Parker v Parker

LEGISLATION CITED : Family Provision Act 1982 (NSW) Property (Relationships) Act 1984 (NSW)

Bosch v Perpetual Trustee Co Ltd [1938] AC 463 Deves v Porter [2003] NSWSC 878 Moore v Moore [2004] NSWSC 587 CASES CITED : Re Fulop (1987) 8 NSWLR 679 Singer v Berghouse (1994) 181 CLR 201 Stewart v McDougal (NSWSC, Young J, 19 November 1987, unreported) Van Zonneveld v Seaton (No 2) [2005] NSWSC 175

4544/05 Donna Margaret Townsend (P) Nigel Henry Francis Parker (D)

7029/04 PARTIES : Nicole Maree Corry (P) Nigel Henry Francis Parker (D)

5615/04 Michael Howard John Parker (P) Nigel Henry Francis Parker; Estate Of Howard Neville Parker (D)

4544/05 - Mr G Gemmell (P); Mr V Gray (D) COUNSEL : 7029/04 - Ms S Mason (P); Mr V Gray (D) 5615/04 - Mr P O'Loughlin (P); Mr V Gray (D)

4544/05 - Rice More & Gibson SOLICITORS : 7029/04 - Turnbull Hill Lawyers 5615/04 - Kells The Lawyers

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

4544/05 DONNA MARGARET TOWNSEND v NIGEL HENRY FRANCIS PARKER; ESTATE OF HOWARD NEVILLE PARKER

7029/04 NICOLE MAREE CORRY v NIGEL HENRY FRANCIS PARKER; ESTATE OF HOWARD NEVILLE PARKER

5615/04 MICHAEL HOWARD JOHN PARKER v NIGEL HENRY FRANCIS PARKER; ESTATE OF HOWARD NEVILLE PARKER JUDGMENT (ex tempore) 1 HIS HONOUR: Howard Neville Parker died on 2 April 2004. He was divorced and aged 76 years of age. He was survived by his former wife, who has since remarried, and by six children: the defendant Nigel born 30 April 1954, the plaintiff Michael born 9 June 1957, Lee Anthony born 27 July 1959, the plaintiff Donna born 21 September 1961, Michelle born 9 September 1963, and the plaintiff Nicole born 3 March 1965. He left an asset which now, after payment of debts and expenses, comprises his former home at Marrangaroo worth $235,000, a term deposit of $100,000, and some cash and minor personalty which produces a total net asset pool of $347,000. By his will made on 9 April 1999, probate of which was granted to Nigel on 20 September 2004, he appointed Nigel, and failing him, Michael, to be his executor and trustee, and gave the whole of his estate to Nigel, if he predeceased him then to Michael, and if both predeceased him, then to Lee. In the events which have happened, it is Nigel who is entitled to the whole estate, and Michael, Donna and Nicole claim provision out of the estate.

2 All parties are agreed that Donna should receive provision by way after a legacy of $47,000. There remains for resolution the claims of Michael and Nicole and how the costs of the proceedings, including of Donna's claim, should be borne.

3 In Australia, testators have freedom to leave their property by their will as they wish, subject to the exception imposed by the Family Provision Act 1982 (NSW) ("the Act") and similar legislation, that a testator must fulfil any moral duty to make adequate provision for those for whom the community would expect provision to be made [Stewart v McDougal (NSWSC, Young J, 19 November 1987, unreported)]. 4 In Singer v Berghouse (1994) 181 CLR 201, the High Court described the approach of a court to the exercise of jurisdiction under the Act in respect of an eligible person as follows: It is clear that, under these provisions, the court is required to carry out a two stage process. The first stage calls for a determination of whether the applicant has been left without adequate provision for his or her proper maintenance, education and advancement in life. The second stage, which only arises if that determination be made in favour of the applicant, requires the court to decide what provision ought to be made out of the deceased's estate for the applicant ... The first question is, was the provision (if any) made for the applicant 'inadequate for [his or her] proper maintenance, education and advancement in life'? The difference between 'adequate' and 'proper' and the interrelationship which exists between 'adequate provision' and 'proper maintenance' etc were explained in Bosch v Perpetual Trustee Co Ltd [1938] AC 463, 476. The determination of the first stage in the two stage process calls for an assessment of whether the provision (if any) made was inadequate for what, in all the circumstances, was a 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 made 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.

