Johnson v Wright [2012] NSWSC 879 | Case summary

Discussion 18The defendants submitted when one considers the plaintiff's financial position and the provisions made for her in the will she has not been left without adequate and proper provision for her maintenance, education and advancement in life. That is a matter which, in this case, has to be considered in the context of the plaintiff's claim which is for a portable Crisp order as a variation of the present provisions in the will. She does not ask to receive the house absolutely. Although this is her position it is useful to note that Court's consideration of whether an absolute interest or a Crisp type order is appropriate. I should also refer to these cases where the Court has emphasised the need not to fetter the Court's jurisdiction with judge-made rules. 19The question of what is an appropriate provision and whether a life estate should be awarded to persons in the situation of either a widow or a long standing de facto partner has been dealt with in a number of cases. 20In the 1970s and 1980s there were a number of decisions of single judges of this Court where they have held that a life interest with particular attributes was appropriate. (See Crisp v Burns Philp Trustee Co Ltd, Holland J, 18 December 1979; Banks v Hourigan, Waddell CJ in Eq, 2 March 1989; Cameron v Hills, Needham J, 26 October 1989.) This perhaps is reflected in matters mentioned by the High Court in White v Barron [1980] HCA 14; (1979-1980) 144 CLR 431 where Mason J said (at 444): "A capital provision should only be awarded to a widow when it appears that this is the fairest means of securing the proper maintenance. However, the provision of a large capital sum for a widow who is not young may, in the event of her early death, result in a substantial benefit to her relatives, contrary to the wishes of the testator, when a benefit of another kind would have afforded an adequate safeguard to her personally, without leaving her in a position in which she could benefit her relatives from the proceedings of the legacy." 21He appears to be the only member of the Court to have adverted to this aspect. 22A change in the High Court's attitude to the provision for widows, no doubt in response to changes in community expectations, is illustrated by the fact that in this case it disapproved of observations made in Worladge v Doddridge (1957) 97 CLR 1, but as a general rule an order for provision in favour of a widow should be confined to widowhood. Stephen J, who was one of the majority in White v Barron (at 438-440), went to some lengths to point out that the jurisdiction was one which should not be unduly confined by judge-made rules of purportedly general application. 23In Elliott v Elliott (NSWCA, 24 April 1986, unreported), Glass JA said in reference to the above quoted statement: "The statement there was made in an evidentiary context where the provision was made at the expense of the children of a previous marriage who had some claim on the testamentary bounty of the deceased. The residuary beneficiaries here have none and it seems to me that no fairness is owed to them." 24McHugh JA agreed with this judgment and the President agreed substantially with the reasons given by Glass JA. He added nothing on this aspect. I do not think that it can be said that the Court of Appeal has adopted the statement of Mason J in White v Barron. All that can be said is that they distinguished the situation before them. 25By the late 1980s the Judges in this Division were taking a slightly different view. For instance, in Court v Hunt, 14 September 1987, unreported, Young J said at: "Old age is a growing problem in our community and judges who sit in Family Provision Act applications get experience, as well as their own experience in the community, as to what happens when people reach the age when they can no longer look after themselves and one Judges the evidence in these sorts of proceedings against that background knowledge." 26His Honour then went on to talk about the assumptions one could make about the fact that frequently people, once they pass 55, had to change their accommodation and locate themselves either in retirement villages or nursing homes which have different requirements for capital contribution. 27After talking about the evidence necessary, His Honour went on to say: "In many cases these days a life estate will not be sufficient because it does not cover the situation of the plaintiff moving from her own home to retirement village to nursing home to hospital. Sometimes it is possible for a Court to alter a life estate to a more flexible non-capital provision, such as was done by Holland J in Crisp v Burns Philp Trustee Co Ltd, 18 December 1979, unreported, but noted in Mason & Handley Probate Service at page 13206. Other times the proper provision is for a fee simple gift, realising that this property will be sold and will be turned over into the appropriate property to maintain the widow for the rest of her life. Care also has to be given by those administering the plaintiff's property to ensure that there is sufficient income being raised after tax that will provide for maintenance levies and the other payments that have had to be made by the widow." 