McReynolds v Matthews [2008] NSWSC 580 | Case summary

1088 of 2007 WARREN LESLIE McREYNOLDS -v- KYLIE JANE MATTHEWS JUDGMENT 1 HIS HONOUR: These are proceedings under the Family Provision Act 1982. 2 By summons filed on 12 January 2007, Warren Leslie McReynolds claims an order for provision for his maintenance and advancement in life out of the estate/and or notional estate of his late father Leslie Raymond McReynolds (to whom I shall refer as "the Deceased"). 3 The Deceased died on 25 June 2006, aged 75 years. He left a will dated 13 December 2003, probate whereof was on 23 October 2006 granted to Kylie Jane Matthews, the executor named in such will (who is the Defendant to the present proceedings). 4 The inventory of property discloses the following assets, and the respective values ascribed thereto: House property situate at and known as 5 Karoo Crescent, Hornsby Heights $480,000 ANZ Bank Limited access advantage account $8,386 Investments, totalling $159,998 VN Commodore 1989 sedan motor vehicle $1000 Furniture $2000 Watches and articles of personal adornment $100 Total $651,485 5 The Deceased, who was a widower at the time of his death (his wife having died on 18 January 1994), was survived by his two children, being Warren Leslie, the present Plaintiff (who was born on 11 April 1955, and is presently aged 53 years), and Robyn Christine (Mrs Walker) (who was born on 11 April 1958, and is presently aged 50 years). 6 By his will the Deceased gave his house property at 5 Karoo Crescent, Hornsby Heights, together with all moneys held by him in any current bank accounts, to his daughter Robyn. He gave one half of the residue of his estate to Suzanne Maree McReynolds (who is the former wife of the Plaintiff). He gave the other half of the residue equally among the Plaintiff, the Deceased's grandchildren Kimberly Rachel McReynolds and Timothy Scott McReynolds (those two latter persons being the children of the Plaintiff). 7 I shall, for convenience and without intending any disrespect, refer to the Deceased's daughter and the other beneficiaries named in his will by their first names. 8 The practical effect of the testamentary dispositions of the Deceased is that Robyn receives the house property at Hornsby Heights, together with the amount of $8,386 held by the Deceased in a bank account; the residue of the estate (which, according to the inventory of property, has a total estimated value of about $163,000) is divided as to one half (about $81,500) to Suzanne; the other one half is then divided equally among the Plaintiff and his two children, Kimberly and Timothy, each of those persons thus receiving one third of about $81,000, that is, about $27,000. 9 However, in calculating the value of the estate available for distribution, the costs of the present proceedings should be taken into consideration, since the Plaintiff, if successful, will normally be entitled to an order that his 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 for her costs be paid out of the estate. 10 It was estimated on behalf of the Plaintiff that his costs will total $41,800 whilst it was estimated on behalf of the Defendant that her costs will total $61,800 (inclusive of GST). (Of the total costs of the Defendant an amount of $33,342 has already been paid.) Accordingly, since those costs will, at first instance, be payable out of residue, the consequence of the institution of the present proceedings is that the residuary estate will be reduced by about $104,000, from (upon my calculations) about $163,000 to an amount of about $59,000. The practical consequence is that the Plaintiff will be entitled to one sixth of that sum, in an amount of about $9800. If, however the Plaintiff had not instituted the present proceedings, he would have received about $27,000 under the terms of the will. 11 During the course of the hearing the parties agreed that the present financial position of the estate was as set forth in Exhibit 6. 12 That document attributes an agreed value of $462,500, to the house property at Hornsby Heights. The Defendant holds the sum of $43,978 in a trust/controlled money account. Accumulated rent is held by a real estate agent in a trust account in an amount of $12,164 (from which managing agent's commission of $1,361 must in due course be deducted). 13 It was also agreed in Exhibit 6 that provision must also be made for the deduction from the estate of the balance of the Defendant's costs, in the sum of $20,000 and for the Plaintiff's costs in the sum of $41,800, as well as for the costs of Suzanne for the preparation of her affidavits (in an amount of $5,800). 14 In the event that the Hornsby Heights property is sold, the costs of that sale (in an agreed estimated amount of $13,875) would need also to be deducted from the present assets of the estate. 