Bull v Booth [2011] NSWSC 1231 | Case summary

Assets in the estate 3The only asset of any substance in the deceased's estate was her home at McMichael Street, Maryville NSW. There was some furniture, personal items and jewellery worth some $5,500.00. The only cash which she held was $97.00. 4The value of the deceased's house was subject to evidence. The deceased's house was built across two separate allotments, having an area of approximately 540 square metres. In the street most of the houses are built on 270 square metre allotments. The defendant's evidence is that, in its existing state, the value is $420,000.00, whereas evidence tendered by the plaintiffs suggested that, in its existing state, it was valued at $410,000.00. I will adopt, taking a conservative approach, the value of $410,000.00. The plaintiffs' valuer in his valuation put in a comment relating to the valuation of the property if the existing house, which is in some disrepair could be removed and the land sold as two separate building blocks. His comments are as follows: " As If" Two (2) x Vacant Independently Titled & Marketable Allotments From our enquiries to Newcastle City Council we are advised that each independently titled allotment would provide a residential building entitlement, subject to Council approval. Further, as outlined supra we have assumed that the existing residential improvements are constructed across the adjoining boundary of the subject allotments. For the purpose of this approach we have considered value 'as if' vacant and that each independently titled allotment could provide a residential building entitlement and be marketed independently. Additionally, we draw attention to site costs would include demolition and removal of existing buildings and establishing services to both allotments. We have estimated site costs in the order of $25,000. Should a later representation of site costs evidence a marked variation to what we have adopted in this report, we reserve the right to reconsider this valuation. We are of the opinion that each allotment (cleared and serviced and providing a residential building entitlement) would evidence value within the range $240,000 to $265,000 . General Comment The subject property comprises residential improvements as described supra situated on two (2) x independently titled allotments. We draw attention to the fact that the consolidated land area of the subject property - some 526m2 - is a larger than standard sized allotment in comparison to residential allotments within the immediate surrounding locality. We are of the opinion that the subject property 'as is' would be attractive to a broad range of purchasers with regard to the large consolidated land area. |n addition, we have considered value of the two (2) x independently titled allotments on the basis each allotment was cleared and serviced. We draw particular attention to the fact that this approach is premised on the basis that each allotment would provide a residential building entitlement - subject to Council approval and would require the removal of existing improvements and establish services to each allotment." 5It will be observed that the valuation is after the cost of removing the building so, accordingly, if one works on the lower end of the value quoted the sale price would be $480,000.00 less $25,000.00, namely $455,000.00. This is only $40,000.00 above the likely price if the property was sold in one line. Putting it at the higher end of the valuation, the likely increase is $70,000.00. 6The evidence before me addressed a number of requirements for the issue of a separate certificate of title. It would appear that, as it is an old subdivision, the Registrar General would issue two certificates of title for the two lots which comprise the land on which the building is erected. The evidence from the local council as to whether approval could be obtained was of no help. Having regard to the zoning it is plain that even using the land as a residence requires development consent and the Council has indicated that it is not in a position to give any view in advance. It would need to assess the application including any environment constraints, including flooding. In these circumstances and absent any evidence of a town planning nature showing the likelihood of obtaining consent, I will proceed on the basis that the property has a value of $410,000.00. 7Debts of the deceased, including funeral expenses, amount to $5,410.00. In addition, there are costs of administration which have been incurred of $11,617.75 making a total sum of $17,027.75. This figure does not take account of $2,000.00 of costs relating to some complaint to the Law Society about conflict of interest which was not pressed by the defendant. 8There are legal costs involved and fortunately the hearing was able to be accommodated within one day rather than two days upon which the original estimates were based. The defendant's costs for one day are estimated at $54,692.00 in respect of the litigation, and the plaintiffs' costs similarly are estimated at $30,000.00. 9The total of all these amounts is $84,692.00. In the event that the plaintiffs' costs are not included, the defendant will have to find funds to pay the estate debts and his own costs (absent any order against the plaintiffs) in the sum of $71,719.75.

