Morton v Little Price v Little

Mr L. Ellison for J. Morton COUNSEL : B. Sharpe for defendant

Maclarens Solicitors for J. Morton SOLICITORS : Gaden Lawyers for defendant

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

1110/04 - JANETTE MORTON v DAVID LITTLE 6209/04 - SUSAN PRICE v DAVID LITTLE

1 MASTER: This is an application under the Family Provision Act in respect of the estate of the late Genevieve Little who died on 19 July 2002 aged eighty-eight years. She was survived by her four children, two of whom are plaintiffs in the proceedings. The defendant is one of the sons of the deceased and the executor of the estate. 2 The deceased made her will on 11 March 1997. In that will she gave one of her sons a legacy of $20,000 plus one half of her half share of the home at Roseville. Her other son received a similar legacy and a specific bequest. The plaintiff, Susan Price, received a sum of $20,000 and some paintings and Janette Morton, the other plaintiff, received $20,000 which was to be held in trust by her sister. The residue went to the Foundation for the National Parks and Wildlife and, to use the wording of the will, "to be used for the acquisition of land for the purposes of a national park or nature reserve." 3 At the present time the estate of the deceased consists of her half share of the land at Roseville worth $300,000, cash in the sum of $763,539.60 and shares of $24,466 giving a total of $1,088,005.60. Costs have been incurred in the matter fortunately in a modest way - costs for the plaintiff $25,500 and for the defendant $25,000. A short family history 4 The plaintiff Janette Morton was born on 2 June 1939, and the plaintiff Susan Price was born on 13 July 1940. The deceased's son, David, was born in 1942 and Andrew, the other son, in 1948. The deceased and her husband divorced in 1960. By 1966 the deceased and Janette Morton moved to Melbourne. There was an earlier will of the deceased in which she left everything equally to her children. 5 In 1975 Janette Morton commenced a de facto relationship and her daughter was born two years later. Unfortunately her relationship with the de facto partner ended in 1978. In 1980 she moved from Melbourne to Sydney. In 1981 the deceased moved to her home at Katoomba. In the following year Janette purchased a home at Bullaburra. In 1982 the deceased moved back to 43 Griffith Avenue, East Roseville. By 1987 the deceased was becoming frail, having had a fall at that stage and a head injury. In 1996 Janette Morton was diagnosed with chronic fatigue syndrome. 6 The deceased made her last will, as I said, on 17 March 1997. In 1998 she was found to be not capable of managing her affairs and Susan Price was appointed as manager of her property and her son, Andrew, appointed as guardian. She died on 19 July 2002. 7 The proceedings commenced by Janette Morton were commenced on 16 January 2004. Susan Price's proceedings are out of time, the proceedings having been commenced on 18 November 2004. I heard both matters together having made an order that evidence in one matter be evidence in the other. Both plaintiffs are of course daughters of the deceased and are thus eligible persons. 8 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 following: "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 Company 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." The situation in life of the plaintiff Janette Morton 9 Janette Morton is aged sixty-five years. She is a single woman and has a daughter who is not dependent upon her. She owns her own home at Bullaburra which is valued at $210,000. She has moneys in the bank totalling $2287.25. She has some furniture which is of no value and she also has some shares worth a little under $20,000. Her liabilities amount to a debt due to the deceased of $3186.85 and a Bankcard debt of $2547.86. She receives income by way of a pension of $458.60 per fortnight and dividends of $23 per fortnight. This is a total income of $481.60. She manages to keep her expenses at an amount of $449.50. Janette suffers from type two diabetes and also suffers from chronic fatigue syndrome. Clearly this has an effect upon her quality of life. Janette had a good relationship with her mother and kept in touch with her throughout her life. 10 Janette did not make any contribution to the estate of the deceased. She received some money by way of loans which were repaid and there is a small amount still outstanding. It is necessary to see how the plaintiff Janette has been left without adequate and proper provision for her maintenance, education and advancement in life. 11 Her principal problems relate to the house. That house is in a terrible state, and the photographs indicate that a part of the wall is falling down and there is an expert's report on the matter. Clearly it is in a dilapidated state and needs to either be renovated or rebuilt. Although the cost of doing immediate reconstruction and repairs to put it in order and make it habitable, might be something in excess of $100,000 and a total refurbishment of the house would be in the order of $187,247, the recommendation of the building consultant, who has made an inspection of the house and has given a report to the court, is that the home should be demolished and replaced on a concrete slab. The estimated cost for this is somewhere between $150,000 and $175,000. 