28More recently the Court of Appeal on a number of occasions has referred to this problem. In Golosky v Golosky (5 October 1993, unreported), the Court summarised the proper provision for widows in the following terms: "In testing the Master's decision it is appropriate to keep in mind the principles which govern the approach which he was obliged to take to the widow's application under the Act. Relevantly, these included: (a)Proper respect must be paid for the rights of testamentary disposition which is the fundamental premise upon which the provisions of the Act are based. That premise required the Court out of respect for the continuing right of testamentary disposition, to limit its disturbance of the testator's will to that which is necessary to achieve the purposes of the Act, and not more. See The Pontifical Society for the Propagation of the Faith and St Charles Seminary, Perth v Scales (1962) 107 CLR 9, 19; White v Barron and Anor, above, 458; Hunter, above, 576. (b)The jurisdiction is not the correction and hurt feelings sense of role of the competing claimants upon the estate of the testator. The Court is diligently to respond to the application the person who was a member of the testator's household and to consider whether, as claimed, the provision made by the will is inadequate for that person is proper maintenance and advancement in life. See Heyward v Fisher, Court of Appeal, unreported, 26 April 1985; (1985) NSWJB 81. (c)Consideration of other cases must be conducted with circumspection because of the inescapable detail of the factual circumstances of each case. It is the detail that the answer to the proper application of the Act is to be discovered. No hard and fast rules can be adopted. Nevertheless, it had been said that in the absence of special circumstances, it will normally be the duty of a testator to ensure that a spouse (or spouse equivalent) is provided with a place to live and appropriate to that which he or she has become accustomed to. To the extent that the assets available to the deceased will permit such a course, it is normally appropriate that the spouse (or spouse equivalent) should be provided, as well, with a fund to meet unforeseen contingencies; see Luciano (above) 69-70; (d)A mere right of residence will usually be an unsatisfactory method of providing tourist bosses accommodation to fulfil the foregoing normal pre-supposition. This is because a spouse may be compelled by sickness, the huge, urgent supervening necessity or otherwise, with good reason, to leave the residence. The spouse provided and will then be left with out the kind of protection which is normally expected will be provided by a testator who is both wines and just. See Moore v Moore , Court of Appeal, unreported, 16 May 1984, per Hutley JA; (e)considering what is some "proper" and by inference what is "improper" is a provision in a will, it is appropriate to take into account all of the circumstances of the case including such matters as the nature and quality of the relationship between the testator and the claimant; the character and conduct of the claimant; the present and reasonably anticipated future needs of the claimant; the size and nature of the state and of any relevant dispositions which may have reduced the estate available for distribution according to the will; the nature and relative strengths of the competing claims of testamentary recognition; and any contributions of the claimant to the property or to the welfare of the deceased. See Re Fulop Deceased (1987) NSWLR 679 (SC); Churton v Christian and Ors (1988) 13 NSWLR 241 (CA), 252." 29In talking of the need to provide a house and a sum for contingencies Kirby P is clearly referring to passages in Luciano v Rosenblum (1985) 2 NSWLR 65. In the judgment of Powell J at first instance in Elliott v Elliott, (NSWSC, 18 May 1984, unreported) his Honour said that such a type of provision only applies where it can be said there has been a long and happy marriage and a widow has helped build up the estate of the deceased. This seems to have been generally adopted over the years in many subsequent cases. 30In Permanent Trustee v Fraser 36 NSWLR 24 Sheller JA had the following to say (at 47): "Once it is accepted that adequate provision for her proper maintenance and advancement in life required secure accommodation for life as well as a capital sum to meet exigencies, this need is not met by giving her only a life interest in the home unit. Commonly people in the community need to move from their own home into a unit in a retirement village and then into nursing accommodation and then into total care accommodation. See Young J in Christie v Christie. That need can be met if the respondent is given the home unit absolutely. She then has a greater flexibility as well as greater security." 31In Salmon v Blackford [1997] NSWCA 274, the Court of Appeal was dealing with the case where the trial Judge had given a fee simple to the deceased widow. Sheller JA said: "The principal point according to Mr Gibb was that his Honour failed to take into account that by reason of the widow's advanced years and the probability that her adopted son would be the natural object of her bounty, the effect of the order made was likely to be that the adopted son, whom the deceased had no intention to benefit, would be the beneficiary of half of the estate. I have great difficulty in seeing how a submission of this sort has any weight in the circumstances of this case. The matter that this Court must consider is whether the order that his Honour made was in such terms that one could only come to the conclusion that in some way his discretion must have miscarried. It is well established that proper provision is not to be measured solely by the need for maintenance. It should, in the case of this respondent and in the circumstances of this case, free her mind from any reasonable fear of any insufficiency as her age increases and her health and strength fails. I may say in this regard that her life expectancy, according to the tables, was something over 11 years at the time of the hearing. If one comes to the conclusion that for her proper maintenance and order such as the present is appropriate, it seems to me to matter not at all that she has an adopted son of an earlier marriage and that he may be the ultimate beneficiary of her bounty." 