Dark v Dark

Supreme Court of NSW|2016-08-18|Before: White J

Solicitors: Johnsons Solicitors (Plaintiff) Alliance Compensation Lawyers (Defendant) File Number(s): 2015/251173

Judgment

HIS HONOUR: This is an application for an order for provision out of the estate of the late Jarrod James Dark who died on 1 September 2014 aged 45.
The plaintiff is his widow.
The plaintiff and the deceased cohabited from 2000. They were in a de facto relationship from at least 2003 until they married in October 2008. They separated in October 2012 but were not divorced.
There were two children of the relationship, Brianna born in September 2003 and Tye born in May 2009.
Both parties to the marriage had had a child from a previous relationship. The plaintiff has a daughter Cheltsea, born in September 1995, and the deceased had a son Hayden, also born in September 1995.
After separation the plaintiff had a further child, Eva, who was born in September 2014.
The plaintiff is aged 38. She works for the Army. She currently lives in subsidised rental housing in Wattle Grove near Holsworthy with her three youngest children and, from time to time, also with Cheltsea.
She is not supported by Eva's father, save that he pays half of Eva's child care expenses. The plaintiff has minimal assets.

Plaintiff's financial position

Before dealing with the application for approval of the release in Clause 8 of the financial agreement and the plaintiff's claim for provision, it is necessary to say something more about the plaintiff's financial circumstances. As I have said, the plaintiff has minimal assets. She owns a car which is the subject of a car loan. She estimates that she owes approximately $30,000 for the loan for her car in respect of which she makes monthly payments of $517.88. She has approximately $6,000 in a savings account and superannuation of approximately $150,000. She is 38 years of age. She is employed and does not have access to that superannuation.
The plaintiff has a gross monthly income of $6,882. She is paid fortnightly. The Army deducts tax, superannuation and also rent and water expenses in respect of her subsidised accommodation. These deductions total $3,066.53 per month leaving approximately $3,815 per month for other expenses.
The plaintiff lists her estimated regular monthly expenses as follows:

DEDUCTIONS ELECTRICITY $240.00 GAS $100.00 CAR REPAYMENT $517.88 CAR SERVICE $120.00 FUEL $240.00 PHONE $80.00 KID'S [sic] HAIR $20.00 INSURANCE $70.00 FOOD $800.00 CLOTHING $170.00 ENTERTAINMENT $80.00 CHILDCARE (EVA) $500.00 PETS $600.00 TENNIS (TYE) $40.00 SINGING (BRIANNA) $55.00 SCHOLORSHIP [sic] BRIANNA $101.00 DRAMA (BRIANNA) $220.00 TUDOR [sic] (BRIANNA) $80.00 CHILDREN'S SAVINGS CONTRIBUTIONS $100.00 SWIMMING LESSONS FOR TYE AND EVA $240.00

