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[2013] NSWSC 1911
Supreme Court of NSW
2013-12-12
Young AJ, Mr J
Original judgment source is linked above.
Judgment Introduction 1This is an application under part 3.2 of the Succession Act 2006 by an adult son for an order for provision out of the estate of the late John Joseph Dunne (the Testator). The matter was heard on 12 December 2013 but time did not permit the giving of an ex tempore judgment on that day. However the Court is indebted to Ms D V Robinson who appeared for the plaintiff and Mr J S Emmett who appeared for the defendant for their helpful submissions. Facts 2The Testator died on 23 December 2011, aged 93. He had been married twice. He had two children by his first marriage, a son and a daughter now both deceased. He had six children by his second wife, namely Darrel now deceased, Jacqueline, Gregory and John, plus the plaintiff (Joseph) and the defendant (Paul). Without meaning any disrespect I will refer to the children of the deceased by their first names. 3The deceased's last will left the whole estate to Paul, the defendant. Paul obtained probate on 17 May 2012. 4It would seem that the only asset in the estate is the testator's home at Narrabri valued at $270,000. 5The plaintiff is almost 49 years of age. He has been married to Jennelle for 29 years but they have no children. 6The plaintiff is illiterate and has been unemployed since about 1997. His income comes from a disability pension plus the occasional sale of livestock. His wife is also a pensioner. The plaintiff's health is poor, he has been diagnosed with Type 1 diabetes. He is under medication for depression, hypothyroid and epilepsy. 7The plaintiff lives on a property near Kingaroy, Queensland, which is owned by himself and his wife. His dwelling does not have local council approval and the occupation may well be illegal. However he has been living there for some years. Unfortunately, because of the status of the structure on the property, if the property were to be sold it could only be sold as vacant land and there is evidence of a valuation by a local real estate agent that the land would only be worth some $40,000 to $50,000, though some of the comparable sales mentioned would suggest the figure might be even double that. 8There is no doubt that there was relatively little contact between the plaintiff and the testator after 1989 when the plaintiff left the family home at Narrabri and moved to other country towns in New South Wales and Queensland before settling at his present house. However, the parties came to some agreement on certain factual matters and it was admitted that the plaintiff had visited the deceased as set out in the schedule of visits which was annexed to his affidavit of 2 August 2013. There was no hostility between the plaintiff and the deceased from at least 2003 to the date of death. It was also agreed that the defendant had a close relationship with the deceased and was the deceased's carer for the last five and a half years of the deceased's life. It was also common ground that Gregory, Jacqueline and John received interest free loans from the deceased during his lifetime which they repaid and that a gift of $10,000 to two of those children was the only financial aid which the testator provided for them during their respective lives. 9The schedule to the plaintiff's affidavit shows that he did visit the testator at Narrabri on probably two or more occasions each year. Doubtless he was having to drive from Kingaroy to Narrabri and the evidence shows that he only had a rather old unreliable vehicle. This had something to do with the infrequency of visits. 10The plaintiff says that he was virtually excluded from the family circle before he left Narrabri in 1989. He says that it would appear that his father did not approve of his marriage to his wife, Jennelle. It would seem that this was originally because she was not a Catholic and the testator was a very strict Catholic. Later on relations got worse because Darrel was accused of improper conduct with a young girl and Jennelle gave evidence for the prosecution after the young girl had complained to her about what had happened. The jury found Darrel guilty but he was later acquitted on appeal. The fact that their daughter-in-law sided with the prosecution seems to have completely soured relationships for quite a while. 11The evidence seems fairly clear that the plaintiff and his wife were made most unwelcome in the family home. Despite this, from 2003 the plaintiff did visit the testator and some other members of the family, all of whom seem to live in the Narrabri area. The Claim 12The plaintiff's wish list is that he receive a sum to enable him to build a proper house on his land at Kingaroy. The evidence shows that kit homes can be purchased for about $117,000 but there is a further $10,000 installation cost so that $130,000 has been taken as a round figure for the cost of putting up such a home. In addition, the plaintiff seeks to have a good four-wheel drive motor vehicle, even a second hand one, which he could use not only for personal transport but also for some use on his property which he could, with the aid of a vehicle, use to grow crops to at least a limited extent. His doctor has advised he could work up to two hours a day. The evidence is that such a second-hand vehicle could be purchased for $34,500. Further, the plaintiff seeks to have a more efficient water supply. At the moment he has to get water from the nearby creek and he would like to install a pump and ancillary equipment which would cost about $10,000. He also seeks a tractor which would cost another $30,000 but this claim has been strongly resisted by the defendant on the basis that (a) the plaintiff could not in his state of health be able to operate the tractor for any worthwhile period; and (b) the land which the plaintiff has which is timbered would not need a tractor to do work involved in growing crops on what part of the land has already been cleared. I am in accord with the defendant's submissions on the tractor. 13So far as the house is concerned, the wish list just cannot be met. The estate consists of $270,000 if the valuation of the testator's home is accurate and the market does not change. The defendant wishes to retain the property so one does not have to make any allowance for estate agent's commission and solicitor's costs on sale etc so that I can take the value of the testator's house at $270,000. Affidavits as to costs have been filed. These affidavits do not disclose the precise figure that will be charged at the end of the case but the costs of both sides are in the vicinity of $100,000. Accordingly there is something like $170,000 which could be diverted to the plaintiff if he has established his case. 14Under the will the whole of the estate passes to Paul. In his will the deceased acknowledged that Paul had been his sole carer for the last part of his life. 15It is however also true that Paul benefited at an earlier stage by the deceased transferring property into Paul's name. Paul paid for these properties, but I have not investigated whether he paid full value or not. As a result, Paul does not wish to have his financial circumstances considered as a factor in this case. 16Jacqueline, Gregory and John have made it clear in their affidavits that they do not wish to upset their father's will. It would seem from what they have said that there are two reasons for this: (a) that they think that Paul deserves what he obtained from his father; and (b) they respect their father's wishes. However there is also some evidence to suggest that two of them are not in wealthy circumstances.