5 Accordingly, in an application under the Act, the Court must consider, first, whether the relevant plaintiff is an eligible person; secondly, whether the plaintiff has been left with inadequate provision for his or her proper maintenance, education and advancement in life; and thirdly, if so, what, if any provision or further provision, ought to be made out of the estate for those purposes.

6 The Act prescribes certain considerations relevant to whether an applicant has been left with inadequate provision for his or her proper maintenance and advancement in life. Relevantly, these include any contribution made by the applicant to the estate or welfare of the deceased. The relevant factors were described by McLelland J (as he then was) in Re Fulop (1987) 8 NSWLR 679, as follows: In making these determinations, the following principles apply: first, the court should not interfere with the dispositions in the Will ... except to the extent necessary to make adequate provision for the plaintiff's proper maintenance, education and advancement in life; secondly, the expression 'proper' in this context connotes a standard appropriate to all the circumstances of the case; and thirdly, the court may take into consideration any matter (whether existing or arising before or after the death of the deceased) which it considers relevant in the circumstances, including (a) the nature and quality of the relationship between the plaintiff and the deceased, (b) the character and conduct of the plaintiff, (c) the nature and extent of the plaintiff's present and reasonably anticipated future needs, (d) the size and nature of the estate of the deceased, (e) the nature and relative strength of the claims to testamentary recognition by the deceased of those taking benefits under the will of the deceased... and (f) any contribution, financial or otherwise, direct or indirect, by the plaintiff to the property or welfare of the deceased.

7 Each proceedings was commenced within time. Notice under Supreme Court Rules, Schedule J Provisions relating to the Family Provision Act 1982 (NSW), cl 9(2), has been given to all the deceased's children. Notice was not given to his former wife, now Mrs Fulthorpe, who is an eligible person in category (c). However, she was present at the hearing, and when informed of her rights, after consideration over a luncheon adjournment, informed the Court that in the circumstances she did not want to make an application.

8 In the context of this case it is convenient first to address the position of the defendant Nigel, the sole beneficiary under the will because, as a competing claim, it affects the claims of all the plaintiffs. Nigel is a 52 year old accountant, who works and lives overseas. There is no evidence before me of his financial position and it is accepted on his behalf that, in those circumstances, I should approach this case on the basis that there is nothing at all in his financial circumstances which would lead me to decline to make an order, or reduce such order as otherwise I might make, in favour of the plaintiffs, if the plaintiffs make out a case.

9 But that is not a complete answer to any competing claim of Nigel. It is clear that the deceased was proud of Nigel and his achievements, and took a traditional view that he should leave a will which favoured his eldest son. As I have said, subject to the obligations to those who are economically or morally dependent on a testator which are imposed by the Family Provision Act, the deceased was, if so minded, entitled to do so.

10 It is clear that the deceased must have had a close relationship with Nigel personally, even if it was sometimes one in which they were separated by oceans. After all, it was with Nigel and Nigel alone that the deceased discussed his will and in whom he confided, and whom he trusted to carry into effect his testamentary wishes.

11 Moreover, Nigel provided accommodation for the deceased in his or his wife's Sydney flat over a period of some three years or so after the deceased was diagnosed with cancer in or about 2000, and the deceased occupied that accommodation when he came to Sydney for treatment not requiring hospitalisation. Some of the children, at least Nicole, also occupied that accommodation when visiting him for that purpose. In those circumstances, Nigel, as claimant, would have a claim to have contributed to the estate and welfare of the deceased by having provided that accommodation during that period, and by his ongoing personal relationship with the deceased which, as I have said, was obviously a close one.

