West v Mann
[2013] NSWSC 1852
•11 December 2013
Supreme Court
New South Wales
Medium Neutral Citation: Jacqueline May Isabella West v John Alexander Mann [2013] NSWSC 1852 Hearing dates: 9 December 2013 Decision date: 11 December 2013 Jurisdiction: Equity Division Before: Kunc J Decision: Order for provision made
Catchwords: FAMILY PROVISION AND MAINTENANCE - Principles upon which relief granted - Adult brother and sister - Succession Act 2006, ss 59, 60 Legislation Cited: Succession Act 2006 (NSW) Cases Cited: Andrew v Andrew [2012] NSWCA 308; (2012) 81 NSWLR 656
Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72
Sahab Holdings Pty Ltd v Registrar-General [2011] NSWCA 395
Singer v Berghouse [1994] HCA 40; (1994) 181 CLR 201
Vidler v Ivimey [2013] NSWSC 1605Category: Principal judgment Parties: Jacqueline May Isabella West (Plaintiff)
John Alexander Mann (Defendant)
Estate of Pavlova May CaineRepresentation: Counsel: Mr H.S. Packer (Plaintiff)
Mr L. Ellison SC (Defendant)
Solicitors: Bolzan & Dimitri (Plaintiff)
Roberts Mann (Defendant)
File Number(s): 2013/44567 Publication restriction: No
Judgment
Summary
The plaintiff is the daughter of the late Pavlova May Caine ("Mrs Caine"). Mrs Caine died on 16 February 2012. By her will made on 21 December 2010 Mrs Caine left her entire estate to the plaintiff's brother.
Without disrespect, I shall refer to the plaintiff and her brother as "Jacqueline" and "Phillip" respectively. They are the only eligible beneficiaries in the estate.
The defendant ("Mr Mann") is the solicitor executor appointed under Mrs Caine's will.
The estate comprises little more than Mrs Caine's house at Grose Wold (the "House"). Phillip has lived in the House for most of his life.
By summons filed on 13 February 2013, Jacqueline applies for provision out of her mother's estate under s 59 of the Succession Act 2006 (NSW) (the "Act"). Mr H.S. Packer of Counsel appeared for Jacqueline. Mr L. Ellison of Senior Counsel appeared for Mr Mann. The case was argued fully but with exemplary economy, such that it occupied less than a day. At the conclusion of the hearing I made these orders:
The Court:
1. Having found that the plaintiff, Jacqueline May Isabella West, is an eligible person, and that inadequate provision has been made for her proper maintenance or advancement in life, orders that provision be made for her from the estate of the late Pavlova May Caine by payment of a sum calculated as follows:
(a) $115,000 or such lesser amount as is available after the defendant trustee has first paid the Son's Legacy to Phillip Newton Christian Caine; and
(b) if the amount available in the nett residuary estate exceeds $460,000, 25% (twenty-five percent) of that excess.
2. Orders that in these orders "Son's Legacy" means $345,000 less any costs incurred by the defendant trustee in obtaining vacant possession of the premises known as 332 Grose Wold Road, Grose Wold.
3. Orders that the plaintiff's costs of and incidental to these proceedings be paid out of the estate on the ordinary basis assessed as a lump sum of $37,848.00.
4. Orders that the defendant's costs of and incidental to these proceedings be paid out of the estate on the indemnity basis assessed as a lump sum of $37,500.00.
5. Orders that the exhibits be returned to the parties' legal representatives upon publication of the Court's reasons to be held by them or the parties in accordance with Practice Note SC Gen 18.
These are the reasons for those orders.
The Act
Part 3.2 of the Act deals with family provision orders. Division 1 of that part identifies, in s 57, who are "eligible persons who may apply to the Court for a family provision order in respect of the estate of a deceased person". Section 58(2) requires an application for a family provision order to "be made not later than 12 months after the date of the death of the deceased person, unless the Court otherwise orders on sufficient cause being shown".
Division 2 of Part 3.2 of the Act deals with determination of applications for family provision orders. For the purposes of these proceedings, the relevant provisions are:
59(1) The Court may, on application under Division 1, make a family provision order in relation to the estate of a deceased person, if the Court is satisfied that:
(a) the person in whose favour the order is to be made is an eligible person, and ...
