Woodward v McGregor

[2003] NSWSC 672

CITATION:	Woodward v McGregor [2003] NSWSC 672
HEARING DATE(S):	12,14 February, 14,15,16 May 2003
JUDGMENT DATE:	25 July 2003
JURISDICTION:	Equity Division
JUDGMENT OF:	Master McLaughlin
DECISION:	(1) I order that, in addition to the benefit given to her by the will of the late Eric Henry Woodward ("the Deceased"), the Plaintiff receive a legacy in the sum of $60,000, such legacy to borne by that share of residue to which the Second Defendant would under the terms of the will of the Deceased otherwise be entitled, and such legacy not to bear interest if paid on or before 25 September 2003, and if not so paid to bear interest at the rate prescribed for unpaid legacies pursuant to the Wills, Probate and Administration Act 1898; (2) I order that the costs of the Plaintiff on the party and party basis and the costs of the First Defendant on the indemnity basis be paid out of the estate of the Deceased, and that there be no order in respect to the costs of the Second Defendant of the proceedings; (3) I order that the cross-claim of the Second Defendant be dismissed; (4) I order that the Second Defendant pay the costs of the First Defendant of the cross-claim; (5) The exhibits may be returned.
CATCHWORDS:	Succession - Family Provision - Claim by adult daughter - Financial and material circumstances of Plaintiff - Whether Plaintiff has been left without adequate provision for her proper maintenance - Competing claim of other beneficiary (widow of Deceased) - Cross-claim by widow for payment of debt owed by Deceased - Loan made by widow and acknowledged by Deceased - Loan repayable upon demand - No demand made during lifetime of Deceased - Whether claim is statute barred. - Limitation period commences on date when loan was made - Obligation of personal representative to fulfil contractual obligations of deceased considered.
LEGISLATION CITED:	Family Provision Act 1982 Limitation Act 1969 Limitation Act 1980 (UK) Wills, Probate and Administration Act 1898
CASES CITED:	Anguilla v Estate & Trust Agencies (1927) Limited [1938] 3 All ER 106 Anasson v Phillips (Young J, 4 March 1988, unreported) Blore v Lang (1960) 104 CLR 124 Bradford Old Bank v Sutcliffe [1918] 2 KB 833 Re Brown's Estate [1893] 2 Ch 300 Cooper v Jarman (1866) LR 3 Eq 98 Garden v Bruce (1868) LR 3 CP 300 Lloyd's Bank v Margolis [1954] 1 WLR 644 Rumble v Ball (1712) 10 Mod 39 Singer v Berghouse (1994) 181 CLR 201 Tate v Crowdson [1938] Ch 869 Young v Queensland Trustees Limited (1965) 99 CLR 560
PARTIES :	Megan Joy Woodward (Plaintiff) John Kevin McGregor (First Defendant, Cross-Defendant) Rosemary Evelyn Woodward (Second Defendant, Cross-Claimant)
FILE NUMBER(S):	SC 3794/02
COUNSEL:	P. Blackburn-Hart (Plaintiff) J. Baird (First Defendant, Cross-Defendant) A. Colefax (Second Defendant, Cross-Claimant)
SOLICITORS:	Boyd House & Partners (Plaintiff) Minter Ellison (First Defendant, Cross-Defendant) Harris & Co, Solicitors (Second Defendant, Cross-Claimant)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

MASTER McLAUGHLIN

Friday, 25 July 2003

3794 of 2002 MEGAN JOY WOODWARD v JOHN KEVIN McGREGOR

JUDGMENT

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

2 By summons filed on 30 July 2002 the Plaintiff, Megan Joy Woodward, claims an order for provision for her maintenance and advancement in life out of the estate of her late father, Eric Henry Woodward (to whom I shall refer as “the Deceased”).

3 The Deceased died on 12 August 2001. He left a will dated 5 November 1999, probate whereof was on 12 June 2002 granted to John Kevin McGregor, one of the executors named in such will (who is the First Defendant to the proceedings). By that grant of probate leave was reserved to John Robert Woodward, the other executor named in such will, to come in and prove the will.

4 The Deceased had been married twice. The Plaintiff is the only child of the Deceased, having been born of his first marriage, to Jessie May Woodward. After the death of his first wife in 1984 the Deceased on 6 February 1993 married Rosemary Evelyn (formerly Donovan), with whom he had been living in a de facto relationship since 1983 (who is the Second Defendant to the proceedings). No children were born to the marriage of the Deceased and Mrs Rosemary Woodward, to whom the Deceased remained married to his death.

5 The inventory of property discloses the following significant assets owned by the Deceased at the time of his death:

Real property, 20 The Crescent, Linley Point (to which an estimated value of $1,100,000 was ascribed)

Real property, 9 and 9A Georges River Road, Croyden Park (to which an estimated value of $400,000 was ascribed)

Honda motor car (to which an estimated value of $36,000 was ascribed, that figure being stated to be the cost price of the vehicle)


Life Insurance - $9,881

Shares in public companies - $19,055

6 The total value of the assets disclosed in the inventory of property was a little under $1,572,000.

7 The inventory of property also sets forth jointly held assets, all such assets having been held jointly by the Deceased with his wife Rosemary Evelyn Woodward. Those assets include the following:

Real property, 18 The Crescent, Linley Point (to which an estimated value of $900,000 was ascribed)
Home unit at 1/70 Cardwell Street, Arakoon (to which an estimated value of $340,000 was ascribed)


Vacant land, being Lot 29 Salmon Crescent, South West Rocks (to which an estimated value of $150,000 was ascribed)

Real property, 22 River Court, Hampton Fakenham, United Kingdom (to which an estimated value of $180,000 was ascribed)

Furniture (excluding 20 The Crescent, Lindley Point) - $6,860

Moneys in various bank accounts, totalling about $158,300

Debenture - $20,000

Shares in public companies – about $13,247

8 It will be appreciated that the foregoing jointly held assets passed by survivorship to Mrs Rosemary Woodward.

9 The liabilities of the Deceased are disclosed as totalling almost $20,000.

10 By his will the Deceased, after giving a legacy of $5,000 to his former secretary, gave to the Second Defendant his residence at 20 The Crescent, Linley Point, together with the furnishings and fittings therein and thereof, and also his motor car. The Deceased then gave one half of the net residue of his estate (after payment of debts, funeral and testamentary expenses and administration costs) to the Second Defendant and gave the other one half thereof to the Plaintiff.