12 Much has been made in the course of the proceedings of the deceased having told Nigel that if any of the other children were to challenge the will, the deceased wanted Nigel to defend the proceedings, and in rougher words than mine, did not mind even if it was the case the estate was frittered away on the lawyers. While it is true that Nigel told the deceased that he would do as the deceased wished, I do not believe it is fair or reasonable to criticise him for that course. Firstly, he is doing no more than he undertook to his father that he would do. Secondly, I do not accept that the defence in this matter has been conducted in a manner which has deliberately or gratuitously run up excessive costs. The costs estimate of the defendant in the proceedings does not exceed by much the highest of the costs estimates of the three plaintiffs, all three of which cases the defendant has had to defend.

13 I turn next to the circumstances of Nicole. Nicole, as a child of the deceased, is an eligible person, and, accordingly, has standing to make application for provision out of the deceased's estate. She is a 41 year old nurse. There is no evidence that she had other than a good relationship with the deceased. They had relatively infrequent but ongoing contact throughout their joint lives; each used to visit the other a couple of times each year, he visiting her either in Armidale or Guyra, and she visiting him from time to time in Marrangaroo. He attended significant events in her life, including her wedding and her graduation, and took an interest in the welfare of her children, his grandchildren. She maintained an interest in his health and welfare, and visited him relatively frequently in Sydney when he became ill after 2000. 14 Nicole was married in 1986. Of that marriage a daughter was born in 1987 and twin sons in 1989. She and her husband separated in April 2004, I infer very shortly after the death of the deceased, but even if it was before the death of the deceased, there is no reason to think that he had that in mind when he made his will. There has since been a property settlement between her and her former husband and she has repartnered, although the circumstances of her current relationship are somewhat tense, there having been a recent separation and apparent reconciliation only in the last month or so.

15 In January 2005 Nicole was diagnosed with chronic ongoing multiple sclerosis. This is a degenerative condition which has already begun to impact on her mobility, an inference which I draw from observations I made in Court, as well as from the slight references to it in the evidence, and from the diagnosis of Dr Eather. Needless to say, growing incapacity resulting from multiple sclerosis will, in due course, likely impact on her earning capacity. Nicole is unable to obtain private health cover as a result of her illness.

16 Nicole has, at present, a net income of about $45,000 per annum. Her current partner earns about $4,000 per annum. Their joint income of $49,000 per annum is exceeded by their joint living expenses of $56,630 per annum. As a result of a property settlement with her former husband, she acquired a property at Guyra now worth $180,000 and subject to a mortgage of $100,000. She has $1,200 in the bank, a motor bike worth $4,600 and she and her partner together have personalty worth about $30,000. Other than the mortgage, she owes $6,000 on credit cards and $1,600 to a hardware store. Leaving out of account the minor personal assets and debts which her de facto partner has brought to the relationship and which, in any event, approximately offset each other, indeed the debts probably exceed the assets, her net position is about $108,200. In addition, she has a superannuation entitlement. Until 2004, she had three superannuation funds, with $4,000 in a HESTA fund and an account balance of $64,504 gross in a State Authorities Superannuation Scheme Fund. On 10 November 2004 she, in effect, cashed in her entire benefit with the State Authorities Superannuation Scheme, receiving net after tax $55,000. She retains an interest in the First State Superannuation Scheme, with a closing account balance as at today's date of $24,693, and apparently an entitlement on death or permanent total disablement of $36,000. The evidence does not enable me to say what her retirement benefit would be today or in the future, but the figure of $24,000 as the closing balance provides some indication of the value of her remaining superannuation.

17 As I have said, I do not think I can proceed on the basis that her relationship with her present partner is necessarily a stable or permanent one and, in any event, the assets and debts which he has brought to the relationship at the age of 47 do not warrant an inference that he will be a source of extensive financial support in the future, although it may be he will increase his contribution to household expenses if and when he obtains full time employment.

