Dunn v McCarthy

PARTIES : James Nevill Dunn v Maurice John McCarthy

COUNSEL : Mr RE Quickenden for plaintiff Mr A Martin for defendant

SOLICITORS : JJ Lees and Associates for plaintiff Brazel Moore Lawyers for defendant

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

2009/3009 Dunn v McCarthy (Estate of the late Frederick Milton Gear) JUDGMENT

1 His Honour: This is an application under the Family Provision Act 1982 in respect of the estate of the late Frederick Milton Gear who died on 30 March 2008, aged 86 years. The deceased was a widower who was survived by the plaintiff, James Neville Dunn, the deceased's stepson and an adopted son, Keith Milton Gear. The deceased was also survived by Noelene Kay Tame, a close friend during the last years of his life. 2 The deceased made his last will on 20 February 2008 and provided legacies in the sum of $30,000 to each of the following: Keith Milton Gear (son); Joanne Cadby (plaintiff's daughter and deceased's granddaughter); James Dunn (step son).

3 He left the residue to his friend, Noelene Tame. Estate of the deceased 4 The assets in the estate have been received and the three legacies totalling $90,000 have been paid as well as the funeral expenses. 5 The present assets in the estate are as follows: Deceased's home at 17 Brisbane Street, Noraville $340,000 Funds in Solicitor Trust Account $ 55,914 820 Commonwealth Bank shares $ 43,164 $439,078

6 The plaintiff's costs are estimated at $40,000 and the costs of the defendant which remain to be paid out of the estate are estimated at $16,000. This leaves $383,078 less the expenses of sale of the home. Family history 7 The deceased was born in 1922. His friend in later life, Noelene Tame, was born in 1927. 8 The plaintiff was born in 1943. His mother purchased a property at Manly Vale in 1947. She first met the deceased in 1958 and at that stage they were both single. 9 The deceased operated a trucking business at Goulburn and the plaintiff's mother was still living at the Manly Vale property. 10 In 1962 the plaintiff's mother and the deceased married. At that time there were discussions about selling the Manly Vale property and the sale took place in 1963. It seems that the plaintiff commenced living on a full time basis with his mother and the deceased after the Manly Vale property was sold. 11 At some time in 1964 when the plaintiff moved to Goulburn he obtained employment as a mechanic's assistant. Since he was 16 years of age he had been helping in the deceased's trucking business and he continued to assist with the trucking business even though he had employment for about nine months. 12 In 1964 after the plaintiff obtained his truck licence he would drive the truck on occasions to help the deceased. He was not paid at that time. 13 In 1967 the plaintiff resigned as a labourer and obtained full time employment with the deceased's business which was carried on by the deceased and his mother. 14 In 1968 when the plaintiff was 25 years he moved out of his mother's and the deceased's household to marry. His son, Michael, was born in 1970 and his daughter, Joanne, was born in 1971. 15 In 1975 when the plaintiff needed to earn more money than was available in the family business, he resigned and obtained other employment. 16 In 1976 the plaintiff and his family left Goulburn and moved to Terrigal while his mother and the deceased remained in Goulburn. 17 In 1980 the plaintiff's mother won $40,00 in the lottery and she purchased land on the Central Coast. In 1985 the plaintiff's mother and the deceased sold the property in Goulburn and they moved to Noraville to be near the plaintiff's family. 18 In 1998 following some medical problems the plaintiff and his family moved to Kempsey but he still maintained regular contact with his mother and the deceased. 19 In July 2000 the plaintiff's mother died. In 2005 the deceased had a relationship with a friend, Jean, which led to difficulties with the plaintiff's relationship with the deceased. 20 In 2002 Noelene Tame began to provide domestic assistance to the deceased. 21 The deceased made his last will on 20 February 2008 and he died on 30 March 2008. Probate was granted to the defendant, a solicitor, Maurice John McCarthy, on 10 June 2008 and a summons was filed in time on 3 June 2009. Eligibility 22 The plaintiff claims to be an eligible person as he was a member of the household of which the deceased was a member and that he was partly dependent upon the deceased. It is plain that he was part of the household for the relevant period between 1963 and 1968. However there is some debate about whether he was dependent upon the deceased. 23 In Ball v Newey (1988) 13 NSWLR 489 the Court of Appeal first considered the question of dependency. Samuels J at page 490 said the following: "His Honour concluded that 'dependent' meant financially dependent, a proposition which has not been challenged in the appeal. It may be that there are other forms of dependence analogous to but distinct from financial dependence which would be capable of satisfying the requirements of section 6(1) the definition of 'eligible person', par (d)(i). In the present case, however, only financial dependence is relied on and I approach the matter on that basis. 'Dependent', in the ordinary sense of the word, means the condition of depending on something or on someone for what is needed. In determining whether that relationship exists, it is relevant to bear in mind what was said by Sankey LJ in Lee v Munro (1928) LJKB 49 at 53; 21 BWCC 401 at 408, that in 'deciding whether or not there is dependency the factors to be considered are past events and future probabilities'. While it is true that here we are concerned with financial dependence and not emotional dependence, the whole relationship between the appellant and the deceased must be examined in the light of that statement in order to exclude situations which might present the simulacrum but not the substance of dependency."