Consideration 33It necessary to see how the plaintiffs suggest that they have been left without adequate and proper provision for their maintenance, education and advancement in life. It was submitted on their behalf that the plaintiff Kevin should receive a legacy of $50,000.00 and that both Rodney and Ian should each receive a capital sum of $7,000.00. 34Such claims have to be seen in the context of the relationship between the defendant and the deceased, particularly having regard to the size of the estate. 35The deceased's property is not in good repair. In anticipation of doing renovations the kitchen has been removed and so there is no working stove. The defendant currently uses a gas camping stove, a frypan and a microwave to cook for himself. 36There are cracks in the walls of the house, including tiling in the bathroom. The house has problems with an uneven floor and it is plain that it will have to be re-peered to level it. It has not been painted for about 23 years and the roof leaks. The veranda is separating from the house and needs to be fixed. 37The defendant, not unnaturally, does not wish to do this work until he knows the result of the Court case, but whether he could effectively do it is another question. He suggests that he may have friends who could help him do some of the work. 38There is a more important reason why the house might have to be sold. That is the existence of the debts of the estate and the administration expenses and the defendant's costs of this litigation. The arrangement with his solicitor is that when the matter is finalised his solicitor will require payment of these amounts. The matter is not being done on a contingency basis. 39It may be that at the conclusion of this case, if I dismiss these proceedings, the defendant might be entitled to an order against the plaintiffs and, even if this is granted, there may be difficulties recovering it. 40The claim for provision by the plaintiffs was put as either a sum for contingencies or a need to reduce their outstanding liabilities. This might be an appropriate claim in respect of some of them, but not all. For instance, Ian has no mortgages and because of his very unfortunate situation in life he really needs some sum to assist him with living expenses. The evidence did not descend to a consideration of what would be appropriate and in any event such a provision would have to be considered in the light of the other considerations such as the size of the estate. 41Rodney's situation is not much different, although he has a house with a modest equity. He is plainly stretched to the limit and needs to perhaps pay off his car debt and to have something to provide additional funds for living expenses. 42Kevin on the other hand is in a reasonably comfortable situation for a person with a second marriage and has been able to take some holidays over the recent years. 43In submissions it was suggested that perhaps the competing claims could be accommodated by the making of a Crisp order in respect of the funds that become available from the sale of the property. The question of what is an appropriate provision and whether a life estate should be awarded to persons in the situation of either a widow or a long standing de facto partner has been dealt with in a number of cases. 44In the 1970s and 1980s there were a number of decisions of single judges of this Court where they have held that a life interest with particular attributes was appropriate. (See, for instance, Crisp v Burns Philp Trustee Co Ltd, Holland J 18 December 1979; Banks v Hourigan, Waddell CJ in Eq, 2 March 1989; Cameron v Hills, Needham J, 26 October 1989.) This perhaps is reflected in matters mentioned by the High Court in White v Barron (1979 - 1980) 144 CLR 431 where at p444 Mason J said: "A capital provision should only be awarded to a widow when it appears that this is the fairest means of securing the proper maintenance. However, the provision of a large capital sum for a widow who is not young may, in the event of her early death, result in a substantial benefit to her relatives, contrary to the wishes of the testator, when a benefit of another kind would have afforded an adequate safeguard to her personally, without leaving her in a position in which she could benefit her relatives from the proceedings of the legacy." 45He appears to be the only member of the court to have adverted to this aspect. 46A change in the High Court's attitude to the provision for widows, no doubt in response to changes in community expectations, is illustrated by the fact that in this case it disapproved of observations made in Worladge v Doddridge (1957) 97 CLR 1 that as a general rule an order for provision in favour of a widow should be confined to widowhood. Stephen J, who was one of the majority in White v Barron at pp 438-440, went to some lengths to point out that the jurisdiction was one which should not be unduly confined by judge-made rules of purportedly general application. 