[1994] HCA 40
Slack v RoganPalffy v Rogan [2013] 85 NSWLR 253
Judgment (4 paragraphs)
[1]
Solicitors:
AKC Legal (Plaintiffs)
Bryson Kelly (Defendant)
File Number(s): 2023/158098
[2]
JUDGMENT (Ex tempore, revised)
Malcolm Chester died on 25 May 2022 at the age of 78 without leaving a will. He left two daughters, Geraldine and Penelope. The deceased's estate consists of a property at Reindeer Place, Werrington which, the evidence shows, to be worth about $760,000. He also had cash in bank accounts totalling $109,055 together with some shares, although there is no evidence as to their value. Pursuant to s 127(1) of the Succession Act 2006 (NSW), the deceased's estate will be distributed equally between his two daughters subject to the outcome of these proceedings.
Geraldine was born in 1973 and is currently 51 years old. Save for the years 2010 to 2012 when she briefly owned a house in Wilberforce, she lived with her father her whole life until his death. She continues to live at the Reindeer Place property.
Geraldine has four children: Matthew, Mitchell, "CW" (not his real name) and "TW" (not her real name). As at 13 June 2023, the children were aged 21, 17, 10, and 8. They must now be about 22, 18, 11 and 9. All of them continue to live at the Reindeer Place property with Geraldine.
Geraldine and her four children have commenced proceedings seeking further provision from the deceased's estate pursuant to s 59 of the Succession Act. CW and TW, who are probably now aged 11 and 9, bring the proceedings through Geraldine as their tutor. The evidence as to the plaintiffs' financial position and the financial position of the estate was unclear in some quite basic respects. I will return to this in due course but in the meantime it is relevant to note that the form of provision which all of the plaintiffs seek seems to be that Geraldine should have the right to remain in the Reindeer Place property until the youngest child turns 18. None of the second to fifth plaintiffs seek any relief on their own behalf save that the effect of allowing their mother to stay at the Reindeer Place property will allow them all to continue to reside there with her.
Penelope, who is the defendant, and who has been made administrator ad litem pursuant to orders made by Meek J on 14 July 2023 opposes the relief sought. She contends that the summons should be dismissed. But, in the alternative, she contends that if Geraldine is to be granted a right to occupy the Reindeer Place property then it should be on terms, for example, that she be required to pay a fee equal to some portion of what the market rental of the property might otherwise be.
There are some additional background matters that I should mention before I come to the evidence of the parties' financial positions.
The deceased was undoubtedly a much-loved father to Geraldine and Penelope and grandfather to their children including the other plaintiffs. He was deeply involved in the lives of his children and grandchildren and it seems he derived a lot of joy and satisfaction from living with them, and from his close involvement in their upbringing.
The evidence suggests that he turned his mind to his testamentary intentions on two occasions. In 1989, he prepared a form of will which would have left his estate to Penelope and Geraldine equally; however, that document was not duly executed. I infer that that document may have been prepared in connection with the breakdown of his relationship with Penelope and Geraldine's mother because it also said:
"Jean Mary Chester (ex-wife) will not benefit from my death. If the girls are not old enough to look after the house on their own, they must sell the house and split the money. I do not want their mother moving back to 10 Reindeer Place on the excuse of looking after her children."
There is no evidence that the document was ever actually executed as a will and no application has been made to admit that document to probate.
The deceased also prepared a handwritten document in March 2020 which sets out what appears to be some testimonial wishes, although it was not in the form of a will, nor was it expressed to be a will. It was also neither signed nor witnessed. It was also, obviously, incomplete. However, it is relevant to note that the document included the following:
"I have asked my next door neighbour Fran Grant (soon to be Fran...) to be executor. Now my two daughters Pennie and Geri plus the five grandchildren should know that I love them all equally. I hope that they see what I'm about to do is that I'm trying to be fair to all. The house 10 Reindeer Place, has always been for Pennie + Geri. Now Pennie has always been off doing her own thing where on the other hand Geri has been here contributing to the house. I think it would be right to allow Geri to live at N 10 until [TW] leaves school when she is eighteen, with Geri paying for electricity + water rates. If Geri finds a companion who lives with her at the house, rent must be paid. I am suggesting $250 per week which would pay for all utilities (insurance rates water rates + electricity) plus a little for repairs. Sorry Pennie you might have to wait for your half but you should have your money from Greg to live on. Now if Geri decides to sell [indecipherable] for any reason she must split the money 50/50 with Pennie. I am still unsure how I can make sure the insurance + rates are paid for but before I finish this will, I might come up with something, plus whose name or names to put on the house deeds."
