Determination
108Although this is not a widow's claim, such claims are frequently the subject of applications in this Court and give guidance to what provision should be made for a widow. The Court of Appeal in Golosky v Golosky (5 October 1993, unreported) has referred to formulations of the standard to be expected in respect of a widow in terms which refer to the decisions of Powell J in Luciano v Rosenblum (1985) 2 NSWLR 65 and Elliott v Elliott (NSWSC, 18 May 1984, unreported), which was approved by the Court of Appeal on 24 April 1986. In Elliott v Elliott Powell J said:
"Where the marriage of a deceased and his widow has been long and harmonious, where the widow has loyally supported her husband and assisted him to build up and maintain his estate, the duty which a deceased owes to his widow can be no less than to the extent to which his assets permit him to achieve that result; first to ensure that his widow be secure in her home for the rest of her life and that if either the need arises or the whim strikes her she have the capacity to change her home; secondly that she have available to her an income sufficient to enable her to live in a reasonable degree of comfort and free from any financial worry; and, third, that she have available to her a fund to which she might have resort in order to provide herself with such modest luxuries as she might choose and which would provide her with a hedge against any unforeseen contingency or disaster that life might bring."
109There have recently been reminders about the limited use of such formulations. In Marshall v Carruthers [2002] NSWCA 47 Young CJ in Eq said:
[73]It must be remembered that Powell J put his proposition as a "broad general rule". However, there is in fact no "standard former spouse" to which one can just apply that proposition as a rule of thumb.
[74]Powell J's broad general rule may not be a good guide as to what the Court will consider as the duty of a testator towards a spouse except in the case of a financially dependent spouse where there is a history of bringing up children with the deceased or in supporting the deceased while he was amassing his fortune. The broad general rule may well be inapplicable in cases of other spouses. Indeed, the cases in the first half of the 20th century show that as far as widowers were concerned, the proposition was quite untrue.
[75]I also take this opportunity to reject Mr Ellison's submission that a person who has a claim as a class (a) eligible person ipso facto has a stronger claim than a person who comes under class (b). Indeed, in many cases, such as where there are infant children, this may not be so."
110Palmer J concurred in these sentiments.
111The matter was again dealt within more detail in Bladwell v Davis [2004] NSWCA 170. In that case Bryson JA, with whom Ipp JA concurred on this aspect, said:
"[12]There have been many statements in judicial decisions, including decisions in the Court of Appeal, generally to the effect that primacy of some kind is accorded to claims of widows for proper maintenance and advancement in life, including continuance of housing arrangements which they enjoyed during the lifetimes of their late husbands. These statements are not altogether uniform in expression, and should be understood as made in each case in relation to the facts under consideration; and those facts vary widely and in truth are unique to each particular case. " Widow takes all" is not a rule which has been or could be established by judicial decisions: the Court cannot resign the functions which it has under s 7 of the Family Provision Act 1982 in favour of rules of thumb. A rule which was once followed which practically prevented ordering provision for an adult son who was fit to work has been abandoned.
[13]Observations on the claims of widows were made by Powell J in Luciano v. Rosenblum [1985] 2 NSWLR 65 at 69-70 in these terms:
'It seems to me that, as a broad general rule, and in the absence of special circumstances, the duty of a testator to his widow is, to the extent to which his assets permit him to do so, to ensure that she is secure in her home, to ensure that she has an income sufficient to permit her to live in the style to which she is accustomed, and to provide her with a fund to enable her to meet any unforeseen contingencies.'
These observations were not made in the context of a competing claim or proved need by another eligible person, and were introduced by a guarded reference to a general rule and the absence of special circumstances. However they are frequently, almost universally cited in applications where provisions for widows are under consideration.
[14]In Golosky v. Golosky NSWCA 5 October 1993 (unreported) the widow, second wife of the testator, was the applicant and the sons of the first marriage, the will beneficiaries whose interests were affected, were well off and did not assert financial need. The majority (Kirby P, Cripps JA concurring) ordered further provision for the widow, and Kirby P referred to Luciano v. Rosenblum briefly for comparison, but also said:
'Matters such as these rule out an inflexible rule that every spouse or every widow is entitled, as of right and in every case, to look to a testator to provide accommodation for life. Such inflexible rules used to exist in this area, as for example the previous rule that an "able bodied son" was disentitled to a claim under the predecessor to the Act for that reason alone. That rule has now been abandoned in this State. See [ Hunter v Hunter and Ors (1987) 8 NSWLR 573 (CA) 575f] , 580f; cf Anderson v Teboneras and Anor [1990] VR 527 . So should inflexible rules about spousal provision.