47In Elliott v Elliott ( 24 April 1986, unreported), Glass JA said in reference to the above quoted statement: "The statement there was made in an evidentiary context where the provision was made at the expense of the children of a previous marriage who had some claim on the testamentary bounty of the deceased. The residuary beneficiaries here have none and it seems to me that no fairness is owed to them." 48McHugh JA agreed with his judgment and the President agreed substantially with the reasons given by Glass JA. He added nothing on this aspect. I do not think that it can be said that the Court of Appeal has adopted the statement of Mason J in White v Barron. All that can be said is that they distinguished the situation before them. 49By the late 1980s the Judges in this Division were taking a slightly different view. For instance, in Court v Hunt ( 14 September 1987, unreported) Young J said: "Old age is a growing problem in our community and judges who sit in Family Provision Act applications get experience, as well as their own experience in the community, as to what happens when people reach the age when they can no longer look after themselves and one Judges the evidence in these sorts of proceedings against that background knowledge. 50His Honour then went on to talk about the assumptions one could make about the fact that frequently people, once they pass fifty five, had to change their accommodation and locate themselves either in retirement villages or nursing homes, which have different requirements for capital contribution. 51After talking about the evidence necessary, his Honour went on to say: "In many cases these days a life estate will not be sufficient because it does not cover the situation of the plaintiff moving from her own home to retirement village to nursing home to hospital. Sometimes it is possible for a Court to alter a life estate to a more flexible non-capital provision, such as was done by Holland J in Crisp v Burns Philp Trustee Co Ltd, 18 December 1979, unreported, but noted in Mason & Handler Probate Service at page 13206. Other times the proper provision is for a fee simple gift, realising that this property will be sold and will be turned over into the appropriate property to maintain the widow for the rest of her life. Care also has to be given by those administering the plaintiff's property to ensure that there is sufficient income being raised after tax that will provide for maintenance levies and the other payments that have had to be made by the widow." 52More recently the Court of Appeal on a number of occasions has referred to this problem. In Golosky & Anor v Golosky ( 5 October 1993, unreported), Kirby P summarised the proper provision for widows (and thus the plaintiff in these proceedings) in the following terms: " 2. In testing the Master's decision it is appropriate to keep in mind the principles which governed the approach which he was obliged to take to the widow's application under the Act. Relevantly, these included: (a) Proper respect was to be paid for the right of testamentary disposition which is the fundamental premise upon which the provisions of the Act are based. That premise requires the Court, out of respect for the continuing right of testamentary disposition, to limit its disturbance of the testator's will to that which is necessary to achieve the purposes of the Act, and not more. See The Pontifical Society for the Propagation of the Faith and St Charles Seminary, Perth v Scales (1962) 107 CLR 9, 19; White v Barron and Anor, above, 458; Hunter , above, 576; (b) The purpose of the jurisdiction is not the correction of the hurt feelings or sense of wrong of the competing claimants upon the estate of the testator. The Court is obliged simply to respond to the application of the eligible person who was a member of the testators household and to consider whether, as claimed, the provision made by the will is inadequate for that person's proper maintenance and advancement in life. See Heyward v Fisher , Court of Appeal, unreported, 26 April 1985; (1985) NSWJB 81. (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; (d) A mere right of residence will usually be an unsatisfactory method of providing for a spouses, accommodation to fulfil the foregoing normal presupposition. This is because a spouse may be compelled by sickness, age, urgent supervening necessity or otherwise, with good reason, to leave the residence. The spouse provided and will then be left without the kind of protection which is normally expected will be provided by a testator who is both wise and just. See Moore v Moore , Court of Appeal, unreported, 16 May 1984, per Hutley JA, 2; (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 ." 53In talking of the need to provide a house and a sum for contingencies Kirby P is clearly referring to passages in Luciano v Rosenblum (1985) 2 NSWLR 65. In the judgment of Powell J at first instance in Elliott v Elliott ( 18 May 1984, unreported) his Honour said that such a type of provision only applies where it can be said there has been a long and happy marriage and a widow has helped build up the estate of the deceased. This seems to have been generally adopted over the years in many subsequent cases. 