BLADWELL v DAVIS & ANOR

LOWER COURT Supreme Court - Equity Division JURISDICTION : LOWER COURT 3420/2002 FILE NUMBER(S) : LOWER COURT Master McLaughlin JUDICIAL OFFICER :

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL 40920/2003

IPP JA BRYSON JA STEIN AJA

FRIDAY 4 JUNE 2004 BLADWELL v. DAVIS & DAVIS Judgment 1 IPP JA: 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 … " 2 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. 3 I agree with Bryson JA that in the unusual circumstances of this particular case leave to appeal should not be granted. In coming to this conclusion I have weighed the following matters in the balance:

(b) The fact that both the claimant and the opponents are needy and meritorious persons, but the estate is insufficient to satisfy their needs;

(c) The fact that the claimant is the sole owner of the matrimonial home worth $400,000;

(d) The fact that were the appeal to succeed, the claimant (in my view) - should she obtain a judgment in her favour - would be likely to receive less than $60,000;

(e) As Bryson JA has noted, costs are already unusually high, and the costs of the appeal would be more than half of $60,000;

(g) Litigation has already consumed an excessive proportion of the estate and the litigation should now stop. 4 In my opinion, these matters do not result in the competing factors being more or less otherwise in equilibrium. In my opinion, the overall justice of the matter requires the refusal of leave. 5 BRYSON JA: The claimant applies for leave to appeal against the judgment of Master McLaughlin of 26 September 2003 which granted the application of the opponents, the adult son and daughter of the testator's marriage, for further provision in addition to the legacies given to them in the testator's will which was made on 25 June 1998. Under the will legacies of $40,000 each were given to the first opponent Lesley Anne Davis and to the second opponent Peter Robert Davis. The Master ordered further provision of $20,000 to Lesley Ann Davis and $40,000 to Peter Robert Davis. The testator died on 13 April 2001 at the age of 64. The claimant was the residuary beneficiary and lived in a domestic relationship with the testator for 28 years; for the purposes of the Family Provision Act 1982 she was treated by the learned Master as in the same position as if she had been the testator's widow. She is in the strong position of having a legal right to all the benefits conferred on her by the will subject only to any provision for eligible persons which the Court may order. 6 There were several small legacies to four other family members which the Master's order did not disturb. The effect of the Master's order was that the further provision made for the opponents was payable only out of the residuary estate, that is wholly out of the part of the estate passing to the claimant. If the Master's order were re-opened, consideration of that aspect would also be re-opened, and the interests of the four legatees of small legacies totalling $50,000 would come into competition with the interests of the claimant and of the opponents. 7 The Master found, substantially correctly, that the distributable estate was $313,000, but for some reason at a later point in his judgment erroneously adopted $389,000 as the distributable estate. No application was made to the learned Master for reconsideration of his reasons before entry of the order. It is plain that the Master at some point in his consideration made an error which led to his regarding the value of the distributable estate as $76,000 more than it truly was, and correspondingly the amount which is available to provide for the needs of the claimant is $76,000 less than the Master contemplated; and it is $60,000 less than it would be if the Master had not ordered further provision and made it payable out of the residue. 8 The opponents had sound grounds on which to claim further provision. They proved that they had significant needs. They had never received any advancement in life from the testator, they had never been guilty of any conduct which might call for consideration as disentitling them from provision, and they had never been in a state of estrangement from the testator. The testator recognised that they had claims on his bounty by giving them legacies, and the Master recognised that they had claims by the terms of his order. The total provisions made for them, both by the legacies and by the Master's order, made no more than modest contributions towards meeting their proved needs. 9 The claimant proved to the satisfaction of the Master that she has a number of needs including needs for funds for home improvement, a new car, an investment fund to supplement her income; and as it is plain that she has no reserve funds, she has a need for reserve funds for adverse contingencies. She was 67 years of age at the time of decision and had a life expectancy of 20 years. $60,000 is a significant sum in that it would represent potentially about $250 per month or $3000 per year additional annuity income if it were available to the claimant and if she decided to invest it in an annuity. The proposal to invest in an annuity on these terms was not her proposal and there is no reason to think it is at all likely that she would make such an investment, but the availability of the investment is a useful index of the value in terms of income of any capital which she receives from the estate. 10 The claimant has by far the largest asset which can be seen as being available to any member of the testator's family in that she owns the matrimonial home at Doonside: she and the testator were co-owners, and she became the sole owner by survivorship on his death. The value of the home was found to be $400,000, which is more than the value of the distributable estate under the will, and more than six times the provision ordered for the opponents. Ownership of the house is more than provision for her accommodation; she is its absolute owner, it is a significant asset, and it is available for her to deploy in other ways than occupying it as her home when and if her circumstances change with advancing years. Declining health or adverse circumstances may make it unsuitable for her to occupy a family suburban home herself. 11 As recurringly happens, it is not possible to meet all the claims on the testator's bounty which have been shown to exist. Determination whether there is power to make an order under the Family Provision Act 1982, and also what order should be made, requires the Court to have regard to the assets available for distribution; and the assets available are not sufficient to satisfy all proved needs and claims on the testator's bounty. There can be no truly satisfactory outcome for this litigation. No-one with a claim on the testator's bounty could receive adequate provision in relation to that person's needs except at the expense of making less than adequate provision available for some other such person. Complete success on the appeal would bring no more than an additional $60,000 in provision for the claimant, unless the Court of Appeal took a course which the claimant did not ask the Master to take, and decided to impose the burden of some or all of the provision on legacies given to the four other family members.