[15]In Hertzberg v. Hertzberg [2003] NSWCA 311 provision ordered by Acting Master Berecry for a widow, second wife of the testator, out of a large estate was confirmed by the Court of Appeal. There was no competing claim or circumstance of need of any will beneficiary. McColl JA said at [35] in the context of the claim of a widow for the matrimonial home (which in this case the claimant owns):
'His Honour's judgment recognised the community expectation that a testator should make provision for a widow to ensure that she can lead an independent and dignified life. That prospect is diminished when the widow does not have the benefit of the fee simple, but rather, a right of occupation of her home with a provision for expenses associated with that right being left in the hands of the executors. In this case the situation was exacerbated where, regrettably, the previously affectionate relationship between the appellants and the respondent had, as Acting Master Berecry found, completely broken down following the execution of the deed. Thus the situation in which the deceased may well have contemplated he had left the respondent appeared to have altered.'
The statement in the first sentence of this passage should be understood in its context of a claim in a very large estate where there was no competing claim based on need.
[16] In Sayer v. Sayer [1999] NSWCA 340 at [34] Sheller JA (with whom Davies AJA concurred) accorded primacy to the claim of a widow (of a second marriage) over the claim of a granddaughter who was an eligible person "in the circumstances and in accordance with prevailing community standards." This does not in my opinion express any general principle of paramountcy.
[17]In Cropley v Cropley [2002] NSWSC 349 (at 56) Barrett J said:
'When it comes to claims by adult children, it can be said at once that, if there is a competing claim by the widow and all claims cannot be fully accommodated, the widow's claim should be afforded precedence in the sense that a demonstrated requirement for the allocation of resources in aid of the widow must be satisfied before any similarly demonstrated requirement for the allocation of resources in aid of an adult child. That a widow's claim to maintenance out of the estate of her deceased husband is a claim which is "paramount" and "of a high order" is borne out by the judgments of Sheller JA in Sayer v Sayer [1999] NSWCA 340 (Davies AJA concurring) and Blackmore v Allen [2000] NSWCA 162 (Priestley JA and Foster AJA concurring). In the former case, Sheller JA described the relativities between the claims of the widow and those of an adult grandchild applicant (Francesca) as follows:
In my opinion, the question is whether [the grandchild] has satisfied the Court that there is, in the circumstances and in accordance with prevailing community standards ( Permanent Trustee v Fraser (1995) 36 NSWLR 24 at 46 ), sufficient in the estate to provide for the widow's proper maintenance and advancement in life and yet leave some amount out of which provision can be made for her.'
This was accepted as an accurate statement of the law by Palmer J in Latimore v Latimore (2003) NSWSC 364 at [59]. At [57] Barrett J proceeded to approach the applications according to the two stage approach described in Singer v Berghouse (1994) 181 CLR 201.
[18]In my respectful view there is an inconsistency between an approach, in the context of competing claims, to the claims of widows as paramount, and the application to the facts and circumstance of each case of s.7 and the approach established by Singer v Berghouse . Preconceptions and predispositions are likely to be the source of inadequate consideration of the process required by the Family Provision Act 1982 .
[19]In the application of the test in s 7, and of the exposition thereof in Singer v Berghouse by Mason CJ, Deane and McHugh JJ at 409-411 it would be an error to accord to widows generally primacy over all other applicants regardless of circumstances and regardless of performance of the stages of consideration described in Singer v Berghouse, in full and with reference to the instant facts. Defeat of the opponents' claims does not necessarily follow from a demonstration, which the claimant can make, that all her needs with respect to income, home renovation, and provision for contingencies cannot be met if any provision is made for the opponents; indeed she could well demonstrate that even if the provisions of the will took effect without any modification, the provision for her is not adequate. That is not a demonstration that no claim by an eligible person can succeed; the claims and circumstances of the opponents also have to be weighed, and they too have their needs and merits."
112Interestingly Ipp J adopted this in paragraph 1 of his judgment and also said as follows at [1] - [2]:
"I agree with Bryson JA, for the reasons his Honour has stated, that 'it would be an error to accord to widows generally primacy over all other applicants regardless of circumstances and regardless of performance of the stages of consideration described in Singer v Berghouse (1994) 181 CLR 201...'
I would add, however, that where competing factors are more or less otherwise in equilibrium, the fact that one party is the elderly widow of the testator, is permanently unable to increase her income, and is never likely to be better off financially, while the other parties are materially younger and have the capacity to earn more or otherwise improve their financial position in the future, will ordinarily result in the needs of the widow being given primacy. That is simply because, in such circumstances, the widow will have no hope of improving herself economically, whereas that would not be the position of the others. In that event, the need of the widow would be greater than that of the others."
113Stein AJA agreed with both judges.
