NUDD v MANNIX

Family Provision Act 1982 (NSW) LEGISLATION CITED: Uniform Civil Procedure Rules 2005 (NSW) Suitor's Fund Act 1951(NSW)

CASES CITED: Milillo v Konnecke [2009] NSWCA 109

PARTIES: Rita Nudd - Appellant Stephen Mannix - Respondent

COUNSEL: S Burchett - Appellant L Ellison SC and P McEniery - Respondent

SOLICITORS: Shanahan Tudhope Lawyers Sydney - Appellant Marsdens Law Group (Campbelltown) - Respondent

LOWER COURT JURISDICTION: Supreme Court

LOWER COURT JUDICIAL OFFICER: McLaughlin AsJ

LOWER COURT MEDIUM NEUTRAL CITATION: [2008] NSWSC 1228

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40047/09

MCCOLL JA MACFARLAN JA HANDLEY AJA

FAMILY PROVISION - claim by de facto widow - need for secure independent accommodation - Crisp order for flexible life estate - question to be litigated at trial - unconditional provision made for widow. HEADNOTE

The deceased left an estate of $415,182 to his sons and grandchildren and made no provision for his de facto widow after a relationship of at least 19 years. She brought an application under the Family Provision Act and the Trial Judge found that she had been left without adequate provision for her proper maintenance. She was in poor health and at the date of the trial had a life expectancy of only four years. She lived satisfactorily with a married son and his family but wanted to live in her own accommodation. The Judge declined to make an order which would allow her to purchase a retirement unit and awarded her a legacy of $60,000. He also made an order capping her costs. On appeal Held: (1) errors by the Judge entitled the Court to intervene and re-exercise the discretion; (2) the question of making a Crisp order providing a flexible life estate to the widow in appropriate accommodation had not been litigated at the trial and the question could not be entertained on appeal: Milillo v Konnecke [2009] NSWCA 109 followed; (3) the appellant's legacy would be increased to $120,000 with the burden to be borne by the legacies under the will in favour of the grandchildren; (4) the Judge had power to make an order capping the plaintiff's costs of the trial, and his exercise of the discretion could not be disturbed.

(1) Appeal allowed with costs. (2) Orders of Associate Justice McLaughlin of 21 November and 9 December 2008 set aside. (3) In lieu thereof substitute an order that the appellant receive a legacy of $120,000 from the estate of the deceased. (4) Subject to any payment under the orders that have been set aside interest on the appellant's legacy at legacy rates is to run from 28 days after the date of these orders. (5) The burden of the additional legacy of $60,000 for the appellant is to be borne by the six legacies of $10,000 in favour of the grandchildren of the deceased. (6) Order that the costs of the plaintiff of the trial on a party and party basis, not exceeding $60,000, be paid out of the estate of the deceased. (7) Order that the defendant's costs of the trial and the appeal on an indemnity basis be paid out of the estate of the deceased, except to the extent that such costs are recovered under the Suitor's Fund Act. (8) The Court notes and accepts the undertaking given by the solicitors for the appellant on 4 August 2009 recorded in the reasons of this Court. (9) The respondent is to have a certificate under the Suitor's Fund Act. IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40047/09

