Underwood v Caulfield

[2005] NSWSC 1164

CITATION:	Underwood v Caulfield [2005] NSWSC 1164 This decision has been amended. Please see the end of the judgment for a list of the amendments.
HEARING DATE(S):	25 July 2005
JUDGMENT DATE :	16 November 2005
JURISDICTION:	Equity
JUDGMENT OF:	Associate Justice McLaughlin at 1
DECISION:	1. I order that the Plaintiff receive a legacy in the sum of $80,000 from the estate of the late Darrell William Lyons ("the Deceased"), such legacy to be borne by the assets of the estate referred to in clause 3(b) in the will of the Deceased, and such legacy not to bear interest if paid on or before 16 December 2005, and if not so paid to bear interest at the rates prescribed for unpaid legacies pursuant to the Wills, Probate and Administration Act 1898. 2. I stand the proceedings over to a date to be fixed by arrangement with my Associate for argument as to costs.

CATCHWORDS:	Succession. - Family Provision. - Claim by mother. - Whether Plaintiff is an eligible person in relation to Deceased. - Factors warranting the making of the application. - Financial and material circumstances of Plaintiff. - Absence of contact between Plaintiff and Deceased during last six years of Deceased's life. - Relevance of services performed by Plaintiff for Deceased. - Competing claims of beneficiaries. - Needs of Plaintiff. - Whether Plaintiff, who has resided in rented accommodation for past eleven years, is entitled to obtain from the estate a benefit sufficient to purchase a residence.
LEGISLATION CITED:	Family Provision Act 1982 Wills, Probate and Administration Act 1898
CASES CITED:	Re Fulop Deceased (1987) 8 NSWLR 679 Singer v Berghouse (1994) 181 CLR 201 Vigolo v Bostin (2005) 79 ALJR 731
PARTIES:	Yvonne June Underwood (Plaintiff) Garry John Caulfield (First Defendant) Sandra Kathleen Evans (Second Defendant)
FILE NUMBER(S):	SC 6409 of 2003
COUNSEL:	A. L. Hill (Plaintiff) R. Quickenden (Defendants)
SOLICITORS:	Slater & Gordon (Plaintiff) Kevin Burrell (Defendants)

LOWER COURT JURISDICTION:

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

ASSOCIATE JUSTICE McLAUGHLIN

Wednesday, 16 November 2005

6409/03 YVONNE JUNE UNDERWOOD – v – GARRY JOHN CAULFIELD AND ANOR.

JUDGMENT

1 HIS HONOUR: These are proceedings under the Family Provision Act 1982.

2 By Summons filed on 19 December 2003 Yvonne June Underwood claims an order for provision for her maintenance, education and advancement in life out of the estate of her late son Darrell William Lyons (to whom I shall refer as “the Deceased”).

3 The Deceased died on 1 July 2002, aged 46. He left a will dated 4 February 1991, probate whereof was on 24 September 2002 granted to Garry John Caulfield and Sandra Kathleen Evans, the executors named in such will (who are the Defendants to the present proceedings). Each of the Defendants is a first cousin to the Deceased. The First Defendant is the son of the Deceased’s maternal aunt, whilst the Second Defendant is the daughter of the Deceased’s paternal aunt.

4 By that will the Deceased gave a legacy of $10,000 to the Apex Club of Lockhart Incorporated. He gave the balance of money in bank accounts and cash investments to be divided as to one half to the children of the First Defendant and as to the other half to the children of the Second Defendant. He gave the residue of his estate, after payment of debts, funeral and testamentary expenses, to be divided equally between the First Defendant, the Second Defendant and Karen Harris (who is the sister of the First Defendant).

5 The Inventory of Property discloses the following assets of the Deceased at the time of his death:

House property situate at and known as 62 Ferrier Street Lockhart, to which an estimated value of $40,000 is ascribed.
Furniture, watches and jewellery, having an estimated value of $2,000.
Moneys in savings investment passbook account with Commonwealth Bank of Australia at Narrandera, $53,012.
Superannuation policies and cash management trust $489,736.
Shares in companies, $93,248.
Funds held in Creaghe Lisle trust account $2,478.

