Chatard v Bowen [2008] NSWSC 533 | Case summary

House property situate at and known as 24 Forest Road, Double Bay $2,650,000 Residential property situate at and known as 14/35-37 Woodstock Street, Bondi $385,000 Property situate at and known as 1 Abbott Street, Coogee $1,550,000 Heathley Keystone Property Trust No 26 (estimate) $353,425 Strategy Portfolio Services $1,619,504 Westpac Bank Account #***003 $61,705 Westpac Bank Account #***307 $5,103 Westpac Bank Account #***319 $83,390 Furniture, furnishings, household effects (estimate) $4,000 Jewellery (estimate) $7,000 Income due from estate Lilly Fulop (estimate) $132,594 800 shares, Woolworths Limited, $16,536 9148 shares, Iluka Resources $68,152 Total $6,936,412 6 The effect of the will and codicils thereto was: The Plaintiff receives a legacy of $1,000,000 and the contents of the Deceased's home at Forest Road, Double Bay, other than her jewellery; in addition, he receives a right of residence for life in the Deceased's home, provided he pays the outgoings; alternative accommodation may be purchased, if requested by the Plaintiff. St Vincent's Private Hospital receives a legacy of $100,000. St Vincent's Hospital Sydney Limited receives a legacy of $100,000. Vanessa Gay receives the Deceased's jewellery. Multiple Sclerosis Society of New South Wales receives the residue of the estate. 7 The foregoing legacies to the Plaintiff, St Vincent's Private Hospital and St Vincent's Hospital Sydney Limited have been paid. 8 The properties at 14/35-37 Woodstock Street, Bondi and 1 Abbott Street, Coogee have been sold since the death of the Deceased. 9 In his most recent affidavit, that of 29 April 2008, the First Defendant estimated the value of the estate in a total amount of $6,342,864. That estimation included the Double Bay property (having an estimated value of $2,650,000), together with cash in bank ($2,454,754, representing the net proceeds of sale of the Bondi and Coogee properties after the payment of the foregoing legacies) and St George IBD investment ($800,000), together with the foregoing units in Heathley Keystone Property Fund (having an estimated value of $353,425), and shares (having an estimated total value of about $84,700). 10 The estate is liable for income tax incurred by the Deceased before her death in amounts estimated to total about $185,000. In addition, there will be a capital gains tax liability (presumably in respect to the sale of the Bondi and Coogee properties) in an estimated amount of $620,000. 11 In calculating the value of the estate available for distribution, the costs of the present proceedings should be taken into consideration, since the Plaintiff, if successful, will normally be entitled to an order that his costs be paid out of the estate of the Deceased, whilst the executors, irrespective of the outcome of proceedings, will normally be entitled to an order that their costs be paid out of the estate. It has been estimated on behalf of the Plaintiff that his costs will total about $120,600 (being calculated on a party and party basis) or about $138,000 (if calculated on a solicitor and client basis). It was estimated on behalf of the First and Second Defendants (the executors) that their costs will total $16,500, whilst it was estimated on behalf of the Third Defendant that its costs will total $61,000. 12 It should here be recorded that the role of contradictor to the claim of the Plaintiff was assumed by the Third Defendant and that the First and Second Defendants, whilst represented, took little active part in the hearing of the proceedings. Indeed, apart from the formal affidavits required by Schedule J (in respect to the Family Provision Act) of the Supreme Court Rules, each of the First and Second Defendants provided affidavit evidence supporting the claim of the Plaintiff. The cross-examination of the Plaintiff was conducted on behalf of the Third Defendant, and the submissions in opposition to the claim of the Plaintiff were presented on behalf of the Third Defendant. 13 When taking into consideration the foregoing costs for all parties (in a total amount of about $198,000), together with the foregoing amounts of $805,000 (representing the totality of income tax and capital gains tax liabilities) and an amount for commission to be claimed by the Defendants, it is prudent to proceed upon the basis that there will be available for distribution (apart from the Forest Road property) an amount of about $2,680,000. It will be appreciated that, since the legacies have been paid, that amount of about $2,680,000 represents the residue of the estate, to which (together with the Forest Road property) the Third Defendant is entitled under the terms of the will. 14 The Plaintiff, who was born in France on 17 September 1944, is presently aged 63. He became an Australian citizen in 1989. 