Pattison v Mulqueeny

PARTIES : Wayne Gregory Pattison v Maurice Raymond Mulqueeny (Estate of Leah Marian Pattison)

COUNSEL : Mr P. Blackburn-Hart SC for plaintiff Mr M. Gorrick for defendants

SOLICITORS : Lees Lawyers Solicitors Wilkinson Throsby & Edwards for defendants

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

6827/04 Wayne Gregory Pattison v Maurice Raymond Mulqueeny and Diane Marian Eccleston (Estate of Leah Marian Pattison) JUDGMENT 1 His Honour: This is a claim under the Family Provision Act 1982 (the Act) in respect of the estate of the late Leah Marian Pattison who died on 14 August 2003 aged 79 years. The deceased was survived by the plaintiff, her son and the second defendant, her daughter. The will of the deceased 2 The deceased made her last will on 15 February 2001 under which she appointed the defendants as executors. Under that will she gave her daughter a small farm at Hill Top, New South Wales of some 88 acres, her house at number 6 Holly Street Bowral, farming plant, equipment, motor vehicles and her furnishings. She gave her residuary estate to be divided as to one half for her son, the plaintiff, and the other half to her daughter, the second defendant. Assets in the estate of the deceased 3 Apart from the two properties, which I have mentioned, the deceased had shareholdings in a number of companies. One of these was BHP Billiton in which she held 22,078 shares. On 9 August 2005 those shares were distributed equally between the plaintiff and the second defendant. By the time of the hearing the plaintiff had sold 2,039 of these shares and the second defendant had sold 8,000 of her shares 4 The remaining undistributed assets of the estate are as follows: a. The Hill Top property $445,000.00 b. The Bowral property $395,000.00 c. 1,320 shares in IAG $7,392.00 d. 4,868 shares in One Steel Limited $18,985.20 e. Money in trust $80,768.94 TOTAL $947,146.14

5 The figure for the money held in trust is after deduction of the defendants' costs of the proceedings in the sum of $33,504. The plaintiff's costs are estimated at $35,006.88. Family history 6 The deceased was born in 1924 and her son, the plaintiff was born on 3 December 1956. The second defendant was born on 31 January 1959. Not long after the deceased and her husband separated, the deceased, together with the two children, moved to live with their grandmother at 6 Holly Street, Bowral. 7 In 1972 the plaintiff obtained his School Certificate and in the following year, at what he says was the deceased's insistence, he left school to obtain an apprenticeship. That apprenticeship was interrupted when the plaintiff suffered a serious motorcycle accident early in 1974. The second defendant left home to marry in 1977 and the plaintiff himself was married in 1979. 8 The plaintiff thereafter obtained a number of qualifications. In 1982 he obtained welding qualifications and print reading skills. In 1984 he completed a computer course and in 1986 he completed two further advanced welding courses. He obtained a forklift operator's licence in 1989 and in 1991 completed a course for a Security Operative's licence. He completed a course in Occupational Health and Safety in 1992. Throughout this period he was working at TAFE as a cleaner. 9 Because of the separation of his parents there was little contact between the plaintiff and his father. Circumstances changed in 1993 and 1994 when the plaintiff moved to his father's farm in Kangaroo Valley to help him look after the farm. In the following year 1995 he gave up his job at TAFE and he has remained living on the farm ever since. 10 The father of the plaintiff and the second defendant, Ronald Keith Pattison, died on 12 November 1996. At some stage in the early 1990s prior to his death their father had given the plaintiff and the second defendant a sum of $20,000 each. 11 Under the father's will the plaintiff received his farm, a vehicle, farm implements and one half of residue. The second defendant received the remaining one half of the residue. Thus each child at this time received a cash distribution of $179,000. 12 The second defendant has three children. Her daughter Jodie was born on 1 September 1979, her son Bradley was born on 9 February 1982 and her daughter Alicia was born on 14 February 1997. In 1999 the second defendant separated from her husband and moved into the deceased's farm at Hill Top for some three or four months with her young daughter. She returned to her husband and there were several separations in the ensuing years. Her husband, a bricklayer, had an accident at work in 2001 when he was off work for six months. He has had a number of operations on his heel and as a result now walks with a limp. 13 The deceased made her last will on 15 February 2001 as I have already indicated. In 2003 the deceased was hospitalised and then entered a retirement village at Bowral where she remained until she died on 14 August 2003. Probate of her will was granted on 15 December 2003. 14 The plaintiff and his wife separated in 2004 and on 12 November of that year they signed terms of settlement of their property affairs which they had negotiated themselves. On 3 March 2006 the plaintiff and his former wife signed fresh terms of settlement which had been negotiated by solicitors. The plaintiff was divorced on 11 April 2006 and although the plaintiff's solicitors had instructions to obtain approval of the settlement of the property matters this has not yet occurred. 15 These proceedings were commenced on 17 December 2004 within the time limit of the Act. Eligibility 16 The plaintiff is an eligible person under the Act. In applications under the Act the High Court in Singer v Berghouse (1994) 181 CLR 201 has set out the two-stage approach that a Court must take. At page 209-210 it said the following:- "The first question is, was the provision (if any) made for the applicant "inadequate for [his or her] proper maintenance, education and advancement in life"? The difference between "adequate" and "proper" and the interrelationship which exists between "adequate provision" and "proper maintenance" etc were explained in Bosch v Perpetual Trustee Co Limited . The determination of the first stage in the two-stage process calls for an assessment of whether the provision (if any) made was inadequate for what; in all the circumstances, was the proper level of maintenance etc appropriate for the applicant having regard, amongst other things, to the applicant's financial position, the size and nature of the deceased's estate, the totality of the relationship between the applicant and the deceased, and the relationship between the deceased and other persons who have legitimate claims upon his or her bounty. The determination of the second stage, should it arise, involves similar considerations. Indeed, in the first stage of the process, the court may need to arrive at an assessment of what is the proper level of maintenance and what is adequate provision, in which event, if it becomes necessary to embark upon the second stage of the process, that assessment will largely determine the order which should be made in favour of the applicant. In saying that, we are mindful that there may be some circumstances in which a court could refuse to make an order notwithstanding that the applicant is found to have been left without adequate provision for proper maintenance. Take, for example, a case like Ellis v Leeder where there were no assets from which an order could reasonably be made and making an order could disturb the testator's arrangements to pay creditors." [footnotes omitted]