12 Because of Janette's financial situation she does not have a lot of furniture. She has estimated the cost of those items which need to be replaced or provided for her in the varying range between $6,900 and $12,000. It is obvious that she needs these items of furniture. She would also like a car to give her some independence and an appropriate vehicle could cost somewhere between $15,000 and $20,000. 13 The other important thing to note about Janette is that she is now in a situation where she has nothing behind her at all. She has no cash funds in reserve and still owes some money. 14 I turn now to the claim made by the plaintiff Susan Price. This claim is out of time and because the application is out of time it is necessary for the court to consider s 16 of the Family Provision Act which allows an application to be made notwithstanding it is out of time. There are a number of cases which refer to the principles to be applied in an application for an extension of time. In re Duskett (deceased) (1947) VLR 211 the following was said: "It is necessary for the applicant to make out a case that will justify the grant of the indulgence sought. He is to show reasons why his failure to apply within the time allowed should be excused. Every case will have to be dealt with on its own facts but it would seem necessary for the applicant to satisfy the court that the circumstances are such as to make it unjust for him to be penalised for being out of time. As moreover he is seeking an indulgence he should apply promptly for an extension of time." 15 His Honour Young J in several cases has dealt with the principles governing applications to extend time under this Act. In Massie v. Laundy (unreported NSWSC 7 February 1987) his Honour indicated that when looking at "sufficient cause" under 16(3) of the Act the factors which one looks at include the following: (a) Is the reason for making a late sufficient? (b) Will the beneficiaries under the will be unacceptably prejudiced if the time were extended? (c) Has there been any unconscionable conduct on either side which would enter into the equation? 16 Apparently he also accepts a view which was expressed by his Honour Needham J in Fancett v. Ware (unreported NSWSC 3 June 1986) that there is no purpose in extending the time with respect to a claim which might fail. In Phillips v. Quinton (unreported NSWSC 31 March 1988) Powell J when considering the matter at the substantive hearing leant to the view that a plaintiff seeking extension of time under the Testators Family Maintenance Act must now demonstrate not merely a reasonable prospect but at least a strong probability of obtaining substantive relief. That view was not accepted by his Honour Hodgson J in Basto v. Basto (unreported NSWSC 8 September 1989). 17 In Dewinter v. Johnstone, a decision of the Court of Appeal on 23 August 1995 his Honour Powell J referred to this matter and in particular the fact that nowadays the application for extension of time is invariably dealt with at the time of the application for substantive relief. He said at p 23: "In such a case, so it seems to me no extension of time ought to be granted unless it be established (inter alia) that the applicant for an extension of time would, in the event of that extension being granted be entitled to an order for substantive relief." 18 His Honour Sheller J considered that it was only necessary to show that the application was not bound to fail. His Honour Cole J seems to have adopted the parties' approach of looking at the strength of the plaintiff's case. 19 The case of Dewinter v. Johnstone is also useful in that Sheller J commented on the meaning of "unconscionable". He was dealing with an appeal from Master McLaughlin and he referred to the Master's comments to the following effect: "Unconscionable conduct in this context of course relates to such matters as whether the plaintiff has made an informed decision not to make a claim against the estate and has then decided after the limitation period has expired to make such a claim on account of such change in her financial and material circumstances which has occurred after the expiry of the limitation period." With regard to the Master's comments, his Honour observed: "... with all respect I would not have thought this to have been unconscionable conduct. No doubt it depends on the circumstances. However the concept of unconscionable conduct is to be directed towards a deliberate holding off designed to lull beneficiaries into a false sense of security. There is nothing to suggest anything of that sort in the present case." 20 In this case the plaintiff has acted for herself except for the drawing of her initial affidavit which was done by a solicitor. Initially she consulted a solicitor with her sister Janette but the solicitor would not act for her as he said she had too many assets. There is no evidence that she was advised of time limits at that time. She therefore acted for herself and on 11 December 2003 she sent the executor a letter advising that she was going to make a claim. That letter was sent within the time limit. There has of course in this matter been no distribution and so clearly there is no question of any unconscionable conduct or prejudice to the beneficiaries as a result of the late application. 21 The question of the explanation for delay is dealt with in her affidavit of 16 December 2004. She drew her own summons and filed it on 18 November 2004. It did not seek an extension of time and the need for this seems to have been drawn to her attention by the Registrar on 6 December 2004. 22 In those circumstances and given the fact that she was acting for herself I would infer that she did not know of the time limit. 