Bayley v Sivewright; Sivewright v Sivewright - [2021] NSWSC 666 - NSWSC 2021 case summary — Zoe

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Bayley v Sivewright; Sivewright v Sivewright

[2021] NSWSC 666

Supreme Court of NSW|2021-02-11|Before: Kunc J

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Source facts

Court

Supreme Court of NSW

Decision date

2021-02-11

Before

Kunc J

Source

Original judgment source is linked above.

Judgment (19 paragraphs)

[1]

Judgment

This judgment resolves the family provision claims in two sets of proceedings about the estate of the late Stephen William Sivewright brought under the Succession Act 2006 (NSW) (the Act).
This judgment assumes familiarity with the Court's first judgment in this matter, delivered on 23 February 2021: Bayley v Sivewright; Sivewright v Sivewright [2021] NSWSC 134 (the First Judgment). Defined terms in that judgment have the same meaning in this judgment. For convenience and without disrespect, I again refer to the parties and other family members by their given names.
In the First Judgment, the Court determined that the proceeds of the Insurance Policy did not form part of the Estate and belonged to Ian absolutely. The parties agreed that the Court should determine the balance of the proceedings on the papers with the benefit of further written submissions. Those submissions were provided over the course of March and April 2021.
The salient facts were not in dispute. The Court's decision may be summarised as follows: 1. There were two people for whom Stephen owed a moral obligation to make provision: Leon and Sarah. Stephen's testamentary intention was for those obligations to be satisfied by Leon receiving a substantial insurance and superannuation payout and for Sarah to receive the Estate, which in substance comprised his interest in farming properties and stock. While on the day of his death Stephen hoped to provide more for each of them from the Insurance Policy if Ian agreed, Stephen did not intend what he had already provided for Leon and Sarah to be reduced. 2. Stephen undoubtedly had a moral obligation to provide for Leon as his partner of 13 years. He did so by ensuring Leon received approximately $1.3 million in superannuation and insurance. Given Leon's age, circumstances and future earning capacity, and taking into account what Leon did receive and Stephen's testamentary intentions referred to in the preceding sub-paragraph, the Court is not satisfied that the Will did not make adequate provision for Leon. If that conclusion be wrong, the same considerations would lead the Court to conclude that no additional provision for Leon should be ordered, which would necessarily come out of what Stephen intended Sarah to receive. 3. Sarah should be granted leave to bring her proceedings out of time and, as someone who was treated by Stephen as a daughter rather than a niece, has demonstrated factors warranting the making of her application. Sarah inherited the entire Estate (which before costs has a distributable value of between $982,925.40 and $1,072,925.40). Insofar as she seeks a notional estate order in relation to what are referred to as the Police Monies (see [10]-[11] below), and assuming without deciding that she was otherwise entitled to additional provision, there is no evidence that those funds form part of the Estate. She also reserves her right to claim a notional estate order "only insofar as Sarah may potentially (one way or another) be left with a substantial liability for legal costs" (to quote her Counsel, Mr D Liebhold's submissions). As this potentiality has neither yet been realised nor been the subject of submissions, the Court has not considered that matter in these reasons.

[5]

