Usawai v NSW Trustee and Guardian

[2020] NSWSC 1456

Supreme Court

New South Wales

Medium Neutral Citation:

Usawai v NSW Trustee and Guardian [2020] NSWSC 1456

Hearing dates:

19 October 2020

Date of orders:

19 October 2020

Decision date:

19 October 2020

Jurisdiction:

Equity - Family Provision List

Before:

Parker J

Decision:

See [28]

Catchwords:

EQUITY – trust and trustees – judicial advice – family provision claim – extension of time granted – settlement approved

Legislation Cited:

Succession Act 2006 (NSW), ss 57(1)(f), 58(2)

Probate and Administration Act 1898 (NSW), s 84A(3)

Category:

Principal judgment

Parties:

Panawan Usawai (Plaintiff)
NSW Trustee and Guardian (Defendant)

Representation:

Counsel:
C Bolger (Plaintiff)
MM Pringle (Defendant)

Solicitors:
Hub Lawyers (Plaintiff)
NSW Trustee and Guardian (Defendant)

File Number(s):

2019/268309

Publication restriction:

Nil

Judgment – EX TEMPORE

Revised from transcript; issued 20 October 2020

1. These proceedings concern the estate of John Patrick Gallagher who died in April 2018 at the age of 69.  The plaintiff seeks an order for family provision out of Mr Gallagher’s estate.  For convenience, and without disrespect, I will refer to Mr Gallagher’s family by their given names. 

2. The deceased had a long-term de facto relationship with Diane Smith.  They later separated before she died in April 2004.  Together the deceased and Ms Smith had four sons: Michael Patrick Gallagher born in September 1971; Gary Patrick Gallagher born in December 1973; John Michael Gallagher (to whom I will refer as “Johnny”) born in September 1977; and Patrick John Gallagher born in March 1984.  They also had a daughter, Michelle, who died young. 

3. The deceased left no formal will.  The New South Wales Trustee and Guardian (“the Trustee”) has been appointed as the administrator of his estate.  Under the intestacy provisions of the Succession Act 2006 (NSW), the estate is to be divided equally among the deceased’s four sons.

4. The main asset in the estate is the deceased’s former home, a house at Unwins Bridge Road in St Peters in inner western Sydney.  The value of the estate is approximately $1 million. 

5. The plaintiff in the proceedings, Panawan Usawai, who is also known by the name of Brooke, is the wife of Gary. Together they have three children: Benji who was born in February 2011; Jett who was born in July 2013; and Michelle who was born after the deceased's death in October 2018. 

6. According to the evidence of both Brooke and Gary, their marriage was a tumultuous one and they have been separated since 2012 or 2013 although they continue to see each other on and off.

7. When the matter came before the Court this morning, counsel for the parties announced that, subject to the Court's approval, they had agreed terms for the settlement of the proceedings.  The terms provide for Brooke to receive the sum of $150,000 inclusive of costs in settlement of her claim. 

8. The need for approval arises from the fact that the Trustee had been unable to obtain the consent of the deceased’s sons, as beneficiaries, to the settlement. Michael, Gary and Johnny attended the hearing. Gary supported the settlement but Michael and Johnny did not. Patrick had been expected by the Trustee’s lawyers to attend the hearing but he did not and the reason for his non-attendance was unknown.

9. In the circumstances I decided to conduct a separate hearing in the absence of the plaintiff's legal representatives to consider whether to approve the settlement. Counsel outlined the reasons why she considered the settlement was in the estate’s interests. Johnny addressed me briefly but left Court before completing his submissions.  I heard full submissions from Michael and also from Gary.

10. The first issue with the claim is that it is out of time.  As I have mentioned, the deceased died in April 2018 and the proceedings were not commenced until August 2019, outside the twelve month period specified by the Succession Act, s 58(2).

11. There is, however, evidence from Brooke explaining the delay. She says in June 2018, shortly after the deceased’s death, she was compelled to resort to living in a women’s refuge.  She has no experience with estates and it was not until steps were taken to appoint an administrator and she and Gary obtained legal advice that she appreciated she could make a claim.  This was not until late April 2019 after the date for bringing the claim had already expired. 

12. There is no evidence that the Trustee has suffered any prejudice as a result of the delay. In the circumstances I consider that sufficient cause has been shown and the extension sought should be granted. 

13. The next issue with the application is eligibility.  The plaintiff's claim was based on membership of the deceased's household, Succession Act s 57(1)(f).

14. There is evidence from Brooke that she lived at the house with the deceased and indeed there appears to be no dispute that she was in fact living there at the time of the deceased's death.  There was also evidence from Brooke this was at the deceased's specific request. 

15. On Brooke’s evidence the deceased was distressed by the breakup of her relationship with Gary and the circumstance of that breakup, which are not necessary to go into for the purpose of this judgment.  She was contemplating going back to Thailand and the deceased did not want to be separated from her, nor from his grandchildren.  Counsel for the Trustee indicated that there was no evidence available to the Trustee to dispute the statements that the plaintiff made. 

16. The third question is whether the lack of provision for Brooke (given that she would receive nothing from a distribution on intestacy) has the result that the deceased failed to make adequate provision for her maintenance, education or advancement.  I have already referred to Brooke's evidence that she lived with the deceased and the importance to the deceased of her companionship.  Brooke also gave evidence of having cared for the deceased, particularly while he was recovering from surgery which he had at some point in the last few years of his life.

