Donaldson v Lawless

They have a mortgage with Citibank which is currently approximately $99,000. It has been necessary to increase the amount of the mortgage to pay for costs associated with the estate. The Ford Cougar is currently off the road because it requires repairs which Lynette cannot afford to make. 19Lynette and her husband's fortnightly income is approximately $1,500. It consists of a state superannuation pension of approximately $1,000 per fortnight to which Lynette is entitled and a Centrelink part pension of approximately $500 per fortnight to which Ron is entitled. Lynette estimates their monthly expenses as $3,656.18, including mortgage repayments of $1,100 per month. 20Lynette's and Ron's health appears to be reasonable, although Lynette has type 2 diabetes which requires daily insulin injections and Ron suffers from a number of complaints including rheumatoid arthritis, diabetes and persistent atrial fibrillation. 21The net distributable estate is estimated to be as follows: Proceeds of sale of Fishing Pont property $550,098.40 Less Legacies $13,000.00 Payments by executor on behalf of the estate $15,944.80 Estimated costs of this proceeding $37,307.60 Administration costs $1,705.00 $67,957.40 $482,141.00

22On that basis, each of Lynette and Alan would receive $241,070. However, as I have said, on 15 June 2012, White J ordered that Alan should pay the costs of the proceeding commenced to remove him as an executor. Those costs total $44,615.40. It is estimated that Alan's legal costs of this proceeding on a party/party basis are $32,041.75.

