Von Keisenberg v Leonard

[2001] NSWSC 181

CITATION:	Von Keisenberg v Leonard [2001] NSWSC 181
CURRENT JURISDICTION:	Equity Division
FILE NUMBER(S):	SC 5266/99
HEARING DATE(S):	02/03/2001
JUDGMENT DATE:	2 March 2001
PARTIES :	Christopher Arthur Leopold Von Keisenberg v Patricia Ann Leonard - Estate of the late Peter Leonard
JUDGMENT OF:	Master Macready at 1

COUNSEL :	R.D. Wilson for plaintiff Mrs M. Gilmour for defendant
SOLICITORS:	Flanagan McGonigal for plaintiff J.H. Stamell & Co for defendant
CATCHWORDS:	Family Provision. Application by son of first marriage who had been left a legacy of $40,000 the residue passing to the widow. - Estate not sufficient. Claim dismissed.
CASES CITED:	Singer v Berghouse (1994) 181 CLR 201 Cameron v Hills Justice Needham 26.10.89 Banks v Hourigan Justice Waddell 2.3.89 Court v Hunt Young J 14.9.87 Golosky v Golosky Court of Appeal 5.10.93 Elliott v Elliott Court of Appeal 29.4.86 Salmon & Anor v Blackburn Court of Appeal 18.2.97
DECISION:	Paragraph 37

- 1 -

THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

MASTER MACREADY

FRIDAY 2 MARCH 2001

5266/99 - CHRISTOPHER ARTHUR LEOPOLD VON KEISENBERG v PATRICIA ANN LEONARD - ESTATE OF THE LATE PETER LEONARD

JUDGMENT

1 MASTER: This is an application under the Family Provision Act in respect of the estate of the late Arthur Leonard who died on 11 November 1998 aged eighty-seven years. He was survived by his second wife, the defendant, and his son, the plaintiff. The deceased made his last will on 12 October 1994. In that will he gave a legacy of $40,000 to his son, the plaintiff. He gave the residue of his estate to the defendant.

2   The assets in the estate were simple. There was a house at Chatswood in which the deceased and the defendant had lived for many years which is valued at the present time in the order of $480,000. There is now cash held in an investment of $40,938 and in the Solicitor's trust account there is $3,116. This is a total cash amount of $44,054. As in all these matters costs have been incurred. So far the defendant's costs total $18,258. The plaintiff's costs are some $19,500. The costs of administration have already been paid and the figures I have referred to are after payment of those.

3   I will deal briefly with some of the chronology of the family history. The deceased was born on 5 January 1910 and the defendant on 14 January 1930.

4   In 1932 the deceased purchased a motor mechanic's business known as Chapmans Garage and he worked for all his life in that business as a mechanic. The deceased married his first wife on 31 May 1936. The plaintiff, their only child, was born on 31 October 1934.

5   In 1958 the property at 27 Bellevue Street Chatswood was acquired by the deceased. The plaintiff had a normal upbringing. He was sent to Newington College when he was about twelve and a half years of age and he left Newington in 1962. Thereafter he studied for an Arts degree. Not having quite completed it he started work doing some teaching.

6   In 1973 the plaintiff went overseas and he worked from time to time in Europe teaching English as a second language and other matters.

7   In 1977 the defendant commenced to work as the deceased's secretary in his business. They were just friends initially but by 1981 they had commenced a relationship, which was a more intimate one. Although the defendant was at that stage married, the marriage had long since finished in a practical sense as her husband had been for many years in a nursing home. There was nothing left in the marriage.

8   Also it appears there had been some difficulties with the deceased's marriage. His wife had lived overseas for some time in the seventies and unfortunately at the end of 1981 she suffered from cancer and died. At that stage the plaintiff came back from overseas to Sydney and was with his father. His father was anxious for him to stay but in due course, after deferring his plans for a while, in the middle of 1983, the plaintiff returned to Europe to wind up his affairs. It was at this stage that the defendant and the deceased commenced living together in Chatswood.

9   Towards the end of 1983 the plaintiff returned to Australia and he moved in and lived with the defendant and the deceased in the Chatswood home. This continued until 1987. In 1984 the deceased stopped work and sold his garage. He did some part time work after that but that was not of great moment. In the middle of 1990 the plaintiff went to New York to open a fine arts gallery. He returned home for a few visits, one in 1991 and one in 1992. In 1993 that business failed and the plaintiff effectively was penniless.

