Luciano v Rosenblum

Court of Appeal (NSW)|2002-02-22|Before: Hodgson JA, Young CJ, Palmer J

CITATION : Marshall v. Carruthers; Marshall v. Marshall [2002] NSWCA 47 FILE NUMBER(S) : CA 40670/01; 40671/01 HEARING DATE(S) : 22 February 2002 JUDGMENT DATE : 22 February 2002

Margaret Lesley Marshall - appellant PARTIES : Linda Hope Carruthers - respondent (40670/01) Kim Neil Marshall - respondent (40671/01) JUDGMENT OF : Hodgson JA at 1; Young CJ in Eq at 71; Palmer J at 78

LOWER COURT JURISDICTION : Supreme Court - Equity Division LOWER COURT ED5141/00 FILE NUMBER(S) : ED2839/01 LOWER COURT Master Macready JUDICIAL OFFICER :

Mr. C. Bevan for appellant COUNSEL : Mr. L. Ellison for Ms. Carruthers Submitting appearance by Mr. Kim Marshall SOLICITORS : Turner Freeman, Sydney for appellant Teece Hodgson & Ward, Sydney for respondent CATCHWORDS : SUCCESSION - Family provision and maintenance - Whether provision by testator inadequate - Necessity to determine what if any provision made - Provision by testator for person with legitimate claim - Relevance of this to what is "inadequate" and what is "proper" in relation to another person with a legitimate claim - Relevance of marriage and care of children to strength of surviving partner's claim. D. LEGISLATION CITED : Family Provision Act s.9(2) Voges v. Monaghan (1954) 94 CLR 231 CASES CITED: In Re Snowden [1979] Ch. 528 Brown v. Pourau [1995] 1 NZLR 352 Luciano v Rosenblum [1985] 2 NSWLR 65 at 69 DECISION : In both cases, appeal allowed and summons dismissed.

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40670/01 SC 5141/00

CA 40671/01 SC 2839/01

HODGSON JA YOUNG CJ IN EQ PALMER J

Friday 22 February 2002. MARSHALL V. CARRUTHERS MARSHALL V. MARSHALL Judgment 1 HODGSON JA: On 3 August 2001 Master Macready made orders in two Family Provision Act proceedings in the estate of Neil Marshall, one brought by Linda Carruthers the de facto wife of the deceased, and one by Kim Marshall the son of the deceased, who I will refer to as Kim. 2 The order in favour of Ms Carruthers was that she receive a specific bequest of the deceased's half interest in a property in Herbert Street, Newtown, on certain conditions, and that she receive certain personal items; and the order in favour of Kim was that he receive a legacy of $20,000. The costs of all parties were ordered to be paid out of the estate, with some provision for abatement of the costs of the plaintiffs. 3 On 16 November 2001, Master Macready ordered that the costs of the defendant to both proceedings, the executrix Margaret Marshall, be on an indemnity basis up to the commencement of the hearing, and on a party and party basis thereafter. 4 Mrs Marshall has appealed from these decisions. 5 I will commence with a brief outline of the circumstances. 6 Mrs Marshall married the deceased in 1967. Kim, who was their only child, was born on 17 January 1980. In December 1990, the deceased and Mrs Marshall purchased the house at Herbert Street, Newtown as joint tenants. 7 On 23 December 1992, the deceased made his last will. He appointed Mrs Marshall executrix, and gave the whole estate to her, and in the event her not surviving him he gave the estate to his children who should be living at his death. 8 In June 1995, the deceased moved out of the Herbert Street property into rented premises at 80 Australia Street, Camperdown, which he then shared with Ms Carruthers. The Master found that a de facto relationship between them commenced at that time, and this finding is not challenged on appeal. 9 During 1996, the deceased and Mrs Marshall settled their property affairs, although they remained married. Terms of settlement were signed on 16 August 1996, and given effect to by orders of the Family Court of Australia on 5 September 1996. The effect of the orders was as follows. The deceased was to pay Mrs Marshall $20,000 by 1 October 1996, and $155,600 by 8 January 1997. Mrs Marshall was to transfer to the deceased her interest in the Herbert Street property subject to any mortgage, and also her interest in a property at Cannons Creek, Victoria subject to any mortgage. The deceased was to indemnify her in respect of the moneys borrowed on the security of the properties and liability for outgoings. 10 Evidence was given by Mrs Marshall before the Master that, on a number of occasions during discussion of the property settlement, the deceased said to her words to the effect "I want to make sure that if anything happens to me, Kim will receive all the money I am entitled to when I die to ensure his financial security." 11 It appears that the Master accepted that this occurred. There is an express finding by the Master that, before the agreement was reached, there was a conversation between the deceased and Mrs Marshall to the following effect: NEIL: "My will provides for my entire estate to go to you, Margaret. I won't be changing it. I want you to inherit everything and look after it for Kim until you think he's old enough to look after it for himself. If anything happens to you before I go, it is all to go straight to Kim. I don't want this trouble with the marriage to affect my relationship with Kim. I want to properly provide for his future financial security. Do you understand?"