11 At the hearing it was agreed between the Plaintiff and each Defendant that the house property at 20 The Crescent, Linley Point has a present value of $1,275,000; that the home unit at 1/70 Cardwell Street, Arakoon has a present value of between $380,000 and $400,000; and that the vacant land at South West Rocks has a present value of $250,000.

12 In calculating the amount which under the terms of the will the Plaintiff is entitled to receive, it is appropriate that the costs of the present proceedings be taken into account, since, irrespective of the outcome of the proceedings, the Defendant executor will be entitled to have his costs out of the estate, whilst the Plaintiff, if successful in her claim, will also be entitled to an order for her costs to be paid out of the estate.

13 It is estimated that the costs of the Plaintiff total $74,500, whilst those of the First Defendant total $130,722. (I would here interpolate that for a three day hearing, even where there have been two contested interlocutory applications, in proceedings which are in no way out of the ordinary, those amounts (especially the latter amount) appear to me to be excessive).

14 The Croydon Park properties have been sold since the death of the Deceased. The residue of the estate which is presently held by the First Defendant totals $293,567. From that amount the First Defendant considers that provision should be made for various liabilities (including the disputed claim of the Second Defendant for an asserted debt of $65,000). Those liabilities, which include provision for further costs of the Defendant in respect to the present proceedings, total $151,150. Accordingly, when that amount is deducted from the residue of the estate there remains an amount of $142,417. That figure takes into account the totality of the costs of the First Defendant amounting to $130,722 (of which an amount of $91,722 has already been paid) and also the interim distributions, totalling $19,400, already made to the Plaintiff. The costs of the Plaintiff in an amount of $74,500 should also be deducted from the figure of $142,417 and the amount of $19,400 should be brought into account. Of the balance then remaining, being $87,317, the Plaintiff will be entitled to one half, being an amount of $43,658 (of which she has already received $19,400).

15 It will be appreciated that ultimately the Plaintiff might, in fact, be entitled to a greater amount by way of her one half share of residue, if the amounts claimed by the Plaintiff and the First Defendant for costs (especially the amount of the costs claimed by the First Defendant) are, upon assessment, held to be excessive. Further, if the Plaintiff were not to be successful in the present proceedings and her costs were not to be payable out of the estate, the amount available for distribution as residue would be increased by $74,500, and the Plaintiff would be entitled to one half of that amount. However, in such event (that the Plaintiff be unsuccessful in her present claim), it is possible that she might be ordered to pay the costs of the Defendant. If so, although her own assets would thereby be depleted, the value of the residue of the estate (of which she is entitled to one half) would thereby be increased.

16 Further, in the event that the Second Defendant not be successful in her cross-claim, the amount of residue will increase by $65,000 (since provision for that amount has been made in the foregoing calculations presented on behalf of the First Defendant), and it is possible that the amount of residue will be further increased if the Second Defendant be required to pay the costs of the First Defendant of the cross-claim.

17 On 15 November 2002 the Court, consequent upon application made by her therefor, ordered that Rosemary Evelyn Woodward be joined as Second Defendant in the proceedings, at her own risk as to costs.

18 In respect to costs I would, for completeness, also here record that there has been filed an affidavit by the solicitor for the Second Defendant setting forth an estimation of the costs of that party in the present proceedings as totalling $31,100. I have already observed that the Second Defendant was, upon her own application, joined as a party to the proceedings, but at her own risk as to costs. It would be most unusual for a beneficiary who is joined at her own risk as to costs in proceedings where the estate, through the executor in carrying out his obligation and duty to uphold the terms of the will, bears the primary responsibility for opposing the claim of the Plaintiff, to receive an order that her costs be paid out of the estate. Accordingly, I have, in performing the foregoing calculation in respect to the value of the net residue of the estate available for distribution between the two beneficiaries, disregarded the costs of the Second Defendant.

19 The Plaintiff has during the course of the present proceedings obtained orders for interim distributions to her from the estate of the Deceased, in respect to her entitlement under the will, those interim distributions being in amounts totalling $19,400. In this regard I would make reference to my orders of 14 February 2003 and to my reasons for judgment in respect thereof.

20 The Plaintiff was born on 23 July 1949 and is presently aged fifty-three. After leaving school in 1966 the Plaintiff attended the Metropolitan Business College, and thereafter was in employment both in Sydney and in London until her marriage on 2 August 1974. The Plaintiff in 1970 returned to Australia from the United Kingdom and resumed residence with her parents at Abbotsford, where they were then residing. Shortly after the Plaintiff’s return her parents acquired the house property at 20 The Crescent, Linley Point. The Plaintiff resided with her parents in that property from the time of its acquisition in 1970 until her marriage in 1974.

21 Of that marriage were born three children, being Kylie (born in 1978, who is presently aged twenty-five), and twin daughters Courtney and Lindsay (born on 8 April 1983, who are presently aged twenty). The Plaintiff and her husband, Phillip Benger, separated in 1985, and were subsequently divorced.

22 According to the Plaintiff the Deceased gave to her (and, during her marriage, to her and her husband) considerable financial assistance, especially in regard to the purchase of various residences. The Deceased also paid about $90,000 to assist the Plaintiff in connection with her divorce.

23 It is not necessary that I should rehearse in detail the history of all the real property transactions in which the Plaintiff has been involved during the past almost thirty years. It should, however, be recorded that in 1988 she inherited from her grandmother a house property at Five Dock. At that time that property was tenanted and from it the Plaintiff received rent of $90 a week. That house property was sold by the Plaintiff in 1991, she receiving about $160,000 from that sale. According to the Plaintiff that money, consonant with the testamentary wishes expressed by her grandmother, was spent on the education of the Plaintiff’s children and the maintenance of the children and herself.

24 It is, however, difficult to reconcile the raw figures provided by the Plaintiff in respect to those real property transactions with her assertions of impecuniosity by 1999. I would observe, for example, that the Plaintiff said that she sold the Turramurra residence in 1999, at a time when she was in employment, in order to meet bills of $14,000. The sale price of $510,000 represented a profit of almost $190,000 since she had purchased that property four years earlier (although, in calculating precise profit, such expenses as agent’s commission and legal expenses would need to be taken into consideration).