10   The defendant and the deceased married on 5 March 1994. The deceased had been pressing the defendant to marry him for some years, he being anxious to marry. The defendant was somewhat reluctant to take the step of getting a divorce but ultimately did so. Her reluctance was no doubt as a result of her natural consideration for her husband who was totally immobile and being looked after in a nursing home.

11   In 1994 the plaintiff came back to Australia and the will was made, as I have mentioned, in October 1994. The plaintiff after some period had been out of work and had commenced work as an office manager for the St Vincent de Paul Society in 1995. He worked there for about a year on contract and in April 1996 he had a fall in Crown Street in which he injured his right hand. This hindered his work and in due course he made a claim which ultimately was settled and he received some funds as a result of that injury. The settlement was for about $125,000 but the amount he received himself after payment of costs and all medical bills was about $43,500.

12 In applications under the Family Provision Act the High Court has recently in Singer v Berghouse (1994) 181 CLR 201 set out the two stage approach that a Court must take. At page 209 it said the following:-

"The first question is, was the provision (if any) made for the applicant 'inadequate for (his or her) proper maintenance, education and advancement in life'? The difference between 'adequate' and 'proper' and the interrelationship which exists between 'adequate provision' and 'proper maintenance' etc were explained in Bosch v Perpetual Trustee Co Limited. The determination of the first stage in the two-stage process calls for an assessment of whether the provision (if any) made was inadequate or what, in all the circumstances, was the proper level of maintenance etc appropriate for the applicant having regard, amongst other things, to the applicant's financial position, the size and nature of the deceased's estate, the totality of the relationship between the applicant and the deceased, and the relationship between the deceased and other persons who have legitimate claims upon his or her bounty.
The determination of the second stage, should it arise, involves similar considerations. Indeed, in the first stage of the process, the Court may need to arrive at an assessment of what is the proper level of maintenance and what is adequate provision, in which event, if it becomes necessary to embark upon the second stage of the process, that assessment will largely determine the order which should be made in favour of the applicant. In saying that, we are mindful that there may be some circumstances in which a Court could refuse to make an order notwithstanding that the applicant is found to have been left without adequate provision for proper maintenance. Take, for example, a case like Ellis v Leeder where there were no assets from which an order could reasonably be made and making an order could disturb the testator's arrangements to pay creditors."

13   As directed by the High Court I turn firstly to the position of the plaintiff. He is single, aged fifty-six and has no dependents. His assets consist presently of cash in the sum of $13,800. He lives on social security which is an amount of $388 per fortnight. He lives in rented accommodation for which he is presently paying $265 per week. As a result he is living on his capital. He has some medical problems. He has high blood pressure and cholesterol and hypertension. The injury to his right hand has left him with some residual deficiency. He has less of an ability to play the piano and violin and it affects in some way his ability to paint.

14   So far as his current situation is concerned he does from time to time make money from painting portraits. He has at times in the past been successful as an author in writing articles and he has managed in previous times to earn sufficient income for him to be able to live a lifestyle which suited himself by teaching English as a second language when he was overseas. How he will continue to work is somewhat uncertain. In any event, he is presently receiving social security and it is probably likely that will continue.

15   One of the things one has to look at in considering the positions of the respective claimants is of course the contributions they have made to the estate. The plaintiff points to the fact that when he was a child and up until 1973 he helped his father with various things in the garden, doing landscaping and building walls. He also helped with the cleaning of the house and says he paid for the wallpapering. I have no reason to doubt him when he says he did that. At that stage he was earning a reasonable income teaching. In the period from 1981 to 1983 he also says that he was doing work in the garden.

