Manley v Anderson [2011] NSWSC 1013 | Case summary

Discussion 46It is necessary to see how Ross says that he has been left without adequate and proper provision for his maintenance, education and advancement in life. In this case the problems that he identifies relate to his independence and accommodation and they can be summarised as: (a) A need to bear the outgoing and expenses in connection with the Bishops Avenue property and the inadequacy of the annuity coupled with his present income to meet those expenses (b) A need for greater for greater flexibility in respect of his accommodation, noting that he may need to be moved to aged-care accommodation; and (c) A need to preserve his present asset portfolio in order to maintain his present income as well as a buffer for contingencies. 47Ross has asked for the estate's interest in the unit to be transferred to him absolutely so that he may decide what steps to take in the future should he need to go into nursing home accommodation. He also asks for a small fund of $200,000 for contingencies. 48Sharon's response to this is to suggest that it would be appropriate for Ross to receive a Crisp order in respect of the estate's 9/10 share of the Bishops Avenue property. It was also suggested that further provision should be made by increasing the annuity of $600 a month to $1,000 a month as from 10 August 2009. It was suggested that the CPI for the weighted average of six capital states, compared to the index currently as at 8 August 2008, could index the annuity. 49The 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. 50In 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, for instance, Crisp v Burns Philp Trustee Co Ltd (NSWSC, Holland J, 18 December 1979, unreported); Banks v Hourigan (NSWSC, Waddell CJ in Eq, 2 March 1989, unreported); Cameron v Hills (NSWSC, Needham J, 26 October 1989, unreported). This perhaps is reflected in matters mentioned by the High Court in White v Barron (1980) 144 CLR 431 where at p 444 Mason J said: " A capital provision should only be awarded to a widow when it appears that this is the fairest means of securing her 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 proceeds of the legacy" He appears to be the only member of the Court to have adverted to this aspect. 51A 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 that 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 ( 1980) 144 CLR 431 ) at pp 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. 52In 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." McHugh JA agreed with his 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. 53By the late 1980s the Judges in this Division were taking a slightly different view. For instance, in Court v Hunt (NSWSC, 14 September 1987, unreported) Young J said: "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. His Honour then went on to talk about the assumptions one could make about the fact that frequently people, once they pass fifty five, had to change their accommodation and locate themselves either in retirement villages or nursing homes, which have different requirements for capital contribution. 54After 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 noncapital provision, such as was done by Holland J in Crisp v Burns Philp Trustee Co Ltd , 18 December 1979, unreported, but noted in Mason & Handler 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." More recently the Court of Appeal on a number of occasions has referred to this problem. In Golosky v Golosky (NSWCA, 5 October 1993, unreported), Kirby P summarised the proper provision for widows (and thus Ross in these proceedings) in the following terms: " 2. In testing the Master's decision it is appropriate to keep in mind the principles which governed the approach which he was obliged to take to the widow's application under the Act. Relevantly, these included: (a) Proper respect was to be paid for the right of testamentary disposition which is the fundamental premise upon which the provisions of the Act are based. That premise requires 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 purpose of the jurisdiction is not the correction of the hurt feelings or sense of wrong of the competing claimants upon the estate of the testator. The Court is obliged simply to respond to the application of the eligible person who was a member of the testators household and to consider whether, as claimed, the provision made by the will is inadequate for that person's 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 in 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 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 to 70; (d) A mere right of residence will usually be an unsatisfactory method of providing for a spouses, accommodation to fulfil the foregoing normal presupposition. This is because a spouse may be compelled by sickness, age, urgent supervening necessity or otherwise, with good reason, to leave the residence. The spouse provided and will then be left without the kind of protection which is normally expected will be provided by a testator who is both wise and just. See Moore v Moore , Court of Appeal, unreported, 16 May 1984, per Hutley JA, 2; (e) Considering what is "proper" and by inference what is "improper" as 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 estate 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) 8 NSWLR 679 (SC); Churton v Christian and Ors (1988) 13 NSWLR 241 (CA), 252 ." 55In 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 ( 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. 56In Permanent Trustee v Fraser (1995) 36 NSWLR 24 at 47 Sheller JA had the following to say: "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." 57In 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." 58No 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. 59Recently 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 judgment 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." 60This 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. 61It 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." 62Similarly 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 par [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 par [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." 