The situation in life of the plaintiff 17 The plaintiff is 49 years of age, separated from his wife and has no dependants. He resides on the property which he inherited from his father in 1996. The plaintiff's assets are not insubstantial and they comprise: A small farming property at Barrengarry on which he resides $1,200,000.00 17 head of cattle and calves $10,000.00 Motor vehicle $20,000.00 Money in the bank $8,520.00 Superannuation $6,190.00 Furniture and personal items $5,000.00 9,000 shares in BHP Billiton (being a distribution from the estate) at $30.24 per share $272,160.00 TOTAL $1,521,870.00

18 The plaintiff has liabilities the principal of which is the liability to his wife under the agreement for settlement of the property matters. Although these arrangements have changed there is no reason why I should not regard the property settlement as binding on the plaintiff. The terms of settlement basically provide for his wife to have 24% of the joint assets. At his option either the assets can be sold or he can pay his wife $288,000 for her entitlement. In addition clause 2 of the terms of settlement provides: "The wife shall receive 20% of the net proceeds of any award received by the husband in the Supreme Court of NSW application number 6827/2004 being a claim under the Family Provision Act respect of the estate of the late Leah Marion Pattison" 19 In addition the plaintiff has a liability for capital gains tax on the sale of his BHP Billiton shares and to a further liability if he sells any further shares. 20 The plaintiff has little income. He has lived on the property as I mentioned since 1996. His only income is from agistment, proceeds of running 20 head of cattle on the property and occasional work on neighbouring farms. His income tax return to the year ended 2005 showed casual wages of $3,905 and income from agistment of $7,541. After allowing for some depreciation and motor vehicle expenses he eventually had a taxable loss for the year. As can be seen from the amount of the income the farm is plainly not a profitable one but this no doubt results from its small size. 21 The plaintiff says that over recent years he has applied for some 40 jobs and apart from casual labouring jobs has been unsuccessful in those applications. This is surprising given his qualifications to which I have already referred. 22 It is necessary to consider the relationship of the plaintiff and the deceased. There was some debate in the evidence about the failure of the plaintiff to see his mother in the last few months. According to the plaintiff this was because his sister had threatened to take out an apprehended violence order against him, an allegation which she denied. Given the shortness of time and the fact that he made efforts to try and see his mother when his sister was not at the nursing home, I do not think this matter is of any consequence. It does illustrate the substantial falling out between the plaintiff and the second defendant. This falling out occurred at about the time they became aware of the provisions of their father's will. 23 The plaintiff has not contributed in a financial sense to the assets in the estate. 24 It is necessary to consider the situation in life of others having a claim on the bounty of the deceased and the only person is the second defendant. The situation in life of the second defendant 25 The second defendant is 47 years of age married with one dependent daughter who is nine years of age. Her older daughter is apparently separated from her husband will probably shortly move back to live with the second defendant. 26 The second defendant and her husband have the following assets: Property at no. 8 Church Avenue Colo Vale $875,000.00 House at Lot 3, Wilson Drive Colo Vale $530,000.00

