Christina Elizabeth Hay v Sarah Renwick

Family provision

1. Applications such as these for provision out of the estate of a deceased person have been described by the High Court of Australia, in the context of the former (NSW) Family Provision Act 1982, in Singer v Berghouse (No 2) (1994) 181 CLR 201 as involving a two stage approach. The first requires the determination of the jurisdictional fact, whether the applicant has been left without adequate provision for his or her proper maintenance, education, and advancement in life; and the second, which arises only if the first is resolved affirmatively, involves the discretionary assessment of what provision ought to be made out of the estate for the applicant. However, as the High Court explained, similar considerations inform both stages of the process: 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, et cetera, 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 have been made in favour of the applicant.
2. Although there have been suggestions that subtle changes in the language now used in (NSW) Succession Act 2006, s 59, may have affected this, [1] the prevalent view is that there is no change to the conventional two-stage approach [see Estate of the late Anthony Marras [2014] NSWSC 95 at [15], Bergin CJ in Eq]. That said, because the considerations relevant to both stages overlap, consideration of a family provision application does not always divide neatly into the two questions, as Callinan and Heydon JJ pointed out in Vigolo v Bostin [2005] CLR 191 (at 192). Nonetheless, in such an application, the Court must consider first, whether the plaintiff is an eligible person; secondly, whether the plaintiff has been left with inadequate provision for his or her proper maintenance, education, and advancement in life; and thirdly, if so, what, if any, further provision ought to be made out of the estate for those purposes.

Eligibility

1. In the present case, the plaintiff - being a de facto spouse of the deceased at the date of his death - is plainly an eligible person. As a de facto spouse, she does not have to demonstrate "factors warranting" the making of her application. Her application was made within time.