I infer that the indecipherable word in the extract from the document just mentioned was "No 10" being a reference to the house at Reindeer Place. As I mentioned, the document was not signed, there is no evidence that it was ever completed, and no application has been made to admit that document to probate.
According to Geraldine, the deceased's assets at the date of his death were as follows:
Asset Current value
Reindeer Place, Werrington NSW $900,000
Westpac Account 230484 $42,954.46
Westpac Account 380383 $16,037
Westpac Term Deposit 311142 $50,074.23
Westpac Core Equity Services TBA
Westpac Group Ordinary Shares (estimate 500) TBA
Amcor Shares (estimate 930) TBA
ASX Shares (estimate unknown) TBA
English Pension TBA
Household items including train sets, paintings, cassettes and DVDs E $20,000
TOTAL: $1,034,055.69
[3]
The references in the table of the deceased's assets contains a number of matters that are "TBA". Those references are somewhat troubling. As a result of the fact that no letters of administration have been sought in relation to the estate and no-one seems to have taken any steps to ascertain the value of the estate, I am unable to be entirely sure as to what the total value of the estate is. I was told from the bar table by counsel for the plaintiffs that the total value of the shares mentioned in the table of assets comes to about $30,000, but I have no way of knowing whether or not that is correct.
The value of the Reindeer Place property is over-stated in the table. The evidence of a valuer who was jointly appointed by the parties puts the value of that property at $760,000, as I have already mentioned.
Geraldine's situation is as follows. She was born in 1973; she is currently single, but the details of her earlier relationships are very unclear. She, like the other parties, enjoyed a close and loving relationship with the deceased and she depended on him in numerous respects. She lived with him at the Reindeer Place property together with her children continuously from 2012. She had, as mentioned, also lived with him for most of her life prior to that date as well. The evidence shows that the deceased assisted her and her children throughout their lives.
Geraldine's evidence is that the deceased assisted her by doing such tasks as caring for her children, taking them to and from school, assisting them with homework, attending school events, picking the children up from school if they were sick or needed to come home; looking after the children when they were sick; taking Mitchell to all soccer practice, weekend games, soccer-related events and so on. I accept Geraldine's evidence that the deceased was a huge part of her life and that he helped raise her children.
In 2012, when Matthew was 10 years old, and the youngest was 4 weeks, Matthew was kidnapped by his grandparents which led to an expensive custody dispute. The deceased contributed time and money towards securing Matthew's return by contributing a sizeable portion of his superannuation savings towards legal expenses. Geraldine's evidence is that thereafter she felt obliged to meet many of his financial needs, and that she did so over many years including paying for such things as telephone bills, groceries and so on.
She received a sum of $50,000 in a property settlement (as to which there were no details whatsoever) in 2019, and contributed some or all of this sum towards the Reindeer Place property, although she did not say how. She also used some of the funds received from the property settlement to acquire a car and to meet her everyday living expenses. She has never paid rent at the Reindeer Place property.
Geraldine did not provide a helpful description of her financial circumstances. In her affidavit sworn 13 June 2023, she said that her total expenses came to $1,492 per week on average. This implies a total yearly expenditure of $77,584. In the same affidavit, she said that her "gross" monthly income was $4,450 which she says was income from cleaning and from Centrelink. Of that amount, it is clear that $2,400 was from Centrelink. This implies that her income from undertaking work as a cleaner was a little over $2,000 per month. In the same paragraph, she says her net income was $4,350 because, as she put it, she pays "minimal tax". I note that on this evidence she would be well under the registration threshold for GST, although she said she does nonetheless have an ABN.
