first Defendant in 2014/325781 & second Defendant in 2014/357398)
Leonie Alice Crompton (Plaintiff in 2014/325781
first Defendant in 2014/325781 & second Defendant in 2014/357398)
Ms P Lowson (Plaintiff in 2014/325781
first Defendant in 2014//325781 & 2014/357398)
Mr J Brown (Plaintiff in 2014/357398)
Mr R Wilson SC (Administrator)
Source
Original judgment source is linked above.
Catchwords
first Defendant in 2014/325781 & second Defendant in 2014/357398)
Leonie Alice Crompton (Plaintiff in 2014/325781first Defendant in 2014/325781 & second Defendant in 2014/357398)
Ms P Lowson (Plaintiff in 2014/325781first Defendant in 2014//325781 & 2014/357398)
Mr J Brown (Plaintiff in 2014/357398)
Mr R Wilson SC (Administrator)
Judgment (3 paragraphs)
[1]
Solicitors:
Paul Brown Solicitor & Mediator (Plaintiff in 2014/325781; first Defendant in 2014//325781 & 2014/357398)
Owen Hodge Lawyers (Plaintiff in 2014/357398)
L. Rundle & Co (Administrator)
File Number(s): 2014/289474; 2014/325781; 2014/357398
[2]
Judgment
HIS HONOUR: I am hearing three applications for relief under Chapter 3 of the Succession Act 2006 (NSW), namely the part dealing with family provision. The three applications are 2014/289474 Susanne Cecilia Richmond v Leonie Alice Crompton, 2014/325781 Leonie Alice Crompton v Susanne Cecilia Richmond, and 2014/357398 Karl Francis Richmond v Susanne Cecilia Richmond and Leonie Alice Crompton.
The deceased, Joan Esme Little, was born on 16 June 1918 and died on 7 October 2013, thus aged 95. The deceased's main asset was her real estate in Keilvale, near Murwillumbah. By her Will she devised that property to her trustees upon trust for her grandson, Karl, and her daughter, Leonie, and son-in-law, Rodney, on the following terms and conditions:
"(i) Karl Francis Richmond may reside in the residence located on the western side of the property ('the cabin') free of charge, and have the use and benefit of the property to farm for his own reward during his life on the following conditions…
(ii) Leonie… and Rodney… may lease and retain the profits from the residence located on the eastern side of the property ('my residence') on the following conditions…"
The Will then gave any cattle stock, farm plant and equipment to Karl and the rest of the residue of the estate to be distributed equally between such of her grandchildren who survived her and attained the age of 21. She appointed her two daughters, Susanne and Leonie, as her executors.
Unfortunately, the executors do not get on at all well together and it was only in June 2015 that Probate of the Will was obtained.
On 2 October 2014, that is within the statutory time limit, Susanne, now aged 72, filed an application under the Succession Act for relief under its family provision aspects. On 5 November 2014 (thus out of time), Leonie, another daughter, now aged 68, also filed an application. On 4 December 2014, Karl, son of Susanne and thus grandson of the deceased, filed an application under the Act.
I will, without disrespect, refer to the disputants by their first names.
Because both executors were claimants against the estate, Pamela G Suttor, Solicitor, was appointed administrator for the purpose of representing the estate in these three proceedings which were heard together.
I heard the proceedings on 14 and 15 December 2015. Mr B Ryan of the Brisbane Bar, by leave, appeared for Susanne. Mr P Lowson of Counsel appeared for Leonie. Mr J Brown of Counsel appeared for Karl. Mr R Wilson SC appeared for the administrator.
The deceased's property at Keilvale is said to be worth about $850,000. It is virtually the only asset in the estate. She also left 70 head of cattle and farming equipment. These have a value of between $25,000 and $50,000. They have been distributed to Karl.
If one takes $850,000 as the sale price of the real estate, and deducts $17,600 for estate liabilities, $35,000 for the costs of sale, and $262,000 for the costs of all parties to these proceedings, one ends up with a net figure of $535,400. Although there is some argument, the general consensus is that It would be appropriate for me to treat the amount available for distribution at $535,000. The costs claimed may not be allowed if there is a full assessment and if one or more of the applications is dismissed, then they will need to be adjusted. The figures on which I am working for a 2 day hearing are the costs claimed by Susanne, $70,000, by Leonie, $70,000, by Karl, $57,000, and the administrator $65,000.