17. Of greater significance still is a document signed by the deceased attached to one of Brooke’s affidavits. That document stated that the deceased wished Brooke to continue to live at the Unwins Bridge Road property after his death despite any wishes other members of his family might have to the contrary. Counsel for the Trustee indicated that there was no information available to the Trustee which suggested that the document was other than genuine.

18. In these circumstances there is a clear case for provision.  In fact, as I understood Michael, he did not object to Brooke receiving a provision but rather to the quantum.  However, the advice from counsel for the New South Wales Trustee and Guardian is that the figure is within the range of possible outcomes and I agree.

19. If (as I must assume for present purposes) the document is genuine, it bespeaks an intention on the deceased’s part to benefit Brooke by providing her with somewhere to live indefinitely into the future. That will not be practicable and the house will have to be sold.  In those circumstances it would be readily conceivable that the Court could award more than $150,000 to Brooke.  In that event she could also be expected to receive an order for costs in her favour which would have to be met out of the estate also.

20. In my view the settlement is comfortably within the range of reasonable outcomes and it is in the interests of the estate to approve it.  The approval will result in some saving of expected costs given that the hearing will not now need the two days that were allocated for it. 

21. I should mention two other matters.  The first is that there was some evidence that after the deceased's death Brooke withdrew the sum of $33,000 from the deceased’s savings account.  According to Brooke, these moneys were withdrawn so as to meet funeral expenses, outgoings on the property and other domestic expenses. Michael, and I think Johnny, both suggested that Brooke was not entitled to these moneys, or at least all of them.

22. This is not a reason for refusing to approve the settlement.  Counsel for the Trustee made it clear that the settlement would not preclude the Trustee from verifying that the expenditure was indeed proper expenditure on behalf of the estate, and the Trustee intends to take steps to do so.  If it turns out that moneys were paid out when they should not have been, the Trustee will be able to recover those moneys (should it be worthwhile and cost effective to do so) from Brooke, and distribute them to the beneficiaries in accordance with their entitlements. 

23. I should emphasise that nothing I have said indicates that the Court has formed any view on whether moneys were withdrawn that should not have been, or whether, if so, it would necessarily be a cost effective exercise for the Trustee to pursue recovery.  That will be left to the Trustee’s judgment.

24. The second point is that Johnny, and I think also Michael, suggested that there was something collusive about the settlement. Essentially, the allegation was that Gary and Brooke are not really separated and the effect of the settlement will be to give them collectively more than the one-quarter share to which Gary would otherwise receive. 

25. The evidence that has been filed in the proceedings, however, from Brooke and from Gary is against this.  There is no information available to the Trustee which suggests that there is any such collusion, or at least there is no evidence which would allow the Trustee, responsibly, to defend the proceedings on the basis that there is. 

26. The Court appreciates that in a case like this beneficiaries may be disappointed at a settlement which sees someone who is not a blood relative of the deceased receive something from his estate.  But it must be emphasised that the right to make a claim of this sort is one that is conferred by Parliament, and an executor or administrator will not advance the true interests of the beneficiaries by attempting to contest claims which cannot properly be resisted or can only be resisted at the risk of incurring increased liabilities or costs.

27. Despite everything that I have heard, I am firmly of the view that the resolution of the proceedings, in accordance with the terms of settlement, is very much in the interests of all of the beneficiaries and of all concerned with the litigation. 

28. The Court makes the following orders and notations:

1. Pursuant to s 58(2) Succession Act2006, sufficient cause having been shown, the time in which to file the Summons be extended up to and including 28 August 2019.

2. Pursuant to s 59 Succession Act 2006, the plaintiff to receive a lump sum of $150,000 from the estate of the late John Patrick Gallagher, (the deceased).

3. Interest pursuant to s 84A(3) Probate and Administration Act 1898 (NSW) shall accrue on so much of the lump sum in order 2 as remains unpaid 14 days after the completion of the sale of the estate realty situate at Unwins Bridge Road, St Peters, being the land contained in folio identifier 8/6336 (“the Property”) until paid in full.

4. No order as to the plaintiff’s costs to the intent she pays her own costs.

5. The defendant’s costs be paid or retained, as the case may be, from the deceased’s estate on the indemnity basis.

6. Grants liberty to any party to apply for consequential or ancillary orders, or directions, for the purpose of implementing the order for provision made in favour of the plaintiff.

THE COURT NOTES:

1. The balance of the deceased’s net distributable estate after the payment of the lump sum in 2 above is to be divided equally between the beneficiaries entitled on the deceased’s intestacy.

2. The defendant’s intention to list the Property for sale no later than 6 weeks after the date of these orders.

3. The agreement of the parties that:

(a)   The application was not made within time, but an order extending time has been made;

(b)   The plaintiff is an eligible person;

(c)   The plaintiff has served a notice identifying all other eligible persons on the administrator at the time of serving the Summons;

(d)   The administrator has filed the administrator’s affidavit

(e)   The administrator has filed the affidavit of service of the notice of the plaintiff's claim on any person who is, or who may be an eligible person, as well as upon any person beneficially entitled to the distributable estate, and any person holding property of the estate, as trustee or otherwise; and

(f)   The administrator has filed an Appearance.

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Decision last updated: 20 October 2020