These total $4,373.88, a shortfall of about $560.
The plaintiff also has irregular expenses. She lists these as holidays and Christmas presents for the children of $5,000 per year; school fees, uniforms and expenses of $2,000 per year and car registration and insurance of $1,700 per year. There are other irregular expenses, for example, the purchase of new tyres for her car which recently cost her $670.
She deposes, and I accept, that she borrows moneys from her mother to make ends meet. Last year she borrowed $8,000. In July 2016 she received a lump sum of $14,000 as a family assistance payment from Centrelink. She used $8,000 of that money to repay her mother. The remaining $6,000 represents the moneys in her savings account.
The plaintiff did not receive any superannuation benefit or life insurance from her husband's death. However, each of Tye and Brianna receive a lump sum payment of approximately $22,000. Each is in receipt of a fortnightly after tax pension payment from the deceased's military superannuation of $240.36. This totals approximately $6,240 per annum.
The moneys are paid directly into the children's bank accounts. These are not accounts in the plaintiff's name where the money is held on trust for the children. They are the children's own accounts.
The plaintiff says that her children will continue to receive these fortnightly pension payments until they turn 16.
The defendant submits that the plaintiff can use these moneys for those children's expenses. The plaintiff has access to the accounts. She deposes that whilst she has access to the accounts, she only uses that access to monitor the accounts and to make sure that they are growing and that her children are accruing savings for their future.
The defendant says that the plaintiff could use the moneys for Brianna and Tye's benefit, thus saving her costs that she lists in her schedules of expenses of about $616 per month. There would also be no need, the defendant says, for her to make her regular contribution of $10 per week that she has been accustomed to make for savings of each of her children.
This submission raised an interesting question as to the plaintiff's entitlement to have recourse to her children's property in order to meet expenses that were incurred for the children's maintenance and education. Counsel was not able to refer me to any statutory provision or authority regarding a parent's power to use a child's property for their benefit when the parent has custody and guardianship of the child. Nor have I been able to find any clear authority or statement of principle on this question.
Section 61B of the Family Law Act defines "parental responsibility" in relation to a child as meaning all the duties, powers, responsibilities and authority which, by law, parents have in relation to children. This section deliberately makes no reference to parental rights (see Re B and B: Family Law Reform Act 1995 (1997) 21 Fam LR 676 at [9.24]-[9.26]). In that case the Full Court of the Family Court said that the section relies on the common law and relevant statutes to give it content. I was not referred to any relevant statute and I am not aware of one relevant to the present issue.
Prior to 1995, s 63E of the Family Law Act provided in substance that a guardian of a child under that Act had responsibility for the child's long-term welfare and had, in relation to the child, all powers, rights and duties that, apart from the Act, were vested by law or custom in the guardian of a child, subject to presently irrelevant exceptions. This section also did not identify what rights a parent as guardian, either by nature or nurture, would have in respect of a child's assets. In any event, it has been repealed and s 63B of the Family Law Act throws no light on the present question.
The position at common law was described by one text writer (Cretney, Principles of Family Law, 3rd ed (1979) at p 434) as confused and uncertain, without any elaboration or other assistance.
Describing the position in the 19th century, Blackstone's Commentaries, 17th ed (1830) said at p 452: "A father has no other power over his son's estate, than as his trustee or guardian; for though he may receive the profits during the child's minority, yet he must account for them when he comes of age."
Blackstone also said: "The power and reciprocal duty of a guardian and ward are the same, pro tempore, as that of a father and child." (Page 462)
However, Macpherson's Law Relating to Infants (1842) says (at pp 60 and 61): "Parents have an undoubted control over all their children, by virtue of their guardianship for cause of nurture. Where there is no other guardian, whether the infant has land by descent or otherwise, or has other property, or has no property at all, the father, or if he be dead, the mother, … is guardian for nurture of every son or daughter", but that: "This species of guardianship extends only to the government of the person", (at p 60) and that: "In all dealings with the infant's property, the guardian for nurture is very much on the same footing as a stranger."
In M'Creight v M'Creight (1849) 13 I Eq R 314, the Lord Chancellor said (at 324-325): "The father is merely guardian of the person and guardian by nature, but in neither capacity has he any power over the property of the infant."
Thus, Simpson on the Law of Infants, 4th ed (1926) says (at 129) that a father cannot give a good discharge to an executor if a legacy is given to the infant. That is to say, the executor cannot discharge himself by paying it to the father as guardian.
In the third edition of Cretney's Principles of Family Law, that is, an edition that predated the Children Act 1989 (UK), the author said (at 434) that although the law on the subject is confused and uncertain, a parent as the child's natural guardian "presumably" has the same right as a guardian. But that is contrary to the view of Macpherson at least, and the decision in M'Creight v M'Creight.
The best commentary I have found on the subject is Working Paper number 91 of the UK Law Commission on Family Law, Review of Child Law: Guardianship, published in 1985 by the Law Commission, then under the chairmanship of Ralph Gibson J. The position at common law as it appears from that report appears to be that although a guardian of a child's estate appointed pursuant to an instrument, such as a testamentary guardian appointed by will or by order of the court, has control of the child's property that can be applied for the child's benefit, the guardianship of a parent by nature (a status applicable only to a father in the 19th century), or by nurture, has rights only in relation to the person of the child and not in relation to the child's property. That is to say, at common law the parental right was not co-extensive with the power of a testamentary guardian or a guardian appointed by the court to the child's estate. The Law Commission said (at para 2.23) that guardianship of the child's estate is akin to trusteeship, with the important difference that the child's property is not vested in the guardian and that: "A guardian of the estate has, subject to the rights and powers of statutory owners, personal representatives and trustees for sale, the right to recover rents and profits from the minor's land and to manage his personal estate for the duration of their guardianship, ie he can control the income due to the infant and any of the personal profit to which the infant is legally as well as beneficially entitled", and "must account to the minor for the profits and income of the estate received by [the guardian]".
