HIS HONOUR: It is not uncommon when the parent of a child or children loses her or his first life partner and re-partners that issues arise between the children of the first relationship and the surviving partner of the second relationship as to their respective claims on the deceased's testamentary bounty. This is another such case. As in most will cases where there are not ample assets to be distributed, it requires that the competing claims of the child of the deceased's first marriage and her surviving second partner on her testamentary bounty, and her moral obligations to each of them, be weighed, giving due regard to the deceased's own testamentary freedom.
In this case, the deceased Heather Joyce Henderson died on 18 May 2013 aged 85 years, leaving a will dated 29 October 2012, probate of which was granted to the defendants - Lucille Lees, the solicitor who drew the will, and Stanley Munro, who had been in a domestic relationship with the deceased for nigh on two decades. The will left the deceased's estate, which amounts to approximately $727,000 in net distributable terms, in two equal shares to the plaintiff Mr Henderson, who is her sole child, and to the second defendant Mr Munro. By summons filed on 4 October 2013, the plaintiff claims further provision out of the estate.
The deceased, who was born on 5 October 1928, first married Guy Thornley Henderson on 30 March 1957. Their sole child, the plaintiff Russell, was born in 1966. Mr Guy Henderson died in 1992. Russell lived with the deceased until he married his wife Jane in 2001 at the age of 35 years. They lived in a home at Pittwater Road, North Ryde.
Following her husband's death, the deceased, in about 1995, commenced a relationship with Mr Munro. Initially, he seems to have stayed at the Pittwater Road property over weekends. Following his retirement in 1999, the relationship intensified somewhat and he typically spent Fridays through to Mondays at the deceased's Pittwater Road home. However, except for some periods when the deceased was convalescing and needed intensive care and support, they never cohabited on a full time basis, and each continued to maintain their own separate households.
Mr Munro lived, at first, in what he described as a granny flat at Northmead and, in 2003, moved to premises in Ryde, closer to the deceased's home.
On 10 June 2005, a number of transactions were completed which gave effect to the partition of the property at Pittwater Road into two lots: the front lot (lot 1), was transferred into the name of the deceased alone, and the rear lot (lot 2), into the name of the plaintiff - nominally for a consideration of $385,000, but in fact as a gift. The plaintiff's family - which, by then, also included their first child Stephanie, who was born in 2001 - lived with the deceased for between six and nine months while a home was built on lot 2. Thereafter, the plaintiff's family occupied lot 2.
On 15 November 2006, the deceased executed a power of attorney in favour of the plaintiff and, on the same date, made a will under which the plaintiff was the sole beneficiary. This reflected a promise which, it seems, she had made to her husband Mr Guy Henderson at or about the time of his death, and which she thereafter repeated from time to time to the plaintiff.
In late 2010, the plaintiff sold lot 2 for $810,000 and, after discharge of a mortgage which had funded the building and completion of the house on lot 2, received $447,000 net. With his family, he moved to Queensland, with the expectation of obtaining employment in more satisfactory circumstances there. I do not think it can be doubted that this move was the course of some disappointment to the deceased, who had given lot 2 to the plaintiff, more or less in the expectation that he would be there for her in case of need thereafter. While a parent does not have the right to determine or dictate where her adult child lives, on the other hand, an adult child who has benefited in that way from a parental gift cannot insist that the parent's affections or intentions be uninfluenced by any sense of disappointment.
While the plaintiff's family was in Queensland, on 13 May 2011 the deceased gave a power of attorney to Mr Munro and appointed him her enduring guardian. The plaintiff learnt of this and returned to Sydney, and on 18 May 2011, Mr Munro having been hospitalised for a short time, the deceased revoked that power of attorney and, once again, appointed the plaintiff her attorney under power.
The move to Queensland proved unsuccessful for a number of reasons, including the economic impact of the floods in Brisbane and the illness of the plaintiff's wife. The plaintiff and his family returned to Sydney in December 2011 and rented premises in the same general vicinity; their children, now two of them, attended school very close to the deceased's home.
