Mitchell v Hamitlon

Baker Deane & Nutt for plaintiff SOLICITORS : Grech Partners for 1 defendant Maclarens for 2 Defendant

• 1 - THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

3879/04 - NOELENE LOUISE MITCHELL - IN THE ESTATE OF WILLIAM MERVYN BOYD v DOREEN JEAN HAMILTON & ANOR

1 HIS HONOUR: This is an application under the Family Provision Act in respect of the estate of the late William Mervyn Boyd who died on 11 November 2003 aged seventy-six years. He was survived by his three children who are the parties to the proceedings. The Last Will of the Deceased 2 The last will was made on 28 May 2003. The first defendant was appointed the executor and the whole of the estate was given to the second defendant, William Boyd. In that will in cl 9 the deceased said: "I DECLARE that I have not made any provision in this my Will for my daughters DOREEN HAMILTON and NOLEEN MITCHELL as although I hold them in affection and love, I am satisfied that I have adequately provided for them during their lifetime and that they are well able to provide for themselves and their families." 3 The evidence before me certainly establishes that the plaintiff has not been adequately provided for during her lifetime and is not able to provide for herself. 4 There had been an earlier will of 15 September 1999 which left the estate to the three children equally. The Estate of the Deceased 5 Apart from minor personal possessions and some small items of cash and shares, the deceased owned his house at 6 Stephens Street, Blacktown and a car. Both were transferred to William in February 2004. The car was worth $3,000 and the present value of the house is valued at between $270,000 to $320,000. Some of the IAG shares were sold and a bank account collected by the executors. The funds were used to pay legal expenses of administration and a balance of $1,299.07 is held by the estate's solicitors. 6 Costs have been incurred in this matter. The plaintiff's are estimated on a one day basis in the sum of $32,852.96. The second defendant's costs on a one day basis were estimated at $25,859.73. The first defendant's costs on a two day basis were estimated after amendment at about $47,000. This is a total of $105,712. 7 The trial did in fact go for two days and, accordingly, one can assume that the costs of the plaintiff and the second defendant would be greater. 8 If an order is made it is clear that the home will have to be sold. If there is no order made the second defendant, William, has a loan approved of some $60,000 to meet his own costs. There is, however, another liability, and that is in this case the first defendant proposes to claim commission. One is then looking at a net estate of somewhere around or under $180,000. Family History 9 The testator was born on 29 July 1927. Noelene was born on 5 March 1952. In 1960 the family moved to Blacktown and in 1963 William, the second defendant, was born. 10 The plaintiff married in December 1972 and they moved out of the home in 1974. William married in 1985 and apparently lived away from home at that stage. In early 1988 he came back to live with the deceased along with his wife. Their daughter Rebecca was born in March that year. 11 In 1989, early in the year, the plaintiff and her family moved to Queensland. She did not see the deceased until 1999 when she was back in Sydney at that stage, although she had kept in contact. 12 The deceased's wife died on 26 March 1989. Shortly prior to this there were a number of discussions about what would happen to the house and I will return to the details of this somewhat later. 13 In July 1989 William's daughter Samantha was born and in 1991 the plaintiff, who had purchased a home at Beaudesert in Queensland fell on hard times and she and her husband lost their Queensland house. In June 1994 they eventually went bankrupt. William's two sons, Matthew and Mark were born in 1992. 14 On 21 August 1997 there is a solicitor's file note, to which I will return, in which the deceased discussed a document which was said to have been executed just after his wife died and in which the children apparently agreed that the property was to go to William. 15 In 1999 William moved out of the deceased's home to live with his mother-in-law. This was apparently because she needed care and attention at that stage. The family, of course, moved with him. 16 On 15 September 1999 there was the will of the deceased in which he left his estate to the three children and the will, which was his last will, was made on 28 May 2003. The testator died on 11 November 2003. Probate was granted and these proceedings were commenced within time. Probate was granted on 24 December 2003 and the property was transferred to the defendant William on 5 February 2004. 17 In January 2005 William and his family moved back in to live in the deceased's home. Apparently it had been vacant for some time. 18 Plainly the plaintiff is an eligible person. In applications under the Family Provision Act the High Court in Singer v Berghouse (1994) 181 CLR 201 has set out the two-stage approach that a Court must take. At page 209 it said: "The first question is, was the provision (if any) made for the applicant 'inadequate for (his or her) proper maintenance, education and advancement in life'? The difference between 'adequate' and 'proper' and the interrelationship which exists between 'adequate provision' and 'proper maintenance' etc were explained in Bosch v Perpetual Trustee Co Limited. The determination of the first stage in the two-stage process calls for an assessment of whether the provision (if any) made was inadequate or 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. The determination of the second stage, should it arise, involves similar considerations. Indeed, in the first stage of the process, the Court may need to arrive at an assessment of what is the proper level of maintenance and what is adequate provision, in which event, if it becomes necessary to embark upon the second stage of the process, that assessment will largely determine the order which should be made in favour of the applicant. In saying that, we are mindful that there may be some circumstances in which a Court could refuse to make an order notwithstanding that the applicant is found to have been left without adequate provision for proper maintenance. Take, for example, a case like Ellis v Leeder where there were no assets from which an order could reasonably be made and making an order could disturb the testator's arrangements to pay creditors."

