Ivy Agnes Maud Twomey v Neridah McDonald

Supreme Court of NSW|2012-02-02|Before: Nicholas J

Judgment 1This is an application under s 59 Succession Act 2006 (the Act) for an order that provision be made for the plaintiff's maintenance, education and advancement in life out of the estate of the late Ivy May Twomey (the deceased). 2The deceased died on 6 November 2009 aged 91 years. Her husband died in 1974. She was survived by three of her five children namely Carolyn May Hickel (born 29 August 1949), Ronald James Twomey (born 12 January 1953), and the plaintiff (born 1 July 1956). Her two other children predeceased her: Robert Edward Twomey on 6 November 1999 aged 54 years, and Arthur Roy Twomey (Arthur) on 27 May 2009 aged 68 years. 3Arthur was survived by his widow, Helen Margaret Twomey (Helen), and their children Neridah McDonald (the defendant), Arthur Craig Twomey (Craig), and Brinawa Twomey (Brinawa). 4The deceased left a will made on 12 July 1990. A grant of administration with will annexed was made to the plaintiff on 2 August 2010. Relevantly, the will provided: "I GIVE to my son ARTHUR ROY TWOMEY the property known as # ### Street, North Parramatta or any interest I may have therein at my death, such devise being subject to the said ARTHUR ROY TWOMEY being wholly responsible for payment of all sums secured thereon, but if the said ARTHUR ROY TWOMEY dies before me or before attaining a vested interest leaving children those children shall on attaining their majority take equally the share which their parent would otherwise have taken." Accordingly, the property passes to Arthur's children, the defendant, Craig, and Brinawa (the beneficiaries). 5Clauses 4 and 5 of the will disposed of items of jewellery and other personalty. By cl 6, the residue of the estate was left equally to the surviving children Carloyn Hickel, Ronald Twomey, and the plaintiff. 6The estate has a net value of $627,507.62, allowing for costs of administration of about $10,500. The assets include the deceased's property at North Parramatta (the property) of which the agreed value is $610,000, and funds in bank accounts in the total amount of $28,007.62.

