Close v Close

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

MONDAY, 30 JULY 2001 2015/00 - RHONDA LOUISE CLOSE v JEFFREY IAN CLOSE JUDGMENT 1 MASTER: The matter before me today is an application under s 7 of the Family Provision Act, 1982 ("the Act") brought by Rhonda Louise Close, a daughter of the deceased, the late Jean Close. The defendant in these proceedings is Jeffrey Ian Close, the brother of the plaintiff. Mr Close is the executor of his mother's estate. 2 The starting point of any application under the Act is a consideration of the testamentary intention of the deceased. It is trite to say that a court cannot interfere with the testamentary intention of a testator or testatrix, except in a limited number of circumstances. The Act allows a court to interfere with the intention in certain circumstances, however, such interference is constrained by the Act itself and by the authorities that have flowed from the cases that have been heard under this piece of legislation. 3 There are, in evidence before me, three wills made by the deceased. There is the will dated 21 April 1994, which was admitted to probate, and there are two earlier wills, one dated 8 December 1987 and one dated 15 April 1990. 4 The will that was admitted to probate makes provision for each of the three surviving children of the deceased. However, the will provides that the defendant is to receive the real estate together with furniture, fittings, fixtures, appliances and utensils therein. The residue of the deceased's estate is bequeathed equally to the three surviving children, that is, the defendant, the plaintiff and another sister. 5 The inventory of property shows that the estate has one major asset. The plaintiff, at one stage, thought that the property at Sans Souci was worth $600,000. For the purposes of probate the value was given at $525,000. It subsequently sold for less than that. Nevertheless, that was the most significant asset in the estate. 6 The balance of the estate consisted of moneys held in bank accounts, debenture stock and some shares. In total, those items came to an amount of just over $24,000. The Sans Souci property was sold and the proceeds of sale were $455,570.39. 7 At the time that the deceased made her will, it could be argued that she was not fully apprised of the financial circumstances and the full extent of the health problems of the plaintiff. The defendant, it would appear, had lived with his parents until they died. The deceased, no doubt, was well-informed of the defendant's position, both as to his finance and as to his health, and one can assume that she made the third and final will on that basis. 8 The earlier wills, as Mr Walsh, who appeared for the defendant, mentioned in his submissions, made very different provisions. The first will divided her estate equally amongst her four children. That was the will of 1987. Subsequently an older brother, Christopher, died. The deceased had a fresh will prepared, and, on 15 April 1990, that will was duly signed, but, once again, the intention of the will was the same as the earlier will, that is, that her estate was to be divided equally amongst her children, with a right of residence. 9 The Court, as I have already mentioned, will only interfere with a testator's or testatrix's intention where it can be seen that there ought to have been other provision made for a plaintiff, and that, therefore, the provision that was made, if any, was inadequate to meet the needs of the plaintiff as at the date of the hearing of the application. That, perhaps, is one anomaly in the legislation. The Court does not look at the position of the parties as at the date of the making of the will, or at the date of the death of the deceased, but at the date when the proceedings are heard. 10 Both the plaintiff and the defendant suffer from significant medical problems. The defendant, who is forty-six years of age, left school at the end of Year 10. He worked in various jobs until approximately 1996, mainly as a salesperson and mainly with either advertising agencies or newspapers. It was rare for him to hold down a job for more than a couple of years. According to his evidence, he lost many of the jobs simply because he was unable to cope. 11 The defendant appears to have had a stress-related problem or anxiety problem from early in his adult life. By the 1990's, he was also suffering from other ailments, both mental and physical. The deceased's health deteriorated in the mid to late 1990's. The defendant no longer worked after 1996, and, in fact, spent the last few years of his mother's life caring for her. 12 There is some evidence of the parties, which is inconsistent, as to the amount of assistance that the defendant rendered to his mother. However, on balance, I accept that the defendant was the primary carer of his mother and would normally look after her day to day needs. It would appear from his evidence, which is not really contested, that he and his mother had a very good relationship. His evidence is that, after the death of his father, he took over the role of his father. He took his mother to fetes and out for meals, watched her favourite television shows with her, and for all intents and purposes, they enjoyed a number of activities together. 