In early 2012, the plaintiff, using the power of attorney he held, lodged with the relevant council a development application for the building of two attic rooms on top of the deceased's home. There is controversy as to whether this was discussed with the deceased, and whether she was aware of what was proposed. At some stage after learning that the development application had been lodged, she denied that she had been consulted about the matter. The plaintiff, on the other hand, says that it was a matter discussed with her over several months and to which she ultimately agreed. In any event, by June 2012, the deceased attended on a solicitor and, on her instructions, the solicitor wrote to the council withdrawing the application.
It is clear that this must have provoked some strain in the relationship between the deceased and the plaintiff, but it is also clear that the relationship between the plaintiff and Mr Munro was a poor one. It is striking that in the plaintiff's primary affidavit in the proceedings, Mr Munro's role in the deceased's life after the early 1990s, which on any view was a most significant one, received barely a mention or acknowledgment.
On 26 June 2012, the deceased revoked the power of attorney which she had on 18 May 2011 given to the plaintiff, and appointed Mr Munro, once again, her power of attorney. The plaintiff having learnt of this, made an application to the Guardianship Tribunal to review the power of attorney and the appointment of enduring guardian. A hearing before the Guardianship Tribunal was appointed for 12 October 2012. The deceased attended unrepresented. The tribunal apparently interviewed the deceased and the plaintiff and the matter did not proceed to a formal hearing or a contested decision, with the plaintiff withdrawing his application. A fortnight after that hearing, the deceased made her last will on 29 October 2012.
The estate of the deceased now comprises, as I have said, approximately $727,000, the Pittwater Road property having been sold. Presently, there is cash of $821,779, from which a number of actual already incurred expenses, together with the estate's costs of the proceedings, must be deducted, leaving a net estate of $727,000 approximately.
As I have said, by her will and in the events which have happened, the deceased left her estate in two equal shares to the plaintiff and the second defendant. The plaintiff's estimated costs are said to be a further $75,000 on an indemnity basis, or $50,000 on a party-party basis. If those costs were not deducted, then each of the half shares of the net distributable estate would be $363,500 approximately. If it were assumed that $50,000 would be payable to the plaintiff, pursuant to a costs order, that would reduce the two shares to about $338,000.
Applications such as these for provision out of the estate of a deceased person have been described by the High Court of Australia - in the context of the (NSW) Family Provision Act 1982 - in Singer v Berghouse (No 2) (1994) 181 CLR 201 as involving a two stage approach. The first requires the determination of the jurisdictional fact, whether the applicant has been left without adequate provision for his or her proper maintenance, education and advancement in life; and the second, which arises only if the first is resolved affirmatively, involves the discretionary assessment of what provision ought to be made of the estate for the applicant. However, as the High Court explained, similar considerations inform both stages of the process:
The determination of the first stage in the two stage process calls for an assessment of whether the provision, if any made, was inadequate for what, in all the circumstances, was the proper level of maintenance, et cetera, 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.
Although there have been suggestions that subtle changes in the language now used in (NSW) Succession Act (2006), s 59, may have affected this [Andrew v Andrew (2012) 81 NSWLR 656] the prevalent view is that there is no change to the conventional two stage approach [In the Estate of the late Anthony Marras [2014] NSWSC 915, [15] (Bergin CJ in Eq)].
That said, because considerations relevant to both stages overlap, consideration of a family provision application does not always divide neatly into the two questions, as Callinan and Heydon JJ have pointed out [Vigolo v Bostin (2005) 221 CLR 191, 192]. Nonetheless, in an application under the Act, the Court must consider, first, whether the plaintiff is an eligible person; secondly, whether the plaintiff has been left with inadequate provision for his or her proper maintenance, education and advancement in life; and, thirdly, if so, what, if any provision or further provision, ought be made out of the estate for those purposes.