(c) at the time when the Court is considering the application, adequate provision for the proper maintenance, education or advancement in life of the person in whose favour the order is to be made has not been made by the will of the deceased person, or by the operation of the intestacy rules in relation to the estate of the deceased person, or both.
59(2) The Court may make such order for provision out of the estate of the deceased person as the Court thinks ought to be made for the maintenance, education or advancement in life of the eligible person, having regard to the facts known to the Court at the time the order is made.
...
60(1) The Court may have regard to the matters set out in subsection (2) for the purpose of determining:
(a) whether the person in whose favour the order is sought to be made (the "applicant") is an eligible person, and
(b) whether to make a family provision order and the nature of any such order.
60(2) The following matters may be considered by the Court:
(a) any family or other relationship between the applicant and the deceased person, including the nature and duration of the relationship,
(b) the nature and extent of any obligations or responsibilities owed by the deceased person to the applicant, to any other person in respect of whom an application has been made for a family provision order or to any beneficiary of the deceased person's estate,
(c) the nature and extent of the deceased person's estate (including any property that is, or could be, designated as notional estate of the deceased person) and of any liabilities or charges to which the estate is subject, as in existence when the application is being considered,
(d) the financial resources (including earning capacity) and financial needs, both present and future, of the applicant, of any other person in respect of whom an application has been made for a family provision order or of any beneficiary of the deceased person's estate,
...
(f) any physical, intellectual or mental disability of the applicant, any other person in respect of whom an application has been made for a family provision order or any beneficiary of the deceased person's estate that is in existence when the application is being considered or that may reasonably be anticipated,
(g) the age of the applicant when the application is being considered,
(h) any contribution (whether financial or otherwise) by the applicant to the acquisition, conservation and improvement of the estate of the deceased person or to the welfare of the deceased person or the deceased person's family, whether made before or after the deceased person's death, for which adequate consideration (not including any pension or other benefit) was not received, by the applicant,
...
(m) the character and conduct of the applicant before and after the date of the death of the deceased person,
(n) the conduct of any other person before and after the date of the death of the deceased person,
...
(p) any other matter the Court considers relevant, including matters in existence at the time of the deceased person's death or at the time the application is being considered.
In applications under the Act's predecessor, the High Court's decision in Singer v Berghouse [1994] HCA 40; (1994) 181 CLR 201 at 208-209 established that the determination of an application involved two stages. The slightly different wording of the Act to its predecessor re-opened consideration of the nature of the determination under the Act. That reconsideration was undertaken by the Court of Appeal in Andrew v Andrew [2012] NSWCA 308; (2012) 81 NSWLR 656. In that case, Basten JA (at [41]) expressed the view that the language of the Act was not consistent with the two stage approach that had previously been applied. Barrett JA (at [94]) said that it was consistent. Allsop P did not decide the question.
This outcome in Andrew v Andrew has led to different judges at first instance in this Court following the approach of one or other of Basten JA and Barrett JA. The different decisions and their jurisprudential intricacies are set out, with what I respectfully describe as his Honour's characteristic thoroughness, by Hallen J in Vidler v Ivimey [2013] NSWSC 1605. His Honour deals with both the state of the post Andrew v Andrew debate and the other legal principles (not subject to the same controversy) which apply to a family provision application at paragraphs [33]-[129] of that judgment. I gratefully adopt those paragraphs as a summary of both the controversial and settled aspects of how an application for family provision under the Act should be approached.
In this case the parties invited me to apply the terms of the Act. They did not suggest any different result would follow depending on whether a two stage or other approach was applied. What is clear is that experienced first instance judges have been unable to agree upon the effect of current appellate authority. For my own part, and with the greatest of respect, I will do no more than observe that there is a risk that the description or characterisation of the process can become an unnecessary distraction. To adapt what the Court of Appeal has observed in another context, whether the process is correctly described as "two stage", "one stage", "twin tasks" or otherwise is "not a substitute for applying the wording of the statute, construed as a whole and purposively, to the particular fact situation that arises for decision in a particular case": Sahab Holdings Pty Ltd v Registrar-General [2011] NSWCA 395 at [185] per Campbell JA and Tobias AJA; McColl JA agreeing.