The Law Commission observed (at [2.26]) that it is not possible to say that the powers and responsibilities of guardians are the same as those of parents, and that in some cases a parent may be said to have powers and responsibilities not possessed by a guardian, but to some extent a guardian may be said to have powers not possessed by a parent.
The Law Commission said (at [2.32]): "The case in which a guardian, but not a parent, may have power is in relation to the administration of the child's property. It is generally assumed that a parent has certain powers of administration over any property his child may have. The law on this subject is, however, particularly confused and uncertain...the equal rights and authority of parents in relation to their children derived from those which the father of the child originally had to the exclusion of the mother. This predominant position of the father stems from his natural guardianship of his child. A guardian by nature or for nurture, however, had rights only in relation to the person of the child."
After referring to the feudal forms of guardianship in relation to land, the Law Commission added that: "Whether or not the father had any other powers and duties over the property of his child is uncertain. There is, however, authority to suggest that he did not [referring to M'Creight v M'Creight], including the fact that the court has in the past appointed the father to be guardian of the estate."
But the Law Commission added that it may be that the father's powers of control over the child's person would include the power to direct the child in the management of property in the child's possession.
In the United Kingdom the position is clarified by the Children Act 1989. Section 3 of that Act provided a definition of "parental responsibility" as meaning all the rights, duties, powers, responsibilities and authorities which by law a parent of a child has in relation to the child and his property and as also including the rights, powers and duties which a guardian of the child's estate would have had in relation to the child and his property at the commencement of s 5 of that Act. There is no equivalent provision in this State.
The older law in relation to guardianship, insofar as it related to the primacy of the father's right of guardianship, expounded in Re Agar-Ellis (1883) 24 Ch D 317, is now obsolete (Hewer v Bryant [1970] 1 QB 357; and Gillick v West Norfolk & Wisbech Area Health Authority [1986] AC 112 at 186 to 187).
But the present issue was not considered in those cases. It may be that the common law would now consider that it is a correlative of a parent's duty to maintain, protect and educate the child of which a parent has custody and guardianship, that the parent should be able to have recourse to the child's property for use for the child's benefit in furtherance of the parental duty. This would be consistent with the view of Lord Scarman in Gillick (at 183-184) that parental rights relate to both the person and the property of the child and are correlative with the parent's duty. However, that was not always the case in respect of a child's estate. The position is unclear.
However, one undoubted parental right is the right to approach the court for the exercise of the Crown's parens patriae jurisdiction, and that jurisdiction can extend beyond the parent's own right (Secretary, Department of Health and Community Services v JWB and SMB (Marion's case) (1992) 175 CLR 218).
Moreover, s 50 of the Minors (Property and Contracts) Act 1970 (NSW) provides that where a minor is beneficially entitled at law or in equity to property, the Supreme Court may, on such terms as it thinks fit, make orders authorising a person, either generally or in any particular instance, to make any disposition of the property or to receive the income of the property where, amongst other things, it appears that the order is for the benefit of the minor.
There is no reason to doubt that, if sought, the plaintiff would obtain approval to the use of at least the pension moneys paid to Brianna and Tye to assist with the payment of expenses that are incurred for their benefit. The purpose of the pension payments being made until the children turn 16 must be to provide assistance for their upbringing. In my view, either on application under s 50 of the Minors (Property and Contracts) Act, or in the parens patriae jurisdiction, approval would almost certainly be given for the use of the children's funds, provided the Court were satisfied that each child's money would be applied for his and her benefit.
Accordingly, some of the expenses listed by the plaintiff set out above could be met from the moneys paid to Brianna and Tye, thus reducing, and potentially eliminating, the shortfall between the plaintiff's income and expenditure.
Section 95 of the Succession Act relevantly provides: "95 Release of rights under Chapter (cf FPA 31 (1)-(6)) (1) A release by a person of the person's rights to apply for a family provision order has effect only if it has been approved by the Court and to the extent that the approval has not been revoked by the Court. (2) Proceedings for the approval by the Court of a release of a person's rights to apply for a family provision order may be commenced before or after the date of the death of the person whose estate may be the subject of the order. … (4) In determining an application for approval of a release, the Court is to take into account all the circumstances of the case, including whether: (a) it is or was, at the time any agreement to make the release was made, to the advantage, financially or otherwise, of the releasing party to make the release, and (b) it is or was, at that time, prudent for the releasing party to make the release, and (c) the provisions of any agreement to make the release are or were, at that time, fair and reasonable, and (d) the releasing party has taken independent advice in relation to the release and, if so, has given due consideration to that advice. (5) In this section: 'release of rights to apply for a family provision order' means a release of such rights, if any, as a person has to apply for a family provision order, and includes a reference to: (a) an instrument executed by the person that would be effective as a release of those rights if approved by the Court under this section, and (b) an agreement to execute such an instrument."

