Dwyer v Mulligan

COUNSEL : Mr RE Steele for plaintiff Mr JA Trebeck for defendant

SOLICITORS : Flowers Legal for plaintiff Garden & Montgomerie for defendant

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

2133/06 - DEONE MICHELLE DWYER v HELEN MULLIGAN - ESTATE OF GRAHAM NEVILLE MULLIGAN

JUDGMENT 1 HIS HONOUR: This is an application under the Family Provision Act in respect of the estate of the late Graham Neville Mulligan who died on 8 February 2005. The deceased was survived by his daughter from his first marriage, who is the plaintiff in these proceedings, and his third wife, who is the defendant in these proceedings. His first and second wives and another daughter have been given notice of the proceedings and make no claim. The will of the deceased 2 The plaintiff in his will of 29 May 2000 left the estate to the defendant and appointed her executrix. As there was little actual estate, no grant of probate was obtained in New South Wales. The grant under s 41A was obtained by the plaintiff. Assets of the estate 3 The deceased's property at Cowra, which was in the course of construction at the date of death, passed by survivorship to the defendant. They also held jointly a property in Fiji, farm equipment, various bank accounts and these have all been realised except the Fiji property, which is in the course of transfer to the defendant. The Cowra property and the Fiji property are now worth respectively $420,000 and between $300,000 and $330,000. The bank accounts passing were $41,710 95 plus the Fiji account FJD$2,081.02. The farm machinery was sold by the defendant and she received the proceeds of $58,062 93. The deceased's estate owes Centrelink the sum of $74,591. This sum arose because the deceased, on the advice of his doctor, applied for a pension and apparently did not disclose at some later stage his assets. Similarly, the defendant was persuaded to apply for a pension, and I will come back to the debt that ultimately she has to pay as a result of that and also the deceased's claims not being appropriate claims and pensions. 4 Costs have been incurred in this case as follows: the plaintiff has incurred $45,000 and the defendant $30,000. The case in respect of those costs has been well prepared, as I have mentioned, with detailed affidavits by the parties. Family history 5 The defendant was born in Cowra on 2 December 1945. She grew up in Cowra and lived on a farm. She married and in 1966 went to England with her husband. They had one daughter who is now self-sufficient. 6 The plaintiff was born on 19 November 1962 and is the daughter of the deceased and his first wife, Evelyn Ida Mulligan. Her sister was born in April 1969 but makes no claim. The plaintiff completed year 10 at Cowra High School in 1979 and then did secretarial studies for a year before moving to Sydney. There she resided with the deceased for a while in a caravan park and then in 1981 moved in to live with Max Dwyer in a flat above her father's flat at Narrabeen. Their first son was born on the 11 November 1982 and, in due course, in February 1985 the plaintiff and Max Dwyer married. In this period she had a number of jobs as a receptionist and has continued in that employment throughout her life. 7 In 1988 the defendant returned to Cowra from England. As I have mentioned, she had been married but she was divorced in England and returned to Cowra so she could look after her parents. She purchased a property at 24 Nambucca Circuit, Cowra in 1988 on her return. It was on 17 November 1990 that the defendant and the deceased married and they moved into the house in Brisbane Street, Cowra, which was owned by the deceased's mother. They met again for the first time since childhood apparently the year before. 8 The plaintiff's second son, Sam Dwyer, was born on 25 August 1991. In 1992 the defendant sold her house in Cowra for $117,000, which funds she applied to hers and the deceased's joint endeavours. In 1995 the deceased's mother transferred to the deceased her farm "Glendara". This was a property of some 800 or 900 acres. The mother suffered a stroke in 1997 and the deceased and the defendant moved out to the farm to run it and also look after the deceased's mother. That involved quite some work but by 1999 she had to go into a nursing home. 9 In May 1998 the deceased and the defendant purchased a block of land in Fiji upon which they subsequently erected a residence. They travelled to Fiji quite often as the deceased was fond of that place. At one stage in 1999 the plaintiff travelled to Fiji with her son to keep the deceased company and that trip was paid for by the deceased. 10 In March 2000 the deceased, acting as his mother's attorney, sold her property at Brisbane Street, Cowra for $90,000. The net proceeds of the $85,812 were used by the deceased for the purchase of the property at 55 River Park Road, Cowra. The purchase was on 17 April 2000 and it was purchased by the deceased and the defendant as joint tenants in the sum of $70,000. 