15 The Plaintiff met the Deceased in France, in July 1967. He migrated to Australia in the following year, and he and the Deceased married in August in 1970. In order to marry the Deceased, the Plaintiff, who had originally been a Catholic, converted to the Deceased's Jewish faith, and underwent a certain physical procedure in accordance with the requirements of that faith. There were no children of the marriage of the Plaintiff and the Deceased. 16 In 1975 the Plaintiff and the Deceased purchased a residence at 25 Spencer Street Rose Bay, which was to be their matrimonial home until 2001. In that year they moved into the residence at 24 Forest Road, Double Bay, where they remained until the death of the Deceased five years later, and where the Plaintiff continues to reside. The property at 24 Forest Road, Double Bay had been given to the Deceased by her uncle in about 1999. The Plaintiff and the Deceased thereupon sold their residence at Spencer Street, Rose Bay for $800,000 and used the proceeds to build a new house on the Double Bay site (that house being built to specifications which accomodated the Deceased's deteriorating physical condition). 17 In 1980 the Deceased was diagnosed with multiple sclerosis (often referred to as "MS"). 18 It emerged from the evidence, not only of the Plaintiff himself, but also of her close friends, Sue Carleton (the Second Defendant) and Robyn Pal, as well as of the Deceased's aunt, Erica Fulop, that the Plaintiff was a model husband. There was a close and loving relationship between the Plaintiff and the Deceased. He cared for her as her illness progressed and as her physical mobility deteriorated. Even when the Deceased was confined to a wheelchair the Plaintiff and the Deceased continued to travel each year to Europe or to Asia, the Plaintiff being entirely responsible for the Deceased and her welfare during each of those trips. The Plaintiff sacrificed for the Deceased his career and his income earning ability. He compromised his own lifestyle in order to care for the Deceased in her difficult circumstances. This he did willingly, with love and with good humour. 19 Throughout their marriage most of the household expenses came from the income derived from the Plaintiff's own exertions. In the 1970s the Deceased inherited a home unit at Flood Street, Bondi Junction. Rental from that unit assisted with the household expenses. The Deceased gave up paid employment in 1981. Her family was relatively wealthy, and some contribution was also made by family members (such as the Deceased's mother) towards household expenses. 20 The Deceased inherited substantial property in consequence of the death of her uncle and then the death of her mother (although most of her mother's estate of $6,000,000 was left to the Multiple Sclerosis Societies in Australia and in Israel). 21 According to the Plaintiff's affidavit of 17 July 2007, his assets consist of: Household furniture $4,000 Peugeot 407 motor car, 2004 model $25,000 Shares $2,000 Cash in bank $35,000 Superannuation entitlement $478,000 Total $540,000 22 His current liabilities were set forth as follows, Credit card debt $1,500 Business loan $150,000 Property Trust investment loan $230,000 Total $381,000 23 The Plaintiff, who is a company director by occupation, said that he enjoys business and works six days a week. He has an interest in an oriental restaurant and an oriental food shop, and be gave evidence concerning his current weekly income as follows, Share dividends and interest $4 Property Trust income $100 Wage (from 1 July 2007) $500 Total $604 24 The Plaintiff in his affidavit evidence provided details of his estimated weekly living expenses, in a total amount of $600. He also estimated that the weekly costs of maintenance of the Forest Road residence totalled $140. 25 In his subsequent affidavit of 2 November 2007 the Plaintiff corrected certain inaccuracies in his earlier affidavit of 17 July 2007. He said that settlement of the sale of the former matrimonial home at Rose Bay took place in April 2001. From the proceeds of sale the Plaintiff said that he and the Deceased each invested $350,000 in a superannuation fund with Strategy Retirement Fund. 26 He said that he believed that the balance of the proceeds on settlement of $6,992 and the deposit, less commission, of $57,009 were paid into the joint bank account of himself and the Deceased. 27 Most of the cost of the construction of the residence at Forest Road, Double Bay came from the estate of the Deceased's uncle. However, the Plaintiff and the Deceased paid for some of the landscaping, carpeting, furnishing and some of the fittings in that house property. 