Application for approval of release

I turn then to the defendant's application for approval of the release in cl 8. Clause 8 of the financial agreement provides: "8. Claims for provision out of the estate of a deceased party This clause is severable from the rest of this agreement: (a) Subject to the approval of the Supreme Court of New South Wales pursuant to the legislation relating to the release of rights to apply for a provision order, the husband and the wife each releases his or her rights to make an application in relation to the estate of the other pursuant to such legislation; (b) The husband and the wife each gives that release in consideration of the other terms of this agreement; (c) The husband and the wife acknowledge that it is to his and her advantage in the light of the terms of this agreement to grant the release; (d) The husband and the wife acknowledge the terms of this agreement and that they have taken into account the position of the other in the event of the death of the other; (e) The husband and the wife accept that for the purposes of the Act the provisions of this agreement including this release are fair and reasonable; (f) At any time after the execution of this agreement the husband or the wife or their legal representative may request the other party or their legal representative to join in an application to the Supreme Court, at the cost of the one requesting, for the approval of this agreement to relinquish all claims under the Act. If such a request is made, the other covenants to comply with such request and to do all things reasonably necessary to obtain the approval."
Other parts of the financial agreement are also relevant. They are relevant in assessing the extent to which cl 8 is advantageous to the plaintiff. They are also relevant having regard to a submission made for the defendant that even if the release in cl 8 is not approved, the Court should separate the deceased's estate into two categories in determining what provision should be made: one being the property that the parties agreed would be the deceased's separate property - and this, so it was said, would include the property he later acquired from his mother - and the other category would be the property acquired by him during cohabitation with the plaintiff, that is, not separate property under the agreement, against which a claim could be made.
The agreement provided in recitals F, I, J, K and L as follows: "F. The marriage has broken down irretrievably. The parties have been living separated and apart since 26 October 2012. … I. There is also an adopted child, Hayden Burgess (DOB: July 2008) currently residing with Joeanne. Both Brianna and Tye will also reside with Joeanne. J. In order to arrange their property affairs the parties have agreed to enter into this agreement under the provisions of section 90C of the Family Law Act 1975 to deal with the division of their separate property in the event of the breakdown of their relationship. K. This agreement is intended to deal with the separate property of the parties in the event of the breakdown of their marriage without resort to litigation. L. The parties intend the terms of this agreement to be given effect by any court having jurisdiction to determine financial matters (property) in issue between Jarrod James Dark and Joeanne-Marie Dark pursuant to the Family Law Act 1975."
Recital I was wrong. The parties did not have an adopted child.
Clause 2 of the agreement provided that the separate property of the deceased was set out in annexure A and the parties had agreed on the values attributed to his separate property. Clause 2 provided that the separate property of the plaintiff was set out in annexure B and the parties had agreed to the values attributed to her separate property. Clause 2(c) provided: "(c) 'Separate property' is defined as and property which is: (i) Property set out in annexure A and B of this agreement; (ii) Acquired before co-habitation or after separation; (iii) Acquired by gift or inheritance from a third party to one but not both of the parties; (iv) Acquired in exchange for any separate property or an increase in the value of any separate property; (v) Any damages payments or potential damages payments; (vi) All income and other gains derived from separate property for whatsoever reason; and (vii) The increase in value of all separate property for whatsoever reason."
Clause 4 provided: "Separation Separation is taken to have occurred when the parties have been living separately for no less than 3 months and one party notifies the other in writing that they intend to end the marriage. The parties will not be taken to have separated if they have been living separately solely due to holidays, illness or business."
Clause 5(a), (b) and (c) and cl 6 provided: "5. Division of property in the event of breakdown of the marriage (a) It is agreed by the parties that in the event of the breakdown of the marriage evidenced by separation as set out in paragraph 4 above, each party will remain individually entitled to their separate property. (b) In relation to any property which is not separate property, the parties agree that this property will be divided by agreement and if no agreement can be reached, by the court in accordance with the Family Law Act 1975 or such other applicable legislation at the time the application is made to the court. (c) The parties agree that in the event either of them makes an application to the court for property division pursuant to the Family Law Act 1975, they will not ask the court to take into consideration their separate property pursuant to sections 79 and 75(2) of the Act. 6. Independent legal advice That the parties each state and warrant to the other party that as recorded in this agreement and as certified in an annexure to this agreement that before this agreement was signed by him or her, he or she was provided with independent legal advice from a legal practitioner on the following matters: (a) The effect of the agreement on the rights of that party; and (b) The advantages and disadvantages, at the time that the advice was provided, to the party of making the agreement."
Annexure A listed the separate property of the deceased. It identified as an asset of his only his MSBS superannuation, with an estimated value of $25,000. It listed as the plaintiff's separate property her MSBS superannuation, two cars, a motorbike and furniture and household contents, these having what was said to be an agreed value of $57,000; and it listed as a liability of the plaintiff her car loan then, with a debt of $34,000.
The agreement included a statement signed by Dr Rashed, given under s 90C of the Family Law Act, that stated as follows: "1. This statement is an annexure to the section 90C binding financial agreement entered into between Jarrod James Dark and Joeanne-Marie Dark. 2. I provided my client with independent legal advice prior to entering into this agreement as to the following matters: (a) The effect of this agreement on the rights of the parties; and (b) The advantages and disadvantages, at the time that the advice was provided, to my client of making this agreement."
Under s 90C of the Family Law Act, a financial agreement can include not only matters dealing with how the property or financial resources of the parties are to be dealt with in the event of a breakdown of the marriage and matters of maintenance and ancillary or incidental matters, but also "other matters" (s 90C(3)(b)). Section 90H provides: "90H Effect of death of party to financial agreement A financial agreement that is binding on the parties to the agreement continues to operate despite the death of a party to the agreement and operates in favour of, and is binding on, the legal personal representative of that party."