15 The parties were in agreement that, in consequence of the foregoing calculations, the net distributable estate at the present time was in an amount of $435,796. 16 It is difficult to reconcile the amount of the moneys held by the Defendant in a trust/controlled money account (even after the payment of $33,342 representing part of the costs of the Defendant of the present proceedings), in an amount of almost $44,000, with the investments totalling almost $160,000 disclosed in item 3 of the inventory of property. I observe, however, that the Defendant's affidavit of 4 July 2007 states that the value of the investments at the death of the Deceased totalled $102,622. The explanation may be that the investment of $57,376 with the National Bank of Australia Limited (item 3(1) in the inventory of property) may, in fact, not have been an investment of the Deceased, but may have represented his superannuation entitlement (which was subsequently distributed between the Plaintiff and his sister Robyn). 17 Upon the calculations set forth in Exhibit 6 (which, as I have already recorded, were figures agreed between the parties during the course of the hearing), it appears to be inevitable that the Hornsby Heights property must be sold, if only to meet the outstanding costs of the present proceedings. 18 It was the calculation of the Defendant that under the terms of the will, if the present proceedings had not been instituted, the Plaintiff would have received about $16,000. That calculation appears to proceed upon the basis that the residue of the estate had a value of about $96,000. 19 The Plaintiff is employed as a health services manager by Sydney West Area Health Services at Cumberland Hospital. He holds a degree in Health Sciences Management from Charles Sturt University at Bathurst, and has been employed in health services administration since the age of 18. His gross annual salary is about $73,000 (his net salary being about $54,700). 20 The Plaintiff married his first wife, Suzanne Maree (who is one of the beneficiaries named in the will of the Deceased), on 18 March 1978. They were divorced on 19 August 1985. One child was born of that marriage. The Plaintiff subsequently married his present wife, Susan Louise, on 11 January 1986. Kimberly and Timothy were born of that marriage. All the Plaintiff's three children are now adults. The Plaintiff's wife is employed as an admissions clerk at the Nepean Hospital by the Sydney West Area Health Service, receiving a gross annual salary of almost $34,000. 21 The Plaintiff and his present wife jointly own their residence at 223 Mileham Street, South Windsor, which has an estimated present value of $310,000. That residence is subject to a mortgage to the St George Bank Limited, upon which an amount of about $86,000 is presently outstanding. The Plaintiff and his wife own a Holden Utility VU series II Storm, 2002 model, for which purchase they borrowed $33,477 from Esanda. The payout figure on that loan is presently $18,740. 22 They also own a Holden HSV VL SS group A 1988 model motor vehicle, which was also financed by a loan from Esanda, in amount of $47,723, the payout upon which is presently $29,675. 23 In addition, they own a 4.5 metre aluminium boat, for the purchase whereof they borrowed $25,592, from Capital Finance. There is an amount of about $11,000 owing upon that purchase. 24 Subsequent to the institution of the present proceedings, the Plaintiff has received an amount of about $13,000 from the trustees of the Deceased's superannuation fund. That money is currently held by the Plaintiff in a credit union account. 25 The Plaintiff and his wife are jointly guarantors for car loans of their son Timothy and their daughter Kimberly, upon which amounts of $9,531 and $11,070 respectively are presently outstanding. At the present time both Timothy and Kimberly are meeting their obligations under those loans. 26 The Plaintiff since 1 April 1999 has been a member of the State Authorities Superannuation Scheme, in respect of which he makes monthly contributions of $613 out of his gross salary. The Plaintiff's present superannuation entitlement is about $122,000; if he continues his employment until retirement (which he proposes to do) that entitlement will be $342,000. 27 According to the Plaintiff, the 1988 Holden motor vehicle was purchased by his wife as an investment. It is kept secured in their garage, and is not driven. The utility motor vehicle is used for everyday driving and for the Plaintiff's work. 28 Apart from the mortgage liability, the liabilities of the Plaintiff and his wife (in respect to the purchase of the motor vehicles and the boat and in respect to credit card debts) exceed $58,000. When the mortgage liability is taken into consideration, their total liabilities are in an amount of about $144,000. 29 It was the evidence of the Plaintiff that the weekly outgoings of himself and his wife were essentially in about the same amount as their weekly income. 