11 The deceased made his last will on 29 May 2000. Thereafter the deceased sold "Glendara" on 20 April 2001 for $129,281 and the balance was sold in February 2003 $580,579. After the sale $280,000 was put into investment accounts in the deceased's name and a similar amount in the defendant's name with the AMP. 12 In September 2005 the defendant purchased a property at 5 Mees Street, Cowra, which was an investment property, for $90,000 with the funds provided. In January 2000 the parties started building their home at 55 River Park Road, Cowra. They used a substantial amount of the funds that they then had available to them. The property was nearly completed when, on 8 February 2005, the deceased died quite suddenly in Fiji. 13 In April the defendant moved from "Glendara" into their home at 55 River Park Road, Cowra. 14 The proceedings were commenced on 31 March 2006 within time. The plaintiff is an eligible person as she is his daughter. 15 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 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 from arrangements to pay creditors". The plaintiff's situation in life 16 The plaintiff is 44, married with three dependent children and she and her husband live in rented accommodation at Warriewood in the northern suburbs of Sydney. Their assets are small. She has furniture of $10,000, a car worth $20,000 and about $1,400 in the bank. They have car loans and card debts of $36,824. The plaintiff works part-time as a medical receptionist. She receives some family tax benefit. Her husband works as an operations manager for United Resource Management and for the year ended 2007 he received a gross pay of $87,375. Their net weekly income is $1,740. Their expenses, including rent and after making allowances for concessions made in cross-examination, appear to be in the order of $1, 600 per week. The plaintiff has not disclosed what superannuation she must have but obviously there is some small amount. Her husband has at least $64,854 in superannuation, but whether there is any more is not certain. 17 Insofar as the relationship with the deceased is concerned the plaintiff had a good relationship with the deceased. Since the late 1980s the deceased was back in Cowra or in Fiji but contact was still maintained. It was not as frequent as before when they were both living in Sydney and there were many Christmases which were not spent together because of distance. Plainly there was no breach in the relationship and it continued until the death of the deceased. The plaintiff made no contribution to the estate and she did receive some benefits from the deceased including the trip to Fiji. The defendant's situation in life 18 The defendant is single, 61 years of age. She has as assets her house at Cowra which, together with a block of land at the back, is worth on the evidence $420,000. She also has the property 26-28 Mees Street, Cowra valued at $115,000. That is an industrial shed which has not been let for quite some time because of the downturn in the economy in Cowra. There is the property in Fiji worth between $300,000 and $330,000 and she has cash of some $31,000. She also has some superannuation of $25,000. 19 The defendant has a number of liabilities. She has a Centrelink debt of $86,679 presently which is being repaid in the sum of $10 per week. There is no reason why that current arrangement for repayment might not change, particularly if she receives further funds once Fiji is sold or she sells the property at Mees Street, Cowra. The arrangements do not seem to contemplate that they cannot be changed. There is a question mark over the property in Fiji. The evidence does not state directly whether it will be part of the estate or whether it will be joint property. Such little evidence as there is indicates there is a transfer to the plaintiff in the process which may simply be a transfer to her pursuant to the will of the deceased, as she had to obtain probate of the property in Fiji to get the property transferred. 20 The defendant closed the AMP account of the deceased and withdrew some $35,000 shortly after the date of death and to this extent that certainly amounts to assets in the estate for which she would be liable to Centrelink as she intermeddled in the estate in New South Wales and would be an executrix de son tort. Given the uncertainty as to the state of the Fiji title and that the only indications are it was part of the estate, I think that it is likely that the defendant may have to meet the debts of $161,270. 21 As far as her income is concerned at the moment she is not entitled to any pension because of the assets which she has. She works as a secretary on a casual basis and between October last year and June 2007 she has received about $6,000 to date in that employment. The chances of her obtaining any other employment are small and she will not be entitled to the aged pension for some four years. 