23 In the circumstances of this case there is an adequate explanation and I propose to extend time. The situation in the life of the plaintiff Susan Price 24 Susan Price is aged sixty-four. She is a single woman and is an artist who lives in her own home at Blackheath. She has land and a shed on her Lawson property which is valued at $250,000. That property is used by her as a bush retreat so that she can carry out her painting. If any development were to occur the road would need to be built at a cost of $100,000. She also owns a one bedroom unit worth $185,000 at Potts Point. She now receives a rental of $220 per week from the unit. It has been expensive to maintain in the past. She has cash in the sum of $137,836.47, some furniture which has no value, some shares worth $17,300 and a Land Rover worth $15,000. In terms of pure assets these amount to $795,136.47. 25 Susan does not receive the pension and for the last twelve months her income, which was mainly her paintings and interest, was $13,322. I would expect that her income would rise as she will benefit from the full rent of the Potts Point unit. It is likely that her earning capacity will be a sum of $17,000. That is still less than her expenses of $20,324. 26 Susan has a number of medical problems. She has type two diabetes and suffers from asthma and allergies and is shortly to have a cornea transplant. She, like her other sibling, had a good relationship with her mother. She made no contribution to the estate and so far as she is concerned does not seem to have received any benefits. 27 It is also necessary to see how she has been left with regard to proper maintenance, education and advancement in life. In her affidavit she deals with this in part when talking about her house at Blackheath. She talks about her need for painting of her house and replacement of downpipes, replacement of a hot water tank and a lot of other matters. Unfortunately, probably because she acted for herself, there are no details of what these matters would cost to repair. She needs to do dental work at a cost of $5000 and she would like to add a studio to her house at Blackheath to help her with her painting. That also has not been costed. She would also like a new vehicle but said that she would still keep the Land Rover. What is significant about Susan's case is that although she has substantial assets her income is less than her expenses. 28 It is also necessary to consider the situation in the life of others having a claim on the bounty of the deceased. Neither plaintiff sought to interfere with any of the bequests to their siblings and the defendant conceded is that the burden of any provision should be borne by the Foundation rather than the legatees. 29 In this situation the actual financial circumstances of the two sons of the deceased are probably not relevant, however, for the record David did give evidence of his financial circumstances. He has an existing home worth $250,000, a newly built home worth $350,000, another block of land worth $242,000, cash of $120,000 and country land worth $350,000. He has a vehicle and a modest income. Andrew gave no evidence. 30 The other body it is important to consider is of course the Foundation for National Parks and Wildlife. That foundation was established in 1970 for the purpose of creating appreciation and raising funds for the benefit of natural and cultural environment and heritage in Australia. Today that foundation solicits and encourages gifts and bequests to it. Over the years it has acquired large quantities of land for public purposes. It also works in connection with the Dunfee Wilderness Association. 31 In the affidavit filed in support of the Foundation there is reference made to the protection of some areas of land in western New South Wales and other areas in the State. Apparently if the land is acquired it is donated by the Foundation to the State to be made available to the public. 32 In par 7 the deponent talks of his understanding that the deceased had a particular interest in conservation and wildlife. The evidence as it transpired in this case does not support this, the daughters suggesting that this was not the case. 33 It is clear of course that the deceased knew about the Foundation because she expressed a purpose for the bequest. There is no evidence of contact with the Foundation. 34 The defendant did not contest the fact that Janette Morton had been left without adequate provision for her maintenance, education and advancement in life. It submitted that the plaintiff Susan Price had established no such failure on the deceased's part as she was wealthy and could support herself. 35 We have here, leaving aside the legacies and bequests to the two sons of the deceased, an estate in the order of $697,000 after payment of costs. This is a substantial amount which the deceased had available to her to provide for her two daughters and indulge her own wish to benefit a charity which she considered worthy but which had no known connection with her. 36 So far as children are concerned normally they cannot in ordinary circumstances be expected to be given a house. 37 In Shearer v. The Public Trustee and Hawke v. The Public Trustee, Young J, (unreported NSWSC 29 March 1998), his Honour had this to say: "The community's attitude is not to be judged by a feeling as to whether it is morally wrong for a person to leave property otherwise than to her spouse or children. One must really look at the obligations to provide for persons who have so dependants.