Relevant legal principles 23Section 59 of the Act relevantly provides: (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: (a) the person in whose favour the order is to be made is an eligible person, and (b) ... , and (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. 24Section 60 provides: (1) The Court may have regard to the matters set out in subsection (2) for the purpose of determining: (a) whether the person in whose favour the order is sought to be made (the applicant) is an eligible person, and (b) whether to make a family provision order and the nature of any such order. (2) The following matters may be considered by the Court: (a) any family or other relationship between the applicant and the deceased person, including the nature and duration of the relationship, (b) the nature and extent of any obligations or responsibilities owed by the deceased person to the applicant, to any other person in respect of whom an application has been made for a family provision order or to any beneficiary of the deceased person's estate, (c) the nature and extent of the deceased person's estate (including any property that is, or could be, designated as notional estate of the deceased person) and of any liabilities or charges to which the estate is subject, as in existence when the application is being considered, (d) the financial resources (including earning capacity) and financial needs, both present and future, of the applicant, of any other person in respect of whom an application has been made for a family provision order or of any beneficiary of the deceased person's estate, (e) if the applicant is cohabiting with another person -the financial circumstances of the other person, (f) any physical, intellectual or mental disability of the applicant, any other person in respect of whom an application has been made for a family provision order or any beneficiary of the deceased person's estate that is in existence when the application is being considered or that may reasonably be anticipated, (g) the age of the applicant when the application is being considered, (h) any contribution (whether financial or otherwise) by the applicant to the acquisition, conservation and improvement of the estate of the deceased person or to the welfare of the deceased person or the deceased person's family, whether made before or after the deceased person's death, for which adequate consideration (not including any pension or other benefit) was not received, by the applicant, (i) any provision made for the applicant by the deceased person, either during the deceased person's lifetime or made from the deceased person's estate, (j) any evidence of the testamentary intentions of the deceased person, including evidence of statements made by the deceased person, (k) whether the applicant was being maintained, either wholly or partly, by the deceased person before the deceased person's death and, if the Court considers it relevant, the extent to which and the basis on which the deceased person did so, (l) whether any other person is liable to support the applicant, (m) the character and conduct of the applicant before and after the date of the death of the deceased person, (n) the conduct of any other person before and after the date of the death of the deceased person, (o) any relevant Aboriginal or Torres Strait Islander customary law, (p) any other matter the Court considers relevant, including matters in existence at the time of the deceased person's death or at the time the application is being considered. 25As a result of the Court of Appeal's decision in Andrew v Andrew [2012] NSWCA 308; (2012) 81 NSWLR 656, there is a question now whether in applying s 59 the court should follow the two stage process adopted by the High Court in Singer v Berghouse [1994] HCA 40; (1994) 181 CLR 201 at 208-9 and Vigolo v Bostin [2005] HCA 11; (2005) 221 CLR 191 at [5] per Gleeson CJ; at [56] per Gummow and Hayne JJ; and at [112] per Callinan and Heydon JJ in relation to the analogous provisions of the Family Provision Act 1982 (NSW), the predecessor of Chapter 3 of the Act. The first stage involved the court determining whether it could make an order for provision for the maintenance, education or advancement in life of a particular applicant. If the court was so satisfied, the second stage involved a determination of what provision, if any, should be made. In Andrew v Andrew Basten JA (with whom Allsopp P agreed) expressed the view that ss 59 and 60 no longer involved a two-stage process. Rather, they required the court to consider the single question whether to make a family provision order and the nature of any such order having regard to the factors set out in s 60. The issue has been most recently discussed in detail by Hallen J in Harrisson v Skinner [2013] NSWSC 736 at [62]-[79]. His Honour concluded that it was appropriate to continue to apply a two-stage process. It is not necessary to add to the debate in this case. As I pointed out in my judgment in Oldereid v Chan [2013] NSWSC 434 at [53] it seems clear from the terms of s 59 that the court must ask itself the question whether it is satisfied that "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". If it is so satisfied, it must consider whether to make an order and, if so, the terms of that order. In undertaking each of those steps, it may have regard to the matters set out in s 60. The answer to those questions in this case is not going to turn on the precise way the issue is approached. 26Section 58(2) of the Act provides: An application for a family provision order must be made not later than 12 months after the date of the death of the deceased person, unless the Court otherwise orders on sufficient cause being shown. 27The principles to be applied by the court in determining whether to grant an extension of time under s 58(2) were helpfully summarised by Hallen AsJ (as he then was) in Thomas v Pickering; Byrne v Pickering [2011] NSWSC 572 in these terms: [84] The decision of the court to extend time is a discretionary decision. Other than "sufficient cause being shown", there are no statutory criteria that must be taken into account. There are no rigid rules in regard to the exercise of the discretion. [85] The principles governing that exercise of discretion under the Act are clear. Apart from the reason(s) for the lateness of the claim, the factors to which the court must look, include whether beneficiaries under the Will would be unacceptably prejudiced if time were to be extended; whether there has been any unconscionable conduct by either side; and, finally what is the strength of the claim made by the party seeking an extension of time: see, for example, John v John; John v John [2010] NSWSC 937 at [37]-[51] per Ward J; Campbell v Chabert-McKay [2010] NSWSC 859 at [45]-[47] per White J; Durham v Durham [2010] NSWSC 389 at [15] per Ball J; Taylor v Farrugia [2009] NSWSC 801 at [14] per Brereton J; Burton v Moss [2010] NSWSC 163 at [31] ff, per Macready As J, in which the relevant earlier cases are referred to. [86] The onus lies on the applicant to establish sufficient cause. It will be for the court to determine the strength of the applicant's claim. [87] The prejudice to which the section looks is any prejudice occasioned by the delay in lodging the claim rather than any disappointment that might occur consequent upon readjustment of the interests under the will in order to make provision for the applicant: Cetojevic v Cetojevic [2006] NSWSC 431; McCann v Ward & Anor [2010] VSC 452 at [11]. Where there has been a long period since the deceased died, the lapse of time, itself, might create prejudice in any fact-finding exercise: Vasconelos v Bonetig at [21]. [88] In De Winter v Johnstone (NSWCA, 23 August 1995, unreported), Sheller JA held that the concept of "unconscionable conduct" referred to above was "directed towards a deliberate holding off [in bringing proceedings] designed to lull the beneficiaries into a false sense of security". Cole JA, whilst not expressing a concluded view, said that it must be doubted whether a change of mind (because of some change in the financial and material circumstances of the Plaintiff which has occurred after the expiry of the limitation period) constitutes unconscionable conduct. [89] As to the strength of the claim, in De Winter v Johnstone, Powell JA considered that as an application for extension of time was invariably dealt with at the time of the application for substantive relief, no extension of time ought to be granted unless it was established that the applicant seeking an extension of time would, in the event of the extension being granted, be entitled to an order for substantive relief. By contrast, Sheller JA considered that it was only necessary for the applicant to show that the application was not bound to fail. [90] Where the delay is not unduly long and the estate remains undistributed, ignorance during the period within which proceedings are to be commenced, of the right to claim, followed by a prompt application to extend the time once the right to claim becomes known, will usually be a sufficient explanation: Clark v Burns [2011] VSC 394 at [6]. 28It is apparent from what Hallen AsJ said that there is an issue whether the applicant for an extension of time must establish that the applicant is entitled to substantive relief or merely that the applicant's claim for substantive relief is not bound to fail. Where the application for an extension and the application for substantive relief are heard at the same time, as is usual and as occurred in this case, there is no practical difference in the two approaches. Given the interrelationship between the two issues, it is convenient to consider the substantive question first.

