Lancaster v Bray [2008] NSWSC 155 | Case summary

3924 of 2007 OONAGH MARIA LANCASTER -v- MICHAEL JOHN BRAY JUDGMENT 1 HIS HONOUR: These are proceedings under the Family Provision Act 1982. 2 By summons filed on 7 August 2007 the Plaintiff claims an order for provision for her maintenance, education and advancement in life out of the estate of the late Stuart Kirkland Clough (to whom I shall refer as "the Deceased"). 3 The Deceased died on 10 November 2006, aged 55. He left a will dated 8 September 1981. Letters of administration with that will annexed were on 17 April 2007 granted to Michael John Bray (who is the Defendant to the present proceedings). 4 That will had been made in contemplation of the marriage of the Deceased to Suzanne Gay Patterson-Kane, whom he subsequently married on 15 January 1983. By that will the Deceased appointed his future wife as executor and gave to her the entirety of the his estate. However, in consequence of the divorce of the Deceased and Mrs Suzanne Clough on 16 August 2005, there was, pursuant to section 15A of the Wills, Probate and Administration Act 1898, an omission of the foregoing appointment of Mrs Suzanne Clough as executor and there was a revocation of the foregoing dispository provisions of the will. The substitutionary provisions of the will (contained in clause 4 thereof) were thereupon brought into operation. By clause 4 of the will the Deceased appointed his brothers Simon Deacon Clough and Alexander John Clough as joint executors and gave the entirety of his estate to such of his children as should survive him "as and when they shall attain the age of twenty-one (21) years". 5 The substitutionary executors did not seek probate. The Deceased was survived by two children, Eve Louise Clough (who was born on 16 April 1985, and is now aged 22), and Nicholas John Clough (who was born on 25 July 1998, and is now aged 19). 6 Michael John Bray, who was the solicitor for the Deceased during his lifetime, was the nominee of those beneficiaries for the purpose of seeking administration of the estate of the Deceased. 7 The inventory of property discloses assets of the Deceased at the time of his death having a total value exceeding $4,421,610. According, to the Defendant, the estate of the Deceased presently has liabilities exceeding the value of the assets, with the consequence that the estate is insolvent. The Plaintiff disputes that the estate is insolvent. 8 It was the case for the Plaintiff that she was the de facto partner of the Deceased at the time of his death. 9 The Plaintiff said that that relationship obtained from November 1998 until the death of the Deceased. The Defendant denied that the Plaintiff had ever been in a de facto relationship with the Deceased, and in particular that she was in such a relationship at the time of the Deceased's death. 10 In calculating the value of the estate available for distribution, or, in the event that the estate is found to be insolvent, the extent of that insolvency, the costs of the present proceedings must be taken into consideration, since the Plaintiff, if successful in her claim, will normally be entitled to an order that her costs be paid out of the estate of the Deceased, whilst the Defendant, irrespective of the outcome of the proceedings, will normally be entitled to an order that his costs be paid out of estate. It was estimated on behalf of the Plaintiff that her costs will total about $47,000, whilst it was estimated on behalf of the Defendant that his costs will total $15,000 for a hearing occupying one day. In the event, however, the hearing occupied two days. Accordingly, it seems prudent to assume that the costs of the Defendant will total at least $25,000 11 The Plaintiff was born on 13 February 1953 in Ireland, and is presently aged 55. She came to Australia in December 1972 and has resided in this country since then. 12 At the time when they first met, in August 1997, the Plaintiff had been married, and divorced, and the Deceased was separated from his wife, Mrs Suzanne Clough. 13 According to the Plaintiff, from March 1998 until his death more than eight years later she and the Deceased had a loving and sexual relationship. She said that between November 1998 and the Deceased's death in November 2005, she and the Deceased resided together for various periods at various locations. 