30 The Plaintiff gave evidence concerning his desire to effect improvements and repairs to their residence, which he and his wife have owned for the past 20 years. 31 The various investments held by the Deceased have been liquidated, and the Defendant holds an amount of almost $45,000 representing those investments (of which all but $816 is held in a controlled moneys account). There is an outstanding liability of $7,109 in respect to the funeral of the Deceased. 32 The claim of the Plaintiff must be approached in the light of the competing claims of the other beneficiaries or of any other persons who might have a claim upon the testamentary bounty of the Deceased. The chief competing claim is that of Robyn Christine Yates, the daughter of the Deceased, who under the terms of the will receives the house property at Hornsby Heights, and the moneys in the bank accounts of the Deceased. Evidence concerning her financial and material circumstances has been placed before the Court. Suzanne Maree McReynolds, the former wife of the Plaintiff, who under the terms of the will is entitled to one half of the residuary estate of the Deceased, has also given evidence concerning her financial and material circumstances. 33 The Plaintiff's own children, Kimberly and Timothy (each of whom is entitled to one sixth of residue), have also placed before the Court information concerning their respective financial and material circumstances. 34 Suzanne (who is presently aged 50) is employed as a child and family health/women's health nurse by the Northern Sydney Central Coast Area Health Service, by which she has been employed for about 25 years. She receives a net salary of $2,107 a fortnight, which is her only income. Suzanne provided details of her regular outgoings, totalling $1,855 a fortnight. In recent times she has incurred a number of major expenses, mainly relating to maintenance and repairs to her residence. 35 Suzanne's assets (and the estimated values attributed thereto) consist of : House property situate at and known as 27 Dorothy Street, Freeman's Reach $280,000 2000 Toyota Corolla Ascent motor vehicle $6,000 Household furniture $4,000 Cheque account $5,295 State Superannuation $229,545 Total $524,841 36 Suzanne's liabilities consist of two loan accounts, and a credit card liability, in amounts totalling $122,549. 37 Suzanne suffers from carpal tunnel syndrome in both wrists, for which she has been receiving medication and for which surgery may become necessary. In addition, she also suffers from oesophageal reflux, for which condition she also takes medication. 38 Robyn, the major beneficiary under the will of the Deceased, was born on 11 April 1958, and is presently aged 50 years. Robyn is employed part time as a bar person, earning on average, $150 a week. She lives in a de facto relationship with her partner of the past four years, John Theodore Fogg, who is a shearer by occupation. Robyn has three children, two being adults, and the youngest, Claire (who is presently aged 10), living at home with herself and Mr Fogg, as also does Mr Fogg's son Joshua James, who is aged 14. 39 Robyn and Mr Fogg conjointly own a property known as Rockcliff, situate at 1598 Geegullalong Road, Murringo in New South Wales. That property was purchased by them in their joint names in October 2005, for $420,000. They have a mortgage liability of about $150,000 on that property. Robyn maintains a bank account, which is currently in overdraft to the extent of $1,900. Her assets consist of a Ford BA 2003 station wagon (worth about $15,000), and a 1988 camper-caravan (worth about $3,000). Her only other asset consists of 500 $1 shares in Boorrowa Bendigo Community Bank. 40 Robyn has accrued superannuation of about $5000 and Mr Fogg has accrued superannuation of about $19,000. The property Rockcliff, which consists of 149 acres, is located about equidistantly from Young and from Boorowa. Upon it stands a three bedroom residence, which is the family home of Robyn and Mr Fogg and their respective dependent children. Upon that rural property Robyn and Mr Fogg maintain about 140 sheep, 3 horses and 4 poddy calves. Mr Fogg is presently aged 37. He is a shearer by occupation, but his work is intermittent and uncertain. He is currently earning $75 a week. The two dependent children are each at school, Robyn receives no child support for her daughter Claire (whose father is about $9,000 in arrears for child support). Joshua's mother does not pay child support to Mr Fogg. 41 In 2002 Robyn received an amount of about $53,000 from the estate of an aunt (which sum she used to discharge the outstanding balance of a mortgage on a property upon which she was residing at that time; she also updated a very old motor vehicle, and purchased a camper van). Robyn stated that at the same time her brother received an equivalent amount from their aunt's estate. No reference to the receipt of such a fund was made in the Plaintiff's evidence in chief. 