28 The Plaintiff in his November 2007 affidavit set forth details of the financial structure of the two businesses in which he currently participates (with a business associate, Thidarut Eng), those being Asia Pantry Pty Limited, which was incorporated in August 2003, and Mae Cheng Pty Limited, which was incorporated in March 2006. The Plaintiff said that he had made loans totalling $125,777 to Asia Pantry Pty Limited, and loans totalling $300,000 to Mae Cheng Pty Limited. From the legacy of $1,000,000 which he has received from the estate of the Deceased the Plaintiff repaid to Ranimat Pty Limited the sum of $200,000 (which he had borrowed from that company, in order to make loans to Mae Cheng Pty Limited). 29 According to the Plaintiff's affidavit evidence, both Asia Pantry Pty Limited and Mae Cheng Pty Limited have thus far been operating at a loss, although it was the Plaintiff's belief that each of those companies will ultimately become profitable. 30 It cannot be emphasised too strongly that it is the obligation of an applicant for an order for provision to place before the Court as fully and as frankly as possible, all information concerning the applicant's financial and material circumstances. 31 In the instant case the information provided by the Plaintiff in his affidavit evidence concerning those circumstances was not complete. Under cross-examination, various additional assets of the Plaintiff emerged. No reference to a substantial term deposit of $755,000 lodged by the Plaintiff on 10 September 2007 was made in the Plaintiff's affidavit evidence. Upon maturity he deposited the principal of that term deposit in his bank account. It was unclear whether he also deposited the income earned thereon. 32 On 14 March 2007, the Plaintiff transferred the sum of $123,872 from the joint account which he had conducted with the Deceased to his own bank account. 33 It was quite apparentthat there were deficiencies in the Plaintiff's affidavit evidence concerning his present financial circumstances. 34 According to the Plaintiff, he was diagnosed with lymphoma in about August-September 2007. Although that diagnosis was made before the Plaintiff swore his affidavit of 2 November 2007, the Plaintiff first disclosed the diagnosis to his solicitors in early April 2008, and the first reference to that alleged health condition of the Plaintiff appeared in his affidavit of 23 April 2008. He said that he had undergone ten radio therapy sessions between December 2007 and January 2008. Although he believes that the treatment was successful, he has been advised by his treating specialist that the condition may reoccur, and that it would then be necessary for the Plaintiff to undergo chemotherapy. Regarding the Plaintiff's health situation, it should be observed that no medical evidence was placed before the Court. The only evidence concerning the Plaintiff's lymphoma was that of the Plaintiff himself. 35 There was placed before the Court evidence on behalf of the Third Defendant, consisting of an affidavit by William Henry Younger, the Chief Executive Officer of Multiple Sclerosis Limited, and a delegated officer of the National Executive Management Team of Multiple Sclerosis Australia, representing the interests of Multiple Sclerosis Limited. By that affidavit the Third Defendant set forth information concerning the management structure of the Multiple Sclerosis Society of New South Wales, which merged operations with the Multiple Sclerosis Society of Victoria on 1 May 2006, to constitute a new legal entity Multiple Sclerosis Limited, trading as Multiple Sclerosis Society of New South Wales/Victoria. In that affidavit Mr Younger described the activities of the foregoing entities. He also set forth some information concerning the medical condition, multiple sclerosis, which he said is a chronic disease that randomly attacks the central nervous system. The progress, severity and specific symptoms of the disease cannot be predicted, and symptoms may range from tingling and numbness to paralysis and blindness. 36 According to that affidavit, the Deceased had been initially referred to the Multiple Sclerosis Society of New South Wales by her neurologist, and was subsequently registered onto the Society's client database on 12 August 1985. The records of the Third Defendant revealed the extent and nature of the contact between the Deceased and the Third Defendant, and the fact that the Deceased had in the period from 1985 to 2002 made donations to the Multiple Sclerosis Society totalling $103.65, and had also, on three occasions in 1996 and 1997, paid membership fees of $2.50 (that is, total membership fees of $7.50). 