The relevant principles and considerations were summarised by McLelland J in Re Fulop Deceased (1987) 8 NSWLR 679 as follows (at 680):
In making these determinations, the following principles apply: first, the Court should not interfere with the dispositions in the will (or, where applicable, arising under the laws relating to intestacy) except to the extent necessary to make adequate provision for the plaintiff's proper maintenance, education and advancement in life, secondly, the expression "proper" in this context connotes a standard appropriate to all the circumstances of the case, and thirdly, the Court may take into consideration any matter (whether existing or occuring before or after the death of the deceased) which it considers relevant in the circumstances, including (a) the nature and quality of the relationship between the plaintiff and the deceased (b) the character and conduct of the plaintiff (c) the nature and extent of the plaintiff's present and reasonably anticipated future needs (d) the size and nature of the estate of the deceased (e) the nature and relative strength of the claims to testamentary recognition by the deceased of those taking benefits under the will of the deceased (or where applicable under the laws relating to intestacy) and (f) any contribution, financial or otherwise, direct or indirect, by the plaintiff to the property or welfare of the deceased.
Again, while that was said in the context of the (NSW) Family Provision Act 1982, similar considerations are now to be found in (NSW) Succession Act 2006, s 60(2). It is also important to bear in mind the principle articulated by Young J, as he then was, in Stewart v McDougall (New South Wales Supreme Court, 19 November 1987, unreported), in explaining that the Court's role is limited to making adequate provision for an eligible person's proper maintenance and advancement:
It is important to state what the Family Provision Act permits a court to do and what it does not permit a court to do. The Act recognises that Australians have freedom to leave their property by their Will as they wish, with one exception. The exception is that a person must fulfil any moral duty to make proper and adequate provision for those whom the community would expect such provision to be made before they can leave money as they wish.
Thus in these cases one does not ask is the Will fairs one does not ask why did the testatrix not divide her property equally; one does not as a judge say how would I have made a Will had I been the testatrix; what must be asked is whether the testatrix by her Will failed in her moral duty to those who had a claim on her. Even if the court comes to the view that that question should be answered in the affirmative, the court still does not remake the Will, but only alters it to the extent that proper and adequate provision is made to the eligible person in respect of whom the testatrix failed in her moral duty.
Against the background of those principles, I turn to the situation and claim of the plaintiff and the competing obligation of the testatrix to the second defendant.
The plaintiff, as a child of the deceased, is an eligible person and is not in such a category of eligibility as to have to also establish factors warranting the making of the application.
Mr Henderson is 49 years of age, married, with two children, presently aged 13 and eight years. His wife suffers from major depression for which she is medicated, and it appears clear that this is a permanent illness and that it significantly limits her earning capacity. Mr Henderson is a warehouse leader. His taxable income over the last five years has been $56,924 in 2010, $41,971 in 2011, $17,900 in 2012, $39,153 in 2013 and $72,926 in 2014. Those are before tax figures. The decrease in 2012 and 2013 reflects periods of unemployment in those years including, in part, during the move to Brisbane.
The family receives a family benefit from the Commonwealth, currently, it would seem, in the sum of $385 per fortnight. At least according to some of the evidence, however, Mr Henderson's current net fortnightly income is $2,100 and net family benefit is $432, indicating a total family income of $2,532 a fortnight.
He has assets of $110,000 - but that includes a superannuation entitlement of $92,000 - and liabilities of about $32,000. Mrs Henderson has additional liabilities of $4,392. They estimate their weekly expenditure at $3,330, of which $1,520 is rent, but the cross-examination demonstrates that their weekly expenditure is likely, in fact, to be significantly higher.
As will be apparent from that short summary of the asset and liability position, there is a deficiency of about $18,000 in the present net asset position, if the superannuation is disregarded, notwithstanding the gift and subsequent sale of lot 2 at Pittwater Road. Their current position appears to result from the costs of the move to Queensland, the impact of some periods of unemployment, and expenditure on living expenses consistently at a level higher than the income being received. Cross-examination of Mr Henderson established that, including the proceeds of sale of lot 2, since December 2010 his family has received - from the proceeds of sale, his income, Mrs Henderson's income and the Family Benefit - funds amounting to, approximately, $642,000, of which virtually nothing remains; this indicates a level of expenditure in the order of $160,000 per annum.
