MULCAHY v. WELDON [2001] NSWSC 474

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

4732/99 PATRICIA ELIZABETH MULCAHY v. PAUL JOHN WELDON ESTATE OF THE LATE JOHN ROBERT MULCAHY

JUDGMENT 1 HIS HONOUR: John Robert Mulcahy (in the will called Robert John Mulcahy) late of Maroubra, retired waterside worker, died at a date which cannot be exactly established between 19 April 1998 and 20 May 1998 aged 67 years and on 16 October 1998 this Court granted to the defendant Paul John Weldon probate of his last will dated 31 July 1992. By the provisions of the will which took effect Mr Mulcahy appointed Mr Weldon executor and he gave the whole of his property to Mr Weldon and his sister Susan Weldon in equal shares. 2 The plaintiff is the former wife of Mr Mulcahy. She was born on 26 August 1932 and married Mr William James Moffit in 1953; Mr Moffit died in 1965 and the plaintiff has three adult children of that marriage. She married Mr Mulcahy on 9 January 1971. Their marriage was dissolved by decree of the Family Court of Australia about 1989; the exact date has not been established. No provision was made by the will for the plaintiff. By her Amended Summons of 21 June 2000 she claims provision pursuant to s.7 of the Family Provision Act 1982 (NSW) for her maintenance and advancement in life out of his notional estate. As the former wife of Mr Mulcahy she is an eligible person having regard to para.(c) of the definition in s.6. Her application must be considered in accordance with subs.9(1) and the Court is required first to determine whether in the Court's opinion, having regard to all the circumstances of the case (whether past or present), there are factors which warrant the making of the application. 3 The plaintiff attributes her separation from Mr Mulcahy, which took place about 1988, to his alcoholism and his extreme violence towards her. In the Family Court of Australia application was made by one or both parties for a property settlement and was disposed of by orders made on 21 March 1990; the Court made orders by consent in terms of paras.(1), (2) and (3) of Terms of Settlement dated 19 March 1990 and noted para.(4) and (5) of the Terms of Settlement. The operative clauses of the Terms of Settlement were as follows: 1. By way of property settlement that the Husband:- Pay to the Wife the sum of $150,000 2. In the event that the Husband pays the sum referred to in Order 1, the Wife shall forthwith upon receipt of the said payment, hand to the Husband or his nominee a Memoranda of Transfer in registrable form of all her rights, title and interest in the said Maroubra property together with a Withdrawal of Caveat No. W886403 also in registrable form. 3. The Wife herey [sic] relinquishes any claim she might have against her Husband with respect to any sums which the Husband may receive upon the termination of his employment as a Waterside Worker, including any claim for long service leave, holiday pay, sick leave accrual, superannuation, retirement or redundancy benefit. 4. Except as otherwise referred to herein, each party covenants that the other is the sole legal and beneficial owner of all items of matrimonial furniture, savings and any other property now in possession of that other party. 5. Each party covenants to execute a Deed of Release of any claim against the other under the Family Provision Act, if requested to do so by the other party. 4 Answers given by the plaintiff in cross-examination seemed to show that she did not remember or would not acknowledge that she had been a party to the Terms of Settlement, or that she had agreed to all the clauses in the Terms of Settlement, or that she understood them; it was very difficult to understand what position she was taking. However that may be, it is in my view established by the order of the Family Court of Australia that she is bound by the Terms of Settlement on the basis that she agreed to them. 5 So far as appears paras.1, 2 and 3 of the Terms of Settlement and the agreement relating to furniture, savings and other property in para.4 dealt with all significant property of the parties which was or ought to have been brought under consideration in dealing with the property settlement. The mutual covenant to execute a Deed of Release of claims under the Family Provision Act, which the Family Court of Australia noted but did not adopt as part of its order, was never taken any further during Mr Mulcahy's lifetime. The plaintiff did not and so far as appears Mr Mulcahy did not make a request for the execution of a Deed of Release. 6 In my opinion para.5 of the Terms of Settlement itself operates as an agreement to release any such claim and the references to executing a deed and to a request to execute a deed relate to matters of form for giving effect to the agreement to release and do not affect the substance of the obligation. The agreement in para.5 carried with it an implied obligation of each party to do all things reasonably necessary to give effect to the agreement to release claims. Whether or not any Deed of Release was ever executed, or whether or not any request was ever made for the execution of a Deed of Release, there was an agreement to release from the time the agreement was made. In my opinion the force of the agreement is not diminished or affected by the fact that neither party requested execution of a Deed of Release during Mr Mulcahy's lifetime. However the effect of subss.31(2) and (3) of the Family Provision Act is that the agreement to release has no effect, as this Court has not ever given its approval under s.31 of the Release. In my opinion each party was and Mrs Mulcahy is under an implied contractual obligation to take reasonable steps to obtain the Court's approval. 