NSW Trustee and Guardian v McGrath & Ors

Judgment 1The plaintiff is the administrator of the Estate of the Late Ethel Rose Clarke who died intestate on 21 October 2009. The plaintiff obtained Letters of Administration on 14 May 2010. The estate seems to consist of a little over $205,000 in cash plus real estate which has a value of somewhere between $395,000 and $410,000. 2Apart from the question of whether the deceased left a de facto spouse, the persons entitled to her estate are six grandchildren. The problem that the plaintiff has is that it is not sure whether the late Maurice McGrath was the de facto spouse of the deceased as at the date of Mrs Clarke's death. 3Accordingly, this Summons has been issued to obtain the advice of the Court as to whether the plaintiff would be justified in distributing the estate on a certain basis. 4As at the date of death the applicable legislation was s 32G of the Probate and Administration Act 1898. That section defined "de facto relationship" as having the same meaning as that term has in the Property (Relationships) Act 1984. Section 4 of that latter Act relevantly provided that: a de facto relationship is a relationship between two adult persons: (a) who live together as a couple, and (b) who are not married to one another or related by family. 5Sub-section 2 of section 4 then set out a series of guidelines for Courts when determining whether there was a de facto relationship. 6Mr McGrath died on 13 April this year. His legal representatives have now been added as defendants to these proceedings in his stead. The six grandchildren are also defendants. I heard submissions on this matter on 21 November 2013. Ms Ramena Kako of counsel appeared for the plaintiff. Mr Colin F Hodgson, of counsel, appeared for three of the grandchildren and the representatives of Mr McGrath and the other three grandchildren submitted to any order the Court might make. 7The plaintiff collected as much evidence as it could about the relationship between the deceased and Mr McGrath. Mr McGrath declined to sign the standard affidavit by a de facto spouse, writing to the plaintiff on 23 February 2010 that the draft did not accurately describe the relationship that he shared with the deceased to whom he referred as Ethel. The letter continued: Ethel and I and our respective partners were friends for approximately 20 years. When our respective partners passed away within weeks of each other in mid 1996, Ethel and I formed a close bond and shared that bond right up until her death in October 2009. One could describe our relationship, not as de facto spouse, but as "boyfriend / girlfriend". Ethel and I discussed the matter, but made a conscious decision not to formally live together, however Ethel was a regular guest at my home, staying most weekends so that we could visit North Ryde RSL on Saturday night. I would pick her up by taxi on Saturday and take her home on Sunday afternoon by taxi. We had an intimate relationship. In addition, on a weekly basis, my daughter and I would pick Ethel up on Thursday shopping days and go to a local club for lunch. I was unable to visit her on a more regular basis due to medical problems with my sight. I would also visit her on Wednesdays and we would talk every night on the phone. Ethel and I holidayed for two weeks in June each year at Forster. We either stayed in my sons unit or at Gallipolli units, which are owned by Merrylands RSL and a club which I am still a member of. She always looked forward to our holidays and enjoyed the break away from Sydney. Ethel was accepted by my family and joined us for all birthday, mothers' day and Christmas day celebrations. She always looked forward to these festive occasions. In recent years, Ethels' health deteriorated and she had many stints in hospital, both at Ryde and Concord Hospitals. Each time she was in hospital, my daughter and I were her only visitors. I used to visit her every day and was known at the hospitals as her "next of kin". Doctors and staff would refer decisions on Ethels' care to me and I would take her clothes home to wash and return the next day. I was always the person they rang when Ethel was due to come home, so that I could arrange for her to be picked up. Ethel [w]as transferred to Strathdale Nursing Home in May 2008. Again I was Ethels' only visitor and was well known to the staff at Strathdale, as I visited Ethel at least once a week up until her death. During this time, I bought all her clothes and personal items for her and ensured that she was well cared for. The director and staff at Strathdale referred all Ethels care decisions to me and I had an open communication line with them. In July 2007, due to Ethels worsening dementia, an application was made to the Guardianship board to have a guardian appointed to manage her finance and personal decisions. The appointed guardian would regularly liaise with me on matters relating to Ethels' care and decisions relating to her financial affairs. In particular, advice was sought on the future of Ethels' unit at Ryde and the decision to rent the property. I was also given approval by the guardian to remove Ethels' furniture and personal effects from the unit, which I arranged to be donated to local charities. The Office of Protective Commissioner approved to reimburse me for taxi fares incurred in visiting Ethel and for buying personal items for her. I also expended my own funds in caring for Ethel and making sure she was properly clothed and provided for. During her time at Strathdale, I continued to pick Ethel up each Saturday morning and return her on Sunday afternoons. This practise continued right up until a few weeks before Ethels' death. Shortly before her death, Ethel was admitted to Concord Hospital. She was gravely ill and I was a daily visitor. On her passing, I was the only person notified. With the approval of the Office of Protective Commissioner, I