Can the circumstances of eligible persons who are not claimants be taken into account? 17Ms Robinson protested when I admitted evidence as to the circumstances of two of what I will call the siblings. She says that that can have nothing to do with the case at all. 18However I do not agree with that submission but it is necessary to divert and consider section 61 of the Succession Act 2006. 19Section 61 is as follows: 1. In determining an application for a family provision order, the Court may disregard the interests of any other person by or in respect of whom an application for a family provision order may be made (other than a beneficiary of the deceased person's estate) but who has not made an application. 2. However, the Court may disregard any such interest only if: a. notice of the application, and of the Court's power to disregard the interests, is served on the person concerned, in the manner and form prescribed by the regulations or rules of Court, or b. the Court determines that service of any such notice is unnecessary, unreasonable or impracticable in the circumstances of the case. 20It is common ground that section 61 and its predecessor section 20(2) of the Family Provision Act 1982 were enacted as a result of the decision of LW Street J in Re Bourke [1968] 2 NSWR 453. In that case the testatrix left a widower and nine adult children. The only substantial assets she had was the matrimonial home in which she gave a life interest to the widower and the remainder for religious purposes. The widower did not make an application under the Act but one of the daughters did. His Honour held that as the testatrix should have left the whole estate to the widower the daughter's claim had to fail. 21One possible construction of section 61 is that if a person is notified of the application made by the plaintiff and deliberately decides not to make an application himself or herself then the Court should at least, if the appropriate notice under section 61(2) is given, disregard the "moral duty" that the testator may have owed to that person. I do not favour that construction because if it were correct it would mean that whenever a widow/widower or child took the view that he or she respected the testator's decision to not benefit him or her then the child who did not respect the testator's decision would get an advantage because the only "moral duty" that would be considered would be the moral duty to the applicant and the children who have not respected the testator's wishes. The alternative construction which I favour is that, even though this is contrary to how the Act generally works as held by LW Street J in Bourke's case, it is open to the Court to disregard the interests of those who fall within the section if it is appropriate. 22The court has a discretion as to whether to do this as highlighted by the word "may" before "disregard". 23Accordingly it seems to me that when one is working out what is the testator's "moral duty" or what does the general community expect of a wise and just testator (whatever may be the current test they all amount to the same thing) one does take into account the duty to the other members of the family but does not necessary do what LW Street J considered he had to do in Bourke's case. 24However the problem does not really arise in this case because although a notice was given to the siblings that the application was on and they have sworn evidence in the proceedings and were present in Court for part of them, no notice was given to them of the Court's power to disregard their interests. As Mr Emmett says, the words in subsection (2) are very strong, the Court may disregard any such interest only if such a notice was given, and it was not. Ms Robinson says that is a mere technicality and that the children affected knew all about it. However, I am governed by the wording of the section which requires a notice calling specific attention to the possible disregarding of the recipient's rights. Accordingly in my view I do need to take into account, when considering whether the testator breached his duty, his duty to the other children as well as to the plaintiff and the defendant.
Rider 25After the draft of these reasons had been prepared, I received further submissions from Ms Robinson protesting that it would be unjust to consider the position of the siblings in view of the default on the part of the executor to notify them properly of their rights. 26Ms Robinson headed her submissions with the words "Application for leave to re-open the proceedings". However I found it difficult to glean what the re-opening was to achieve. Most of the submissions have already been made and considered. 27Mr Emmett opposes the application in his further written submissions. 28My assessment of the case at the time the additional submissions were received was that I could see that the point involved would have very little if any bearing on the result. 29In family provision applications, especially those involving small estates, the Court must be very careful to keep costs down. 30In view of what I have said in the previous two paragraphs, I refuse the application to re-open.
