4084 of 2007 SONDRA LOUISE CLIFFORD -v- PETER MAYR and ANOR
JUDGMENT
1 HIS HONOUR: These are proceedings under the Family Provision Act 1982.
2 By summons filed on 17 August 2007 Sondra Louise Clifford claims an order for provision for her maintenance, education and advancement in life out of the estate and or notional estate of the late Helmut Mayr (to whom I shall refer as "the Deceased").
3 The Deceased died on 11 December 2006, aged 46 years. He left a will dated 8 December 2006, probate whereof was on 5 July 2007 granted to Peter Mayr and Joseph Donnelly, the executors named in such will (who are the Defendants to the present proceedings).
4 The First Defendant is the only brother of the Deceased, and the Second Defendant is the de facto partner of the mother of the Deceased and the First Defendant. The Deceased and the First Defendant had no other siblings.
5 The Plaintiff, who was the de facto partner of the Deceased at the time of his death, had been living as such with the Deceased from November 1999 (although they separated for a period of one year, from July 2001 to July 2002, during which period the Plaintiff resided with her sister).
6 There were born to the Plaintiff and the Deceased three children, being Lachlan MacKenzie Clifford (born August 2000), who is presently aged 8; Noah Marshall Clifford (born October 2002), who is presently aged 6; and Georgia Rose Clifford (born November 2004), who is presently aged 4.
7 By his will the Deceased gave the house property at 2 Pinaroo Place, Lane Cove ("the Pinaroo Place property") to his three children in equal shares as tenants in common upon the youngest of them attaining the age of 21 years. The Deceased gave the rest and residue of his estate to the Plaintiff.
8 The will contained a power of advancement in respect to the benefits given to the infant beneficiaries.
9 The assets of the Deceased at the time of his death included three pieces of real estate, being (a) the Pinaroo Place property, to which a value of $900,000 is presently ascribed, and which is subject to a mortgage presently in an amount of about $18,000; (b) a home unit situate at and known as 1 /34 Centennial Avenue, Lane Cove (which was sold by the Defendants in 2008 for $330,000, the net proceeds of sale, in an amount of about $318,000, being presently held by the Defendants as an asset in the estate); and (c) a residential property at 27 Rawson Street, Lidcombe, which was sold by the Defendants in October 2007, for $420,000 (and after the allocation of the proceeds of sale of that property, which was fully mortgaged, about $30,000 was owed to the mortgagee; that shortfall has been paid personally by the Defendants).
10 The estate also included a death benefit arising from a superannuation policy in an amount of $64,763. That amount has been paid to the Plaintiff, as the Deceased's surviving spouse. (It is somewhat unclear whether that amount, strictly, constituted an asset in the estate, or whether it was paid directly to the Plaintiff without becoming such an asset. However, whichever be the case, the Plaintiff has received the benefit of the payment of that amount in consequence of the death of the Deceased.) In addition, the Deceased held 5000 shares in Telstra (which have a present value of about $22,800), and an amount in a bank account, which includes the proceeds of sale of other shares, in an amount of $6,700.
11 According to the Defendants, the assets of the estate presently consist of:
Pinaroo Place property $900,000
(subject to a mortgage of $18,000)
Proceeds of sale of Centennial Avenue property $318,155
Westpac estate account $10,000
Telstra shares $22,800
Total $350,955
12 In addition, the estate has received a Land Tax refund of about $3,000 (which amount includes $1,550 paid by the Plaintiff, the balance of $1,465 having been paid from the Deceased's bank account). Further, the Centennial Avenue property had been tenanted from the death of the Deceased until June 2008, shortly before it was sold. In that period it generated a gross rental income of a little under $20,000. It is somewhat unclear whether that rental income and that part of the Land Tax refund paid from the Deceased's bank account have been included in the foregoing list of assets of the estate.
13 Further, the Lidcombe property was also generating rental income until it was sold. I assume, however, that that rental income was appropriated towards the mortgage debt on that property.