7 It was submitted on behalf of the plaintiff that the defendant is not in a position to request execution of a Deed of Release or to take any steps directed to enforcing the agreement for release. In my opinion the death of Mr Mulcahy has no effect to diminish the force of para.5, Mr Mulcahy's executor is in as good a position to enforce para.5 as he himself was, and there was no reason to suppose that the binding effect of para.5 was intended to be limited to his lifetime, or to request execution of a Deed of Release made in his lifetime. Indeed there was an element of absurdity about the submission that the agreement in para.5 could not be relied on after Mr Mulcahy's death; at no other time could it be given effect. 8 The question whether the benefit of a contractual promise, or the opportunity to exercise a contractual right or to take any step to which a contract attaches consequences is personal to the very person who entered into the contract, or may be availed of by successors in the same interest as that person, is in my understanding essentially a question of construction of the contract and of its meaning and effect. The nature of the contract may sometimes make it obvious that only the person who entered into it could act under it, and a contract for personal service is an example. The nature of the arrangement in the Terms of Settlement appears to show that successors such as executors or administrators of the parties to it would probably be interested in enforcing the underlying arrangement to release the right to claim under the Family Provision Act. It is very unlikely that either of the parties would ever have occasion to rely on the Deed of Release themselves, and their executors or administrators are the only persons who are likely to undertake its enforcement. It is unlikely that the benefit of the arrangement would ever be assigned. There is no indication contrary to the view that the parties intended that executors or administrators could give effect to it. I am unable to see any contractual purpose which the parties might have had in mind by providing that their agreement about releases was to be effectual only if completely carried through while both were alive, but could not be taken advantage of by their executors or administrators. In my view it should be understood, as is usually understood of contractual obligations, that the parties intended that executors or administrators could use the contractual machinery. Wilson v. Harper [1908] 2 Ch 370 furnishes an illustration, in a most general way, of the approach which in my view should be taken. 9 I do not think that the position is affected by s.70 of the Conveyancing Act 1919 (NSW) as I do not regard para.5 of the Terms of Settlement as a covenant relating to any land of a covenantee; it relates to the assets of the covenantee generally, whether or not any land is included. 10 Consideration of the prospects of specific enforcement of para.5 of the Terms of Settlement is sterile, as the question whether the Court should, after specific enforcement, make an order under s.31 would lead to consideration of much the same matters as are raised by the plaintiff's claim for further provision. If when all circumstances are considered, including the contractual arrangement for a release, the right outcome is that the plaintiff should have further provision, approval under s.31 would not be forthcoming. The fact that the arrangement was made, even though no approval under s.31 had been obtained, has a bearing on whether provision ought to be ordered. 11 It was contended that reliance on para.5 is barred by delay in enforcement of it. On the evidence there is no basis for finding that the plaintiff has incurred any detriment or alteration of position as a result of such delay. 12 The property of Mr Mulcahy at the time of his death was as follows:

1. Real estate Lot 4 SP 53 - the Maroubra home unit, estimated value: $195,000.00 2. Furniture, watches and jewellery 500.00 3. Money in house or hand 105.00 4. Moneys in bank or financial institution Commonwealth Bank Maroubra Junction Branch 2,093.27 St George Bank Ltd (Advanced Bank) $25,319.03 Life Policies GIO Term Annuities - 3 policies totalling: $135,009.83 TOTAL: $358,027.13