It emerged during the course of her evidence that her income from her cleaning business alone came to $52,837.62 for the 12-month period up to the date of the hearing. There was no corresponding evidence as to what her cleaning business income had been in any earlier period, nor was there evidence as to what percentage of her overall expenditure was referrable to the cleaning business. She said that she had an accountant and that she had prepared tax returns in recent years, but did not produce any of them, or any other material that would shed any light on her financial circumstances.
Her counsel at one point suggested that he might tender some bank statements but in the end did not do so. Geraldine has no assets to speak of, save for her 2019 Mazda CX5 which she owns outright.
Geraldine's financial position seems, in summary, to be this: in the 12 months leading up to the hearing, she earned $52,837.62 in revenue from her cleaning business, plus about $31,200 from Centrelink. She also received an unknown amount of child support for TW and CW, but she did not say how much. During the same period she probably had expenses totalling about $77,584.
Geraldine has two young children, TW and CW, but there was no evidence whatsoever as to their circumstances. I do not know where they attend school or what any of their social or financial needs are. For example, I do not know what curricular and extra-curricular activities they participate in. As just mentioned, it emerged during Geraldine's evidence that she receives financial support from their father but she did not say how much.
The circumstances of the other children who are now aged about 18 and 22 were barely more discernible. I know nothing whatsoever about the boys' financial circumstances, save that Matthew is an apprentice roofer and that Mitchell is an apprentice plumber. The fact that both Matthew and Mitchell are plaintiffs leads me to infer that they wish to continue living at the Reindeer Place property, however, they have not said how long for, nor have they said what they are willing and able to contribute by way of rent or board. Both of them have commented on the state of the Reindeer Place property. They described a number of serious structural issues. The roof is leaking badly, and Matthew, who is an apprentice roofer, describes the house as a health and safety hazard. It is no longer safe to go on to the roof to do basic repairs. The bathroom tiles are coming off, the floorboards are suffering from mould and rot, and are in poor condition. Both boys have said that they would like these issues to be resolved but they have not suggested how this might occur.
Penelope's circumstances are somewhat complicated. She was born in 1970. She married her partner Russell Cowin in 2019 and is now known as Penelope Cowin. The court record should reflect this. Penelope and Russell rent a house together in Tennant Creek and it seems that Penelope's 31 year-old son from a previous relationship lives with them.
Like the other parties, Penelope had an excellent relationship with the deceased. She had not lived with him for many years but she kept in close contact with him and they enjoyed a close personal bond. She spoke with him every couple of days. Penelope says that the deceased lived for the grandchildren; she describes with affection his attachment to Geraldine's children, which was clearly very close. She says that he loved them and would have stopped the earth for them if that's what they needed.
Penelope also said that she spoke to her father about his testamentary wishes probably within about two years of his death. She recalls that he said he wanted Geraldine and Penelope to get the house and for the balance of his estate to be divided amongst the grandchildren.
Penelope's personal circumstances have been much affected by health issues. She suffers from Crohn's disease and related conditions. Crohn's disease is a life-long auto immune disease. She was diagnosed with cancer in 2019 and told that she had about 18 months to live. She received chemotherapy and has since improved. She now describes her position, so far as the cancer is concerned, as stable. She does, however, continue to receive monthly chemotherapy.
Penelope works five days a week as a retail manager at a pharmacy in Tennant Creek. She and her husband also receive income from managing a fleet of Thrifty hire cars in Tennant Creek. However, Penelope's husband has suffered from a series of strokes and his capacity to work is now reduced. He has hearing loss and short-term memory loss because of his strokes. Penelope described him as a contractor who drives a truck. But since the onset of his medical condition, he has only been able to drive a very limited distance within the township of Tennant Creek. Penelope used to work as a tour guide but gave that work up because it was not compatible with the demands of caring for her husband.
Penelope's total gross monthly income is $5,666.83, her net monthly income is $4,005.
Counsel for the plaintiff toyed with the submission that Penelope is, to use his word, a malingerer. If that submission is seriously put, as to which I have some doubt, I reject it.
Russell's gross annual income was $52,000 as at August 2023, but by the time of the hearing it had deteriorated to about $46,800 per year. He has superannuation of about $19,000. Penelope and her husband share rental and living expenses.