14 The Deceased also at the time of his death was the sole shareholder of Mayr & Company Pty Limited, which was the trustee of a family trust set up by the Deceased in, according to the Plaintiff, January 2006. The beneficiaries under that trust were the Deceased, the Plaintiff and each of their three children.
15 The Deceased at the time of his death possessed two motor vehicles. Apparently, those two motor vehicles were held by him in the name of the foregoing company. One of those motor vehicles, a Peugeot, which was held under a leasing arrangement, has been disposed of, the outstanding lease amount having been paid. That vehicle was sold in March 2007 by the Plaintiff for $12,000. The amount outstanding on the leasing debt was $6,500. The balance of $5,500 was, according to the Plaintiff, retained by the company.
16 The other motor vehicle, a Volvo, has been retained by the Plaintiff. According to the Plaintiff, she paid $13,500 to the company for that vehicle. However, it would appear from the Plaintiff's oral evidence that she did not, in fact, pay any actual cash for that motor vehicle, the price of which was offset against a wage of $14,000 which the Plaintiff regarded herself as being owed by the company. The result, as I understand it, is that, although no payment was actually made by the Plaintiff to the company, she is now the legal owner of the Volvo motor vehicle, to which a value of $13,500 has been attributed. That Volvo is used by the Plaintiff as the family vehicle for herself and the three children.
17 The executors' administration expenses are expected to total $96,557 and the commission which they propose to claim will total $17,500. In addition, the First Defendant, Peter Mayr, proposes to claim interest on the amount of $25,000 of his own funds which he has advanced towards the administration of the estate (and, presumably, towards meeting the shortfall on the mortgage over the Lidcombe property). The amount of that interest being claimed by the First Defendant will be at least $1,500. The Second Defendant, Joseph Donnelly, has advanced about $71,000 towards those costs and expenses. However, it would appear that he does not propose to claim interest on that amount.
18 In calculating the value of the estate available for distribution the costs of the present proceedings must be taken into consideration, since the Plaintiff, if successful in her claim, will be entitled to an order that her costs be paid out of the estate, whilst the Defendants, irrespective of the outcome of the proceedings, will be entitled to an order that their costs be paid out of the estate.
19 It has been estimated on behalf of the Plaintiff that her costs will total $64,482 (of which amount the Plaintiff has already paid $28,182). It has been estimated on behalf of the Defendants that their costs of the present proceedings will total about $40,000. Each of those estimations was grounded upon the assumption that the hearing would occupy two days.
20 That is, it has been estimated on behalf of the Plaintiff and of the Defendants that the total costs of the proceedings for a two day hearing would be in excess of $104,000. In this regard, it should be observed, first, that the hearing occupied only one day, and not two days, and that, in consequence, the costs will be less than the foregoing estimations. Further, that, even if the hearing had occupied two days, I consider costs totalling in excess of $104,000, for a case which is in no way exceptional or out of the ordinary, to be excessive.
21 I note that the Defendants in the course of the hearing submitted that the estimation of the Plaintiff's costs totalling in excess of $64,000 for a two day hearing was excessive, and submitted that the Plaintiff's costs should ultimately be the subject of assessment.
22 Upon the foregoing calculations, however, it was estimated on behalf of the Defendants that the value of the estate available for distribution was about $211,400. Since, as I have already observed, the hearing occupied only one day, and not two days, in consequence the value of the distributable estate will, in any event, be somewhat greater. Further, that estimation does not appear to take into account the rental income derived from the Lane Cove home unit. Neither does it appear to take into account the value of the Volvo motor vehicle ($13,500), or the superannuation payment of almost $65,000 which the Plaintiff has already received.
23 The Plaintiff is presently aged 37 years. She has tertiary qualifications from the University of Queensland, and is a certified practising accountant. In that profession, in which she has been practising for the past ten years, she currently works part time. At the hearing she estimated that her income from her accountancy work for the current financial year would be $55,000 (gross) and that her total annual income for the year would be $72,500.