Leon

Leon is 38 years old. He was Stephen's partner for 13 years. By all accounts, it was a happy and loving relationship.
The couple met in 2005. After a few months, Stephen began staying over at Leon's flat in Lennox Head several nights a week. Leon made arrangements with his landlord to pay a small addition to his weekly rent to allow this to occur. In 2009, Leon moved from Lennox Head to Cumbalum, and made similar arrangements for Stephen to stay a few nights each week.
Out of concern for Stephen's career as a police officer, Stephen and Leon initially kept their relationship private. However, by 2012, Stephen and Leon began living together full-time in a house in Cumbalum and presented themselves to the world as a couple. They shared the rent payments and most household expenses equally. Stephen paid the electricity bill. Leon did most of the domestic work and Stephen managed the paperwork for their finances and his farming business. They adopted a cat.
In 2016, Stephen took a promotion to Sergeant, which required him to move to Wagga Wagga for three years. Leon remained in Cumbalum to continue in his stable job of 12 years. Stephen planned to move back to Cumbalum after his three years in Wagga Wagga, and he continued to pay half the rent on the couple's Cumbalum home. They called each other daily and visited each other approximately eight times over the two years Stephen lived in Wagga Wagga, each visit lasting one to two weeks.
In July 2017, Stephen entered a period of intense financial and emotional pressure which continued until his death in April 2018. As well as providing emotional support, Leon paid extra rent and lent Stephen money as required.
Leon has understandably struggled with depression and anxiety since Stephen's death. He has been receiving medical treatment since that time. Leon took several months off work, before gradually returning to full-time employment. However, he struggled to cope and resigned from his job as a graphic designer in February 2019. Leon's evidence was that his mental health will not improve until these proceedings and the coronial inquiry into Stephen's death are finalised.
Leon's relationship with Sarah has deteriorated since Stephen's death and they have not spoken since he commenced these proceedings. Leon and Ian did not have a relationship even during Stephen's lifetime.
Before his resignation from employment, Leon's annual salary was $52,398.00 ($3,566.00 net per month). After Stephen's death, Leon received Leon's Payment. Leon is currently unemployed and living from the capital and interest on those funds.
Leon's estimated monthly expenditure is $5,430.00. Leon gave evidence in cross-examination that his expenditure is more than the interest earned on the funds from Leon's Payment.
Leon's assets are: 1. Household contents: $50,000.00. 2. Car: $27,000.00. 3. Superannuation: $84,371.97. 4. Bank account: $1,193.75. 5. Savings account: $1,052,383.86.
Leon has $869.15 in credit card liabilities. His legal fees on the ordinary basis are $100,629.00.

[6]

Sarah

Sarah is 24 years old. She was Stephen's niece and they had a close relationship akin to a father and daughter. Stephen acknowledged this in the letter he wrote to Sarah on the day of his death (see First Judgment at [29]).
From the age of 9 months, Sarah lived in her maternal grandparents' home in Lismore. When Sarah was around 2 years old, Stephen returned from the Police Academy in Goulburn and moved back into the Lismore home. From that time, Stephen and his two brothers paid most of the household expenses, including rates, bills, fuel, vehicle registration, farm costs and other everyday expenses. After Sarah's mother left when Sarah was 14 years old, Stephen and his brothers also paid Sarah's school and personal expenses.
Stephen moved out of the Lismore home when Sarah was 15 years old. After he moved out, Sarah visited Stephen regularly at his home with Leon. Stephen continued to provide substantial financial support to the Lismore household, and to Sarah. Stephen gave Sarah a mobile phone, paid her phone bill and car registration, and covered all expenses for the three head of stud cattle Sarah owned, which ran with his cattle.
From when she was young, Sarah assisted Stephen with his cattle. She attended cattle sales and showed cattle with him, set up trade displays and did bookwork for him. Sarah had purchased her three head of cattle from Stephen when he needed money for the farm, using a small inheritance from her great-grandmother. Once Sarah started working, she contributed some $10,000.00 towards Stephen's cattle over several years until his death. Sarah's evidence was that while the cattle were in Stephen's name, he treated her as a part owner and always asked for her input.
Since Stephen's death, Sarah has been managing the Lismore property with the help of her partner and grandfather. She gave evidence that she is struggling to find enough money to maintain the property and cattle.
Sarah indicated that the Partnership with Ian will be dissolved regardless of the outcome of these proceedings, as she and Ian no longer speak and will not be able to continue the farming business together.
Sarah lives with her partner and their 1 year old daughter in her partner's parents' home. She is studying for a Certificate 3 in aged and disability care and expects to graduate in July 2021. To allow Sarah to study, her daughter attends day care two days a week.
Sarah receives a parenting payment from Centrelink of $808.14 per fortnight ($1,616.28 per month). Her partner is supporting her financially while she studies. His weekly after-tax income is approximately $600.00 (approximately $2,400.00 per month).
Sarah and her partner's estimated monthly expenditure is $4,473.00. However, Sarah indicated in cross-examination that this varies and they cover all their expenses with their combined monthly income of approximately $4,016.28.
Sarah has $75,711.91 in assets: 1. Half share of stud cattle (which includes the cattle Stephen gave to Sarah the day before his death): $35,450.00. The other half share is owned by Sarah's partner. 2. Half share of commercial cattle: $28,900.00. The other half share is owned by Sarah's partner. 3. Car: $5,000.00. 4. Household furniture: $3,000.00. 5. Bank account: $61.32. 6. Superannuation: $3,300.59.
Sarah has $37,912.72 in liabilities: 1. Credit card debt: $1,862.00. 2. Buy now pay later debt: $1,423.33. 3. Cattle debt: $34,627.50.
Sarah's partner has $123,683.00 in assets: 1. Half share of stud cattle: $35,450.00. The other half share is owned by Sarah. 2. Half share of commercial cattle: $28,900. The other half share is owned by Sarah. 3. Working dogs: $10,000.00. 4. Chainsaws: $5,000.00. 5. Bank account: $333.00. 6. Superannuation: $12,000.00. 7. Car: $15,000.00. 8. Boat: $17,000.00.
Sarah's partner has $52,408.53 in liabilities: 1. Boat loan: $3,000.00. 2. Veterinary bills: $4,300.00. 3. Buy now pay later debt: $926.00. 4. Credit card debt: $6,269.81. 5. Cattle debt: $37,912.72.
Sarah and her partner have $199,394.91 in total assets and $90,321.25 in total liabilities.
Sarah's legal fees on the ordinary basis are $120,240.31.