In this case, no issue arises concerning the interrelationship of s 90H of the Family Law Act and s 95 of the Succession Act because cl 8 in its own terms is only operative if approval is given by this Court to the release of rights to apply for a family provision order under s 95 of the Succession Act. Hence, no question of possible inconsistency between the provisions arises.
Section 95(4) requires the Court to consider all the circumstances of the case. Hence, the inquiry is not limited to the circumstances as they existed when the financial agreement was signed (Neil v Jacovou [2011] NSWSC 87; Russell v Quinton [2000] NSWSC 322; and Mulcahy v Weldon [2001] NSWSC 474).
The defendant submitted that when the agreement was entered into, it was to the plaintiff's advantage for her to make the release, that it was prudent for her to do so, that the provisions of the agreement were fair and reasonable, that the plaintiff took independent advice and that she gave due consideration to it. I do not agree with any of these propositions.
Mr Lo Schiavo, for the defendant, submitted that the arrangement was advantageous to the plaintiff as she retained the majority of the parties' assets. That submission addressed the reasonableness of the agreement under s 90C with respect to the division of property consequent upon the breakdown of the marriage and what property could or could not be the subject of an order for the division of property under the Family Law Act.
Contrary to the plaintiff's understanding, and it appears also contrary to the deceased's understanding, the omission of the deceased's assets from annexure A to the agreement meant that (assuming the agreement to be binding) such of his property as he had acquired during cohabitation and before separation (as defined) could be the subject of division under a court order in family law proceedings. Hence the omission of a statement of particular assets in annexure A to the agreement was potentially to the plaintiff's advantage. That advantage might have been more apparent than real as the deceased had taken steps to have assets transferred to others and for registration papers to be changed.
It does not follow that the release of rights to seek family provision orders was to the plaintiff's advantage. The deceased had more assets than the plaintiff, even if all of the $129,000 withdrawn from his mother's account had somehow been dissipated rather than hidden. I think he also had a shorter life expectancy than the plaintiff. At the time of the agreement he was retired and on a pension due to injuries and was unable to stop using drugs. It was not advantageous to the plaintiff to give up any claim on the deceased's estate even at the time the agreement was entered into. Nor was the release prudent. Mr Lo Schiavo argued that the release was prudent because the plaintiff had already commenced her relationship with Jason Myers. That does not follow. In my view her relationship with Jason Myers is irrelevant to the present issue. It is irrelevant whether, as the defendant contended and sought to demonstrate, the plaintiff was pregnant with Jason Myers' child at the time of the agreement. The fact that at the time of the agreement the plaintiff might already have a future dependent child to care for would not make the release of her right to seek a family provision order less unwise. If anything it would suggest that the release was neither prudent nor advantageous.
It has not been shown that the provisions of the agreement with fair and reasonable. Any judgment about the fairness and reasonableness of the terms of the agreement when it was made would require knowledge about the full extent of the deceased's assets. For the same reasons as it has not been shown that the release was advantageous to the plaintiff I am not satisfied that the agreement was fair and reasonable.
So far as it appears such advice as the plaintiff received was independent but it was not informative. I accept the plaintiff's evidence as to the events leading up to her signature to the agreement and the extent of the advice given to her by the solicitor and the events that took place in his office. Irrespective of the particular matters referred to in s 95(4) I would not approve the release because the plaintiff was coerced into giving it.
The defendant argued that the plaintiff's evidence should not be accepted because she did nothing to dispute the terms of the solicitor's certificate. Plainly that is wrong. She did give evidence that effectively disputed the terms of the certificate the solicitor gave. The defendant submitted that because the plaintiff did not call the solicitor, presumably with a view to corroborating her version of events and impugning the certificate he signed, the plaintiff's evidence should not be accepted. I do not agree. Either party could have called the solicitor. The plaintiff had given her version of the advice she received and thereby waived privilege. It was the defendant who was the party who could be expected to call the solicitor to contradict the plaintiff's version of events.
In support of his submission that it was for the plaintiff to call the solicitor Mr Lo Schiavo referred to s 173(2) of the Evidence Act 1995 (NSW). Section 173 provides that: "A copy of the affidavit or statement must be served on each party a reasonable time before the hearing of the proceeding", and subs (2) provides that "The party who tenders the affidavit or statement must, if another party so requests, call the deponent or person who made the statement to give evidence but need not otherwise do so."
Mr Lo Schiavo submitted that because the defendant had annexed to his affidavit a copy of the financial agreement and the statement of the solicitor was an annexure to that agreement and part of the defendant's affidavit, there was no need for the defendant to call the solicitor, because the plaintiff had not required the defendant to do so.
This submission misapprehends the effect of s 173. The solicitor's statement was in evidence as a statement annexed to the financial agreement, for whatever weight it might have. Section 173 has nothing to say on whether the plaintiff or the defendant would be expected to call the solicitor to give evidence in relation to the matters that were the subject of that statement.
In Neil v Jacovou Slattery J said (at 84): "[84] Fairness and reasonableness must be assessed over time, 'having regard to all the circumstances': Family Provision Act, s 31(5). When determining whether or not to approve the release, the court can also take into account the value of the rights that in these reasons the court finds that [the plaintiff] would have but for the operation of the release as well as the fact that she made the agreement for the release. As Bryson J (as his Honour then was) said in Mulcahy v Weldon [2001] NSWSC 474 at [10], '… the question whether the court should make an order under [Family Provision Act] s 31 would lead to a consideration of the same matters as are raised by the plaintiff's claim for further provision. If when all the circumstances are considered, including the contractual arrangement for a release, the right outcome is that the plaintiff should have further provision, approval under s 31 would not be forthcoming. The fact that the arrangement was made, even though no approval under s 31 had been obtained, has a bearing on whether provision ought be ordered.' The court concludes under question 9 below that further provision should be made for [the plaintiff] despite her execution of the pre-nuptial agreement. The quantum of the rights the release neutralised is one measure of its unfairness."
I would follow that approach as a matter of comity. But even if the focus of an application for approval of a release of rights should be on the circumstances as they existed at the time of entry into the agreement containing the release, as the defendant's submission assumed, I do not consider that the release should be approved.

