfactory for the plaintiff’s needs. If she took this course, after payment out of the mortgage and allowing for the cost and expenses of sale and purchase on a purchase price of $1 million, there should be a surplus of $100,000 and there would be no mortgage. If that course were taken then the weekly outgoings would be reduced by $650.00, and the plaintiff would have a capital fund of $100,000 and the income from that.

33 One final matter needs to be taken into account. The plaintiff is not in certain health. Once again the evidence was scanty. It did establish a medical condition which at the moment requires attention but is under control. It may however lead to medical expenses not all of which would be covered by private fund entitlements. Professor Shorey also has health problems. There is insufficient evidence of this but in a general way it should be taken into account.

34 The question then is whether there has been inadequate provision and if there has been whether provision ought to be made. The matters must overlap as was pointed out in Collins v McGain [2003] NSWCA 190. The position must be looked at at the present time, but the provision made by the plaintiff’s father and her relationship with her mother and the fact that the expenditure is not really accounted for must bear upon what is proper and whether there is a legitimate claim. The fact that an eligible person who is a child of a testatrix choses to live in circumstances which require expenditure beyond her means is to a large extent the decision of that person not to be automatically set at right by a parent.

35 I am satisfied that even taking into account these matters the plaintiff had a legitimate claim on the deceased and that in making no provision for her the deceased failed to make proper provision for her maintenance and advancement and that she ought to have made such provision. On the other hand I am not satisfied that an order in the amount put forward by the plaintiff’s counsel should be made, namely that she should receive something between 40% and 45% of the estate, or about $330,000. It is reasonable that the plaintiff should be able to provide for her sons to go to university; it is not necessarily reasonable for costs to be incurred in sending them overseas if there are no funds for that, nor that they should not make some contributions to their own maintenance and expenses while at the university, if they do not do so now. The court should not assume the worst, namely that the plaintiff’s husband will not be able to continue to contribute towards the family expenses and that funds will not be available in the event of his death.

36 The court cannot control what happens to provision made. It cannot make an order, a condition of which is that it be applied to discharge the mortgage, and in any event there might be a penalty involved in early discharge. This plaintiff is a daughter. Provision does not require a guarantee of continued living in the present home even if the deceased’s husband provided much assistance to enable the purchase of earlier homes. An unsustainable lifestyle at the time of death of the deceased does not mean that proper provision requires provision to enable that lifestyle to be maintained. It does however mean, in this case, that provision of a fund which if properly used will give the plaintiff some certainty for the future, ought to be made. I consider that proper provision is the sum of $200,000. That is the order I will make.

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Last Modified: 10/03/2003