Franks v Franks

Judgment 1MCCOLL JA: I agree with Young AJA's reasons and the orders his Honour proposes. 2SACKVILLE AJA: I agree with Young AJA. 3YOUNG AJA: These two appeals are from a decision of Macready AsJ in the Equity Division of this Court on two applications brought under the Succession Act 2006 seeking orders for provision out of the estate of the late Dawn Franks who died on 13 January 2010. 4The Associate Judge heard the two applications together and gave his decision on 10 November 2011 [2011] NSWSC 1261. 5The following paragraphs set out the basic facts taken from the primary judge's reasons. 6Dawn Franks was survived by her husband, Alan Franks, and her two children, Brad Franks and Gregory Franks. Alan and Brad Franks each brought applications for provision out of Dawn Frank's estate. I refer to members of the Franks family by their first names without intending any disrespect in doing so. 7Each application succeeded to some extent, and there is an appeal in each case. In Brad's application (2011/50364), Gregory is the appellant and Brad the respondent; in Alan's application (2012/45265), Alan is the appellant and Gregory, the respondent. 8By her will of 13 March 2008, the deceased appointed Gregory as executor, and gave legacies of $20,000 to her son Brad and $10,000 to her niece Paula Elizabeth Magnee. She gave the residue of her estate to Gregory. 9The only significant asset in the estate is the deceased's house at Treetop Crescent, Port Macquarie ("the Port Macquarie property"). The primary judge accepted that it has a value of between $409,000 and $420,000. 10At the date of death there were cash funds of just over $4000, minor items of furniture and an unregistered car. Administration expenses and funeral expenses amounted to $10,000. 11Alan is 82 years old; he has retired. At the time of the trial, he lived in a Housing Commission unit in Sydney which he did not want to give up until he knew the outcome of this case. He owns some old furniture which was given to him by a relative and he purchased a recliner some years ago. Apparently he has sufficient savings to cover his funeral expenses. His sole income is the aged pension. 12Brad is 51 years of age. He is married and lives with his wife, Melissa, who is responsible for her two children who live with them most of the time. The primary Judge found that Brad received income from Centrelink and from casual work as a cleaner totalling $450 per fortnight. Brad had completed studies qualifying him to work as a nursing assistant in aged care and he gave evidence that he had been offered a part-time job at a nursing home in Port Macquarie. Brad's wife earned $1226 per fortnight and in addition apparently received some support from the father of her children. Brad and his wife had assets of approximately $5000 and paid rent of $310 per week for their accommodation. 13Gregory is 48 years of age, single with no dependants. He had to close his DVD hire business because of his need to care for his mother. He had left his business to friends to run but this was not a success and it eventually closed. He is in receipt of a carer's pension of $776.10 a fortnight in relation to the care he gives to his father, Alan. He has no assets other than a car worth approximately $1000 and superannuation worth approximately $5000. Gregory wishes to look after his father and for that reason cannot work full time. As discussed above, he has incurred expenses as executor of the deceased's estate including funeral expenses and other costs. 14Clause 7 of the will reads as follows: I have limited my gift to my son Brad Alan Franks as I believe my son has mistreated me most cruelly. I have suffered physical abuse and lost weight due to the stress and distress that has come from his verbal abuse. I also say that he broke my right hand at one time. For these reasons I have limited my bequest to him. 15The primary judge referred to a statement made by the deceased in 2007 to her solicitor in which she denigrated Brad. The primary judge did not accept as accurate the allegations made in that statement in clause 7 of the will. Although he did not accept all of Brad's evidence, he found that Brad did provide care for the deceased between 1991 and 2005. 16The primary judge found that Brad did not contribute financially to the deceased's estate. Indeed, his Honour found that Brad was a financial drain on his parents all his life until he obtained a carer's pension in about 1991, when the deceased was diagnosed with osteoporosis and granted a disability pension. 17The primary judge cited the High Court's decision in Singer v Berghouse [1994] HCA 40; (1994) 181 CLR 201 and adopted the two stage process required by that decision. 18After a full discussion of the evidence, his Honour held that inadequate provision had been made for both Alan and Brad under the deceased's will (see [94]). There is no challenge to this finding on appeal, nor is there any challenge to the finding that both applicants were eligible persons entitled to make their applications. 