Consideration 31For many years courts have approached this sort of case on a two stage basis following what the High Court said in Singer v Berghouse [1994] HCA 40; (1994) 181 CLR 201 at 208-210. In Andrew v Andrew [2012] NSWCA 308; (2012) 81 NSWLR 656 the Court of Appeal was divided as to whether this approach was still consistent with the provisions of the Succession Act 2006. Barrett JA said it was, Basten JA said it was not and Allsop P did not decide the point. In Franks v Franks [2013] NSWCA 60 the Court of Appeal of which I was a member with McColl JA and Sackville AJA Came to the same conclusion as Barrett JA. 32I believe that I should still continue to follow the two stage approach though in the present case it has little significance whether I do or not. 33The first stage is to see whether adequate provision was made for the plaintiff. As he received nothing under the will the answer to this is very clearly no. The second stage is what provision would a wise and just testator have made for the plaintiff. The estate is a very small one and there is just not enough money to provide housing for the plaintiff even on his own land. There was some exploration during submissions as to whether the plaintiff would be wise to sell his existing land and buy another property which had a house on it, but I think that the way in which our discussion went was that this was equally impractical given the amount of money that is available. 34Accordingly, I must look at the situation on the basis that the plaintiff and his wife will continue on their present block of land. The main need he has is for a vehicle of $34,500, a better water supply which would cost about $10,000 and a nest egg for contingencies. If the last mentioned were fixed at $15,000 that would give an award of approximately $60,000. 35I have performed various exercises as to whether this sort of figure would be in the range. 36One way of looking at the matter is that I disregard the interests of the three siblings and give Paul twice what I give to Joseph in which case a third of $170,000 would be $58,333. 37Another way of looking at it is to say that if one sits in the testator's armchair and says I have Paul who has been my carer for many years so he should get much more than the others, I have the plaintiff who has health problems, is illiterate and is living in poor conditions, he probably should get a double portion and I have three other children so that I might split my estate into ninths and give Joseph two-ninths. This sort of exercise would end of up with a figure of about $43,500. 38Accordingly whichever way I look at it I tend to get something like the same figure. Although $60,000 is the top of the range, I think it would be cheese-paring to go below this and especially in view of the fact that there does not appear to be any severe financial problems with Paul and the other three children are not going to benefit anyhow. 39Accordingly, in my view the proper order is that the plaintiff receive a legacy of $60,000. That legacy is not to carry interest if paid by 28 February 2014, otherwise it is to carry interest in accordance with the rules. Costs 40There is then the question of costs. The defendant's costs on the trustee basis should be paid out of the estate but that is of no moment as the defendant gets the rest of the estate in any event. So far as the plaintiff's costs are concerned, I have consistently taken the view that the costs of a successful plaintiff in a small estate should never exceed the amount of his or her award. This policy is necessary in order to control the conduct of litigation in small estates. 41Although I have forecast to Ms Robinson that I would be taking this attitude in all probabilities I indicated I would give her the chance of making contrary submissions when I deliver these reasons. Accordingly unless I make some other order orally after handing down these reasons I will order that the plaintiff receive his costs out of the estate but capped at $60,000. 42The exhibits may be returned. 43The question arose as to whether any award to the plaintiff should be discounted because of the fact that the plaintiff was not in touch with his father as often as the rest of the family. There is some suggestion in the authorities that this factor may warrant a discount: see eg Keep v Bourke [2012] NSWCA 64 and Andrew v Andrew [2012] NSWCA 308; (2012) 81 NSWLR 656. However I have really absorbed any such concept into my general consideration of the figures including the fact that even though it was 20 to 30 years ago the plaintiff did a considerable amount of unpaid work or inadequately paid work for his father on his father's properties. 44Another factor which is of some but little relevance is that the deceased got the benefit of Darrel's estate but the plaintiff had to look after two of Darrel's children after his untimely death. 45Ms Robinson also put that the estate had a higher value than $270,000. She says that the testator's home has been occupied by the defendant since his death and the defendant has not paid any occupation fee at all. She reckons that the estate should be notionally considered to have the value of $30,000 more than the $270,000. I do not consider that one can, in this sort of case, add on notional figures for what the executor might have done. Ordinarily these disputes would have to be dealt with on accounts and a number of factors would need to be taken into account before charging the executor with some defalcation. In any event where the executor is the beneficiary of the whole estate and intends to keep the property it seems to me that it is artificial to do the exercise in any event.
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: 19 December 2013
Dunne
Dunne
[1994] HCA 40
(2012) 81 NSWLR 656
(1994) 181 CLR 207
(1994) 181 CLR 201