32No reference was made in either of these cases to the comments of Mason J in White v Barron. In Permanent Trustee v Fraser there were no competing claims by children of the first marriage. In Salmon v Blackford there were children of the first marriage but they appeared well off and their claims were thus minor. 33Recently in Hertzberg v Hertzberg [2003] NSWCA 311, McColl JA referred with approval to Golosky v Golosky and said [34]-[35]: "[34] ....section 9 (2) of the Family Provision Act directs the Court to consider the issues of jurisdiction and the exercise of discretion at the time of the proceedings, not the time of the will, and in this case the deed, were made. In reaching his decision the Acting Master took into account community expectations. He referred to Young J's observations in Blackford v Salmon, unreported, 27 July 1994, in which his Honour said: 'It seems to that for a widow of a 30 year marriage who has lived in the house for some time and who continues to wish to live there, the expectation in the community would be that a wise and just testator would have left her the house in fee simple.' [35]His Honour's judgement recognized the community expectation that a testator should make provision for a widow to ensure that she can lead an independent and dignified life. That prospect is diminished when the widow does not have the benefit of the fee simple, but rather, a right of occupation of her home with a provision for expenses associated with that right being left in the hands of the executors." 34This also was a case where there was no competing claim. It seems to me that the comments of Mason J in White v Barron should still be given consideration when one is considering a situation of competing claims. 35It is however worth noting the comments of Young CJ in Eq in Marshall v Carruthers [2002] NSWCA 47. His Honour agreed with the comments of Hodgson JA and added: "[72]Mr Ellison for the respondent strongly submitted that a person who makes a claim as a spouse of a class (a) eligible person is entitled to take comfort from the words of Mr Justice Powell in Luciano v Rosenblum (1985) 2 NSWLR 65 at 69 that a spouse is more or less entitled to have a home plus income to enable her to live in the style to which she is accustomed provided out of the estate. Indeed this passage is actually a summary of a similar but longer statement made by Powell J in Elliott v Elliott 18 May 1984 unreported which was approved by the Court of Appeal on 24 April 1996 and which is set out in the learned Master's judgment. [73]It must be remembered that Powell J put his proposition as a "broad general rule". However, there is in fact no "standard former spouse" to which one can just apply that proposition as a rule of thumb. [74]Powell J's broad general rule may not be a good guide as to what the Court will consider as the duty of a testator towards a spouse except in the case of a financially dependent spouse where there is a history of bringing up children with the deceased or in supporting the deceased while he was amassing his fortune. The broad general rule may well be inapplicable in cases of other spouses. Indeed, the cases in the first half of the 20th century show that as far as widowers were concerned, the proposition was quite untrue." 36Similarly in Bladwell v Davis [ 2004] NSWCA 170, Bryson JA, reviewed the authorities and concluded that the adoption of any such preconceived position or formula was likely to result in error, stating at [19]: "In the application of the test in s 7, and of the exposition thereof in Singer v. Berghouse by Mason CJ, Deane and McHugh JJ at 409-411 it would be an error to accord to widows generally primacy over all other applicants regardless of circumstances and regardless of performance of the stages of consideration described in Singer v. Berghouse, in full and with reference to the instant facts. Defeat of the opponents' claims does not necessarily follow from a demonstration, which the claimant can make, that all her needs with respect to income, home renovation, and provision for contingencies cannot be met if any provision is made for the opponents; indeed she could well demonstrate that even if the provisions of the will took effect without any modification, the provision for her is not adequate. That is not a demonstration that no claim by an eligible person can succeed; the claims and circumstances of the opponents also have to be weighed, and they too have their needs and merits." Ipp JA added at [2]: "I would add, however, that where competing factors are more or less otherwise in equilibrium, the fact that one party is the elderly widow of the testator, is permanently unable to increase her income, and is never likely to be better off financially, while the other parties are materially younger and have the capacity to earn more or otherwise improve their financial position in the future, will ordinarily result in the needs of the widow being given primacy. That is simply because, in such circumstances, the widow will have no hope of improving herself economically, whereas that would not be the position of the others. In that event, the need of the widow would be greater than that of the others." 