organized Ethels' funeral, I attended a viewing of her body with my family, I ensured that notices were placed in the Sydney newspapers advising Ethels' funeral arrangements and contacted her nearest family members (two sisters in law) and advised them of Ethels' passing and funeral arrangements. I ensured that she had a dignified and solemn funeral and cremation, but was very disappointed that, although I ensured her family had all the details of the funeral, not one family member attended or bothered to send flowers or condolences. I was told by one sister in law that she wasn't interested...... Ethel kept her husbands' ashes in her unit at Ryde. When she went to Strathdale and with Ethels' approval, I retrieved Colins' ashes and kept them at my home. After receiving the approval of the Office of Protective Commissioner, I have now arranged for Ethel and Colins' ashes to be placed next to each other at Northern Suburbs Crematorium, to bring closure to Ethels' life. Ethel was estranged from her family and had no contact with them. When our relationship commenced in 1996, Ethel had a daughter, Joan, who lived on the Central Coast. However, Ethel had no contact with Joan and when she passed away, Ethel was not formally informed, but did receive an anonymous call from someone who just said "Joans' dead" and hung up. Ethel rang me and told me about the call and after phoning around the various funeral parlous on the Central Coast, I was able to find out where and when the funeral was to take place. I arranged for a community car to take Ethel and I to the funeral and during the service, the extended family totally ostracized us. After the service, we left and travelled back to Sydney. For whatever reason, Ethel was an outcast with her own family. Ethel would often tell me that she wanted part of her estate to go to me if she predeceased me, because of the way she was treated by her family and in recognition of our relationship, but like many people, it was a chore we would do later. But later never arrived. She also expressed a desire that part of her estate should go to a charity such as Crowle Home, where she worked for many years. I trust that this letter provides you with an understanding of our relationship. To my best knowledge, I believe that Ethel has no living "blood" relatives. Therefore, I request that consideration be given to assign a portion of Ethels' estate to me. (sic) 8There is no contradiction of any of that material. Indeed there is some corroboration that there was a close relationship between Mr McGrath and the deceased. The grandchildren are not in any position to comment on the relationship as it would seem that they had very little to do with the deceased during her life. 9The plaintiff decided that on the material before it the probabilities were that Mr McGrath was a de facto spouse of the deceased. However there was sufficient uncertainty about it to seek the advice of the Court. 10However when the plaintiff was told that the representatives of Mr McGrath merely wished to submit to any order the Court might make the plaintiff changed its position and instead suggested that the whole of the estate should be distributed amongst the six grandchildren. 11With great respect, this was a rather illogical decision. A person may decide to submit and not place any argument before the Court trusting that the Court will come to the right decision even though it is not aided by that party's own submissions. Submitting to an order for the Court does not mean giving in. The plaintiff and the Court must evaluate the material whether or not the representatives of Mr McGrath choose to argue it. 12Putting aside this factor then the plaintiff would favour the claim of Mr McGrath to a share in the estate. As I understand it, Mr McGrath, if a de facto spouse, would be entitled to the first $200,000 plus a percentage of the balance. 13Human relationships cover a wide spectrum. The cases show that there have been many situations other than the situation where a man and a woman share the one residence and live as if they were man and wife for the whole week where a de facto relationship has been held to be made out. One of the earlier cases was my own decision in Weston v Public Trustee (1986) 4 NSWLR 407 where to quote what I said at 410: A typical week, the plaintiff told me, would mean that the deceased would stay at the weekend with her at Homebush and then, after he retired, he would go back to his flat at Bondi for two to three days through the week but he would always ring her to let her know whether he was coming back to Homebush or staying at Bondi. Before that when he was at work if he was staying the night that he left for work at Homebush and the next night at Bondi, she would give him a container of curry or stew to heat up the following night... 14I held it was a borderline case but that the parties were properly classified as de facto spouses. 15The basal problem is the words "living together" in the definition of de facto relationship. There have been cases, and a good example is Light v Anderson [1992] NSWCA 136; (1992) DFC ¶95-120 where a housekeeper gradually became a de facto wife. 16In most of the cases the couple have actually shared a residence. In some of the cases the residence has not been for the whole week, each week, such as in Jonah v White [2011] FamCA 221; (2011) 258 FLR 236, a decision of Murphy J in the Family Court of Australia. 17As Campbell JA pointed out in Piras v Egan [2008] NSWCA 59 at [146] although there are a list of circumstances in s 4(2) of the Property (Relationships) Act listing matters which the Court should consider "in deciding whether two people are in a de facto relationship ... [they] do not state its essence. The essence is to be found in the definition in s 4(1). If two people do not "live together as a couple" they do not satisfy the definition of being in a de facto relationship, regardless of what might be the situation concerning the various "circumstances" listed in s 4(2)." 