By reference to the language of Act, I will set out what I understand to be the questions and issues which the Court must take into account. What follows is based upon, but significantly expands, what was said by Barrett JA in Andrew v Andrew at [77] to [81]. Whether it is a one or two stage process or anything else is a matter which I will leave for others:
(1) Is the person who has applied to the Court for a "family provision order" (as defined in s 3 of the Act) an eligible person under s 57 of the Act? In accordance with s 60(1)(a), the Court may (not must) have regard to the matters set out in s 60(2) in determining whether that person is an eligible person. It is not readily apparent how many of those matters could be relevant to the issue of eligible person, but nothing turns on that observation.
(2) If the answer to question (1) is "yes", has the application been filed in the Court's Registry not later than 12 months after the deceased's death (ss 58(2) and (3))?
(3) If the answer to question (2) is "no", has the eligible person who has brought the application shown sufficient cause for the Court to order otherwise to extend the date for the filing of the application in the Court's Registry (ss 58(2) and (3))?
(4) If the answer to question (2) is "yes" or the Court has otherwise ordered under s 58(2), is the Court satisfied that the person in whose favour the order is to be made (the "applicant") is an eligible person (s 59(1)(a))? In reaching the requisite state of satisfaction the Court may (not must) have regard to the matters set out in s 60(2). As a theoretical matter this question admits of the possibility that "the person in whose favour the order is to be made" is not the person who has brought the application (in which case, the latter must also be an eligible person).
(5) If the answer to question (4) is "yes", what provision has been made for the proper maintenance, education or advancement in life of the applicant by the deceased's will or by the operation of the intestacy laws (the "Provision")?
(6) Is the Court satisfied, at the time when the Court is considering the application, that the Provision is not adequate for the proper maintenance, education or advancement in life of the applicant?
(7) If the answer to question (6) is "yes" (i.e. the Court is satisfied the Provision is not adequate for the specified purpose) then the Court's discretion conferred by the chapeau to s 59(1) to make a family provision order in favour of the applicant (the "Discretion") is enlivened.
(8) Once the Discretion is enlivened then, noting s 59(2), what provision, if any, does the Court think ought to be made for the proper maintenance, education or advancement in life of the applicant, having regard to the facts known to the Court at the time the order is made (the "Proposed Provision")? This is an evaluative judgment which arises from the word "ought" and requires examination of the applicant's needs. In making this judgment the Court may (not must) have regard to the matters set out in s 60(2) ("the nature of any such order": s 60(1)(b)).
(9) Having answered question (8), should the Court exercise the Discretion to make an order for the "Proposed Provision"? In deciding whether to exercise the Discretion to make such an order, the Court may (not must) have regard to the matters set out in s 60(2) ("whether to make a family provision order": s 60(1)(b)).
(10) Section 60(2) provides a helpful checklist but it is no more than that. The Court is not obliged to take those matters into account. The extent to which it does (if at all) will depend upon the facts of each particular case.
(11) Section 60(2)(p) confirms the breadth of matters the Court can take into account. Once enlivened, the Discretion is expressly fettered only by the requirement in s 59(2) that if an order is made, it must be such order "as the Court thinks ought to be made for the maintenance, education or advancement in life of the eligible person, having regard to the facts known to the Court at the time the order is made". The Discretion is otherwise unconfined, which means that in answering question (9) the Court is otherwise constrained only by the need to act judicially, that is to say "not arbitrarily, capriciously or so as to frustrate the legislative intent": Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 at [22] per Gaudron and Gummow JJ. The Court must act rationally and exercise the Discretion for the purpose for which it was conferred.
Having identified what I consider to be the correct approach under the Act to an application of this kind, I will now set out the facts. They were not in dispute.
The estate
As stated in paragraph [4] above, the estate comprises little more than the House in which Phillip currently lives. The House has an estimated value of $600,000. The parties were in agreement that in order to meet the deceased's liabilities and the costs of administration of the estate, the House will have to be sold. Mr Mann advanced a calculation that after the payment of the deceased's liabilities, the costs of administration of the estate, the payment to the parties of their costs and disbursements in these proceedings and costs and disbursements referrable to sale of the House, the value of the "nett distributable estate" would be approximately $463,000. Jacqueline suggested the figure could be a little higher, perhaps $470,000. I find that the amount which, on the balance of probabilities, will be available out of which provision could be made for Jacqueline is $460,000.