24 His Honour analysed the facts in the case and particularly referred to the fact that the parties had jointly decided to pool their income for the purpose of purchasing property together. He referred to the submission that each of them in the case of a joint mortgage could have only received a partial benefit. At page 492 he addressed the argument in these terms: "Counsel then suggested, as I understood him, that these circumstances produced no dependency because each of them was separately financially capable of acquiring somewhere to live, so that their decision to live together and finance their purchase jointly was, in some sense, an indulgence which the law should not countenance. I see no substance in this argument. I assume that dependency involves the total or partial satisfaction of need. But the need is not restricted to the requirements of basic necessity or sustenance: cf, in a different context certainly, the meaning of "needs" in the Liquor Act 1912 as "reasonable demands or expectations": Toohey v Taylor (1983) 1 NSWLR 743 at 749. Whether dependency, total or partial, exists is a question of fact: Aafjes v Kearney (1976) 50 ALJR 454; 8 ALR 455. It is not to be determined upon theoretical considerations. It is 'the actual fact of dependence or reliance on the earnings of another for support that is the test': per Gibbs J, as he then was, in Kauri Timber Co (Tas) Pty Ltd v Reeman (1973) 128 CLR 177 at 189. 'The standard of support is set by the parties themselves' (at 190). Hence it is irrelevant that the appellant could have provided separate living accommodation out of his own income. That was not what he and the deceased chose to do. If it is relevant, it cannot be said that what they did choose to do was unreasonable; and in order to support the mode of life they wished to pursue, each was, it is open to find, partially dependent upon the other. "

25 This passage emphasises the factual nature of dependency be it financial or otherwise.

26 In Benney v Jones (1991) 23 NSWLR 559, the Court of Appeal returned to the issue in a case where the only dependency was emotional, resulting from a homosexual relationship between a party and the deceased. The Court rejected a submission that dependency may be based solely on the existence of an emotional relationship between them. 27 In Petrohilos v Hunter (1991) 25 NSWLR 343 at 346 the Court once again considered the meaning of dependency. At page 346 the Court had the following to say: "I would respectfully disagree with the Master in both respects. The word 'dependent' is an ordinary English word, and whether a person is or has been wholly or partly dependent upon another is a question of fact. No doubt one of the commonest forms of dependency is a financial one, in the sense that the dependence flows from the fact that accommodation, food, clothing and other necessities or amenities of life are provided by the person who owns or is otherwise entitled to the accommodation and pays for the other things. But I do not think that the word, as used in the statute or otherwise, has this very limited meaning. In ordinary parlance young children are properly and commonly said to be dependent on their mother as well as their father, regardless of where the money comes from. A contrary view, that young children are not dependent on their mother if she has no independent means, seems to me to be a misuse of the language. This accords with what Samuels JA said in Ball v Newey at 491, that "'Dependent' in the ordinary sense of the word, means the condition of depending on something or on someone for what is needed". If the correct view were that the context of the statute requires a limitation of the word to 'financial or material' matters as McClelland J said in Re Fulop Deceased or to 'other forms of dependence analogous to but distinct from financial dependence' as Samuels JA suggested in Ball v Newey (at 491), then surely a mother's services to a young child satisfy the test. The child could not survive without the provision of those services; he or she needs them. To suggest that, in a money sense they are valueless, is simply wrong. If the provision of accommodation by a father for a young child, that is, having the child live in a house which he owns and lives in, can make the child partly dependent upon the father as it undoubtedly can, I am unable to see why the provision by a mother to her children, living with her, of the services essential for their well-being does not make them partly dependent upon her. In my opinion it does. The same considerations apply to a step-child or his or her step-mother when the child lives with the step-mother and is looked after by her. I appreciate that a different view has been taken by others, as for example by Powell J in Dunn v Public Trustee (Powell J, 1 June 1989, unreported), but I would respectfully disagree with that view. In my opinion the plaintiff was partly dependent upon the deceased, certainly for many years of her childhood and probably until her marriage, although no doubt her dependence diminished in the latter years of this period."

