Bladwell and Davis v Davis and Bladwell

Supreme Court of NSW|2003-06-24

CITATION : Bladwell and Davis v Davis and Bladwell [2003] NSWSC 882 HEARING DATE(S) : Tuesday, 24 June 2003 JUDGMENT DATE : 26 September 2003 JURISDICTION: Equity Division JUDGMENT OF : Master McLaughlin DECISION : In 2430/02: (1) I order that the summons be dismissed; (2) I order that the costs of the Plaintiff on the indemnity basis be paid out of the estate of the late Robert Michael Davis ("the Deceased"), and that there be no other order in respect to the costs of the proceedings. In 3420/02: (1) I order that, in lieu of the benefit given to her by the will of the late Robert Michael Davis ("the Deceased"), the Plaintiff Lesley Ann Davis receive a legacy in the sum of $60,000 and, in lieu of the benefit given to him by the will of the Deceased, the Plaintiff Peter Robert Davis receive a legacy in the sum of $80,000, each such legacy not to bear interest if paid on or before 26 October 2003, and if not so paid to bear interest at the rate appropriate for unpaid legacies under the Wills, Probate and Administration Act 1898; (2) Order that liberty be reserved to the parties to apply for an order specifying whether the additional benefit of $20,000 to be received by the Plaintiff Lesley Ann Davis and the additional benefit of $40,000 to be received by the Plaintiff Peter Robert Davis should be borne by the residue of the estate of the Deceased or whether part or all of such additional benefits should be borne by some other part of the estate of the Deceased; (3) Order that the costs of the Plaintiffs on the party and party basis and the costs of the Defendant on the indemnity basis be paid out of the estate of the Deceased; (4) The exhibits may be returned.