There is no reference in the evidence to estate debts. The real estate and the proceeds of the other assets passed to the beneficiaries but are readily accessible for enforcement of any order for provision for the plaintiff, because they only dealt with a very small part before they learnt of these proceedings, and have not disposed of any since. 13 The beneficiaries were distantly related to Mr Mulcahy. It is said that their mother is his cousin, or his second cousin. They had never met him during his lifetime. They are students in their early 20s. The defendant has an Honours degree in Science and is contemplating doctoral studies beginning in 2002; in the meantime he has employment which is not very remunerative. Miss Susan Weldon is studying Commerce-Law, has attained her Commerce degree and is proceeding towards completing her Law degree. Miss Weldon has part-time employment and earns relatively little. They do not have any significant property apart from property passing to them under the will, but they have good prospects in life, in so far as the future can be seen, and their positions would not be greatly injured by a modest provision for the plaintiff of the kind described by her counsel, namely a sum of money to provide for adverse contingencies. The sum was not quantified by counsel but I would think that the maximum provision which it might be considered could not exceed $50,000. The beneficiaries were not natural objects of Mr Mulcahy's bounty as they were only distantly related and not in fact known to him; it can be supposed that he did not know of any closer relative whom he regarded it as appropriate to benefit. 14 Mr Mulcahy's decision to make his will in the form it took was well-considered by him and deliberate. The will was typed for him in the office of the Waterside Workers Federation in Sussex Street Sydney when he saw the then State President Mr Anderson on an occasion when he came to the office to check on industry entitlements and to make a new will. It will be recalled that there is reference to industry entitlements in the Terms of Settlement. Mr Anderson had the will typed, and then read the will back to Mr Mulcahy and asked him "Barney are you sure that's what you want in your will?". He replied to this effect: "I have given a lot of thought to it and that's what I want." Involved in this is that his decision not to give any benefits to the plaintiff must be taken to have been considered and deliberate. The defendant and Miss Susan Weldon have a proprietary right to benefits under the will, which may not be interfered with except in the due exercise of powers under the Family Provision Act and on the grounds indicated by the terms of that Act. 15 Orders 1 and 2 were carried out when, on (by its date) 17 June 1992 the plaintiff by Memorandum of Transfer E595702 registered on 9 July 1992 transferred to Mr Mulcahy her interest in the Maroubra property, of which he had previously been a co-owner, and she acknowledged receipt of the consideration of $150,000 paid in discharge of the obligation in order 1; the Memorandum of Transfer stated that it was made pursuant to orders made in the Family Court. At the same time Mrs Mulcahy signed a withdrawal of a Caveat she had earlier lodged. Registration of the transfer followed, and Mr Mulcahy became the registered proprietor. On 9 December 1998, before these proceedings were commenced, registered proprietorship was transferred to the beneficiaries under the will. 16 The sum of $150,000 to which the plaintiff was entitled under the property settlement was paid to her solicitor. Mrs Mulcahy has claimed in evidence that the solicitor misappropriated some of this money, and that an indemnity which she later received from the Law Society did not make up the amount of the defalcation. She explained the figures involved, but not in a way which I found satisfactory. It is on the whole improbable that an indemnity against misappropriation by a solicitor of clients' funds would be less than complete. She produced no documents or accounts in support of or relating in any way to the supposed defalcation, or to those of the appropriations of her money which she acknowledges the solicitor made correctly. Her evidence indicated that, at least for some things, the solicitor expended money on her account by making payments directly to suppliers. Her evidence was not presented in a clear way so as to carry the probabilities. I do not find that she suffered any significant loss in respect of the moneys paid to her solicitor. In any event, if she did suffer any such loss, it did not arise from any conduct in which Mr Mulcahy was in any way involved or concerned or to overcome which he could be thought to be in any way responsible. 17 In Churton v. Christian (1988) 13 NSWLR 241, in a case which involved an application by a former spouse of the deceased and by a step-child who had lived with the deceased, Priestley JA approved a passage in the judgment of McLelland J in Re Fulop Deceased (1987) 8 NSWLR 679 at 681 in which McLelland J expressed views about the factors referred to in subs.9(1). Priestley JA at 252 said: The second of the two questions arising under s 9(1) in regard to Mrs Christian and Mrs Bailey can now be approached. What are warranting factors within the meaning of the subsection? I agree substantially with the analysis made by McLelland J of this question in Re Fulop Deceased (1987) 8 NSWLR 679 at 681:

"… the subsection appears to be premised upon a distinction between 'factors which warrant the making of the application' on the one hand, and circumstances which would justify the making of an order granting the application, on the other: otherwise the subsection would be pointless. This means that in a particular case the Court might determine that there are 'factors which warrant the making of the application' within the meaning of the subsection, and yet go on to decide that the application should fail. Since the subsection applies only to certain classes of applicants, it suggests that those classes of applicants need to demonstrate some basis for their claims additional to that required of other classes. The difference between the two sets of classes of applicants, in broad terms, seems to be that the classes not affected by s 9(1) (lawful and de facto spouses and children) are as such generally regarded as natural objects of testamentary recognition by a deceased (cf the Wills Probate and Administration Act 1898, s 61B), whereas the classes affected by s 9(1) (former spouses, and some time dependent grandchildren or household members) are as such not generally so regarded. This suggests that 'factors' referred to in the subsection are factors which when added to facts which render the applicant an 'eligible person' give him or her the status of a person who would be generally regarded as a natural object of testamentary recognition by a deceased."

To this I would add that although the classes affected by s 9(1) are not necessarily generally regarded as natural objects of testamentary recognition, in some cases members of those classes may, when the circumstances of their relationship with the deceased are set out, immediately be seen to be persons who would be regarded by most observers as, in their particular circumstances, natural objects of testamentary recognition. 18 Hope JA agreed with these reasons: see 242. In my understanding Mahoney JA also did: see 243. Mahoney JA gave further illustrations of factors for consideration at 244 and referred back to consideration in earlier High Court judgments, particularly Stephen J in White v. Baron (1980) 144 CLR 431 at 438-439, where Stephen J noted a divorced wife with a continuing entitlement to maintenance as a possible claimant. 19 Churton v. Christian was considered and extensive consideration was given to the operation of subs.9(1) in Dijkhuijs (formerly Coney) v. Barclay (1988) 13 NSWLR 639. Observations in the judgments show that the circumstances in which a former spouse's claim may succeed are not confined to preconceived categories, and are not closely defined. See Kirby P. at 652 and Mahoney JA at 659 particularly at G. Public policy in finality of decisions under the Family Law Act 1975 (Cth) expressed in s.81 was a proper subject for attention, but there are other public policy considerations and the "clean break" is not a paramount policy consideration: see Kirby P at 652-3. These authorities speak in terms of the moral duty of the testator, which is no longer used as a mnemonic for the test for provision in s.7: see Permanent Trustee Co. Ltd v. Fraser (1995) 36 NSWLR 24. However their force is not thereby impaired. 20 Since 1988 there have not been any changes in the Family Law Act or in the approach taken by the Family Court of Australia to the finality of property settlements which could be thought to have changed the basis on which the Court of Appeal acted. 21 In Burke v. Public Trustee [1997] SASC 6423 Debelle J ordered provision for a former wife where there had been a continuing relationship after there had been dissolution of the marriage and a property settlement. His Honour said: 6 Factors relevant to a claim by a divorced wife include the culpability of the deceased in relation to the grounds of divorce, the length of time from the separation of the spouse to the death of the former husband, and the course which the lives of the two spouses have followed since separation: Re Adams [1967] VR 881, 888; Re Estate of Brooks [(1979) 22 SASR 398] 400. The first of these factors still has some relevance in relation to the plaintiff's claim upon the bounty of the deceased, notwithstanding that it is obsolete in matrimonial law. However, the court should guard against indulging in the process of "evening up the score": Worladge v Doddridge (1957) 97 CLR 1 ; Re Estate of Brooks (supra) at 400. 7 A settlement upon the dissolution of the marriage is not a bar to the plaintiff's claim: Re Estate of Brooks (supra) at 403 ; Re Mayo deceased [1968] 2 NSWR 709 at 712 ; Dijkhuijs v Barclay (1988) 13 NSWLR 639 , but the terms of the settlement are nevertheless relevant in determining the plaintiff's need and the extent to which it may have been satisfied in the deceased's lifetime. As Kirby P explained in Dijkihuijs v Barclay at 652, the public policy in finality of financial dealings by property settlement ordered by the Family Court must be read in conjunction with the competing public policy that, in certain circumstances, former spouses may seek orders for provision under the Act. Whether provision will be made and the nature of the provision will depend on the facts and circumstances of each case. So the divorce and any settlement of property lead the court to exercise "a carefully guarded discretion": Re Preece [1947] SASR 134 ; Re Estate of Brooks (supra) at 404 . 