54In Permanent Trustee v Fraser (1995) 36 NSWLR 24 at 47 Sheller JA had the following to say: "Once it is accepted that adequate provision for her proper maintenance and advancement in life required secure accommodation for life as well as a capital sum to meet exigencies, this need is not met by giving her only a life interest in the home unit. Commonly people in the community need to move from their own home into a unit in a retirement village and then into nursing accommodation and then into total care accommodation. See Young J in Christie v Christie. That need can be met if the respondent is given the home unit absolutely. She then has a greater flexibility as well as greater security." 55In Salmon v Blackford [1997] NSWCA 274, the Court of Appeal was dealing with the case where the trial Judge had given a fee simple to the deceased widow. Sheller JA said: "The principal point according to Mr Gibb was that his Honour failed to take into account that by reason of the widow's advanced years and the probability that her adopted son would be the natural object of her bounty, the effect of the order made was likely to be that the adopted son, whom the deceased had no intention to benefit, would be the beneficiary of half of the estate. I have great difficulty in seeing how a submission of this sort has any weight in the circumstances of this case. The matter that this Court must consider is whether the order that his Honour made was in such terms that one could only come to the conclusion that in some way his discretion must have miscarried. It is well established that proper provision is not to be measured solely by the need for maintenance. It should, in the case of this respondent and in the circumstances of this case, free her mind from any reasonable fear of any insufficiency as her age increases and her health and strength fails. I may say in this regard that her life expectancy, according to the tables, was something over 11 years at the time of the hearing. If one comes to the conclusion that for her proper maintenance and order such as the present is appropriate, it seems to me to matter not at all that she has an adopted son of an earlier marriage and that he may be the ultimate beneficiary of her bounty." 56No reference was made in either of these cases to the comments of Mason J in White v Barron. In Permanent Trustee v Fraser there were no competing claims by children of the first marriage. In Salmon v Blackford there were children of the first marriage but they appeared well off and their claims were thus minor. 57Recently in Hertzberg & Anor v Hertzberg [2003] NSWCA 311 McColl JA referred with approval to Golosky v Golosky and said [34]-[35]: "34....section 9 (2) of the Family Provision Act directs the Court to consider the issues of jurisdiction and the exercise of discretion at the time of the proceedings, not the time of the will, and in this case the deed, were made. In reaching his decision the Acting Master took into account community expectations. He referred to Young J's observations in Blackford v Salmon, unreported, 27 July 1994, in which his Honour said: 'It seems to that for a widow of a 30 year marriage who has lived in the house for some time and who continues to wish to live there, the expectation in the community would be that a wise and just testator would have left her the house in fee simple.' 35. His Honour's judgment recognized 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." 58This also was a case where there was no competing claim. It seems to me that the comments of Mason J in White v Barron should still be given consideration when one is considering a situation of competing claims. 59It is however worth noting the comments of Young CJ in Eq in Marshall v Carruthers [ 2002] NSWCA 47. His Honour agreed with the comments of Hodgson JA and added: " [72] Mr Ellison for the respondent strongly submitted that a person who makes a claim as a spouse of a class (a) eligible person is entitled to take comfort from the words of Mr Justice Powell in Luciano v Rosenblum (1985) 2 NSWLR 65 at 69 that a spouse is more or less entitled to have a home plus income to enable her to live in the style to which she is accustomed provided out of the estate. Indeed this passage is actually a summary of a similar but longer statement made by Powell J in Elliott v Elliott 18 May 1984 unreported which was approved by the Court of Appeal on 24 April 1996 and which is set out in the learned Master's judgment. [73] It must be remembered that Powell J put his proposition as a "broad general rule". However, there is in fact no "standard former spouse" to which one can just apply that proposition as a rule of thumb. [74] Powell J's broad general rule may not be a good guide as to what the Court will consider as the duty of a testator towards a spouse except in the case of a financially dependent spouse where there is a history of bringing up children with the deceased or in supporting the deceased while he was amassing his fortune. The broad general rule may well be inapplicable in cases of other spouses. Indeed, the cases in the first half of the 20th century show that as far as widowers were concerned, the proposition was quite untrue." 