Claim for provision

I turn then to the plaintiff's claim for provision. Section 59(1)(c) and s 59(2) provide: "59 When family provision order may be made (cf FPA 7-9) (1) The Court may, on application under Division 1, make a family provision order in relation to the estate of a deceased person, if the Court is satisfied that: … (c) at the time when the Court is considering the application, adequate provision for the proper maintenance, education or advancement in life of the person in whose favour the order is to be made has not been made by the will of the deceased person, or by the operation of the intestacy rules in relation to the estate of the deceased person, or both. (2) The Court may make such order for provision out of the estate of the deceased person as the Court thinks ought to be made for the maintenance, education or advancement in life of the eligible person, having regard to the facts known to the Court at the time the order is made. Note. Property that may be the subject of a family provision order is set out in Division 3. This Part applies to property, including property that is designated as notional estate (see section 73). Part 3.3 sets out property that may be designated as part of the notional estate of a deceased person for the purpose of making a family provision order."
Section 60 sets out a large range of matters that the court can consider in making the assessment called for by ss 59(1)(c) and 59(2). Section 60 does not provide that any particular matter is to be given primacy or given particular weight. I do not enter into the debate as to whether ss 59(1)(c) and 59(2) require or permit a two stage assessment. Under both s 59(1)(c) and s 59(2) the enquiry is to be made at the time the court is considering the application. The time extends up to the time the order is made and requires a consideration of the facts as then known to the court.
The question under s 59(1)(c) is in substance whether the applicant has been left with adequate provision or less than adequate provision for his or her maintenance, education or advancement in life. The question under s 59(2) is what provision ought to be made for the maintenance, education or advancement in life of the applicant. That is not a gateway to the court's interfering with a testamentary disposition to do what the judge thinks would be best in all circumstances or would be fair. The power is circumscribed by the requirement that the provision be what is adequate for the applicant's proper maintenance, education or advancement in life, but the words "proper" and "adequate" are so general that in many cases they do not indicate a particular outcome.
In Singer v Berghouse [1994] 181 CLR 201 Mason CJ, Deane and McHugh JJ said as to the predecessors of the current statutory provisions (at 209-210): "…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."
A constraint on the provision which a court can order is that the provision must be for the maintenance, education or advancement in the life of the applicant. However, where the applicant has an obligation to support a dependent child that is a relevant factor in determining what is an appropriate provision for the maintenance of the applicant (Mayfield v Lloyd-Williams [2004] NSWSC 419 [at 86] and cases there cited).
In this case the plaintiff's need for proper maintenance and advancement in life must be assessed having regard to the length of her relationship with the deceased, a period of 14 years, their marriage, her having responsibility for two of his children, her support of the deceased, the fact that she has another dependent in the home she is obliged to support as well as her obligation to support the deceased's two children, and also the claim of the deceased's older son on his estate.
The deceased made no provision at all for the plaintiff in his will and, as I have said, the gift in favour of Brianna and Tye is contingent upon their attaining the age of 25. Whilst the trustee would have the discretion to apply income for the maintenance and education of the children and would have power to appoint part of the capital for their advancement under ss 43 and 44 of the Trustee Act, I think that such a power is likely to be of little assistance to the plaintiff. Contrary to his denial, I think the defendant is unlikely to look favourably on requests from the plaintiff for the advancement of income or capital for the benefit of her children. Relations between the deceased's mother and brother on the one hand and the plaintiff on the other are strained at best. Certainly there is no guarantee that any such requests for the advance of income or capital would be considered favourably.
Mr Lo Schiavo submitted that if any order for provision were made it should be made only in respect of assets acquired by the deceased before the parties' separation and should not include the proceeds of sale of the Fairfield property. Those proceeds have only become part of the estate because Mrs Coral Dark sold her house to the deceased at a substantial undervalue. The transaction was one of sale and not gift but nonetheless she effectively gave the deceased land to the value of about $700,000.
The defendant submitted that it would not be right for that property to be applied contrary to the deceased's wishes which was to exclude the plaintiff. He submitted that it should be found that both the deceased and his mother thought that the financial agreement would be efficacious so that the plaintiff would not have any claim on the property and that they had that view when the property was sold to the deceased in March 2014. He submitted that morally the plaintiff had no claim upon the bounty that was derived from the deceased's mother.
In my view the deceased's moral obligation relevant to his testamentary disposition extended not only to his children, but to his wife, and that was so even though they had separated and intended to divorce. To the extent he had assets to do so, and subject to his obligation to provide for his son Hayden, that obligation included that he attempt to ensure that his younger children so far as possible should have a stable financial environment in which to grow up. In this respect his younger children's interests coincide with those of their mother. This was not provided for by the deceased's will under which his children would inherit only if and when they attain the age of 25. Their need and their mother's need is for money, both capital and income, for at least the medium term.
Neither the Succession Act nor the Acts that preceded it, refer to the concept of moral obligation, but Vigolo v Bostin (2005) 221 CLR 191 shows that it is not a concept foreign to an assessment of what provision is adequate for an applicant's proper maintenance, education or advancement in life. I refer to the concept because of the circumstance pressed by the defendant that the only reason there is a substantial asset from which provision could be made is because the deceased's mother sold her house to the deceased at a substantial undervalue. The plaintiff's own evidence is that Mrs Carol Dark preferred Hayden to the plaintiff's children and was cold towards her. Mrs Carol Dark did not give evidence, although she attended court with the defendant and there was no suggestion that she could not have done so. Nonetheless, on the plaintiff's evidence I can infer that she would not wish to benefit the plaintiff, nor the plaintiff's children beyond what was provided for in the deceased's will. Nonetheless I also infer that in selling the house to her son at a fraction of its true value Mrs Dark intended to benefit her son. The asset was available to be dealt with by him as he thought fit. It was available to meet any legal or moral obligation the deceased had, including any moral obligation he owed after his death.
Turning to the matters referred to in s 60(2), those that are of particular relevance are, first, the relationship between the plaintiff and the deceased including its nature and duration (s 60(2)(a)). The nature of the relationship is that they were husband and wife and, before that, de facto partners, but they had separated and intended to divorce. They had spent 12 years together and two separated but with a continuing relationship described as an on-again off-again relationship, apparently mostly of a sexual character. The nature of the relationship has been set out earlier in these reasons.