Jacqueline
Jacqueline is 53 years of age. She and Phillip were born in South Africa. The family moved to the United Kingdom in 1964 and then to Australia in 1965. In 1966 the family moved into the House.
Jacqueline has various qualifications, including a Diploma of Teaching and a Bachelor of Education in Adult Education from the University of New England. She married in 1981. That marriage ended in divorce in 1994. There were two children of the marriage.
Jacqueline always had a close relationship with Mrs Caine until about late 2008 when issues between herself and Phillip about Mrs Caine's care resulted in contested Guardianship Tribunal proceedings. Not for want of trying, Jacqueline never had face to face contact with Mrs Caine after that. Until that time Jacqueline had provided Mrs Caine with considerable practical care and assistance. Insofar as there was an estrangement between her and Mrs Caine, it was not suggested that this was Jacqueline's fault. Rather, Mrs Caine was suffering from a mental illness which caused her to distrust Jacqueline completely and to assert that she (Mrs Caine) wanted to have nothing further to do with Jacqueline. Despite this, Jacqueline tried to follow Mrs Caine's fortunes from afar.
Jacqueline has assets valued at approximately $380,000. These include her home at Bathurst, which is mortgaged and in which she currently has equity of approximately $65,000, and superannuation with a current value of approximately $100,000. Until recently she also had a car, which has now had to be written off after a collision with a kangaroo as Jacqueline was driving to work. She will receive $3,930.00 from her car insurer.
Jacqueline's liabilities are approximately equal to her assets. In addition to the mortgage over her home, she owes her ex-husband $134,550 and another friend approximately $10,000. For some time her expenses (which are not extravagant or unreasonable) have exceeded her income and she has obtained these advances from her ex-husband and her friend. The terms of those advances are not in writing, but I accept that they are loans at call. Jacqueline accepts a responsibility to repay them as and when she is able.
Jacqueline's monthly expenses (of which the largest component is mortgage repayments) exceed her current monthly income of $3,800 by approximately $600. This and other circumstances have caused her to rely on the loans to which I referred in the preceding paragraph. Jacqueline has two jobs. Every Monday she works seven hours for Bathurst Harness Racing and Bathurst Greyhound Racing as the on-course first aid officer and also performing some office functions. Her main employment is as the night shift operator at the New South Wales Country Taxi Call Centre. That centre is located in Orange, so she has to drive between Bathurst and Orange every day. Her ex-husband has loaned her a car, at least for the short term, as a result of the accident referred to in paragraph [18] above.
Jacqueline does not enjoy good health. She suffers from migraines and has severe pain in her left hip and pain and weakness in her knees which require her sometimes to use a walking stick. Most significantly, she has been treated for depression since 2002. The psychiatric evidence which was tendered in her case demonstrates an unfavourable prognosis with a chronic and pervasive major depressive order. The evidence suggested that her psychiatric condition could result in her not being employable in the future.
It was submitted for Jacqueline that while she has displayed resilience over many years and has been able to maintain consistent employment, her current employment situation was precarious. Her capacity to work at the track as a first aid officer was threatened by the deteriorating condition of her hip and knees. Her psychiatric condition was, so it was said, also threatening her main employment. As recently as 2 December 2013 she had received a warning letter from her manager at the call centre reprimanding her for being short with customers and hanging up on people before they had finished talking.
I am not satisfied that her employment position is quite so precarious as was submitted on her behalf. In reaching that conclusion I do not underestimate either the physical or psychiatric problems which afflict Jacqueline. On the other hand, she has been able to maintain employment for most of her life. The psychiatric evidence indicated that at least one cause of her current particular anxiety was the fact of her having been excluded from Mrs Caine's will and these proceedings. Resolution of these proceedings, particularly in circumstances where they have resulted in provision being made for Jacqueline, will eliminate this particular stressor and, hopefully, improve her capacity to fulfil her obligations at the call centre to an adequate standard.