114Reference was also made in submissions as to what was said in Easterbrook v Young (1976-1977) 136 CLR 308. There the High Court was dealing with a widow's claim and made the following comments (at 324):
"... The learned judge expressed the view, with which we agree, that the appellant's entitlement on intestacy did not constitute adequate provision for even proper maintenance. He went on to say that, had he been free to do so, he would have ordered that she receive a life estate in the remaining asset in the estate with power in the respondent to sell the cottage and purchase other suitable accommodation. In this respect we are unable to agree that such an order would have constituted adequate provision for her maintenance. Her claim upon the estate is paramount to that of her sons. She was in financial need at the date of the deceased's death; that need is still considerable and is likely to increase in the future. The asset which remains is not of great value and we think that nothing less than an absolute interest in the property would constitute adequate provision for the appellant. She may then realize its value and obtain for herself some other abode within her financial competence to maintain."
115The comments made by the High Court about the paramountcy of her claim have to be seen in the context of the facts of that case where it was plain that the widow had no means and was in receipt of an aged pension. Her sons who were the competing claimants had put no evidence of their financial situation before the court.
116I turn therefore to the consideration of a number of factors, which should be taken into account in deciding whether in the circumstances of this case bearing in mind the widow's claim to retain her dwelling, the plaintiffs have been left without adequate and proper provision for their maintenance, education and advancement in life.
117In respect of one of the plaintiffs, namely Kim, it is abundantly clear that he is in a very sound financial situation and indeed a situation comparable or perhaps even better given his cash reserves than that of his step mother, Catherine. His large cash reserves mean that the payment to him of $125,000 is, in his personal situation, of no consequence. In my view, he has not demonstrated that he has been left without adequate and proper provision for his maintenance, education and advancement in life.
118The claims of the children were put forward on the generic basis that they needed some buffer for the future.
119Given the small provision asked for, namely $125,000 for each child, it is abundantly plain that such amount would go to satisfy real needs for the remaining six children whether it be to discharge liabilities or to make their situation in life less stressful.
120The first defendant, Catherine, has a life expectancy of 20 years. A suggestion that there be some charge to be paid by the sale of the property or the death of Catherine was criticised as it did not respond to an immediate need of the plaintiffs. This raises two questions, the first being whether the house is likely to be sold and the second being whether, if it is not likely to be sold, that provision is appropriate.
121On the first question, it is clear that the cash reserves of Catherine will only allow her to remain in the house for perhaps two or three years if the level of expenditure which she has forecast continues over the next few years. Her alternatives are to increase her income or reduce her expenditure. The only way this can be done realistically is by letting out the main house with Catherine living in the small flat which is hardly an achievement of her own aim to enjoy the benefits of the matrimonial home which had a large part to play in the long life she had with the deceased.
122One of the matters obviously concerning the defendant was the enormous effect that the global financial crisis in 2007-2008 had on the value of the home. It fell from having a value of $10 million at the date of death to a present value of $7 million. It is understandable that Catherine may wish to retain the home in the hope that the property will increase in value to make her situation far more comfortable when she does decide to sell.
123The ages of the six children are such that although they are now in difficult circumstances with some worse than the others they will probably be able to continue for some years and the provision of funds for them at that time will be as useful as it would be now.
124The provision of funds of this amount, namely, $750,000, can be comfortably accommodated if the property is sold as there will be sufficient left for Catherine to purchase a more appropriate residence but still of high quality and keep sufficient funds to enable her to fund her future life.
125Although there is no evidence of what will be the cost of a smaller residence the decrease in size will free up substantial funds. Furthermore the fact that Kim's property, which is large enough for him to live in with his wife and two children, is valued at $3.5 million provides a strong indication that Catherine could obtain suitable accommodation in Mosman for approximately half of the current value of the Quakers Road property.
126Given the life expectancy of Catherine if the matter is allowed to drift on well into the future some of the children may not survive their present position and the value of their benefits will be eroded. Also, it seems, that the expenses in maintaining the property for Catherine will soon be beyond her means.
127The "Family concerns" document signed by Catherine is not enforceable given the lack of any time scale for the sale. At most it records Catherine's then present intention and does not bind me or indeed assist in the decision I have to make.
128The life Catherine had with the deceased was one where they brought up their adopted child and for most of the relationship Catherine did not work. The lifestyle they enjoyed was one usually enjoyed by the wealthy. The previous income is not available now and life has changed for Catherine given the deceased's death. She will still be able to have a good residence and have a reasonable level of funds for her support after some provision for the children.
129In my view, an appropriate resolution is to provide legacies for the six children of $125,000 each payable in three years' time or earlier sale of the property. This will give Catherine time to see if there will be an improvement in the property market. Given such a decision the legacies should not be indexed due to a possible non-improvement of the property market.