Dinnen v TerrillTerrill v Dinnen

COUNSEL : Mr R Brender for plaintiff Mr JA Trebeck for defendant

SOLICITORS : Kennedy & Cooke for plaintiff Stacks/Taree for defendant

• 1 - THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

1722/06 - DAVID ANTHONY DINNEN v ANTHONY TERRILL (ESTATE OF LATE JAMES PETER DINNEN)

3941/07 - ANTHONY JOHN TERRILL v DAVID ANTHONY DINNEN

1 HIS HONOUR: This is an application under the Family Provision Act in respect of the estate of the late James Peter Dinnen who died on 9 September 2007. The deceased was survived by his four children, one of whom was the plaintiff. He was the last of the deceased's children. 2 The deceased's last Will was made on 9 December 1996 and apart from some minor bequests, gave the residuary estate to his son, the plaintiff, and his daughter Joelene Dinnen. He provided that: "...in dividing the residue the Trustee shall take into account and treat as part of the share of David Anthony Dinnen monies owed by him to me which as at the date of making this my Will stands at THIRTY FIVE THOUSAND DOLLARS ($35,000)". 3 I have not had any submissions as to whether or not that provision would apply notwithstanding that the plaintiff might not have owed the amount of $35,000 to the deceased. On some view of the facts, it may be that the amount is not recoverable or as was forgiven. Whether or not it operates in this way is a matter which, as I say, has not been debated before me. 4 Under a codicil dated 10 January 2000 he appointed the defendant, who was Joelene's husband, as sole executor. The deceased made a statement to which I will refer later about assistance given to the plaintiff by the deceased and his wife during their lifetime. ASSETS IN THE ESTATE 5 Apart from a small number of shares which have been distributed equally and cash of $5,000 distributed to the plaintiff, the estate consists of the deceased's house at Lomandra Place, Ulladulla which was valued at $310,000. On a sale likely proceeds would be $297,680. 6 There is claimed to be a debt owed to the estate by the plaintiff of $40,962.40 which includes $35,000 which the plaintiff says the deceased told him he did not want it back. There is a car and some furniture. 7 Costs have been incurred in these and related possession proceedings which seem to have escalated out of all proportion to the sums involved. The plaintiff's costs are estimated at $54,000, the defendant's at $92,000. In addition the defendant executor proposes to charge $5,000 commission. Possession proceedings which have not progressed have been heard together with these proceedings brought by the executor to evict the plaintiff from the house so it can be sold. Proceedings were commenced shortly after the possession proceedings were served. FAMILY HISTORY 8 The deceased married in 1940 for the first time and he had three children born in 1948, 1953 and 1956. Joelene, his daughter, was born in 1956. His first wife died in 1958 and he re-married the following year, the plaintiff being born of that union in July of 1961. 9 In 1982 the plaintiff purchased a motor vehicle for some $5,500 which funds were borrowed and his father paid off somewhere between $4,000 and $4,500 on his behalf. Unfortunately in that year the plaintiff was involved in a car accident and suffered injuries and was unable to work for some nine months. It was also aggravated by dislocation of his shoulder. At that stage the deceased lent the plaintiff some $35,000 to pay his debts. Not long after, according to the plaintiff, he was re-employed, sold a block of land at Bateman's Bay and he offered to pay his father the money which offer was declined to the plaintiff. It was in 1993 approximately that the deceased and his wife sold the family home and moved to Lomandra Place, Ulladulla. Shortly after that the plaintiff's mother suffered a stroke. The plaintiff lived at various places thereafter and briefly in 1995 at the deceased's property at Ulladulla. It seems to be that from May 1997 he lived fairly permanently at Lomandra Place with the deceased and commenced to care for the deceased and his wife. 10 In 1998 there was a boat purchased by the plaintiff and a Mr Hunter and the deceased advanced $6,000 for this asset. In 1999 the deceased made a gift of $10,000 to his daughter Joelene and gave $5,000 to each of her two daughters. He also gave $10,000 to the plaintiff. 11 On 14 July 1999 the plaintiff's mother died and this imposed a further caring burden on the plaintiff looking after his father whose health started to deteriorate. The plaintiff, who had started his own supply business, was then unable to continue the business he had started. He was given $10,000 by his father said to be from his mother's estate for his inheritance. 12 In 2001 the plaintiff purchased a 1985 Jaguar paying $4,500 borrowed from the deceased. Thereafter a number of repayments were made by the plaintiff in reduction of the loans to him by the deceased. 13 The plaintiff met his current partner in November 2001. In 2002 the plaintiff again purchased some scuba diving tanks, regulators and a trailer for $4,500. At that stage the plaintiff's partner moved to Ulladulla. In June 2002, Ms Jones, to whom I will refer, a registered nurse, commenced care of the deceased for a few hours each day. In 2003 the regulator and trailer were apparently sold and $4,350 was paid to the deceased. 