13 Nevertheless, that does not take away, of course, from the quality of the relationship that the deceased may have had with her daughters. Their circumstances were very different to their brother's. 14 The defendant's health is clearly summarised in the report of Dr Foster dated 25 July 2001 (Exhibit 1). Without referring to vast extracts from that report, on pp 5-6, there is a diagnosis and an opinion of the present position of the defendant. It is the most recent report that is available in respect of the defendant. It is clear that the defendant does have significant problems. The problems referred to by the doctor are chronic panic disorder, secondary depression, acute psychotic episodes, schizotypal personality disorder, chronic muscular, skeletal and joint pain, as well as a number of other matters. 15 There is, annexed to one of the defendant's affidavits, a report from Dr Ian Portek. This report is dated 18 April 2000 so it is not as current as Dr Foster's report. Nevertheless, there are two matters that Dr Portek refers to which are of some significance in these proceedings. In the first paragraph, he refers to the stress that the defendant was at that time suffering as a result of the family disputing the deceased's will, and, in the last paragraph, he formed the view that the defendant was capable of gainful employment. That is somewhat different from the views of Dr Foster. However, Dr Foster's report is the more recent of the two reports. It must also be noted, however, that the two doctors specialise in different fields. 16 Each of the defendant's problems appear to be related to stress, anxiety and depression rather than any physical ailment that he may have. He is forty-six years of age and still has in front of him a working life of about fourteen years. However, he has not been employed since approximately 1996. His financial position is parlous. He appears to have no assets. He is living in rented accommodation and his income is a pension of about $223 per week but he has outgoings of $887 per week. 17 There is evidence which demonstrates that the defendant has had, in the past at least, great difficulty in managing his financial affairs. On his evidence today, it would appear that he still has those problems. It is clear to me that the defendant is living beyond his means. There is evidence of a motor vehicle which was purchased for $19,500 in May 2000 and then sold recently for $10,000. There is the defendant's evidence that there are times when he needs a motor vehicle; for example, to attend urgent dental appointments on the weekend or for the purpose of moving. 18 There is evidence from the defendant that he spent about $50,000 on the poker machines at the St George Leagues Club. There is also evidence from the defendant that he lent money to former landlords by the name of Green. How much he lent, he has no idea. There is also evidence from him that he gave them additional sums of money by way of gifts. Once again, there is nothing precise about the amount that was given, but probably in the vicinity of $6,000. 19 After the sale of the Sans Souci property, the defendant received a sum of just under $136,000. That was received on or about 1 May 2000. In a period of just over twelve months, not only has that money gone, but the cash assets of the deceased's estate, that is, the money in the bank, the shares and the bonds, have also gone. The defendant's evidence is that he now has, either in the bank or by way of bonds, about $7,500. 20 The plaintiff is fifty-eight years of age. She is divorced. She has two adult independent children. Her assets are valued, as at July 2001, at approximately $227,000, the most significant asset being the realty that she owns near Albion Park. She has outgoings of about $570 per week. However, because of a personal injuries judgment she is unable, at this stage, to get any sort of pension. Her evidence is that she is not entitled to any support or assistance from the Department of Social Security until January 2016. The only means of income she has, therefore, are the moneys that she currently has. 21 Her health position, like her brother, is not good. She was involved in a motor vehicle accident in 1992 in which she appears to have sustained significant injuries. She received a judgment in those proceedings of an amount just under a million dollars. She has also developed multiple sclerosis. As a result of the multiple sclerosis, she is unable to work. Multiple sclerosis can be a slowly debilitating disease which can result in permanent damage to the complete nervous system of the sufferer. Having developed multiple sclerosis, it is highly unlikely that she would ever be able to do any form of work again. She has a significant disability. 22 The plaintiff's relationship with her mother appears to be nothing out of the ordinary. It appears to have been a normal daughter/mother relationship. She saw her mother on a regular basis. Prior to the accident in 1992, she would go to her mother's place and, after the accident, her mother usually went to her place. Her evidence was that, after the accident, she never went to Sans Souci because of the injuries she had sustained. Nevertheless, they kept in touch by telephone and the mother used to write to her. 23 There is no great controversy about any of that evidence and it would appear to me that it was a normal relationship, bearing in mind the age of the deceased and the locations of the deceased and the plaintiff. There is nothing that could suggest that there was any disentitling conduct on the part of the plaintiff. 24 However, there are parts of the plaintiff's evidence which are very unsatisfactory. I have already mentioned that the plaintiff received a large sum of money by way of a personal injuries claim. Her evidence, in both affidavit form and in the witness box, is unsatisfactory. Mr Walsh, in his submissions, says that much of the money, after the various compulsory payments were taken out of the verdict, is not accounted for. 25 It seems to be agreed that the plaintiff received a sum of about $591,000. Her evidence is that she has spent approximately $113,000. It would appear that she also invested some of that money, an amount of $175,000, in an investment account. When the $113,000 is taken away from the $591,000, that leaves a net sum of about $478,000. 