[7]

The law

The Act relevantly provides: "58 When an application may be made … (2) An application for a family provision order must 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 or the parties to the proceedings consent to the application being made out of time. … 59 When family provision order may be made (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 (b) in the case of a person who is an eligible person by reason only of paragraph (d), (e) or (f) of the definition of eligible person in section 57 - having regard to all the circumstances of the case (whether past or present) there are factors which warrant the making of the application, 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. (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. … 63 Property that may be used for family provision orders (1) A family provision order may be made in relation to the estate of a deceased person. … (5) A family provision order may be made in relation to property that is not part of the estate of a deceased person, or that has been distributed, if it is designated as notional estate of the deceased person by an order under Part 3.3. … 79 Notional estate order may be made where property of estate distributed The Court may, on application by an applicant for a family provision order or on its own motion, make a notional estate order designating property specified in the order as notional estate of a deceased person if the Court is satisfied that on, or as a result of, a distribution of the deceased person's estate, property (whether or not the subject of the distribution) became held by a person (whether or not as trustee) or subject to a trust. … 90 Restrictions on out of time or additional applications (1) This section applies to proceedings where - (a) an application for a family provision order is made later than 12 months after the date of the death of the deceased person, or (b) an application for a family provision order is made in relation to an estate that has been previously the subject of a family provision order. (2) The Court must not make a notional estate order in the proceedings unless - (a) it is satisfied that - (i) the property to be designated as notional estate is property that was the subject of a relevant property transaction or of a distribution from the estate of a deceased person or from the estate of a deceased transferee, and (ii) the person who holds the property holds it as a result of the relevant property transaction or distribution as trustee only, and (iii) the property is not vested in interest in any beneficiary under the trust, or (b) it is satisfied that there are other special circumstances that justify the making of the notional estate order."
Section 60(2) of the Act sets out matters which the Court may consider in determining whether to make a family provision order.

[8]

