Warland v Reece

[2000] NSWCA 380

CITATION:	Warland v Reece [2000] NSWCA 380
FILE NUMBER(S):	CA 40895/99
HEARING DATE(S):	31 August 2000
JUDGMENT DATE:	31 August 2000
PARTIES :	Patria Virola WARLAND (In the Estate of the late John Richard WARLAND) v Helen Margaret REECE as tutor for Ashley Richard REECE
JUDGMENT OF:	Meagher JA at 1; Handley JA at 13; Stein JA at 14

LOWER COURT JURISDICTION :	Supreme Court
LOWER COURT FILE NUMBER(S) :	1348/98
LOWER COURT JUDICIAL OFFICER :	Master Macready

COUNSEL:	Appellant: M.Lilienthal Respondent: M.B. Oakes SC/M. Evans
SOLICITORS:	Appellant: Mark Solomon & Associates. Respondent: Thomas Mitchell Partners.
CATCHWORDS:	Family Provision Act - provision from estate extinguishes pension rights of invalid son - provision reviewed.
CASES CITED:	Luciano v Rosenblaum (1985) 2 NSWLR 65 Elliott v Elliott (unreported, Powell J, Supreme Court of New South Wales 24 April 1986)
DECISION:	1. Appeal allowed; 2. Judgment and orders of Master Macready made 29 October 1999 be set aside; 3. In lieu thereof, the plaintiff to recieve a legacy payable from the estate of the late John Richard Warland in the sum of $325,750 from which are to be deducted any amounts of the original legacy which have been already paid; 4. Interest from today's date; 5. Costs of both parties in the appeal are to be paid out of the estate.

THE SUPREME COURT
OF NEW SOUTH WALES
COURT OF APPEAL

CA: 40895/99

MEAGHER JA
HANDLEY JA
STEIN JA

Thursday 31 August 2000

Patria Virola WARLAND v Helen Margaret REECE as Tutor for Ashley Richard REECE

JUDGMENT

1   MEAGHER JA: This is an appeal by Patria Virola Warland, the fifth and last wife of the late John Richard Warland. She was the sole executrix of his will and the sole trustee of his estate, she was also the only beneficiary under his will.
2   The respondent, Ashley, is his son by a relationship he had with an ex-employee named Helen Raymond Reece, who is now his tutor for the purpose of this litigation. None of his other wives or children seem to claim against the estate. The Master found the net value of the estate was approximately $800,060.
3   The respondent, Ashley, is both autistic and of subnormal intelligence. In an ideal world he should be placed in an appropriate institution but at the moment there is no institution which will accept him while his mother is alive. He and his mother live together in a unit. He has a normal life expectancy, and he was born on 23 November 1980.
4   The appellant, Mrs Warland, seems to have had a happy and enjoyable relationship with her husband, the deceased. They had five years of marriage and two years living together before that. She doubtless loved him and he her. Over the period of her marriage she accumulated certain assets which the master estimated at $442,367. It is suggested, with some plausibility by the respondent that there should be added to that two further assets, one $26,680 and one $80,000. If those additions are made the total comes up to $549,047.94.
5   The respondent, Ashley, has virtually no money. I think he may have $100 or the like in a savings bank. As far as income is concerned he has from Social Security the sum of $255.30 a fortnight coming in regularly, while his mother is in an occupation which gives her $16,000 per annum.
6   In the light of these simple facts he asked for a figure of over $800,000 and indeed the Master found that his actual needs could be quantified at the figure of $983,804. That of course is a sum considerably in excess of the amount of the estate. The order which the master made was for the figure of $525,000. The appellant appeals against this result. In my view the appeal should be upheld.
7   It is an extraordinarily difficult case on which to adjudicate because the plain fact is there is a very large need on the part of the respondent, Ashley, and also the widow of a deceased testator has certain rights which have been explained by this Court and which were accepted by his Honour. The widow's rights have I think most clearly been set out in two judgments by Powell J, one in Luciano v Rosenblaum (1985) 2NSWLR 65, and Elliott v Elliott (unreported, Supreme Court of New South Wales, Powell J 24 April 1986). Powell J's decisions on the Act have subsequently been confirmed by this Court. 8   But that does leave us in the difficulty where the undoubted right of the respondent, Ashley, coupled with the undoubted right of the appellant, the testator's widow, cannot be reconciled. There is simply no way the estate could satisfy both claims. Some sort of balancing act therefore is necessary and that indeed is what his Honour tried to do. 9   There are two difficulties with the figure his Honour arrived at. One is that it would force the appellant, Mrs Warland, to sell the house in which she lives, which was the matrimonial house and which is a house to which she has very strong affection. If that result can be avoided I don't see why it should not be. The other difficulty which his Honour's balancing act has I think created, is that it will give Ashley a sum in excess of that which would attract the pension, in other words, as a result of the master's judgment, if it remains undisturbed, will be that Ashley's pension rights will disappear. That is a result which ought to be avoided at all costs.
10   In my view therefore the orders which should be substituted in lieu of those made by the master ought be that the respondent, Ashley, instead of receiving a legacy of $585,000, should receive a legacy of $325,750. That legacy in essence contains two components, one of $200,000, which should be amply sufficient to buy him a house which is suitable for his needs. It might or might not be in the suburb he wants, it might or might not have as many bedrooms as he wants, but one can certainly, on the evidence, buy a suitable house for that amount.
11   The other amount which the revenue authorities at the moment will permit him to hold is $125,750 without in any way diminishing or jeopardising his pension rights.
12   Therefore in my view the orders made by the master should be set aside and in lieu thereof it should be ordered that the plaintiff receive a legacy out of the estate of the deceased in the sum of $325,750. Interest to run on such legacy from today's date. From that legacy will of course be deducted any amounts of the original legacy prepaid. That is my view on the main point.
13   HANDLEY JA: I agree though I think that we may need to vary the order for the running of interest.
14   STEIN JA: I also agree.
15   MEAGHER JA: The costs of both parties on the appeal be paid out of the estate. 16   The orders of the Court will be;

1. Judgment and orders of Master dated be set aside
2. In lieu thereof, the plaintiff to receive a legacy payable form the estate of the late in the sum of $325,750 from which are to be deducted any amounts of the original legacy which have been already paid;
3. Interest to run from today’s date; and
4. The costs of both parties in the appeal are to be paid out of the estate.