MCCOLL JA MACFARLAN JA HANDLEY AJA

15 October 2009 NUDD v MANNIX Judgment 1 McCOLL JA: I agree with Handley AJA. 2 MACFARLAN JA: I agree with Handley AJA. 3 HANDLEY AJA: This is an appeal by the de facto widow of the deceased from part of the decision of McLaughlin As/J in a Family Provision Act case. The deceased was a widower who was survived by the three children of his marriage, six grandchildren, and the appellant. The deceased's wife died in 1978, and his association with the appellant began in 1983. Their friendship developed and the appellant moved into the deceased's home and lived with him in a de facto relationship until a short time before his death. There was a dispute as to whether the de facto relationship began in 1983 or 1987 which the Judge did not resolve, which this Court need not resolve either. 4 The deceased died on 6 May 2006 aged 79 leaving a will dated 8 February that year. His distributable estate was $415,182. He gave legacies of $10,000 to each of his six grandchildren and his son Wayne, and left the residue to his other two sons equally. He made no provision for his de facto widow. 5 The deceased's health began to deteriorate some years before his death. By late 2003 he had become partially blind, and was suffering from Parkinson's Disease. The appellant became his full-time carer and she had to assist him in the shower, at the toilet, and with his meals. In February 2006 the deceased fell and broke his ribs. He had had several strokes prior to this and was suffering from congestive cardiac failure. The appellant, who was in poor health herself, could no longer look after him, and arrangements were made for another live-in carer who proved to be unsatisfactory. 6 The appellant then decided that she had no option but to move to Queensland to live with her son Ivan and his family. She moved on 13 March 2006. After the appellant left she and the deceased remained in contact by telephone until he was admitted to hospital on 17 April after suffering a stroke. The deceased wanted the appellant to return to live with him in Campbelltown, and she wanted him to come to Queensland but neither was prepared to move. The judge found that the de facto relationship continued until the death of the deceased despite their physical separation. This finding was challenged in a notice of contention but cannot be disturbed. 7 The judge found that the appellant had failed to provide the Court with full information about her financial and material circumstances. She disclosed in her affidavit of 18 September 2007 a United Kingdom pension of $421 a month, and a Centrelink pension of $487 a fortnight and two bank accounts with credits totalling $25,000. This evidence was not updated in her second affidavit of 2 July 2008 sworn the day before the trial. During the trial she disclosed in cross-examination that her Centrelink pension was currently $532.88 a fortnight (Blue 247), and her UK pension was $517 a month (Black 25). 8 She was also cross-examined about an account statement from Centrelink dated 12 May 2008 (Blue 247) which referred to a "National Passbook A/C" with a credit balance of $13,914 and a Flexi-rate account with St George Bank with a credit balance of $30,338. The statement also referred to "caravans and like vehicles" said to be worth $2000. This information must have been given to Centrelink by the appellant at some stage. The covering letter from Centrelink of the same date (Blue 246) stated: "You need to let Centrelink know if any of these details change." 9 The appellant denied having anything remotely resembling "caravans and like vehicles" other than a wheeled shopping trolley and she also denied having $43,000 in bank accounts. Her NAB bank statements produced to the Court (Blue 243-5) did not relate to a "National Passbook A/C" but a "Retirement" A/C into which her Centrelink pension was paid. She said her UK pension was $520 a month and "they take $3 out" (Black 25). The bank statement she produced do not disclose such payments but disclosed payments of $349.59 and $344.29 in May and June and a lump sum payment of $3,929.98 in April identified as "Dwp Pens W1 ACH setup for 329380" (Blue 244-5) which was not explained in her oral evidence. The appellant said that she no longer had the money in her bank accounts shown in the Centrelink statement (Black 31). 10 The appellant said in her affidavit of 18 September 2007 that she had "savings" of $23,000 (Blue 16), but said in cross-examination that she had recently given $21,500 to her son Ivan for a garage, solar heating, and blinds at his new house. She had previously given $40,000 to her son Kevin to purchase gym equipment (Black 30). It transpired that she had received $60,000 from a personal injury claim (Black 32). She said that she had given Kevin this money four or six years before the trial (Black 31). 11 The judge found that the appellant was an eligible person within the definition in s6(1)(a)(ii) of the Act, and, having been left with nothing in the will, she had been left without adequate provision for her proper maintenance. In a parallel application by Wayne Mannix, an adult son, the judge ordered that he receive an additional legacy of $30,000, for a total of $40,000. The appellant did not join Wayne as a respondent to her appeal and this order cannot be disturbed. 12 The judge made an order in favour of the appellant for $60,000 "which will enable her to enhance her modest lifestyle, assist in meeting her outgoings and provide a fund for unexpected contingencies." He rejected her claim for an amount which would enable her to purchase a residence of her own. He did so for two reasons - her answer in cross-examination that she was satisfied with her present domestic arrangements living with her son Ivan at Redcliffe in Queensland, and because "the size of the distributable estate is such that it is not possible for a provision to be made to that effect, whilst accommodating the entitlements of the three sons of the deceased." (Red 29). 13 In her first affidavit the appellant said she needed a home and furniture, and believed (Blue 16, para 55) "that a suitable 2 bedroom apartment located near medical facilities, shops, transport and near family in Redcliffe will cost approximately $245,000-$405,000". She annexed photocopies of sale advertisements for apartments and townhouses, and provided a list of furniture and appliances costing $15,541. In her second affidavit she said that although her son Ivan "has offered to care for me, I want my own independence" and she referred to a retirement unit "in a suitable area" costing $130,000 shown in a brochure annexed to her affidavit. This stated (Blue 82) that units in the development were available "from $120,000", so the balance presumably represented acquisition costs and perhaps some furniture and appliances. She had taken a queen size bed and some other furniture with her when she went to Queensland (Blue 78, 79). 14 The question and answer relied on by the judge were (Black 43): "Q. Is the Redcliffe house just a, it's a nice place, you are happy living there with your family? A. Yes, I am, yes." 15 Although this was the double question the judge was entitled to find that the appellant agreed that she was happy living in her son's house. There was no further cross-examination on this issue. The appellant had said in her evidence in chief (Black 19) that her bedroom in her son's house was on the first floor. She did not like climbing up and down the stairs and if there was a good movie on at night she would sleep in her chair (Black 20). The bathroom was downstairs (Black 20). This evidence was not directly challenged in cross-examination and her statement that she was happy living with her son and his family cannot fairly be understood as inconsistent with her affidavit evidence that she wanted a place of her own and her oral evidence about her difficulties with the stairs. 16 There was evidence from two medical practitioners that the appellant suffered from a multiplicity of ills (Blue 2, 61-9). Her diabetes, hyper-lipidemia, and hypertension were being controlled by medication (Blue 62-3), but she had gastrointestinal bleeding requiring blood transfusions, some renal dysfunction (64), and she had some symptoms which could indicate that she had multiple myeloma (63). 17 Nevertheless her health had improved since she had come to live in Queensland and was no longer burdened with looking after the deceased (Blue 78). She was also managing to do all the housekeeping for her son Ivan, his family, and her son Mario including the shopping, cooking, washing and ironing and making the beds (Blue 65). Her life expectancy at the date of trial was estimated by one doctor at three years (Blue 259) and by another at four (Blue 69). 18 In my judgment the exercise by the trial judge of his discretion to fix the quantum of the order in favour of the appellant miscarried for three reasons. He said it was not possible for provision to be made for her accommodation "whilst accommodating the entitlements of the three sons of the deceased" (Red 29). This was an error because it left out of account the six legacies of $10,000 to grandchildren who were not eligible dependants of the deceased. It also treated the entitlements of the sons to cash legacies as of greater weight than the appellant's entitlement, as the de facto widow of the deceased, after a relationship of at least 19 years, to provision for her accommodation. The other error was in treating the appellant's answer in cross-examination that she was "happy" living in Ivan's house with his family and her son Mario as a bar to her need for independent living, and her difficulties with the stairs in Ivan's house. In my judgment these errors entitle the Court to intervene and re-exercise the discretion. 19 The stage will come sooner or later when the appellant can no longer manage the stairs in Ivan's home, and other arrangements will have to be made for her accommodation. Although she may well prefer to stay where she is as long as possible, living with and looking after Ivan, his family and Mario, she should have such further provision as would give her some chance of purchasing a retirement unit, or securing a place in a nursing home when she can no longer cope with the stairs or look after herself. To that end I would propose that she be given an additional legacy of $60,000 to be borne by the legacies in favour of the grandchildren. 20 On the evidence at the trial the appellant now has a life expectancy of only two to three years. The position may well have changed but the Court must act on the evidence available to it. It is a matter of some concern that, under the orders of this Court that I have proposed, the appellant would receive a substantial capital sum for accommodation which she may only use for a short time before the asset passes to members of her family who were not eligible dependents of the deceased. The situation can sometimes be accommodated by making a Crisp order of the kind considered in Milillo v Konnecke [2009] NSWCA 109. 21 This issue was not raised or litigated at the trial and in the absence of appropriate evidence and findings this Court is unable to balance the legitimate short-term interests of the appellant with the legitimate longer term interests of the deceased's sons by making such an order in this case: Milillo v Konnecke (above). 22 If the appellant ultimately needs more than $120,000 which she is to receive under the orders, as varied by this Court, her two sons who received substantial gifts from her in recent years, which she could ill afford, may have to make up the difference.