MARGARET: "Yes, I understand. I will look after it for him." 12 There was also in evidence a document from the Superannuation Trust of Australia saying that the deceased had nominated, as beneficiary of at least part of his superannuation, Mrs Marshall for the years 1996 to 1998 inclusive, and Kim for the years 1999 and 2000. I note that Kim in fact became 18 during the year 1998. 13 In late 1996, Ms Carruthers advanced $35,000 to the deceased to assist him to pay the first instalment of the property settlement. In February 1992, the deceased paid $150,000 to Mrs Marshall to complete the property settlement, and it appears that Mrs Marshall then transferred her interest in the two properties to the deceased. The $150,000 was provided by Ms Carruthers from her share in her father's estate and from money loaned by her family. Although there seems to be no clear finding to this effect, it is common ground that this payment of $150,000 was treated as consideration for the transfer by the deceased to Ms Carruthers of a one half interest in the Herbert Street property. This actual transfer was given effect to in August 1999, when the deceased transferred the property to himself and Ms Carruthers as tenants in common, for a stated consideration of one dollar. 14 The deceased and Ms Carruthers moved to Herbert Street in about February 1997, and continued to live there together until the death of the deceased. There were some improvements and renovations made to the property, still in progress at the death of the deceased. It appears that the mortgage on the property was increased to finance this work. 15 On 31 May 2000, the deceased was killed in an aircraft accident in Spencer Gulf near Whyalla. 16 The assets and liabilities of the estate at the date of death were as follows. 17 There was the deceased's half interest in the Herbert Street house, the value of which was established by valuation to be $262,500. It appears that the deceased's share of the mortgage at that time was around $100,000. There was the Cannons Creek property, which later valuation suggested to be worth $55,000, which was also subject to a mortgage, apparently of about $37,000. There were personal effects of about $5000. There was money due from an insurance policy, wages, long service leave, and money in the bank amounting to a total of about $53,000. There were motor vehicles amounting to the value of about $3000. 18 The liabilities appear to have included credit card liabilities and personal loans amounting to about $38,000. There was a further debt of about $11,000, which was balanced by an insurance policy. There were sundry debts for electricity and the like of about $700. There were debts claimed to be due to Ms Carruthers for the $35,000 advanced in 1996, and $2630 advanced for dental costs. 19 This account leaves out three matters. The deceased had an accidental death policy for $100,000 which has not yet been paid because of a question whether the circumstances of his death were such as to give rise to liability under the policy. The deceased had superannuation totalling a little over $205,000, the disposition of which was in the discretion of the Superannuation Trustees. There was also, as I will recount shortly, a workers compensation claim in respect of the debt. 20 On 9 November 2000, probate of the deceased's will was granted to Mrs Marshall. On 24 November 2000 the Superannuation Trust of Australia approved payments out of the deceased's superannuation. It determined that 80 per cent should go to Ms Carruthers, and 20 per cent should go to Kim. In consequence, something over $164,000 was paid to Ms Carruthers in March 2001, and a little over $41,000 paid to Kim in March 2001. 21 On 21 December 2000 Ms Carruthers commenced the Family Provision Act proceedings. 22 It appears that between June 2000 and July 2001, Ms Carruthers lent a little over $10,000 to the estate to assist it in paying its share of mortgage payments for the Herbert Street property. In about mid 2001, Mrs Marshall borrowed $8631 from Kim, which was provided from his share of the superannuation, to make mortgage payments. 