18However the concept of living together does not relate to sharing a particular residence but rather what Murphy J said in Jonah v White, whether a couple manifests a relationship of "coupledom" which involves the merger of two lives. 19Generally speaking it seems to me that this concept has been picked up in most of the cases that have had this particular problem of a relatively devoted couple who have not shared the one residence for a lengthy period of time. See for instance the decision of the Queensland Court of Appeal in PY v CY [2005] QCA 247; (2005) 34 Fam LR 245, the decision of White J in this Court in Vaughan v Hoskovich [2010] NSWSC 706 at [51] and the decision of the NSW Court of Appeal in Hayes v Marquis [2008] NSWCA 10; (2008) DFC ¶95-415. 20Hayes' case involved a man who in the first three years of his relationship with a woman stayed at her house on an average of three times per week, later four times and then the parties moved in and lived together fulltime for about three years. The Court of Appeal consisted of Beazley and McColl JJA and Einstein J. McColl JA, with whom Beazley JA substantially agreed, held that the primary Judge was correct in holding that the concept of "living together" did not require the parties to live together fulltime. McColl JA at 76,068 [78]: The definition of "close personal relationship" does not require the two adults to live together fulltime. The language...does not require such co-habitation...A de facto relationship is one which might ordinarily be expected to emphasise common residence. However, while the definition of a de facto relationship requires a relationship between two adult persons who live together as a couple, s 4(2) makes it plain that sharing "common residence" fulltime is not essential to a conclusion that a de facto relationship exists. 21At 76,069 [83] McColl JA affirmed what Barrett J had said in Petersen v Gregory [2007] NSWSC 8 at [11] that the concept of "living together as a couple" involves "a personal commitment that is mutually acknowledged and of an emotional kind transcending the mere fact of the shared residential setting". 22The third Judge, Einstein J, did not agree - see at 76,081 [166] - where his Honour indicated that a joint residence is essential. However one must go by the decision of the majority, especially a majority which is in accord with what the Queensland Court of Appeal held in PY v CY. 23Looking at Mr McGrath's statement it would seem to me that although this is another borderline case the factors favour him being, in law, a de facto spouse of the deceased. 24This is a view that the plaintiff came to before the erroneous decision was made to say that because the representatives of Mr McGrath had only submitted that they virtually were conceding that there was no viable claim by Mr McGrath's estate. 25I now turn for a moment to procedural matters. The plaintiff seeks an order that it be at liberty to distribute the estate in accordance with the decision of the Court. It is quite clear that the order being sought is not a final determination of the issue. The administrator of the estate is not protected unless it gets the imprimatur of the Court to distribute, in which event the various claimants can fight it out amongst themselves if they really wish to, at their own risk as to costs, but the trustee is protected. 26In England such an order is often referred to as a "Benjamin Order" named after the decision of Joyce J in Re Benjamin [1902] 1 Ch 723. A Benjamin Order for most cases in New South Wales has been superseded by the procedure under s 63 of the Trustee Act 1925 which allows the trustee to approach the Court to get judicial advice and, by sub-section 8 of s 63, permits a binding decision to be given on notification to persons affected if those persons take no action to reverse it. The procedure to get a Benjamin Order does not involve any equivalent of s 63(8) of the Trustee Act. 27Because of the existence of s 63, the Benjamin procedure is not much used by trustees. However juristically it covers much the same field as the statutory application under the Corporations Act 2001 (Cth) whereby a liquidator can get judicial advice. The Judge is in a position qua a liquidator or qua a trustee that as both are officers of the Court they are subject to the direction of the Court. As in the case of a liquidator, the Court may give sound practical advice, such as that the liquidator or trustee would be justified in settling a claim on some compromised basis so a Benjamin Order can cover the same field. 28It would have been possible for the administrator to have come to the Court and said that this was a borderline case and that there had been negotiations between the persons affected and that it was sought by all that, say, 60% of Mr McGrath's claim should be allowed and then have asked the Court to sanction that arrangement. However the Court does not itself propose a compromise, at least it does not in the normal case, but there have been the odd exceptional case where this has happened. The Court usually confines itself to sanctioning what the trustee has put forward on counsel's advice. 29In the present case the time has passed where there can be any compromise. The matter has been submitted to me virtually on the basis that I should make a decision as to what is the proper distribution of the estate according to law. In my view, because the evidence just gets over the barrier to show that there was a de facto relationship, the estate should be distributed on the basis that Mr McGrath was the de facto spouse of the deceased at the time of her death. Accordingly I advise the plaintiff that it would be justified in distributing the estate on that basis. The costs of all parties to these proceedings are to come out of the estate.