Capping costs order 23 The judge included an order that the appellant's costs on a party and party basis payable out of the estate should not exceed $60,000. At the start of the hearing he expressed surprise at the estimate of $82,200 he had been given for the appellant's costs and said "The Court will have to give consideration to her getting those costs". He told counsel for the appellant that he expected "some more information about that in due course" (Black 2). No further information was provided during the hearing. 24 In his reasons for judgment the trial judge said that he regarded the amount of $82,200 as "grossly excessive" and he proposed to make an order capping her costs to a reasonable amount (Red 16). 25 This order was challenged as vitiated by a denial of procedural fairness, and as beyond power. There is very little in the first point and nothing in the second. Counsel for the appellant was on notice that such an order was being contemplated. Although he had not been heard before the order was made he or his solicitor could have asked the judge to entertain argument on the question after the reserved judgment was delivered on 21 November. In any event the judge heard further argument on another costs question on 9 December on the application of the executor, but counsel for the appellant did not take this opportunity to seek to be heard on the costs capping order. In the circumstances there was no denial of procedural fairness. 26 The power to make this order was conferred in express terms by CPR Pt 42.4 (1) which provides: "The Court made by order, of its own motion or on the application of a party, specify the maximum costs that may be recovered by one party from another." 27 The order was not beyond power, and there is no basis for interfering with the judge's exercise of his discretion in view of his extensive experience in Family Provision Act matters and his knowledge of the general level of costs in such cases. Although I have proposed that the order in favour of the appellant should be substantially increased this should not, in my opinion, affect the order capping the appellant's costs of the trial which I would not disturb.