19 Noelene, who is aged fifty-three years, and her husband live in rented accommodation in Morayfield in Queensland. They both work as an order assembler at Woolworths. Their financial position is as follows. They have the following assets:

(a) Furniture and household effects $ 3,000 (b) Motor vehicle $10,000 (c) Noelene's superannuation $10,348.15 (d) Gary's superannuation $31,468.37 (e) Noelene 161 Woolworths shares $ 2,563.12 (f) Gary 104 Woolworths shares $ 1,655.68 (g) Commonwealth Bank account $ 520.00 (h) Bendigo Bank account $ 2.21 Total assets $46,000 They have the following liabilities: (a) Car loan $12,000 (b) VISA card $ 3,000 (c) Woolworths/Safeways account $ 4,136.95 Total liabilities $19,000 20 They have joint net wages of $2128.00 per fortnight (Noelene $970 and Gary $1158). Their expenses (which total $2172.97 per fortnight) exceed their income. This is no doubt because although their children do not live at home, they spend a substantial amount of their income in support of one of their children and their grandchildren. Health 21 Noelene had major surgery in February 1995. She had a work related accident at Woolworths in April 1999 and later in the year her back locked up and she was taken to hospital and admitted for four days. On 9 October 2000 she was injured in an accident on the way to work and in March 2002 she was diagnosed with widespread muscle pain and fatigue. Her grandchildren have a number of problems but that is not relevant to the plaintiff's claim, although it is an indication of why their expenses are so high. Relationship with the Deceased 22 It is necessary to deal with the plaintiff's relationship with the deceased. It seems, from reading the affidavit evidence, that it was an unhappy childhood for the plaintiff. The deceased drank and seemed to have little time for his children. He seems at times to have been quite cruel to the plaintiff. As the deceased said in his will, he seems to have held the plaintiff in his affections, although it was a difficult relationship and she said she continued to maintain it, apart from the last fifteen years when she was living in Brisbane. No doubt due to the existence of the difficult financial circumstances she did not see the deceased much in this period. 23 Notwithstanding, for instance, the treatment of the plaintiff by the deceased in her early childhood the plaintiff came to Sydney to look after him in 2002 after he had heart surgery. Clearly there is nothing in the relationship which would lead me in any way to diminish the claim of the plaintiff. The deceased made no provision for the plaintiff in her lifetime, nor, of course, did she contribute to the estate. 24 It is of course necessary to consider the circumstances of anyone else having a claim on the bounty of the deceased. In this case the only relevant person is William Boyd. 25 William is aged forty-four, married with three children aged between thirteen and seventeen years. Two of these children live with him and his wife. As I have mentioned earlier, they recently moved back into the deceased's home. 26 The second defendant's assets of 914 shares in IAG, the value of which does not appear in the evidence; a 1994 Toyota Tarago worth $19,500; furniture, and superannuation of $27,472. Obviously, of course, at the moment he has the house which has been transferred to him. He has liabilities on the vehicle of some $1,100. He is employed by Australian Native Landscapes and has a net weekly income of $650 and the family allowance of $207 net per week making a total of $857. 27 He stated that prior to the recent increases in the cost of petrol he was just making ends meet but now he says his expenses have increased because of the increased cost of fuel. 28 It is plain he is struggling to provide the basic necessities for his children's education. He can meet some of them but not what might be described as the more usual ones. He obviously had a good relationship with the deceased and the evidence seems to indicate he was the deceased's favoured child. 29 In the notes to which I have referred when the deceased saw a solicitor, he commented that William was struggling and was a genuine sort of bloke. He wanted to leave his property to William because he thought William was entitled to it because "he has been at the back end of everything all his life; left out in the cold as a child and nearly died, OK now, fit and normal, if anyone deserves a helping hand it is him". 30 Apart from tidying up the deceased's house he has not contributed to the estate. Indeed, he had many years of occupation provided to him and his family by the deceased. 31 It is necessary to see how the plaintiff says she has been left without adequate provision and proper maintenance for her education and advancement in life. She sets out specific claims in the latter part of her affidavit of 24 August 2004. Obviously she needs to discharge debts which she has of some $19,000, which include a car. She has described the cost to replace her various white goods and furniture in terms which indicate there is a real need for these amounts and they total $8096.00. She also wishes to trade in her car, but the evidence is not clear and it may well be she will have to find another $19,000 and then only obtain a second hand car on the trade-in. She wants to do some travelling but I think in the context of this estate that is a luxury. She also wants to provide for her grandson's schooling in the sum of $5,000 but that really is not an appropriate need to be advanced on her behalf. 