24 The Plaintiff gave evidence of her expenditure and outgoings in respect to herself and her three children, in a total annual amount of almost $104,000.
25 Apart from the Volvo motor vehicle, the Plaintiff's assets consist of an account with ING, having a credit balance of $45,000, and another account with ING (which the Plaintiff maintains to provide for her income tax), currently having a credit balance of $38,000. The Plaintiff has a superannuation entitlement of $30,000. She owns jewellery, to which she ascribes an estimated value of $30,000. (Some of that jewellery was purchased by the Plaintiff with the benefit of a borrowing of $10,000 from her parents in 2006, with the intention that she should be able to pass that jewellery on to her daughter Georgia. The arrangement between the Plaintiff and her parents was that she should repay that loan when she is enabled to do so.) The Plaintiff also maintains a bank account in her own name, but which she holds as trustee for her three infant children, which currently has a credit balance of $98,000. In addition, the Plaintiff maintains a current account with the St George Bank, which presently has a credit balance of $800. The Plaintiff's debts total $25,000 (representing credit card ($4000), balance of debt to parents ($6500), taxation liability for 2007 - 2008 ($14,500)).
26 The Plaintiff has resided in the Pinaroo Place property since it was purchased by the Deceased in 2004. Of the purchase price of $835,000 an amount of $500,000 was provided by loan secured by mortgage, and the balance of $335,000 was provided by the Deceased himself from his own funds. That property was the family home of the Plaintiff, the Deceased and their three infant children. The Plaintiff and the three children continue to reside in that house property. The Plaintiff did not make any monetary contribution towards the purchase price of that property.
27 During his lifetime the Deceased (who was a qualified chartered accountant, but whose occupation was described by the Plaintiff as being that of a "day trader") paid all the outgoings on the house property and paid for all the significant items of household and family expenditure. Those payments included the mortgage payments, electricity, telephone, gas, insurance, groceries, clothing for the Deceased himself and most of the clothing for the children, expenses for weekend outings for the family. The Plaintiff paid for the children's extracurricular activities, for her own clothes and for Christmas and birthday presents for the children, and for their friends and family members, as well as trips to Brisbane to visit the Plaintiff's family. In addition, the Plaintiff in December 2005 made a one off payment of $30,000 in reduction of the outstanding mortgage debt on the Pinaroo Place property.
28 The Plaintiff in mid-2002, during the period while she and the Deceased were living separately, purchased an investment property in Brisbane for $200,000. That purchase was funded by a mortgage loan of $180,000, the balance being provided by the Plaintiff from her own savings. The rental income generated by that property was not sufficient to meet the entirety of the mortgage payments, and the Plaintiff from her own funds met that shortfall. The Plaintiff said that when the Deceased fell ill the ownership of that property became a burden to her and she decided to sell it. That would probably put the date of sale in 2006. The Plaintiff did not provide precise details of the sale price. However, in her affidavit of 18 September 2007, she that her then savings of $160,000 represented the balance of the net proceeds of sale of that property.
29 Lachlan attends Mowbray Public School, where he was to commence Year 3 in 2009. Noah also attends Mowbray Public School, and will presumably commence in Year 1 in 2009. Georgia attends Birahlee Preschool for two days a week, and will be commencing formal education in 2010. The Plaintiff avails herself of the services of a babysitter to look after the children on the days and at the times when she is working.
30 According to the Plaintiff, although each of the children enjoys good physical health, Lachlan, the eldest child, found it difficult to cope with the death of his father. For a period after his father died, Lachlan was receiving treatment from a psychiatrist.
31 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.
32 I have had the benefit of receiving a written outline of submissions and a chronology from Counsel for the respective parties, those documents will be retained in the Court file.
33 The Plaintiff, as the de facto partner of the Deceased at the time of his death, 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 she has the standing to bring the present proceedings. The only other eligible persons in relation to the Deceased are the three infant children of the Plaintiff and the Deceased, each of whom is an eligible person within paragraph (b) of the foregoing definition.
34 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 her proper maintenance.