Costs of the second day. 28 On 9 December 2008 the judge made an order disallowing the appellant's costs of the second day of the hearing because her conduct and that of her legal representatives "necessarily increased" the costs payable by the estate. The appellant's claim and that of the deceased's son Wayne were heard together. Wayne indicated at a mediation on 12 May 2008 (the hearing commenced on 3 July) that he was prepared to settle for $35,000 and costs, and the executor was prepared to accept that offer. 29 On 16 May the executor's solicitors sought the agreement of the appellant and her solicitors to that settlement. Her solicitors replied on 30 May stating: "Our client is not in a position to consent to the settlement of Wayne Mannix's claim in the absence of full information as to the value of the estate or the amount of costs incurred by Wayne Mannix. Further, our client is not in a position to consent to the settlement of Wayne's case in the absence of full information as to the amount of costs incurred by the estate or the anticipated amount to be incurred by the estate in defending the proceedings." 30 There was no reply to this letter, and the case brought by Wayne went to trial. The judge found (Red 36) that if the appellant's case had been the only one heard the hearing would have concluded in one day. He also found that it would have been imprudent for the executor to compromise Wayne's claim without the appellant's consent. These findings cannot be disturbed. 31 His Honour asked himself whether the conduct of the de facto widow in withholding her consent was reasonable in all the circumstances (Red 39), but did not make an express finding on that question. He simply found (Red 39) "that the withholding of [her] consent … significantly contributed to the increase in those costs of the defendants." 32 In my judgment his Honour's implicit finding that the appellant's withholding of her consent was unreasonable cannot be supported. The appellant's solicitors made an apparently reasonable request for further information which was never supplied, and there was no evidence that this request was unreasonable. The order for costs made on 9 December 2008 should therefore be set aside.

Undertaking to the Court 33 The Court became concerned during the oral argument that the effect of the appellant's no-win, no-pay retainer of her solicitors and the order capping her party and party costs of the trial at $60,000 might leave her liable to her solicitors for solicitor-client costs of $22,200 or more. If that were the case an order that she receive a legacy of $120,000 to enable her to acquire independent accommodation would not achieve its purpose. The Court expressed its concerns and after a short adjournment the solicitors for the appellant, through counsel, gave the following undertaking to the Court (t.40): "The solicitors for the appellant undertake to the Court that they will not seek to recover any costs, charges and disbursements including any uplift factor from the appellant except to the extent that those costs are recovered from the estate." 34 The Court accepted that undertaking and on that basis I propose the following orders: (1) Appeal allowed with costs. (2) Orders of Associate Justice McLaughlin of 21 November and 9 December 2008 set aside. (3) In lieu thereof substitute an order that the appellant receive a legacy of $120,000 from the estate of the deceased. (4) Subject to any payment under the orders that have been set aside interest on the appellant's legacy at legacy rates is to run from 28 days after the date of these orders. (5) The burden of the additional legacy of $60,000 for the appellant is to be borne by the six legacies of $10,000 in favour of the grandchildren of the deceased. (6) Order that the costs of the plaintiff of the trial on a party and party basis, not exceeding $60,000, be paid out of the estate of the deceased. (7) Order that the defendant's costs of the trial and the appeal on an indemnity basis be paid out of the estate of the deceased, except to the extent that such costs are recovered under the Suitor's Fund Act. (8) The Court notes and accepts the undertaking given by the solicitors for the appellant on 4 August 2009 recorded in the reasons of this Court. (9) The respondent is to have a certificate under the Suitor's Fund Act.

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