23 On 5 April 2001 Master Macready granted expedition of Ms Carruthers' proceedings, and requested Mrs Marshall's solicitor to inquire from Kim whether he proposed to bring a claim. 24 On 30 May 2001 Kim's proceedings were filed. 25 On 26 July 2001, that is, four days before the commencement of the hearing, the Workers Compensation Court awarded $200,000 under the Workers Compensation Act to Ms Carruthers, and nothing to either Kim or Mrs Marshall. 26 The proceedings were heard between 30 July and 2 August, and the Master gave his decision on 3 August. 27 In his decision, he determined that the assets of the estate then consisted of the Herbert Street property, subject to a mortgage liability of the estate of $109,174, the Cannons Creek property, then subject to a mortgage liability of $36,680, and a claim under a life policy of $28,679. He found that the liabilities then were $37,360 said to be due to Ms Carruthers, $10,493 advanced by Ms Carruthers, and $8631 advanced by Kim. He held there was a good chance that the estate would receive $100,000 from the insurance policy: the question was whether the death occurred when the deceased was "a passenger on an aircraft authorised to fly under a law that relates to safety of an aircraft"; and Master Macready expressed the view that the draft accident report suggested that he did fall within this category. 28 Master Macready noted that the costs of the proceedings for Ms Carruthers were estimated at $47,000 for two days, that Kim, who represented himself at the hearing, had received a bill for $26,259 up to the week before the proceedings and that the costs of Mrs Marshall were estimated at $64,592 for a two day hearing. 29 He found that there was a de facto relationship between Ms Carruthers and deceased from June 1995. 30 The Master considered the position of Ms Carruthers. He noted that she was 49 and single, and had a salary of around $61,000 per annum. He noted her assets as consisting of a half share in the Herbert Street property worth $262,500. Amongst other things, there was a deposit of $176,754, and a roll over fund of $39,653, workers compensation proceeds of $200,000, and superannuation of $243,319. There was a car said to be worth $10,000, and the claims against the estate to which I have already referred. These assets total about $980,000. He noted that her share of the liability under the mortgage on Herbert Street was $48,478. I note that it appears that the total mortgage liability was about $157,000, and that Mrs Marshall accepted a contention by Ms Carruthers that, because of an agreement between her and the deceased, the estate was responsibility for sixty nine per cent of this and Ms Carruthers thirty one per cent. 31 The Master noted the position of Kim, to the effect that he was twenty one and enrolled in a course of blacksmithing and metal welding in the UK. His assets were cash of $27,000, a debt from the estate of $8631, and a motor cycle that he purchased for $4500. 32 He noted the position of Mrs Marshall. She was fifty six, and owned a property at Petersham said to be worth $270,000, subject to a mortgage of $14,000. She had cash of $5000 and credit card liability of $3000. She had shares said to be worth $11,600, a motor vehicle said to be worth $6000, and modest superannuation. 33 The Master found that the conversation to which I have referred between the deceased and Mrs Marshall did occur, but commented "The precise nature of that trust which she has accepted is somewhat unclear". He held that the claim of Ms Carruthers as de facto partner of the deceased was superior to that of the son, and he continued: The other thing is that it seems to me that really the only claimants in this estate are the plaintiff, Linda Carruthers, and Kim Marshall. I do not consider the claim of the defendant now to be appropriate once Kim has brought his own claim. Kim's claim should stand or fall on its own merits and it should not be dealt with by the way the defendant approaches the matter