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

2430/02 HELEN JEAN BLADWELL -v- LESLEY ANN DAVIS and PETER ROBERT DAVIS

3420/02 LESLEY ANN DAVIS and PETER ROBERT DAVIS -v- HELEN JEAN BLADWELL JUDGMENT 1 MASTER: These are two proceedings under the Family Provision Act 1982. 2 By summons 2430 of 2002 filed on 26 April 2003 Helen Jean Bladwell sought an order pursuant to section 17 of the Family Provision Act that any application by Lesley Ann Davis and Peter Robert Davis for relief under that Act be made within a period of one month from the date of such order. That summons named those two persons as Defendants. 3 Before that summons came on for hearing Lesley Ann Davis and Peter Robert Davis had themselves by summons 3420 of 2002, filed on 3 July 2002, instituted substantive proceedings. By that summons those Plaintiffs claimed an order for provision for their maintenance pursuant to section 7 of the Family Provision Act out of the estate of the late Robert Michael Davis (to whom I shall refer as "the Deceased"). That summons named Helen Jean Bladwell as Defendant. 4 The hearing proceeded in respect to the substantive claim for provision in proceedings 3420 of 2002. The only matter outstanding in proceedings 2430 of 2002 is in respect to the costs of those proceedings, since, without the necessity for an order of the nature sought in summons 2430 of 2002, Lesley Ann Davis and Peter Robert Davis instituted substantive proceedings for an order for provision pursuant to section 7 of the Family Provision Act. 5 I shall therefore proceed to a consideration of the claim of Lesley Ann Davis and Peter Robert Davis in proceedings 3420 of 2002, (I shall hereafter in this judgment refer to those parties conjointly as "the Plaintiffs" and I shall refer to Helen Jean Bladwell as "the Defendant".) 6 The Plaintiffs are the two adult children of the late Robert Michael Davis (to whom I shall refer as "the Deceased"). The Deceased died on 13 April 2001, aged 64. He left a will dated 25 June 1998, probate whereof was on 27 August 2001 granted to Helen Jean Bladwell and Lesley Ann Davis, the executors named in such will. (It should be observed, in passing, that summons 3420 of 2002 named both Helen Jean Bladwell and Lesley Ann Davis as Defendant. Since a person cannot be on both sides of the record and since Lesley Ann Davis was named as one of the Plaintiffs in that summons, the Court by consent on 9 September 2002 ordered that Lesley Ann Davis be removed as a Defendant and that Helen Jean Bladwell have conduct of the proceedings on behalf of the estate of the Deceased.) 7 The inventory of property discloses that the assets of the Deceased at the time of his death consisted of moneys held in the Colonial State Bank on deposit (having a total value of about $65,600), together with superannuation entitlements (having a total value of about $355,000). In addition, the Deceased at the time of his death was co-owner, as joint tenant, of a house property situate at and known as 21 Pattern Place, Doonside. That property (which was their matrimonial home at the death of the Deceased) passed by survivorship to the other joint tenant, the Deceased's de facto wife, Helen Jean Bladwell (who is the Defendant to the present proceedings). 8 By his will the Deceased gave legacies totalling $130,000 to various family members. Those legacies included a legacy of $40,000 to each Plaintiff, a legacy of $20,000 to Hollie Davis, the daughter of Lesley Ann Davis, and a legacy of $10,000 to each of the three children of the Defendant. The Deceased gave the residue of his estate to the Defendant. 9 The assets of the estate presently consist of moneys held in a bank account ($89,291), cash management accounts ($311,048) and a motor vehicle (to which a value of $12,000 is ascribed). 10 The house property at Doonside was purchased in January 1999 for $263,000. The present value of that property is estimated to be $400,000. The Deceased and the Defendant had previously owned conjointly successive residences at Bankstown and at Bass Hill. 11 In calculating the value of the estate available for distribution the costs of the present proceedings must be taken into consideration, since if the Plaintiffs are successful in their claim they will be entitled to an order that their costs be paid out of the estate, whilst the Defendant, in any event, is entitled to an order for payment of her costs out of the estate. 12 It is estimated that the costs of the Plaintiff will total about $48,300, whilst those of the Defendant will total almost $50,000 (which amount, however, includes about $7,500 in respect to costs and expenses relating to the obtaining of Probate and to the administration of the estate). Accordingly, the value of the distributable estate will be about $313,000. (It is appropriate that I should here say that in an estate where the assets have a value of about $412,000 and where the hearing occupied only half a day, I consider that costs totalling more than $90,000 are excessive.) 13 The Plaintiffs are the children of the first marriage of the Deceased, which was came to an end in 1971. 14 After the separation of their parents the Plaintiffs continued to reside with their mother. However, they maintained a good relationship with the Deceased whom they saw once a week while they remained at school, and with whom they would on occasion stay overnight. So far as the Plaintiffs are aware, the Deceased did not provide any maintenance to their mother after the separation. 15 The Deceased entered into a de facto relationship with the Defendant in 1973. The Defendant (who had been born on 27 October 1936 and who is presently aged 66) had separated from her husband in 1971. She had three children of her marriage (each of whom, as has already been recorded, is a beneficiary under the will of the Deceased). 16 Lesley Ann Davis (to whom I shall refer as "Lesley") was born on 20 February 1961 and is presently aged 42. She was previously married, but now lives in a de facto relationship. Lesley has four children, aged from thirteen years to two years. She is not in employment, but remains at home looking after he children. Lesley's de facto partner of ten years, Trevor Hoornick, is in full time employment as a maintenance electrician. His gross annual earnings total $65,000 - $70,000. Mr Hoornick has a superannuation entitlement in an amount of about $36,600. Lesley is in receipt of a Family Allowance of $540 a month, and Child Support of $560 a month. Lesley does not receive any maintenance from the father of her eldest child Hollie (who was born in December 1989 and is presently thirteen years of age). I would here interpolate that Mr Hoornick is the father of Lesley's other children, being Alex (who was born in 1995 and is presently aged about eight), Nicky (who was born in 2000 and is presently aged about three) and Osca (who was born in 2001 and is presently aged about two). 17 The house property situate at and known as 165 Shellharbour Road, Warilla, which is the residence of Lesley, Mr Hoornick and the four children, was purchased by Lesley in about 1992 for $100,000 (being subject to a mortgage of $50,000). It is estimated that the value of that property is presently about $200,000, but the amount outstanding under the mortgage is now $168,000. The purchase of that house property was funded from the proceeds of sale of a home unit which Lesley had owned at 1/24-26 Sheffield Street, Merrylands which she sold in 1992. From that sale Lesley received a net amount of about $50,000. The balance for the purchase of the Warilla residence was borrowed, by way of a mortgage in the sum of $50,000. That mortgage was refinanced in 1992, at which time the Deceased gave Lesley the sum of $6,000 towards the refinancing. The circumstances in which Lesley acquired the Merrylands unit (which she described in her affidavit evidence as being "an investment unit") did not emerge from the evidence. 18 In 1995 Lesley again refinanced her mortgage, borrowing an additional sum of $80,000 from Aussie Home Loans. With the balance of $40,000 (available to her upon the discharge of the 1992 mortgage), Lesley and Mr Hoornick purchased a second-hand motor car (to which an approximate value of $15,000 was ascribed), together with various household items, a new hot water system, a new stereo system and cabinet, and effected various internal renovations and alterations to the Warilla residence. At that time Lesley also paid out a debt owing by Mr Hoornick to AGC Financial Services in an amount of about $6,000. 19 In 1999 Lesley again refinanced her mortgage, acquiring an additional indebtedness of $20,000. With that sum she and Mr Hoornick purchased a second motor vehicle (costing about $3,000), a computer system and desk (costing about $2,500), and effected further renovations and alterations to the residence (at a total cost of about $12,000). The house property at Warilla is the only significant asset of Lesley and her partner. 20 The present liabilities of Lesley and Mr Hoornick are as follows: Mortgage - Aussie Home Loans - $100,000