Extension of time 7The summons in these proceedings was filed on 12 November 2010, six days out of time. The plaintiff's application for an order that time be extended to allow the making of an order for provision was opposed. The application was made under s 58(2) of the Act which provides: "58 When an application may be made ... (2) An application for a family provision order must be made not later than 12 months after the date of the death of the deceased person, unless the Court otherwise orders on sufficient cause being shown." 8The onus of establishing sufficient cause for the making of an order outside the limit lies on the plaintiff. The principles governing the exercise of discretion to extend time were recently summarised by Hallen AsJ in Thomas v Pickering; Byrne & Anor v Pickering [2011] NSWSC 572. He said: "85 The principles governing that exercise of discretion under the Act are clear. Apart from the reason(s) for the lateness of the claim, the factors to which the court must look, include whether beneficiaries under the Will would be unacceptably prejudiced if time were to be extended; whether there has been any unconscionable conduct by either side; and, finally what is the strength of the claim made by the party seeking an extension of time: see, for example, John v John ; John v John [2010] NSWSC 937 at [37]-[51] per Ward J; Campbell v Chabert-McKay [2010] NSWSC 859 at [45]-[47] per White J; Durham v Durham [2010] NSWSC 389 at [15] per Ball J; Taylor v Farrugia [2009] NSWSC 801 at [14] per Brereton J; Burton v Moss [2010] NSWSC 163 at [31] ff, per Macready As J, in which the relevant earlier cases are referred to." 9In about late November 2009 the plaintiff informed Helen that she wished to administer the estate. On about 11 February 2010 the plaintiff and Helen attended the office of WG McNally Jones Staff, solicitors, then acting for the estate. The plaintiff advised she did not expect any dispute would arise in relation to the estate. In June 2010 the plaintiff borrowed the sum of $2,000 from Helen to meet a mortgage repayment, to be repaid from her share of the residue. On 2 August 2010 the plaintiff was granted letters of administration with the will annexed. 10On 21 September 2010 the plaintiff had a telephone conversation with Mr Mark Turner, a solicitor with W G McNally Jones Staff. The file note of 21 September 2010 of Mr Turner's conversation with the plaintiff, and the letter to the plaintiff of 1 October 2010 from Ms Amber Notley of the same firm, show that the plaintiff was asked whether she intended to claim against the estate, and was advised about the need for separate representation if she did. No reference was made to the time limit within which any application should be made. 11By email of 30 September 2010 to the defendant the plaintiff expressed her distress with regard to the will, and proposed an arrangement whereby provision was made for her from the estate. In her email of 7 October 2010, the defendant rejected the proposal and requested the plaintiff to proceed with the administration of the estate in accordance with the will. 12On 21 September 2010 the plaintiff retained Ms Joanne Butler, solicitor, of Butlers Will Dispute Lawyers to act for her. Correspondence followed which resulted in the relevant file being sent to Ms Butler. She received it on 28 October 2010 and deposed that she was unable to read it until 11 November 2010. Ms Butler's evidence, which I accept, was that she did not recall discussing the limitation period with the plaintiff, and that she forgot to file the summons within the prescribed time. The plaintiff said that she was aware of a 12 month limit, but relied on Ms Butler to make an application within time. 13The plaintiff submitted that the explanation for the short delay was the solicitor's oversight. It was common ground that there was no issue of prejudice. It was put that there was no evidence of unconscionable conduct on the part of the plaintiff and, in any event, the beneficiaries had become aware of the likelihood that she would dispute the will. Furthermore, as it was accepted by the defendant that the plaintiff was in need, it was put that there were strong prospects of success in a claim. 14The defendant opposed any extension. It was put that it was relevant to the exercise of discretion to take into account that from November 2009 until June 2010 the plaintiff advanced her interests by obtaining the grant of administration, and also the loan from Helen as an advance on her share of the residue. It was put that she was aware of the 12 month limitation period, but left it until she retained Ms Butler in September 2010 before indicating the possibility of a claim. It was argued that, in the circumstances, reliance upon the solicitor's oversight was not sufficient to justify an extension. 15The delay of six days in filing the summons has caused no impediment to the administration of the estate. No prejudice will be suffered by the defendant if time is extended. The conduct of the plaintiff as described in the defendant's submissions was not unconscionable. For reasons later given, the nature and extent of the plaintiff's relationship with the deceased, and her situation of need, demonstrated that her application for an order for provision had reasonable prospects of success. 16In support of the proposition that the solicitor's failure to lodge an application in time was not sufficient cause for the court extending time, the defendant relied on the statement of Young J (as he then was) in Charles v Charles [25 March 1988, NSWSC, Unreported] that "... there must be something more than mere incompetence or inattention by a solicitor before time can be extended under this Act". However, the submission loses force in this case when the solicitor's oversight is taken into account with the other factors referred to. Relevantly, in Kalmar v Kalmar [2006] NSWSC 437 White J said: "24 His Honour's statement that inattention or incompetence by a solicitor is an insufficient ground to warrant an order extending time does not mean that an application for extension must be refused if the limitation period expired through the fault of the solicitor. Contrary to the impression conveyed in the passage quoted from De Groot and Nickel, Family Provision in Australia, it was not held in Charles v Charles that the extension ought not to be granted in that case. In fact, an extension of time was granted as notice of intention to apply had been given before the limitation period expired and the beneficiaries were not prejudiced by an extension." 17In Cetojevic v Cetojevic [2006] NSWSC 431 (par 55) Campbell J (as he then was) observed that his Honour's statement was a rule of thumb which could not confine the statutory discretion. What is required of an applicant in order to show sufficient cause will depend on the particular facts and circumstances of the case. There is no code which governs the exercise of the court's wide discretion. 18In my opinion, sufficient cause has been established which, in all the circumstances, justifies an order for the extension of time as sought in par 4 of the summons. In so deciding I have not overlooked the plaintiff's evidence that she was aware of a limit, but I do not regard her knowledge as fatal to the application ( Taylor v Farrugia [2009] NSWSC 801, par 23, per Brereton J). In my opinion the interests of justice require that the plaintiff be given the opportunity to have her application heard and determined; it would be unjust that she be turned away without a hearing.