Counsel for the plaintiffs also submitted that Penelope had been evasive about her income because her affidavit in which she described her income and expenditure does not specifically mention the fact that she and her husband also have income from Thrifty. I am not able to accept that submission. Penelope stated what her income was and it was not seriously suggested that she earned anything more than the amount stated. It is true that she did not, when asked during cross-examination, produce tax returns or other documents to corroborate her evidence but that is not of any particular consequence in circumstances where there didn't seem to me to be any challenge to her evidence as to what she and her husband actually earn nor was there any evidence to contradict it.
In circumstances where I have no reason to doubt Penelope's evidence generally, I am not prepared to reason in the way that I was invited to by the plaintiffs. Specifically, I was asked to find that her evidence about her income should not be accepted because it is not corroborated.
In any event, on the conclusion that I have otherwise reached, the precise amount of her income would not make much difference to my assessment of the plaintiffs' needs and their entitlement to further provision from the estate.
I will now turn to the terms of the Succession Act.
Geraldine is an eligible person because she is a child of the deceased: see s 57(1)(c) of the Succession Act. The deceased was also survived by a former spouse who is also an eligible person by reason of s 57(1)(d). However, there is evidence that she did not wish to make any claim for provision. The second to fifth plaintiffs are eligible persons because they are grandchildren of the deceased who were members of his household. They are therefore eligible by reason of s 57(1)(e). However, they are, for that reason, only entitled to a family provision order under the Succession Act where there are "factors which warrant the making of" an application, pursuant to s 59(1)(b).
A threshold issue for the second to fifth plaintiff is therefore whether they have demonstrated factors warranting the making of an application for family provision. The plaintiffs referred me to no authority on this or any other matter.
The Succession Act does not specify the factors which might warrant an application being made by a person who is eligible by reason only of s 57(1)(e). As the Court of Appeal explained in Churton v Christian (1988) 13 NSWLR 241 at 252; [1988] NSWCA 23, citing McLelland J in Re Fulop Deceased (1987) 8 NSWLR 679 at 681, the factors which might warrant the making of an application are those matters which, when added to the facts which otherwise render the applicant an eligible person, give that person a status of someone who might naturally be regarded as the object of testamentary recognition by the deceased. In the present case, those factors exist for all of the children. Although the deceased did not necessarily entirely take the place of a father, all of the children had a close relationship of dependency with him during the whole of their lives until his death. Not only did he supply their housing, they lived with him in the same household and he took responsibility for a considerable portion of their upbringing. Those are matters which warrant the making of an application by each of the second to fifth plaintiffs.
It is next necessary to consider the principles which govern the exercise of my power to make a family provision order under the Succession Act. Those principles were helpfully summarised by Meek J in Tarbes v Taleb [2023] NSWSC 565 at [195]-[222]. I respectfully adopt his Honour's statement of the relevant principles.
The exercise of the power to make an order under s 59 of the Succession Act involves an evaluative judgment by reference to all of the facts of a particular case. The making of that evaluative judgment involves what is often described as a two-stage enquiry. The two-stage enquiry was explained by the High Court in Singer v Berghouse (1994) 181 CLR 201; [1994] HCA 40 at 209-210 (Mason CJ and Deane and McHugh JJ):
"The determination of the first stage in the two-stage process 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.
The determination of the second stage, should it arise, involves similar considerations. Indeed, in the first stage of the process, the court may need to arrive at an assessment of what is the proper level of maintenance and what is adequate provision, in which event, if it becomes necessary to embark upon the second stage of the process, that assessment will largely determine the order which should be made in favour of the applicant."
The position was also explained by White JA in Sgro v Thompson [2017] NSWCA 326 at [68]-[70]. I am particularly mindful of what White JA pointed out at paragraph [71] in undertaking the two-stage enquiry. His Honour said:
"The risk of error arises if a two-stage approach is adopted and it is assumed that the first stage requires an evaluation of whether the applicant has been left without adequate provision for his or her maintenance, education or advancement in life, thereby focusing primarily, or perhaps exclusively, on the applicant's financial needs. An applicant's financial needs and the financial needs of other persons with claims on a deceased's testamentary bounty are important, and often highly important considerations, but as Basten JA said in Chan v Chan [2016] NSWCA 222 at [22]:
'… [I]t is important not to elide the distinction between needs and adequate provision; the former is but one indicator of the latter. The adequacy of provision is not to be determined by a calculation of financial needs.'"