Adequate provision

1. It was conceded that the plaintiff had been left without adequate provision for her proper maintenance, education, and advancement in life, so that the only remaining question is what, if any, provision or further provision ought to be made out of the estate for her.
2. The relevant principles and considerations were summarised by McLelland, J (as he then was) in Re Fulop Deceased (1987) 8 NSWLR 679 as follows: In making these determinations the following principles apply: first, the Court should not interfere with the dispositions in the will, except to the extent necessary to make adequate provision for the plaintiff's proper maintenance, education, and advancement in life. Secondly, the expression 'proper' in this context connotes a standard appropriate to all the circumstances in the case, and thirdly, the Court may take into consideration any matter, whether existing or occurring before or after the death of the deceased which it considers relevant in the circumstances, including (a) the nature and quality of the relationship between the plaintiff and the deceased, (b) the character and conduct of the plaintiff, (c) the nature and extent of the plaintiff's present and reasonably anticipated future needs, (d) the size and nature of the estate of the deceased, (e) the nature and relatively strength of the claims to testamentary recognition by the deceased of those taking benefits under the will of the deceased, and (f) any contribution, financial or otherwise, direct or indirect, by the plaintiff to the property or welfare of the deceased.
3. The defendants' submissions cited numerous cases for the proposition that a relatively restrictive approach should be taken to the family provision jurisdiction - an approach that focused on meeting the needs of an eligible person, and for that matter doing so adequately only. However, the jurisdiction is not limited in that way.
4. First, the jurisdiction is not exclusively needs-based. Both the relevant considerations listed in the section which describes them in the Succession Act, and authorities such as the passages in Singer v Berghouse and Re Fulop Deceased to which I have referred, show that there are many other considerations - including, but not limited to, contribution-based considerations, as well as needs. The jurisdiction is not an exclusively needs-based one.
5. Secondly, the provision that the Court may make is not limited to merely "adequate" provision, but to adequate provision for proper maintenance, education, and advancement in life. As McLelland J explained in the passage that I have cited, the expression "proper" in that context connotes a standard that is appropriate to all the circumstances in the case.
6. Thirdly, the provision that can be made is not limited to maintenance, but extends to advancement which envisages not merely maintaining the standard or status of an eligible person, but in an appropriate case, improving and enhancing it.
7. One of the cases to which reference was made in support of a restrictive approach was the judgment of Bryson J (as his Honour then was) in Gorton v Parks (1989) 17 NSWLR 1. It is true that in that case his Honour observed (at [5] to [6]) that orders made under the then Family Provision Act would detract from the testator's freedom to dispose of his property as he wished and from beneficiaries' rights under the will, and so could only be made in accordance with the terms of the Act, applied according to well established principles "which limit the provision which can be made by reference to the moral duty of the testator, and the needs of the person applying". His Honour continued: These limits arise from the need under s 7 that the order should make such provision as ought to be made for the maintenance, education, and advancement in life of the applicant, and from the need under s 9(2) to be satisfied if an order is to be made that the provision, if any, already made for the applicant is inadequate for the proper maintenance, education, and advancement in life of the applicant. Consideration of what provision ought to be made, and of what is inadequate for proper maintenance, necessarily limits what the Court can order to provision which meets needs, and does not express generosity. Accordingly, there is no need for my orders to produce an overall fair division of the estate, or to put all the testators children in a position where each receives much the same benefits as the others... it would be wrong to attempt any of these exercises.
8. However, what follows in that judgment demonstrates that insofar as his Honour referred to "provision which meets needs", no narrow view of what is encompassed by that concept is to be adopted. Essentially, his Honour found the narrow approach - once explained by Dixon CJ, in Pontifical Society for the Propagation of the Faith v Scales (1962) 107 CLR 9 - of little assistance in the present day and age. Expressing scepticism at the view of Dixon CJ that a public servant aged 50 who had attained the position of Section Leader in a branch of the Department of Customs earning £2,200 per year in 1961, with two children aged 16 still at school and owning a home a home subject to a mortgage, could not be said to be in need, his Honour said: "It seems to me a very strange view of the facts, expressing a concept of need which I would not share, and which must have been indifferent to any consideration of relativity of need to available resources".
9. Bryson J preferred the approach of Taylor J, in dissent in Scales, as follows: The conclusion is, I think, inevitable that had the testator made any reasonable attempt to fulfil his marital and parental obligations the respondent and his family might well have been enjoying now a higher standard of living than that which his present means permit. He is not of course destitute but this is beside the point. In all the circumstances of the case he had, in my view, sound grounds for thinking that the testator was not morally free to dispose of his estate without regard to his claims.
10. Bryson J continued: The concept of need on which Dixon CJ appears to have acted does not well accord with the concept of need with which case law and practical experience and litigation have made me familiar, which is that applied by Taylor J. It does not seem possible to give a complete or exhaustive statement of the concept.
11. Bryson J illustrated the point by reference to the judgment of Fullagar and Menzies JJ in Blore v Lang (1960) 104 CLR 124 who said (at 135): In a case such as this, where the applicant is a married woman with a healthy husband in satisfactory employment who supports her in reasonable comfort, her need is not for the bread and butter of life, but for a little of the cheese or jam that a wise and just parent would appreciate should be provided if circumstances permit.
12. Reference was also made to the judgment of Young J (as he then was) in Stewart v McDougall (NSWSC, 19 November 1998, unreported), in explaining that the Court's role was limited to making adequate provision for an eligible person's proper maintenance and advancement. In a passage which I have often referred to in family provision cases, his Honour said: It is important to state which the Family Provision Act permits a Court to do, and what it does not permit a Court to do. The Act recognises that Australians have freedom to leave their property by their will as they wish, with one exception. The exception is that a person must fulfil any moral duty to make proper and adequate provision for those whom the community would expect such provision to be made before they can leave money as they wish. Thus, in these cases, one does not ask if the will is fair; one does not ask if the testatrix divided her property equally; one does not ask, as a judge, how would I have made a will had I have been the testatrix. What must be asked is did the testatrix fail in her moral duty to those who have a claim on her. Even if the Court comes to the view that the question should be answered in the affirmative, the Court still does not remake the will, but only alters it to the extent adequate provision is made for the eligible person in respect of whom the testatrix failed in her moral duty.
13. As it has often been, that may all be accepted. It does not say that in deciding what is adequate provision for the proper maintenance and advancement of an eligible person, the Court is constrained to limit itself to barely adequate maintenance. Rather, in McLelland J's words, the cases make clear that attention must be directed to "a standard appropriate to all the circumstances in the case".
14. The plaintiff Christina was born on 28 February 1968, and is now 48 years of age. She too has had at least one earlier de facto relationship, but no children or other dependants. So far as the evidence discloses, her health is satisfactory. She was the proprietor of a floristry business, but as I have mentioned has sold it and entered into a restraint of trade. From that business, in FY2012/13, she earned a net income of about $27,000 and she also received $7,500 net in rent from the Mascot premises, giving her a taxable income for the 2013 year of a mere $35,000. Since the sale of the floristry business, she has retained the benefit of one floristry contract, from which she earns about $3,000 gross per month. She has gained casual employment with a florist in Double Bay for about 15 hours per week, from which she earns about $450 per week before tax.
15. Following the death of the deceased, she at first leased a ground floor apartment at Randwick, which she occupied until December 2015. Since then she has occupied a room in an apartment owned by a friend of the deceased, for which she pays $250 per week. Her assets are almost entirely in liquid form and amount to slightly over $480,000, and she has a credit card liability of about $5,000, leaving net assets of approximately $475,000.
16. It is indisputable and undisputed that she had a close and loving relationship with the deceased. The quality of that relationship and her commitment to it is demonstrated by the course of in-vitro fertilisation that was undertaken; by their shared plans to liquidate their assets, move to regional New South Wales and operate a country pub as the deceased desired: and her ongoing aspiration to bear a child to the deceased from material harvested in the course of the in-vitro fertilisation procedures.
17. Christina wants to live in a house with some scope for a small garden and a shed, from which in due course she might be able to re-establish, on a small scale, a floristry business or at least perform some floristry work. She does not want to live in an apartment. She wants to remain in the Eastern Suburbs, near where she lived with the deceased - preferably in the vicinity of Woollahra, Double Bay and Paddington, at the northern end of the Eastern Suburbs. So far as the evidence discloses, there is no one else to support her, and no one else on whom she has a moral claim.
18. As I have said, she was the deceased's de facto spouse at the date of his death and, in that capacity, is plainly an eligible person. The defendants rightly conceded that the deceased did not make adequate provision for her in his will. The will miscarried as an exercise of his testamentary discretion - not at the time that it was made (when it was a perfectly logical and appropriate will), but retrospectively, by reason of the subsequent change in circumstances brought by the development of a permanent and close relationship with the plaintiff.

