Hadfield v Hadfield

Supreme Court of NSW|2010-05-05|Before: Rein J

Background to the dispute 4 The will relevantly provides: " 3. I GIVE AND BEQUEATH to my trustees the principal residence owned by me at the date of my death being at present the property situated at and known as 32 Mindarie Street, Lane Cove, together with the fittings, furnishings and contents thereof UPON TRUST to permit my daughter the said LYNETTE HADFIELD to have the use occupation and enjoyment thereof during her lifetime she paying all rates and taxes and other outgoings thereon and keeping the same in good and habitable state of repair fair wear and tear and damage by fire lightning flood and tempest excepted and she keeping the same insured against fire, lightning, flood and tempest AND I DECLARE that upon the death of my said daughter the said residence, fittings, furnishings and contents shall fall into and form part of my residuary estate. I FURTHER DIRECT that should my said daughter fail to permanently occupy my said residence within eight (8) months of the date of my death, or indicate in writing to my trustees at any time during her lifetime that she does not wish to take up or to continue this right of occupation THEN I DIRECT that as soon as practicable thereafter my trustees shall sell the said residence, fittings, furnishings and contents and the net proceeds of sale thereof shall fall into and form part of my residuary estate. IN THE EVENT THAT through accident or incapacity through hospitalisation, my said daughter is unable to so permanently occupy my said residence within the said period of eight (8) months THEN I DIRECT that the period of such incapacity shall be added to the said period of eight (8) months to the effect that my trustees shall not be empowered to sell my said residence unless and until my said daughter fails to permanently occupy within the aggregated period of eight (8) moths plus the period of her said incapacity. I FURTHER DIRECT that during the period of time between the date of my death and the taking up of occupation of the residence by my said daughter that my trustees shall rent out the residence on the best terms available employing such real estate and legal assistance as they deem necessary and shall pay the net rental therefrom after the deduction of all agency, management and legal fees, insurance costs, rates, taxes and maintenance fees in relation to the residence, to my residuary estate." 5 I shall refer to the requirement to occupy the property within eight months as "the occupancy requirement" and the requirement to pay rates and taxes and to keep the property in good and habitable state of repair as "the maintenance requirement". Graham claims that: (a) Lynette did not take up occupancy within eight months of their mother's death, and no evidence has been led by her that she was hospitalised; and (b) when Lynette did move into the property, she left it unattended for lengthy periods, and even when in occupation, she has not maintained the property or paid rates and taxes due in respect of the property. 6 In relation to the failure to occupy the property within eight months of her mother's death, Lynette now accepts that she did not occupy the property within eight months. She asserts that she was unwell, but no evidence of hospitalisation within the terms of the proviso to the occupancy requirement was given by her. In relation to the failure to maintain case, Lynette claims that she did have the property cleaned up by August 2009. She admits that she is in arrears in relation to the payment of rates. 7 Lynette spent many years in England prior to her mother's death. She worked there and receives payment from a superannuation fund built up there in relation to her work. She has returned to England a number of times between 1997 and now, and she retains an apartment (held on a long term lease of the kind common in London) in Battersea, London, which she describes as a studio apartment. She says that the apartment (that is, the leasehold interest) is worth approximately $120,000 (using an exchange rate utilised at the hearing of £1.00 to $1.60) and is encumbered with a $9,600 mortgage. 