25 It does, however, seem somewhat strange that the Plaintiff felt it necessary to sell a residence worth more than half a million dollars in order to meet outstanding bills of $14,000, and that she thereupon purchased another residence for $456,000, which required her to obtain a mortgage in an amount of $85,000. The Plaintiff said that she did not require such a large mortgage, but that, in effect, an advance in that amount, secured by mortgage, had been forced upon her by Gainsworth Finance and Mortgage Pty Limited. That mortgage debt is being repaid at the rate of $477.80 a month.

26 At the present time the Plaintiff resides in a house property at 11 Watson Avenue, Wahroonga, which she purchased in 2000, for $456,000. That purchase was funded by $400,000 from the proceeds of the sale in 1999 of her previous residence at Turramurra for $510,000, and she borrowed $85,000 to complete the purchase. (In the interim between the sale of the Turramurra residence and the purchase of the Wahroonga residence the Plaintiff and her daughters were living in rented accommodation, for which she was paying rent of about $430 a week.)

27 The Plaintiff gave evidence concerning various repairs, renovations and improvements which she says are presently required upon the Wahroonga residence. They include the necessity for an office to be set up in the home, and the acquisition of a desk and filing cabinets as well as some bookcases.

28 The Plaintiff’s present assets and liabilities are as follows:

29 Assets

House property, 11 Watson Avenue, Wahroonga (to which an estimated value of $560,000 is ascribed)
1994 Nissan Blue Bird sedan motor vehicle (to which, before repairs costing $3,160 are effected, an estimated value of $3,000 is ascribed)


4,000 shares in Telstra - $1,748

834 shares in IAG - $2,085

Money in bank - $730

Furniture and household contents (to which an estimated value of $12,000 is ascribed)

Jewellery (to which an estimated value of $7,500 is ascribed)

30 Liabilities

Mortgage over house property - $86,000


Mastercard - $1,832

Visa Card - $1,634

HCF - $1,610

Ku-ring-gai Council municipal rates - $437

Sydney Water, water rates - $188

Telstra – landline - $310

Vodafone – mobile phone - $101

Debt to daughter Kylie - $5,600

Debt to daughter Courtney - $16,500, plus interest ($5,000)

Debt to daughter Lyndsay - $11,000, plus interest ($5,000)

Debt to Virginia Hill (loan) - $200

Debt to John Woodward (loan) - $1,000

31 The Plaintiff since January 2002 has been employed as a casual market researcher. Her employer is a company engaged in assisting buyers in the purchase of real estate. The Plaintiff is entitled to receive payment of commission in respect of persons whom she assists in buying a property. The income which she receives is variable. She is paid at the rate of $21 gross per hour, plus car expenses on mileage, plus telephone calls. She earned nothing from that employment from December 2002 until February 2003. Before that period she had been working two days a week (earning a total of $294 a week). From 10 February 2003 until 9 May 2003 the Plaintiff earned a total of $779. Shortly before the hearing the Plaintiff made application for assistance from Centrelink. By the commencement of the hearing the Plaintiff had received a total of $2,231 from Centrelink by way of a disability allowance. The amount of that allowance is variable, depending upon the Plaintiff’s earnings from her employment.

32 The Plaintiff was cross-examined concerning her financial circumstances, especially concerning her recent employment history. In that regard she was questioned about the information furnished when applying to Gainsworth Mortgage and Finance for the finance which enabled her to purchase the Wahroonga residence in 2000 (Exhibit 2). That information was in material respects inconsistent with the information provided to the Court in her affidavit evidence in the present proceedings. The responses given by the Plaintiff concerning these inconsistencies revealed the Plaintiff to be an unreliable witness. (That unreliability was emphasised by the fact that under cross-examination the Plaintiff on no fewer than fifty-one occasions responded with answers such as “I can’t recall” or “I can’t remember”.)

33 In March 2001 the Plaintiff made application to Sydney Home Search for employment. In the resumé which she attached to her letter of 5 March 2001 (Exhibit 3) the Plaintiff referred to her then current employment (“…I’m working part-time as a Relocation Consultant, and must say that I enjoy this job immensely…”). Neither in that resumé nor in the covering letter did the Plaintiff make any reference to an inability to work because of ill health, although such an inability is relied upon by the Plaintiff in support of her present claim.

34 It also emerged during the course of her cross-examination that the Plaintiff had at some time after 5 March 2001 pursued and completed a Real Estate Certificate of Registration course (although the Plaintiff asserted that she could not recall the date when she pursued that course). Neither the course nor the successful completion thereof was referred to in the Plaintiff’s affidavit evidence.

35 It also emerged that the Plaintiff had, according to her, obtained a Diploma in Computing Studies from TAFE Crows Nest at an unspecified date between 1989 and 1991. In the resumé to which I have referred the Plaintiff expressed her “interests” as “gardening, swimming, keeping fit, tapestry, and reading”. Although making no reference to anything about her alleged health problems, the Plaintiff wrote that she “Also copes well under pressure and in stressful situations”.

36 It is difficult to resist the conclusion that the Plaintiff was being far from frank either in her sworn evidence to the Court (in seven separate affidavits) in the present proceedings, or in her application to a prospective employer. The two cannot stand together.

37 It has already been recorded that the Plaintiff has received two interim distributions from the estate of the Deceased. In her affidavit of 13 February 2003 the Plaintiff set forth details of how the interim distribution of $8,000 received on about 13 December 2002 had been disbursed (essentially on household outgoings (including mortgage arrears of $3,000)).

38 In her affidavit of 9 May 2003 (filed in Court on 14 May 2003, the third day of the hearing) the Plaintiff set forth details of the manner in which that interim distribution had been disbursed (largely on household outgoings and personal expenses, as well as mortgage payments ($2,500) and household and car insurance ($1,660)). The Plaintiff also set forth details of structural and furnishing problems in the main bathroom in her residence. At the time of swearing her affidavit of 9 May 2003 the Plaintiff had about $730 standing in her bank account.