60Similarly in Bladwell v Davis [2004] NSWCA 170 Bryson JA, reviewed the authorities and concluded that the adoption of any such preconceived position or formula was likely to result in error, stating at par [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." 61Ipp JA added at par [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." 62Frequently in these matters it is suggested that a life estate and a Crisp order might be appropriate in order to prevent the person receiving the funds passing them to others which the testatrix did not intend to benefit. In this case the opposite is true. The defendant gave evidence that his present will leaves one third of his estate to Ian Bull, a third of his estate to Taylor Bull who is the son of Kevin Bull and a third of his estate to Rodney Bull's children. Plainly his will has been made with a careful appreciation of benefiting those who will need it the most. 63Other factors such as the age of the defendant militate against a Crisp order or life estate being appropriate. 64I think it is likely that, if not immediately, the defendant will have to sell the deceased's property. The estate expenses and his solicitor's costs will have to be paid. In these circumstances it is useful to see what will remain for him and whether he can obtain some suitable accommodation. 65The defendant not unreasonably wants to have at least a two bedroom place because of his need to house his book collection. He also needs a ground floor unit for health reasons and a place where he can have the dog which he and the deceased owned. This virtually rules out any units. The defendant gave evidence of a number of homes in his suburb, where he wishes to remain, being for sale for between $295,000.00 and $369,950.00. 66There was also some evidence of the costs of purchases of units by the plaintiffs. There is no doubt that at the bottom end of the market a single bedroom unit can be purchased for $222,000.00. The price of the units naturally rises up to a two-bedroom unit on two levels costing $430,000.00. 67If the deceased's house was sold for $410,000.00 and another house purchased there would be sale costs and purchase costs of $24,715.00, leaving a net sale price of $385,285.00. Assuming for the moment that the defendant has to pay all the administration and Court costs, as these come to $71,719.00, the amount remaining would be $313,281.00. 68With these funds available it is plain that the defendant would only be able to purchase something in the bottom end of the house market. 69With these facts in mind it is useful to return to the principle question, which is whether the estate is large enough to accommodate some claims by the plaintiffs which are in competition with claims by the defendant. 70The defendant is plainly the natural object of the deceased's bounty. She was in a position where she knew the very difficult situations of her children but for whatever reason thought that it was more appropriate to leave her estate to the defendant. In addition, she married him shortly before her death. 71Their relationship was one where they lived together for some 16 years. Admittedly, the assets in the estate were not contributed to by the deceased and they did not have any children together which required their care and attention to their upbringing. They did, however, involve themselves with their grandchildren in this respect. 72In submissions the plaintiffs counsel referred me to the comments of Young J in Marshall v Carruthers; Marshall v Marshall which I have extracted above. The general rule to which his Honour was referring certainly does not apply in this case, where we are at a different point in the scale of both in terms of relationship and length of attachment. In this case the comments of Ipp JA in Bladwell v Davis to which I have referred above point to another factor that is present in this case. That is the factor that the defendant, because of his numerous medical problems, will have no opportunity to improve his financial position in the future. The same perhaps can be said for two of the plaintiffs, but not for the first plaintiff. 73This is a difficult case because at least two of the plaintiffs are in very difficult financial circumstances and cannot look forward to any improvement in their situation. The defendant himself is also unfortunately in this situation and, with his long relationship with the deceased, I think having regard to all the matters that I have referred to, that he should be entitled to retain the benefits given to him under the will of the deceased. 74I dismiss the proceedings and I will hear the parties on costs.

Bull v Booth

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Judgment (11 paragraphs)

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Cases Cited (11)