Because there are over $300,000 in administration expenses and costs to be deducted from the sale price of the Keilvale property, it is clear that it has to be sold. Because it has to be sold, it is impossible for the deceased's plan for her estate, to be carried out. Accordingly, any order that I make needs to be for a sum of money or a percentage of the estate.
Susanne puts herself forward as a 72 year old lady who lives with her husband, Blair, who is now 79. Together with her husband she owns two properties in Ipswich, Queensland, which she values at $320,000 for one and $160,000 for the other. She said that she lives in both houses because they are close together. The first house was severely damaged in floods so that she needs to use some of the facilities in the second house which is semi-derelict. Both houses carry an asbestos problem. Susanne considers it would cost about $150,000 to bring them into proper condition. They also own a property at Keilvale to be worth $450,000, plus household furniture. There is a mortgage to the Bank of Queensland for $250,000 and she owes $120,000 to her daughters, thus her schedule of joint assets and liabilities show assets of $940,000 and liabilities of $370,000, giving a net figure of $570,000. The husband's income is from a Defence Force retirement and death benefits pension of almost $20,000 a year. The mortgage is an interest-only mortgage which involves an outlay of $14,000 a year, and Susanne states her yearly expenditure, including the mortgage, is $60,114. She says she is dependent on her husband for support. She also says she believed her mother made a Will of 27 July 2009 in which she was a beneficiary but on 27 September 2013 the deceased said to her "when I die, you are getting nothing".
Karl says in paragraph 152 of his first Affidavit that the deceased said to him on a number of occasions, shortly before she began to deteriorate, "the reason your mum [Susanne] is being written out of the Will is because Leonie is not allowed to visit me otherwise". What that means is not quite clear but no-one cross-examined on it.
Susanne's health is not good. She says she suffers from heart problems, she has spinal column cancer, she has an eye tumour, she suffers from diabetes, she has stable angina, and has problems with her teeth. Her husband was diagnosed with aggressive prostate cancer and he is deaf. However, her husband declined to give any evidence as to his assets personally.
Susanne has a souvenir shop in Ipswich which she operates in conjunction with her husband, Blair. She says that it is now in the wrong part of town, its takings are very meagre and she intends to close it down in due course. She also trades from a weekly Sunday market at Cleveland near Brisbane.
Susanne was cross-examined and it was strongly suggested to her that she had not been fully frank about the income she is receiving from the Sunday market and that she was highly inaccurate in saying that the only rental income she had received was for a few weeks in 2008, when there was some documentary material to show that she was receiving it as late as 2012. She failed to produce any tax returns, indicating that she had not in fact filed any for some time, but she said that the Tax Office knew about this and did not seem to be particularly concerned. Susanne says she thought that the Tax Office actually owed her money. She failed to comply with various notices to produce with respect to her assets. However, the market appraisals of the Ipswich properties show a much reduced value than that shown in her earlier affidavit, which tends to confirm that the property market in Ipswich is depressed. Susanne says that she does not wish to sell the properties while the market is depressed.
Submissions were made by both Counsel for Leonie and Counsel for Karl that Susanne has not given a full and frank disclosure to the Court of her financial affairs and this virtually disqualifies her from entitlement to an order under the Act. I will return to this submission in due course.
Leonie owns a unit in Canberra together with her husband which she states has been valued at $450,000 by the Centrelink valuer. She owns property at Keilvale which she states is worth $625,000, she has about $9,000 with her husband in bank accounts. She has a personal superannuation fund valued at $86,400, $4,000 in the bank, and $1,000 in the public sector super scheme. She receives a part pension of $5,000 per year from Centrelink. It is very hard to see how Leonie has established any need at all. Indeed, in her evidence she conceded that if she was to receive a legacy of $100,000 as her Counsel suggested, she would give two thirds of that away to her daughters. Again, I will return to that matter in due course.