Is Alan entitled to substantive relief? 29There is no dispute that Alan is an eligible person. 30It is submitted on Alan's behalf that he has been left without adequate provision for his proper maintenance and advancement in life because the legacy that has been left to him is not sufficient to enable him to buy a suitable house in which to live. It is said that he needs to be able to buy a suitable house because, having regard to his psychological or psychiatric conditions, he cannot be placed in accommodation offered by the Housing Commission or by other institutions. For example, Ms Denise Rickman, the retirement living coordinator for Anglican Care, gives evidence that Anglican Care has three villages in the Westlakes, Toronto area. However, she expresses the view that, because of the disabilities with which Alan suffers, and in particular his hoarding, she does not believe that he would be a suitable person to be offered accommodation in any independent living unit established pursuant to the Retirement Villages Act 1999 (NSW). The only alternative, then, if he is unable to acquire a house of his own is that he will be homeless, as is essentially the position now. 31Evidence has been filed on Alan's behalf of the type of housing that is available in the area in which he lives. According to that evidence, the costs of a suitable house is in the range of $225,000 to $279,000. To those figures need to be added the costs of acquisition. On that basis, it is submitted that, in place of Alan's half share of the residual estate, provision should be made in favour of Alan to enable him to buy a house to the value of $300,000, to pay stamp duty and legal costs of approximately $11,500 and to pay his costs of the revocation proceeding of $44,614.40. Assuming those orders were made, Alan would also be entitled to recover his costs of this proceeding of approximately $32,000 with the result that approximately $94,000 would be available to Lynette. 32Mr Hill, who appeared for Alan, recognised that Lynette had a strong competing claim. However, in his submission, if the court made the orders sought, there would still be sufficient money in the estate for Lynette to repay most of her mortgage of $99,000. Moreover, an order could be fashioned which gave Alan a life estate in the property that was acquired for him or, alternatively, gave Lynette the amount to which she was entitled absent an order if the property acquired for Alan is sold. 33I do not accept these submissions. I say that for a number of reasons. 34First, I am not satisfied that it is so important that Alan live in a house of his own that his needs should, in effect, take priority over those of Lynette's. I accept that it would be preferable for Alan to live in a house of his own, and that that would provide the best conditions under which to treat him. However, accepting that, it remains unclear just what that means in practical terms. It is not suggested that the psychological problems from which he suffers could be cured or even improved substantially if he lived in a house of his own. His obsessive compulsive behaviour is said by Dr Connors to be incurable given his age, circumstances and the treatment required. Dr Connors says that Alan's obsessive compulsive behaviour is the principal reason why Alan needs a house of his own. The idea appears to be that if he had a large storage shed he could store his existing possessions and those that he continues to collect there, and that would improve his state of mind. However, it is not suggested that that would improve his sleep pattern or agoraphobia, which appear to be the principal sources of his depression. Nor is it clear whether Alan could be prevented from accumulating possessions in the house as he did at the Fishing Point property, how that could be done and what effect it would have on his mental state if it could be done. It is obviously undesirable that anyone, and particularly anyone of Alan's age, should find themselves living in a caravan park. However, Alan was offered Housing Commission accommodation. He turned it down. It appears that, for whatever reason, he would prefer to live in the caravan park rather than the accommodation that was offered to him. That is unlikely to be a choice that most people would make. But it was the one he made. On the available evidence, the most that could be said is that, if Alan had his own house, that would provide some improvement in his mental state, but how significant that improvement would be remains unclear. 35Second, I am not satisfied that the object that is sought to be achieved could be achieved by the provision that is sought on Alan's behalf. Dr Connors says in his report dated 28 May 2013: I concur wholeheartedly that a small house with facilities for storing his gear or potential for such a building to be built is essential for the optimal control of his medical problems. We should put a caveat on the living arrangement that they be close to medical services and that he has enough funds to actually employ a house cleaner and a yard maintenance person. I think due to Alan's poor ability to organise himself if these facilities aren't allowed for, then his house and yard will become over run and this would not be desirable for his medical and psychological conditions. No evidence has been given of what funds would be necessary to provide for a cleaner or yard maintenance person. Mr Hill suggested that, all that was needed was for someone to come in once every 6 months to clean the place up and that the costs of that could be paid for from Alan's pension. In my opinion, that is unrealistic. Dr Connors does not express a view on how often a house cleaner and yard maintenance person would be required. However, the likelihood is that a cleaner would be required at least weekly and a yard maintenance person fortnightly or monthly. Alan is not only incapable of doing any cleaning or tidying up himself, but his behaviour means that he creates mess. It is difficult to see how that could be controlled unless he is visited frequently. It seems unlikely that those costs could be paid out of his pension. Moreover, it seems likely that to ensure that a cleaner and yard maintenance person continued to clean the property it would be necessary for the orders made by the Guardianship Tribunal to continue indefinitely. Whether or not that will happen remains uncertain. 