Claims by a surviving spouse

The principles relevant to family provision claims by a surviving spouse were summarised by Brereton JA in Steinmetz v Shannon (2019) 99 NSWLR 687; [2019] NSWCA 114 at [98]-[109] (Steinmetz). As his Honour observed at [106]-[109], family provision claims under the Act are determined by reference to community standards. This is also referred to as moral duty. While Mr A L Hill of Counsel for Leon framed this in terms of the testator's moral duty (see below at [48]), I respectfully agree with Brereton JA's comment at [109] that: "… I doubt that the difference matters much; what the community expects a testator to do by way of provision for claimants on his or her bounty, and what the testator is morally obliged to do in that respect, are probably the same thing."
Community standards will naturally change over time. In Luciano v Rosenblum (1985) 2 NSWLR 65 (Luciano), Powell J stated at 69-70: "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."
Kirby P, as he then was, said in Golosky v Golosky [1993] NSWCA 111 (Golosky) (Handley and Cripps JJA agreeing) at 10: "(c) Consideration of other cases must be conducted with circumspection because of the inescapable detail of the factual circumstances of each case. It is in the detail that the answer to the proper application of the Act is to be discovered. No hard and fast rules can be adopted. Nevertheless, it had been said that in the absence of special circumstances, it will normally be the duty of a testator to ensure that a spouse (or spouse equivalent) is provided with a place to live appropriate to that which he or she has become accustomed to. To the extent that the assets available to the deceased will permit such a course, it is normally appropriate that the spouse (or spouse equivalent) should be provided, as well, with a fund to meet unforeseen contingencies; see Luciano (above) 69 to 70. … (e) Considering what is "proper" and by inference what is "improper" as a provision in a will, it is appropriate to take into account all of the circumstances of the case including such matters as the nature and quality of the relationship between the testator and the claimant; the character and conduct of the claimant; the present and reasonably anticipated future needs of the claimant; the size and nature of the estate and of any relevant dispositions which may have reduced the estate available for distribution according to the will; the nature and relative strengths of the competing claims of testamentary recognition; and any contributions of the claimant to the property or to the welfare of the deceased. See Re Fulop Deceased (1987) 8 NSWLR 679 (SC); Churton v Christian and Ors (1988) 13 NSWLR 241 (CA), 252."
Recent cases have placed less emphasis on any general duty on a testator to provide a surviving spouse with accommodation of a particular standard. Primarily, the focus is on whether such provision would be justified in the circumstances of the case. In Ikonomou v Panagopoulos [2017] NSWSC 1805, Parker J stated at [94]: "In my opinion, there is no rule, general or otherwise, that following a long marriage the surviving spouse, by virtue of that status alone, will be entitled to provision out of the deceased spouse's estate sufficient to keep him or her in the same lifestyle as he or she enjoyed during the marriage. An entitlement to provision of this type must always be justified by reference to the circumstances of the particular case."
Similarly, Rees J observed in Schneider v Kemeny; Kemeny v Schneider [2021] NSWSC 524 at [12] that: "Put shortly, the application of the criteria in section 60(2) of the Succession Act may well, in the case of longstanding, devoted marriages, have the consequence that the surviving spouse will be regarded as entitled to substantial provision being made to secure their quality of life and financial security going forward, but that cannot be assumed simply because they are the surviving spouse. If a spouse makes a claim for provision, the statutory considerations apply equally to them as any other claimant."
To these dicta I would respectfully add that what are sometimes compendiously referred to as the "widows' cases" must, as the name suggests and might be expected, be understood as reflecting the cultural circumstances of their times in relation to women. These often included plaintiffs who had never worked and had no particular qualifications; or, later, had qualifications but had either never entered into employment or had cut short careers to raise families and provide domestic support to their husbands. The sole intent of these observations is to fortify the proposition that previous cases may be of little or no utility as relevant comparators and that each case must be considered solely by reference to the facts proven in the case at bar.

[9]