21 Peter Robert Davis (to whom I shall refer as "Peter") was born on 1 June 1959 and is presently aged 44. He married in 1981, but was divorced in about 1992. For the past eleven years he has had the sole care and responsibility of his three teenage children (aged 19, 18 and 16). Peter is a school teacher by profession and for the past eleven years he has been employed as such at the Noosa District High School in Queensland. He is in receipt of a net salary of $1,400 a fortnight. 22 Peter does not own his own residence, but (as I understand it) at least since his divorce has lived in rented accommodation (he has lived in three separate residences over the past three years). His only significant asset consists of a motor vehicle which is now twenty years old (and to which he ascribes a value of $1,000). He has no other significant assets. His only liability is an indebtedness of $2,000 on a Visacard with the Queensland Teachers Credit Union. However, Peter has a superannuation entitlement, details of which are set forth in Exhibit B. At 30 June 2002 the balance of his account with Q Super was $226,212. It appears, however, that he will not receive that amount until he retires, which, at his present age of 44, he has no intention of doing. 23 It is Peter's desire to purchase his own residence, for himself and his children. However, the entirety of his income is expended on living expenses for himself and for his three children (two of whom have completed school and are in part-time employment, and the youngest of whom is in final year of high school). The most significant items of his expenditure are rent ($400 a fortnight) and food (also $400 a fortnight). 24 The Defendant was born on 27 October 1936 and is presently aged 66. She and the Deceased entered into a de facto relationship in 1973, which obtained until the death of the Deceased some 28 years later. 25 Apart from the house property at Doonside, the assets of the Defendant consist of:

Shares in Coles Myer no value stated 26 The Defendant is not in employment, having retired in February 1996. She is in receipt of an age pension in an amount of $847 a month. She also receives dividends and interest totalling $86 a month. She has credit card debts totalling about $5,000. 27 The Defendant suffers a number of health problems, the most significant of which are diverticular disease of the left colon, chronic and severe disc abnormality in the cervical and lumbar spine, and osteoarthritis. 28 The Deceased's granddaughter, Holly Emma Davis (who receives a legacy of $20,000 under the will), is presently thirteen years of age, having been born in December 1989, and is a high school student. She lives with her mother, the First Plaintiff, and appears to have a good relationship with the First Plaintiff's partner, Mr Hoornick. She does not have any contact with her natural father. 29 Gregory Francis Bladwell, son of the Defendant (who receives a legacy of $10,000 under the will) is presently aged 48. He is a self-employed plumber, earning about $40,000 a year, whilst his wife (who is a secretary) earns about $30,000 a year. Their assets consist of a family residence, a motor car ($10,000) and plumbing business assets ($10,000). Their residence at Acacia Gardens, which is estimated to be worth about $400,000, is subject to a mortgage of $30,000. They have a credit card debt of $2,000. 30 Michelle Jean Woods, daughter of the Defendant (who receives a legacy of $10,000 under the will) is presently aged 42. She has an income of $16,000 a year, whilst her husband has an income of $54,000. They own their own residence at Blacktown (which has an estimated value of $280,000 and which is subject to a mortgage of $69,000). Their other assets consist of a motor vehicle, together with household and furniture effects. Each of Mrs Woods and her husband has superannuation entitlements and life policies. Apart from the foregoing mortgage, their liabilities consist of a credit card debt ($2,700), and a business vehicle debt ($18,000). 31 Janine Marie Bladwell, daughter of the Deceased (who receives a legacy of $10,000 under the will), is presently aged 42. Miss Bladwell is a single mother of two children, aged thirteen and ten. She resides in a Housing Commission dwelling. Her income consists of pension and family benefits, totalling $1712 a month, an amount which almost equals her monthly outgoings. She has no significant assets or liabilities. 32 It is in the light of the foregoing facts and circumstances that the Court must proceed to a consideration of the claim of the Plaintiffs. 33 I have had the benefit of receiving a written outline of submissions and a chronology from Counsel for the respective parties. Those documents will be retained in the Court file. 34 Each 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, each Plaintiff has the standing to bring the present proceedings. It will be appreciated that the Defendant also, as the de facto widow of the Deceased, is an eligible person in relation to the Deceased, being such within paragraph (a) of the foregoing definition. 35 The executor's affidavit sworn by the Defendant on 7 November 2002 states that each of those legatees is or may be an eligible person in relation to the Deceased. It is possible that the Deceased's granddaughter Hollie Davis may be an eligible person. Although each of the three children of the Defendant was a member of the same household as the Deceased, the evidence does not disclose any dependency upon him. Thus they are not eligible persons. 36 It should not be overlooked that each of the Plaintiffs is by the will of the Deceased the recipient of a legacy of $40,000. 37 Lesley has not referred to any specific needs, but is desirous of receiving some additional provision from the estate of her father, which will, as I understand it, enhance the modest lifestyle of herself and her family. Emphasis was placed upon the fact that her equity in her residence at Warrilla was 50 percent of the time of its purchase eleven years ago, whilst at the present time her equity in that property is now only 16 percent. 38 Peter finds himself in a far more difficult financial situation. He has no security of residence, having, through financial necessity, had to change his rented accommodation three times in the last three years. Whilst it is rare for an adult child to establish an entitlement to receive a residence from the estate of a Deceased parent, nevertheless, in the instant case, what Peter is seeking is an amount which, together with the legacy of $40,000 will enable him to place a deposit on the purchase of a modest residence for himself and his three children. The evidence did not disclose the total cost of such a residence, or identify any specific residence which he desired to purchase, or indicate the amount which would be required for a deposit. Upon the assumption, however, that Peter could raise by way of mortgage an amount equal to approximately three times his annual salary (which is about $36,400 net), it seems to me that he would require, in order to purchase even the most modest residence, an amount greater than the $40,000 which he receives under the will. But if he were enabled to purchase a residence, the amount of $400 a fortnight which he presently pays in rent would be available to service a mortgage. 39 Any order for provision an entitlement to which either or both of the Plaintiffs might otherwise establish, must be approached in the light of competing claims upon the testamentary bounty of the Deceased. In the instant case the most significant of such claims is that of the Defendant, who was the de facto partner of the Deceased for about twenty-eight years. She is also the chief object of the testamentary beneficence of the Deceased. In addition, the Deceased also, by the terms of his will, recognised the daughter of Lesley and the three children of the Defendant as objects of testamentary beneficence. 40 Further, it must not be overlooked that the Deceased by his will also recognised each Plaintiff as an object of his beneficence. I am satisfied that he had a good relationship with his two children, to each of whom on occasion he gave financial assistance.