26 Her oral evidence is that, of the $175,000 that she had in the account as at July 2000, she now has approximately $2,000 remaining. In a space of twelve months, about $173,000 has passed through that account. She is able to account for some of that money and, in essence, about half of that money went on either a property settlement or adjustment in the Family Court proceedings and the associated legal costs with those proceedings. 27 The amount remaining was about $90,000. Her evidence is that her day to day living costs had by and large exhausted that money. That is inconsistent with the written evidence that she has relied on. I have already mentioned that her evidence is that she has outgoings of about $570 per week. Over a twelve month period, that amounts to outgoings of approximately $30,000. That is a far cry from $90,000. However, if what is meant by the plaintiff's evidence is that the $90,000 that has been expended covers her day to day living costs since 1998, when she received the damages claim, then the $90,000 is pretty much accounted for. 28 Nevertheless, that still leaves, by way of a shortfall and no explanation, an amount of about $300,000. Without any explanation, I can only assume that, at least, some of that money is still available to the plaintiff. In the absence of any evidence from the plaintiff as to the expenditure of that money, that is the position that I take. 29 The plaintiff's assets consist of about three and a half acres of land about seven kilometres out of Albion Park. When questioned about the standard and type of accommodation that she has, she responded that the home is a weatherboard home which is in need of repair. Whilst in the past she has felt secure on the property, she no longer feels that way and, no doubt, is experiencing some difficulty because of her multiple sclerosis. 30 There has been some indication that she would like to move to an area where there would be some support for her, either support from her aunties and sister or, I suppose, from the type of medical support that one suffering from multiple sclerosis is going to need, if she does not need it already. That, to me, seems to be a reasonable request of the plaintiff. Nevertheless, she does have an asset which she can sell, which will assist her in getting some other form of accommodation. 31 The difficulty is, however, that this estate, whilst it is not a small estate, is not a large estate either. There are two people who have needs to be provided for out of this estate. The total needs that they both have, however, cannot be met out of the estate, simply because of the size of the estate and the competing needs on the assets of the estate. 32 There is, of course, another set of proceedings which were to be heard with these proceedings. They have been settled. Those proceedings involve another sister. It has been agreed that the estate has approximately $329,000 in it. There are, of course, the legal costs to come out of these proceedings, as well as the other proceedings. The only evidence before me today in relation to legal costs are the costs incurred by the plaintiff. As I understand the figures, the costs incurred by her current solicitors and her former solicitors come to an amount of just over $18,500. On a party/party basis, I would assume that that figure would probably be about $15,000. 33 The defendant has dealt with the assets of the estate in a way which is contrary to the duties of an executor and trustee. His evidence is that the jewellery was valued. It appears he has received two valuations. Those valuations are significantly different. What remains of the jewellery has been placed in the care of one of his sisters; however, it is not the sister who is the plaintiff in these proceedings. His evidence is that, once these proceedings are over, it is his intention that the jewellery be shared between the siblings in accordance with the testamentary direction of their mother. 34 I do not find that there is any great difficulty in dealing with that aspect of the estate. At the end of the day, regardless of these proceedings, each sibling will receive from the estate, so far as the jewellery is concerned, the jewellery that formed part of the assets of the estate. 35 However, there must be criticism of the defendant in relation to the moneys that were held in the bank account and by way of shares and debenture stock. There is no satisfactory explanation given other than that the defendant has, in fact, spent these moneys. It would appear that the moneys have been spent to support himself since the death of his mother. That, however, does not excuse those actions. He is responsible for the performance of his duties as a trustee to ensure that the moneys are, in fact, paid out in accordance with the terms of the testatrix's wishes. He has not done that. He has taken it upon himself to use the moneys for his own benefit. 36 Mr Millar's written submissions concentrate on the plaintiff's lack of income. He has set out, in paragraph 3 of his written submissions, the amount that the plaintiff would need to give her funds which would provide for the current outgoings that she has. That sum, on the tables, discounted by 3 per cent, is an amount just under $349,000. That is a sum greater than the net sum that is remaining in the estate. 