37 Mr Younger in his affidavit referred to the fact that in 2007 Multiple Sclerosis Limited was the beneficiary of a bequest from the Deceased's mother, the late Mrs Lilly Fulop, and he set forth, in general terms, the intention of the Third Defendant concerning its proposed use of its entitlement from the estate of the Deceased and also from the estate of the Deceased's late mother (such intention essentially being "to provide new and expanded services to people with MS"). Mr Younger said that the Third Defendant "is currently evaluating sustainable longer term options to maximise the benefits the bequest can deliver to both people with MS and research into the disease". 38 It is in the light of the foregoing facts and circumstances that the Court must proceed to a consideration of the claim of the Plaintiff. 39 I have had the benefit of receiving a written outline of submissions and a chronology from Senior Counsel for respectively the Plaintiff and the Third Defendant. Those documents will be retained in the Court file. 40 The Plaintiff as the widower of the Deceased is an eligible person within paragraph (a) of the definition of that phrase contained in section 6 (1) of the Family Provision Act. As such he has the standing to bring the present proceedings. 41 The Plaintiff is the only eligible person in relation to the Deceased. 42 In carrying out the first stage in the two-stage process identified by the High Court of Australia in Singer v Berghouse [1994] HCA 40; (1994) 181 CLR 201 at 208 - 210 (the correctness of which test was affirmed by the High Court in Vigolo v Bostin [2005] HCA 11; (2005) 221 CLR 191) the Court must determine whether in consequence of the provisions of the will of a testator the applicant has been left without adequate provision for his proper maintenance. 43 The High Court in Singer v Berghouse (at 209 - 210) said that the determination of the first stage calls for an assessment of whether the provision (if any) made was inadequate for what, in all the circumstances, was the proper level of maintenance etc appropriate for the applicant having regard, amongst other things, to the applicant's financial position, the size and nature of the deceased's estate, the totality of the relationship between the applicant and the deceased, and the relationship between the deceased and other persons who have legitimate claims upon his or her bounty. 44 It should be emphasised that it is for the Plaintiff to establish his claim upon its own merits. The Third Defendant, as the chief chosen object of the testamentary beneficence of the Deceased does not need to prove anything. Nevertheless, it will be appreciated that the Third Defendant is not an eligible person. Further, that the Deceased's own contact with the Third Defendant appears to have been slight and without any particular interest or affection on her part, and that during her lifetime her financial contributions to the Third Defendant were minimal. It appears to have been the Deceased's mother, rather than the Deceased herself, who had greater contact with and interest in the Third Defendant. 45 It should be recognised that an order for provision is not given as a reward for good conduct and services on the part of the Plaintiff. Neither is such an order withheld as punishment for perceived bad conduct on the part of an applicant. 46 It was submitted on behalf of the Plaintiff that the benefits given to him by the testamentary dispositions of the Deceased were such that he was left without adequate provision for his proper maintenance. In particular, it was submitted that he should receive the Double Bay house property absolutely and that he should receive an additional significant legacy from the estate. 47 The Third Defendant, however, in disputing the foregoing submissions, pointed to the fact that in consequence of the testamentary dispositions of the Deceased the Plaintiff has received a secure right of residence for his life in the Double Bay property (or, if requested by him, in sequential substitutionary residences), and that he has received a very significant legacy, in the sum of $1,000,000. The Third Defendant also pointed to various deficiencies in the Plaintiff's affidavit evidence, concerning his present financial circumstances. 