The second relevant matter (s 60(2)(b)) is the nature and extent of any obligation or responsibility owed by the deceased to the applicant and to the beneficiaries of his estate. I have set out above what I consider to be the deceased's moral obligation to provide for his wife and their children but he also had a moral obligation to provide for his older son, Hayden.
The third matter (s 60(2)(c)) is the nature and extent of the deceased's estate. After allowing for the defendant's costs the available cash in the estate should be in the order of $615,000 less any additional expenses of administration. The defendant has deposed that he does not seek commission. If the plaintiff's costs are recoverable from the estate then I am told that they are in the order of $50,000. This would reduce the available cash to be distributed to $565,000.
There is a question as to whether the chattels of the estate have actually been distributed. The defendant says they have. The plaintiff says that the goods earmarked by the defendant as having been distributed to Brianna and Tye are simply in her possession. The total value of those goods as stated by the defendant is in the order of $60,000.
The fourth relevant matter under s 60(2)(d) is the financial need, both present and future, of the applicant and of any beneficiary. At present the plaintiff could just about get by with recourse to her children's moneys. But her expenses will increase. She has no buffer for adverse contingencies. In particular she has no buffer to deal with the possibility of having to leave the army if she is posted elsewhere. The plaintiff deposes that her main need, as she would have it, is to be able to have sufficient funds to purchase a four bedroom house (a room for herself and her three children who live with her) because she says that she does not know for how much longer she would be able to be employed in the army and receive subsidised housing. She deposed that it was becoming increasingly difficult to juggle her work and being a single mother, and if she were posted interstate she would have no choice but to leave the army. At present she is assisted by her mother in the care of her children.
Since making her affidavit in October last year the plaintiff's position has been clarified in the short to medium term, in that she will be entitled to remain in her current house until 2019. However, there is no certainty as to her position after then. I accept her evidence that if she were posted interstate she would have to retire from the army rather than take her young children with her interstate where she would not have the family resources available to assist with childcare. She would have three children ranging from a teenager to a very young child. If she were to retire the plaintiff would lose her subsidised accommodation. Without any order for provision she would have no means of buying a house. Having regard to the extent of the rental subsidy, she would then be placed in serious financial difficulties with three dependent children.
The next matter under s 60(2)(e) of the Succession Act is not relevant. The plaintiff is not cohabiting with another person other than her own children. She is not cohabiting with Mr Jason Myers. He does provide a degree of financial support in that he pays half of Eva's childcare costs. Contrary to the submission of the defendant I do not consider that that contribution is a matter to be taken into account in assessing the asserted shortfall between the plaintiff's income and expenses. The plaintiff was not cross-examined on the question, but as I read her affidavit the statement of her monthly expenditure, including the expense of Eva's childcare, relates to her expenditure for Eva's childcare after account is taken of the contribution made by Jason Myers.
As I have said, the plaintiff is 38 (s 60(2)(g)). That means that she does not have access to her superannuation and is unlikely to obtain it.
Section 60(2)(h) entitles the court to have regard to any contribution (financial or otherwise) made by the applicant to the acquisition, conservation and improvement of the deceased's estate or to his welfare for which adequate consideration was not received by the applicant. The plaintiff contributed to the retention of property by the deceased by her assuming the burden of paying household expenses. It is not known what happened to the deceased's savings withdrawn from his mother's account. The plaintiff did not contribute to the deceased's acquisition of what is now the substantial asset of the estate, being the proceeds of sale of the Fairfield property.
Section 60(2)(i) refers to any provision made for the applicant by the deceased. No financial provision was made by the deceased for the applicant in his lifetime, save for his sometimes buying food and the like for the household. However, he provided assistance in other ways, in particular by having the fulltime care of their children whilst the plaintiff worked.
This is also a relevant matter to take into account pursuant to s 60(2)(k). It does not appear that any other person is liable to support the applicant beyond the childcare payments that Jason Myers presently makes.
There is nothing in the character or conduct of the applicant that would disentitle her to an order for provision.
In my view having regard to these matters the provision that the plaintiff ought to receive is a provision that, so far as possible, would provide the plaintiff and her children with a stable financial environment and which is sufficient to provide a buffer against future adverse contingencies.
The first of the plaintiff's financial needs is for a provision which would relieve her of the debt of her car loan of approximately $30,000. Her second need is for provision as a contingency against there being a shortfall between her income and household expenses including her children's expenses. A third is for provision to meet a contingency against unforeseen mishaps to her or her children, and the fourth is provision to meet the contingency of her needing to find alternative accommodation if she leaves the army. As I have said, the plaintiff's evidence indicates that she will be able to remain in her current house until 2019 but there is no guarantee after that that she may be posted elsewhere. If that were to happen she would be likely to resign rather than move with her family, with no obvious way of being able to provide necessary care for them.
The plaintiff deposes that if her car loan were paid off and her wage was not partly being applied in payment of rent she could service a loan of approximately $360,000 at 5 per cent per annum. I accept that evidence. She has no substantial savings. The plaintiff deposed that she would wish to remain living in a similar area to where she does now because her children attend the local school. She deposed that she had conducted a search online and that "the most affordable four bedroom house in Wattle Grove is $670,000." She annexed a copy of the online search. The online search to which she referred does not suggest to me that the house in question could be purchased for $670,000. Rather, the real estate agent invited offers over $670,000. The advertisement appears to be more in the nature of a bait designed to attract the attention of interested buyers, rather than an indication that the house could be purchased for the sum indicated. But the plaintiff would not, in any event, want to buy a property at the moment given that she has the benefit of subsidised rental that appears very favourable.
What might happen between now and when the plaintiff might have to find new accommodation is uncertain. There is uncertainty in relation to the future of house prices, her income, her other personal circumstances, her children's needs and the returns that might be obtained on the investment of a pecuniary legacy. What can be said is that at the present day the plaintiff would require a sum of not less than and potentially substantially more than $310,000 plus stamp duty and other usual expenses to acquire a four bedroom house for herself and her three children in the vicinity of the present house.