14 The plaintiff and his partner have a son, Nicholas, born in April 2003. For various reasons which do not concern the matter, his partner moved to her mother's home in Sydney for some time with the son. Apparently in October 2003 the deceased indicated that he wanted to give some $5,000 to Nicholas. 15 The family were all together for Christmas 2003. There were some other minor provisions of gifts for Joelene in 2004. In September 2004 there were discussions between the deceased, the plaintiff and his partner. According to the plaintiff's partner, which I think probably accurately reflects what was said, the deceased wanted them to stay in the house until they could get themselves sorted out. The deceased died on 9 September 2004. 16 In October 2005 the plaintiff secured his first substantial job for a period of about eight years. He worked and continues to work at Sydney airport as a work safety officer. ELIGIBILITY 17 The plaintiff is, of course, an eligible person. In applications under the Family Provision Act the High Court in Singer v Berghouse (1994) 181 CLR 201 has set out the two stage approach the Court must take. At page 209 it said the following: "The first question is, was the provision (if any) made for the applicant inadequate for (his or her) proper maintenance, education and advancement in life? The difference between 'adequate' and 'proper' and the interrelationship which exists between 'adequate provision' and 'proper maintenance' etc were explained in Bosch v Perpetual Trustee Co Limited . The determination of the first stage in the two-stage process calls for an assessment of whether the provision (if any) made was inadequate or 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. In saying that, we are mindful that from arrangements to pay creditors". THE PLAINTIFF'S POSITION AND SITUATION IN LIFE 18 The plaintiff is 47 years of age and lives with his partner and their 4-year old child in the deceased's property. He works as a casual work safety officer at Sydney Airport and he commutes to Sydney for that work mainly staying with his partner's family in Sydney when he is there for work. During 30 June 2006 his gross income was $42,458. His partner, who was not working and looking after their child, receives social security of $366 per week. They have expenses of $525 per week in Sydney and Ulladulla. He seems to be in reasonable health. 19 The plaintiff certainly received assistance from the deceased in his lifetime. In 1978 there was repayment of his car loan and in 1982 there was the $35,000 which was provided by the deceased. There is no reason why I should not accept the plaintiff's statement except for the fact that there is a reference in the Will to the amount still owing. This would seem to indicate that perhaps the deceased did not regard the plaintiff's debt as being forgiven. In any event one of the other problems about it is that the debt is statute barred. 20 In 2001 there was a loan for $4,500 for the Jaguar. In 2002 there was a loan of $4,500 for the scuba gear and the boat loan of $6,000. Those ones which are loans have been repaid by the deceased in part and this is probably about $6,000 owing plus the $35,000 if one regards that as recoverable. His present assets consist of first some AIG shares worth $5,830.20, a Mazda car worth $8,000, an unregistered Jaguar worth $4,500, an unregistered BMW 735i worth $6,000 and a half interest in a cabin boat of some $9,000 to $10,000. He has savings of $1,181.25. 21 I turn to consider the relationship that the plaintiff had with the deceased. Usefully, the deceased left a statement dated 3 October 1999 in which he summarised the relationship that he and his wife have had with the plaintiff and spoke of some of the problems that they incurred. That was in these terms: "I, James Peter Dinnen, residing at 2 Lomandra Place, Ulladulla in the State of New South Wales wish to make the following statement concerning my son David Anthony Dinnen. David has made statements that he has devoted the last five (5) years of his life living with and taking care of my wife Eileen and my self, this is incorrect. My wife suffered an extensive stroke in September 1994. The result of this stroke left Eileen with minimal speech and unable to walk without assistance. David said he could not stand to see his mother in this condition and he ceased to live with us for a period of approximately 3 years with no contact details available to us. At the time of our moving to Ulladulla, David refused to assist us in the moving and in the packing of his personal effects on in the care and future of his German Shepherd 'Angie'. This caused great distress to my wife and myself at a stressful time, moving from a house which we had occupied all of our married life. As David did not take up the offer of a room in our new home at Ulladulla, we set up the rear bedroom for our granddaughters Katy and Jessica. After a number of months of not knowing where David was or having any contact with him, he appeared and started to reside off and on with us. At the time of my wife Eileen's stroke and David's subsequent unwillingness to see her in that condition, David took up residence in Sydney with my daughter Joelene and her family. Whilst initially living amicably, this relationship deteriorated over a period of time as David was unwilling to contribute physically or financially to the household and was acting in a belligerent manner towards Joelene and her daughter Katy. After some derogatory comments by David about the home, he was requested to move out by Joelene and he commenced to reside at our home in Ulladulla, approximately