The application under s 59 of the Act 19It is common ground that the plaintiff is an eligible person under s 57(c) of the Act, in whose favour an order may be made under s 59(1)(a). 20Relevantly, the Act provides: "59 When family provision order may be made (1) The Court may, on application under Division 1, make a family provision order in relation to the estate of a deceased person, if the Court is satisfied that: ... (c) at the time when the Court is considering the application, adequate provision for the proper maintenance, education or advancement in life of the person in whose favour the order is to be made has not been made by the will of the deceased person, or by the operation of the intestacy rules in relation to the estate of the deceased person, or both. (2) The Court may make such order for provision out of the estate of the deceased person as the Court thinks ought to be made for the maintenance, education or advancement in life of the eligible person, having regard to the facts known to the Court at the time the order is made. ... 60 Matters to be considered by Court (1) The Court may have regard to the matters set out in subsection (2) for the purpose of determining: ... (b) whether to make a family provision order and the nature of any such order. (2) The following matters may be considered by the Court: (a) any family or other relationship between the applicant and the deceased person, including the nature and duration of the relationship, (b) the nature and extent of any obligations or responsibilities owed by the deceased person to the applicant, to any other person in respect of whom an application has been made for a family provision order or to any beneficiary of the deceased person's estate, (c) the nature and extent of the deceased person's estate (including any property that is, or could be, designated as notional estate of the deceased person) and of any liabilities or charges to which the estate is subject, as in existence when the application is being considered, (d) 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, (e) if the applicant is cohabiting with another person-the financial circumstances of the other person, ... (g) the age of the applicant when the application is being considered, (h) any contribution (whether financial or otherwise) by the applicant to the acquisition, conservation and improvement of the estate of the deceased person or to the welfare of the deceased person or the deceased person's family, whether made before or after the deceased person's death, for which adequate consideration (not including any pension or other benefit) was not received, by the applicant, (i) any provision made for the applicant by the deceased person, either during the deceased person's lifetime or made from the deceased person's estate, (j) any evidence of the testamentary intentions of the deceased person, including evidence of statements made by the deceased person, ... (p) any other matter the Court considers relevant, including matters in existence at the time of the deceased person's death or at the time the application is being considered." 21The approach to be taken by the court under s 59(1)(c) and (2) is the two- stage process described in Singer v Berghouse [1994] HCA 40; (1994) 181 CLR 201, pp 209-210: "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 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."

The estate 22I turn first to the size of the estate. It has a net value of $627,507.62, including the property of an agreed value of $610,000. 23The plaintiff's costs on a solicitor/client basis are estimated in the amount of $91,500, and on a party/party basis in the amount of $82,500. The defendant's costs on an indemnity basis are estimated in the amount of $93,500, and on the ordinary basis in the amount of $84,500. 24Taking these matters into account it is reasonable to assume that the net distributable estate would be about $461,000 if an order for provision is made, and the plaintiff is entitled to her costs on a party/party basis.