8 Lynette is not a well person: she walks with the aid of Canadian-style crutches, has a number of chronic conditions, and has had a number of episodes of hospitalisation in the last few years. It appears from reports of her health care worker that she has difficulty looking after herself and attending to her affairs: see pages 119-164 of Exhibit D. She does not seem able to deal with mail that she receives and she appears to have a hoarding problem. There is evidence that her home is extremely cluttered to a point that extends beyond untidiness and has potential health implications. She has the help of a carer regularly and she was assisted by a carer in attending court for the hearing. Notwithstanding these problems, Lynette asserts that she wishes to remain independent, and although health care workers have suggested the possibility of a care-oriented residence, she does not want to accept that such an outcome is appropriate. She says that she is very keen to remain in the property since she has strong emotional ties to it, it is conveniently located vis-à-vis the hospital, and it is level ground with a garden space in which she can grow plants. 9 From 1997, when Lynette moved into the property, until 2008, Graham has tolerated Lynette's occupation of the property in breach of the will's provisions. Further, in 2008, when Lynette found herself in financial difficulty arising out of her position in England, which led to the threat of bankruptcy proceedings, she asked Graham if he would agree to a mortgage being placed on the property and guarantee a loan of $50,800 plus expenses, which Lynette sought from the Commonwealth Bank. There is no dispute that most of the loan went to pay off debt in England. Lynette did use $6,500 to pay for drains and guttering work on the property. 10 In 2009, Graham became concerned about his exposure on the guarantee, Lynette's failure to pay rates and other expenses for the property, and the generally poor state of the property. He sought legal advice and was informed that he was an eligible person under the FPA. He said that he only became aware at that time that he could bring a claim under the FPA. 11 In respect of that claim, and leaving aside the question of leave, the basis of it is that by virtue of the provision of the will, apart from a small bequest, Graham will receive nothing out of the estate until after Lynette's death (unless his contentions concerning the defeasance of the life estate are upheld). There is no dispute that he had a close relationship with his mother (indeed, Lynette herself asserts that as a result of her brother's excellent relationship with her mother, she felt excluded). Given that Graham is two years older than Lynette (they are now 69 and 67 respectively), it would appear that the provision that he is to receive one half of the net residue when Lynette dies is of no practical benefit to him. He is retired and does have some assets, which I shall detail below, but he has a daughter who is 47 years of age who lives with him and who has had cancer and is currently in remission. 12 Lynette did have a solicitor appearing for her in this matter until 2 March 2010, when he filed a Notice of Ceasing to Act. On the morning of the hearing, Lynette sought an adjournment, but given the long period of notice that she had with which to put her solicitor in funds (August last year) and her failure even in March to organise funds (and notwithstanding that she holds shares in England), I refused the adjournment, so she represented herself at the hearing. 13 Although Lynette, in paragraph 22 of her affidavit sworn on 31 August 2009, asserted that she had moved into the property within a few months of her mother's death, she admitted that this was not correct, the plaintiff having asserted otherwise and evidence having been obtained from the Department of Immigration and Citizenship which established that she left Australia on 21 February 1996 and did not return until 3 January 1997: see pages 113-114 of Exhibit D. 14 Graham's evidence was that Lynette moved into the property after she returned from England, which we know was in January 1997. Between January 1997 and 2008, Lynette was frequently away from the property and lived in England for a substantial part of the time. Graham says that he attended to mowing the lawn and feeding her dog for part of that period, and chased her up in relation to rates which she had not paid. I have mentioned that he agreed to Lynette using the property as security for a loan from the bank. 15 In paragraph 2 of his affidavit sworn on 3 May 2010, Graham said: "My mother died on 20 March 1996. Between the time of my mother's death and the date on which the Summons was filed I had on 2 or 3 occasions spoken to my solicitor about what action I could take to have the property at 32 Mindarie Street, Lane Cove sold because the Defendant was not living at the property, not renting it out, not paying the rates and not maintaining the property as she was required to do so under the terms of our mother's Will."