January 1997. David's lifestyle at this stage, as he chose not to work, basically consisted of sleeping and giving minimal assistance to me in the care of his mother. However, his mother derived great pleasure at the times he sat beside her watching television. Over a period of time until the week before Eileen died in July 1999, Eileen became less mobile and David had started to assist more with her care and preparation of meals for her. There were periods of up to weeks at a time when he would disappear without notice or leaving contact details, to work in Sydney. During these periods David made no contact with us. David's behaviour towards Joelene and her family continued to be belligerent. He would go out of his way to make the occasions when they visited as uncomfortable and upsetting as possible to his mother and I and Joelene and her family. Even as his mother was dying and she tried to resolve the problem between David and Joelene, David walked out of the room. Even though David was financially self sufficient, receiving income from such sources as the Carer's Pension, Army Reserve and casual employment he chose not to contribute to the household expenses. On numerous occasions without any thought or discussion with me, David would take my vehicle leaving my wife and I without any form of transport, this could be for days on end. Recently he has remove from the home, without my permission, various things such as the vacuum cleaner and stereo equipment for use in his office. After my wife Eileen died I gave David $10,000 (ten thousand), which he has used to set up a successful cleaning and hospitality supplies business. This business has required a large investment in time and effort on David's part, to the extent that I may not see David for days on end due to his times of departure, and arrival from work each day. In summary, there were times when David was great assistance and comfort to his mother in the last couple of years, which both his mother and I appreciated. However, David's statements about the amount of time, care and effort he has devoted to his mother and I have been greatly misrepresented and it is hoped that the above statement will serve to present the facts, and that David has been more than adequately compensated for his efforts." 22 The only matter which the plaintiff expressly disagreed with was his failure to contribute to household expenses and claimed that he did. He says that in respect of the move he did help by having some of his goods stored at friends' places in Sydney. That only takes the matter up to the date of 1999 but the important part is what happened later. I have earlier mentioned that Mrs Jones, a nurse, gave evidence that she provided assistance from 2002. She says that the plaintiff was the deceased's primary carer and responsible for the supervision of his day and night administration of medication and providing other assistance. She saw the plaintiff doing this. She said that they appeared to have a close relationship and in her opinion he performed his caring duty diligently with a high degree of concern for his father's health and welfare, sometimes in trying circumstances. It is not disputed that the plaintiff cared for the deceased on a very intensive full-time basis in the last seven months of his life. The extent of it beforehand was obviously less although it was necessary for the nurse to also be available in 2002. It is clear that although there were some frustrations that the deceased has referred to in his note, there was extensive care supplied by the plaintiff. 23 It is necessary to consider the situation in life of others having a claim on the bounty of the deceased. In this case the only relevant one is Joelene. Joelene is 51 years of age, married to the defendant with no dependants. She works part-time as a teacher's aide earning $21,840 per annum. Her husband has retired from the Australian Trade Commission. He occasionally receives some extra work which will take him up to December this year and he has no promise of further work. Their current income, excluding any part-time work, is the sum of $1,624 per week and their expenditure is $1,357 per week. Their assets total some $831,515. The most important of these is their home of $450,000 and superannuation which is now being used in part for the Pension Provision for the defendant of $278,000. They have total debts of $50,894 and a mortgage on their home of $48,521. 24 It is clear that Joelene had a good relationship with the deceased who trusted her. He gave her a Power of Attorney and she helped with the management of his affairs. Not living near the deceased they could not always be there but when she could, she certainly was given the distance between Sydney and Ulladulla. She was provided with some benefits by the deceased. There is the $10,000 gift and $5,000 to each of their two children. 25 It is necessary to see how the plaintiff says that he has been left without adequate and proper provision for maintenance, education and advancement in life. In this respect the plaintiff says that he wants an increased share of the estate so that he can retain the home and pay out his sister's share. At the moment, if all the costs were payable, he would need $151,000 to pay the costs and commissions and a sum to pay a legacy to his sister. There is some appeal in such a solution because it avoids the selling costs involved which are not insubstantial. He does not have a home or permanent accommodation, unlike his sisters. 