37Returning from the general principles to the specific question of the appropriate use of a Crisp order recently, in O'Leary v O'Leary and Eccles [2010] NSWSC 1347, Hallen AsJ considered making a provision for a plaintiff by way of Crisp order and a small capital sum and stated: "[77] It should be noted that Hertzberg v Hertzberg and Blackford v Salmon was each a case in which there were no competing claims. A different principle may be applicable where there are competing claims: Robertson v Pearce [2010] NSWSC 124 as per Macready AsJ at [45]. [78] Not infrequently, the jurisdiction of the court to interfere with the deceased's testamentary intentions, comes to be exercised upon the application of a spouse, of advanced age, and in circumstances where tensions arise between other family members as to the real probable beneficiaries in the event that an order be made and that the applicant's remaining number of years may prove to be relatively short. Whilst such tensions sometimes provide, at least, part of the backdrop and reasons for the respective stances taken in the litigation, the task of the Court is, no more and no less, than to exercise its jurisdiction in accordance with the Act (Hertzberg v Hertzberg per Einstein AJA at [44]). [79] This tension often presents a fundamental division on the question whether adequate provision requires an interest less than an absolute interest, namely a life interest, or Crisp order, in the property of the deceased. [80] What is described in the cases as a "Crisp order" is an order of the kind made by Holland J in Crisp v Burns Philp Trustee Company Ltd (NSWSC, 18 December 1979, unreported), except in part, in Mason and Handler's Succession Law and Practice New South Wales at p 13580 at [9433]). Such an order gives an applicant an interest for life in real property, or in an interest in real property, with the right to it (should the need arise) for the purposes of securing, for the applicant's benefit, more appropriate accommodation. That type of order is intended to provide flexibility, by way of a life estate, the terms of which could be changed to cover the situation of the applicant moving from her own home to retirement village to nursing home to hospital. The flexibility provided by such an order underlies the notion that a Crisp order confers a "portable life interest": Court v Hunt NSWSC, 14 September 1987, unreported, cited with approval by Ipp JA in Milillo v Konnecke[2009] NSWCA 109 at [47]-[48]." 38Apart from the earlier reference to Marshall v Carruthers that case concerned a claim by a de facto partner. In this respect Hodgson JA had the following to say: "[63] The Master found that Ms Carruthers had a strong claim, and I agree with that finding. However, the strength of a claim of a surviving partner does, in my opinion, vary with circumstances. Although the Family Provision Act does, in some respects, equate de facto spouses with de jure spouses, this does not, in my opinion, make the existence or otherwise of a marriage irrelevant. In my opinion, a formal and binding commitment to mutual support through good times and bad, other factors being equal, adds strength to a legitimate claim. In my opinion also, the strength of a claim can be affected by the length of a relationship and contributions to the relationship. One factor which may be particularly important in a claim by a woman is that a woman may have, to the detriment of her own financial prospects, taken a major role in raising the children of herself and the deceased. [64]The Master referred to the following statement of principle which appears in Luciano v Rosenblum [1985] 2 NSWLR 65 at 69: 'It seems to me that, as a broad general rule, and in the absence of special circumstances, the duty of a testator to his widow is, to the extent to which his assets permit him to do so, to ensure that she is secure in her home, to ensure that she has an income sufficient to permit her to live in the style to which she is accustomed, and to provide her with a fund to enable her to meet any unforeseen contingencies.' [65]I do not think it is to be assumed that this statement is to apply in all cases, particularly where factors such as those I have mentioned are absent. In my opinion, it is not clear that this statement would apply to applications by widowers. The difference in attitude that the Court may take to applications by widowers is due in part, I think, to economic disadvantages which women still face. One important aspect of this is the economic disadvantage occasioned by the greater responsibility which women often take in looking after children. That factor is of course absent here." 39Whilst acknowledging his Honour's comments in respect of the strength of the marriage bond, there are a number of factors which are of importance in this case. The most important factor is, of course, a long and happy relationship of 22 years. They did not have nor did they care for any children during that relationship, but they both worked throughout the relationship until close to its end. In this sense they worked together for their mutual benefit. 40The situation of Karen is not a secure one, however, she and her husband seem likely to be able to continue on and bring up their children. James is in a dire situation and does not seem to have any particular suggestions as to how his situation could be improved. No doubt some money now may prevent bankruptcy. His inability to work means he is severely disadvantaged. To his credit he did assist his father with the house. 41A Crisp order will, however, hold out the realistic expectation of funds at some time in the future when both children will probably be more needy. Although, so far as James is concerned, he may well feel that he cannot be in a worse situation than he is at the moment. 42The large capital sums which the plaintiff has received from the estate of her sister's partner is, to an extent, illusory because it takes away her pension income and must be kept intact to provide her with an alternative income. 