Kim has some funds but I think that some further small increase in his funds is appropriate. In my view he should receive a legacy in the order of $20,000. It is also appropriate that Linda Carruthers receive the estate's half share of the realty upon the basis that she does not claim her debts and that she takes over the liability for the mortgage on that property. The question really is whether she should contribute something more to the estate. There is the cash of $43,000 and when the insurance payment is paid, $143,000, with costs in the order of about $170,000. There needs to be further argument on the basis of the defendant's costs. Apparently submissions are needed as to whether that should only be on a party/party rather than an indemnity basis.

What I propose to do is to make orders which will deal with costs which will also take into account and enable to be dealt with without further court hearings the fact that the $100,000 may or may not be paid although I would say I think it is likely that it will. I say again that I think there is only a contest between the two plaintiffs and that that should govern what happens. Accordingly, the orders that I make are these: 1. That Linda Carruthers receive a specific bequest of the deceased's half interest in Herbert Street, Newtown subject to and conditional upon: (a) her assuming liability for the mortgage over the property; (b) her making no claim for debts against the estate or for the funeral account she has paid; (c) her paying the estate the sum of $20,000. 2. That Linda Carruthers receive a specific bequest of any items of personality owned by the deceased which were at Herbert Street at the date of death. 3. That the plaintiff, Kim Marshall, receive a legacy of $20,000 out of the estate of the deceased, such legacy to rank for payment after the specific bequest to Linda Carruthers. 4. The costs of the defendant be paid out of the estate on a basis to be decided after hearing further argument but in priority to any costs of the plaintiff. 5. The costs of the two plaintiffs on a party and party basis to be paid after payment of the defendant's costs out of that part of the estate of the deceased which excludes the two specific bequests and the legacy in orders 1, 2 and 3 above. To the extent that there is any deficiency those costs shall be borne by that part of the estate rateably to the intent that if there is any ultimate deficiency such deficiency shall be borne by the respective plaintiffs, Linda Carruthers and Kim Marshall rateably. 34 In a later judgment he dealt with the question of the basis on which the executor's costs should be allowed, and he concluded as follows. He [that is, Kim] was to be represented but ultimately on the morning of the first day the matter proceeded with him appearing in person. He took little part in the proceedings and cross examined no witnesses. Once the defendant knew that Kim was appearing and running his own claim, it seems to me, that at least from that time she should have left the matter to be debated between the two plaintiffs. In these circumstances I think the appropriate order is that the defendant's costs on an indemnity basis up to the commencement of the hearing on 30 July 2001 be paid out of the estate of the deceased in the manner indicated in my earlier judgment and thereafter on a party and party basis and I so order. 35 Mrs Marshall relies on the following grounds of appeal. In relation to orders in Ms Carruthers' case, there are the following: 1. The Master erred in concluding that the only claims upon the estate of the deceased which he had to consider in his determination of the respondent's application under the Family Provision Act were those of the respondent and her co-plaintiff, Kim Neil Marshall, the deceased's son, under Section 7 of the Family Provision Act to the exclusion of the entitlement of the appellant as the nominal beneficiary under the deceased's will and trustee of a testamentary trust which arose on the death of the deceased over his whole estate for the benefit of Kim Neil Marshall.

The Master erred in refusing to recognise at all the entitlement in the estate of the deceased of the defendant as executor of the deceased's will and as the trustee of a testamentary trust which arose on the death of the deceased over the whole of the deceased's estate for the benefit of the deceased's son, Kim Neil Marshall, as a competing claim on the estate with the claim of the respondent under the Family Provision Act.

The Master erred in not limiting the Court's disturbance of the deceased's will to that necessary to achieve the purposes of the Family Provision Act in fulfilment of the obligation on the Court to respect the deceased's right of testamentary disposition, and in particular, the Master erred in disturbing the deceased's will at all.

The Master erred in determining that provision should be made for the respondent out of the estate of the deceased under Section 7 of the Family Provision Act without having first concluded that inadequate or improper provision had been made for her maintenance, education and advancement in life at the trial date, or indeed at any date.

The Master erred in concluding that various amounts lent by the respondent to the deceased in his lifetime, which were claimed by her as debts due to her by his estate in the Court below, were contributions she made to the estate of the deceased for the purposes of Section 9(3)(a) of the Family Provision Act.

The Master erred in refusing to consider the entitlement of the appellant in the estate of the deceased under his will, as an eligible person under sec. 6 of the Family Provision Act, in assessing the entitlement and extent of the claim upon the estate of the respondent on the basis that the appellant held that entitlement as trustee of a testamentary trust for her son, Kim Neil Marshall, rather than on her own behalf beneficially under the terms of the deceased's will.

The Master erred in concluding that there should be provision out of the estate of the deceased under Section 7 of the Family Provision Act, be it in the amount ordered or at all, in favour of the respondent in the light of his findings of fact, first, that the respondent had been the de facto wife of the deceased for only five years, secondly, that the respondent had at the trial date fairly substantial assets amounting to some $931,871 net of her liabilities, thirdly, that the deceased's estate was a small one with assets net of liabilities of about $180,000, fourthly, that the deceased gifted the whole of his estate under his will) to the appellant to hold it on trust for his son, Kim Neil Marshall under a testamentary trust of an unclear nature, fifthly, that the respondent had already benefited from the deceased's estate by receiving 80% of his superannuation entitlement amounting to some $164,000 prior to the trial date, and sixthly, that the respondent was financially independent, with an income of $61,000 per annum.