Plainly enough, Mr Henderson and his family do not have present resources to meet contingencies, let alone to acquire a home of the type which they aspire to acquire in the vicinity in which they already reside, which would cost approximately $750,000. The evidence suggests that he has a borrowing capacity of $344,000 were suitable security available and that, to acquire a home in the order of $725,000, he would need, in addition to the half share of the estate to which he is entitled under the will and the amount that he could borrow, an additional $100,000 or so plus his costs of the proceedings.
Mr Henderson's claim is based on the relationship of maternity; the fact that he did not inherit from his father (as, presumably, his mother inherited from his father); that he is the sole child of his parents; that he lived with his mother until the age of 35 and no doubt was partly dependent on her throughout that period, at least for accommodation, which she provided in her home; and that he was made contributions to her welfare, particularly during the period that he was living at home with her.
Turning to the defendant, Mr Munro is 83 years of age and in good health for his age. He resides in a small one-bedroom unit rented from the Ryde Hunters Hill Housing Co-operative of some 45 square metres. It has insufficient room for a double bed. Guests when visiting sleep on a mattress on the floor in the living space. It has a small kitchenette only. He receives a Centrelink pension which, after deducting a contribution for the rent of approximately $194, leaves him with $218 per week. He also receives interest and dividends of $192, meaning that he has a disposable income after rent of about $410 a week. As I have said, his rent is subsidised to some extent by the housing co-operative. He has no superannuation, but has savings of $104,000 and a share portfolio of $123,000. He would like to be able to acquire a larger and more comfortable two bedroom unit in much the same area, around Gladesville or thereabouts, which the evidence suggests would cost in the order of $500,000 to $600,000.
Mr Munro was in a close personal relationship with the deceased for close to 20 years. The evidence establishes that he accompanied her to her medical appointments, took her to hospital when she needed to go to hospital, visited her in hospital, attended on her at home and stayed over at the home for lengthy periods when she was convalescing and that, as her health deteriorated in later years, she became increasingly dependent on him. They shopped together and frequently went to clubs for lunches and dinners together.
Mr Munro does not have to establish a claim because he is not a plaintiff and for that reason it is necessary that he establish that he was an "eligible person" within the meaning of the Act. It is plain that the nature and quality of his relationship with the deceased was such as to make him a most important person in the deceased's life for close on the last 20 years of it.
As was said in Taylor v Farrugia [2009] NSWSC 801 (at [57]), it is impossible to describe in terms of universal application the moral obligation or community expectation of a parent in respect of an adult child. I think, however, it can be said that ordinarily, the community expects parents to raise and educate their children to the very best of their ability while they remain children; probably to assist them with a tertiary education where that is feasible; and, where funds allow, to provide them with a start in life, such as a deposit on a home, although it might well take a different form. The community does not ordinarily expect a parent to provide an unencumbered house or to set their children up in a position where they can acquire a house unencumbered, although in a particular case, where assets permit and the relationship between the parties is such as to justify it, there might be such an obligation. Generally speaking, the community does not expect a parent to look after his or her children for the rest of their lives and into retirement, especially where there is someone else, such as a spouse, who has a prime obligation to do so. It will be otherwise if the adult child remains dependent on the parent, in which case the community will usually expect the parent to make provision to support that ongoing dependency after death. If the child, even an adult child, falls on hard times, then if there are assets available, and depending on what competing claims there are, the community may expect parents to provide a buffer against contingencies.