A further matter to be taken into account is that the plaintiff will have a liability for legal costs not recoverable from the estate of approximately $25,000.
Because of the very general nature of the tests to be applied, a judgment as to what provision is adequate for the applicant's proper maintenance and advancement in life can be described as intuitive or evaluative. That is another way of saying that the judge, after considering all of the relevant circumstances, has to pick a figure or an outcome that he or she thinks is adequate for the applicant's proper maintenance et cetera, but for which there can usually be no precise justification.
In my view provision for the plaintiff to a value of approximately $380,000 is a provision that is no more than is adequate for her maintenance and advancement in life having regard to her obligation to her dependents who include the deceased's two children. The primary burden of that provision should fall on the deceased's children, Brianna and Tye. This is because they will be the indirect beneficiaries of the order for provision. Indeed, taking their position into account I think it better for them that their mother have the means to provide financial stability for them and for herself and her wider family when they are growing up, than that they have the prospect at the age of 25 of coming into an inheritance. The money spent on their education and the avoidance of poverty if their mother had to resign her employment with the Army far outweighs any benefits from their coming into possession of a legacy at the age of 25.
I am satisfied that the plaintiff will provide for her children, including Brianna and Tye, from the legacy that will be left to her by an order for provision so far as she is able. She has demonstrated, by her actions, a strong desire to ensure that her children learn the habit of saving. For example, she pays $10 per week into each of the children's savings account. I do not think there is a risk that provision for the plaintiff will be squandered to the detriment of the deceased's children.
I need also to take into account the circumstances of the deceased's older son, Hayden. There was no evidence, as there should have been, as to his financial circumstances, save that I was told that he is now employed fulltime in the Army. Having regard to the evidence as to his upbringing and the support his grandparents needed to give for his education, I do not infer that he has any substantial assets other than those provided to him from the deceased's estate. In any event the order for provision which I will make will not substantially affect his position.
The question then is how this provision should be provided. As noted above, the defendant says he has distributed the deceased's chattels between the three beneficiaries, even though none has yet taken a vested interest under the will under which the assets could be appropriated in satisfaction of a beneficiary's interest. Leaving that problem aside, the defendant has not made a distribution in accordance with the beneficiaries' entitlements under the will. On the defendant's own valuations Hayden has received assets that the defendant says have a value of $27,600 out of a total distribution of assets to which the defendant attributes a value of $60,050. That is to say on the defendant's own evidence Hayden has received assets valued by the defendant at $7 650 more than his one-third entitlement under the will. This does not include the Husqvarna bike.
The defendant submitted that the plaintiff could sell the assets that the defendant has put in her possession and purportedly distributed to Brianna and Tye. For the reasons I have given there is at least a serious question as to whether the plaintiff could do so, at least without obtaining an order of the Court.
It is desirable to avoid future litigation. It is desirable also that the plaintiff should be able to deal with the assets distributed to her children. Part of the provision to be made for the plaintiff can be provided by giving her a specific legacy of those chattels that the defendant has identified in annexure D to his affidavit of 16 February 2016 as having been distributed to Brianna and Tye, or at least such of those assets as were the property of the deceased. There is a small issue about that.
For reasons I have given I do not accept that such a specific legacy would go near to satisfying the provision that should be made to the plaintiff. The values placed on those assets by the defendant are disputed and, in any event, there is no guarantee that the individual items could be sold for the value the defendant attributes to them.
In my opinion in addition to the specific legacy there should also be provision in the form of a pecuniary legacy in favour of the plaintiff in the sum of $360,000. Interest on that legacy should run at the rates prescribed for the purposes of interest on legacies under the Probate and Administration Act from 14 days after the date of these orders.
The burden of the specific legacy should be borne by Brianna and Tye Dark. The burden of the pecuniary legacy should be borne first by Hayden Dark to the sum of $7,650. This would provide some correction for the appropriations that the defendant has made of the deceased's chattels. Thereafter the burden of the pecuniary legacy should be borne by Brianna and Tye Dark equally and only then, if necessary, by Hayden Dark.
Before concluding these reasons I should note that the defendant had stated his intention to transfer the assets of the estate to the NSW Trustee and Guardian to hold them on behalf of the beneficiaries, presumably on the trust of the will. Although the power under which this was proposed was not identified I infer it was probably s 12 of the NSW Trustee and Guardian Act 2009 (NSW). After I raised the question as to whether such a course would be in the interests of the beneficiaries having regard to the charges the NSW Trustee and Guardian would make I was advised that the defendant did not persist with that intention. It is therefore unnecessary to consider whether, having regard to clause 4 of the will, that course would be open to the defendant if the plaintiff were willing to act as trustee of the will.
Subject to any submissions that counsel for the parties might have as to the appropriateness of the form of the order I propose the following:
Order that provision be made for the plaintiff out of the estate of the late Jarrod James Dark by way of: (a) a specific legacy of such of those chattels as were the property of the deceased as were identified in annexure D to the affidavit of the defendant dated 16 February 2016 as having been distributed to Brianna and Tye Dark; and (b) a pecuniary legacy of $360,000.
Order that interest on the pecuniary legacy referred to in order 1(b) commence to run from 6 September 2016 until payment at the rate provided for pursuant to s 84A of the Probate and Administration Act 1898.
Order that the burden of the specific legacy in order 1(a) be borne by Brianna and Tye Dark and the burden of the pecuniary legacy in order 1(b) be borne by the beneficiaries entitled under the will of the deceased as follows: first, by Hayden Dark as to $7,650, then by Brianna and Tye Dark in equal shares, then to the extent necessary (if at all) by Hayden Dark. [Counsel addressed on costs. The plaintiff relied on a Calderbank offer served shortly before the hearing that did not say how it was proposed the burden of provision proposed for the plaintiff be borne.]
In relation to costs, I am not satisfied that it was unreasonable for the defendant not to have accepted the offer having regard to the time at which it was made and having regard to the fact that it was incomplete. The appropriate order is that the defendant pay the plaintiff's costs on the ordinary basis and be entitled to be indemnified in relation to those costs out of the estate. I make that order.

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: 09 September 2016

(UK) Evidence Act 1995(NSW)

Trustee and Guardian Act 2009(NSW)

(1997) 21 Fam LR 676

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