The plaintiff 25I find that the following matters concerning the plaintiff were either undisputed or supported by the evidence. 26In 1962, when about six years old, the plaintiff moved with the deceased, Carolyn and Ronald Twomey to the property at North Parramatta then rented from the housing commission. The deceased had left her husband some years before. 27Except for a period of her nursing training between 1974 and 1976, and for another short period in about 1978, the plaintiff lived almost continuously with the deceased until about 1986 when she went to live with her partner, Mr Garry Page (Garry), in nearby premises. 28The deceased lived at the property until about November 2003 when she moved to a nursing home. Throughout the time that the deceased was living at the property the plaintiff made various contributions towards the improvement of the property and to her welfare. These included the installation of an air conditioner, insulation of the roof, an above ground pool and related plumbing, and a pergola. In some of these she assisted Garry in the work. 29As she and Garry lived only a short distance away from the deceased, the plaintiff spoke to her daily, and visited several times a week. Often she accompanied the deceased shopping and was on call if help was required. She and Garry assisted with household maintenance frobm time to time. From about 1998, as the deceased's health deteriorated, the plaintiff maintained daily contact to ensure medication was taken. In about 2000, after the deceased suffered a fall, the plaintiff arranged for home care, and for Meals on Wheels to provide meals to her. Subsequently, the plaintiff and Garry cooked and delivered meals to the deceased, and would take her on various social outings. On occasions the plaintiff arranged overnight nursing at her expense, and sometimes spent the night with her. 30After the deceased went to the nursing home, the plaintiff visited her almost daily, and would accompany her to social events. 31The defendant correctly accepted that the plaintiff enjoyed a close relationship with the deceased, and contributed to her welfare. 32From 1974 - 1976 the plaintiff was employed as a nurse, and also undertook television agency work. From 1984 - 2003 she was employed as an advertising sales representative for Fairfax Community Newspapers. She resigned in November 2003 as a result of injuries received in a motor vehicle accident. Since 2004 she has been employed as an assistant nurse, and is currently working part-time. 33In January 1993 the plaintiff and Garry purchased their home in North Parramatta for $180,000 funded by a bank mortgage. Additional funds were expended on extensions to the property, and in 1998 refinancing was obtained to secure the amount of $250,000. By 2002 the debt level had risen to $384,000, apparently attributable to additional building work at the property. By May 2004 it had become necessary to refinance by way of mortgaging the property to secure the amount of $560,000, and by September 2005 the debt secured had increased to the amount of $657,000. 34After ceasing employment in November 2003, the plaintiff and Garry worked together in a sign writing business. Sometimes they were unable to meet mortgage repayments. In 2007 the plaintiff received $170,000 in compensation for injuries received in the 2003 motor vehicle accident, which monies were used for living expenses and investment in the business. 35In about March 2007 Lighthouse Management Pty Ltd was formed to operate the business. It has not traded profitably. For the last three months the company has not traded at all. Its stock is of minimal value. Garry is in full-time employment elsewhere. There is no prospect of recovering the amount invested in the company. 36The agreed estimated joint financial position of the plaintiff and Garry may be summarised as follows: Assets Savings accounts $100 Home at ### ### Road, North Parramatta $800,000 2002 Saab motor vehicle $4,500 2005 Holden Crewmen ute (unregistered) $8,000 Household furniture (of little or no commercial value) Unknown Ivy's accrued superannuation entitlement $35,000 Garry's accrued superannuation entitlement (01/06/10) $5,010 Digital printer $12,000 Total assets $864,610 Liabilities Mortgage to Perpetual Trustees $729,140 Credit cards and other loans $95,044 Total liabilities $824,184 Weekly income Plaintiff (varies) $320 Garry (varies) $780 Total weekly income $1,100 Weekly expenditure $1,187 Weekly expenditure is in the total amount of $1,187. It includes mortgage repayments, rates, property and living expenses, motor vehicle repayments and running costs.

37The defendant accepts that the plaintiff has established a need for provision, and that it is open to find, as I do, that she is in a desperate financial situation.