16 He does not reveal what advice he received and he did not, on his evidence, raise any question concerning the failure of the defendant to move into the property within the eight month period. The occupancy requirement 17 Mr Meek SC, who appeared for Graham, quite properly drew my attention to the requirement of clarity in relation to conditional gifts, and in particular to the learned exposition by Dixon CJ in Perpetual Trustees Executors and Agency Company of Tasmania Limited v Walker (1953) 90 CLR 270 of the law dealing with conditions relating to particular residence. Although Dixon CJ dissented from the conclusion of the majority on how the words used in that case were to be construed, Dixon CJ holding that "while 'Huonden' remains unsold and my wife resides there" meant that no annuity was payable if she ceased to reside there, the majority (Fullagar, Kitto and Taylor JJ) indicated that the requirement for certainty only applied to true conditions subsequent and agreed that if the words did constitute a condition subsequent, they were not too uncertain to be enforced.

18 I am of the view that however clause 3 of the will is characterised, its meaning is clear. The property in which the defendant must reside and the period within which that must occur are clearly stated. The period within which residence was to be taken up was not overly short (if that be relevant), and the testatrix even provided for an extension of time should Lynette be unable to occupy the property due to ill health. The condition meets the description of Lord Cranworth in Clavering v Ellison (1859) 7 HLC 707 at 725 as being one that enables the Court to "see from the beginning, precisely and distinctly, upon the happening of what event it was that the preceding vested estate was to determine".

19 The clause is not void for uncertainty and was not complied with, and, subject to what follows, Graham would be entitled, as a beneficiary, to require sale of the property.

The maintenance requirement 20 I think that the evidence establishes that the defendant has not been paying council rates as required for a very long period: see pages 8-9, 98, 186-188 and 205 of Exhibit D and the affidavit of Mr James Kelly sworn on 4 May 2010, but the defendant said that she had paid the rates up to 30 June 2010 and was not challenged on this. 21 The failure to comply with the maintenance requirement is more difficult because it is less clear whether this was intended to be a condition subsequent, the breach of which would lead to termination of the life estate or the right to occupy. In Perpetual Trustees WA Ltd v Darvell [2001] WASC 123, Wheeler J granted a life estate to the wife, "she being liable for the payment of rates, taxes, insurance premiums, maintenance and other outgoings thereon and subject thereto", and said at [7]: "Plain words are required to establish that a requirement such as that found in this will is a condition of the interest continuing rather than in the nature of a direction or expectation: Lehman [ v Haskard , unreported; SCt of NSW; Equity Div; 29 August 1996] at page 8, Carrodus v Carrodus [1913] VLR 1. It is suggested that the words "and subject thereto" may be intended to suggest that the interest given is conditional. However, they are oddly placed to perform this task. Appearing where they do in the will they rather suggest that it is merely intended to convey that the gift to the remaindermen is subject to the first defendant's interest so long as she chooses to have it, in contrast to conveying an intention that she could occupy the property subject to her payment of rates. The nature of the duty cast upon the first defendant also makes it unlikely that the duty is imposed as a condition of her life estate continuing. The payment of rates, taxes and probably insurance premiums is a duty which is clear and breach of which is readily ascertainable; however, it seems unlikely that the deceased intended that any failure of maintenance or failure to pay any "other outgoing" of whatever nature should have the result that the life estate would be forfeited."

I think that this is an even stronger case for adoption of the approach that Wheeler J took, because the words "subject to" are not used. A breach of the clause by Lynette would not lead to forfeiture here. 22 Even if the failure to maintain the property and pay rates could lead to forfeiture, once again the plaintiff, either as trustee or in his own right as beneficiary, took no action to enforce the condition prior to 2009. Further, whilst there may be rubbish strewn around the property (most of what is pictured has apparently been removed) and a considerable degree of unsightly clutter within the house, I do not think that is enough to establish a breach of the condition. The failure to pay rates is in a different category, but given the extended period of acquiescence by Graham in relation to breach by Lynette, I think that Lynette would have to be put on notice by Graham that he intended to rely on her failure to pay rent and that Lynette should be given a reasonable opportunity to meet the obligations which the trust created by the will imposed on her. On the evidence, it is not clear that she is currently in default.

Laches/Acquiescence 23 I raised with Mr Meek the failure of his client to take any point about the occupancy requirement in January or February 1997, or indeed at any time prior to the commencement of these proceedings. His response was that the defendant had not raised any argument of laches, acquiescence or estoppel. Whilst it is true that the defendant did not put an argument couched in those terms, she is not represented, the case is not one which was the subject of pleadings, and she made reference to the delay of 13 years at one point: see T34.10-11. It could hardly be unexpected that the Court would require an explanation for the extensive period of delay. As Lord Blackburn said in Erlanger v The New Sombrero Phosphate Company (1878) 3 App Cas 1218 at 1279, "a Court of Equity requires that those who come to it ask its active interposition to give them relief, should use due diligence, after there has been such notice or knowledge as to make it inequitable to lie by" (cited in R P Meagher, W M C Gummow and M J Leeming, Equity: Doctrines and Remedies (4th ed, 2002), LexisNexis Butterworths, Sydney at [36-005]).