What order should be made?

1. The only question for the Court is what order should be made. The estate amounts to about $2.4 million net. No-one suggests that the legacies to Sarah's children should be disturbed.
2. Sarah is not herself an eligible person. That does not mean that any moral claim that she might have on the deceased is not to be taken into account. To the contrary, she starts from a position of strength in that she is a named beneficiary. However, she does not advance any circumstances of need as a basis for diminishing the order that would otherwise be appropriate in favour of the plaintiff. She points to the origins of the deceased's assets in their father's estate, but that is of very slight significance in the present circumstances. Ultimately, there is no competing claim which would diminish what would otherwise be proper provision in favour of the plaintiff.
3. As I have said, the plaintiff had a close and loving relationship with the deceased, albeit a relatively short one, and one in which they were plainly committed to a shared future. Importantly, by the time of his death, she was dependent on him for accommodation, and to a substantial extent also for financial and material support, for most of which he paid. Also of great importance is that Christina had made significant changes in her position in reliance upon the relationship. Those include the sale of her Mascot home, the sale of her business, and the entry into a restraint of trade which would prevent her from plying her business within 25 kilometres of Mascot and thus compromised her earning capacity and her borrowing capacity. She moved from a position in which she was independent, to a position in which she was dependent.
4. Thus, though the relationship was a relatively short one, and insofar as it was a de facto relationship had not reached three years at the date of death, it was continuing at that date, and it was contemplated by both of them that it was a permanent relationship. Christina had liquidated her assets and her position, and sacrificed her earning capacity, to throw in her lot with the deceased to follow his dream to the country.