39 Evidence was placed before the Court concerning various medical problems of the Plaintiff. Those problems include ulcerative colitis, irritable bowel syndrome, recurrent bowel infection (probably giardiasis), fibrocystic disease of her breasts and costo-chondrial-osteochondritis. Evidence was given by the Plaintiff’s treating surgeon, Dr John Dixon-Hughes, that there is always a risk with ulcerative colitis that it will escape from medical control, requiring major surgery, and that there is also the increased risk of the development of colonic carcinoma. The Plaintiff’s other medical problems (details of which were set forth in the affidavit of Dr Yasmin Abadi, her treating general practitioner) included chronic asthma, an old rotator cuff tear in the left shoulder, linear fracture of the left ankle, with a consequent pre-disposition to osteoarthritis in the joint, together with “some anxiety, depression and hopelessness after traumatic life events”. Dr Abadi stated that the prognosis of the above conditions was poor, as they are all of a chronic nature and as such incapacitate the Plaintiff greatly.

40 Dr Abadi considered that the Plaintiff was not able to engage in full-time employment.

41 The Plaintiff was also examined by Dr David James Byrnes, a gastroenterologist/endoscopist, on behalf of the Defendant. It was the opinion of Dr Byrnes that the Plaintiff was suffering from an irritable bowel syndrome, for which Dr Byrnes said there is symptomatic treatment but no cure. Dr Byrnes in his report dated 17 April 2003 stated that an irritable bowel syndrome is an extremely common condition affecting up to one third of the population. It was his conclusion that the Plaintiff should be able to perform full-time work, but during periods of exacerbation that might be reduced to three or four days a week. He considered that secretarial work, office management, research, and the like should be well within her grasp.

42 In the light of the Plaintiff’s work history which emerged from cross-examination and which (deliberately or inadvertently) was not revealed in any of her seven affidavits and in the light of the assertions made in her resumé of March 2001, and also in the light of the Plaintiff’s recreational activities (including those associated with her recently acquired dog, which she intends to show). I am not persuaded that the Plaintiff’s medical condition prevents her from working in employment to the extent that she desires to do so.

43 Much evidence (especially affidavit evidence) was placed before the Court concerning the nature and details of the personal relationships between the Plaintiff and the Deceased, between the Plaintiff and the Second Defendant, and even (somewhat curiously) between the Second Defendant and the Deceased (it being appreciated that the Second Defendant was the chosen object of the significant testamentary beneficence of the Deceased).

44 It was the case for the Plaintiff that she maintained a close and affectionate relationship with the Deceased and that she was a loving and caring daughter. She conceded, however, that there were three periods of estrangement between herself and her father, being in 1993 (one month), 1996 (four to six weeks) and 1999 (six months), but said that each such period was followed by a resumption of a normal daughter-father relationship. Both the Plaintiff and the Second Defendant frankly admitted in their respective evidence that there were times of conflict between them. At the hearing it was stated on behalf of the Second Defendant that there would be no challenge made concerning the Plaintiff’s relationship with her father and that no submission of conduct disentitling would be made.

45 Sensibly, there was little, if any, cross-examination directed to the foregoing personal relationships among the parties and the Deceased. That was a proper approach on the part of Counsel for the respective parties, especially in the light of the salutary admonition of the High Court of Australia in Blore v Lang (1960) 104 CLR 124 at 137 per Windeyer J.

46 The present assets and liabilities of the Second Defendant are as follows:

47 Assets

House property, 18 The Crescent, Linley Point ($900,000)

Home unit at 1/70 Cardwell Street, Arakoon ($380,000-$400,000)

Vacant land at South West Rocks ($250,000)

22 River Court, Hampton Fakenham, United Kingdom ($180,000)

Investments

National Australia Bank - $140,000


CBFC Term Deposit - $10,000

National Australia Bank Managed Fund - $12,000

National Australia Bank Cheque Account - $1,000

National Australia Bank Cheque Account - $1,000

Share portfolio - $12,600 (approximate)

Honda CRV motor vehicle - $35,000 (estimate)

Furniture and contents at 20 The Crescent, Linley Point

48 Liabilities

NAB Visa Card debit balance - $1,009

Costs of the present proceedings

49 The Second Defendant’s income consists of interest and dividends, as well as rent received from 18 The Crescent, Linley Point ($750 a week) and from the Arakoon home unit ($270 a week). In addition, the Second Defendant, upon her recent attainment of the age of sixty, has now become entitled to receive a United Kingdom pension of about 30 to 33 pounds a week (that is, about $75 to $83 a week) as a result of contributions which she has made over many years, from about 1958 until 1968 (when she left the United Kingdom and came to Australia) and from the late 1980s until this year. For the financial year ended 30 June 2002 it was estimated that the Second Defendant’s taxable income would be about $32,000. Among her outgoings (details of which are set forth in her affidavit evidence, and are disclosed as totalling almost $3,000 a month) is a land tax bill which in 2002 was in an amount of $7,563. It was the belief of the Second Defendant that she would need to resort to her capital in order to continue her present lifestyle.

50 The house property in the United Kingdom was purchased by the Second Defendant in 1997 for £39,000. The Second Defendant purchased that property as a residence for her father, who is presently aged eighty-four, is frail and unwell and resides alone. The purchase price was funded by a payment of about $120,000 (representing £35,000), and a contribution of about $10,000 from the Deceased, representing the balance of the purchase price. All the outgoings on the property are paid by the Second Defendant’s sister, who resides in Norfolk in the United Kingdom. It is proposed that their father will continue to reside in that house property for as long as he is able to live alone. Part of the purchase price which was advanced by the Second Defendant came from the proceeds of sale of a vacant block of land owned by her at South West Rocks which she sold for $42,000.

51 Apart from the properties which she owned conjointly with the Deceased, the Second Defendant, at the time of the death of the Deceased, did not own any property.

52 The Second Defendant continues to reside in the house property at 20 The Crescent, Linley Point, which was the matrimonial home of herself and the Deceased from 1983 (when they entered into a de facto relationship). It is the Second Defendant’s desire to remain in residence in that house for as long as she is able to do so.

53 The Second Defendant (who was born in London on 7 July 1943) is now aged sixty. She is not in employment, and, on account of a cracked vertebrae which she sustained in 1999, it is unlikely that she will work in the future. Accordingly, she expects that it will be necessary for her to live on her investments for the remainder of her life.

54 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.

55 However, it is appropriate that before doing so I should deal with the cross-claim of the Second Defendant, since the determination of that cross-claim will impact upon the size of the estate available for distribution and (more significantly) the size of the residuary estate, to one half of which the Plaintiff is entitled under the terms of the will.