However, as Mr Wilson SC, Counsel for the administrator of the estate points out in the events which have happened, Leonie and her husband, Rodney, are not able to take the benefit which the deceased gave them under her Will. Accordingly it may be appropriate to make a provision to compensate them for that loss and to ensure that the spirit of the deceased's intention is carried out or alternatively an order might be made under s 66(2) of the Succession Act.
Leonie is 68 years of age and enjoys reasonably good health.
Karl is 46 years of age. He is a pensioner. Although he has a university and TAFE qualification, he has only briefly held paid employment and has spent the majority of his adult life on the farm owned by the deceased. A cabin was built on that land. There is some suggestion that it was originally built because of trail riders but it would seem that its predominant purpose was to provide accommodation for Karl.
Unfortunately there is very little hard evidence to support Karl's case that he is disabled from earning income in the workforce. The medical evidence is a letter from Dr Waters, who practices in The Pines Shopping Centre on the Gold Coast, who mentions that Karl has a history of severe anxiety illness for over 20 years, with severe agoraphobia. There is also a letter from Dr Lichter, a Psychiatrist, of Surfers Paradise of 1995 that stated that Karl was suffering from a depressive disorder.
One would have expected much more than this to support Karl's case that he is incapable of working. His Counsel, Mr J Brown, says that Centrelink has accepted him as an invalid pensioner for the last 20 years or so. Centrelink is not particularly generous in giving away its money and one must accept its view that Karl is a disabled pensioner. In the light of the lack of contrary evidence, there is much in that submission. However, it would appear that Karl is not taking any medication even though he had been recently assessed as having class 2 Diabetes. He said in one of his affidavits that he stopped taking the medication to manage that disease and now hopes that diet alone will be sufficient.
Karl asserts that he has been dependent on the deceased for his entire life, both financially and emotionally. His current gross fortnightly income is $840, which just covers his expenses. He has liabilities of about $52,000 which includes student loans, that are unlikely ever to be called up, and $10,000 owing to his sister, Trudi.
Karl realises that the deceased's property will have to be sold. He would like to have a residence somewhere in the country with sufficient acreage to run some cattle because he likes animals and unless he has some animals to care for, he says his life is just completely empty. He says that he is caring for the 70 head of cattle that the deceased gave him. Both Leonie and Rodney say that these cattle are not well cared for, they are suffering from problems with flies because they have not been recently drenched as they should have been. It is very difficult for me to assess this situation because it would seem that Leonie and Rodney are the only persons that have had bad things to say about Karl's care of cattle. In any event, it does not matter that much.
What does matter is that Karl has given some evidence that to acquire land of the size he has his eye on in the Inverell area would cost about $400,000 and a house as well would be about $600,000 (see Paragraph 45 and 46 of Karl's Affidavit on Page 148 of the Court Book).
However, Karl said in evidence that he wanted to get away from the Murwillumbah area and he wasn't particularly worried as to where that might be. It is a shame when so much money was spent on law costs that there was not more evidence presented before me as to whether it was possible for Karl to have the sort of land he would like in, say, west of Dubbo, or in the Riverina, or anywhere. There is just not enough material for me to find that the figures of $400,000 or $600,000 are typical of New South Wales country generally. In any event, it was submitted by Karl's opponents that, as a grandson, he would not normally be in the first row of persons for whom a testator would need to consider when making her Will and it would be a very strange result if he were to be given a home of his own when there was relatively little in the deceased's estate.
I now pass to an assessment of the credibility of the various witnesses.
None of the three applicants was an impressive witness.
Susanne gave her evidence in a way which showed her generally as a pleasant, capable person. She was attacked in cross-examination and, to a great degree, was unaffected by the cross-examination. However, despite this, even after her evidence, I was left with the impression that she was not telling me everything relevant about her business or her income. The fact that there was non-compliance with one of the notices to produce is significant. Susanne employs a bookkeeper so that she should have records, yet gave the excuse that she has been so busy that she was not able to provide the appropriate information to the Court, which does not ring completely true. Then there is the fact that she has not been filing tax returns and puts forward the excuse that the Tax Office may owe her more money than she owes it.