6 The liabilities of the Deceased at the time of his death totalled $2,390.

7 It has been calculated on behalf of the Plaintiff (and the Defendants do not disagree with this calculation), that after payment of the pecuniary legacy and of the debts, funeral and testamentary expenses, the estate of the Deceased will be distributed as follows:

Tegan Caulfield (child of First Defendant) $135,687

Justin Caulfield (child of First Defendant) $135,687

Sonny Evans (child of Second Defendant) $135,687

Louise Evans (child of Second Defendant) $135,687

Total $542,748

Garry John Caulfield $45,908

Sandra Kathleen Evans $45,908

Karen Harris $45,908

Total $137,724

Grand total $680,472

8 The foregoing calculations have been made upon the basis that the estate is not subject to any depletion in consequence of the institution of the present proceedings.

9 It will be appreciated, however, that in calculating the value of the estate available for distribution the costs of the present proceedings must be taken into consideration, since the Plaintiff, if successful, will be entitled to have her costs out of the estate, whilst, irrespective of the outcome of the proceedings, the Defendants will be entitled to have their costs out of the estate. It is estimated that the costs of the Plaintiff will total $102,350, whilst those of the Defendants will total about $60,000. During the course of the hearing I observed that an amount of $102,350 for the Plaintiff’s costs of a one day hearing in a case that is not in any way out of the ordinary appeared to me to be excessive. Indeed, the $60,000 estimated as being the likely amount for the costs of the Defendant also appears to me to be excessive. If costs in amounts such as these continue to be claimed in family provision proceedings which are of short duration and are absent of complexity, it will be necessary for the Court to give serious consideration to placing a cap upon the costs which parties are entitled to recover from the estate which is the subject of the proceedings. In the instant case, doubtless the foregoing costs will, in due course, be the subject of assessment by a costs assessor.

10 Despite the observations which I have just made, I, nevertheless, consider it prudent, for the purpose of calculating the value of the estate available for distribution, that the Court should adopt a conservative approach and should make allowance for the possibility (albeit in my view remote) that costs in the foregoing amounts might be allowed out of the estate. In consequence, the Court should proceed upon the basis that the distributable estate may be as little as $518,000, although I would be surprised, and disappointed, if it were to be so.

11 The Plaintiff was born on 15 June 1933 and is presently aged 72. She has been married twice. Her first husband was Valentine George Lyons (referred to in the evidence as “Val”), whom she married on 19 June 1954. The Deceased, who was born on 28 April 1956, was the only child of that marriage.

12 According to the Plaintiff her marriage to Val Lyons was, for the most part, an unhappy one, and, as a result, in the 1960s and 1970s the Plaintiff suffered four nervous breakdowns, for which she was admitted to psychiatric hospitals for treatment. On each occasion she was in hospital for periods of between six and eight weeks and underwent electric shock treatments.

13 The Plaintiff and Mr Lyons separated in 1979, and they subsequnelty divorced. The Plaintiff married her present husband, Alan Underwood, in 1981. No children were born of that second marriage of the Plaintiff.

14 The Deceased resided with his parents in Narrandera until he was aged 17. After completing Year 10 he went to Sydney and to Canberra, returning to Narrandera at the age of 19. When the Plaintiff and Val Lyons separated in 1979 the Plaintiff moved into residence with her mother in Argyle Street, Narrandera. The Deceased, who was aged 22 at that time, also moved with the Plaintiff into his grandmother’s residence. However, subsequently the Deceased returned to live with his father in Melbourne Street, Narrandera.

15 The Deceased worked in various occupations at Narrandera, and ultimately obtained employment with the New South Wales Government Railways. In that position he was transferred to Sydney in mid-1979. On 3 September 1979 the Deceased was involved in a work accident, in which he suffered severe injuries, including a fractured skull, which (according to the Plaintiff) caused brain damage and epilepsy; injury to his kidneys, which subsequently required a kidney transplant; injury to his spleen, which required the removal of that organ; fractures to left arm and left leg; various other internal injuries.

16 The Deceased was admitted to the Liverpool Base Hospital and was subsequently transferred to the Royal Prince Alfred Hospital, where he remained for 18 months, spending the first five months on life support whilst in a coma. He was then in a nursing home at Concord for several months, before attending rehabilitation at Ryde for a further six to eight months.

17 It was the Plaintiff’s evidence that, immediately upon being informed of the Deceased’s accident, she came to Sydney, and was in constant attendance upon him throughout the period whilst he was in the hospital.