18 Nicole still has the care of her twin sons on a shared care basis: they spend alternative weeks with her and her former husband.

19 The circumstances are that Nicole's expenses at this stage exceed her income. As a result of her multiple sclerosis, it can be anticipated that in the future, her earning capacity will reduce; her medical needs will increase; and, in due course, it is likely that she will require care.

20 The deceased was not to know when he made his will, and probably not when he died, that Nicole would separate from her first husband. The deceased certainly did not know that Nicole would be diagnosed with multiple sclerosis. A wise and just testator, knowing of those matters which the Court is entitled to take into account in deciding what is proper provision, would have made provision at least to ease her current economic difficulties and to cushion the impact of her likely deteriorating position in the future as her condition degenerates. I am, accordingly, satisfied that Nicole has been left with inadequate provision for her proper maintenance and advancement in life.

21 I come finally to the circumstances of Michael. Michael, as a child of the deceased, is an eligible person and has standing to make application for provision out of his estate. Michael is a 48 year old mine deputy. He enjoyed a good relationship with the deceased throughout their lives. He continued to reside with the deceased when Michael's parents separated in 1975 and he was about to sit the High School Certificate. When Michael left school at the end of that year, he obtained work at Lithgow and remained, first with the deceased for a year, and then nearby.

22 Michael married on 8 February 1986. There were two children of that marriage now aged 16 and 14. Michael and his wife separated in 1994 and decree nisi for dissolution of their marriage was propounded on 1 February 1995. As a result of that separation, Michael settled almost all of his assets on his former wife, retaining only some land near Lithgow worth less than $50,000, ultimately sold for $38,000, heavily encumbered and ultimately realising to Michael only some $3,000. He has paid and continues to pay $200 per week child support in respect of his children. During his marriage he and his wife and family had continued to live in Lithgow.

23 Following the separation, he resumed living with the deceased in nearby Marrangaroo until he moved to Wollongong with his new partner, Margaret Nicholson, in August 1995. In 1987, Michael made an albeit modest contribution of $900 to the repayment of an indebtedness which the deceased had accumulated during a period of unemployment, Michael's brother, Lee, making most of that repayment. Following the deceased's diagnosis with cancer in 1999, Michael and the deceased had frequent contact and Michael provided assistance for the deceased. I accept that, in terms of maintaining contact with the deceased and providing support and assistance to him, Michael's efforts and contributions probably exceeded those of the other children. To some extent, this is reflected in the circumstance that when the deceased was admitted to hospital, Michael was nominated by him as his next-of-kin.

24 As a mine deputy, Michael earns about $1,500 net per week, which more than covers any expenses including child support, leaving, very roughly, an excess of about $200 of income over expenditure. His assets are a half interest in the home which he shares with Margaret Nicholson in Figtree, that half interest being worth $240,000; his liability for half of the mortgage being $122,000, and credit card amounts of $12,000. He has a car, subject to a debt of $21,000, and he has an interest in a franchise business which generates something less than $50 per week but for which he paid $30,000. He has a superannuation interest of $143,000, which also provides benefits on incapacity or disability, and as an employee of Austral Coal or member of that fund, he is entitled also to some sickness benefits in the event of illness.

25 As a result of accounting advice, Michael invested in a tax minimisation scheme which involved borrowing funds. Like many at the time, he was affected when the tax department disallowed schemes which it had previously authorised, and he was required to repay the moneys borrowed and to pay a substantial debt to the Australian Taxation Office. He has recently completed repaying the debt.

26 At this time he is in good health and his children have no special needs. He continues to cohabit with Margaret Nicholson in a domestic relationship. She owns the other half of the Figtree property and earns about $930 per week net. Both of them have been previously married. Both of them have children of their previous relationships. They have generally kept their financial affairs separate to the extent of each assuming separate responsibility for half the mortgage, and while one cannot know, it may well be that they will deal separately with their estates for the benefit of their children. I think it would be unsafe to proceed on the basis that Margaret is to be seen as a source of potential support for the Michael.