That is a point that has particular relevance here because of the manifestly deficient way in which the plaintiffs have presented their application so far as their financial needs are concerned. Were I to approach the matter on the footing that I must first be satisfied that the plaintiffs had not been left adequate provision in terms of financial need, I would, in all likelihood, simply dismiss the summons outright. That would be because their evidence does not demonstrate what their financial needs are in any meaningful way. However, it is clear that there would be error in that approach for the reasons explained by White JA. Instead, it is necessary to form a view based on the considerations set out in s 60 of the Succession Act, and any other relevant matters as to whether the plaintiffs have been left adequate provision. It is useful in that regard to commence with a consideration of the matters enumerated in s 60(2). I have considered each of those matters but there are several that warrant particular mention.
As to paragraph (a), I note that each of the plaintiffs was dependent on the deceased for a very long period. He provided them with housing and, in the case of the children, provided them with what amounted to parental support during the whole of the time that he lived with them. He did not, strictly speaking, owe them the duties of a parent but he assumed a range of responsibilities towards them during his lifetime and did so out of love and affection. As I will mention, he seems to have considered this would translate into some form of testamentary obligation on his part.
The nature of the deceased's estate is such that he was able to make provision for both his daughters and for his grandchildren. If the estate is to be divided according to the rules of intestacy, each daughter will likely receive approximately $400,000. That is a rough figure but it was one that was mentioned in the course of argument. Based on what I have seen as to the value of the estate it is probably about right. In any event, that is a considerable sum of money.
However, the circumstance to which paragraph (d) of s 60(2) refers has not really been the subject of meaningful evidence. I simply do not know what the plaintiffs' financial needs are, either individually or as a whole. I do not know whether Matthew and Mitchell wish to live at the Reindeer Place property and, if so, for how long; I do not know whether and to what extent they are able to contribute to either rent or board; I do not know whether Geraldine would be able to afford to rent a suitable property if she was able to take her share of the estate; I do not know whether she would need to rent a three bedroom apartment or a five bedroom house; I do not know anything whatsoever about the younger children whose circumstances and needs should quite obviously have been explained to the Court on an application such as this. Nonetheless, for all of the manifest deficiencies in the way the plaintiff's case was presented, there are two additional circumstances that warrant particular mention.
The first is that, as I have already noted, there was some evidence as to the deceased's testamentary intentions which is a matter referred to in s 60(2)(j). The relevance of the deceased's testamentary intentions in the making of the evaluative judgment called for by s 59 was explained by White J (as his Honour then was) in Slack v Rogan; Palffy v Rogan [2013] 85 NSWLR 253; [2013] NSWSC 522 at [127]. Those observations were subsequently approved by Macfarlan JA in Strang v Steiner [2019] NSWCA 143 at [72]. The 2020 document to which I have referred has many deficiencies in this regard which I have already mentioned. It is clearly incomplete including as to the terms on which Geraldine would be entitled to live in the Reindeer Place property if she were to find another partner. The document is also inconsistent with Penelope's own recollection of what her father said about what would happen to the house when he died.
Nonetheless, I find that the 2020 document is at least some evidence that the deceased wished for Geraldine and her children to be able to continue to live at the Reindeer Place property until the youngest finished school. The existence of the 2020 document confirms a matter which I would otherwise have been willing to infer from the other evidence, namely, that the deceased considered himself to have some obligation to provide housing for the grandchildren both while he was alive and also from his estate once he died.
The other matter concerns the situation of the youngest children who are still in school. They have lived their entire lives at the Reindeer Place property with their elder brothers and their mother, all of whom still live there. The question of whether they have been left adequate provision in circumstances where they are eligible persons and have demonstrated factors warranting the making of an application turns, to a very large extent, on whether they will be able to continue to live at the Reindeer Place property. If the rules of intestacy take their usual course, the house will be sold, the family will need to move, and they will be disrupted. As I have mentioned, that is probably not what their grandfather wanted.