16   The other things that have to also be considered are of course the benefits that might have been provided by the deceased to the particular claimant. One thing the plaintiff had was the benefit of a good education. That no doubt was at quite a cost to his father. It gave him sufficient skills to be able to teach and earn an income to support himself. There obviously has occurred in this case some feeling of dissatisfaction on the deceased's part in that he made a statutory declaration at the same time as he made his will in which he said that the reason why he had only left his son $40,000 in the will was that since Christopher had left school he thought he had given him approximately $100,000 in financial assistance. No precision was given by the deceased as to how that sum was arrived at. One has one other piece of evidence which was a typewritten note which the defendant typed out at the deceased's request when he went through his records to try and see what he had spent on his son Christopher from 1981 to early 1984. These indicate provisions of things like some airfares, passports, cash, some matters towards contributions to the running of a car and matters of that kind. they came to some $11,000 for those several years. Certainly the plaintiff concedes that his father had provided for him some airfares for travelling but whether they totalled $100,000 as the deceased mentioned in his declaration is hard for me to determine. In one sense if one does provide for children and get into the habit of doing so this tends to continue and probably this happened on this occasion. Certainly there were times when the deceased had refused to provide for his son and that caused some anxiety for the son. I think probably there were quite a few things that the deceased provided to his son during the periods after he left school and they do include things like airfares and ski equipment, assistance with holidays and matters of that nature.

17   The relationship between the plaintiff and the deceased was also of some significance. One has to stand back and look at the situation as people's lives unfold. Here Christopher’s life took him overseas and no criticism of that can be levelled at him. He lived the life that he thought appropriate but he did say that he kept in touch with his father. One does not have much evidence about the lack of contact. There was also the time when the plaintiff came back to Australia and lived with the defendant and the deceased at Chatswood for a while. In one sense that may have been to the plaintiff's advantage as it provided him with accommodation but it also provided the opportunity for the plaintiff and the deceased to have inter-reaction which clearly they did.

18   There was one incident in 1993 when as a result of the failure of the Art Gallery, the plaintiff pleaded guilty to an allegation of obtaining money by false pretences. That led to him being sentenced to some community service and caused him a lot of anguish at the time. It seems that this was not something which was to the plaintiff's personal gain but more related to avoiding a problem in relation to closure of the gallery business which was funded by others. In any event the deceased became aware of that and the relationship continued on in any event. I do not see it as in any way detracting from the claim of the plaintiff.

19   The other person of course who has to be considered today is the position of the defendant. She is single and has no dependents. She is seventy-one years of age. Her assets are few. She has a 1990 model Magna car worth $4000. She has a deposit at call with ING of $2500 and she has cash savings of $1144. She also has furniture which she owns in the property. She lives in the matrimonial home which is the main asset in the estate. She gets a pension of $397 per fortnight. Clearly she struggles to survive on this pension.

20   The fact of the matter is that she has over the recent year or so been spending slightly in excess of that pension and she has been slowly dipping into her savings. At some stage she will come to the point when those savings will not be available to her and she will then have to see whether she can then continue to live in and be able to maintain the house.

21   As far as her relationship with the deceased is concerned there does not seem to be any doubt that it was a happy relationship for the two of them. They lived together in a de facto relationship for fourteen and a half years and they had a relationship which was an intimate one for some years before that.

22   The deceased was somewhat older than the defendant and there was then of course the period of a year or so before he died when there was extensive care required on the defendant's part to look after the deceased.

23   One of the important things in this case is the contributions to the estate by the defendant. In 1983 when she moved in with him she had $40,000 in savings. At that stage she was living in rented accommodation. She moved into the house at Chatswood and they commenced using those funds to tidy up the place and make improvements. It apparently needed a lot of work at that stage. The whole of those funds except perhaps $4000 or $5000 were expended by her over the years in improvements to the house and for their joint purposes. That included some $22,000 spent in 1996 when her money was used to put a bathroom upstairs to help the deceased. It made it far more easier for him with that bathroom upstairs.

24   It must be appreciated that one has here a defendant who has put the whole of her life's savings into the house that now remains. She had no property settlement from her first marriage.

25   The plaintiff puts this case as one where it would be appropriate, apart from him receiving the legacy to also receive some interest in remainder in respect to the house. This raises fairly and squarely the conflict between widows’ and children’s claims. Normally of course the widow's claim has priority. There have been many cases which dealt with this vexed problem as to the type of order that ought to be made for widows. One has early in the 1970's references to a Crisp order which derives from the decision of his Honour Mr Justice Holland. I have been referred to a number of decisions of Judges of this Court, experienced Judges who in the late 1980's have found it appropriate to give a widow some life estate rather than a complete interest in a house. One for instance is Cameron v Hills, a decision of Mr Justice Needham on 26 October 1989. That was a case which concerned a lady who had been the wife of the deceased for some seven and a half years.