Phillip
Phillip is 52 years old.
Phillip has lived for most of his life in the House. After some difficulties completing the HSC, he ultimately graduated with a Bachelor of Applied Science in Quantity Surveying. However, at the same time he began to exhibit symptoms of mental illness, a topic to which I shall return.
After graduating from university he worked in the Attorney-General's Department in both the Local Court Criminal Section and the Sheriff's Office for approximately eight years. He has also had various part time and casual jobs in call centres and brief periods of work (weeks only) with quantity surveying firms.
He purchased a home unit in South Windsor in 2001, but was unable to meet the mortgage payments. He was declared bankrupt on his own petition in 2005 and was discharged from bankruptcy in 2008.
In June 2002 he met a woman whom he married in 2003 in the Philippines. He separated from his wife in 2006 and a divorce was finalised in 2010.
Phillip enjoyed a close relationship with Mrs Caine. After Mrs Caine went into a nursing home in 2008 Phillip would visit her every weekend and sometimes during the week. At various times thereafter and when Mrs Caine was in other nursing homes, he would visit her daily.
Phillip's mental illness, compounded by physical issues, has rendered him unemployable and he is currently a disability pensioner. He suffers from chronic paranoid schizophrenia, severe cardiomyopathy, atrial fibrillation, hypotension and morbid obesity. He is on a number of medications. The evidence from his consulting psychiatrist is that his chronic paranoid schizophrenia is an intractable condition which can to some extent be controlled by medication, but not cured. Phillip suffers from delusions, some of which he exhibited during the course of giving evidence in these proceedings.
But for his interest in the House by reason of being the sole beneficiary of Mrs Caine's estate, Phillip has no assets of value. His only source of income is the Centrelink Disability Support Pension and a pension supplement. From this he is able to meet his basic expenses including $140 per fortnight which he pays in church expenses and tithes as a member of the Church of Jesus Christ of the Latter Day Saints. His only activity outside of the House appears to be his involvement with the Church, where he sings in the Church choir. He also sings in a community choir, but none of this activity generates income.
Resolution of Jacqueline's claim
I shall consider Jacqueline's claim by reference to the issues posed in paragraph [12] above.
As a child of Mrs Caine, there is no doubt that Jacqueline is an eligible person under the Act (s 57(1)(c)). Jacqueline therefore has standing under the Act to bring these proceedings.
The summons in these proceedings was filed less than 12 months after Mrs Caine's death.
For the reasons referred to in paragraph [33] above, the Court is satisfied that Jacqueline, as a person in whose favour a family provision order is to be made, is an eligible person.
No provision has been made for the proper maintenance, education or advancement in life of Jacqueline under Mrs Caine's will.
The absence of any provision for Jacqueline in Mrs Caine's will means that the Court is satisfied, at the time when the Court is considering Jacqueline's application, that no adequate provision has been made for Jacqueline's proper maintenance, education or advancement in life.
It follows from the findings made in paragraphs [32] to [37] above that the Court's discretion to make a family provision order in favour of Jacqueline under s 59(1) of the Act is enlivened.
In determining what provision ought to be made for the proper maintenance and advancement in life of Jacqueline, I have taken into account all of the facts set out in paragraphs [14] to [31] above. I have particularly considered the following matters (using some parts of s 60(2) as a convenient checklist):
(1) [ss 60(2)(a), (h) and (m)] For most of their lives Jacqueline enjoyed a close relationship with Mrs Caine, providing her with regular assistance. To the extent that relationship came to an end after 2008 it was not attributable to anything said or done by Jacqueline, but rather to Mrs Caine's mental illness.
(2) [s 60(2)(b)] Mrs Caine owed some obligation to both Jacqueline and Phillip. Notwithstanding their status as adult children, they both live in difficult circumstances. That being said, the degree of difficulty (including the severity of mental illness), suffered by Phillip is much greater than Jacqueline's. Mrs Caine owed a commensurately greater obligation or responsibility to provide for Phillip, in particular to ensure that he owned his own home.
(3) [s 60(2)(c)] The estate is not large. As set out in paragraph [14] above, after the sale of the House and payment out of all costs and expenses, $460,000 will be available for distribution.