Before expressing a conclusion as to whether and on what terms it is appropriate to make any order under s 59, it is relevant to return to a question of the financial circumstances of Geraldine and the two older boys.
As I have mentioned, the evidence as to this matter was hopeless. It would have been open to them to demonstrate, for example, that their combined income, even after distribution of the other assets in the estate, would be insufficient to pay a fee for the right to occupy the house, or that it was otherwise insufficient for them to pay rent to live in an alternative property. However, they have said nothing about any of these things.
I have already referred to the fact that Geraldine's income is substantially more than she had first described in her affidavit and that her financial circumstances remain something of a mystery.
In all of the circumstances, I reach the following conclusions. First, I am satisfied that Geraldine and the two youngest children have not been left adequate provision because the estate does not allow them to continue to live in the Reindeer Place property. In my view, it is appropriate to make an order for further provision by granting them the right to occupy the house until such time as neither child is still in secondary school. However, I am not persuaded that they should be entitled to remain in the property at no cost to Geraldine. The state of the evidence just does not allow me to conclude that their right of occupation should be at no cost to Geraldine. She will have some capacity to pay for a right to occupy the premises. That is partly because she earns more than she had otherwise said in her affidavit, and because she is entitled to child support, the amount of which she has not specified, and because she will receive half of the other assets of the estate if someone gets around to administering it. So long as she has Matthew and Mitchell living with her, it is reasonable to suppose that they will contribute by way of rent or board for the privilege of continuing to live in the Reindeer Place property.
Each of Geraldine, Matthew and Mitchell have indicated a willingness to do work on the property to make it safer to live in. Any work they do will probably help to protect the value of the property.
In the circumstances, the right of Geraldine and the two younger children to occupy the property should be subject to the following conditions:
1. that Geraldine pays a fee equal to one-third of the market rental for the property;
2. that Geraldine is solely responsible for the upkeep and maintenance of the property while ever she has the right to occupy the property. This includes the payment of insurance, rates, tax and utilities; and
3. that Geraldine is entitled to allow Matthew and Mitchell to continue to live in the property while ever she has the right to occupy the property.
The reason why I have concluded that an appropriate fee for occupation is equal to one-third of the market rent is that this amount strikes a balance between the interests of Penelope and Geraldine so far as the house is concerned. The starting point is that the house will otherwise devolve to Penelope and Geraldine equally. If it is not to be sold immediately, then they might ordinarily be expected to share equally in any income from renting the house but they would also be expected to share the costs associated with maintaining and improving it. The house clearly does need considerable maintenance. It will also need to be kept insured for several years for as long as Geraldine continues to live there before it can be sold. These are all things that will involve costs that, to some extent, will benefit both Penelope and Geraldine. Some of those costs are likely to be fairly substantial.
In these circumstances, it is appropriate that Geraldine be responsible for keeping the house in good order for so long as she lives there but, in return, she should only be required to pay to Penelope one-third of the market rental.
I am not satisfied that it is appropriate to make any order in relation to the claims by Matthew and Mitchell. I understood their claims in substance to be supportive of the orders sought by Geraldine and the younger children, but whether they continue to live at the property will be a matter for Geraldine.
No steps have been taken to appoint an administrator to the deceased's estate. That will obviously need to occur. There seems to me to be no reason why the estate cannot be administered in a way that takes into account the right of occupation that I am prepared to order. The house can be transferred into the names of Penelope and Geraldine as tenants in common but subject to the rights and on the conditions set out in the order which I will ultimately make in these proceedings.
I will allow the parties some time to formulate an order that gives effect to my conclusions and to make any submissions about costs. I therefore will not make any orders at the moment but will make the following directions:
1. The parties are to bring in agreed short minutes of order to give effect to my conclusions by 4pm on 3 December 2024.
2. If the parties are unable to agree short minutes of order to give effect to my conclusions they are each to file and serve submissions of no more than three pages explaining the orders which, they say, I should make by 4pm on 10 December 2024.
3. The parties are also to file and serve any evidence and submissions on costs by 4pm on 10 December 2024.
[4]
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Decision last updated: 03 December 2024