In this case, the plaintiff's evidence referred from time to time to promises that had been made by the deceased to the effect that she would leave the Pittwater Road property to him and would never do otherwise, a promise which was, it would seem, originally a deathbed promise made to the plaintiff's father. There was nothing contractual about any such promise and the evidence does not establish any such detrimental reliance on it by the plaintiff as would give it the type of force that might arise from an equitable estoppel. In the context of an application under the Family Provision Act, it is still not irrelevant, but it must be said that a testator is not bound forever by a non-contractual, non-enforceable promise made on the deathbed of her first spouse. Life moves on, things change, new relationships develop and in that context it would be unreasonable to hold a party to that type of promise in the absence of contractual or other legal effect.
A striking feature of this case is that the plaintiff has already received very substantial provision during his lifetime in the form of, effectively, a half interest in the Pittwater Road property, converted into an entire interest in lot 2, which ultimately generated cash of $447,000. In addition to that, half of the estate, or $360,000, will mean that, quite apart from the benefits of accommodation until he was 35 years of age and accommodation for his family while the house on lot 2 was being built, the plaintiff would have received property to the value of $800,000 from his mother.
As I have said, the defendant does not have to establish a claim. Essentially, the conflict in this case boils down to looking at the immediate comparative needs positions of the plaintiff and the second defendant on the one hand, and the overall and enduring obligations and claims that arise from relationships over a lengthy period of time on the other. Community expectations in this area do not involve merely assessing the comparative needs of plaintiffs and beneficiaries favoured by the deceased. As the factors listed in s 60(2) illustrate, they also involve taking into account a wide range of considerations, including contributions made to the welfare of the deceased, to which I think it cannot be doubted Mr Munro contributed in a significant way.
Essentially, the deceased was faced with having to weigh and balance the claim of her only child - an independent adult, albeit with dependants, and who was in circumstances where he did not have resources to meet all of his reasonable needs, but for whom she had already made fairly significant provision - with that of her partner of nearly 20 years, who had been continually by her side, supportive and attentive, and contributed in marked ways to her welfare and happiness.
I do not think the conclusion can be escaped that the deceased was affronted by the circumstance that the plaintiff brought proceedings in the Guardianship Tribunal to challenge her wishes, but even then, she did not, in spite, cut him out of her will, but reached a decision that the estate should be divided equally between the two claims to which I have referred.
She would not have failed in her duty to Mr Munro had she made greater provision for Mr Henderson than she did. Likewise, it seems to me, she would not have failed in her duty to Mr Henderson had she made greater provision for Mr Munro than she did. But it seems to me that, as a broad brush attempt at achieving a fair recognition of both the significant claims on her testamentary bounty, her discretion as a testator did not miscarry when she decided that treating them equally was appropriate.
In short, it seems to me that if, in the terms referred to by Young J in Stewart v McDougall, the case is approached from the perspective of community expectations, the community would have expected this testator to make some substantial provision for Mr Munro and, while it would probably have expected her also to make further provision for her son than the half interest in Pittwater Road that he had already received, would not have thought that her obligation to him manifestly outweighed Mr Munro's claim.
As I have said, with reference to Singer v Berghouse, the determination of the first stage calls for an assessment of what was the proper level of maintenance appropriate for the plaintiff having regard to his financial position, the size and nature of the deceased's estate, the totality of the relationship between the plaintiff and the deceased and the relationship between the deceased and other persons - in this case Mr Munro has legitimate claims upon her bounty. Having regard to the amount of provision made in the past for the plaintiff, the competing claim of Mr Munro, the totality of the relationship between the plaintiff and the deceased and the size and nature of her estate, I am unpersuaded that, notwithstanding the plaintiff's financial position, it can be said that he has been left with inadequate provision for his proper maintenance and advancement. If I were persuaded of that at the first stage, then at the second stage Mr Munro's competing claim would drive me to the conclusion that it would be inappropriate to make any order for further provision in favour of the plaintiff.
For those reasons, the Court orders that:
1. The summons be dismissed with costs.
2. This order not be entered for seven days and if either party seeks a different costs order, such application be made by arrangement with my associate within that seven day period.
[3]
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Decision last updated: 12 March 2015