3,039 BHP Billiton shares @ $30.24 $91,899.36 New tractor $20,000.00 Suzuki motor vehicle $10,000.00 Household furniture and effects $2,000.00 Toyota Hi-Lux ute $2,000.00 Second defendant's superannuation with First State Super $2,679.47 Second defendant's superannuation with Advance Retirement Plan $4,209.17 John Eccleston's superannuation with Advance Retirement Plan $3,015.59

TOTAL $1,540,803.59

27 They have liabilities to the Commonwealth Bank under a mortgage of $425,000. They have credit card debts of $6,000 and will have a liability in respect of capital gains tax following the sale of 8,000 BHP Billiton shares. 28 This recitation of the second defendant's assets does not include the two estate properties which she will inherit if the will is not disturbed. They presently have the property being Lot 3, Wilson Drive, Colo Vale on the market and once that has been sold that they will have more than sufficient funds to discharge the liability the Commonwealth Bank. The second defendant made a gift of $30,000 each to her children Jodie and Bradley following the sale of the shares and she also repaid to them certain sums which were advanced for the deposit when she and her husband purchased the Church Avenue Colo Vale, property. That property is set on five acres. 29 The second defendant works at Colo Vale Public School two days a week and her net monthly income is approximately $800. Her husband has a monthly income of approximately $4,333. At the moment their expenses seem to exceed their income had no doubt this will change once they have sold Lot 3, Wilson Drive and paid off the Bank. That would reduce their monthly expenditure by a sum of $2,600. 30 There is no doubt that the second defendant had a good relationship with the deceased. She has not contributed in a financial sense to the assets in the estate. Discussion 31 It is necessary to see how the plaintiff says that he has been left without adequate and proper provision for his maintenance education and advancement in life. In this regard the plaintiff advances four matters. The first of these I have already referred to and that is his need to meet his liability under the property settlement with his wife. Two other matters which he advances relate to improvements to the property and the removal of asbestos from the house on the property in which he lives and resheeting it with cement sheeting at a cost of $10,560. He also wishes to carry out some further pasture improvements on the property in an amount of $17,998.20. Neither of these matters seems to be urgent. He also suggests that he needs an income supplement. 32 On the question of whether one should take account of the liability which the plaintiff has to his wife under the property settlement, the defendants referred me to McGrath v Eves [2005] NSWSC 1006 where his honour Justice Gzell had to consider a similar situation. In that case there was not an agreement as to the amount but estimations of what might be his likely liability. At paragraph 75 his Honour made the following comments: "75 I do not think that any of these claims should be taken into account in determining the extent of the inadequacy of the provision by the deceased. In my view, a parent's testamentary bounty should not be expected to cover the consequences of an adult child's divorce. Nor should an attempt be made to quarantine Mr McGrath against the normal application of the Family Law Act 1975 (Cth) in bringing each party's assets into a pool. Nor could such a quarantine be achieved because any increase in provision from the estate of the deceased will automatically increase the size of the pool." 33 Precisely why his Honour was of the view that a parent's testamentary bounty should not be expected to cover the consequences of an adult child's divorce does not appear in the reasons. His Honour had earlier referred to some other cases which touched upon the proper provision for children. At paragraph 67 he said: "67 When it comes to children, as Young J observed in Shearer v The Public Trustee , NSWSC, unreported, 23 March 1998, it has never been said by any court that the community expects a mother to leave her children in a position to have a house of their own. That observation applies equally to a father. And in Gorton v Parks (1989) 17 NSWLR 1 at 7, Bryson J pointed out that there is no special principle that able-bodied adults earning a living have no claim, his Honour pointing out that such a proposition in relation to resources of any size was quite erroneous." 34 It would seem that at paragraph 75 his Honour was merely extrapolating in a general sense as to what was appropriate for children. 35 In the present case the plaintiff has committed himself to a payment to his wife and this is a liability that is binding upon him. This is sufficient to distinguish the present matter from the matter which concerned his Honour. One can imagine many circumstances where a child having gone through a divorce will have a liability to partner or perhaps after having paid out such a liability has an increased debt. In ordinary circumstances such debts are considered by the Court as being matters which may require some advancement in life obviously depending upon the circumstances of the particular case. 36 It seems to me that I should consider the liability which he has undertaken with respect to his wife but the terms of that liability causes me some concern. That is because of the agreement to give 20% of the proceeds of his claim to his wife. In Collicoat v McMillan [1999] 3 VR 803 at 822 Ormiston J said: " [51] A particular problem, arguably