32 In her affidavit Noelene said she would like to be able to purchase a home. They have some capacity to borrow funds and if provision is given for this they intend to move to the town of Glasshouse, which is north of Brisbane. However, the indications are that a loan approval would be in the sum of $220,000 and the home they would need would cost in the order of $415,000 after costs. In the circumstances of this estate there is no prospect of this being considered. 33 Noelene provides some support to her daughter Skye. Skye's husband works as a storeman and earns approximately $450.50 per week net. She is unemployed. Their expenses greatly exceed their income. However, these particular things cannot be considered with the needs of the plaintiff. The daughter is not an eligible person and she is not a party to the proceedings. The fact a large part of the plaintiff's income is spent on children and grandchildren is relevant. No doubt there are very good moral reasons why the plaintiff would incur these costs in order to support her children. Accordingly, one can only have regard to these sorts of expenses as one which does impinge upon the circumstances of the plaintiff in her earning capacity. They of themselves do not found an application for greater provision. 34 The plaintiff also advanced a case that she needs to have some sum for future contingencies. She is approaching the latter stages of her life in a fairly menial job with health problems and uncertainties before her. The immediate needs which have been identified are in the order of $46,000 plus a sum for contingencies. 35 These needs were criticised as being of minimal importance. Certainly William is probably struggling more than the plaintiff. To leave him with the home would place him in a far more difficult situation because he would then have a debt to service and to pay off his costs. There is no prospect of the plaintiff paying his costs if she is ordered to do so; she simply does not have assets to do so. 36 Once again this is a case where the impact of costs has a disastrous effect on the lives of the people involved. There was strong criticism of the executor playing an active role in the proceedings. Once William had been joined as second defendant he could take an active part in the proceedings. He had to be joined and it was absolutely necessary because of the fact that the property had been transferred to him. 37 The first defendant made no claim herself in the proceedings. Effectively, the proceedings became a fight between the plaintiff and the second defendant. 38 A letter was written on 24 August 2004 by William Boyd's solicitor to the solicitor for the executors. It was to this effect: "We refer to the above proceedings and note that you are instructed by the Executrix of the Will of the deceased. We are instructed to put you on notice that as your client is not a beneficiary under the Will of the deceased and as our client has been joined in the proceedings our client will object to any costs and disbursements incurred by your client being paid by the estate, except insofar as the executrix is required to comply with Part 77, rules 59 and 63(2). In particular we are instructed to object to any payment from the estate involving the obtaining of advice of counsel or the representation of the first defendant by counsel at any mention, call-over or hearing. As our client is the sole beneficiary of the estate, and since he is at risk in the proceedings, he will do everything to uphold the Will. Any input by the first defendant beyond that noted above would be totally superfluous." 39 There was no response to this letter. Instead of accepting the offer the first defendant has continued to be actively involved in the proceedings and has incurred an enormous amount of costs since that time and was represented by counsel at the hearing. 40 In Vasiljev v Public Trustee [1974] NSWLR 497 at 503 the Court referred to the duties of the executor in these terms: "These rules put the executor in a position of great responsibility, as he is the only defender of the will. In In the Will of W F Lanfear (Deceased) , Williams J, speaking with the concurrence of Nicholas CJ in Eq, said: 'In an ordinary case, specially where the estate is a small one, it is the duty of the executors either to compromise the claim, or to contest it and seek to uphold the provisions of the will. For that purpose they should place all the relevant evidence before the Court relating, not only to the case generally, but to any particular circumstances which the Court should take into consideration relating to any particular gift in the will. In special cases where for instance the executors are themselves beneficiaries under the will, or where very substantial benefits are confirmed upon beneficiaries, it can be proper for beneficiaries to intervene and be separately represented. But as a general rule such separate representation should not be necessary if the executors do their duty. If beneficiaries desire to intervene an application to do so must be made before or at the hearing, and it is by no means a matter of course that such application will be granted. If the executors take up an attitude, which compels beneficiaries to seek separate representation to protect their gifts, they run a grave risk of the Court holding that they have acted improperly and, in a case where the Court considers that only one set of costs should be allowed between the respondents, the result may follow that the Court will order that set of costs to be applied in the first instance on behalf of the beneficiaries who have been forced to intervene, and only the residue to be applied on behalf of the executors.'