56 I have had the benefit of receiving written outlines of submissions and chronologies from Counsel for the respective parties concerning both the substantive claim of the Plaintiff and the cross-claim of the Second Defendant. Those documents will be retained in the Court file.

57 On 10 December 2002 the Second Defendant filed a cross-claim, naming the First Defendant as Cross-Defendant. By that cross-claim the Cross-Claimant seeks a declaration that the First Defendant is indebted to her in the sum of $65,000.

58 The present hearing encompassed both the claim of the Plaintiff under the Family Provision Act and the cross-claim of the Second Defendant. All parties were content that both the claim and the cross-claim should be heard together, and the hearing proceeded upon that basis.

59 However, it appears that, apart from the order of Mr Justice Young, Chief Judge in Equity, of 8 November 2002 (by which His Honour fixed the matter to be heard by myself), that order being made before the filing of cross-claim on 10 December 2002, there was no order made by a Judge that the entirety of the proceedings (including the cross-claim) should be heard by a Master. In consequence, therefore, for an abundance of caution, Mr Justice Young in Chambers on 10 July 2003 ordered that all issues in the proceedings be heard by a Master.

60 In support of her cross-claim the Second Defendant relies on the affidavit sworn by her on 10 December 2002, in particular, paragraphs 52 to 58 thereof.

61 The Cross-Claim is grounded on asserted loans made by the Second Defendant in 1985 and 1986. According to the Second Defendant, in 1985 she lent the sum of $60,000 to the Deceased’s company, Eric Woodward Pty Ltd. That sum came essentially from the proceeds (in an amount of about $55,000) of the sale of a laundry business conducted by the Second Defendant, together with the Second Defendant’s own funds of $10,000. The Second Defendant said that it was the Deceased who suggested that she should advance money to him, and that he would pay interest on such advance. The Deceased provided the Second Defendant with a letter dated 21 November 1985, addressed to her (as Mrs R.E. Donovan). That letter (Annexure G to the affidavit of Rosemary Evelyn Woodward sworn 10 December 2002), which is on the letterhead of the Deceased’s company, Eric Woodward Pty Ltd and is signed by the Deceased (described as “E.H. Woodward – Director”), is in the following terms:

Dear Mrs Donovan,
We write to confirm the company has borrowed $60,000 from you upon the following terms: -
Interest: 20% per annum reducible to 19% per annum if paid within 14 days of the due dates for payment that is 3 monthly on the 21st days of February and May, August, November
Repayable: Upon demand

62 The letter bears the following endorsement:

I ROSEMARY EVELYN DONOVAN acknowledge receipt of this letter and confirm the contents thereof.
Dated this 21st day of November, 1985
R.E. Donovan
ROSEMARY EVELYN DONOVAN

63 It was the understanding of the Second Defendant that the foregoing loan was reflected in a loan account with the company, to which interest was credited from time to time.

64 Subsequently, on about 18 February 1986 the Second Defendant lent a further sum of $8,124.92 to the Deceased’s company, and the Deceased gave to her another letter from the company acknowledging that debt. That letter (annexure H to the foregoing affidavit), which is again on the letterhead of Eric Woodward Pty Limited and which is in the handwriting of the Deceased, is dated 18 February 1986 and is addressed to the Second Defendant (as Mr R.E. Donovan) and is in the following terms:

Dear Mrs Donovan,
We write to confirm the company has borrowed from you $8,124.92 from you upon the following terms:
Interest: 20% per annum reducible to 19% per annum if paid within 14 days of the due date for payment that is 2 monthly on the 18th day of April, June, August, October and December.
Repayable Upon demand.
Yours faithfully,
ERIC WOODWARD PTY LTD
Per E.W. Woodward, Director
ERIC W. WOODWARD
I ROSEMARY EVELYN DONOVAN acknowledge receipt of this letter and confirm the contents therefore [ sic ]
Dated this 18th Day of February 1986
Rosemary Evelyn Donovan
R.E. Donovan

65 According to the Second Defendant, by 30 June 1993 the company was indebted to her in an amount of $101,455. During the ensuring financial year the company credited the loan account with a dividend in an amount of $70,000. From the loan account one half of the deposit payable on the purchase of a parcel of real estate at South West Rocks (namely an amount of $4,000) was paid by the company, leaving the overall balance due to the Second Defendant by the company as at 30 June 1994 in an amount of $167,455. In the ensuing financial year (ended 30 June 1995) the Second Defendant’s loan account received interest of $3,000, making the overall debt due to her by the company an amount of $170,455.

66 In mid-1995 the Deceased decided to liquidate Eric Woodward Pty Limited. It was the evidence of the Second Defendant that at a meeting in the office of the Deceased’s accountant, Mr David Gurney, the Deceased said to her, “I’ll repay you the $65,000 at call if you’ll agree to release the company”, to which the Second Defendant replied, “OK. If that is what is required”.

67 The Deceased on 1 June 1995 in the presence of his accountant, Mr Gurney, executed a statutory declaration (annexure I to the foregoing affidavit), in the following terms:

I, Eric Woodward of 20 The Crescent, Lane Cove in the State of New South Wales, do solemnly and sincerely declare as follows:

That as at 31st May 1995 I am indebted to Mrs R.E. Woodward to the extent of $65,000. This debt represents the balance of the amount owing to Mrs Woodward from Eric Woodward Pty Limited which was $170,455 as at 31st May 1995. This amount was reduced via the making of a gift from Mrs R.M. Woodward to Mr E. Woodward to the extent of $105,455. The remaining amount of $65,000 is a loan from Mrs Woodward to Mr Woodward.

And I make this solemn declaration conscientiously believing the same to be true and by virtue of the provision [ sic ] of the “Oaths Act 1900-1953”.

68 The foregoing amount of $65,000 has never been repaid to the Second Defendant, and she now claims that amount from his estate.

69 The First Defendant, however, denies the liability of the estate to pay that amount to the Second Defendant. This denial is grounded, firstly, upon the assertion of the First Defendant that the Deceased could not assume the indebtedness of the company to the Second Defendant; secondly, that, in any event, the claim of the Second Defendant is defeated by the expiry of the appropriate limitation period.