26 The estate is a small one. The property was sold and all the costs and commission allowed there would be $146,680 in cash available plus perhaps $35,000 due by the plaintiff. This, allowing for the $35,000 as an asset, makes the defendant's share $90,840 and the plaintiff's $55,840. If the plaintiff's share were not depleted on the basis that he did not owe the $35,000, the residue would be split with each receiving $73,340. 27 The plaintiff has an indicative loan approval of $160,000 and given that it is a thirty year housing loan, he thinks that he can afford the repayments. No formal approval is available but given his recent work record he is likely to obtain such an approval. He is thus asking for a sum to allow him to purchase the property with a mortgage. 28 In McGrath v Eves [2005] NSWSC 1006 Gzell J referred to the Court's approach to the question of moral duty when considering claims by children to be provided by funds for the house. He said: "67 When it comes to children, as Young J observed in Shearer v The Public Trustee , NSWSC, unreported, 23 March 1998, it has never been said by any court that the community expects a mother to leave her children in a position to have a house of their own. That observation applies equally to a father. And in Gorton v Parks (19890 17 NSWLR 1 AT 7, Bryson J pointed out that there is no special principle that able-bodied adults earning a living have no claim, his Honour pointing out that such a proposition in relation to resources of any size was quite erroneous. 68 In Barbara Mayfield v Suzy Carolyn Lloyd-Williams [2004] NSWSC 419 at [109]-[110], White J, having referred to this passage, went on to observe that there was no rule to the effect that proper provision for an adult and presently able-bodied child did not extend to providing him or her with a house or money to buy one. His Honour noted that instances in which this had occurred included Re Buckland, deceased [1966] VR 404 and Ogden v Green [2003] NSWCA 352. 69 White J's decision was upheld by the Court of Appeal in Lloyd-Williams v Mayfield [2005] NSWCA 189. In the course of his judgment, Bryson JA at [31] pointed out that there were features to the case that were rarely encountered in claims under the Family Provision Act 1982 and rarely encountered together. First, the value of the shares designated as notional estate was very large in comparison with the estates ordinarily encountered. Secondly, because the appellant was otherwise amply provided for, the further provision ordered by White J could have no adverse effect on her wellbeing. Thirdly, the applicant did not have any needs in terms of lack of present provision for necessities and amenities of life on an ordinary scale of needs as understood in the community generally. 70 It was submitted that Mayfield was distinguishable by the absence of these features in the instant circumstances and because the appellant in Mayfield had filed no financial evidence and put forward no competing financial or other needs for the Court to consider. 71 There are differences of fact between Mayfield and the present case. But they do not affect the central proposition that there is no rule to the effect that proper provision for an adult and presently able-bodies child does not extend to providing him or her with a house or money to buy one. That proposition was not criticised by the Court of Appeal. Indeed, at [32], Bryson JA observed that it was open to White J and altogether appropriate to look well beyond needs when interpreting and applying community standards to decide what provision the court ought to order." 29 In this case the beneficiaries, Joelene and her husband, are in comfortable circumstances and this is no doubt due to their hard work during their life together. 30 In my view the plaintiff needs to have provision for accommodation whether it be by way of a lump sum to enable him to supplement his income to pay rent in the future or by the provision of a sum to enable him to purchase the deceased's house. 31 The problem in this case is the amount of costs which have been incurred on the defendant's part. It is plain that there is animosity between the plaintiff and his sister Joelene. I need not go into the detail of it. There is history to it but, unfortunately, that is entered into these proceedings and they seem to have become adversarial proceedings between the two. In one sense, I could regard the matter as an adversarial case and consider costs on the basis of the result. 32 The defendant is a trustee but in this case he plainly represents the defendant, his wife Joelene, and thus their joint financial interests. 33 I will not make an order that the defendant pay the plaintiff's costs notwithstanding the adversarial nature of the proceedings. This will have a substantial impact on Joelene's financial circumstances. At the moment what they would wish to do would be do discharge from their share their small mortgage. 34 Reference was made in the plaintiff's submissions to the capping of costs. Rule 42.4 of the Uniform Civil Procedure Rule provides as follows: "Power to order maximum costs (1) The court may by order, of its own motion or on the application of a party, specify the maximum costs that may be recovered by one party from another. (2) A maximum amount specified in an order under sub rule (1) may not include an amount that a party is ordered to pay because the party: (a) has failed to comply with an order or with any of these rules, or