This passage was quoted with approval by the Full Court, Owen J, McLelland CJ in Eq and Walsh J in Re S J Hall, Deceased . In that case their Honours, in a joint judgment, emphasised that it was the duty of the executor to put material before the Court which a beneficiary desired should be placed before it and, except where they believed that the material sought to be put before the Court was false, it was not their responsibility to prevent such a case being put. Their Honours said: 'We are of the opinion that at that stage of the case it was the duty of the executors to present to the Court any evidence made available to them by a beneficiary under the will, which she was anxious should be placed before the Court, if that evidence might have any bearing on any issues which had been raised by the applicant's evidence or which might arise at the hearing. This was so whether or not the case was one in which the making of any order could be properly opposed. Assuming that it could not, questions would still arise as to what order should be made and, in particular, whether any order made should affect the interest taken by Miss Blackman under the will and, if so, to what extent and in what manner. If Miss Blackman could provide, and wished to provide, evidence which could have a bearing on these matters, the duty of the executors was to put it before the Court. This duty was, in our opinion, unaffected by opinions held by them as to whether her evidence was true or whether it was an attack on the applicant or would be cruel to the applicant or would cause her pain. Different considerations might apply if it could be shown that the executors knew that the allegations were false, but that is not shown in this case. Short of that, it was not for them to form their own judgment as to the truth or falsity of the evidence or to refrain from putting it forward out of respect for the feelings of the applicant.'

A testator's family maintenance application cannot be properly heard where an executor comes before the Court without the means to enable him to put material as to the financial position and needs of a beneficiary before the Court. This case also emphasises the fact that though the executor is a party, he is there to do what the beneficiaries require him to do. In the case of an infant beneficiary, where the executor cannot get effective direction, it must be the responsibility of the executor to protect the interests of the infant to the full, and a Court should not put him in a position where he cannot do so. This case illustrates in an acute form the problems created by the rule that the executor is the protector of the will. In New Zealand, the usual practice is to name as defendants the executors and any persons who may be prejudiced by an order granting relief, Stephens, Family Protection in New Zealand, 2nd ed, and in England under the Inheritance (Family Provision) Act, 1938, the proper defendants are the personal representative and such of the beneficiaries the beneficial interests of whom may be affected by any order - Tyler, Family Provision , p 83." 41 In this case the comments by the court as to the risks as to costs and the executors doing what the beneficiary requires him to do are quite appropriate. As I said, the second defendant had to be joined and he would carry the burden of advancing all necessary evidence, including that directed to any s 27 factors, such as the matters which clearly agitated the parties in these proceedings. Apart from putting the statutory material forward, there was nothing for the first defendant to do after the second defendant indicated his attitude. For instance, there were no other beneficiaries in respect of whom evidence had to be put before the court. There was only the plaintiff and William involved in the matter. 42 It may be that when the matter started the estate was thought to be somewhat larger but, with the fall in real estate prices, effectively this is a small estate. 43 As indicated by the comments which I have referred to above by the Court, the executor had an obligation in these circumstances to compromise the claim. Quite correctly it tried to have the matter mediated in May 2005 but this was unsuccessful. Apparently the second defendant did not want to take part. Obviously it should be allowed its costs on this aspect in attempting to resolve the matters, and this is a matter which is to be encouraged. 44 It seems to me that after the August letter the executor should only be allowed costs necessary to fulfil its obligations under the Rules, attempts to settle the matter, and generally keeping a watching brief on the matter with a solicitor attending at the hearing. Even with this restriction the costs are likely to be in the order of up to $20,000. 45 I turn to the consideration of the application. Although the plaintiff's claim in the circumstances is small, it is a real matter and it is a real possibility that the defendant will not be able to keep the house in any event. In these circumstances I think it may be preferable for the house to be sold and both William and the plaintiff have their immediate financial situation eased by the provision of funds. 46 In these circumstances, I am satisfied that a provision in favour of the plaintiff should be made. 47 Section 27 of the Family Provision Act is in the following terms: "(1) On an application in relation to a deceased person, the Court shall not make an order designating property as notional estate of the deceased person unless it has considered:

(a) The importance of not interfering with reasonable expectations in relation to property;

(b) The substantial justice and merits involved in making or refusing to make the order; and

(c) Any other matter which it considers relevant in the circumstances.

(2) In determining what property should be designated as notional estate of a deceased person, the Court shall have regard to: (a) The value and nature of property the subject of any relevant prescribed transaction or distribution from the estate of the deceased person;

(b) Where, in relation to any such prescribed transaction, consideration was given, the value and nature of the consideration;

(c) Any changes over the time which has elapsed since any such prescribed transaction was entered into, any such distribution was made or any such consideration was given in the value of property of the same nature as the property the subject of the prescribed transaction, the distribution or the consideration, as the case may be;

(d) Whether property of the same nature as the property the subject of any such prescribed transaction, any such distribution or any such consideration could, during the time which has elapsed since the prescribed transaction was entered into, the distribution was made or the consideration was given, as the case may have, have been applied so as to produce income; and

(e) Any other matter which it considers relevant to the circumstances." Reasonable Expectation 48 I turn to the question of reasonable expectation. In this case there were two areas of evidence which suggest that the second defendant, William, was promised by the defendant that he would have the home. The first concerns some discussions in 1989 when William's mother said that she wanted her half of the house to pass to William. After the death of his mother there was said to have been a document signed by a number of people saying that it was the deceased's wish that William should get the home and that his sisters would not contest the will. This document is apparently said to have been signed by the sisters and their respective husbands. The document has never been found. 49 On the evidence there are disputes as to the conversations, and also about the signing of the document. The plaintiff and her husband, and also the first defendant, deny that they ever signed such a document. To the contrary, William, of course, gives evidence that the document was signed. 50 There are the solicitor's notes which were taken at a conference with the deceased on 21 August 1997 and they are notes that the solicitor made when he interviewed him. In that note the solicitor refers to the fact that the deceased brought in a sheet of paper confirming his instructions in February 1989. There were searches by the solicitor's office and that piece of paper could not be found. Strangely, he goes on to provide at the end to say that he would like a judge to see the notes if there is a dispute. 51 Unless the deceased was being deliberately devious, the notes are support for the proposition that there was some document signed in the terms suggested. Assuming that there was such a document for the moment, there does not seem to be any suggestion in the evidence that William relied upon it or did any matters in relation to such promises. It is not as though he went ahead and expended money on the property or took other steps based on such an expectation. Clearly it is a matter for the justice and the merits of the claim and in those circumstances I have already referred to this and I think it is appropriate that there should be some provision for the plaintiff. 52 The orders that I make are as follows: (1) I designate as notional estate the property 6 Stephen Street, Blacktown. (2) The plaintiff is to receive a legacy out of the notional estate in the sum of $75,000. (3) Interest is to be paid on the legacy at the rate provided for under the Wills (Probate and Administration) Act on and from three months after today's date. (4) The plaintiff's costs on a party and party basis are to be paid out of the notional estate. (5) The first defendant's costs are to be paid out of the notional estate limited as set out in my judgment. (6) I order the exhibits be returned.

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