18 The Deceased concluded his rehabilitation in late 1981, and went to reside with his father in Narrandera. The Plaintiff and Mr Underwood married in 1981, and spent the next 18 months in Perth. The Plaintiff said that she and the Deceased spoke by telephone each week throughout that period. Because of the Deceased’s medical condition, and also because her own mother was admitted to a nursing home during that period, the Plaintiff and Mr Underwood returned to New South Wales. Being unable to find work in Narrandera, they decided to relocate to Sydney. The Plaintiff resumed employment in 1983, working in a laundry in St Peters for four years. She then obtained employment performing office work until 1989, when she and Mr Underwood returned to Lockhart to care for the Deceased. Mr Underwood worked in various occupations during the period whilst he and the Plaintiff were residing in Sydney.

19 Throughout that period in Sydney, the Deceased stayed with the Plaintiff and Mr Underwood on the occasions, about once a month, when he travelled to Sydney in order to see medical practitioners and solicitors.

20 According to the Plaintiff, the Deceased, as a result of the head injuries he received in the accident, suffered from epilepsy and had difficulty in reading and in writing. Further, he had nerve damage in his arm and leg and walked with a limp. It was the Plaintiff’s evidence that these disabilities were extremely frustrating for the Deceased, and that after a while he started drinking alcohol heavily, which had the effect of causing him to act violently and, in the words of the Plaintiff, to “lash out”.

21 In 1989 the Deceased received an out of court settlement in respect to his personal injuries claim in an amount of about $800,000.

22 In June 1989 the Deceased purchased a residence in Lockhart, with a view to the Plaintiff and Mr Underwood residing there with him. The Plaintiff and Mr Underwood gave up their respective employments in Sydney and removed to Lockhart, where they and the Deceased commenced to reside together.

23 According to the Plaintiff, the Deceased had promised that he would purchase the Lockhart residence for her. Nevertheless, that residence was purchased in the name of the Deceased. Somewhat curiously, the evidence on behalf of the plaintiff did not disclose the address of that residence or reveal whether that was the same residence, at 62 Ferrier Street, Lockhart, which was owned by the Deceased at the time of his death.

24 It was the evidence of the Plaintiff that at about the time when she and the Deceased were discussing the proposal that the Plaintiff and Mr Underwood should remove from Sydney to Lockhart, the Deceased offered to pay out the indebtedness of Mr Underwood upon his motor car. Upon being informed of the amount, $8,000, the Deceased sent a cheque for that amount to Mr Underwood, who used it to pay off the outstanding debt in respect to his motor car. Although the Plaintiff’s evidence in chief in regard to this financial assistance by the Deceased suggested that the Deceased had made a gift of the $8,000, nevertheless, the Plaintiff’s affidavit evidence in reply conceded that the advance was by way of a loan, that the Deceased requested repayment of that loan, and that, although the Plaintiff and Mr Underwood promised to repay as soon as they were able to do so, they did not ever reimburse the Deceased for that amount.

25 It was the Plaintiff’s evidence that there were constant problems in the household, on account of the drinking activities of the Deceased.

26 As a result of an incident in February 1990 (precipitated, according to the Plaintiff, by the Deceased’s alcoholism) the Plaintiff and Mr Underwood departed the Lockhart residence, and ultimately removed to Melbourne, where they have resided since that time. It was the Plaintiff’s evidence that she attempted to telephone the Deceased on numerous occasions thereafter, but he would refuse to speak with her, hanging up either immediately or after voicing obscenities to her. The Deceased did not acknowledge any birthday cards which the Plaintiff sent to him until she underwent bypass surgery in 1996. From that time until the Deceased’s death six years later there was no contact whatsoever between the Plaintiff and the Deceased.

27 The Plaintiff is now in receipt of an invalid pension, consequent upon the bypass surgery which she underwent in 1996. She takes ten different types of medication each day. As well as suffering from ischaemic heart disease (angina), she suffers persistent pain in her left leg, and she also suffers from a number of other medical conditions, including oesophagitis, and arthritis.

28 The Plaintiff’s husband also underwent bypass surgery, in 1993. He returned to work for twelve months after that surgery, but ceased employment in 1994. He also is in receipt of an invalid pension.