one of principle, arises in relation to the adult son's claim because he was at his mother's death a bankrupt and still remains an undischarged bankrupt. The problem in the present case is not as acute as it is in other cases in that there seems little doubt that about half of the existing provision out of the personal estate in favour of Kenneth must pass to the official trustee in bankruptcy in order to satisfy the claims of his unsecured creditors but, even then, he will retain some benefits. Thus his claim does not pose the same problems as that of an undischarged bankrupt who has received no provision but nevertheless seeks what in other circumstances would be considered necessary further provision for his proper maintenance and support for the first time. It is probably sufficient to say that it has been accepted that the right to make a claim for further provision itself does not pass to the official trustee but is a personal right and thus the official trustee is not in this case nor in others a relevant party to the application, although from time to time the official trustee may have a right to intervene to protect an interest already given: see Re Estate of Robert Frangos (unreported, Court of Appeal, 7 July 1995). Because of the personal nature of the claim the better view appears to be that an order should not be made if it will not in fact benefit the applicant. If an order for further provision, intended as it is to provide for a person's maintenance and benefit, would invariably go to his creditors and provide no other benefit to the applicant, then it would not seem appropriate to exercise the discretion at the second stage of the enquiry even if a decision were made that the testator had otherwise failed in the distribution of his or her estate to make adequate provision for proper maintenance and support: see McLeod v Johns [1981] 1 N.S.W.L.R. 347 at 348 . In the present case the difficulty is not so acute because, as I have said, the share already to be received by Kenneth will be sufficient and more than sufficient to pay those creditors." 37 A provision for the plaintiff to meet this 20% liability is not for the benefit of the plaintiff in any practical sense but only for the benefit of his wife. However, given that the plaintiff is not bankrupt and has this liability it seems to me that there is some benefit to him in that he would be discharged from that liability. 38 It is plain that the second defendant and her husband are in comfortable circumstances. Shortly they will be debt free and at present they stand to inherit the two properties owned by the deceased. The Hill Top property is a farm of 88 acres and the second defendant has no particular plans for it other than she wishes to keep it for her children on a sentimental basis. In respect of the property in which the deceased lived she claims of this is in disrepair and is not in a fit state to be leased. At this stage she has not thought of what she might do with the property other than nothing for the time being. In any event these properties are a source of another $840,000 capital for her. 39 The second defendant feels strongly that is was appropriate that her mother made these provisions in order to counterbalance the benefits that the father gave to her brother. In terms of equality of dealing with siblings this was an admirable feeling which was demonstrated by the deceased. Unfortunately it is not the only relevant consideration which I have to consider in deciding whether or not to accede to the plaintiff's claim. Other matters such as his current financial circumstances, those of his sister, their situation in life and relative needs are all important. 40 The plaintiff claims that he would like some additional income because his income from the farm is very low. However, that is so but he does not indicate the extent of any income supplement which he needs although he has given his weekly expenses which totalled $287.60. He talks of wanting to improve his property but does not indicate what increase in income might then be generated. In a sense the plaintiff seems to be committed to a lifestyle of living on a property and surviving on that income. It is a matter of lifestyle choice by him. 41 The plaintiff already has assets worth $272,160 in the form of his BHP Billiton shares. He has a liability for capital gains tax on the sale of those shares amounting to $37,548.93. He thus has sufficient funds to make nearly the whole payment to his former wife. If he were provided with further funds of $100,000 he could cover this liability and have a small amount left with which he could then decide whether he wished to remain on the property in his present lifestyle or take some other step. 42 The plaintiff's sister is more than adequately provided for under the will and, accordingly, it seems to me that is appropriate that the plaintiff receive a further legacy of $100,000. 43 The orders I make are as follows:

1. In addition to the benefits received by the plaintiff under the will of the deceased he receive provision by way of a further legacy of $100,000,

2. Interest shall run on the legacy provided for in 1 above at the rate provided for under the Wills, Probate and Administration Act 1898 on and from three months after date of these orders.

3. The plaintiff's costs on a party and party basis and the defendants on an indemnity basis be paid or retained out of the estate of the deceased. **********

15/05/2006 - Delete lower court decision date - Paragraph(s) not applicable

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