The beneficiaries 38The defendant is 41 years of age, and the wife of Mr Peter McDonald. They have two children, a son and a daughter aged four and two respectively. The defendant is employed as a human resources manager, and her husband has been employed by Qantas as a maintenance supervisor since 1990. 39Their agreed joint financial position may be summarised as follows: total assets in the amount of $1,232,996 which include the home at Drummoyne ($815,000), motor vehicles ($7,000), the defendant's superannuation ($113,943), and Mr McDonald's superannuation ($268,924). Total liabilities amount to $586,031, and include a mortgage for $512,355, and loans and credit card debt in the amount of $73,676. 40On a fortnightly basis, the defendant's salary is about $3,200, and Mr McDonald's salary is about $2,200. Total fortnightly expenditure is $4,849 which includes mortgage repayments, and expenses for child care, household and living, and motor vehicles. 41Craig is 38 years of age and lives in a de facto relationship with Ms Donna McCann. They have two sons, one aged 13 and one aged nine. Craig is self-employed and the owner of a smash repair business. Ms McCann manages her own hair dressing salon from their residence, and takes care of the boys. 42Their agreed joint financial position may be summarised as follows: total assets in the amount of $984,500 which include the home at Byron Bay ($650,000) motor vehicles ($44,500) and superannuation ($49,000). Total liabilities amount to $173,591 in respect of loans. Their income is from drawings from their businesses on a monthly basis, each in the sum of $2,400. Their total monthly expenditure is $4,375 which includes expenses for school fees, medication, household and living, and motor vehicles and boats. 43Brinawa is 37 years of age, and resides with his mother at her home in Balmain. He is currently self-employed in his business known as "Display Flooring". The business is in its infancy. He is unable to project his income for the current year, but it is anticipated to be small.

The property 44Evaluation of the claims of the plaintiff and the beneficiaries involves consideration of Arthur's relationship with the deceased, and the arrangement with her which came to be reflected in cl 3 of the will for the disposition of the property. 45In July 1967 the deceased became eligible to purchase the property, and on 4 March 1968 she entered into a contract with the Housing Commission to buy it for the price of $7,500. The price was payable by monthly instalments of $33.40 over a period of 45 years, with an option to pay one half of this amount fortnightly. It was common ground that an arrangement was made between the deceased and Arthur that she would leave him the property if he paid the deposit and outgoings such as rates and insurance. It was also accepted that Arthur made these payments commencing 1 April 1968, and that the deceased paid the instalments under the contract from 1 April 1968 until about 1978. 46On 4 April 2002 Arthur paid the balance owing on the property being an amount of $2,973.67. The property was transferred to the deceased in about August 2002. Helen deposed, and I accept, that soon thereafter she was present during a conversation with the deceased and Arthur when the deceased said she wished to transfer the property to him. Helen said that Arthur declined, and referred to the will under which the property was left to him, or if he died before the deceased, to his children. 47In these proceedings an issue arose as to whether the instalments under the contract were paid between 1978 and 4 April 2002 by the deceased or by Arthur. Helen's evidence that the payments were made by Arthur was not accepted by the plaintiff who, in cross-examination, said that the deceased told her that the payments were made by her. 48The plaintiff accepted that from 1978 Helen regularly accompanied the deceased on shopping trips for the purpose of making the payments. She said she was unaware that the deceased had asked Arthur to make the payments after she became an aged pensioner upon retirement from her employment as a cleaner. In support of the denial that the payments were made by Arthur, reference was made to the lack of any relevant documentary evidence for the period 1978 to 9 January 1991. It was accepted that with regard to the payment records for the period 9 January 1991 until 4 April 2002 it was open to the court to conclude that a substantial contribution had been made by Arthur during this period. 49Helen's evidence (aff 29.05.11, pars 26, 27, 28) was that in about 1978 there was a conversation in which the deceased told Arthur she could no longer afford to pay the instalments, and asked him and Helen to pay them, and Arthur agreed to do so. Helen also said that in addition to the property expenses, she and Arthur paid the instalments from 1978, and these were usually made by cash or cheque at the local Post Office. She also referred to many occasions when the deceased was with her when the payments were made. Her evidence was uncontradicted, and not shaken in cross-examination. I found Helen to be a truthful witness, and I accept her evidence. 50In my opinion Helen's evidence supports the finding, which I make, that it is highly probable that, consistent with his agreement to do so, it was Arthur who paid the instalments under the contract from 1978 until 4 April 2002.