Karl, understandably, could not be classed as an impressive witness because of his mental state. However, apart from making it quite clear that he was unable to accurately remember dates when various events occurred, he was not detrimentally affected by cross-examination. He did say that he continued to care for the cattle and drench them, which is contrary to the evidence of Leonie and Rodney but as I said earlier, it is difficult to determine who is telling the truth.
Leonie was a different type of witness. Right from the beginning of the cross-examination she was combative and she sought to outsmart the cross-examiner whenever the question asked of her was a little imprecise. She would also seek to answer the immaterial part of the question rather than the material part. For instance, she was asked whether she had researched, during the weeks after her mother's passing, that the mother's house would rent for $250 per week. She honed in on the words "after my mother's passing" and eventually answered "not immediately after my mother's passing, no". Eventually she said she couldn't remember and then was shown her affidavit where she had dealt with the matter.
However, the worst defect in Leonie's evidence was her denial, even in the light of correspondence between her solicitors and Susanne's solicitors, that she was not aware of what her solicitors were doing. This was just incredible.
However, despite the imperfections of the witnesses, it does not seem to me that much depends on the problems in their evidence; the basal facts seem fairly clear.
Before leaving the witnesses, I must say something about the way in which Susanne and Leonie's affidavits were prepared. In particular, Susanne's is the worst example. Susanne goes back to her childhood and we even have a story of how she was carried on by the school bus and so missed a day of school for which she received a belting from her father. It is almost impossible to see how that incident could have the slightest bearing on what I have to decide in this case. It may well be that it was therapeutic for Susanne (and for corresponding details, Leonie) to get out of her system something that had been troubling her for years, but that is no reason why the Court should be burdened with excess semi-irrelevant details. That is one of the reasons why the costs in this relatively small estate are over $250,000. It is to be hoped that solicitors acting for plaintiffs will employ their professional skills when these affidavits are prepared, not just to put in affidavit form the client statement but only to put forward such details as are really relevant to the decision that has to be made.
The next matter to look at is the question of possible extension of time for Leonie and Karl to make their applications. The legislation sets 12 months from the date of death for the making of applications under Chapter 3 of the Act and it does so for a purpose, so that these claims will be dealt with in good time. Accordingly, extensions of time are not granted as of course, there must be some reason for them.
In the case of Leonie, she swore that it was only after the period expired that she realised that claims had to be put in within 12 months of the date of death. She was under the impression that it was first necessary to obtain Probate. This is an understandable mistake as the law was only altered relatively recently and Leonie's explanation seems to have been accepted by the other parties. No prejudice was caused and her delay was only minimal. Accordingly, it is appropriate to extend the time for Leonie to make her application.
Karl's application was a little more out of time than Leonie's. Here again, there is an explanation for the delay. It would seem that Karl was content with what was given to him by his grandmother's Will but when his mother and aunt filed challenges and it appeared that it was just impossible to comply with the deceased's Will, Karl, or his advisors, realised that they needed to make an application. Again, there was no real opposition to an extension of time being granted to Karl and I will extend the time accordingly.
In this background I have had to assess what the community would expect a wise and just testatrix to have done with her estate of approximately $535,000.
Of the 3 claimants, two, Karl and Leonie, are mentioned in the Will so that they were recognised by the deceased as persons whom she should benefit. I have seen four earlier Wills and in most of these Susanne was a beneficiary. It would seem from the remark that I quoted earlier from Karl, that Susanne was dropped because the deceased was worried about Leonie's attitude to Susanne, rather than any fractured relations between the deceased and Susanne. It was significant that at the very end of her cross-examination Leonie actually said that she, Leonie, really had no needs but she thought that her mother should have distributed her estate equally between her daughters.
Karl, as a grandchild, is not in the prime categories of eligible persons under the Act. If he is to be an eligible person he must come within paragraph (e) of s 57(1) of the Succession Act, that is, that he is a person who, at any particular time, was at least partly dependent on the deceased and is a grandchild of the deceased.
Clearly Karl is a grandchild and I am satisfied that he was at least partly dependent on his grandmother both financially and emotionally.