(b) has sought leave to amend its pleadings or particulars, or (c) has sought an extension of time for complying with an order or with any of these rules, or

(d) has otherwise caused another party to incur costs that were not necessary for the just, quick and cheap: (i) progress of the proceedings to trial or hearing, or (ii) trial or hearing of the proceedings.

(3) An order under subrule (1) may include such directions as the court considers necessary to effect the just, quick and cheap:

(a) progress of the proceedings to trial or hearing, or

(4) If, in the court's opinion, there are special reasons, and it is in the interests of justice to do so, the court may vary the specification of maximum recoverable costs ordered under subrule (1)." 35 I have discussed this in the case of Dalton v Paull (No.2) [2007] NSWSC 803. That rule took the place of a former Supreme Court Rule Part 52 rule 35. The effect of the Rule has been dealt with by Palmer J in Sherborne Estate (No.2) and Vanvalen v Neaves (2005) 65 NSWLR 268. I agree with his Honour's analysis that the rule "is intended to mean whereby the court may, if the need arises, curb the tendency of one or all parties to engage in disproportionate expenditure on legal costs by making it clear, at an early stage of the proceedings that beyond a certain limit the parties have to bear their own costs - win or lose." 36 After discussing a common matter which tends to increase the cost in these types of matters, namely personal animosity, Palmer J went on to say at paragraphs 29 to 31 as follows: "[29] It seems to me that UCPR 42.5 and its precursor, SCR Pt 52A r.35A, were designed to put into the Court's hands a break on intemperate and disproportionately expensive conduct of proceedings. The power conferred by the Rule is not brought into play only if one of the parties invokes it: The Court itself may exercise the power on its own motion whenever it sees the need. This is because the policy of the law, enshrined in CPA s.56(1), is to facilitate the just, quick and cheap resolution of the real issues in proceedings. By s.56(2), the Court not only may, but must, give effect to that policy whenever it exercises any power conferred upon it by the Act or the Rules -indeed, even when the parties themselves do not wish to conduct the proceedings quickly or cheaply. [30] Proportionality of costs to the value of the result is central to the just and efficient conduct of civil proceedings: See e.g. Lownds v Home Office (Practice Note) [2002] 1 WLR 2450 per Lord Wolfe CJ. It is a pity that the precursor of UCPR 42.4 seems never to have been used to this end. In Jvancich v Kennedy (No 2) [2004] NSWCA 397 at para [6], the Court of Appeal pointed out that it has not been the practice in Australia for the Court to fix the amount of costs. However, the Court in that case was concerned with a costs order made at the conclusion of proceedings and was not giving consideration to the making of a capping order in the course of case management under SCR Pt 52A r.35A (UCPR 42.4). I do not read Jvancich as inhibiting the use to which I have suggested UCPR 42.4 may be put. In my opinion the Court should not be reluctant to use UCPR 42.4 to prevent extravagant expenditure of legal costs in FPA cases, such as has occurred here. The time for its use is early in case management, whenever it appears that the parties' litigious fervour may be leading them to excessive expenditure of costs. [31] However, the remedy provided by UCPR 42.4 is prophylactic: it cannot be used as a cure for excessive expenditure at the time of making a final costs order at the conclusion of proceedings: other powers of the Court must be engaged."

37 The practice note Supreme Court Practice Note SC Eq 1, announced on 17 August 2005, makes it clear that in cases where the estate is under $500,000 the Court may cap the costs of a successful claim. Thus, although in this particular case there were no pre-trial directions in which the costs were limited early on, there was a clear warning in the practice note and also in the number of other decisions of the Court that costs might be capped in circumstances where the estate is under $500,000. 38 I appreciate that in this case it is the defendant's costs which I am considering capping. This is normally not appropriate in an ordinary case where the defendant is acting as a trustee. In this case the better view of the proceedings is that they have been conducted as adversarial proceedings between two siblings with a nominal defendant having an economic interest in the outcome. If the defendant's costs in the ordinary basis were capped at $55,000 the plaintiff could meet these the commission of $5,000, his own costs and a legacy of $35,000 for Joelene if he received the property. 39 The orders that I make are as follows:

1. That in lieu of the provisions of the Will of the deceased, the plaintiff receive a bequest of: (a) The forgiveness of any debt due by him to the deceased. (b) The deceased's property at Lomandra Place, Ulladulla and the furniture and effects therein conditional upon him within four months of today's date at the time of transfer of the Title to him paying to Joelene Iris Dinnen the sum of $35,000 by way of pecuniary legacy to her. 2. The contents, other than furniture, shall be equally shared between the plaintiff and Joelene Iris Dinnen. 3. Order that the residue of the estate of the deceased apart from the existing distribution of shares and costs, be held by the executor for Joelene Iris Dinnen. 4. Order that the defendant's costs on an ordinary basis capped at $55,000 be paid by the plaintiff. 5. Order that the plaintiff bear his own costs. 6. Reserve liberty to apply in case the conditions to the plaintiff's bequest are not able to be complied with by the plaintiff.

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