70 The First Defendant submits that the proper construction of the statement of the Deceased set forth in the statutory declaration of 1 June 1995 is that the Deceased and the Second Defendant agreed that, in consideration for the Second Defendant releasing the company from all claims by her, the Deceased agreed to owe the Second Defendant the sum of $65,000. It is, however, submitted on behalf of the First Defendant that the Second Defendant never released the company from its indebtedness to her. In this regard the First Defendant relies upon the company’s declaration of solvency dated 7 June 1995 (Exhibit 8), which is signed by both the Deceased and the Second Defendant and discloses unsecured creditors in the amount of $170,455. The Second Defendant under cross-examination agreed that that sum in the declaration of solvency was the same amount which was owed to her by the company.

71 It was further submitted by the First Defendant that payment by the Deceased to the Second Defendant of the sum of $65,000 was a precondition to her releasing the company from its liability to repay to her the sum of $170,455. Since (thus runs this argument) the Deceased never paid the sum of $65,000 to the Second Defendant, the company remained indebted to her for the full amount of $170,455, and thus the Second Defendant is not entitled to make a claim against the estate of the Deceased in respect to the debt, the proper claim, if any, being against the company.

72 Whilst the First Defendant recognises that all parties involved may, by novation, agree to substitute one contracting party (here the Deceased) for another (here the company), thereby transferring the burden of a contract, but submits that there was no such novation in the instant case. It was submitted that the company did not participate in any agreement with the Second Defendant and the Deceased of the nature set out in the statutory declaration of the Deceased of 1 June 1995.

73 The foregoing submission, whilst superficially attractive, appears to disregard the realities of the relationships and arrangements between the parties.

74 The original loan of $60,000 to the Deceased’s company, Eric Woodward Pty Limited, was made by the First Defendant at the request of the Deceased (with whom she was at that stage living in a de facto relationship), who said to her words to the following effect, “Why don’t you put your money with me. I can use it and I’ll pay you interest just the same as if you had it in the bank. If ever you want it back again you only need to ask.”.

75 The various amounts of interest credited to the Second Defendant’s loan account as disclosed in the financial records of the Deceased’s company appear to have been for the benefit of the Deceased and his company, and were of no practical benefit to the Second Defendant. She did not at any stage receive payment of those amounts of interest.

76 By the time the Deceased was desirous of liquidating the company in mid-1995 he and the Second Defendant were married. They were the sole directors of the company. The acknowledgment of the personal indebtedness of the Deceased to the Second Defendant in the statutory declaration, in return for the abandonment by the Second Defendant of the indebtedness of the company to her to the extent of $105,455 merely reflects the original loan of $60,000 made by the Second Defendant to the company in 1985 and the further loan made by her in 1986.

77 It seems to me that the submission of the First Defendant that the facts supporting the indebtedness of the Deceased personally arising only after the Second Defendant had released the company from the indebtedness could equally be regarded as supporting a situation where the First Defendant released the company from its indebtedness to her only upon the Deceased acknowledging indebtedness to her for $65,000. The release of the indebtedness of the company and the acceptance by the Deceased of his indebtedness were the counterparts of the same transaction. Nothing turns upon the fact that the declaration of solvency (Exhibit 8) was signed by the Deceased and the Second Defendant on 2 June 1995, rather than on the same date as the statutory declaration, 1 June 1995 (which recognises the indebtedness of the Deceased’s company to the Second Defendant as at 31 May 1995). In any event, the declaration of solvency includes, “that a correct statement of the company’s assets and liabilities as at the latest practicable date (specified on the statement) before the making of this declaration is set out on page 2 of this form”. The statement itself does not bear a date.

78 To submit, as the First Defendant does, that the Second Defendant has never released the company from the debt seems to me to fly in the face of the realities of the relationship between the Second Defendant and the Deceased. By making her present claim and by relying upon the statutory declaration of the Deceased the Second Defendant clearly acknowledges that she does not assert any indebtedness against the company. Indeed, the conduct of the parties during the balance of the lifetime of the Deceased is consistent with the absence of any claim by the Second Defendant against the company. The First Defendant made no claim against the company, which in any event had been liquidated. She must be treated as having, by her conduct, released the company from such alleged indebtedness.

79 I regard the statutory declaration as constituting a binding undertaking, for consideration, upon the Deceased. If, however, the concept of novation be necessary to impose the obligation of indebtedness upon the Deceased, an obligation which was formerly that of the company, then I consider that there has been such novation. Whilst there is no documentation executed under seal of the company, nevertheless, the Deceased and the Second Defendant were the only directors of the company, and it would appear that the Deceased largely treated the company as a vehicle for his own activities. All persons beneficially interested in the transaction were parties thereto. Accordingly, I consider that, in any event, there was a novation of the liabilities of the company under the original arrangements between the company and the Second Defendant.

80 There remains to be considered finally the submission of the First Defendant that the claim of the Second Defendant, which I regard otherwise as having been established and being an indebtedness of the Deceased for which his estate is liable, has been barred by expiry of the appropriate limitation period under the Limitation Act 1969.

81 The relevant provision of that statute is section 14(1)(a), which is in the following terms,

An action on any of the following causes of action is not maintainable if brought after the expiration of a limitation period of six years running from the date on which the cause of action first accrues to the plaintiff or to a person through whom the plaintiff claims:

(a) a cause of action founded on contract (including quasi contract) not being a cause of action founded on a deed.

82 In the instant case the cause of action is in debt, grounded upon a contract, such cause of action having its origin in the offshoot of the form of action in contract which is known as indebitatus assumpsit. (For the development of that latter cause of action, recognised in Slade’s Case (1602), 4 Rep 92b, see F.W. Maitland, The Forms of Action at Common Law (1948, Cambridge), 68-70). It was submitted on behalf of the First Defendant that the time at which an action accrues in relation to a contract of loan depends on the terms for repayment of the loan. If no time is specified, then, according to that argument, time runs from the date of the loan, that being, in the instant case, no later than 1 June 1995. Since the claim of the Second Defendant in the instant case was made only upon the filing of the cross-claim on 10 December 2002, and since that was more than six years after 1 June 1995, the claim of the Second Defendant is defeated, and the cause of action is, by section 63(1) extinguished.