Leon's claim for provision

Mr Hill submitted that Leon faces a shortfall in funds for his needs of between $152,903.00 and $318,063.00. He submitted that Leon's total needs are between $1,206,480.00 and $1,371,640.00, comprising: 1. Unencumbered accommodation: $833,500.00 including $800,000.00 to purchase a house, $31,000.00 stamp duty and $2,500.00 conveyancing fees. Leon wishes to buy a freestanding house similar to the home he rented with Stephen in Cumbalum, which had four bedrooms and two bathrooms. There was evidence before the Court of the value of such a home. Leon indicated that his current intention is to remain in the same area. 2. Medical treatment not covered by Medicare: $27,500.00, being $5,500.00 per year for five years. 3. Funds for expenditure until Leon recovers from the trauma of Stephen's death: between $195,480.00 and $260,640.00 (the estimated cost of Leon's monthly expenditure for three to four years). 4. Funds for superannuation and a buffer for contingencies: between $150,000.00 and $250,000.00.
It was undisputed that Leon is an eligible person under s 57 of the Act, as he was Stephen's de facto spouse from around 2005 until his death in 2018.
Mr Hill submitted that Stephen did not make adequate provision for Leon, and that Stephen had a greater moral duty to Leon, his long-term partner, than he did to Sarah, his niece (referring to Golosky and Stienmetz).
Mr Hill submitted that Stephen's final letters of April 2018 are evidence of his testamentary intentions under s 60(2)(j) of the Act, which demonstrate that Stephen thought he had not made adequate provision for Leon through Leon's Payment. While those letters are set out in full in the First Judgment at [27]-[30], they relevantly included in relation to the proceeds of the Insurance Policy: "$1 million to pay out the Farm Loan/Home loan is needed and any credits cards in my name. $500,000 is to be paid to Leon. $700,000 is to be paid to Sarah. $200,000 is to be paid to Ian."
Mr Hill also contended that the size of the Estate is sufficient to allow further provision to be made for Leon without unduly burdening Sarah.

[16]

Consideration - Leon

Taking into account the considerations which follow in this section, the effect of Leon's Payment in practical terms is that the Court is not satisfied that the Will does not make adequate provision for Leon, notwithstanding that it makes no provision for him. If that conclusion be wrong, the same considerations mean that even if the Court's jurisdiction to make a family provision order had been enlivened, in the exercise of its discretion the Court would not do so. In what follows, I cross-reference the paragraphs to the relevant provision of s 60(2) of the Act setting out matters which may be taken into account by the Court: 1. Section 60(2)(a) - relationship with the deceased: Leon was Stephen's life partner of 13 years. As such, Leon has an undoubted moral claim on Stephen's testamentary bounty. 2. Section 60(2)(b) - obligations owed by the deceased to the applicants: in relation to Leon, the position is as set out in the preceding sub-paragraph. In relation to Sarah, Stephen felt he had the obligation that a parent would to a child. 3. Section 60(2)(c) - the nature and extent of the Estate: this is set out in [5]-[8] above. 4. Section 60(2)(d) - financial resources, needs and earning capacity of the applicants: Leon's circumstances are set out in [17]-[22] above and Sarah's in [29]-[37] above. I return to the question of Leon's needs in [84]-[85] below. 5. Section 60(2)(f) - any disability of the applicant: there is no doubt that Leon is suffering depression and related health issues caused by Stephen's death, the coronial inquest and these proceedings. However, the medical evidence went no further than that. There was no medical evidence to support Mr Hill's contention that Leon would be unable to return to employment for three to four years. 6. Section 60(2)(g) - applicant's age: Leon is 38 years old. 7. Section 60(2)(i) - provision for the applicant made during the deceased's lifetime: Stephen deliberately provided for Leon by ensuring Leon would receive Leon's Payment. 8. Section 60(2)(j) - deceased's testamentary intentions: I have set this out in [79]-[81] above.
By reason of Leon's Payment and Leon's superannuation (see [9] and [21(3)] above), Leon is in a strong cash position for someone aged 38 and who has chosen thus far to rent his home, a home which he accepts is much larger than he in fact needs.
Turning to Leon's needs as identified by Mr Hill (see [46] above), the Court does not accept that it is likely that Leon will be unable to return to work for three to four years. There is no medical evidence to support that conclusion. The medical evidence was that Leon's mental health is unlikely to improve until these proceedings and the coronial inquest are concluded. The most recent evidence about the course of the coronial proceedings was that the inquest would be held in May 2021. There is every reason to think that once these proceedings are concluded, Leon will begin to move forward with his life. Based on Stephen's last letter to Leon, that is what Stephen expected and wanted Leon to do. Leon was employed with a good income before Stephen's tragic death (see [19] above) and he intends to re-enter the workforce. There is no evidence that he will have difficulty finding employment and he is not long past the midpoint of his working life. There is no reason to think that he will not continue to build up assets, including superannuation.
Next, the shortfall Mr Hill submits in Leon's needs is based on unencumbered accommodation of a size which Leon accepts is larger than he needs. Leon currently has approximately $1 million in cash. Assuming another year of recovery without work entailing expenses of $65,160 (12 x $5,430 - see [20] above), medical treatment of $27,500.00 (see [46(2)] above), $100,000.00 to be contributed to his existing super and a savings buffer of $100,000.00 (see [46(4)] above), Leon will have approximately $700,000.00 in capital. While Leon has provided evidence of the cost of buying a four bedroom house in the Cumbalum area, he has not provided any evidence that $700,000.00 would be insufficient to buy him accommodation of a smaller, suitable size should he wish to make such a purchase rather than continue renting. On no view does he need a house of the size he currently occupies.
In any event, for the reasons identified by Mr Liebhold (see [55] above), the Court does not accept that Leon's circumstances fall within what I have referred to above as the "widows' cases". This is not a case where, for the kinds of reasons I have identified in [45] above, the community would expect Stephen to have left Leon a four bedroom house of the kind they occupied. The community would expect Stephen to have left Leon well provided for, but in the expectation that Leon still had a long and productive life ahead of him. The Court is satisfied that is exactly what Stephen did.
In addition to Leon's particular circumstances as I have set out in the preceding four paragraphs, the Court has taken into account Stephen's evident intention in relation to both Leon and Sarah to "set them up for life". He did this by providing Leon with Leon's Payment and Sarah with the properties comprising the Estate. There is nothing in Leon's circumstances with the benefit of Leon's Payment, both in his own right and when considered against Sarah's circumstances, that warrants the Court making any alteration to Stephen's carefully considered plans for the two people who mattered most to him.