43The present provisions in the will leave a large discretion with the trustees about a replacement home and this is inappropriate. A number of cases to which I have referred illustrate the fact that in many cases a bond will be required for appropriate aged or nursing care once the home is too much to manage. It happens all too frequently, and very often, of course, it is important for the person who has the unfortunate decision to make to be the one to decide when it is when they should move. 44A consideration of all the circumstances in this case leads me to the view that the plaintiff has not received adequate and appropriate provision for her maintenance, education and advancement in life. She should receive a portable Crisp estate in the house and have the right to change accommodation when appropriate for her. 45The application of that order to the home in Gladesville has a number of practical problems. The first is she will need to meet the mortgage repayments as well as all the outgoings of the property. She also for the time being will have to bear her costs which apparently she agrees to do. 46There is still the problem of the balance of the defendants' costs. They are entitled to be paid for that work and it may be necessary for her to pay them, however, I will hear if there are any further submissions on the question of the defendants' costs before proceeding further. Costs 47I have reached a point in my judgment when the question of payment of costs which are outstanding because of the lack of funds in the estate arrives and I invited submissions. I have now heard submissions on that aspect. It arises not only because the estate is short of funds but because the plaintiff wishes to have the Gladesville property as her home for the time being where there are not sufficient funds to do so in the estate. 48The parties have referred to the principles relating to costs in Succession Act claims and it is clear there are different rules in respect of claims under the Succession Act, although it is submitted that where one party succeeds the ordinary rule and entitlement to costs under the Uniform Civil Procedure Rules 2005, r 42.1 would apply. The problem with this matter is that it has been complicated by two offers. The first one, which is exhibit A, is one is served by the plaintiff on 23 April 2012 and offers to compromise the proceedings by substituting provisions in the nature of a Crisp order in respect of the capital contained in the Gladesville house. It also suggests that the parties would allow the plaintiff to discharge a mortgage over the property and that the defendants' costs be paid on an indemnity basis. The plaintiff sought no order for costs, to the intent the plaintiff pay her own costs. The executors responded by an offer made 19 June 2012 and that offer also made provision, firstly, to remove the discretion of the trustees in respect of the change of residence but also to provide for accommodation in a retirement institution which requires an accommodation bond. It also provided for the plaintiff to pay her own costs and the defendants' costs be paid by the deceased's estate on the indemnity basis. The substantial difference is it provides that Eileen Johnson is to pay all outgoings and costs and fees associated with her accommodation and the services she receives within the retirement institution. It also has the benefit that any additional income that might be available after allowance of the bond will produce income that will be available to her and no doubt will enable her to make those payments. The letter which accompanied the letter from the solicitors for the defendants of 19 June offered to renegotiate any final points regarding the offer and nothing apparently has happened, the matter has simply come on for hearing with people taking positions. 49It seems to me that the difficulties in the matter are caused, as I said, by two factors. One is the fact that the estate is not large enough and the second is that the plaintiff has a desire to keep living in the Gladesville home. The plaintiff's application is in three alternatives: firstly, the plaintiff's costs capped in the sum of $24,000 be paid from the estate; second, there be no order as to costs; and three, that the plaintiff pays her own costs and the defendants' capped at $24,000 paid out of the estate. This is $24,000 which is the only fund available to meet the costs. 50Because of the dual nature of the problem, namely, the costs and the plaintiff's desire, I think there has to be compromise on both sides in respect of costs. 51In my view the appropriate order is that at this stage while Gladesville is retained and until it is sold that the plaintiff bear her own costs and that the defendants' costs be paid out of the estate but only up to at this stage the amount of the funds held in the solicitor's trust account of some $24,000. 52I envisage that the costs may be paid out of the estate if and when the house is sold and the fund is reconstituted either by nursing home accommodation or otherwise so I would anticipate the plaintiff's costs would come out of the joint fund and the balance of the defendants' costs would come out of that fund at that stage. That will be a matter which will only occur when the plaintiff herself decides to leave the home. 53I ask the parties to bring in short minutes to reflect these reasons and so far as the costs of the outgoings for the house are concerned. I have already indicated in my judgment that the plaintiff will have to bear those. In the event there is a substitution house or nursing home accommodation bond the plaintiff should still bear any responsibility but she will be entitled to income from the balance of the fund to enable her to pay outgoings. oOo 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: 07 August 2012

Johnson v Wright

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