Moral obligation of a testator

1. The moral obligation of a testator to a spouse or a spouse-equivalent has been adverted to in many cases. In Luciano v Rosenblum [1985] 2 NSWLR 65, Powell J (as his Honour then was) said (at 69 to 70): It seems to me that, as a broad general rule, and in the absence of special circumstances, the duty of a testator to his widow is to the extent to which his assets permit him to do so, to ensure that she is secure in her home, to ensure that she has an income sufficient to permit her to live in the style to which she is accustomed and to provide her with a fund to enable her to meet any unforseen contingencies.
2. Subsequently, in Elliott v Elliott (NSWSC, 18 May 1984, unreported) the same judge said, in a judgment that was affirmed by the Court of Appeal on 24 April 1986, and endorsed by Young J in Court v Hunt (NSWSC, 29 October 1987, unreported): I take the view, which view I believe is supported by the authorities, that in a case such as this, where the marriage of the deceased and his widow has been long and harmonious, where the widow has loyally supported her husband and assisted to build up and maintain his estate, the duty which the deceased owes to his widow can be no less than to the extent to which his assets permit him to achieve that result. First to ensure that his widow be secure in her home for the rest of her life and that if either the need arises or the quim strikes her she has the capacity to change her home. Secondly, that she have available to her an income sufficient to enable her to live in a reasonable degree of comfort and free from any financial worries and thirdly that she has available to her a fund to which she might resort in order to provide herself with such modest luxuries as she might choose and which would provide her with a hedge against any unforseen contingency or disaster that life might bring.
3. Not all the conditions referred to in that passage are present in this case because his Honour spoke of a long marriage, and one in which the widow had assisted the deceased to build up and maintain his estate; but the general principles are not confined to such cases. There was no such limitation in the passage which I have cited from Luciano v Rosenblum; but of more guidance and higher authority is the judgment of the Court of Appeal in Golosky v Golosky [1993] NSWCA 111 (5 October 1993). That was a case in which the deceased had twice previously been married. Of the first marriage, the deceased had children and a number of grandchildren. The widow plaintiff was younger than the deceased's children. At his request, she moved from the United States to Australia, and sold her apartment in the United States. The relationship in all was of 30 weeks duration, and the marriage of 12 weeks before the deceased's sudden death. The deceased left her a right of occupation of the former matrimonial home on the Northern Beaches, and a legacy of $150,000, from a total estate of $750,000 which had been diminished by dispositions to his children prior to his death by a further $750,000. Master Gressier found that the provision made for the widow was inadequate for her proper maintenance, and instead ordered that she receive the North Curl Curl property absolutely.
4. In the appeal, the executors challenged both the jurisdictional finding that there was inadequate provision, and the discretionary order as to the additional provision. The leading judgment was delivered by Kirby P (as he then was), who referred to principles which governed the approach to a widow's application under the Act, while stressing that consideration of other cases must be undertaken with circumspection, and that the answer to proper application of the Act was to be discovered in the detail, so that no hard and fast rules could 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 unforseen contingencies.
5. Having observed that the potential for competing claims and other circumstances meant that there could be no inflexible rule that every spouse or widow was entitled as of right and to accommodation for life in every case, his Honour continued, in a passage which bears many analogies to the present case: Allowing fully for these considerations, I conclude nonetheless that the provision made by the testator was inadequate. The widow had, in a sense, burnt her bridges on the demand of the testator. Although her daughter was held not to have a separate claim under the Act she was clearly a responsibility of the widow as the testator well knew. The widow's earning capacity is small, the estate is comparatively large. Even if the relationship between the widow and the testator was brief, the commitment of the widow was not. Her expectations were, as promised, if not luxury, at least to handsome provision. The making of such provision would not deprive any with a greater need of their calls upon the estate for provision. In these circumstances, I have concluded, as the Master did, that the provision made was inappropriate as to the conditional right of residence in the testator's family home and inadequate as to the legacy and cash sums which the widow rejected.
6. Accordingly, the fundamental challenge on the jurisdictional ground was rejected. However, the appeal succeeded in overturning award of the family home absolutely, and substituted an enlarged legacy of $300,000, which was judged sufficient to enable the widow either to acquire an apartment on the Northern Beaches, or to return to the United States. It is important to observe that in that case, there were powerful competing moral obligations to the testator's children and grandchildren.
7. Turning to the present case, the relationship was not in relative terms a lengthy one, but it was continuing, and it had involved a significant change of position by the plaintiff, and significant reliance on the relationship. As was submitted for the plaintiff, were the rules of intestacy to apply, as a de facto spouse of more than two years, and in the absence of any children, she would have inherited the whole of the deceased's estate.
8. The testamentary intentions of the deceased, as expressed in the 2010 will, have limited significance because of the supervening change of circumstances, reinforced by the deceased's own statement to his solicitor of his intention to change his will. When the 2010 will was made, the deceased's sister Sarah was the obvious primary object of his testamentary bounty: he had no spouse and no children, and she was the closest person in the world to him at that time. But the developments of the next four years wrought a radical change to that. When he assumed the obligations of a marriage-like relationship - intended by him and relied upon by the plaintiff as permanent - the plaintiff became the closest person in the world to him, and would be regarded as the proper primary object of his testamentary obligations.