The Master erred in concluding that the nature of the testamentary trust in favour of the deceased's son, Kim Neil Marshall, which arose on the death of the deceased was somewhat unclear.

The Master erred in not concluding that the respondent did have adequate and proper provision for her maintenance, education and advancement in life and that her application under the Family Provision Act out of the estate of the deceased ought be dismissed.

The Master erred in not concluding that the deceased arranged for the Herbert Street property to be transferred to himself and the respondent as tenants in common in equal shares in order to preserve his interest in it as an asset in his estate to be held on the testamentary trust in favour of his son, Kim Neil Marshall, which arose on the deceased's death and in not giving that testamentary intention full operation subject to the objects of the Family Provision Act by not disturbing the deceased's will.

The Master erred in failing to make any conclusion in respect of the appellant's submission to him that the respondent's concession in cross-examination that she had no present needs was fatal to her claim for provision under Section 7 of the Family Provision Act.

The Master erred in failing to make any conclusion in respect of the appellant's submission to him that the respondent's concession in cross-examination that she had sufficient funds in hand to purchase the estate's share of the Herbert Street property at market value was fatal to her claim for provision out of the estate under Section 7 of the Family Provision Act by the transfer to her of the estate's one-half interest in that property subject to the mortgage over it.

The Master erred in ruling at the conclusion of the respondent's motion for an expedited hearing of her summons on 5 April 2001 that the entitlement of the deceased's son, Kim Neil Marshall, as an eligible person in the estate of the deceased under Section 6 Family Provision Act would only be taken into account by the Court in determining the respondent's claim for provision out of the estate if Kim Neil Marshall brought his own claim under Section 7 of the Family Provision Act to be considered in competition with the respondent's claim under Section 7 of the Act. 36 In relation to orders in Kim's case she relies on the following: 1. The Master erred in concluding that the respondent's entitlement in the estate of the deceased as an eligible person under Section 6 of the Family Provision Act could only be taken into account by making an order for provision out of the estate of the deceased in his favour under Section 7 of that Act.

The Master erred in concluding that the only claims upon the estate of the deceased which he needed to take into account in determining the respondent's claim for provision out of the estate under the Family Provision Act were the claims of the respondent and his co-plaintiff, Linda Hope Carruthers, under Section 7 of the Act.

The Master erred in not concluding that adequate and proper provision had been made for the respondent's maintenance, education and advancement in life as the beneficiary of a testamentary trust over the whole of the estate of the deceased which arose on the death of the deceased.

The Master erred in not concluding that, in the absence of any application by the respondent seeking a transfer from the appellant to him of the legal estate of the deceased, and the early termination of the testamentary trust which arose on the death of the deceased, it was incumbent on the Court to dismiss the respondent's claim for provision out of the estate under Section 7 of the Family Provision Act in all of the circumstances.

The Master erred in failing to respect the deceased's right of testamentary disposition, and in particular, the deceased's decision to gift his estate to the appellant in his will subject to the terms of a testamentary trust in favour of the respondent, by disturbing the deceased's will when the purposes of the Family Provision Act required no such disturbance.

The Master erred in concluding that the nature of the testamentary trust in favour of the respondent which arose on the death of the deceased was somewhat unclear.