26   Another is Banks v Hourigan, a decision of Mr Justice Waddell, the then Chief Judge in Equity on 2 March 1989. He also in the particular circumstances of that case found it appropriate to order that there be some life interest.

27   Other Judges at that stage were taking a somewhat different view. For instance in Court v Hunt, Young J on 14 September 1987 said:

"Old age is a growing problem in our community and Judges who sit in Family Provision Act applications get experience, as well as their own experience in the community as to what happens when people reach the age when they can no longer look after themselves and one judges the evidence in these sort of proceedings against that background knowledge."

28   His Honour then went on to talk about the assumptions one could make about the fact that frequently people, once they pass fifty-five, have to change their accommodation and locate themselves either in retirement villages or nursing homes which have different requirements for capital contribution.

29   After talking about the evidence necessary, his Honour went on to say:

"In many cases these days a life estate will not be sufficient because it does not cover the situation of the plaintiff moving from her own home to retirement village to nursing home to hospital. Sometimes it is possible for a Court to alter a life estate to a more flexible non-capital provision, such as was done by Holland J in Crisp v Burns Philp Trustee Co Ltd , 18 December 1979, unreported, but noted in Mason & Handler Probate Service, at page 13206. Other times the proper provision is for a fee simple give, realising that this property will be sold and will be turned over into the appropriate property to maintain the widow for the rest of her life. Care also has to be given by those administering the plaintiff's property to ensure that there is sufficient income being raised after tax that will provide for maintenance levies and the other payments that have to be made by the widow."

30   A fairly comprehensive statement of the provisions normally made in widows' claims appears in the decision of the President of the Court of Appeal in Golosky & Anor v Golosky, unreported, 5 October 1993 where his Honour summarised it in the following terms:

"In testing the Master's decision it is appropriate to keep in mind the principles which governed the approach which he was obliged to take to the widow's application under the Act. Relevantly, these included:
(a) Proper respect was to be paid for the right of testamentary disposition which is the fundamental premise upon which the provisions of the Act are based. That premise requires the Court, out of respect for the continuing right of testamentary disposition, to limit its disturbance of the testator's will to that which is necessary to achieve the purposes of the Act, and not more. See The Pontifical Society for the Propagation of the Faith and St Charles Seminary, Perth v Scales (1962) 107 CLR 9, 19; White v Barron and Anor , above, 458; Hunter , above 576;
(b) The purpose of the jurisdiction is not the correction of the hurt feelings of sense of wrong of the competing claimants upon the estate of the testator. The Court is obliged simply to respond to the application of the eligible person who was a member of the testator's household and to consider whether, as claimed, the provision made by the will is inadequate for that person's proper maintenance and advancement in life. See Heyward v Fisher , Court of Appeal, unreported, 26 April 1958; (1985) NSWJB 81.
(c) Consideration of other cases must be conducted with circumspection because of the inescapable detail of the factual circumstances of each case. It is in the detail that the answer to the proper application of the Act is to be discovered. No hard and fast rules can be adopted. Nevertheless, it had been said that in the absence of special circumstances, it will normally be the duty of a testator to ensure that a spouse (or spouse equivalent) is provided with a place to live appropriate to that which he or she has become accustomed to. To the extent that the assets available to the deceased will permit such a course, it is normally appropriate that the spouse (or spouse equivalent) should be provided, as well, with a fund to meet unforeseen contingencies; see Luciano (above) 69-70;

(d) A mere right of residence will usually be an unsatisfactory method of providing for a spouse's accommodation to fulfil the foregoing normal presupposition. This is because a spouse may be compelled by sickness, age, urgent supervening necessity or otherwise, with good reason, to leave the residence. The spouse provided and will then be left without the kind of protection which is normally expected will be provided by a testator who is both wise and just. See Moore v Moore , Court of Appeal, unreported, 16 May 1984, per Hutley JA;
(e) Considering what is 'proper' and by inference what is 'improper' as a provision in a will, it is appropriate to take into account all of the circumstances of the case including such matters as the nature and quality of the relationship between the testator and the claimant; the character and conduct of the claimant; the present and reasonably anticipated future needs of the claimant; the size and nature of the estate and of any relevant dispositions which may have reduced the estate available for distribution according to the will; the nature and relative strengths of the competing claims of testamentary recognition; and any contributions of the claimant to the property or to the welfare of the deceased. See Re Fulop Deceased (1978) 8 NSWLR 679 (SC); Churton v Christian and Ors (1988) 13 NSWLR 241 (CA), 252."