29 The Plaintiff and her husband have the following combined income:

(a) invalid pension (which includes rent assistance) $443 a week.

(b) British ex-service pension of the Plaintiff’s husband, approximately $85 a week.

The total combined income is about $528 a week.

30 The Plaintiff and her husband have an amount of about $2,000 in a National Australia Bank account, and they own a 1992 Holden Commodore motor vehicle, which has an insurance value of $6,500.

31 The Plaintiff and her husband reside in rented accommodation in Boonong Avenue, Seaford, a suburb of Melbourne, for which they pay rent of $160 a week. Apart from the fact that that accommodation consists of a three bedroom house, there was no evidence concerning the details of that house. The Plaintiff and her husband have been residing in that residence for about eleven years, under a series of leases, the current lease expiring in March 2006. It would appear that they will be able to renew that lease. It was the Plaintiff’s evidence that she was comfortable in that accommodation, which was satisfactory to her.

32 Despite the fact that during the period whilst they have resided in rented accommodation in the Frankston area between 1993 and 2005, the Plaintiff and her husband have received two lump sum payments totalling $80,000 (one being a superannuation payment of $43,286 received by Mr Underwood in July 1994, when he ceased employment; the other being the settlement in 1993 for a WorkCover claim by Mr Underwood in relation to a back injury, in which he received a net amount of $37,000), they have not attempted to purchase their own residence, and have been content to reside in rented accommodation. Apart from the rent which they pay, the balance of their income is used for general living expenses. The moneys in their bank account are used for motor vehicle expenses, and such household outgoings as electricity, gas, telephone and water.

33 It was the evidence of the Plaintiff that out of any provision that might be made for her from the estate of the Deceased, she would purchase a house in the area in which she now resides, which is near the major medical facilities which she and Mr Underwood currently require. She would also like a fund of money to enable her to purchase a new motor car and to meet the payment of bills which arise. The evidence was very skimpy as to the precise needs of the Plaintiff (either present needs or likely future needs) and as to the monetary cost of meeting those needs.

34 In January 2005 the Plaintiff underwent surgery to her bowel for perforated sigmoid diverticulitis. For a period of six months after that surgical procedure the Plaintiff has used a colostomy bag.

35 In about November 2004 the Plaintiff’s husband was diagnosed as suffering from lung cancer. His treatment for that condition has included chemotherapy and radiotherapy. In recent times medical investigations have revealed that Mr Underwood’s cancer has resurfaced. In the event of Mr Underwood’s demise, the British ex-service pension will cease, and the Plaintiff’s income will be reduced to a single invalid pension of $443 a fortnight.

36 Evidence was placed before the Court concerning the financial and material circumstances of each of the beneficiaries under the will of the Deceased. It is unnecessary for me to set forth details of those circumstances in respect to each of the six beneficiaries. However, it is a fair summary of that evidence to say that none of those beneficiaries is in affluent financial circumstances, although some are better situated than others.

37 It is in the light of the foregoing facts and circumstances that the Court must proceed to a consideration of the claim of the Plaintiff.

38 I have had the benefit of receiving a chronology from Counsel for the respective parties and a written outline of submissions from Counsel for the Plaintiff. Those documents will be retained in the Court file.

39 The Plaintiff asserts that she is an eligible person within paragraph (d) of the definition of that phrase contained in section 6(1) of the Family Provision Act. It will be appreciated that unless the Plaintiff can establish that she is an eligible person in relation to the Deceased she does not have the standing to bring the present proceedings, and, in such event, her claim must be dismissed.

40 It is submitted on behalf of the Plaintiff that she is an eligible person in that she was partly dependent upon the Deceased and that she was a member of a household of which the Deceased was a member. It is submitted on behalf of the Plaintiff that she was partly dependent on the Deceased during the period after the Deceased purchased the house property at Lockhart, since for the period from mid-1989 until early 1990 the Plaintiff and her husband were provided with free accommodation by the Deceased. I am satisfied that that accommodation constituted partial dependency of the Plaintiff upon the Deceased, and thus that the Plaintiff has satisfied the first limb of paragraph (d) of the definition.