28 In McKenzie v Baddeley (Court of Appeal, 3 December 1991, unreported) Meagher JA, although in the minority, further discussed dependency and described it as "financial, economic or material dependency, not a mere emotional dependency". Important in that case the majority held that the word "partly" in the phrase "partly dependent" does not mean "substantially" but meant "more than minimally" or perhaps "significantly". 29 In Williams v Legg (1993) 29 NSWLR 687 the Court in considering a case of a young child needing mothering pointed out that the absence of financial dependence is not conclusive. In the present case the plaintiff was a child aged 12 years at the relevant time. With young children dependency becomes complex, as is illustrated in the cases of grandchildren.

30 There seems to be some doubt about whether the move to Goulburn was in 1962 or 1963. Having regard to the cross-examination it would seem that the date was 1963. At that stage the plaintiff was 20 years of age. By then he was not dependent on his mother in the way he would have been as a young child. He was not employed for nine months when he first moved to Goulburn. He then had employment as a mechanic's assistant for some six to eight months. It is also appeared from cross-examination that he did not have constant employment. 31 The plaintiff paid his mother for food but he did not make any financial contribution to the deceased. In 1967 the plaintiff was employed in the deceased's business for a small remuneration. There is thus a period before that time when the plaintiff had intermittent employment, sometimes as a labourer and sometimes as a mechanic's assistant, when he paid his mother a contribution for food. 32 In these circumstances it seems that the plaintiff could be described as being dependent upon the deceased who owned the Goulburn property. It seems that when the plaintiff's mother sold the home at Manly Vale she used the proceeds to purchase a truck for the business which she and the deceased operated thereafter. I infer therefore that the property was owned by the deceased. 33 Under s 9 (1) of the Act it is necessary that the Court shall first determine whether there are factors warranting the making of the application. This expression has been dealt with by courts on a number of occasions. In Re Fulop Deceased (1987) 8 NSWLR 679 at 681 McLelland J described that expression in the following terms: "Secondly, the subsection appears to be premised upon a distinction between 'factors which warrant the making of the application' on the one hand, and circumstances which would justify the making of an order granting the application, on the other; otherwise the subsection would be pointless. This means that in a particular case the Court might determine that there are 'factors which warrant the making of the application' within the meaning of the subsection, and yet go on to decide that the application should fail. Since the subsection applies only to certain classes of applicants, it suggests that those classes of applicants need to demonstrate some basis for their claims additional to that required of other classes. The difference between the two sets of classes of applicants, in broad terms, seems to be that the classes not affected by s 9(1) (lawful and de facto spouses and children) are as such generally regarded as natural objects of testamentary recognition by a deceased (of the Wills Probate and Administration Act 1898, s 61B), whereas the classes affected by s 9(1) (former spouses, and some time dependent grandchildren or household members) are as such not generally so regarded. This suggests that the 'factors' referred to in the subsection are factors which when added to facts which render the applicant an 'eligible person' give him or her status of a person who would be generally regarded as a natural object of testamentary recognition by a deceased. That the subsection is directed at a plaintiff's status as applicant in some such sense as this perhaps finds some support in the statutory direction to the Court, in the event that it determines the preliminary question adversely to the plaintiff, not to go on to determine the application, but 'refuse to proceed with the determination of the application.'" 34 In Churton v Christian (1988) 13 NSWLR 241 the Court approved this statement. Priestley JA at page 252 after setting out and approving the statement, added: "To this I would add that although the classes affected by s 9(1) are not necessarily generally regarded as natural objects of testamentary recognition, in some cases members of those classes may, when the circumstances of their relationship with the deceased are set out, immediately be seen to be persons who would be regarded by most observers as, in their particular circumstances, natural objects of testamentary recognition."