19The primary judge made his decision in [102]-[106] of his reasons as follows: [102] In my view Alan Franks' claim for a life estate in the home at Port Macquarie which he would share with Gregory is of such an order that it should have priority over Brad's claim. [103] Alan Franks' claim is only for a life interest and this leaves the remainder to be divided between his two sons, Gregory and Brad. [104] Although Brad cared for his mother for some years, for which he was mostly paid by a carer's pension, it is clear that he was supported by both his parents for many years before he started working as a carer. His need is not for $20,000 given under the will but for a more substantial deposit on a house. [105] In these circumstances, it seems to me that there should be a life interest in favour of Gregory Franks and Alan Franks in the Treetops Crescent, Port Macquarie property determinable on the death of Alan Franks. There should be appropriate provision for substitute accommodation if Alan Franks needs funds to go into a nursing home. [106] The interest in remainder should be held equally for Gregory Franks and Brad Franks. The provision for Brad should be in lieu of the provision given to him under the will of the deceased. 20The orders provided that if Alan so requested, the executor was to sell the Port Macquarie property and apply the proceeds of sale to acquire accommodation for Alan suitable for elderly, retired, sick or incapacitated persons and to pay Alan any surplus income derived from any balance of the proceeds of sale. The primary Judge ordered each party to bear his own costs. 21Both Gregory and Alan have appealed. Each of them signed the Notice of Appeal as litigants in person. Each Notice of Appeal is in identical form and alleges that the learned primary judge did not properly consider certain aspects of the case. They each ask that the appeals be allowed and that the deceased's will be left undisturbed. This is a little odd as Alan is effectively saying that his own application (as well as that of Brad) ought to have been dismissed. 22In his original written submissions, Alan said that he only made a claim in case Brad's claim succeeded and that his preferred position was to uphold the will. However, shortly before the appeal was heard, Alan Franks sent an additional set of written submissions. Alan argued that the orders did not adequately cater for all contingencies, in that the terms of his life interest did not permit him to sell the Port Macquarie property and purchase private accommodation in another area such as Sydney, should his health needs not be capable of being met in regional Australia. 23The hearing took place on 28 November 2012. Mr I Collins, solicitor appeared for Gregory, Mr D Lloyd of counsel appeared for Brad. 24Alan did not appear at the hearing, but sent a note to say that he was unable to attend court because he was in hospital. In his note, Alan indicated that he was content for Gregory or his solicitor to make submissions on his (Alan's) behalf. Mr Collins quite properly stated that he had no instructions to speak on Alan's behalf and that, in any event, there was a potential conflict between Alan's interests and those of Gregory. 25In these circumstances, the Court ruled that the hearing would proceed as far as it could, but that we would adjourn the conclusion of the hearing to enable Alan Franks to make further submissions after he had read the transcript of the oral hearing. 26The hearing proceeded, written and oral submissions were considered as detailed below, and then the further hearing was adjourned for further written submissions. Alan filed further submissions dated 31 January 2013, Gregory on 15 February 2013, and Alan in reply on 25 February. All these submissions gave the impression that they had a common creator who was not a lawyer. Brad, by his counsel, made very brief submissions on 18 February and has indicated that he does not intend to make further submissions. 27I will first consider the submission made at the original hearing and then consider the supplementary submissions, though, in my view these added little to the argument. 28Gregory's original written submissions (which were composed by himself as a litigant in person rather than by a lawyer) commenced: "1. The grounds of this appeal rest on the lower court's failure to properly apply the provisions of the Succession Act 2006. The Act makes it clear as to what matters the court should take into account in assessing an application for greater provision. The applicant in the lower court, Brad Franks, did not make out a claim for greater provision within the meaning of the Act. 2. It is conceded that the applicant Alan Franks did make out a claim for greater provision within the meaning of the Act. There is dispute however as to the best method of addressing Alan's claim for provision." The suggestion is then made that the will should be upheld with due consideration given to some provision for Alan, although the precise nature of that provision is not identified. 