27 The mining industry in which Michael works is subject to some vagaries and fluctuations. His current level of earnings will not necessarily continue, although it well may. He expects to retire at age of 60, although he might succeed in obtaining work after that age. On the present superannuation figures, were he to retire now and withdraw his entitlement, he could discharge his share of the mortgage, but would have very little left for future living expenses. On the other hand, given the present level of his earnings, it is not unrealistic to think he could pay off the mortgage out of his income over the next ten years. As Mr Gray submits, Michael can adequately support himself in the current circumstances; and as Mr Gray also submits, the ratio of Michael's annual income to his debt is relatively high.

28 Nonetheless, Michael, like Nigel, has made contributions to the estate and welfare of the deceased. There has been no provision made for him in the past. He has encountered the setbacks of divorce and the failure of the tax minimisation scheme which he entered. There is an absence of a competing claim on the part of the only beneficiary which is needs-based (as distinct from a contribution-based claim).

29 There is, I think, an insufficiency in Michael's current circumstances adequately to provide for his retirement. Although it may be that from the $200-odd by which his current weekly income exceeds his expenditure, he could reduce the mortgage and make some further contribution to his superannuation, I do not think an amount of, say, $5,000 a year over the remainder of Michael's working life which that could provide will adequately provide for his retirement.

30 Having regard to Michael's contribution to the property and welfare of the deceased, the absence of any significant provision in the past for him, the setbacks which he has encountered, and the absence of a competing needs based claim on the part of a beneficiary, I think a wise and just testator in those circumstances would have thought it appropriate that, not having been able to give Michael a start in life at a younger age, it was proper to give him some help along the way in preparing for his retirement when the testator was able to do so. Accordingly, I am satisfied that Michael was left with inadequate provision for his proper advancement in life.

31 That said, there is little enough in the estate to make provision for any claimant from the net estate of $347,000 to which I have referred. There needs to be deducted the provision which it has been agreed should be made for Donna of $47,000, leaving $300,000. The costs of the estate are estimated at $57,000. The costs of Michael are estimated at $52,427, those of Donna at $29,913, and those of Nicole at $34,784. Those costs total just under $175,000 and would leave a net distributable estate after costs, were all those to come out of the estate, of only $125,000.

32 Nicole's claim is substantially a needs-based claim for maintenance, and, as such, I think takes priority over the claims both of Michael, which is substantially a contribution-based claim for advancement, and of Nigel, whose claim to testamentary recognition is also substantially contribution based. For Nicole, Ms Mason, in her able submissions, suggested that provision of $80,000 was appropriate. Nicole's mortgage is $100,000. Her credit card debts are $6,000. It is not known, and could not be known, what her future medical expenses will be, but I have no difficulty in concluding that she will in the future have medical expenses in respect of which she will be liable for any gap after what Medicare covers. Given the amount of her mortgage debt, and that the payments on it contribute $9,490 to her annual expenditure, and her credit card debts which apparently contribute $2,400 to her annual expenditure, I am completely satisfied that provision of $80,000 would be not excessive. Were it not for the very limited size of the estate, even more might have been appropriate. 33 Once that $80,000 is deducted from the $125,000, there remains about $45,000.

34 In my view, the testator's intention of providing at least something for Nigel should not be allowed to be completely defeated. Each of Nigel and Michael have a claim to recognition of a roughly similar kind, although Michael has, and on the evidence before me Nigel does not, some needs -based element to his claim. I have concluded that provision for Michael of a legacy of $25,000 would be appropriate.

35 I raised with counsel the question of costs which in an estate as small as this with as many claims on it as here, always presents a difficulty. In Moore v Moore [2004] NSWSC 587, Young CJ in Eq said that ordinarily some special justification would be needed to warrant an order for more than $35,000 for costs of a successful claimant in a family provisions application. In the context of proceedings under the Property (Relationships) Act 1984 (NSW), in Deves v Porter [2003] NSWSC 878 Campbell J suggested that a useful rule of thumb in such proceedings was that the costs awarded ought not exceed the amount recovered. But in Van Zonneveld v Seaton (No 2) [2005] NSWSC 175 Campbell J recognised that, while Deves v Porter provided a useful rule of thumb, it was one which had to be applied with caution and having regard to the circumstances of the individual case.