35 These principles have been applied at first instance for many years. There has been in recent times further attention to this matter in the Court of Appeal in the case of Brown v Faggoter (Court of Appeal, 13 November 1998, unreported). Fitzgerald AJA, who seemed to suggest that an application might be warranted if the application has reasonable prospects of success, gave the main judgment. This seems to be a somewhat different and perhaps easier test than that which the Court of Appeal approved in Churton v Christian (1988) 13 NSWLR 241. I will consider the matter on both bases given that there may be some flux in the state of the law in this regard. 36 In this case the plaintiff came into contact with the deceased when he was aged 16 years. His mother sold her property to live with the deceased and there was continuous contact with the deceased thereafter. The contact was of a family nature with the plaintiff living in the deceased's house where he was partly dependent upon him. There are statements made by the deceased that the plaintiff would receive the business one day. Unfortunately that fact did not eventuate. What happened was that the deceased and his mother sold the business and used the proceeds to move to the Central Coast to be closer to the plaintiff and his family. 37 Given the close relationship I think it is plain that on the traditional test there are factors warranting. I will proceed to consider whether there are prospects of success. 38 In applications under the Act the High Court in Singer v Berghouse (1994) 181 CLR 201 has set out the two-stage approach that a 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 there may be some circumstances in which a court could refuse to make an order notwithstanding that the applicant is found to have been left without adequate provision for proper maintenance. Take, for example, a case like Ellis v Leeder where there were no assets from which an order could reasonably be made and making an order could disturb the testator's arrangements to pay creditors." Plaintiff's situation 39 The plaintiff and his wife are both 62 years of age. They do not have dependant children living with them and their two children live on the Central Coast. The plaintiff receives a pension of $520 per fortnight. His wife receives in the order of $800 per fortnight for intermittent casual work which almost meets their expenses. 40 The plaintiff owns his house at Kempsey which is worth between $290,000 and $300,000. After receiving the interim distribution he made some payments towards his mortgage and he now has a mortgage of $15,000 on that property. He wishes to make repairs to his house which include installing an en suite bathroom at approximately $31,040 and updating the kitchen at a cost of $10,395. He also needs to upgrade the electrics and install some air conditioning at a cost of $37,220. However, should he sell his house expenditure for the air conditioning system may not be warranted. 41 The plaintiff had a good relationship with the deceased and it is plain that the plaintiff's mother and the deceased moved to the Central Coast to be close to them and for some years they lived nearby. After the plaintiff and his family moved to Kempsey they kept in touch. The deceased had a double knee replacement in 1999 and the plaintiff and his wife travelled to Noraville to look after the deceased. When the deceased's health was declining the plaintiff and his wife would travel to Noraville about every three weeks to keep the house in order, to do shopping, prepare meals, attend the gardens, and generally keep the house in a liveable condition. This was particularly important as the plaintiff's mother had died in 2000. 42 In 2004 the deceased formed an inappropriate relationship with a friend, Jean, who apparently was suffering from a medical condition that meant she did not have full control of her faculties. The deceased did not realise the situation and ultimately the plaintiff had to warn him that if he continued with the relationship the police could be involved. This adversely affected the relationship between the deceased and the plaintiff. 43 The plaintiff tried to contact the deceased on a number of occasions but the deceased refused to see him. In the circumstances of a long relationship I do not regard this break in the relationship of any significance. 44 The deceased made the following statement about the plaintiff at the time of signing his will dated 20 February 2008: "As for JAMES NEVILLE DUNN, James is my late wife's son. He is not my son by birth. He is aged about 60 years. His mother died in July, 2000. James is retired. His is in a comfortable position financially and owns his own property/house with his wife as joint owners. He has an independent source of income and lives reasonably well. 45 Although this description of the plaintiff is accurate his reasons for reducing provisions for the plaintiff are not appropriate given the role the plaintiff played in his life. 46 It is necessary to consider the situation in life of others having a claim on the estate of the deceased. 