14 The Plaintiff, although qualified as a solicitor, does not currently practice as such. She prefers to maintain a small business, which she operates through the vehicle of a company. That business presently runs at a loss. According to the Plaintiff, she has no income. She lives in rented accommodation, for which she pays $345 a week. She does not have a motor vehicle. She owes debts to various members of her family and friends totalling $63,200. She gave evidence of her weekly outgoings, in a total amount of $821 (that figure including the foregoing rent of $345). 15 The Plaintiff gave evidence concerning medical problems from which she currently suffers or from which he has suffered in recent years. They included diverticulitis, fractured left arm, shingles, surgical removal of breast lump, surgical removal of ovarian cysts, surgical removal of part of colon, cervical spondylosis, lower back pain, anxiety and depression. She has also undergone procedures of colonoscopy and endoscopy. She is under current treatment by way of medication for hypertension, diverticulitis, cervical spondylosis, spinal pain, pain relief for neck and back, and hormonal regulation treatment. 16 The evidence concerning the assets and liabilities of the estate of the Deceased was quite unsatisfactory. I have already recorded that the inventory of property disclosed assets to a total value of $4,421,610. The liabilities of the estate at the date of the death of the Deceased set forth in the Defendant's affidavit of 3 October 2007, in a total amount of $3,958,664, have the result that at the time of the Deceased's death the net value of the estate, being the excess of assets over liabilities, was in the order of $463,000. 17 It is possible, but by no means certain, that the assets of the estate may be augmented by superannuation and life insurance payments having a total value of a little over $33,000. Since the trustees of those funds may exercise their discretion in favour of, for example, Nicholas, and not in favour of the estate of the Deceased, I consider it prudent that in calculating the value of the distributable estate the possibility of such augmentation of the assets of the estate should be disregarded. 18 However, according to the foregoing affidavit of the Defendant, the assets of the estate presently exceed the liabilities by only $2329. When the costs of even one of the parties (let alone of both parties) are taken into consideration, the estate, according to the Defendant, is insolvent. That asserted insolvency was largely due to a debt of $100,000 owed by the Deceased to his former wife, Mrs Suzanne Clough, in consequence of orders in that regard made by consent of the Deceased and his former wife in the Family Court of Australia. The Plaintiff disputes that that debt constitutes a present liability of the estate, and asserts that the Deceased during his lifetime paid that debt to his former wife. 19 When on 16 August 2007 I specially fixed the hearing, as an expedited hearing, for Monday, 15 October 2007 before myself (reserving also 16 October 2007), I directed the Defendant to file and serve all affidavits upon which he might wish to rely on or before 28 September 2007 and the Plaintiff to file and serve any affidavits in reply on or before 11 October 2007. 20 The Defendant failed to comply with the foregoing direction. No affidavits of the Defendant were filed before the hearing. No adequate explanation was offered for that failure of the Defendant to comply with the direction which had been made two months previously. (I would here interpolate, that, interestingly, the Defendant, who, as I have already observed, is a solicitor and who is the principal of the firm of solicitors acting on his behalf, annexed to his affidavit of 3 October 2007 a number of letters which expressly set forth the directions made on 16 August 2007, including the direction regarding the filing and service of affidavits on behalf of the Defendant.) 