Where the applicant is a spouse it is nowadays usually thought that to leave a spouse with a mere right of residence is insufficient provision. However, that is not the case with the children, and as far as I am aware it has never been said by any court that it is an obligation that the community expects that a mother will leave her child in the position where the child has a house of his or her own." 38 However when one is dealing with Janette it is important to bear in mind that she already owns the land. 39 The question of what is an appropriate provision in respect of a large estate is dealt with by Young J in Anasson v. Phillips 4 March 1988 where he said the following: "... with a very large estate ... there is a great temptation on a court to be over generous with out people's money. This is especially so when the court can see that plaintiffs have been very hardly done by at the hands of a domineering testatrix. However, the case should not be approached in this way as the application has to be determined in accordance with the legal principles. These principles include the fact that in Australia there is freedom of a person to leave her property in whatever way she wishes, to love whom she wishes, to hate whom she wishes and it is only when there has been a failure to comply with a moral duty to those who in the community's eyes she should have made proper provision for, that anyone can legally complain about another person's will. Even then, the court has no power to re-write the will, but can only adjust things, in substitution for the testatrix, in such a way to fulfil her moral duties. If the estate is a large one, the court has a slightly different approach. The basic principles are the same, that is, the will can only be affected to the extent that it is necessary to discharge the moral duty by making adequate provision for the plaintiffs, but where there is a large estate, competition between claimant and claimant, and claimant and beneficiary under the will is much reduced or eliminated. Further, there may be a more liberal assessment of the moral duty owed, to be reflected in what is proper provision for the plaintiffs. In particular, the lifestyle that has been enjoyed by the plaintiffs, because they have been associated with a wealthy testatrix is a relevant factor. These principles all, I think, flow from cases such as re Buckland (1966) VR 404, especially at p 412." 40 In this case there is little competition between the beneficiaries. In the case of Janette I think she should have a substantial legacy to meet the financial needs which have been referred to and to give her some buffer to meet the contingencies ahead of her. In the case of Susan Price she is living on capital and will continue to do so unless her income is supplemented. It is true that she has a number of assets and she has been criticised for not selling her land. She says she needs it for her painting and at this stage I note that she is obviously still enjoying painting while she can. She is concerned about the future in case she loses her sight. In the circumstances I am satisfied that to supplement her income is appropriate. The orders are as follows:

1. That in lieu of the provision for her in the will of the deceased JanetteMorton receive a legacy in the sum of $350,000 plus the forgiveness of any debt due by her to the estate. 2. That in lieu of the provision for her in the will of the deceased Susan Price receive a legacy of $100,000. 3. Interest is to run on the legacy at the rate provided for under the Wills Probate and Administration Act 1898 Administration Act within one month from today's date on and from that day. 4. The plaintiffs' costs to the extent that Mrs Price had legal counsel on a party and party basis and the defendant's indemnity are to be paid and retained out of the estate of the deceased. 5. In respect of the claim of Mrs Price extension of time is granted for the making of her claim up to and including the date of her filing of the summons. 6. Exhibits may be returned.

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