[17]

Consideration - Sarah

The outcome of the First Judgment has somewhat simplified Sarah's position.
Stephen died on 11 April 2018. To be in time, any application for provision had to be filed within a year of that date (s 58(2) of the Act). Sarah commenced her proceedings on 6 June 2019, seven weeks out of time. Ian did not make any submission in opposition to the Court extending time for the commencement of her proceedings. There was evidence of discussions between the parties after Stephen's death with one matter of uncertainty being whether Leon would commence proceedings. He did not do so until 4 April 2019. Sarah then immediately sought advice about her position and commenced her proceedings only a few weeks later. The Court finds that she has demonstrated "sufficient cause" such that the Court will "otherwise order" pursuant to s 58(2) of the Act.
The next question arose from Sarah's status as an eligible person to bring her claim, this being her earlier dependence on Stephen and membership of a common household such that she satisfied s 57(1)(e) of the Act. This meant that to be entitled to provision the Court would have to be satisfied under s 57(2) of the Act that there were factors warranting her application. Again, no particular attention was paid to this in the parties' submissions. There was no dispute that the relationship between Stephen and Sarah was a close one - described by Stephen in his last letter to her (see [29] in the First Judgment) as akin to father and daughter. The Court finds that relationship is a sufficient factor warranting the application, even in circumstances where Sarah has inherited the entire Estate.
Moving beyond these relatively formal matters, Sarah's claim has been modified by the outcome of the First Judgment to two parts.
First, she seeks a notional estate order in relation to the Police Monies. Assuming without deciding that she was otherwise entitled to additional provision, the Court accepts Mr Lawrence's submission that there is no evidence that those funds were part of the Estate. This was a matter for Sarah to prove and she has not done so. Given the state of the evidence, the Court can make no finding about who was legally entitled to those funds, referred to by Stephen in his last letters: "Dad will receive money from the Police Association." This would suggest the funds were an ex gratia bereavement payment to the family of the deceased member rather than a payment to the Estate, but the Court makes no finding about this for want of evidence.
Second, Sarah has reserved her right to seek a notional estate order over Leon's Payment "only insofar as Sarah may potentially (one way or another) be left with a substantial liability for legal costs" (to quote Mr Liebhold's submissions). Because this potentiality has neither yet been realised nor been the subject of submissions, the Court has not considered that matter in these reasons.