In Bowditch v NSW Trustee & Guardian [2012] NSWSC 275 at [113] in a passage approved by the Court of Appeal in Chapple v Wilcox [2014] NSWCA 392, Hallen J said:
"In relation to a claim by a grandchild, the following general principles are, in my view, relevant and should be remembered:
(a) As a general rule, a grandparent does not have a responsibility to make provision for a grandchild; that obligation rests on the parent of the grandchild. Nor is a grandchild, normally, regarded as a natural object of the deceased's testamentary recognition
…
(d) Generosity by the grandparent to the grandchild, including contribution to the education of the child, does not convert the grandparental relationship into one of obligation to provide for the grandchild upon the death of the grandparent…
(e) The fact that the deceased occasionally, or even frequently, made gifts to, or for, the benefit of the grandchild does not, in itself, make the grandchild wholly, or partially, dependent on the deceased for the purposes of the Act.
(f) It is relevant to consider what inheritance, or financial support, a grandchild might fairly expect from his, or her, parents."
In the present case, the support given by the deceased to Karl was greater than mere frequent gifts. She provided the cabin on her land for Karl to make his living quarters. The deceased and the grandson had what might be called second breakfast together of tea and toast. The deceased said she would not go to her own 90th birthday party unless Karl came with her (the problem being that Karl hated going to any assembly of people). It seems to me clear that Karl does establish both financial and emotional dependency within the meaning of paragraph (e) and so is to be classed as an eligible person. The big problem in this estate is that there is not enough money to satisfy the claims made by the three Plaintiffs, assuming that those claims could have been justified.
Mr Wilson SC, who appeared for the administrator of the estate, and to whom I am particularly indebted for an even handed set of submissions on the case, wisely put in Paragraph 34 of his submissions:
"34. The problem with this case is that there are insufficient assets to meet the needs of all relevant parties. The consequence of this is that those with the least claim on the deceased's bounty will necessarily have their entitlements compromised. Were the estate sufficiently large, adequate provision for Karl would involve the acquisition of a property which would provide him security of accommodation and portability."
Counsel went on to say that on the evidence the price of doing so would all but exhaust the estate as it is inappropriate that he receive such provision.
The deceased's two daughters are in relatively sound financial positions. Susanne's position is perhaps a little more doubtful but Susanne has not given the Court all the information needed to make a full assessment. However, it must be borne in mind that the deceased did make provision, indeed substantial provision, for Leonie in her Will, but because the property at Keilvale has to be sold, this provision will not take effect. In the light of the fact that the deceased did intend to make some substantial provision for Leonie, it is appropriate either that provision be made in her claim or, alternatively, that an order be made under s 66(2) of the Succession Act in Karl's claim. The difference is that if I dismiss Leonie's claim on the basis that she has no needs, it would probably be just to make Leonie pay the costs of her own case and, perhaps, the estate's costs as well.
So far as the grandchildren, other than Karl, are concerned, there is little evidence as to their circumstances, but it would seem from Ms Suttor's affidavit that all are relatively well off, though none of them is a rich person. The fact that the deceased wished to benefit them and they have some needs operates in my mind to make sure they receive some provision, though their priority is behind everyone else.
Despite the fact that he is a grandchild, it seems to me that Karl's claim is the strongest. I have already noted that he would like the estate to buy him a house and sufficient acreage to run some cattle, but the estate is just not sufficiently flush with funds to enable this to occur. I have also noted that even though Karl gave evidence that he did not really mind where his little farm and cattle were, though he preferred not in the Murwillumbah area, there has not been sufficient enquiries made as to the cost of a little farm outside the Murwillumbah and Inverell areas.
It seems to me that the highest that a wise and just testator could provide for Karl, remembering that he is not the prime person that she should keep in mind merely by relationships, is about 60% of the estate. That is, $320,000. Consideration should be given as to the administrator holding this money on trust for Karl to make sure that it is spent on permanent accommodation such as a little farm.
It may be difficult for Karl to be able to make the necessary enquiries to find a suitable property, but there is probably very little I can do to assist that problem.