21 A considerable quantity of affidavit evidence was filed on behalf of the Defendant during the course of the hearing. No attempt was made on behalf of the Defendant to deliver copies of affidavits to my chambers at least three working days before the hearing (as required by Practice Note SC Eq 1, paragraph 15), or, indeed, at any time before the commencement of the hearing. In consequence, I had no opportunity to consider any affidavit evidence for the Defendant before the hearing. I was not aware until informed of that fact during the hearing that it was the assertion of the Defendant that the estate was insolvent. Apparently, the Plaintiff was alerted to that suggestion only when on Thursday, 11 October 2007 (two working days before the hearing) an affidavit of the Defendant containing such assertion was served upon the Plaintiff. Until that time all affidavits served on behalf of the Defendant had led the Plaintiff to believe that the net value of the estate was in excess of $400,000. 22 I have already referred to the total disregard by the Defendant (who is a solicitor) of the directions which I had made concerning the filing of his affidavit evidence. At the hearing I received little, if any, assistance from the legal representatives of the respective parties concerning the assets of the estate of the Deceased and concerning whether or not the estate was or is insolvent or whether or not there will be any assets available for distribution. Neither party complied with the standard directions in Family Provision Act matters (Practice Note SC Eq 1, paragraph 55), requiring each party to hand up to the Court at the commencement of the hearing a chronology and a written outline of submissions. No explanation was offered by either party for that failure to comply with those directions. 23 After I had reserved my judgment herein on 16 October 2007, there were delivered to my chambers (without any directions having been made, or any leave granted, in that regard) written outlines of submissions from Counsel for the Plaintiff and the solicitor for the Defendant, and, in response, from Counsel for the Plaintiff, those written outlines being received on, respectively, 22 October, 24 October, and 25 October 2007. 24 It is left now to the Court to attempt, as best it can, to work out the nature of the assets of the estate which are available for distribution, and to calculate whether or not the estate is solvent. 25 It is a primary obligation of an executor or administrator to get in the assets of the estate. In the instant case the Defendant administrator has chosen to allow the former wife of the Deceased (who, it should be emphasised, is not a beneficiary in the estate of the Deceased) to retain a Lexus motor vehicle which had belonged to the Deceased and which is now an asset in the estate, (having a present value, as accepted by the Defendant, of about $19,000), and has made little, if any, attempt to obtain possession of that vehicle. 26 Further, the Defendant has allowed the former wife of the Deceased to act as a manager of a boarding house which had been conducted by the Deceased, and to retain the income from that boarding house business. It was the evidence of the Defendant that on a number of occasions since the beginning of 2007 he had requested Mrs Suzanne Clough to account to him for the income which she had received on behalf of the estate. She had not done so, yet the Defendant appears to have chosen not to pursue this matter. According to the Defendant, the net income received from that business is in an amount of about $1900 a month, of which the sum of about $1000 a month is being applied by Mrs Suzanne Clough for the maintenance and support of her son Nicholas, and a balance of $5000 is presently held by her in accrued rentals. 27 It is quite apparent that, even if, as asserted by the Defendant, the estate is presently insolvent, yet the continuing income provided by the boarding house business in premises where the lease of the Deceased has more than two years still to run, will generate income over the remainder of the period of the lease which may have a significant impact upon the question of whether or not the estate is insolvent. The estate may technically be insolvent at the moment, but not necessarily insolvent when the lease expires. 28 It is difficult to resist the conclusion that the Defendant has chosen to act as he has done, in failing to get in all the assets of the estate, because of his personal views regarding the claim of the Plaintiff and what he considers to be the merits of the two beneficiaries, being the children of the Deceased and Mrs Suzanne Clough. The Defendant had not only a professional relationship, as a solicitor, but also a personal relationship, with the Deceased over many years. The Defendant acted as the solicitor for the Deceased and members of the Deceased's family from before 1980 until the death of the Deceased. 