36 Although I am not critical of the defendant for having defended the proceedings in accordance with the provisions of the testator's wishes, the circumstance that that course has been adopted has to be taken into account in dealing with the question of costs. It was not open to the plaintiffs to do anything other than to litigate to obtain the provision which I have held should be made for them. 37 So far as Nicole is concerned, she has obtained what, in the circumstances, is a legacy of at least some significance, and I do not see any warrant to make any particular costs order or impose any particular cap on her recoverable costs.

38 Michael has obtained only a very modest legacy. I am concerned that the costs which are claimed on his behalf are disproportionate to the extent of success which Michael has achieved. Not just because of Moore v Moore, but as a combination of the fact that practitioners are on notice from that decision of a general prima facie limitation of costs in this type of case to $35,000, in the absence of special justification and having regard to the small amount recovered, I propose to order that the costs recoverable by Michael not exceed $45,000.

39 So far as Donna's claim is concerned, it seems to me that some saving can be made by reason of the circumstance that her representatives were excused for most of the hearing yesterday and this morning, and also from the circumstance that those costs are calculated on an indemnity and not a party/party basis. I do not disregard that before proceedings were commenced, Donna offered to settle for the amount which she ultimately received and she has had to prosecute the proceedings to recover a legacy, but I do not think, in the context of the small amounts involved in this case, that an indemnity costs order for the total sum which she claims is justified.

40 Subject to anything which counsel wishes to say as to the form of the orders, I propose to make the following orders.

1. I order that in lieu of the provisions of the will of Howard Neville Parker deceased: 1.1 the plaintiff Michael Howard John Parker receive a legacy of $25,000; 1.2 the plaintiff Donna Margaret Townsend receive a legacy of $47,000; 1.3 the plaintiff Nicole Marie Corry receive a legacy of $80,000, and 1.4 the defendant receive the rest and residue of the estate.

2. I order that those legacies not bear interest if paid within 6 months, and otherwise bear interest at the rate prescribed by the rules of court for interest on unpaid judgment debts. 3. I order that the costs of each of the plaintiffs on the party/party basis and the defendant on the indemnity basis be paid or retained as the case may be out of the estate of the deceased, provided that the costs recoverable by the plaintiff Michael Howard John Parker shall not exceed $45,000, and the costs recoverable by the plaintiff Donna Margaret Townsend shall not exceed $20,000.

4. The exhibits may be returned. I revoke the reference to 90 days and substitute six months. **********

41 The litigation has been caused and substantially contributed to by the testator's insistence that any challenge to the will be defended and by the defendants' acceptance of that instruction. It now appears that on 28 October 2005, the successful plaintiff, Nicole Corry, offered to compromise the proceedings for a sum less than that which she has ultimately obtained in the contested proceedings. It is very difficult to see why she should be out of pocket at all in respect of her costs. There is only limited force in Mr Gray's argument that, in a case of this kind the consent of all parties would be necessary to a settlement, when it is quite clear on the evidence that the consent of the defendant was never going to be forthcoming. Although it concerns me that this order will ultimately impact on the defendants' share, ultimately the defendant had the choice of concurring with the testator's instruction, or endeavouring to compromise the proceedings.

42 In those circumstances, I think a proper exercise of discretion, in the light of the offer of compromise, is that the plaintiff Nicole should be entitled to her costs on an indemnity basis, from the date of that offer and I will vary the costs order in her favour to provide that the costs of Nicole be assessed on an indemnity basis from 28 October 2005. Therefore:

5. I order that the costs to which the plaintiff Nicole Maree Corry is entitled under order 3 above be awarded on an indemnity basis from 28 October 2005.

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