24 Graham was not only a trustee, but he was, apart from Lynette, the only other beneficiary of the estate and trust established. The trustees may have been in breach of trust by not adhering to the terms of the will, but it is difficult to see how Graham can be heard to complain of the breach 13 years after it has occurred with his full knowledge and participation. It appears to be a very clear case of acquiescence, and not just delay: see Meagher, Gummow and Leeming supra at [36-005]-[36-015] and [36-025]-[36-090]; and see The Lindsay Petroleum Company v Hurd (1874) LR 5 PC 221 at 239-240 and Glasson v Fuller [1922] SASR 148. 25 In Lindsay Petroleum, Lord Selborne said at 239-240: "Now the doctrine of laches in Courts of Equity is not an arbitrary or a technical doctrine. Where it would be practically unjust to give a remedy, either because the party has, by his conduct, done that which might fairly be regarded as equivalent to a waiver of it, or where by his conduct and neglect he has, though perhaps not waiving that remedy, yet put the other party in a situation in which it would not be reasonable to place him if the remedy were afterwards to be asserted, in either of these cases, lapse of time and delay are most material. But in every case, if an argument against relief, which otherwise would be just, is founded upon mere delay, that delay of course not amounting to a bar by any statute of limitations, the validity of that defence must be tried upon principles substantially equitable. Two circumstances, always important in such cases, are, the length of the delay and the nature of the acts done during the interval, which might affect either party and cause a balance of justice or injustice in taking the one course or the other, so far as relates to the remedy."

26 In Hourigan v The Trustees Executors and Agency Company Limited (1934) 51 CLR 619, Rich J said at 629-630: "If a party in a position to claim an equitable right which is not undisputed lies by and acts in such a way as to lead to the belief that he has no such claim, or will not set it up, and thus encourages the party in possession to so deal with his own affairs that it would be unfair to him and to others claiming under him to tear up the transactions and go back to the position which might originally have obtained, the Court of equity will not, even where the claim is that an express trust is created, disregard the election of the party not to institute his claim and treat as unimportant the length of time during which he has slept upon his rights and induced the common assumption that he does not possess any."

27 I think that Graham cannot rely on Lynette's failure to occupy the property within eight months, as specified in the will. Should leave be granted for the FPA claim? 28 The FPA provides for a period of time within which claims should be made, but it does allow the Court, on sufficient cause being demonstrated, to permit late applications. I am conscious of the approach adopted by McHugh J in Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541 at 551-553 and 555 in cases dealing with provisions ameliorating the rigour of statutory limitation periods. McHugh J's comments have even more force in a context where the right itself is one arising out of the same statute which provides for the time bar. 29 It might seem to follow that since I am of the view that Graham is precluded from bringing a claim in respect of the occupation requirement, his application for relief under the FPA should also be viewed as too late. There are, however, some additional factors which I think point in the opposite direction: (1) His evidence (which was not challenged) is that he did not become aware of any right to make a claim of this kind until 2009 and that shortly after being made aware of the right, he did bring the claim. In the case of the occupancy requirement, he knew that it was in the will and he knew that it had been breached, but he does not say he appreciated that he could have done something about it. (2) There is no prejudice to the defendant in her brother's claim being heard now as opposed to it being heard in 1998 or 1999, because the defendant has resided in the property for a long time and it has increased in value significantly. (3) Had the claim been brought in 1997 or 1998, the occupancy requirement would have been far less likely to have been the subject of any claim of acquiescence. In a sense, the significant consequences to the plaintiff arising out of his acquiescence in a breach of the trust which benefited his sister, and not him, can be ameliorated to a degree if the claim is permitted. (4) Lynette obtained, by Graham's acquiescence, a benefit which in fact the will did not provide for.

30 I have had regard to the decision of Macready AsJ in Burton v Moss [2010] NSWSC 163 and I note that his Honour regarded the absence of knowledge of the right to claim as being of significance. I accept that it is a matter to which weight should be given: see Burton at [58]. The period of delay is very lengthy here and would normally, I think, militate against any extension of time, but the case is an unusual one. Like Burton, this is a case in which there is no prejudice to the estate because of the interposition of the life estate: see Burton at [52]. 31 I think that sufficient cause has been shown for leave to be granted.