22 The defendant suffers from reactive stress which is understandable given the present litigation. Whether it will improve is a matter which remains to be seen. The defendant had a good relationship with the deceased. She helped him in all his endeavours, including physical work on the farm, and was a great support to him in his declining years. It was a marriage of nearly 15 years. There are also a number of contributions which the defendant made to the estate. She had previously owned her own home and was employed at the time they met. She met the wedding costs of $5,000 and sold her home in Cowra for $117,000, which was put into their joint names. She purchased cattle at $11,174 and paid running the costs for the property in the sum of $83,826 80. She spent on furniture and similar matters $27,360, made a contribution of $12,000 to the Holden Rodeo and spent another $5,000 on the purchase of furniture. These contributions are substantial, although it is to be remembered that the deceased himself, from the assets which he received from his mother, contributed some $700,000 plus to their joint endeavours which have ultimately ended up in the house in Cowra and the land in Fiji. Discussion 23 It is necessary to see how the plaintiff says that she has been left without adequate and proper provision for her maintenance, education and advancement in life. She puts forward three claims. One is that she needs a deposit on a house of $140,000. She would like to buy a property in the Warriewood area for some $700,000. She needs some items of furniture in the order of some $5,000-$10,000 and she also has debts of $36,824. 24 All such claims have to be seen in the light of the claims of others upon the estate of the deceased, in this case the defendant. Although the defendant does not have to justify that provision made for her, the Court's approach to a claim for a widow gives some guidance as to whether or not the defendant has been adequately provided for by the deceased and whether her share should be impinged upon by some order made in favour of the plaintiff. 25 Recently in Bladwell v Davis & Anor [2004] NSWCA 170 comments were made upon the standard approach in widows' claims. Bryson JA had the following to say: "12 There have been many statements in judicial decisions, including decisions in the Court of Appeal, generally to the effect that primacy of some kind is accorded to claims of widows for proper maintenance and advancement in life, including continuance of housing arrangements which they enjoyed during the lifetimes of their late husbands. These statements are not altogether uniform in expression, and should be understood as made in each case in relation to the facts under consideration; and those facts vary widely and in truth are unique to each particular case. 'Widow takes all' is not a rule which has been or could be established by judicial decisions: the Court cannot resign the functions which it has under S 7 of the Family Provision Act 1982 in favour of rules of thumb. A rule which was once followed which practically prevented ordering provision for an adult son who was fit to work has been abandoned. 13 Observations on the claims of widows were made by Powell J in Luciano v Rosemblum [1985] 2 NSWLR 65 at 69-70 in these terms: 'It seems to me that, as a broad general rule, and in the absence of special circumstances, the duty of a testator to his widow is, to the extent to which his assets permit him to do so, to ensure that she is secure in her home, to ensure that she has an income sufficient to permit her to live in the style to which she is accustomed, and to provide her with a fund to enable her to meet any unforeseen contingencies.' These observations were not made in the context of a competing claim or proved need by another eligible person, and were introduced by a guarded reference to a general rule and the absence of special circumstances. However they are frequently, almost universally cited in applications where provisions for widows are under consideration. 14 In Golosky v Golosky NSWCA 5 October 1993 (unreported) the widow, second wife of the testator, was the applicant and the sons of the first marriage, the will beneficiaries whose interests were affected, were well off and did not assert financial need. The majority (Kirby P, Cripps JA concurring) ordered further provision for the widow, and Kirby P referred to Luciano v Rosenblum briefly for comparison, but also said: 'Matters such as these rule out an inflexible rule that every spouse or every widow is entitled, as of right and in every case, to look to a testator to provide accommodation for life. Such inflexible rules used to exist in this area, as for example the previous rule that an 'able-bodied son' was disentitled to a claim under the predecessor to the Act for that reason alone. That rule has now been abandoned in this State. See [ Hunter v Hunter & Ors (1987) 8 NSWLR 573 (CA)575f],580f; cf Anderson v Teboneras & Anor [1990] VR 527.. So should inflexible rules about spousal provision.'"