41 Throughout his childhood and formative years, indeed until he left school in 1973, the Deceased and the Plaintiff were members of the same household. They were again members of the same household in Lockhart for the period from mid-1989 until early 1990. I am satisfied that the Plaintiff has also satisfied the second limb of the foregoing paragraph. It follows that the Plaintiff is an eligible person within paragraph (d) of the definition. As such she has the standing to bring the present proceedings.

42 However, since the Plaintiff is an eligible person only within paragraph (d), the provisions of section 9(1) of the Act are brought into operation. The Plaintiff must establish, pursuant to the requirements of that section, that there are factors which warrant the making of the present application.

43 It is submitted on behalf of the Plaintiff that the facts that the Plaintiff took care of the Deceased, not only as his primary caregiver as a child, but also (a) during his period in hospital and in rehabilitation after the 1979 accident, (b) during his subsequent visits to Sydney for medical and legal appointments, and (c) when the Plaintiff gave up her life in Sydney to remove to Lockhart in order to care for the Deceased, are each separately and cumulatively factors which warrant the making of the application by the Plaintiff. As McLelland J (as he then was) said in Re Fulop Deceased (1987) 8 NSWLR 679 at 681,

[T]he “factors” referred to in the subsection are factors which when added to facts which render the applicant an “eligible person” give him or her the status of a person who would be generally regarded as a natural object of testamentary recognition by a deceased.

44 I am in agreement that the foregoing matters constitute factors which warrant the making of the application.

45 In performing the first stage in the two-stage test identified by the High Court of Australia in Singer v Berghouse (1994) 181 CLR 201 at 208-210 the Court must first consider whether, in consequence of the testamentary dispositions of the Deceased, the Plaintiff has been left without adequate provision for her proper maintenance. (See, also, Vigolo v Bostin (2005) 79 ALJR 731, in which the High Court affirmed the correctness of the foregoing test in Singer v Berghouse.)

46 The Plaintiff and her husband, both aged in their 70s, are each in poor health. They live in rented accommodation, and have little in the way of material assets or accumulated savings. At their stage in life it is not possible for them to improve their financial or economic situation.

47 The Plaintiff submits that in calculating the amount any legacy which she should receive (and she submits that such legacy should be in a substantial sum), the impending demise of her husband, on account of his declining health, should be a significant factor. The Plaintiff seeks a substantial legacy from the estate of the Deceased, being an amount sufficient to enable her to purchase a house.

48 The chief need identified by the Plaintiff is accommodation. In this regard, she seeks an amount of $250,000 with which to purchase a residence. No evidence was placed before the Court concerning the cost of appropriate residences, (by way, for example, of real estate advertisements or similar material). It should be observed, however, that since she separated from her first husband in 1979 the Plaintiff has not owned a residence of her own, or lived other than in either rented accommodation or accommodation provided free of charge by kinsfolk or friends. There was nothing in the evidence to suggest that the Plaintiff and her husband were not adequately accommodated in their present rented premises, or that they did not have security of accommodation in those premises, where they have resided for the past eleven years. I am not persuaded that the Plaintiff has established that she has any relevant need in respect to accommodation or, if (despite the conclusion I have just impressed) she does have such need, it can be satisfied only be the acquisition by her of a residence which she will own.

49 It will be appreciated that at the time when the Plaintiff was expecting to be provided with a house by the Deceased, the house which she had in contemplation was a residence at Lockhart, which the Deceased in fact purchased in 1989 for $35,000. Even if the Plaintiff were to establish an entitlement to receive from the estate of the Deceased a legacy sufficient to enable her to purchase a residence, I do not see why that residence must be one in the area in which she is presently residing and which would cost as much as $250,000. Doubtless the Plaintiff finds Frankston a more congenial location than Lockhart, but there was no evidence to support that fact. Neither was there any evidence that the medical requirements of the Plaintiff and her husband could not be accommodated in some location other than Frankston. But, in any event, I am not satisfied that the Plaintiff has established an entitlement to receive a legacy sufficient to enable her to purchase a residence.

50 There is no suggestion that the expressed intention of the Deceased to purchase a home for his mother (if I be satisfied that there was a statement by the Deceased to such an effect) was more than merely a statement of intention. There is nothing in the circumstances of this case which would justify any conclusion that the Plaintiff somehow acquired a beneficial or equitable interest in the residence which the Deceased purchased at Lockhart.