48 I consider that the Plaintiff at his present age, 63 years, is entitled to security and flexibility concerning his residentiary accomodation. The terms of the will have the practical effect of binding him to the Double Bay house property for the rest of his life (although, at his request, sequential substitutionary residences can be purchased by the executors, in which he will have a similar right of residence for life). It is all very well for the Third Defendant to submit, as it does, that the Plaintiff is by the will given total security in his place of residence for the rest of his life. However, that security has as a necessary concomitant the existence of a continuing relationship between the Plaintiff and the Defendant executors. Whilst the Plaintiff may at present have a good relationship with the First Defendant, Mr Bowen, it will be appreciated that the latter is considerably older than the Plaintiff (it was the Plaintiff's understanding that Mr Bowen was aged about 80 years.) Who is to say that any substitutionary trustee would have such a co-operative and amicable relationship with the Plaintiff as Mr Bowen and his co-executor Ms Carleton appear to have. 49 By being required by the will to maintain a continuing relationship between himself and the executors (or their successors as trustees) regarding where he should live for the rest of his life, and the ultimate decision in that regard being that of such trustees, the Plaintiff has, to that extent, been left without adequate provision for his proper maintenance. I consider that the Plaintiff is entitled to the security and flexibility concerning his place of residence which he can have only by receiving the Double Bay house property absolutely. 50 I am not however, persuaded that there are any needs of the Plaintiff which are not or cannot be adequately met by the legacy of $1,000,000 which he has received from the estate of the Deceased. Indeed, the only present need which the Plaintiff identified related to repairs to the Double Bay property, and there appears to be no reason why those repairs have not yet been carried out, either by the Defendant executors (if the Plaintiff were to request it of them), or by the Plaintiff himself from his legacy of $1,000,000. In this regard, I am in agreement with the submission of the Third Defendant concerning the inadequacies in the evidence of the Plaintiff, which does not disclose, for example, the present value of his superannuation, his present income, or, indeed, his weekly expenditure, and costs in respect to the Double Bay property. I have already referred to the fact that there was no evidence from any medical witness about the Plaintiff's lymphoma. In particular, there was no evidence concerning the possible effect of that condition upon the Plaintiff's life expectancy. 51 Even if it does not ultimately receive the Double Bay property, the Third Defendant will still receive from the estate an amount in the order of $2,680,000, being the value of the residuary estate. I do not consider that the competing claim of the Third Defendant as the residuary beneficiary is such as should have the effect of reducing, let alone extinguishing, the additional benefit to which I consider the Plaintiff has established an entitlement, being that he receive the Double Bay house property absolutely. 52 I have not heard any submissions concerning costs. Normally a beneficiary which wishes be joined as an additional party defendant is so joined at its own risk as to costs. However, in the instant case it was the Third Defendant, rather than the executors, who served as the contradictor to the Plaintiff's claim. Indeed, as I have already recorded, the Defendant executors themselves actively supported the claim of the Plaintiff. In these circumstances it seems to me that the costs of upholding the testamentary dispositions of the Deceased should be the costs of the Third Defendant, rather than the costs of the First and Second Defendants. 53 Accordingly, unless within seven days of the date hereof any party arranges with my Associate for the matter to be listed for argument as to costs, I make the following orders:

I order, by consent and without admission, that for the purposes of these proceedings, Multiple Sclerosis Limited be appointed to represent the entity that is or may be entitled to the residuary estate of the late Jacqueline Jana Chatard ("the Deceased").
In lieu of the provisions of clause 6 of the second codicil dated 23 July 2002 of the Deceased, and in addition to the other benefits given to the Plaintiff by the will of the Deceased, I order that the Plaintiff receive absolutely the house property situate at and known as 24 Forest Road, Double Bay.
I order that the costs of the Plaintiff on the party and party basis be paid out of the estate of the Deceased.
I order that the costs of the First and Second Defendants on the indemnity basis up to and including 20 November 2007 be paid out of the estate of the Deceased.
I order that the costs of the Third Defendant on the indemnity basis after 20 November 2007 be paid out of the estate of the Deceased.
The exhibits may be returned. **********

Chatard v Bowen

At a glance

Court

Decision date

Before

Source

Judgment (11 paragraphs)

Parties

Cases Cited (5)