29 The claim of the Plaintiff must be approached in the light of any competing claims upon the testamentary bounty of the Deceased. The only such competing claims are those of the Deceased's two children, who are the chosen objects of the testamentary beneficence of the Deceased. It should not be overlooked, however, that the will was made many years before the Plaintiff came into the Deceased's life. 30 The evidence concerning the Deceased's elder child, his daughter Eve, is skimpy in the extreme. Although she swore an affidavit which was filed on behalf of the Defendant, that affidavit did not address Eve's financial and material circumstances. The only evidence in that regard came from her mother, the Deceased's former wife, who said that Eve "has now gained work as a receptionist". Mrs Clough also said that she had for the last few years continued to support Eve, feeding and clothing her, and that "She continues to live at home and has been diagnosed as having a borderline personality disorder. From time to time she suffers from alcohol, gambling and drug related problems." 31 Extensive evidence was placed before the Court concerning the situation of the Deceased's son Nicholas. He suffers from a degree of autism and a degree of intellectual retardation, as well as epilepsy and Crohn's Disease (affecting the bowel). Concerning Nicholas evidence from his mother, Mrs Suzanne Clough, and also considerable evidence from medical advisors and a clinical psychologist was placed before the Court. 32 It is apparent that Nicholas will always be dependent upon his mother, and that he will never be able to live independently or be in receipt of gainful employment. He cannot handle his own financial affairs. His ability to read and write is limited. Since the birth of Nicholas his mother (who had previously worked as a secondary school teacher) has been is full time carer. She receives carer's pensions totalling almost $630 a fortnight. Nicholas himself receives a disability support pension of $343 a fortnight. Before his death the Deceased was paying to Mrs Suzanne Clough $350 a week by way of support for Nicholas. 33 It should, however, be observed that Nicholas has made no claim against the estate of his father (or against any notional estate of the Deceased). By the terms of the will Nicholas is entitled to one half of the distributable estate of the Deceased. If the estate is insolvent, then Nicholas will receive nothing. If, as submitted on behalf of the Plaintiff, it is not insolvent, but has a relatively small excess of assets over liabilities, then Nicholas will be entitled to one half of the amount of that excess. Despite the fact that Nicholas is residing with his mother, and for all practical purposes is dependent upon her, financially, materially and emotionally, nevertheless, he is entitled to some form of independence, at least in a financial sense. I would not be disposed to make an order for provision in favour of the Plaintiff which would have the effect of eroding the entitlement of Nicholas under the terms of the will of his father. 34 The orders which were made by consent in the Family Court of Australia were placed in evidence. They disclose that the Deceased was required to pay $500,000 for the discharge of a mortgage over his former wife's residence at Windsor Street, Paddington and to pay to her the sum of $100,000. The Deceased complied with the order in respect to the $500,000 mortgage. According to Mrs Suzanne Clough, however, he did not pay to her the sum of $100,000. It is that sum which constitutes the alleged debt of the estate of the Deceased which has, according to the Defendant, the result that the estate is now insolvent. 