One matter which passed through my mind is whether Karl's interest should be confined to a life estate. He is unlikely, it would seem on the evidence before me, to marry and have children and unfortunately, statistics generally show that people who have the medical problems he has, tend not to live to the life expectancy that would normally apply to a person of their age. That last matter is one reason why I did not take into account any benefaction that Karl may have when his parents die as even though his parents are aged 72 and 80, the situation where Karl might inherit may not occur. There may be extra administrative costs in holding Karl's interests by way of trust. If there was a life estate I would consider that the remainder then would be 50% to Leonie and her children, and 50% to Susanne and her children. As the remaindermen have no great needs, in the end I abandoned this thought, but I must acknowledge that it was not actually raised during argument.
Leonie and Susanne asked for $100,000 each. I do not consider that the estate can bear $100,000 each. As I have hinted earlier, Leonie's claim is virtually one of compensation for losing the benefit which the deceased gave her under the Will. She has no actual needs and she says that she is going to give two thirds of the bequest to her children. Normally that is a reason for not making any provision at all, but in the instant case the provision is really a substitution for the provision which the deceased did make but circumstances have shown that it was impractical to implement.
Susanne is not as flush with funds as Leonie. Leonie recognises that family harmony and what the deceased should have done means that Susanne should receive the same as what she, Leonie, receives and accordingly, Susanne and Leonie should each receive a legacy of $75,000. This leaves $65,000 which should be split between the four grandchildren. That is, the grandchildren other than Karl, each of whom would receive approximately $16,000. I say approximately because it may well be that what remains after the house is sold and expenses paid, Karl is paid his $320,000 and the daughters a total of $150,000, there may be less than $65,000 or more than $65,000. That figure might also be affected by the actual costs that have to be paid. Whatever is left after the provision for Karl and the deceased's two daughters has been met, is to be divided equally amongst the four female grandchildren.
There thus remains a couple of loose ends. The deceased's property at Keilvale will have to be sold. It is unlikely, from past experience, that Susanne and Leonie will be able to co-operate sufficiently to conduct an efficient sale campaign. It was virtually agreed at the hearing that trustees for sale should be appointed. Leonie put forward Ms Ellis, Solicitor, of Murwillumbah, who would charge an hourly rate of $350 plus GST. Mr Wilson SC suggested that Ms Suttor, who would charge a flat fee, should be appointed. Whoever is appointed, it seems to me, it would be prudent to have two trustees, as is usual when the Court appoints trustees for the sale of property. Cost-wise, it would seem better to appoint Ms Suttor, together with another person, presumably, one of her partners, as she is already very familiar with the facts of the case, whereas Ms Ellis might have to spend considerable time (at $350 per hour) in acquiring the same background information.
It may be that the matter will need to stand over for Short Minutes to be brought in. I will not be sitting again until 22 February 2016. I am quite happy for the parties, if they can all agree, to submit to the Registry, orders which they all agree carry out my reasons for judgment. If not, then the matter can be listed before me on, say, Friday, 26 February 2016 at 9:30 am.
To assist the parties, I will set out the essentials of the orders that I think follow from what I have said:
Order that Karl Francis Richmond receive a legacy of $320,000. However, that legacy is to be paid into the trust account of L. Rundle & Co and only paid out for the acquisition of a farm on which Karl can live and run a small head of cattle. Provided that the bulk of the legacy is paid out for this purpose, any surplus can be paid to Karl personally.
Order appointing Pamela Gaibrielle Suttor and one of her partners as trustee for sale of the deceased's property, noting that Ms Suttor proposes to charge a lump sum fee for this service.
Order that each of Susanne Cecilia Richmond and Leonie Alice Crompton receive a legacy of $75,000, not to carry interest if paid within one month of settlement of the sale of the deceased's farm.
Order that Karl Francis Richmond receive a legacy of the deceased's cattle and farming implements.
Order that the residue of the estate pass in equal shares as tenants in common to the deceased's grandchildren Trudi Richmond, Stephanie Higashida, Toni Gunther and Belinda Crompton.
Order that the costs of the Plaintiffs and the costs of the administrator be paid out of the estate of the Late Joan Esme Little provided that the costs of each applicant is capped at the amount of his or her legacy and the costs of the administrator is on the trustee basis.
Liberty to apply.
[3]
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 18 December 2015