42 I have already recorded that the Plaintiff has received an amount of about $13,000 from the trustees of the Deceased's superannuation fund. That amount represented 25 per cent of the Deceased's superannuation entitlement. The remaining 75 per cent, in a net amount of about $46,000, was paid to Robyn in about October 2007. That sum was expended by her in paying current bills and in purchasing a work vehicle for $25,000. 43 For about the last ten months of his life the Deceased lived with Robyn, 44 There were placed in evidence by Robyn and also by the Defendant various statements made by the Deceased, especially concerning his testamentary intentions. Those statements are admissible pursuant to section 32 of the Family Provision Act. It is quite apparent that there was a close and loving relationship between Robyn and the Deceased. The relationship between the Plaintiff and the Deceased, especially in the Deceased's declining years, was not as close as that which the Deceased had with his daughter, although there was no estrangement between the Plaintiff and his father, with whom the Plaintiff maintained at least telephonic contact. 45 Kimberly, the daughter of the Plaintiff, is in full-time employment with Sydney West Area Health Services at Nepean Hospital, as a medication endorsed enrolled nurse. She works 32 hours a week, receiving an average weekly wage of about $750. For the last financial year her gross pay was $30,351. 46 Kimberly is in a de facto relationship with her fiancé, Aaron Miller. They have a daughter Kaya, who was born on 24 September 2006. Mr Miller, who is aged 28, is employed by the Sydney West Area Health Service (Governor Phillip Nursing Home) as a hospital assistant. He currently receives an average weekly wage of $710. For the last financial year his gross pay was $40,311. 47 Kimberly and Mr Miller are currently residing in rental accommodation, for which they pay $215 a week. Kimberly has a personal loan, for the purchase of her motor vehicle, which she is repaying at the rate of $100 a week. As well as a current bank account in her own name, Kimberly and Mr Miller maintain a joint savings account, which has a current balance of $10,000 (which balance includes the Commonwealth "baby bonus"). That account is intended to be used by Kimberly and Mr Miller towards a deposit on a residence of their own. 48 Kimberly gave details of the current expenditure of herself and Mr Miller, in a total amount of $1,215 a week. Their combined incomes, together with family assistance, total $1,484 a week. Kimberly stated that any benefit which she might receive from the estate of her late grandfather would be used towards the deposit on the purchase of a home. 49 Timothy was born on 31 January 1988 and is presently aged 20 years. He is in full-time employment in recreational vehicle manufacture, having completed his second year of a three year traineeship. His current weekly net wage is $450. 50 Timothy still resides with his parents in the family home at South Windsor (as also does his girlfriend), and he has no present intention of altering those living arrangements. He currently has a liability in respect to a personal loan incurred for the purchase of his motor vehicle, upon which he makes weekly payments of $80. He also has a liability for comprehensive car insurance, in a monthly amount of $90. His motor vehicle has a present value of $7,000, and the personal loan is presently in an amount of $9,000. Timothy gave evidence of his outgoings, in a total amount of $260 a week. 51 Timothy said that any benefit which he might receive from the estate of his grandfather he would use to reduce or to pay out his personal loan, and that any additional funds would be placed into a savings account for the future, such as the purchase of his own residence. 52 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. 53 I have had the benefit of receiving a written outline of submissions and a chronology from Senior Counsel for the Plaintiff. Those documents will be retained in the Court file. 54 The Plaintiff as a son of the Deceased is an eligible person within paragraph (b) of the definition of that phrase contained in section 6 (1) of the Family Provision Act. As such he has the standing to bring the present proceedings. It will be appreciated that Robyn also is an eligible person in relation to the Deceased, also being such within the same paragraph of the foregoing definition. The Plaintiff and Robyn are the only eligible persons in relation to the Deceased. Neither Suzanne nor Kimberly nor Timothy is an eligible person. 55 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 the testator the applicant has been left without adequate provision for his proper maintenance.