35 I have already observed that the Plaintiff disputes that alleged debt. It was the evidence of the Plaintiff that the Deceased said to her that he had paid that sum to his former wife. That statement is, pursuant to section 32 of the Family Provision Act, admissible in evidence. But the Deceased is not, of course, available to be cross-examined upon any such statement. His former wife was, however, cross-examined concerning her evidence that that sum had not been paid to her by the Deceased. The Plaintiff relied upon a letter from the solicitor for Mrs Suzanne Clough to the solicitor for the estate, in which no express reference was made to the sum of $100,000 then being outstanding. However, that letter was only one item in a series of correspondence passing between the respective solicitors for Mrs Suzanne Clough and for the Defendant. Although I was invited by the Plaintiff to draw the inference that the absence of any reference to an outstanding debt of $100,000 meant that that debt had in fact been paid by the Deceased during his lifetime, I am not disposed to draw such an inference. The only other evidence of the payment of the debt was the Plaintiff's statement of what the Deceased had told her. 36 Whilst I am prepared to accept that the Deceased made the statement attributed to him, it must be appreciated that statements of a deceased person can be just as false (deliberately or inadvertently so) or just as unreliable as statements by a living person. Further, as I have already observed, the Deceased cannot be cross-examined on the accuracy of such a statement. 37 In the face of express evidence by Mrs Suzanne Clough, upon which she was cross-examined, that she had not been paid the sum of $100,000 which the Deceased, consequent upon the orders of the Family Court, was required to pay to her, I am not persuaded that that amount has been paid. I would, however, in regard to this debt, observe that it was only after the death of the Deceased that Mrs Suzanne Clough first raised with any solicitor the existence of this debt of $100,000. Further, she has never taken any action, either before the death of the Deceased or since then, to recover this amount of $100,000. I regarded her explanation, under cross-examination, for her failure to attempt to recover this amount as being most unsatisfactory. 38 It follows, therefore, that the amount of $100,000 is a liability in the estate of the Deceased. The consequence of that liability may be that the estate is insolvent. However, any such insolvency does not take into account the value of the Lexus motor vehicle (about $19,000), which the Defendant has an obligation to get in as an asset of the estate. Neither does it take into account the income which is generated from the Deceased's boarding house business. 39 I have already observed that I did not have the assistance of the legal representatives of the parties which the Court is entitled to expect in a case such as this, and that in particular I did not at or before the hearing have the benefit of receiving from either party the written outline of submissions which each party is required to provide, in accordance with the standard directions of the Court in Family Provision Act matters (Practice Note SC Eq 1, paragraph 55). 40 It is in the light of the foregoing facts and circumstances that the Court must proceed to a consideration of the claim of the Plaintiff. At the outset it is necessary to determine whether or not the Plaintiff was, as asserted by her, the de facto spouse of the Deceased at the time of his death. 41 The Family Provision Act incorporates, by reference, the definition of domestic relationship contained in section 5(1) of the Property (Relationships) Act 1984, which definition includes a de facto relationship. 42 Section 4 (1) of that latter statute defines a de facto relationship as being: a relationship between two adult persons: (a) who live together as a couple, and (b) who are not married to one another or related by family. 43 Section 4 (2) provides that, In determining whether two persons are in a de facto relationship, all the circumstances of the relationship are to be taken into account, including such of the following matters as may be relevant in a particular case: (a) the duration of the relationship, (b) the nature and extent of common residence, (c) whether or not a sexual relationship exists, (d) the degree of financial dependence or interdependence, and any arrangements for financial support, between the parties, (e) the ownership, use and acquisition of property , (f) the degree of mutual commitment to a shared life, (g) the care and support of children, (h) the performance of household duties, (i) the reputation and public aspects of the relationship.