31   In talking of the need to provide a house and a sum for contingencies the President is clearly referring to Wellman and passages in Luciano v Rosenblum and other cases. As was pointed out by the Court of Appeal in Elliott v Elliott, unreported, 29 April 1986, such a type of provision only applies where it can be said there has been a long and happy marriage and a widow has helped build up the estate of the deceased. The Court also accepted that she should have sufficient income to enable her to live in a reasonable degree of comfort and free from any financial worry.

32   The matter continues to be dealt with by the Court of Appeal and a recent decision is one of Salmon & Anor v Blackburn, Court of Appeal 18 February 1997. That was a case in which the trial Judge, Young J, had made provision for a fee simple rather than a life interest. The Court carefully considered whether or not it was inappropriate and whether there should have been a life interest. In deciding that his Honour's decision was appropriate the Court put to one side the question that she might in fact leave her estate to someone other than the claimants in the case. They referred to the need for flexibility and referred to the fact that something like a Crisp order compromises both her security and her independence. The situation is there seems to be a slightly different approach now to what one might have found in the 1970s and 1980s.

33   In considering the facts of the present case one has firstly the reasonable length of the relationship which was effectively fourteen and a half years with a period of friendship prior to that.

34   The defendant is seventy-one years of age and she has on the life tables an expectancy of 15.75 years. She is fit and well and enjoys doing the garden at her house at Chatswood and she is attached to the home. It is after all the place where she and the deceased spent the last fifteen years of his life. She has put all of her life savings into the house and the relationship. There is no suggestion that she spent those moneys on her own account or not for the purposes of that relationship. She is getting to the stage where she does not have anything in reserve and hopes to be able to continue. That hope may be able to be fulfilled or it may not.

35   It seems to me that even if it be the case that she is not able to fulfil it, that she needs to have the ability to do with the capital what is most appropriate for her circumstances.

36   She has looked at retirement village accommodation and finds it very expensive. That unfortunately is common experience and sometimes people have to make do with less than they have and in effect she cannot find retirement village accommodation for the amount that she would get if she sold the Chatswood home. If she continues to retain the home it at least gives her some fund. It is perfectly evident that she has little else. She has $3500 in cash which she has in her own bank accounts and there is little left in the estate. She has not, as she could have, brought a cross-claim against the plaintiff seeking the balance of the estate and accordingly no change will be made to the legacy. That might well, depending upon what orders are made, hinge upon her enjoyment of the house.

37   I think having regard to the circumstances, particularly her life expectancy, the need for flexibility, the need to have capital and to be able to be free of worry about being controlled as to what she has to do with it, leads me to the conclusion that the plaintiff's claim should fail. Accordingly I dismiss the summons and I will hear the parties on costs.

(At this stage counsel addressed on costs.)

38   MASTER: I have heard submissions on costs. The defendants submit that they should have their costs on an indemnity basis out of the estate and that those costs should be charged on the legacy of $40,000 to the plaintiff. The nature of the widow’s position was very carefully dealt with in correspondence before the action commenced particularly on 27 April 1999 when a detailed letter was written setting out the basis upon which it was said that the plaintiff could not succeed.

39   It was foreshadowed that a cross-claim might be proceeded with by the defendant if in fact the plaintiff commenced proceedings. Although the proceedings were commenced the defendant did not bring a cross-claim. There was also a Calderbank offer on 25 August when the plaintiff was offered $40,000 with each party to pay their own costs.

40   In the ordinary course costs should follow the event which would mean that there would be an order that the plaintiff would pay the defendant's costs. Effectively I think particularly bearing in mind that the nature of the claim was well-ventilated prior to the proceedings being taken, it is appropriate that the estate's costs on an indemnity basis be paid out of the estate and be the first charge on the legacy given to the plaintiff of $40,000. The plaintiff is to bear his own costs of the proceedings.

41   The exhibits may be returned.

Last Modified: 04/03/2001