83 It is settled law that a simple loan expressed to be repayable on demand is repayable at once, without the need for any demand. Further, that a demand is thus not a condition precedent to a right to commence an action for recovery of the debt. Accordingly, the limitation period commences on the date when the loan was made. In Young v Queensland Trustees Limited (1965) 99 CLR 560 the High Court of Australia (in the joint judgment of Dixon CJ, McTiernan and Taylor JJ) said, at 566,

A loan of money payable on request creates an immediate debt. Speaking of a promissory note payable on demand Parke B in Norton v Ellam (1837) 2 M&W 463 [150 ER 839] said: “It is the same as the case of money lent payable upon request, with interest, where no demand is necessary before bringing the action. There is no obligation in law to give any notice at all; if you choose to make it part of the contract that notice shall be given, you may do so. The debt which constitutes the cause of action arises instantly on the loan. Where money is lent, simply, it is not denied that the statute begins to run from the time of lending” (at 464 [at 840]). This was settled at the end of the seventeenth century, as appears from the report of Collins v Benning (1700) 12 Mod 444 [88 ER 1440].

84 (See, also, for example, Rumble v Ball (1712) 10 Mod 39; Garden v Bruce (1868) LR 3 CP 300; Re Brown’s Estate [1893] 2 Ch 300 at 305; Bradford Old Bank v Sutcliffe [1918] 2 KB 833; Tate v Crowdson [1938] Ch 869 at 881; Lloyd’s Bank v Margolis [1954] 1 WLR 644 at 648.)

85 As a result, once the loan is outstanding for more than six years (which not infrequently happens in the case of loans between friends or members of a family – as in the instant case), the lender’s right to recover the money lent becomes barred, notwithstanding that no demand for repayment has been made. The unfairness and injustice which can result from the application of this rule of law to loans between family members or close friends were recognised by the enactment in 1980 by the Parliament of the United Kingdom of section 6 of the Limitation Act 1980 (United Kingdom) (see Twenty-First Report of the Law Reform Committee, Cmnd 6923 (1977), paragraphs 3.19 – 3.26; see, also, Boot v Boot (1996) 2 FCR 713). However, no such equivalent provision has been inserted in the New South Wales statute.

86 It follows, therefore, that in New South Wales a person who claims repayment of a loan, payable upon demand, which loan is not the subject of a deed, has only six years from the date of the loan in which to bring proceedings for recovery.

87 Where, as here, the claim is against an executor for the indebtedness of his testator, it may be arguable that, if the six year limitation period had not expired by the time of the death of the testator, then (consonant with the principles relating to the obligation of a personal representative to fulfil the contractual obligations of the deceased, enunciated by the Judicial Committee of the Privy Council in Angullia v Estate & Trust Agencies (1927) Limited [1938] 3 All ER 106 at 111-112, expressly approving the reasons of Lord Romilly MR in Cooper v Jarman (1866) LR 3 Eq 98 at 101-102) the executor would be obligated to fulfil the contractual liability of the Deceased to repay the loan.

88 But in the instant case the Deceased died on 12 August 2001, that being more than six years after the date of the loan, 1 June 1995. Accordingly, it is not necessary for me to express any concluded view as to the liability of the First Defendant if the Deceased had died before the expiry of the six year limitation period.

89 In the circumstances of the instant case, therefore, the claim of the Second Defendant for repayment of the acknowledged indebtedness of the Deceased for the loan of $65,000 is defeated by the expiry of the limitation period on 1 June 2001. Thus the cross-claim of the Second Defendant, which was filed on 10 December 2002, must be dismissed.

90 That dismissal will have the consequence of increasing the residue of the estate available for distribution between the Plaintiff and the Second Defendant by $65,000. Of that amount the Plaintiff and the Second Defendant will each by the terms of the will be entitled to receive one half, being $32,500.

91 The Plaintiff, as a child of the Deceased, is an eligible person within paragraph (b) of the definition of that phrase contained in section 6(1) of the Family Provision Act. As such she has the standing to bring the present proceedings.

92 It will be appreciated that the Second Defendant, as the widow of the Deceased, is also an eligible person, being such within paragraph (a) of the foregoing definition. The Plaintiff and the Second Defendant are the only eligible persons in relation to the Deceased.

93 In performing the first stage in the two stage process recognised by the High Court of Australia in Singer v Berghouse (1994) 181 CLR 201 at 208 it is necessary for the Court to consider whether by the terms of the will of the Deceased the Plaintiff has been left without adequate provision for her proper maintenance and advancement in life.

94 The Plaintiff has assets worth upwards of $600,000, the most significant of which is the house property at Wahroonga. That appears to be a comfortable (even if not particularly commodious) residence, in which the Plaintiff is presently residing on her own. None of her daughters are presently dependent upon her. Whilst the Plaintiff asserts that she has liabilities totalling in excess of $135,000, more than $43,000 of that amount consists of debts stated to be owed to her three daughters, in respect of loans and interest thereon. There is no suggestion that she is under any pressure to repay those loans to her daughters.

95 The most significant of the Plaintiff’s liabilities is the mortgage debt of $86,000. The circumstances which resulted in her being burdened with that liability are almost inexplicable. It was entirely through her own choice that she sold the Turramurra property and saddled herself with the present mortgage.

96 There is also considerable substance in the submission on the part of the Defendants that the very significant profits made by the Plaintiff in consequence of her various real estate transactions have been left totally unexplained and unaccounted for. Upon the calculation of the Second Defendant, the amounts which appear to have been received by the Plaintiff, but not accounted for, total upwards of a quarter of a million dollars.

97 The Plaintiff submits that she has the following needs:

Repayment of her liabilities, including the mortgage
Meeting the gap between her income and her outgoings


A new motor car

Improvements to her home

Fund for contingencies

Fund to provide for her security in her old age

98 On the other hand it is submitted by the Defendants that the Plaintiff has not established any need whatsoever.

99 In dealing with a claim in a reasonably large estate the Court should always be careful not to allow itself to succumb to the temptation to be overgenerous with other people’s money (see Anasson v Phillips (Young J (as he then was), 4 March 1988, unreported, page 20). Further, it seems to me to be relevant in the instant case that if the present proceedings had not been instituted the Plaintiff would have been entitled to one half of residue in an amount of about $385,000 (being the residue of $293,567 presently held by the First Defendant plus $91,722 representing the First Defendant’s costs already paid). That is, she would have received about $192,500 from the estate of the Deceased. In consequence of the institution of the present proceedings and the costs associated therewith, she is presently entitled, under the terms of the will, to receive one half of a residue of about $162,000 (if her own costs, for the purpose of this calculation, be disregarded) – that is, about $81,000 (of which she has already received interim distributions totalling $19,400).