The Master erred in ruling at the conclusion at the hearing of the motion for expedition of the respondent's co-plaintiff, Linda Hope Carruthers, on 5 April, 2001 that the Court could not take into account the respondent's entitlement in the estate of the deceased as an eligible person under Section 6 of the Family Provision Act unless the respondent brought his own claim for provision out of the estate under Section 7 of the Act, to be considered in competition with the claim of Linda Hope Carruthers under the Act. 37 Mr Bevan for the appellant has grouped the grounds of appeal under three headings: first, relating to a submission that the Master made an error in not making a determination as to whether Ms Carruthers had been left without adequate provision for her proper maintenance; second, the contention that there were errors associated with the Master ignoring a testamentary disposition to which Kim was beneficially entitled; and third, the contention that the Master was in error in treating the debt of around $37,000 as a contribution which Ms Carruthers had made to the estate. 38 For reasons I will give, in my opinion there was a clear error in relation to the second of those three matters, and it is not necessary to consider the first and third matters. 39 A crucial question to be addressed in any Family Provision Act application is whether, in terms of s.9(2) of the Family Provision Act, the provision if any made by the deceased in favour of the plaintiff was at the time of the determination "inadequate for the proper maintenance, education and advancement in life" of the plaintiff. 40 In this case, in order to decide this question in relation to each application, it was necessary for the Master to determine what, if any, provision had been made by the deceased in favour of Kim. This was directly relevant to Kim's claim. 41 It was also indirectly relevant to Ms Carruthers' claim. If the true effect of the will was that Kim was to receive the whole estate, then Ms Carruthers' claim had to be assessed on the basis that the deceased's will made provision for a person who had a legitimate claim on the deceased's estate. On the other hand, if the true effect of the will was that the whole estate was to go to Mrs Marshall subject to no trust, then Ms Carruthers' claim had to be assessed on the basis that the deceased's will gave the whole estate to a person who was conceded to have no legitimate claim on the deceased's estate. Those two assessments are significantly different. 42 The Master commented that Mrs Marshall's opposition to Kim's claim was on the basis that under a trust Kim would receive the whole estate through Mrs Marshall. He rejected that contention. On one view, he accepted there was a trust, but nevertheless rejected the contention. On another view, he did not make a clear finding whether there was a trust and what were its terms. Whichever view is taken, in my opinion error was involved. 43 On the one hand, if Mrs Marshall held the entire estate on trust for Kim absolutely, and there was no further property which could be made subject to a Family Provision Act order, it was simply not possible to justify any order for provision. The court could not in those circumstances provide any more than the deceased had provided, and Kim's proceedings were pointless and had to be dismissed. 44 On the other hand, if the Master did not make a finding as to whether there was a trust or what were its terms, in my opinion he should have done this, because it was a necessary step in determining what, if any, provision had been made for Kim, and was also relevant to Ms Carruthers' application. 45 Mr Ellison for Ms Carruthers has submitted that the issue of the existence of such a trust was not raised properly or at all before the Master. He submitted that no trust had been pleaded or particularised. He pointed out that no such trust had been disclosed in the probate application. He pointed out that in her affidavit of 6 June 2001 Mrs Marshall deposed that she was the sole beneficiary entitled to the estate, and that she also claimed she needed the estate as well as her own property to provide for her own maintenance and that of Kim. 46 There was also a letter from Mrs Marshall's solicitor, contending that Mrs Marshall had financial needs for provision from the estate. 47 In my opinion, this was not a case where the pleading or particularisation of a trust was required. There was no claim made by Mrs Marshall for relief in respect of any trust, so the case does not fall within the Supreme Court rules Pt.4 r.2. 48 The other matters raised by Mr Ellison are relevant to the question whether the issue was properly raised, but are not conclusive. This Court must consider whether, having regard to the way the case was conducted, the issues of the existence and the terms of a trust were raised for contest and decision. 49 A starting point for this consideration is that the Master had to decide what, if any, provision had been made for Kim. In addition to the matters referred to by Mr Ellison, there were the following matters raised at the hearing which bore on the question. I have already referred to Mrs Marshall's affidavit referring to statements made by the deceased in conversations with the deceased, including the conversation which concluded with her words "I will look after it for Kim." 50 There was further reference to that matter in par 74 of her affidavit of 6 June, the first sentenced of which was as follows: I take the view that I am bound to defend Ms Carruthers' claim for the payment of what amounts to the entire net estate to her (see paragraphs 36 and 37 of her first affidavit) because Neil made it clear to me in the conversation that I have given an account of in paragraph 32 above that he wanted me to receive his entire estate and hold it for the benefit of Kim to ensure Kim's future educational and financial success. 51 The matter was raised in the cross-examination of Kim by Mrs Marshall's Counsel as follows: Q. You appreciated from when you read that affidavit that your mother has, in effect, promised your father that whatever she receives under the will she will hold for your benefit? A. Yes. … Q. You appreciate if the will is upheld and if Ms Carruthers' claim fails, whatever contributions you did make to assist your father to rectify the house, you will receive some recompense for because your mother is holding the estate, including a half share of the house on your behalf? A. Yes. 52 Mrs Marshall was cross-examined by Ms Carruthers' Counsel concerning the alleged conversations, and the Master asked further questions as follows: MASTER: Q. Before you re-examine Mr Bevan, I just want to ask one or two questions and they arise out of paragraphs 33 and 30 of your affidavit Mrs Marshall of 6 June. If you look at paragraph 30 you will see that you refer to a number of statements that Neil said to you about "I want to make sure that if anything happens to me Kim will receive the money", do you remember that? A. Yes Master.