22 In the present case there was a clean break in every sense; the order purported to be complete and there actually was no continuing relationship or financial dependency, nothing in the nature of a continuing maintenance obligation or claim, and no circumstances of a continuing relationship which might be thought to bring provision for the plaintiff under consideration because of conduct or events after the property settlement. The plaintiff's claim calls on the Court to revisit the relationship and the disposition of property and obligations as of the time of the property settlement, and not to consider later conduct of either party which might be thought to contribute to the perception that the plaintiff has the status of a person who would be generally regarded as a natural object of testamentary recognition. According to general community standards a former spouse who has been accorded all rights under a property settlement and does not have any continuing entitlement to maintenance, adjudicated or not, is not generally regarded as a natural object of testamentary recognition. Although such testamentary recognition does occur, it is, in my understanding, regarded as altogether exceptional and remarkable when it occurs. 23 The assets which form part of Mr Mulcahy's estate represent in a general way the kind of assets which it might be expected that he would have if he had the property with which the Terms of Settlement dealt. That is to say, at his death he owned the home unit and financial investments and funds the worth of which it can readily be accepted would be traceable to savings which he may have had in 1990 from work as a waterside worker and moneys which he might later have received on termination of his employment including long service leave, holiday pay, sick leave accrual, superannuation, retirement benefit or redundancy benefit. What he had left at his death in terms of financial resources is quite consistent with such entitlements and there is no reason to suppose that he had any significant unrevealed financial resource at the time of the agreement, or that he later acquired some by chance. 24 In my view I should conclude that whatever claim relating to property or for a property settlement which the plaintiff had in accordance with the Family Law Act or any other law against Mr Mulcahy at the time of the Terms of Settlement was met by the Terms of Settlement. There is no reason for thinking otherwise. The plaintiff has put forward in her evidence conduct and circumstances during her marriage which would have supported a claim for a property settlement and may explain why she received one, but she has not put forward any circumstances which might be supposed to show that the settlement she received then was not just and adequate, or that for any reason it was possible that the Family Court might have reopened its consideration and ordered any other property settlement. In substance their matrimonial life ended when they separated about 1988, and there was no reality in the relationship thereafter. In particular, apart from the property settlement, neither made any contribution thereafter to the welfare or assets of the other. Since the separation and divorce the plaintiff did not meet or see Mr Mulcahy or take any part in his life at all, apart from carrying out the Terms of Settlement. Indeed she avoided him, hid from him according to her evidence, because he was violent. 25 At some time, not established but possibly about 1992, the plaintiff purchased a unit at the Astra Retirement Village, Campbell Parade, Bondi Beach for $80,000. The plaintiff found the premises unsuitable and left about 1993, received about $52,000 for her interest in the unit and thus lost about $28,000 as a result of the transaction. The plaintiff found suitable alternative accommodation at the Edina Retirement Apartments at Waverley, moved there about 1993 and paid $60,000 as licence fee for occupation of a small unit there. The plaintiff still lives in the Edina Retirement Centre, and occupies a small self-care granny flat. The plaintiff receives an age pension, and the last exact figure which she spoke of in her evidence was $371.25 per fortnight in February 2000, although this may have increased to some extent. Her age pension is sufficient to pay her maintenance payments to occupy her unit, and to pay her other outgoings on an extremely modest basis, but there is no surplus whatsoever. The plaintiff made an estimate (Exhibit C) of her outgoings; these are very modest and fully use up her pension which she treated as now being $800 per month. The plaintiff has two Commonwealth Bank Savings accounts. In one her pension is deposited and she makes withdrawals from time to time and the balance at the time of trial was $18.16. In the other she holds her reserve funds; at the time of trial these amounted to $2,622.30. There does not seem in reality to be any prospect of her augmenting this reserve fund. 26 The plaintiff produced in evidence a report of a General Practitioner Dr Paul Stone dated 7 September 2000 which said to the effect that on examination she was found to be a normal, healthy normotensive 68 year old female; that she suffered from hypertension, hyperlipidaemia, gastroesophageal reflux and Hormone Replacement Therapy. The plaintiff takes five daily medications. The doctor's prognosis was that she had normal longevity and health, and he commented that past stress may have a causal connection with her hypertension. In her own evidence she gave a worse picture of her health, but this is not supported by expert evidence. The plaintiff said that she suffered from diverticutis and had had an operation in January 2001 in which part of her colon had been removed, and she had had a cyst on her back surgically removed and suffers from cysts. 