The FPA claim 32 Having determined that leave should be granted and there being no doubt that the plaintiff is an eligible person within the terms of the legislation, I must now consider whether provision should be made for the plaintiff out of the estate for his education, maintenance and advancement in life. I am required to consider the plaintiff's circumstances as at the time of his application, not the date of the will.

33 The defendant, in submissions, accepted that the plaintiff was entitled to 50 per cent of the estate, and she quite properly pointed out that the $58,000 loan she had obtained would have to come out of her share.

34 Mr Meek contended that the "provision" which should be made was the acceleration of the equal distribution under the will, which would only occur on its terms on the failure of Lynette to take up residence, on her departure from the property, or on her death. 35 I raised with Mr Meek a concern that by such an acceleration, the plaintiff would effectively be obtaining 50 per cent of the will now rather than at some time in the future, possibly long-distant. Mr Meek argued that since Lynette accepted that 50 per cent was a fair distribution, that put an end to that issue. I do not accept that contention. The Court must determine if proper provision has been made by the will for eligible persons, and if it has not, what provision should be made. In dealing with the second limb of Singer v Berghouse (No 2) (1994) 181 CLR 201, the Court might conclude that the appropriate provision is to accelerate, but regard must be had to what provision should be made, that is: (1) the plaintiff's financial position; (2) the size of the estate; (3) the history and nature of the relationship between the deceased and the claimant; (4) the relationship of the testatrix to other persons who have a claim on her bounty; and (5) the need to pay regard to the testatrix's wishes.

36 I should note too that in Walker v Walker [1996] NSWSC 188, Young J, as his Honour then was, said: "the Act did not intend to affect freedom of testation except in so far as that freedom had to be abridged in order to ensure that people made proper provision for those who were dependent on them financially or morally." (cited in Kay v Archbold [2008] NSWSC 254 at [122] per White J).

37 This is an unusual case in that the claimant is quite advanced in years and has retired, and it is not a case where the testatrix deliberately excluded him from the bounty; indeed, she did bestow upon him a half interest in the property subject to the life estate in the house. Further, not only is there no evidence of any reason for the testatrix to have made provision that resulted in unfairness to her son, but the uncontested evidence is that the testatrix had excellent relations with her son, far better than with those with her daughter.

38 Thus, on the one hand, the plaintiff was effectively to receive half the estate if: (a) Lynette did not take up occupancy, (b) she did take it up but did not continue in occupation, or (c) she died; but on the other hand, if Lynette did take up occupancy and did not relinquish it, the plaintiff would receive very little from the estate in his lifetime. This is not a case where there is no bounty, but one in which the bounty appears to be so restricted as to be of little benefit. To complicate matters further, the beneficiary has spent a significant part of the period of occupation in England away from the property. Her ability to continue living in the house was put in doubt by the plaintiff, indeed, it was argued that it is not in the defendant's interest to keep residing there given the problems she is experiencing. It is no part of the Court's role to make provision in favour of the plaintiff because it will actually benefit the defendant herself, contrary to her expressed wishes, but it is relevant in determining by how much what is sought by the claimant exceeds what the claimant was to receive under the will. If the plaintiff will be unlikely to continue living in the property for more than short period longer, then 'acceleration' is not very significantly different to the benefit given under the will. Professional and independent people have expressed concerns about the defendant's ability to continue living alone at the property and to manage her own affairs (see pages 134-145 of Exhibit D), and her mobility is quite restricted. The defendant asserted that she has problems with her memory, and there is evidence which suggests that she may be at risk of physical harm living on her own as she does and without a willingness to accept help when it is offered. All of this leads me to think that there are very real doubts as to the defendant's ability to continue living at home for an extended period.

39 The plaintiff is now 69 years old and was 55 years of age at the time of his mother's death. His sister is 67 years old and was 53 at the time of her mother's death. The plaintiff retired in 2006 after a lifetime of work as a plumber. He receives the age pension of $575 per fortnight and has a daughter of 47 years of age living with him. His daughter receives a disability pension. He assists his daughter by paying expenses such as her car insurance. He owns his own home, worth approximately $400,000. He has a superannuation fund of $62,000, a term deposit of $50,000, and receives $4,000 per annum from an allocated pension and $1,000 per annum from his term deposit. His house is in need of repair, and he has problems with his knees and ankles and may need to install ramps, but no quotations in respect of repairs to the house or the installation of ramps were provided to the Court.