Q. You see in 33 that is that other conversation Mr Ellison took you to where you said after hearing what Neil said, "Yes, I understand, I will look after it for him". I just want to ask you fairly plainly, in the way you look at this case, if there is anything left over in the estate, and we all know there are a lot of costs and expenses and things like that, and any money were to go to you as the beneficiary under the will -- A. Yes Master.

Q. Do you intend to hold that for your son Kim, or is it something that you propose to have for yourself? A. It is for Kim. That is what Neil wished, and it will all go to Kim and be held in trust for Kim. 53 The matter was further referred to in written submissions furnished by Mrs Marshall's Counsel on 2 August as follows:

Kim's Claim 7. As regards Kim's claim, it is without merit and was superfluous.

Kim readily accepted when it was put to him that his father left his will unrevoked, despite the breakdown of his parents' marriage, to the intent that his mother would hold the estate for him until he was deemed by her old enough to have it.

Kim readily accepted when it was put to him that whatever contributions he made to the improvement of his father's estate (primarily by helping with renovation work) he would receive full recompense for as the ultimate beneficiary of the estate, the only valuable asset of which is his father's equity of about $153,326 in the Herbert Street property.

The deceased felt strongly about his desire to gift his estate to Margaret Marshall for Kim's benefit, a conclusion reached readily based on the following subjective evidence of the deceased: (i) Aff MLM 6.6.01 par.30; (ii) Aff MLM 6.6.01 par.33; and also based on the following objective evidence, (iii) the deceased's entrusting of his estate to his estranged wife on a trust for Kim when negotiating the terms of a Family Court property settlement with her; (iv) the deceased's careful conduct in taking a transfer of Margaret Marshall's half share - a joint interest - in the Herbert Street property and then conveying the entire estate to himself and Ms Carruthers as tenants in common in equal shares in order to reserve Herbert Street as an asset in his estate: Aff MLM 9.7.01, Annexures C1 and C2. 54 Though the issue could have been raised more clearly, in my opinion on balance there can be no doubt that Mrs Marshall did not put forward ultimately to the Master that she had any legitimate claim on the deceased on her own behalf. There can be no doubt that it was alleged on behalf of Mrs Marshall that there was some kind of trust in regard to Kim. There can be no doubt that Mrs Marshall did lead evidence which could justify the finding of such a trust. In all the circumstances, I think the issue was raised for decision, and it was necessary for the Master to decide it. 55 Turning to the next question as to what decision should have been made on that issue, it is clear as I have said that the evidence could be sufficient to support a trust. It would be fair to approach the question on the basis that the evidence is self-serving, in that it assists Mrs Marshall in her defence of both claims, enabling her to present the will as one gives effect to a legitimate claim against the deceased's estate. It is evidence that the opposing party was in no position to contradict. Mrs Marshall herself gave some evidence which was contrary to the existence of a trust. However, the crucial conversation was challenged in cross-examination, and the Master did make a finding that the conversation occurred. 56 In all those circumstances, this Court has the alternative of itself making a finding of the effect of the conversation as found by the Master, or else sending the matter back for re-trial. Having regard to the size of the estate and the fact that there has already been a four day trial, I have no doubt that the appropriate course is for this Court to determine the true effect of the conversation. 57 In my opinion, the facts as found by the Master are such as to give rise to a trust of the property given to Mrs Marshall under the will in favour of Kim absolutely. Although there is a measure of uncertainty in the words, the general effect of them is in my opinion clear. In my opinion equity would not permit Mrs Marshall to hold that property in any way beneficially. Although there is reference to holding property for Kim until Mrs Marshall thought he was old enough, in my opinion, the trust that the conversation would constitute would be an absolute trust which Kim could put an end to, so as to obtain full possession of the trust property, once he attained eighteen. That the circumstances are sufficient to give rise to such a trust is supported in my opinion by cases such as Voges v. Monaghan (1954) 94 CLR 231, In Re Snowden [1979] Ch. 528, Brown v. Pourau [1995] 1 NZLR 352. 58 Accordingly, in my opinion, in dealing with Kim's claim, and also in dealing with Ms Carruthers' claim, the Master should have made an express finding that Mrs Marshall was bound by a trust to hold any benefit under the will of the deceased for Kim absolutely. Such a finding would have been binding as between Mrs Marshall and Kim, being a necessary step in the resolution of proceedings between them. 59 It follows that the Master should have dismissed Kim's proceedings, and should not have approached Ms Carruthers' proceedings on the basis that there were just two rival plaintiffs seeking orders in respect of an estate, where the will was in favour of a person with no legitimate claim. There is a plain difference in my opinion between this approach, and deciding a claim where a will makes a provision for a person with a legitimate claim and the plaintiff seeks to overturn that provision. The determination whether provision for a plaintiff is "inadequate", and what is "proper", can be affected by a testator's recognition and provision for other persons with legitimate claims. 