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. 20 Setting aside the Master's decision and reopening the opponents' claims for decision by the Court of Appeal would not necessarily result in the opponents' recovering nothing under any order of the Court; there is a fairly wide range of possible outcomes, including that the Court might order the same provision previously ordered or that some smaller provision might be ordered. It cannot confidently be said that entitlement to as much as $60,000 would be in issue in any appeal, if leave to appeal were granted. 21 Plainly the Master has made an error. There is no right of appeal and the grant of leave is discretionary. Costs have loomed enormously large in this litigation. The Master acted on an assessment of the opponents' costs at $42,500, the costs and expenses of obtaining probate and administration at $7,500 and the claimant's costs at $48,300; a total of $98,300, which the Master, not surprisingly, regarded as excessive. We have been given estimates of the costs of application for leave to appeal and of the appeal; the claimant's solicitor made an estimate of $17,964.10 and we were told that the opponents' estimate is $15,000. In economic effect costs are by far the main subject of the litigation, although the principles on which the appeal would be decided would not be principles related to the award of costs. 22 The proposed appeal could not settle any legal principle and would involve no question of general importance to the community. It is unfortunate but it has to be accepted that from time to time arithmetical errors will disturb due judicial administration; in principle they should not occur and if they do, should be corrected, but only within the due administration of the law relating to appeals, which requires leave at discretion where the sums involved do not amount to $100,000. To produce a decision favouring leave to appeal it is not sufficient to show that the judgment appealed against was arguably wrong, and access to an opportunity to appeal has to be kept in proportionality with the nature of the controversy, the amount involved and the amount which it is appropriate to spend on resolving the dispute. 23 In my opinion it is not appropriate to grant leave to appeal. The amount involved does not warrant the expense. The claimant would not necessarily succeed in wholly setting aside the provision made. The opponents were needy and meritorious persons eligible for further provision, and the results of further exercise of power to order provision by the Court of Appeal could well include that no alteration might be made in the order, or that only a small alteration might be made. At the most, leaving costs on one side for the moment, a maximum of $60,000 is involved in whether leave should be granted. The costs of an appeal are a significant proportion, more than half of that amount. Litigation has already consumed an excessive proportion of the estate. In my view this should now stop. Leave to appeal should be refused and the ordinary summons should be dismissed with costs. 24 STEIN AJA: I agree with Bryson JA and with additional remarks of Ipp JA.

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