56 The High Court in Singer v Berghouse (at 209 - 210) said that the determination of the first stage calls for an assessment of whether the provision (if any) made was inadequate for what, in all the circumstances, was the proper level of maintenance etc appropriate for the applicant having regard, amongst other things, to the applicant's financial position, the size and nature of the deceased's estate, the totality of the relationship between the applicant and the deceased, and the relationship between the deceased and other persons who have legitimate claims upon his or her bounty. 57 It should be emphasised that it is for the Plaintiff to establish his claim upon its own merits. Robyn, as the chief chosen object of the testamentary beneficence of the Deceased, does not need to prove anything. The Plaintiff cannot enhance his claim by establishing (if such be the case) that Robyn, had she been left without significant provision under the will, would not have succeeded in a claim under the Family Provision Act. 58 Considerable evidence was given concerning the respective relationships between the Plaintiff and the Deceased and Robyn and the Deceased. In this regard, it should be appreciated that an order for provision is not made as a reward for services and good conduct on the part of an applicant. Neither is such an order withheld as punishment for perceived bad conduct on the part of the applicant. 59 Further, it is appropriate that I should set forth the following salutary admonition of Windeyer J, in the High Court of Australia, in Blore v Lang (1960) 104 CLR 124 at 137, The jurisdiction under the Testator's Family Maintenance Act [the statutory predecessor to the Family Provision Act ] is to provide for deserving persons according to their requirements, not to reward past services. This is sometimes overlooked and evidence concerning the present and probable future requirements of the applicant is subordinated to or submerged in evidence of past services to the testator. Allegations and denials concerning episodes in the past are then likely to become emphasized at the expense of evidence directed to the central issues in the case. 60 The discretion vested in the Court by section 7 of the Family Provision Act is to be exercised "having regard to the circumstances at the time the order is made". I have already observed that the institution of the present proceedings, and the costs concomitant therewith, significantly impact upon the benefit which the Plaintiff is entitled to receive under the terms of the will. 61 Upon my calculations (adopting the value of investments shown in the inventory of property), the Plaintiff would have received about $27,000 (representing his entitlement to one sixth of residue), if the present proceedings had not been instituted, and, in consequence of the institution of the present proceedings, will be entitled to receive about $9,800. However, it was submitted on behalf of Counsel for the Plaintiff that, if the proceedings had not be instituted, he would have received about $14,000, whilst upon the Defendant's calculations he would have received about $16,000. 62 In the circumstances of the present case, where the estate had assets totalling in excess of $650,000, for the Plaintiff to have received a benefit of either $14,000 or $16,000 (or even about $27,000), has the consequence, in my conclusion, of leaving the Plaintiff without adequate provision for his proper maintenance. 63 The amount presently outstanding on the Plaintiff's mortgage debt is about $86,000. If that liability were to be entirely extinguished or substantially reduced, the Plaintiff would no longer have to meet monthly repayments of $938 (that is $11,256 a year). 64 If the Plaintiff were to receive from the estate of the Deceased, in lieu of the benefit given to him under the will of his father, a legacy of $80,000 he would be enabled to substantially reduce, if not entirely discharge, the mortgage, or he could use that sum to discharge other debts and to effect some of the necessary repairs and improvements to his house property. 65 The chief chosen object of the testamentary beneficence of the Deceased is his daughter Robyn. Although Robyn expressed a desire to maintain the Hornsby Heights property, nevertheless it apparently would not be her intention to reside in that property. She seems to be content to continue to reside upon the rural estate Rockcliff, and, to the extent that climatic conditions will allow that to be done, to conduct that estate as a working property. I consider that the competing claim of Robyn is such that any order for provision which might be made in favour of the Plaintiff should not have the effect of substantially reducing the benefit given to Robyn by the terms of her father's will. 66 The situation is otherwise, however, regarding the competing claim of the next most significant beneficiary named in the will of the Deceased, being the Plaintiff's former wife Suzanne. She would not be regarded as a natural object of the testamentary beneficence of the Deceased (unlike the Plaintiff, who would be regarded as such a natural object of that testamentary beneficence). Whilst the Deceased may have had a close and affectionate relationship with the Plaintiff's former wife, the competing claim of Suzanne should not in any way be equated to the entitlement of the Plaintiff to receive from the estate of the Deceased a benefit which will enable him at least to reduce significantly his mortgage liability. 67 In this regard I would also observe that neither would Kimberly or Timothy be regarded as a natural object of the testamentary beneficence of the Deceased. I do not consider that the competing claims of Kimberly and Timothy are such as to have the effect of reducing the benefit of a legacy of $80,000, to which their father has otherwise established an entitlement.

McReynolds v Matthews

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Judgment (12 paragraphs)

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Cases Cited (6)