47 It is not sought to interfere with any of the legacies that have been paid. Accordingly, it is only necessary to consider the situation in life of the residuary beneficiary, Noelene Tame. Situation of Noelene Tame 48 Noelene Tame is a widow aged 83 years. She has no dependants and receives an aged pension of $701.10 a fortnight. She has assets of a 1986 Volvo sedan valued at $1,500 and a bank term deposit of $110,000, furniture, clothing and jewellery. She says she is not in good health but for her age she appeared to be a reasonably fit person. I have no doubt she has developed stress as a result of these proceedings. 49 Noelene Tame lives in a home at Chelsea Close, Noraville, owned by Mr and Mrs Geradis whom she met at church. She previously owned property that she sold and she has paid $150,000 to Mr and Mrs Geradis who have allowed her to reside at the home at Chelsea Close. The terms of the arrangement is not in evidence but it seems that there was some arrangement to allow Noelene Tame to live in the property and the payment was made on account of future rent. One would assume that her accommodation is therefore secure. 50 The deceased made the following statement at the time of signing his will: "I have made substantial provision for my friend NOELENE KAY TAME who has been my confidant and carer for many years. She has attended to my personal needs, washing, cooking, ironing, cleans the house, attends to my banking and shopping, mows my lawns and does the garden, attends to payment of all my bills and administers my medication as prescribed by my medical practitioner. She has lived under my roof for almost 2 years, immediately prior to my executing my last Will. She has been assisting me in those ways I have listed above for almost 6 years. I would have been lost without her and the help, care and assistance she has given me. 51 The deceased's statement about the length of the relationship with Noelene Tame does not seem to be supported by the evidence given the deceased's relationship with Jean in 2005. It is not suggested that there was any sexual relationship between the deceased and Noelene Tame but that they had a friendship which included assistance to the deceased. Consideration 52 It is necessary to consider how the plaintiff has been left without proper provision for his maintenance, education and advancement in life. 53 The plaintiff and his wife say they would like to sell their house at Kempsey and move to the Central Coast to be closer to their children. There is evidence of the cost of weatherboard cottages which are somewhat similar to their existing home which cost between $300,000 and $340,000. If they sold their Kempsey property and purchased another property there would be costs of agent's commission of approximately $6,000, stamp duty and legal fees. One could anticipate that the costs of purchasing a new home would be in the order of $70,000. There are the other matters I have mentioned about their home at Kempsey and some of the costs involved in repairs and upgrading which would probably increase the sale price. 54 So far as the residuary beneficiary Noelene Tame is concerned it is notable that she has given no evidence of what she did to assist the deceased. The only evidence comes from the deceased's statement at the time he made his will. Noelene Tame seems reasonably secure in her home and she has a substantial fund behind her to provide for contingencies. 55 In the circumstances it would seem that the provision made by the deceased for Noelene Tame was somewhat generous considering the nature of the relationship. 56 In contrast the relationship between the plaintiff and the deceased was in the nature of a father and son relationship. When the plaintiff was a child he assisted the deceased by working for him for no reward and when he was involved in the family business he worked for a reduced wage. In the circumstances one would have expected some reasonable provision to be made for the plaintiff by the deceased. 57 I note that no claim has been made by the deceased's adopted son, Keith Gear, and he has been served with notice of the proceedings. 58 In the circumstances it seems to me the provision for the plaintiff was inadequate and the legacy in favour of the plaintiff should be increased from $30,000 to $160,000. 59 The orders I make are as follows:

1. In lieu of the legacy of $30,000 in favour of the plaintiff contained in the will of the late Frederick Milton Gear dated 20 February 2008, the plaintiff will receive a legacy in the sum of $160,000.

2. Interest to be paid on the balance of such legacy if it is not paid within three months from today's date and if not so paid, to bear interest at the rate prescribed for under the Probate and Administration Act 1898.

3. That the plaintiff's costs to be paid on the ordinary basis and the defendant's costs on an indemnity basis be paid or retained from the estate of the deceased. **********

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