51 It should be emphasised that an order for provision is not made as a reward for good conduct. Neither is such an order withheld as punishment for perceived bad conduct on the part of an applicant. Even accepting the evidence of the Plaintiff concerning the nature of her relationship with the Deceased, especially during the period immediately after the Deceased’s accident and whilst he was in hospital and undergoing rehabilitation (and I observe that that evidence was disputed by evidence on behalf of the Defendant’s), those services performed by the Plaintiff for her son do not of themselves entitle her to an order for provision of the nature which she is presently seeking.

52 I would here observe that the greater part of the evidence presented on behalf of the Plaintiff related to incidents in the life of the Deceased and in his relationship with the Plaintiff, rather than addressing the far more significant matters of the present and likely future needs of the Plaintiff and the cost of meeting those needs.

53 Nevertheless, I consider that that the Plaintiff has established an entitlement to receive from the estate of the Deceased a legacy which would enable her and her husband to improve their rather modest lifestyle, and to enable them to purchase household items which they say they presently require, and to provide a fund to meet unexpected contingencies and to provide for the inevitable diminution in her income in the event of the death of her husband.

54 It seems to me, in all the circumstances, that an appropriate amount for such a legacy is $80,000.

55 A legacy in the foregoing amount must be considered in the context of the competing claims of the beneficiaries named in the will of the Deceased. None of those beneficiaries is an eligible person in relation to the Deceased, although I observe that in the executor’s affidavit filed in compliance with the provisions of Part 77 rule 59 (being the affidavit of Sandra Kathleen Evans sworn 4 June 2004), the Second Defendant lists as every person who in her opinion is, or may be, an eligible person each of the seven beneficiaries under the will of the Deceased. However, whilst none of those beneficiaries is an eligible person, it should not be overlooked that each is a chosen object of the testamentary beneficence of the Deceased.

56 The Defendant points to the fact that the residuary estate (consisting of the house property at Lockhart, furniture and personal items, shares in companies, and an amount held in a solicitor’s trust account), which, by the terms of the will, is divided equally among Karen Harris, Sandra Kathleen Evans and Garry John Caulfield, will be totally exhausted by the costs of the present proceedings, with the consequence that those three beneficiaries will receive nothing from the estate of the Deceased. In the event that the proposed legacy in favour of the Plaintiff were also to be paid from residue, the practical consequence would be that in the due administration of the estate the Plaintiff would not receive the entire amount of the proposed legacy. It seems to me, therefore, that the appropriate course is that I should order that the proposed legacy should be borne by the Deceased’s cash management trust and life and superannuation policies, and moneys in bank accounts, which constitute the most significant assets in the estate (having a total value of about $540,000). Those are the assets referred to in clause 3(b) in the will.

57 I have already observed that none of the other beneficiaries are in affluent financial circumstances, although some are better situated than are others. If the proposed legacy of $80,000 is to be a charge against the foregoing assets, then the effect of such legacy is that it will be only the balance of the value of those asset (about $460,000) which will be available for distribution among the four persons referred to in paragraph 3(b) of the will. Thus, instead of each of those persons receiving a little under $136,000, each of them would, if the proposed legacy be a charge against the aforementioned assets receive only about $115,000.

58 In all the circumstances, I do not consider that the competing claims of those beneficiaries are such as would have the effect of reducing, let alone extinguishing, an order for provision of the nature which I have in contemplation in favour of the Plaintiff.

59 I note that Counsel for the Defendant stated that he was desirous of making submissions in respect of costs in the light of my decision in this matter. Such an opportunity will be afforded to him.

60 Accordingly, I make the following orders:

1. I order that the Plaintiff receive a legacy in the sum of $80,000 from the estate of the late Darrell William Lyons (“the Deceased”), such legacy to be borne by the assets of the estate referred to in clause 3(b) in the will of the Deceased, and such legacy not to bear interest if paid on or before 16 December 2005, and if not so paid to bear interest at the rates prescribed for unpaid legacies pursuant to the Wills, Probate and Administration Act 1898.
2. I stand the proceedings over to a date to be fixed by arrangement with my Associate for argument as to costs.

17/11/2005	-	Mis-spelling of Defendant's surname in body of judgment. - Paragraph(s) 2 & 7
28/11/2005	-	Correction of party name - Paragraph(s) Heading of judgment