37 In my view, it would not be appropriate to make an order which would give all of the assets in the estate to the plaintiff. To do that would be to totally disregard the testatrix's testamentary intention. It would also be inappropriate because it would mean that I would also be disregarding the defendant's position. At the end of the day, he has established that he does have needs and he has very little in the way of assets. There are, of course, the other proceedings as well. 38 The matter that causes me most concern is the lack of evidence of the balance of the moneys, approximately $300,000, that the plaintiff received from her personal injuries claim. It would seem to me that, if most of that money is still available, she would require a fairly modest sum, by way of an adjustment, out of this estate. In determining what amount should be provided to her and in the absence of any evidence about the $300,000, the best I can do is make provision for her of an amount which will go some way to assisting her with her week to week living expenses and also take on board her desire to move to a town or to a suburb where she has some infrastructure, either by way of support from relatives or better medical support for her. 39 If that happens, subject to any mortgage that she may need to take out to cover the difference between what she gets for her property and what she requires to purchase a property, it seems that part of the expenses that she incurs on a weekly basis will probably fall by the wayside. Most, however, will probably still be relevant to whatever her needs are. It is difficult, for argument's sake, to see chemist, medical and optical outgoings reducing. They will, in fact, as time goes on, probably increase. There may not be the expenses so far as gardening is concerned and it may well be that, as time goes on, unfortunately the use of a motor vehicle is something that the plaintiff may no longer be able to manage. Of course, those costs may be substituted by the costs associated with taxis or hire cars. Nevertheless, it seems to me that there is probably room for some reduction in her outgoings, if she has some other form of accommodation. 40 As I have already mentioned, it appears that the net amount of this estate is about $329,000. There has been mention made of the way in which the defendant has spent money. It can be said that, in the past, he has shown all the hallmarks of a spendthrift. He has given money away, he has lent money without trying to recover it, he has gambled away a significant amount of the money, all at a time when he was not in employment. All at a time too, when he was suffering from depression, anxiety and other stress-related illnesses. Nevertheless, significant sums of money have been spent. 41 It is difficult to know what to do so far as the defendant is concerned. It is clear that he does have needs. It is clear that he needs a roof over his head. That will only ever be rented accommodation. Perhaps a wise son, on receiving $136,000, would have taken steps to invest that in some form of realty. That did not happen. Whether he does that in the future with any money he receives out of this estate is also open to speculation, but that is not an exercise that I can enter into in these proceedings. 42 It is clear from decisions such as Bondy v Vavros (Young J, 29 August 1988, unreported) and Howarth v Reed (Powell J, 15 April 1991, unreported) that the fact that a child may be regarded as a spendthrift is no reason for a court to disallow an adequate allowance to be made for that person. 43 If the person decides to spend the money in an ill-conceived manner, so be it. It is not a matter for the Court. Therefore, in doing a balancing exercise between these siblings, I must take into account the needs that the defendant does have. 44 It would seem to me that, looking at his weekly outgoings of $887 for a person in his position, notwithstanding the medical problems that he has, whilst he may think that is a necessary amount to expend, to me, that appears to be an unrealistic amount that he is expending on a weekly basis, as it is clear that, no matter what he receives, he is not going to be able to maintain that level of expenditure. In oral evidence, he admitted that there are some areas where he is going to need to cut back. 45 The most significant expenditure he has, of course, is his accommodation. He is a single man who lives by himself and, in fact, his evidence is that he does not think anybody would be able to live with him and he would not like to live with anybody anyway. The renting of a house in his circumstances, seems to me to be unrealistic. It seems to me that there must be an immediate saving by looking at more realistic accommodation. 46 In my view, additional provision ought to be made for the plaintiff out of the estate of the deceased. In making an order in her favour, I also take into account that, out of the $24,000 that formed part of the residue of the estate, she should have received $8,000. In my view, an appropriate amount that should be paid to the plaintiff is the sum of $138,000. 47 I, therefore, order that the plaintiff, in addition to the provision made for her in the will of the late Jean Close, be paid an additional lump sum of $138,000. That sum incorporates any residual amount that she is entitled to, but does not, of course, incorporate the jewellery that she is entitled to. 48 So far as the costs are concerned, the estate is to pay her costs on the party/party basis. The defendant's costs should also be paid on the party/party basis out of the estate.

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