44 A relationship between the Plaintiff and the Deceased obtained from March 1998 until the death of the Deceased, and they lived together from November 1998. I am not persuaded that the statement attributed by the Defendant to the Deceased on the day before his unexpected death can establish that his relationship with the Plaintiff had come to an end, especially in the light of the Plaintiff's own evidence that at that very time the Deceased was discussing with her arrangements for them to be married. It is relevant in this regard that Mrs Suzanne Clough under cross-examination volunteered the assertion that the Plaintiff had ceased to be the de facto wife of the Deceased, but stated that she did not know the exact date when the Plaintiff ceased to be his de facto partner. 45 For at least the last year of the relationship, from November 2005 until the date of the Deceased's death, the parties lived together in the Deceased's residence in Beresford Road, Bellevue Hill. In the seven years before that the parties had lived together in various locations, interrupted, on occasion, by the exigencies of the Plaintiff's employment and professional requirements. 46 There was a considerable degree of financial dependence by the Plaintiff upon the Deceased. He had paid on her behalf $10,000, in February 2004, to enable the Plaintiff's bankruptcy (which been effected on her own petition in April 2003) to be annulled. He had purchased for her exclusive use a second hand BMW motor vehicle in July 2003, and upon the sale of that vehicle in 2005 the Deceased had provided the Plaintiff with a Lexus motor vehicle for her use. It is that Lexus motor vehicle which in April 2007 was taken by the Defendant from the Plaintiff, and which is now in the possession of Mrs Suzanne Clough and is used by her. I would here observe that Mrs Suzanne Clough also owns a Toyota motor vehicle. 47 The Deceased and the Plaintiff went on a number of holidays together, both in Australia and overseas. Evidence was given, not only by the Plaintiff herself but also by others, concerning the social aspects of the relationship, and photographs of the Plaintiff and the Deceased together were placed in evidence, as also were birthday and Valentine cards sent from the Deceased to the Plaintiff. The published death and funeral notice of the Deceased (the terms of which were drafted in consultation with Mrs Suzanne Clough) constitute a clear recognition by the members of the Deceased's family that the Plaintiff was the de facto partner of the Deceased. He was described in that notice as "beloved partner of Oonagh". 48 The Plaintiff gave evidence, which was not challenged, concerning the extent of her assistance to the Deceased from March 1998 until his death, regarding his real property business and various properties owned by him. She also gave evidence concerning her activities in her role as homemaker, in preparing meals for the Deceased and in hosting their dinner parties. She attended to most of the gardening activities at the properties in which they resided. 49 I am satisfied that the Plaintiff had been living in a de facto relationship with the Deceased from November 1998 until the death of the Deceased. 50 As the de facto partner of the Deceased, the Plaintiff is an eligible person within paragraph (a) of the definition of that phrase contained in section 6 (1) of the Family Provision Act. As such she has the standing to bring the present proceedings. 51 The only other eligible persons in relation to the Deceased are his two children, Eve and Nicholas, each of whom is an eligible person within paragraph (b) of the foregoing definition, and his former wife, Mrs Suzanne Clough, who is an eligible person within paragraph (c) of that definition. 52 In carrying out the first stage in the two-stage process identified by the High Court of Australia in Singer v Berghouse [1994] HCA 40; (1994) 181 CLR 201 at 208 -210 (the correctness of which test was affirmed by the High Court in Vigolo v Bostin [2005] HCA 11; (2005) 221 CLR 191) the Court must determine whether in consequence of the provisions of the will of a testator the applicant has been left without adequate provision for her proper maintenance 53 I have already set for details of the Plaintiff's present financial and material circumstances. It is quite apparent that she has been left without adequate provision for her proper maintenance. 54 The question confronting the Court, however, is how the omission on the part of the Deceased to make adequate (indeed, any) testamentary provision for his de facto partner of more than eight years should be remedied, in the light of the present uncertainty as to the value of the estate and, more importantly, in the light of the competing claims of the Deceased's two children, especially the competing claim of his son Nicholas. 55 I have already recorded that the evidence concerning the financial and material circumstances of Eve is skimpy in the extreme. However, she has, and presumably will continue to have, the benefit of accommodation in the Windsor Street property, which, as a result of the payment of $500,000, made by the Deceased, is now unencumbered. That property, according to the evidence of Mrs Suzanne Clough, has a present value of between $1,200,000 and $1,400,000. For the reasons which I have already expressed, I am not disposed to make an order in favour of the Plaintiff which would have the effect of eroding the benefit of one half share of the distributable estate given by the will to Nicholas. 56 Doing the best I can with the extremely unsatisfactory evidence provided by the Defendant concerning the present nature and value of the estate, it seems to me appropriate that the Plaintiff should receive one third of the estate of the Deceased, that share of the estate to be borne by that one half share of the estate which would otherwise pass to Deceased's daughter Eve. In that way the benefit of one half of the distributable estate given by the will to Nicholas will remain intact. Of the other one half, Eve will receive one third and the Plaintiff will receive two thirds. That is, Eve will receive one sixth of the entire net estate and the Plaintiff will receive two sixths of the entire net estate, whilst Nicholas will receive three sixths of the entire net estate. 57 Depending upon the nature of any costs orders which may ultimately be made in the proceedings, such a benefit to the Plaintiff will go a considerable way towards enabling her to repay the debts totalling $63,200 which she presently owes to family and friends. It may also provide her with a relatively small fund to meet unexpected contingencies.

Lancaster v Bray

At a glance

Court

Decision date

Before

Source

Judgment (16 paragraphs)

Parties

Cases Cited (5)

Cited By (1)