(4) [s 60(2)(d)] Phillip has no financial resources to speak of. He appears to be able to get by (and not much more than that) on his disability support pension provided that he does not have any obligation to pay rent. There was nothing in the evidence to suggest that he would not continue to receive that pension in the future. That pension should meet his financial needs. He does not have any earning capacity. On the other hand, Jacqueline does have the financial resources I have referred to in paragraphs [18] and [19] above, including earning capacity. However, she also has financial needs: a new car, a need to reduce her expenditure to below her income, the need to repay her mortgage and to repay the loans from her ex-husband and friend. Jacqueline has some years of employment ahead of her (neither her physical or mental problems seriously put that at risk) and in several years she will be able to draw upon her superannuation.
(5) [s 60(2)(f)] Jacqueline does have both physical and mental problems. The physical ones will probably, with time, worsen. I am unable to make the same conclusion about her depression. However, none of those problems is currently seriously debilitating and I am unable to find that they will become so at least during a potential working life up to the age of 60. On the other hand, Phillip suffers serious mental and physical problems which will not improve and is unemployable.
(6) [s 60(2)(g)] Jacqueline is 53 years old. In the ordinary course she still has several years of working life left to her.
(7) [ss 60(2)(h) and (n)] Phillip also enjoyed a close relationship with Mrs Caine. He visited her regularly and gave her such emotional and practical support as he could.
Taking all of these matters into consideration, provision ought to be made for Jacqueline's proper maintenance and advancement in life to:
(1) enable her to purchase a new car (there was evidence, which I accept, that a suitable new car would cost approximately $20,000);
(2) reduce her mortgage (currently $230,000) so as to reduce her expenses; and
(3) perhaps, have some capacity to repay her ex-husband and her friend.
However, the cardinal consideration in determining the amount of any provision for Jacqueline must be, given his difficult circumstances which I have described above, to recognise Phillip's much greater claim to Mrs Caine's estate. In practical terms, and respecting the obvious scheme of Mrs Caine's will, this must be to ensure that Phillip will be able to purchase a suitable home for himself.
Mr Mann tendered evidence of suitable villa or unit accommodation in the Richmond and Windsor areas ranging in price from $275,000 to $429,000. Calculating the amount of the provision which the Court thinks ought to be made for Jacqueline's maintenance and advancement in life by reference to Phillip's need to buy his own home, that will be met if Phillip receives the first $345,000 available for distribution from the estate. Accepting that the likely value of the nett distributable estate is $460,000 (see paragraph [14] above), the provision which I think ought to be made for Jacqueline is an amount not exceeding the balance of that value after the payment of $345,000 to Phillip. That is an amount not exceeding $115,000. If, on an optimistic view, the value of the nett distributable estate exceeds $460,000, then Jacqueline should also receive 25% of that excess. This will leave 75% of any excess for Phillip. Their respective proportions reflect the substantial difference in the degree of difficulty in their circumstances demonstrated by the evidence and commensurate claim on the estate.
Finally, having determined the provision which the Court thinks ought to be made for Jacqueline's proper maintenance and advancement in life, the Court's discretion to make an order for that provision should be exercised in favour of Jacqueline. The reasons for doing so are those set out in subparagraphs (1), (2), (4) and (5) in paragraph [39] above, coupled with the size of the estate being such that there is likely to be a balance left in the estate which can be applied to Jacqueline's benefit after Phillip's need to own his own home has been met.
For these reasons, I made the orders set out in paragraph [5] above. There is one other feature of those orders that I should explain. Phillip's initial payment is expressed to be less any costs incurred by Mr Mann in obtaining vacant possession of the House. In the course of address as to the form of the orders Mr Ellison SC indicated that Mr Mann had some reason to be concerned Phillip would not co-operate in giving vacant possession of the House. Nothing in the material before me suggests Phillip has any lawful basis to resist giving vacant possession, although interim accommodation will need to be found for him. If he does resist and Mr Mann incurs costs in remedying the situation, those costs are to be visited on Phillip and should not reduce the provision that will otherwise be available for Jacqueline.
Decision last updated: 13 December 2013
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