63This case starkly illustrates the problem that arises in many of these matters where a person has been left only with a right of residence or life estate. On a factual level Sharon points to a number of factors, which may incline the Court to look towards a Crisp order. 64The first of these is that Ross only has a life expectancy of another eight years; and the second is that he made no contribution to the assets in the estate. Sharon also points to a difficulty which owning that unit outright would cause him, namely if there were substantial levies in the unit block as a result of the need to replace the lift. The evidence does not address the likely amount of any such levy. 65The deceased and Ross were together for 19 years and shared the problems associated with John's health. They had no children of their own. Ross also cared for the deceased when she suffered her illness in the last two years of her life. 66It is important not to loose sight of the relative financial and personal situations of Ross and Sharon. The plaintiff has sufficient income to live within his means and he is thus able to keep some cash reserves and some shares. 67Sharon's situation is far more difficult to predict. Assuming her husband to whom she has been married for 21 years, receives half of their assets, which would be an amount of about $684,000, Sharon will need to use some estate assets to pay this or sell her interest at Neutral Bay. Further, assets obtained by a party post-separation are not necessarily excluded from the pool of assets to be divided between separating parties in Family Court settlements as it is the Court's practice to identify and value the assets of the parties at the time of the hearing, rather than on the date of separation , see for example Farmer v Bramley [2000] FamCA 1615. Farmer v Bradley was a case in which a husband won $5 million dollars in a lottery after separation and after the wife had remarried, however that decision has been distinguished somewhat by In the Marriage of A M and J A Bonnici (1991) 15 Fam LR 138, where it was held: "A property does not fall into a protected category merely because it is an inheritance. On the other hand, if there are ample funds from which an appropriate property settlement can be made and a just result arrived at, then the fact of a recently acquired inheritance would normally be treated as an entitlement of the party in question." 68In Bonnici it was decided per curiam, that a party could not be regarded as contributing significantly to an inheritance received very late in a relationship, and certainly not after it had terminated, except in very unusual circumstances (see also Fowler v Fowler [ 2011] FAMCA 273 at [100] and Rickard v Griffin [ 2010] FAMCA 1199 at [63]; and Hayton v Bendel [2010] FamCA 592 at [90]). In these circumstances it is not likely that Sharon's husband will receive some of the estate property passing to Sharon. 69Sharon has little income but has enormous expenses. There could be expected to be some modest contribution to them by her husband in respect of the younger children. 70As Sharon has to look after the younger children, she cannot work and will have to rely on investment income to support the family. Assuming she receives a return of 3.5 per cent on her investments this income may just be sufficient. Any order in favour of the plaintiff as he requests will not alter this situation. 71A Crisp order adds a level of complexity to the parties' arrangements because it means a surviving partner is somewhat beholden to an executor as trustee of the estate to facilitate a move to alternative accommodation. 72This case highlights the difficulty in finding a balance between the deceased's freedom of testation and whether in all the circumstances the community would have expected the deceased to make a greater benefaction than she in fact did to constitute proper or adequate provision for the plaintiff: Walker v Walker per Young J (NSWSC 17 May 1996 unreported). 73Leaving aside the claim by Ross for a fund of $200,000 for contingencies, any order in his favour for the fee simple in Bishop's Avenue will not alter the likely income provision for Sharon. 74There is thus the question of whether that 90 per cent should, on the death of Ross, pass to his children or should it pass to Sharon and her children. Plainly the deceased intended the latter and there is no doubt that Ross did not contribute to the 90 per cent share of Bishops Avenue or the other properties of the deceased. 75There is another difficulty with the Crisp order proposed and that is the prospect of a substantial levy being imposed because of the need for a new lift. Under the terms of the defendant's offer, Ross has to bear all the outgoings for the whole property. This could be disastrous for him. 76If there is to be a Crisp order, I think the estate should bear 90 per cent the outgoings including levies and the same proportion in respect of any substitute accommodation. It would not be necessary to increase the assurity to Ross except to add an indexing and provide for it to continue until his death. 77Having regard to the forgoing matters, I think as his cash reserves are not great, Ross may need some further funds for contingencies. Ross should therefore in addition receive a legacy of $100,000. 78I direct the parties to bring in short minutes to reflect the following orders:

The deceased's will should be varied to provide for: (a) A Crisp order in respect of the estate's interest in Bishops Avenue; and (c) The defendant is to pay 90 per cent of all outgoings in relation to the Bishop's Avenue property.
The plaintiff is to be provided with a lump sum of $100,000 for contingencies and emergencies.
The annuity to the plaintiff should be indexed to continue until his death.
Subject to any submissions, the plaintiff's costs on the ordinary basis and the defendant's costs on the indemnity basis be paid or retained out of the estate of the deceased.
Interest is to run on the legacy at the rate provided in the Probate and Administration Act 1898 from one month after the date of the orders.

Manley v Anderson

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