60 For those reasons, in my opinion the Master did make errors which make it necessary for this court to decide Ms Carruthers' application afresh. 61 On the findings of the Master, Ms Carruthers at the time of the hearing had net assets amounting to about $930,000. If one includes the debt of about $37,000 owing by the estate, which the estate was able to pay at that stage, that $930,000 included something like $460,000 which was in cash or could readily be converted into cash, and about $240,000 in superannuation. It included a half interest in the Herbert Street property. The estate, owning the other half, had an equity of about $150,000 in that property. There was just under $160,000 owing on a mortgage. That suggests that, provided the estate was prepared to sell at value, Ms Carruthers could obtain full ownership of the property and discharge the mortgage for payments totalling around $310,000, leaving about $150,000 in cash as well as her $240,000 superannuation. 62 The estate to which Ms Carruthers was making a claim was at that stage worth in the order of about $150,000. There was a good chance of obtaining a further $100,000. I have already referred to the financial position of Kim as found by the Master, and no challenge is made to that. 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. 66 So although I accept that the claim in this case is a strong one, it is not as strong as some claims made by surviving spouses. However, even assuming that the requirements of Luciano should be satisfied, my opinion is that they are satisfied in this case. 67 I am of the view that Ms Carruthers has not shown that in the circumstances as they existed at the time of the hearing and now the provision for her was inadequate for her proper maintenance. She has received something over $360,000 consequent on the death of the deceased. She has the assets to which I have referred. She has a substantial income and superannuation. The $150,000 or thereabouts, that was available for disposal by the deceased under his will, was directed by the deceased to benefit his son who also has a strong legitimate claim; and in my opinion, when one gives appropriate weight to this claim and the provision made by the deceased to satisfy it, it cannot be said that the provision for Ms Carruthers was inadequate for her proper maintenance. 68 Mr Ellison did submit that Ms Carruthers must have been left without adequate provision because she did not have a secure home. In my opinion, the half interest in the house plus the means which she had to make provision for her accommodation, either by acquiring the other half or otherwise, do mean that she was not left without adequate provision. 69 I have dealt with the matters so far on the basis that the estate is worth relevantly about $150,000. There is the good chance that it will receive a further $100,000. Having regard to the size of the estate and the disputes that have occurred already, I do not think it would be appropriate to dispose of the matter on the basis that, if that amount is received, there would be a further application. There have been very substantial costs incurred in this matter, and whatever order this Court ultimately makes, it is clear that a very substantial sum will come out of the estate for costs. Having regard to that consideration particularly, I do not think that the good chance of a further $100,000 being received makes any difference to the result I have indicated. 70 So for those reasons, my opinion is that the appeal should be allowed in both cases, and that in both cases the summons should be dismissed. 71 YOUNG CJ IN EQ: I agree that the appeal should be allowed and both claims dismissed. I basically agree with the reasons which Justice Hodgson has just delivered. However, I should make a few additional comments. 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. 75 I also take this opportunity to reject Mr Ellison's submission that a person who has a claim as a class (a) eligible person ipso facto has a stronger claim than a person who comes under class (b). Indeed, in many cases, such as where there are infant children, this may not be so. 76 The present case is not one that can be decided by some rule of thumb. One must look at the female applicant as a de facto spouse of five years' standing whose property was held with the deceased as tenant in common rather than jointly, who has no apparent health problems and who earns $61,000 a year. With assets of $930,000 she is no way the typical mid-20th century widow that Powell J had in mind when making his assessment in Luciano's case. 77 Accordingly I agree with the orders announced by the learned presiding Judge. 78 PALMER J: I also agree with the reasons of Justice Hodgson and with the orders which he proposed. I wish to add that I concur with the observations of the Chief Judge in Equity.

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.

At a glance

Court

Decision date

Before

Source

Judgment (36 paragraphs)

Parties

Cases Cited (2)