Determination 51The evidence establishes to my satisfaction that the plaintiff is a person in need, and for whom adequate provision for her proper maintenance or advancement in life has not been made by the will of the deceased. 52The next question for consideration is whether some provision should be ordered out of the estate for the plaintiff's proper maintenance or advancement in life. The court's task is to make a value judgment having regard to the relevant facts and circumstances in these proceedings. In fixing the nature and extent of any provision regard must be had to the expectation or standards of the community as to the proper provision which the deceased ought to have made ( Walker v Walker [NSWSC 17 May 1996, Unreported] p 11; Graham v Graham [2011] NSWSC 504, par 87). 53In my opinion, the most relevant and important factors to be taken into account are the following. 54I find the plaintiff to have been a dutiful daughter who maintained a close and loving relationship with the deceased. Her contribution towards the welfare of the deceased was substantial, and is impossible to quantify in monetary terms. The evidence shows that, at least from the time of her motor vehicle accident in January 2003, the plaintiff has been in a continuing, and worsening, situation of need. To a large extent this situation is the result of the failure of the business which she operated with Garry, and the loss of funds invested in it. That her predicament may be attributable to poor commercial judgment is, in my opinion, irrelevant to the issue of her need. 55It was submitted that the plaintiff and Garry proposed to sell their home in the expectation that the proceeds of sale would be sufficient to discharge their liabilities, with a shortfall of about $25,000. The provision she seeks is a legacy of an amount sufficient to assist her to purchase suitable accommodation in the Parramatta area, or which would otherwise substantially relieve her overall financial position. 56For the plaintiff it was accepted, correctly, that Arthur was a good son, and was caring of, and generous towards, the deceased. His substantial financial assistance in respect of the purchase and maintenance of the property has been earlier referred to. The evidence shows that the provision in cl 3 of the will under which the beneficiaries are entitled to the property was made in accordance with an arrangement between the deceased and Arthur in recognition of the payments made by him. Although it may be assumed that the beneficiaries enjoyed a good relationship with the deceased as her grandchildren, there was no evidence of any claim upon her bounty which any might have had. Their inheritance turned on the sad accident that Arthur predeceased her. Nevertheless, the promises made, and expectations raised, by the deceased under the arrangement with Arthur are relevant factors to be taken into account ( Alexander v Jansson [2010] NSWSCA 176, par 18). 57The size of the estate available for distribution is small. The principal asset is the property which is valued at $610,000. In my opinion, it is relevant that its present value is greatly in excess of its purchase price and of the financial contributions made by Arthur in respect of it. Furthermore, although there was no evidence on the point, it is reasonable to infer that when the property was transferred to the deceased in August 2002, its value was much greater than the price actually paid for it. 58In my opinion assessment of the competing claims of the plaintiff and the beneficiaries justifies the conclusion, in all the circumstances, that the hypothetical wise and just testatrix would have recognised the plaintiff's claim upon her bounty for the contribution and services to her welfare and support over many years. In this case, I am satisfied that provision ought to have been made for the plaintiff by way of a pecuniary legacy. 59In deciding the quantum of the pecuniary legacy it is necessary to take into account the competing claims, the size of the estate, the plaintiff's need for financial assistance, and the troubling fact that the parties have incurred costs estimated in the amount of $176,000. This I have done. In my opinion it is appropriate that the plaintiff should benefit from the increased value of the property. Accordingly I propose to order the provision of a capital sum to assist the plaintiff with accommodation in the future or which would otherwise alleviate her financial need. In my opinion, the appropriate amount is $185,000 which represents about 40 per cent of the likely net distributable estate. The amount should be provided as a pecuniary legacy in addition to the plaintiff's present entitlements under the will. 60In the circumstances, the parties should be given the opportunity to bring in agreed short minutes of orders in accordance with these reasons. I have not dealt with the question of costs and, absent agreement, the parties should also have the opportunity to address me on this issue. 61Accordingly, arrangements should be made with my associate by 17 February 2012 for the re-listing of the matter for the making of orders and consideration of any issue as to costs.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 02 February 2012

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