40 The defendant owns an apartment in Battersea, London, which she says is worth approximately $120,000 and the plaintiff says is worth approximately $272,000 based on kerbside valuation evidence. That evidence (see annexure A to the plaintiff's affidavit sworn on 3 May 2010) was based on the assumption that the apartment was a two bedroom unit. The defendant says that it is only a studio apartment.

41 The evidence of valuation was only served a few days before the hearing and its probative force is significantly undermined by the assumption made about the apartment. On the other hand, there is no evidence from the defendant as to its value, only the defendant's belief that it is only worth $120,000. Whether it is worth $120,000 or even $200,000, there can be no doubt that it is worth much less than the plaintiff's house. There is a mortgage on the apartment of approximately $9,600. The defendant was vague about what shares she now owns and how much on the current market they are worth, but she had said they were worth $30,000 and now put a figure of $15,000-$20,000 on the portfolio. She has no dependants, and she receives a monthly life pension of approximately $1,500 from British Telecom and a fortnightly Australian pension of $345, which has been reduced to $192 per fortnight. She also receives net rental income of approximately $317 per month from the Battersea apartment. She pays approximately $1,000 per month in bills and expenses.

42 If the defendant were now to receive, say, $425,000-$450,000 out of the sale proceeds, it seems clear that she would be able to obtain suitable accommodation: see the affidavit of Mr James Kelly sworn on 28 April 2010 and Annexures C, D and E thereto. I have given consideration to whether, if there is to be acceleration of the sale of the property, there should be an adjustment to the amount which the plaintiff should receive and which would thereby constitute a reduction in the award to the plaintiff. Having regard to all of the circumstances, including: (1) the existing provisions of the will and the fact that, by its terms, the plaintiff is to inherit 50 per cent of the net proceeds of sale of the house at some time in the future; (2) the fact that the defendant has been permitted to reside in the house contrary to the wishes of the testatrix for 12 years (at no rent and with payment of only rates, taxes, insurance and a small amount of repairs), although she has chosen not to avail herself of that right for lengthy periods; (3) the fact that whilst the defendant has no dependants, has property and shares in England, and receives income from England, her assets are not substantial; (4) the extensive pharmaceutical expenses of the defendant; (5) the fact that her ability to continue residing in the house for a substantial period is in question; and (6) the use of the property as collateral for a loan to herself I am of the view that acceleration is appropriate, but with an adjustment to the net proceeds of 35 per cent to the plaintiff and 65 per cent to the defendant, and with a further adjustment to ensure that the amount paid to the Commonwealth Bank is treated as a debt owed by the defendant to the estate before distribution and offset against any amount due to the defendant from the net proceeds.

Further orders 43 It follows that there will need to be orders for sale of the property. I will hear the parties on the form of the orders for sale. Costs 44 I am of the view that the costs of the parties should be paid out of the estate.

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.

Family Provision Act 1982(NSW)

CITATION : Hadfield v Hadfield [2010] NSWSC 561

Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541 Burton v Moss [2010] NSWSC 163 Clavering v Ellison (1859) 7 HLC 707 Erlanger v The New Sombrero Phosphate Company (1878) 3 App Cas 1218 Glasson v Fuller [1922] SASR 148 CASES CITED : Hourigan v The Trustees Executors and Agency Company Limited (1934) 51 CLR 619 Kay v Archbold [2008] NSWSC 254 Perpetual Trustees Executors and Agency Company of Tasmania Limited v Walker (1953) 90 CLR 270 Perpetual Trustees WA Ltd v Darvell [2001] WASC 123 Singer v Berghouse (No 2) (1994) 181 CLR 201 The Lindsay Petroleum Company v Hurd (1874) LR 5 PC 221 Walker v Walker [1996] NSWSC 188

At a glance

Court

Decision date

Before

Source

Judgment (23 paragraphs)

Parties

Legislation Cited (1)

Cases Cited (9)

Cited By (1)