100 There is considerable substance in the submissions made on behalf of the Defendants that the Plaintiff, by the very institution of the present proceedings, has caused the amount which she is entitled to receive from the estate of the Deceased to be significantly reduced. Further, there is considerable substance in the submissions made on behalf of the Defendants that the Plaintiff has not fulfilled her basic obligation to disclose as fully and as frankly as possible full details of her financial and material circumstances, and, in particular, details of what happened to the profits made on each of the three sets of real property transactions in which she changed her residence by selling one house and acquiring another.

101 Although the circumstances in which the Plaintiff presently finds herself are far from penury or destitution, nevertheless, the very fact that she is now dependent upon a disability allowance from Centrecare, and the fact that her income from her employment has been extremely small are such as in my conclusion establish a degree of need which enlivens the discretion of the Court under section 7 of the Family Provision Act.

102 Nevertheless, in my conclusion the Plaintiff has not established an entitlement to the various funds and sums which are sought on her behalf. At most she has established an entitlement to receive an additional benefit which, when added to the amount which she receives under the will, will enable her, if she so desires, to discharge the mortgage debt on the Wahroonga residence, or, if she does not desire to do so, will provide a fund to meet unexpected contingencies and from which she can also effect what she regards as necessary repairs to her residence and can also acquire a replacement motor vehicle. A legacy in the sum of $60,000, when added to the amount (formerly about $44,000, but now (consequent upon the dismissal of the cross-claim) about $76,500, which she receives under the provisions of the will, will be more than sufficient to enable her either to discharge the mortgage, or to effect the repairs and renovations and to acquire a motor vehicle, and in either case still to retain a fund to meet contingencies. It will be appreciated that if the mortgage is discharged, then the Plaintiff’s regular outgoings will be reduced by almost $480 a month, an amount which should significantly improve her lifestyle and place her on a much more secure financial footing.

103 However, the foregoing proposed provision must be approached in the light of the competing claim of the Second Defendant on the testamentary bounty of the Deceased. It will be appreciated that the primary testamentary obligation of the Deceased was to his widow (of whom he had been de facto partner and husband for a period of eighteen years. The obligation of a testator to his widow has often been described as requiring him (to the extent that his estate enables him to do so) to ensure that she is secure in her accommodation, that she is able to maintain a lifestyle no less than that which she enjoyed during the life of her husband, and that she has a fund to meet unexpected contingencies.

104 I have already observed that the amount of residue available for distribution, formerly calculated as being about $87,000 should now (consequent upon the dismissal of the cross-claim) be treated as being about $152,000 (probably more, if the First Defendant’s costs of the cross-claim are brought into the calculation). Under the terms of the will each of the Plaintiff and the Second Defendant is entitled to one half of that amount, being about $76,000 (or somewhat more). The share of the Second Defendant is more than sufficient to accommodate the payment of a legacy to the Plaintiff of $60,000. However, unless such legacy be borne by that share of residue to which the Second Defendant is, under the terms of the will, entitled, if such a legacy is deducted from $152,000, there would then remain $92,000, to be shared equally between the Plaintiff and the Second Defendant. That is, each of those beneficiaries would in that event receive about $46,000 that being less than the figure of about $76,000 of residue, upon which my conclusion regarding a legacy of $60,000 was based. It is appropriate therefore that, subject to the competing claim of the Second Defendant, the proposed legacy should be borne by that one half of residue which the Second Defendant would otherwise receive, under the terms of the will.

105 I do not consider that the competing claim of the Second Defendant is such that it would have the effect of reducing, let alone extinguishing, an order for provision in favour of the Plaintiff by way of a legacy of $60,000, such legacy to be borne by the Second Defendant’s share of residue. In this regard I do no overlook the fact that the Second Defendant may find herself in a situation of being required to pay to the estate the costs of her unsuccessful cross-claim. If that be so, then, from a practical point of view, the residue will be further increased, that additional increase being shared equally between the Plaintiff and the Second Defendant.

106 In the light of my foregoing calculations, it is not necessary to proceed to a consideration of whether one or more of the assets jointly owned by the Deceased and the Second Defendant should be designated as notional estate of the Deceased. However, at the hearing I foreshadowed that an opportunity would be given to the parties, especially the Second Defendant, to make submissions as to the appropriate property to be designated as notional estate of the Deceased, if it became necessary that there be an order out of notional estate.

107 I summarise as follows my foregoing conclusions.

108 Upon the Plaintiff’s claim, she is entitled to receive from the estate of the Deceased, in addition to the benefit given to her by the will of the Deceased, a legacy in the sum of $60,000. That legacy should not bear interest if paid within two months of this day, and if not so paid should bear interest at the rate prescribed for unpaid legacies pursuant to the Wills, Probate and Administration Act 1898.

109 The cross-claim of the Second Defendant will be dismissed. Unless either party to the cross-claim desires to make submissions to the contrary, it follows that the Second Defendant must pay the costs of the First Defendant of the cross-claim.

110 I have not heard any submissions concerning the costs of the substantive proceedings. Unless any party arranges with my Associate within seven days of today to have the matter listed for argument as to costs, I make the following orders:

(1). I order that, in addition to the benefit given to her by the will of the late Eric Henry Woodward (“the Deceased”), the Plaintiff receive a legacy in the sum of $60,000, such legacy to be borne by that share of residue to which the Second Defendant would under the terms of the will of the Deceased otherwise be entitled, and such legacy not to bear interest if paid on or before 25 September 2003, and if not so paid to bear interest at the rate prescribed for unpaid legacies pursuant to the Wills, Probate and Administration Act 1898.

(2). I order that the costs of the Plaintiff on the party and party basis and the costs of the First Defendant on the indemnity basis be paid out of the estate of the Deceased, and that there be no order in respect to the costs of the Second Defendant of the proceedings.

(3). I order that the cross-claim of the Second Defendant be dismissed.

(4). I order that the Second Defendant pay the costs of the First Defendant of the cross-claim.

(5). The exhibits may be returned.

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Last Modified: 07/28/2003