36Third, in my opinion, even if a house were bought for Alan and even if arrangements could be made so that it was cleaned regularly and the yard maintained, that would only provide a temporary solution. Alan is 67. Dr Connors has expressed the opinion that he is highly likely to have a heart attack or a stroke. If he does, there is a substantial risk that another form of care will have to be provided for him in any event. Although this factor should not be over-emphasised, it does seem to me to be a relevant factor where Lynette has needs of her own. 37Fourth, it is accepted that Lynette has a strong competing claim. She had a very close relationship with her mother and cared for her mother over a number of years while Alan lived in the house at Fishing Point rent free. Lynette and her husband have a modest income. Both are retired. They have a substantial mortgage, particularly for a couple of their age. Their house needs work, particularly the bathroom and kitchen, which have not been renovated since the house was built in about 1970. They also need at least one replacement car and, in my opinion, some amount of money to provide a buffer against contingencies. If an order is made in Alan's favour, there is unlikely to be sufficient money to repay the mortgage in full let alone meet any other needs Lynette has. It is not an adequate solution to give Alan a life estate in the property that is bought or to give Lynette an interest in the proceeds of sale of Alan's house if and when it is sold. A number of Lynette's needs are immediate. She should not have to bear the uncertainty of not knowing when she might receive further benefits from the deceased's estate. 38There is one other point to be made about the circumstances of this case. The policy behind Chapter 3 of the Act and its predecessors is that a testator should be free to dispose of his or her estate except to the extent that the testator seeks to deal with his or her estate in a way which offends current community standards concerning the appropriate provision that should be made for those who might be thought to have a legitimate claim on the testator's bounty: Vigolo v Bostin [2005] HCA 11; (2005) 221 CLR 191 at 204 - 205 per Gleeson CJ; Stern v Sekers; Sekers v Sekers [2010] NSWSC 59 at [269] - [280]; Re Leonard [1985] 2 NZLR 88 at 92; see also Gorton v Parks (1989) 17 NSWLR 1 at 11. The community standard is expressed in the legislation in terms of whether the testator has made adequate provision for the proper maintenance, education or advancement in life for certain classes of person who have a close personal or family relationship with, or are dependant on, the testator. As s 60 makes clear, a broad range of considerations must be taken into account in determining whether that standard has been met. But the question remains whether the standard has been met, and, if it has not, what provision is appropriate. The question is not whether some other disposition of the testator's property would be better or fairer than the one provided for in the will: Gorton v Parks (1989) 17 NSWLR 1 at 6 per Bryson J; Cooper v Dungan (1976) 50 ALJR 539 at 542 per Stephen J. 39In the present case, the deceased was faced with a difficult choice. The evidence is that she struggled so that she would have the house at Fishing Point to leave to her children. Even so, the house was not of sufficient value to achieve all that she might have wished. She had a son with psychological problems who needed somewhere to live. For that reason, the deceased reluctantly agreed that he could move back home in 1997, even though he was then 51 years old, and for that reason she was no doubt keen to make provision for him. On the other hand, she had a daughter to whom she was very close, with whom she had lived for a number of years, who had no doubt provided her with a great deal of assistance and emotional support and whose own financial position was not strong. Faced with these competing demands, the deceased chose to leave the bulk of her estate to be divided between them equally. Although that may not have been the only way she could have discharged the obligation she owed to each of her children, I cannot see how it could be said that she failed to meet current community standards of what would be expected of a testator in her position. 40It follows that, in my opinion, the deceased did not fail to make adequate provision for the proper maintenance or advancement in life of Alan.

Should an extension of time be granted? 41Having regard to the conclusions that I have reached, strictly speaking, it is not necessary to answer this question. However, I should express my views on it. 42Assuming that Alan had established that he had not been left without adequate provision for his maintenance and support, I would have granted an extension of time in which to bring his claim. 43The delay was a period of approximately 10 months. Lynette has not pointed to any real prejudice that she has suffered as a consequence of the delay. The only prejudice that she has suffered is that there has been a delay in distributing the estate. 44Although neither Alan nor the Public Guardian filed an affidavit explaining the delay in commencing the proceedings, it appears that Alan did not consult a solicitor until February 2012, when he was served with the summons in the revocation proceeding. It can be inferred that he did nothing before then because of his psychological problems which ultimately caused Mr Churches, his solicitor, to make an application to the Guardianship Tribunal. There was not a significant delay between the time when Alan engaged Mr Churches and the time when this proceeding was commenced. In my opinion, Alan's psychological problems provide an adequate explanation for the delay in commencing the proceedings.

Orders 45The summons should be dismissed. 46If the parties can reach agreement in relation to costs, I will make orders in chambers to reflect that agreement. If not, I stand the matter over until a date to be fixed with Associate for any argument in relation to costs.

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: 28 June 2013