26 His Honour agreed with those comments and with the additional remarks made by Ipp J in that case. His comments were as follows: "I agree with Bryson JA, for the reasons his Honour has stated, that 'it would be an error to accord to widows generally primacy over all other applicants regardless of circumstances and regardless of performance of the stages of consideration described in Singer v Berghouse (1994)181 CLR 201. I would add, however, that where competing factors are more or less otherwise in equilibrium, the fact that one party is the elderly widow of the testator, is permanently unable to increase her income, and is never likely to be better off financially, while the other parties are materially younger and have the capacity to earn more or otherwise improve their financial position in the future, will ordinarily result in the needs of the widow being given primacy. That is simply because, in such circumstances, the widow will have no hope of improving herself economically, whereas that would not be the position of the others. In that event, the need of the widow would be greater than that of the others.

27 The defendant's situation is that it was not a long marriage. There were no children which they had together. However, the defendant was very supportive of the deceased and contributed a lot to his support both financially and in a number of other ways. She has little cash reserves and is likely to receive about half of the Fiji proceeds of sale. 28 The plaintiff is over 40 and may have difficulty in improving her situation. She only has skills as a receptionist and her husband seems to have perhaps reached the position which he will remain in, he previously having been a bus driver like the deceased was at one stage in Sydney. She has some immediate present needs such as repayment of debts and obtaining some furniture. No provision was made for her under the will of the deceased and I would have thought that at least some small provision would be appropriate to make for her. Given that it is appropriate to make some provision it may be necessary to designate property as notional estate in the event that there is no estate. There is a question mark over the Fiji property and to the extent that there is this question mark I think I should consider the question as to whether to designate property as notional estate. The house at Cowra was purchased as joint tenants with the deceased. The relevant prescribed transaction which is alleged under s 23(b)(iii) of the Act is the failure of the deceased to sever the joint tenancy. She said that the joint tenancy. By the combined effect of s 22(1)(a)(i), 4(b) and (5) there will be a prescribed transaction if the deceased omits to sever the joint tenancy immediately before death and full valuable consideration in money or money's worth is not given for the omission of the deceased to do that act (s 22(1)(b)). 29 In Wade v Harding (1987) 11 NSWLR 551 Young J (as he then was), concluded on the facts of that case: "…what was forgone in not severing the joint tenancy was received by continuing to be a joint tenant." 30 This conclusion appears to be a course he formed the view that immediately before death the deceased had an equal chance with the joint tenant of benefiting by the jus accrescendi. 31 In Cameron v Hills (unreported 26 October 1989) Needham J described that approach in these terms: "With great respect to his Honour, I find it difficult to see how a joint tenant, about to die immediately, can be said to have an equal chance of surviving the other joint tenant. The Court must look at the position the moment before death. Whatever may have been the facts in that case justifying the conclusion, there are no such facts in this case. Immediately before the death of this deceased there was no rational prospect of his surviving the defendant. Accordingly, in my opinion, no valuable consideration in money or money's worth was given for the omission of the deceased to sever the joint tenancy."

32 Needham J's approach has now been followed in the Court of Appeal (see Cetojevic & Anor v Cetojevic [2007] NSWCA 33. Provided that a deceased has suffered some injury, had a medical problem or set in train some sequence of events as a result of which death ensues. then, like Needham J, I would normally conclude that there was no rational prospect of the deceased surviving his co-tenant. 33 In the present case the deceased died suddenly and in these circumstances there was no prospect of him surviving the defendant. There is, thus, a prescribed transaction. 34 Section 27 of the Family Provision Act is in the following terms: (1) On an application in relation to a deceased person , the Court shall not make an order designating property as notional estate of the deceased person unless it has considered: (a) the importance of not interfering with reasonable expectations in relation to property , (b) the substantial justice and merits involved in making or refusing to make the order, and (c) any other matter which it considers relevant in the circumstances. (2) In determining what property should be designated as notional estate of a deceased person , the Court shall have regard to: (a) the value and nature of property the subject of any relevant prescribed transaction or distribution from the estate of the deceased person , (b) where, in relation to any such prescribed transaction, consideration was given, the value and nature of the consideration, (c) any changes over the time which has elapsed since any such prescribed transaction was entered into, any such distribution was made or any such consideration was given in the value of property of the same nature as the property the subject of the prescribed transaction, the distribution or the consideration, as the case may be, (d) whether property of the same nature as the property the subject of any such prescribed transaction, any such distribution or any such consideration could, during the time which has elapsed since the prescribed transaction was entered into, the distribution was made or the consideration was given, as the case may be, have been applied so as to produce income, and (e) any other matter which it considers relevant in the circumstances." 35 The important matter to be considered here is the expectation of the defendant. The defendant and the deceased had embarked upon a course before the deceased's untimely death of providing for their retirement with a substantial home which might be described as their dream home. That process was completely interrupted by the untimely death of the deceased. 36 The defendant needs some income supplement. In her affidavit evidence she does not say what amount she will need but plainly something will have to be done and it is probably difficult for the defendant to estimate what her future needs will be because of the uncertainty both of this litigation and the resolution of the rest of the estate. It is plain that the investment property in Cowra will have to be sold but that may take some time. Costs also will have an impact on this estate. 37 In these circumstances it seems to mean that there should be nothing that should impact upon her keeping the house which both she and the deceased had planned and directed their lives towards achieving before he died. She will have to have some income supplement. In these circumstances any order in favour of the plaintiff must be quite modest. 38 In the circumstances I think a legacy in the plaintiff's favour of $50,000 is appropriate. 39 Accordingly, the orders that I make are as follows: 1. I order that the plaintiff receive a legacy from the estate of the deceased in the sum of $50,000. To the extent that the legacy cannot be paid out of the estate of the deceased I designate the property at 55 River Park Road, Cowra as notional estate to the extent necessary to meet the legacy and any interest thereon and costs. 2. I order that interest shall run on the legacy if not paid within four months of today's date to and from that date at the rate provided for under the Wills Probate and Administration Act . 3. The plaintiff's costs on the ordinary basis and the defendants on the indemnity basis can be paid or retained out of the notional estate of the deceased. 4. Exhibits can be returned. *********

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