27 In relation to her health and circumstances, the plaintiff's physical condition and prognosis should not, on the medical evidence, be regarded as poor. The plaintiff is in a position to continue to live, on a very modest basis, in aged person accommodation, with the support of her age pension but with nothing else of substance. That is to say, she is very much in the position which could be foreseen when the property settlement was made, when allowance is made for the influences of the passing of time and increasing age. The presentation of her evidence was characterised by a strong tendency on her part to intrude unresponsive material which might be thought of as assisting her position, although only in the most general way, and by lack of precision. The plaintiff did not make any clear explanation of the social support which may be available to her from her three adult children of whom she said only "My three children are not in a financial position to assist me with the provision of any of those services" referring to assistance in housekeeping, meal preparation and other social support of which she is not yet in need. 28 Mrs Mulcahy's claim does not place her in any category which marks her out in any clear way as a person in respect of whom there are factors which warrant the making of the application. When asked to deal with this her counsel referred me only to general factors which might support a widow's claim, relating to home-making, support and participation in the acquisition of property by her husband during the relationship, his bad behaviour, her narrow resources and lack of any reserve fund for adverse contingencies. I do not see the fact that, if she passes the barrier in subs.9(1), there would then be something to consider as showing that the barrier should be passed. It is clearly established that factors which may warrant the making of an application by a former wife include any factors which prevented the making of an order for property settlement under the Family Law Act, such as premature death of the husband. Those are not the circumstances here as the property claims were fully dealt with and satisfied. Another category sometimes encountered is where the former wife continues to make contributions to the welfare of her former husband after dissolution of the marriage. There is no comparable element in this case as the relationship had ended completely before the property settlement and there was no later conduct or relationship of any kind. I have addressed the circumstances actually put forward in submissions for consideration and I do not regard them as constituting factors which warrant the making of the application. I have reviewed the facts generally and I do not see any others. 29 I would think that the making of an application is warranted where there are significant matters for consideration in relation to the question posed by s.7, whether provision ought in the opinion of the Court to be made out of the estate or notional estate having regard to the present circumstances. There had been a property settlement which on its face dealt with all property, there was no further attempt to re-open the property settlement during Mr Mulcahy's lifetime and no grounds appear on which there could have been such an attempt; Mr Mulcahy was a party to cl.5 of the Terms of Settlement which although not effective as it had not been adopted by the Court, gave what for most purposes would give some assurance that the plaintiff was not to look to him for further provision. The later course of the lives of both of them and the resources available to them fell well within the range of foreseeable events for them both. In the circumstances I see no real prospects of it being established that Mr Mulcahy in his lifetime ought to have made provision for the plaintiff or, to return to the terms of s.7, that the Court should form the opinion having regard to the circumstances at the present time that provision ought to be made for her maintenance or advancement in life. The whole subject of claims by her against him and his property was dealt with fully, past and closed, so that there was no reason for it to engage his attention or bounty thereafter, and in my view there is no reason why the Court should take any action either. 30 The result prescribed by subs.9(1) is that I should refuse to proceed further with the determination of the application and to refuse to make the order claimed. I have not yet considered costs. 31 Order: (1) The proceedings are dismissed. (2) Costs reserved. ********

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