41 Normally, any additional provision which might be ordered in favour of either or both of the Plaintiffs would be payable out of residue. To that extent, such additional provision would have the effect of diminishing the entitlement of the Defendant under the terms of the will. If the distributable estate be taken as having a net value of about $389,000, and if the residue, after payment of legacies totalling $130,000 and disregarding the value of the motor vehicle, be taken as having a value of $247,000, then any order for additional provision to either or both of the Plaintiffs, would to that extent reduce the amount of that residue to which the Defendant would otherwise be entitled. 42 But even if the entire additional $60,000 were to be payable out of residue (and thus reduce by that sum the amount which the Defendant receives from the estate), the Defendant will still receive at least $187,000 (possibly more, if the costs payable out of the estate are on assessment reduced from what I consider to be an excessive amount of more than $90,000). 43 It has been said that as a general rule, in the case of a lengthy marriage (to which the de facto relationship in the instant case should properly be equated), it is the duty of a testator to ensure, so far as the assets of his estate allow, that his widow is secure in her accommodation, is enabled to live at a standard no less than that which she enjoyed during his lifetime, and has a fund to meet unexpected contingencies. 44 Evidence was given on behalf of the Defendant that she has immediate needs in respect to replacement of various items of household equipment and furnishing, as well as repainting of the house (such expenditure totalling $26,240), and that it is likely that she will need to acquire a replacement vehicle some time in the future. The Defendant expressed a desire to continue to reside in the Doonside property for so long as her health and circumstances permit her to do so. 45 On behalf of the Plaintiffs evidence was placed before the Court by Michael Peloquin, an investment adviser. The purport of that evidence was to show how the Defendant could enhance her income by the acquisition of life expectancy annuities. I query whether it is appropriate for the Plaintiff, or the Court, to tell the Defendant how she should conduct her financial affairs. In any event, the resources expended in preparing the evidence of Mr Peloquin would have been better directed to identifying the needs of Lesley and to presenting evidence concerning the cost of an appropriate residence for Peter. 46 The Defendant is secure in her accommodation. Her present income is not great and on occasion she must resort to her savings. However, when she receives from the estate the better part of $200,000, then, after expending about $27,000 on repairs and renovations to the Doonside house, and possibly another $20,000 on the acquisition of a new motor vehicle, she will retain at least $140,000. The investment of that amount will return to the Defendant an additional income of at least $7,000 a year (although such additional income will probably result in a reduction in her age pension). 47 In all the circumstances, however, I am not persuaded that the competing claim of the Defendant should have the effect of extinguishing, or even reducing, the additional provision to which the Plaintiffs have otherwise established an entitlement. 48 In my conclusion Lesley has established an entitlement to receive from the estate of her father a benefit which will enable her to augment the modest and somewhat precarious lifestyle of herself and her partner and her children. I consider that the legacy of $40,000 is not adequate for such purpose, and that an appropriate amount should be $60,000. 49 I consider that it is appropriate that Peter should receive from the estate of his father a legacy in an amount which, taken together with his other assets, will enable him to purchase a residence for himself and his three children. The legacy of $40,000 is not sufficient for that purpose. I consider that a legacy in the sum of $80,000 would be appropriate. 50 If Lesley is to receive an additional amount of $20,000 and Peter is to receive an additional amount of $40,000, then the question arises whether that total additional amount of $60,000 should be paid out of residue, with the effect of thus reducing by that amount the Defendant's entitlement under the terms of the will, or whether such additional amount should be met, at least in part, from the legacies given to Hollie and to the three children of the Defendant. 51 Since Hollie is an infant, aged thirteen, and since she has no contact with her natural father, but lives with her mother and her mother's de facto partner, I would be reluctant to disturb her legacy. If the additional amount of $60,000 were to be borne to the extent of one half thereof ($30,000) by those parts of the estate which would otherwise meet the payment of the three legacies to the three children of the Defendant, then only the amount of $30,000 would need to be deducted from residue. If so, then I consider that the completing claim of the Defendant should not have the effect of reducing, let alone extinguishing, an order for provision of the nature which I consider the Plaintiffs have otherwise established. 52 However, I have not heard any submissions from Counsel concerning whether any additional provision for the Plaintiffs should be borne by residue or should be borne (as I have suggested might be appropriate) partly by residue and partly by the legacies to the children of the Defendant. It may well be that the Defendant herself would not wish the legacies to her own children to be extinguished by an order along the foregoing lines. Accordingly, I consider it appropriate that I should not at this stage make any express order as to how the proposed additional benefits to be given to the Plaintiffs should be borne by the assets of the estate, but that I should reserve to the parties liberty to apply in that regard. If the parties do not avail themselves of such liberty, then the additional provision for the Plaintiffs will be borne by residue, and will, to that extent, reduce the benefit to be received by the Defendant. 53 Accordingly, in proceedings 3420 of 2002 I make the following orders:

(1). I order that, in lieu of the benefit given to her by the will of the late Robert Michael Davis ("the Deceased"), the Plaintiff Lesley Ann Davis receive a legacy in the sum of $60,000 and, in lieu of the benefit given to him by the will of the Deceased, the Plaintiff Peter Robert Davis receive a legacy in the sum of $80,000, each such legacy not to bear interest if paid on or before 26 October 2003, and if not so paid to bear interest at the rate appropriate for unpaid legacies under the Wills, Probate and Administration Act 1898.

(2). Order that liberty be reserved to the parties to apply for an order specifying whether the additional benefit of $20,000 to be received by the Plaintiff Lesley Ann Davis and the additional benefit of $40,000 to be received by the Plaintiff Peter Robert Davis should be borne by the residue of the estate of the Deceased or whether part or all of such additional benefits should be borne by some other part of the estate of the Deceased.

(3). Order that the costs of the Plaintiffs on the party and party basis and the costs of the Defendant on the indemnity basis be paid out of the estate of the Deceased.

(4). The exhibits may be returned. 54 As I have already recorded, the only outstanding matter in proceedings 2430 of 2002 is in respect to the costs thereof. 55 I have not heard any submissions concerning those costs. Since the substantive proceedings for provision were instituted by Lesley Ann Davis and Peter Robert Davis within the period of eighteen months prescribed by section 16 of the Family Provision Act, and since it was not necessary for the executor to obtain an order under section 17 of the Act to require the time for the institution of the proceedings to be shortened, I do not consider that any costs order should be made against Lesley or Peter, the Defendants therein, in proceedings 2430 of 2002. Nevertheless, I consider that the executor was, in the circumstances of this case (in particular, the delay of seven and a half months from 11 September 2001, when Lesley and Peter first foreshadowed their claims, until 28 April 2002, when the executor instituted proceedings 2430 of 2002), entitled to institute such proceedings, and that, in consequence, she is entitled to an order that her costs thereof be paid out of the estate of the Deceased. 56 Accordingly, in proceedings 2430 of 2002 I make the following orders:

(2). I order that the costs of the Plaintiff on the indemnity basis be paid out of the estate of the late Robert Michael Davis ("the Deceased"), and that there be no other order in respect to the costs of the proceedings. **********

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