29On the hearing of the appeal, Mr Collins accepted that it was appropriate for the primary judge to follow the course laid down in Singer v Berghouse and that Brad had surmounted the first hurdle of the two stage process referred to therein. Accordingly, he identified the key question as whether the primary Judge had erred in determining the quantum of the provision made for Brad in lieu of that made under the deceased's will. 30The further submissions made by Alan and Gregory appear to have been made without the benefit of input from Mr Collins or any other lawyer. They do not deal with the key question noted in the preceding paragraph. Rather they repeat one of the themes in the original written submissions; that is, the suggestion that the court below gave too much credibility to the assertions of Brad in the face of the rejection of many of those assertions by the Guardianship Tribunal at a hearing shortly before the deceased's death. 31Perhaps the peak point of these submissions is when Gregory wrote, "It is astounding that once a tribunal has made an informed decision that is not appealed against another court would draw a contrary conclusion with only a scattering of the same facts and none of the witnesses before it. That is indeed what the lower court has done in this matter and yet Lloyd claims that there was no error in the findings of fact in the lower court." 32I do not accept these submissions or indeed similar submissions made originally. The primary judge made it abundantly clear that he did not accept Brad's evidence as accurately reflecting what happened with the care of the deceased (see [67]) and that he perceived a number of inconsistencies in Brad's evidence which made him wary of accepting Brad's evidence at face value ([68]). He also suspected that Brad overstated the deceased's need for care. 33I also do not accept the submissions made by Mr Lloyd to us based on references to supporting affidavits that the primary judge erred in not accepting Brad as a model carer. The primary judge fairly assessed the evidence and stated a conclusion which was within his mandate. 34In any event, the matters I have just been discussing do not go to the key question to which I will now return. 35On an appeal against a decision concerning the application of the second limb of Singer v Berghouse, the Court is dealing with a discretionary judgment (see Singer v Berghouse (at 211) and Durham v Durham [2011] NSWCA 62 at [82]; 80 NSWLR 335 (at 352)). It follows that his Honour's decision is reviewable by this Court only in accordance with the principles established in House v The King [1936] HCA 40; 55 CLR 499. 36Mr Collins submitted that the primary Judge's discretion had miscarried because he had not given consideration to the comparative financial resources of the three parties, particularly to Gregory's needs compared with those of Brad. Mr Collins relied particularly on s 60(2)(d) of the Succession Act which provides that the Court may take into account: "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." 37The primary judge painted a relatively comprehensive picture of the rival claimants and their financial and other circumstances. This was well and thoroughly done. However, with respect, his Honour's reasoning in support of the conclusion that the estate should be equally divided between Gregory and Brad, after the determination of Alan's life estate, is incomplete. In particular, his Honour does not appear to have taken into account the imbalance in the financial resources of the two sons. 38Mr Lloyd did not dispute that if the primary Judge failed to take into account the respective financial resources available to Gregory and Brad, his discretion miscarried. However, he submitted that when the reasons are properly construed, his Honour had borne in mind the disparity in the financial resources available to Gregory and Brad, but had decided that an equal distribution reflected their respective contributions to the deceased's well-being. Mr Lloyd contended that the primary Judge had considered it important that Brad devoted himself for so many years in caring for the testator after she was incapacitated in May 1991 until at least 2005 whilst Gregory was only involved in her care for a very much shorter period. 39I do not accept Mr Lloyd's submissions. It is clear from his Honour's findings that Gregory's financial position is significantly inferior to that of Brad, although neither owns any substantial assets. Gregory is dependent on the carer's pension, has been out of the workforce for a considerable period and, lacking vocational qualifications, is likely to experience difficulty in re-entering the workforce when he is no longer Alan's carer. By contrast, Brad is qualified to engage in paid employment, has opportunities to increase his earnings and has the benefit of living with a partner whose wages, although relatively modest, are higher than welfare benefits. There is no explanation in the reasoning as to why his Honour considered it appropriate to divide the principal asset of the estate equally between Gregory and Brad when their circumstances are significantly different. 40A further difficulty with Mr Lloyd's submission is that, whilst the primary judge did not fully evaluate the evidence, he did not accept (at [67]) that Brad's evidence as to the care he gave his mother accurately reflected what took place. He also noted (at [70]) that Brad's evidence as to the extent of care he provided to the deceased was overstated. Indeed, the primary judge on more than one occasion said that he had to be wary of fully accepting Brad's evidence. He made no corresponding comment about Gregory. 