9. There is also no competing claim of relevance. Unlike in Golosky v Golosky, where there were strong competing claims which made it necessary to balance the provision for the widow with obligations to children and grandchildren, there is no such competition in this case, and there is therefore no need to compromise the provision to be made in favour of the plaintiff on that account.
10. In my view, the community would plainly view the plaintiff as the proper primary object of the deceased's testamentary bounty. A not insignificant portion of the community would take the view that she had a strong claim to practically the whole of his estate. At the very least, community standards are that there is no reason why she should have to suffer any reduction in her lifestyle on account of the premature death of her spouse. If the mutual intention of an enduring permanent relationship of mutual commitment, support and affection (in which the deceased would necessarily have made, given their respective financial positions, the dominant financial contribution to the acquisition of future accommodation and to the provision of financial support), was set to be asunder by his premature death, so as to deprive her of the benefits of the relationship upon which she had relied, then in the absence of any significant competing claim, the moral obligation of the deceased was at the very least to ensure that she was able to continue to enjoy the lifestyle to which she had been accustomed during the relationship.
11. The yardstick of that is accommodation in a home broadly equivalent to that in which they had cohabited, suited to accommodate the plaintiff and her dog and the deceased's dog, and allowing her the ability to change that accommodation if she pleases, together with a fund for contingencies and a sufficient income to cover her reasonable needs.
12. The extent of the deceased's obligation is reduced to some extent by the circumstance that Christina already has a fund of close to $500,000, but she only has a very modest earning capacity. The highest the evidence demonstrates is that she earned $35,000 in 2013, from a business she no longer owns and rents from a property she no longer owns.
13. I do not accept that, having entered into a covenant in restraint of trade, it can lightly be suggested that she should ignore it for the next two years. There is a possibility - I put it no higher - that she may get away with ignoring it, or that a court might decline to enforce it; but having undertaken for valuable consideration a solemn contractual obligation, the Court should not expect her to repudiate it. Insofar as it was suggested that she was free to re-establish business outside the area of the restraint, this tends to overlook that a 25 kilometre radius from Mascot extends in the east well out to sea, in the north to the upper North Shore, in the west well beyond Parramatta, and in the south beyond Sutherland. It might be suggested that she could set up business in Hornsby or Blacktown or Penrith or Campbelltown, but that is - given her residence and connections - not a reasonable proposition.
14. A reasonable yardstick for a proper provision for accommodation is a broadly equivalent home to the Double Bay home, unencumbered. The Double Bay home was sold for $2,110,000, although it appears that, to some extent, development potential might have contributed to that price. It was a small home of two bedrooms and one bathroom, with an open plan kitchen, dining and living area. The internal buildings were about 95 square metres, and had a deck, a patch of grass and a garage.
15. Both parties adduced extensive evidence of the cost of acquisition of comparable accommodation. The plaintiff's evidence included many three bedroom houses, albeit in somewhat less expensive locations than Double Bay. As it seems to me, three bedrooms involves a higher standard than that to which the plaintiff had become accustomed during the relationship with the deceased, and I have excluded them from my consideration. The plaintiff's evidence identified 13 two bedroom homes in Bondi, Waverley, Surry Hills, Alexandria and Mascot, ranging in price from $1.2 million to $1.6 million. The costs of acquisition, being stamp duty and legal costs of a property in that range, is in the order of $100,000.
16. The defendant's evidence, on the other hand, comprised apartments, many of them located in high density housing on arterial roads at elevated levels, hardly suitable for the accommodation of two canines. Moreover, the plaintiff has never lived in an apartment and does not want to live in an apartment. She did not do so with the defendant and in my view, her desire not to do so is a perfectly reasonable one in the circumstances. Her express wishes in that respect are entirely reasonable, and a wise and just testator in the position of the deceased would have enabled her to be able to fulfil those wishes. A couple of properties proposed by the defendants were not inappropriate, but they still involved apartment living and the associated burdens of living under the governance of a body corporate and not being the sole owner of property to which one resorts. The defendant's evidence also included a 2010 sale at $530,000, which I find of little use in ascertaining an applicable price range in 2016.
17. In my view, bearing in mind that all of this is only a guide to what is proper provision, it seems to me that proper provision for the plaintiff would be a legacy of $1.5 million. That will acquire her suitable accommodation, unencumbered. Her own resources provide a fund of $475,000 for contingencies and to generate income. Moreover, $1.5 million, as 60 per cent of the estate of $2.4 million, reflects appropriately the standing of the plaintiff as the proper primary object of the deceased's testamentary obligations.

Orders

1. The Court orders that: 1. By way of provision out of the estate of the deceased, the plaintiff receive a legacy of $1.5 million, such legacy not to bear interest if paid within 28 days but otherwise to bear interest at the rate prescribed under the Probate and Administration Act 1898, s 84A, for unpaid legacies from the date of this order to the extent it remains unpaid; and 2. The plaintiff's costs on the party/party basis until 30 October 2015, and thereafter on the indemnity basis, and the defendant's costs on the indemnity basis, be paid out of the estate.

Amendments 03 August 2016 - Para [46], line 2 - change "probability" to "possibility"; insert ";" after "enforce it" Para [46], line 6 - insert new para break before "A reasonable yardstick …" Renumbered Para [50], line 3 - change "appropriate" to "appropriately" 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: 15 February 2019