41It is therefore difficult to explain the orders made by the primary Judge on the basis that he considered that Brad's contribution to the deceased's welfare outweighed Gregory's to such an extent that it counterbalanced the difference in their financial circumstances. 42There is no real escape from the proposition that in formulating the quantum of the provision he made for Brad, the primary judge did not take into account the disparity in the financial circumstances between Gregory and Brad. Accordingly, the primary Judge's decision as to quantum must be set aside. 43The parties' representatives have sensibly submitted that if we came to that conclusion we should make our own order, rather than subject this rather modest estate to the costs of a further hearing. 44It is clear that increasing the amount of Brad's pecuniary legacy will not be an appropriate method of making provision for his proper maintenance or advancement in life. The primary Judge properly regarded Alan's claim as paramount and gave effect to his claim by granting him a life estate in the Port Macquarie property. Thus the monetary value of the property, which is the only substantial asset in the deceased's estate, will not be available for distribution to Gregory and Brad until Alan's death. The appropriate order is, as the primary judge found, to make provision for Brad out of the estate after Alan's interest terminates. 45The question thus is in what proportion the remainder of the estate, after Alan's interest determines, should be divided between Gregory and Brad. 46Mr Collins, in his sensible oral submissions, submitted that a just apportionment, having regard to the statutory criteria, was two-thirds to Gregory and one-third to Brad. Towards the end of his oral submissions Mr Collins conveyed to the Court Gregory's instructions that in his view should receive 90 per cent of the estate after Alan's death. However, Mr Collins did not attempt to justify that apportionment and it is not an outcome that can be supported. 47In my view, Mr Collins' submission as to the apportionment of the estate after the termination of Alan's life interest should be accepted. The equal apportionment favoured by the primary Judge does not sufficiently take account of Gregory's greater financial needs and his limited prospects for employment when he no longer is needed to care for Alan. A one-third appointment to Brad of the remainder of the estate adequately recognises his contributions to the wellbeing of the deceased, having regard to the primary Judge's findings on that issue. That apportionment also fairly takes account of Brad's needs and financial resources when compared with those of Gregory. 48As I have noted, Alan in his additional written submissions at the oral hearing sought a variation of the order made by the primary Judge. However, the order made at trial was that sought by Alan. No case was presented to his Honour that a sale of the property should be permitted in circumstances other than those specified in the orders. His Honour did not err in that regard. 49Ordinarily, directions would be made for payment of repairs, rates, insurance and other expenses in respect of the Port Macquarie property. However, mindful of the fact that the Port Macquarie property is the only substantial asset in the estate, none of the parties sought any such directions. In the absence of specific directions, repairs and recurrent expenses are usually the responsibility of the life tenant, while capital expenses must be borne by the remaindermen. 50Accordingly, I would propose that the appeal be allowed and that the primary judge's order be varied by deleting from Order 5 the words "in equal shares" and by substituting therefor the words "as to two-thirds undivided share for Gregory Franks and one-third undivided share for Brad Franks." 51Prima facie, Brad should pay Gregory's costs of the appeal to which he was a party (2011/50364), but have a Certificate under the Suitors' Fund Act 1951. The whole costs of the hearing other than the filing of separate documents in 2012/452655 must be considered costs in 2011/50364 because that was the focus of the arguments. I would propose to so order, but as costs were not argued at the oral hearing, Brad should be at liberty to move to delete, modify or vary the above order as to costs by motion filed within 14 days of the delivery of these reasons. 52Accordingly, I would propose the following orders: 1.Appeal allowed. 2.Vary Order 5 made by Macready AsJ by deleting from Order 5 the words "in equal shares" and by substituting therefore the words as to two-thirds undivided share for Gregory Franks and one-third undivided share for Brad Franks. 3.Order that Brad Franks should pay Gregory Frank's costs of the appeal 2011/50354 but have a certificate under the Suitors' Fund Act 1951. 4.No order as to the costs of Alan Franks. 5.Order that the costs of Gregory Franks in appeal 2012/452655 be paid out of the estate of Dawn Franks 6.Liberty to Brad Franks to move to delete, modify or vary the above order 3 as to costs by motion filed within 14 days of the delivery of these reasons.