Plaintiff v Defendants

1 Peter Aloysius Costigan died on 5 August 2002 leaving a last will dated 22 December 1993. Probate of the will was granted to the executors Susan May Norton (his domestic partner of some 11 years), Gerard Anthony Costigan (his son) and Francis Xavier Costigan (his brother).

2 The scheme of the will was straightforward. The deceased left all of his estate upon trust for sale with the proceeds, after payment of the usual expenses, to be divided into four equal parts: two parts he gave to Ms Norton, one part to Gerard Costigan and one part to his daughter Nicole Francis Costigan. He made no provision for his eldest son, David Andrew Costigan.

3 Before the Court are two applications for provision, or further provision, brought by David and Ms Norton respectively. By order of 27 July 2004 the two proceedings were directed to be heard together and this occurred. I ordered, too, that in each case the evidence in one proceeding be evidence in the other.

4 The estate of the deceased comprised his six-sevenths' interest in the matrimonial home at 4 Webb Lane East Melbourne and a car park at that address, as well as some investments. He also had at the date of his death a superannuation entitlement to which I shall return.

5 The position as it now stands is that the car park has been sold. The estate still holds the home which is now valued at $650,000. The interest of the estate in this home is as to six-sevenths, so that the value of the asset for my purposes is $557,142.85. Ms Norton is the owner of the remaining one-seventh interest in the home. The property is subject to an undischarged mortgage of which the share of the estate is $97,349.83.

6 The other assets have been realised so that the estate has cash at bank totalling $57,537.37.

7 The deceased had, as I have mentioned, a superannuation entitlement. The amount standing in his name as at 3 June 2005 was $317,022.02. I was told that the disposition of this money lies in the discretion of the trustee of the superannuation fund. It might pay the proceeds to the executors, in which case it will be dealt with under the will, or to any or all of a number of persons, including Ms Norton and the three children. I was told, too, that all interested parties had requested the superannuation fund trustee to pay the whole of the amount to the estate. I have now been told that the trustee has complied with this request in the sense that, on 10 October 2005 it notified its decision to pay the whole of the proceeds to the estate. As at 21 October 2005, this amounted to $328,632.06. This, then, forms part of the estate for my purposes.

8 I approach each application by addressing first the question whether the deceased had a responsibility to make provision for the plaintiff. The answer in each case must be in the affirmative.

9 Ms Norton stands as the widow of the deceased. Although she is employed she, as a widow, is a person to whom the deceased had responsibility and, indeed, by his provision in her favour, it is clear that the deceased acknowledged this.

10 David, although a son of 40 years, has from birth suffered from a severe and permanent disability. He has had cerebral palsy and a history of mental retardation and epilepsy. He has never been able to manage his affairs or to live a normal life. He has since he was about two years old, lived in one institution or another where his special needs have been catered for. On 16 September 2002 State Trustees Ltd was appointed administrator of his estate under the Guardian and Administration Act 1986. He has cash assets of about $31,000 but is entirely dependant upon the State[1]. He is a man for whom the deceased, his father, clearly had responsibility to make provision.

11 The second question is whether the distribution of the estate under the will fails to make adequate provision for the proper maintenance and support of each plaintiff.

12 With respect to David, it was contended that this was not so, since he receives proper maintenance and support from the State. He resides in a supported accommodation unit in Wantirna and his health is good. He has, however, a mental age of three to five years. Doctor Richard Stark said of his life expectancy that it is possible he will live a normal lifespan but, because of his disabilities, the risk of premature death is greater than for a person without them. Doctor Man Hon Wong expressed the opinion that his condition will deteriorate in the future so that he will require a higher degree of care.

13 He receives a pension and a mobility allowance. These, together with interest, provide an income of about $571 per fortnight. From this he is obliged to pay for accommodation and program fees totalling $408 per fortnight. Other expenses take his fortnightly outgoings to $568.37 so that he has virtually no surplus. His living arrangements were described as spartan albeit adequate and his basic needs are met. The evidence, however, shows that, if provision were made for him, his quality of life would improve and also his chance of improving his life skills and reaching his full potential.

14 I am required by s. 91(4) to have regard to 12 matters when I consider this question. I will not extend this judgment by discussing the application of each of them in turn. I have had regard to them all. It may be that paragraph (n) has application for it was put that the maintenance provided by the State was adequate. I express no view as to whether the State has a "liability" to do this within the meaning of this paragraph.

15 I mention, too, paragraphs (f) and (h) which require me to have regard to the beneficiaries - to the responsibilities of the deceased towards them and to their financial resources. The evidence showed that the relationship between Gerard and Nicole and their father was good and that they were a loving and devoted family. This was not challenged. Nor was the affection and devotion which existed between the deceased and Ms Norton. Indeed, a happy feature of these proceedings was the total absence of bitterness and recrimination which are often a characteristic of these cases.

16 The evidence with respect to the financial positions of Gerard and Nicole leads me to conclude that they are comfortable and by reason of their education and skills well able to provide for themselves from their own resources.

17 I conclude that the deceased failed to make adequate provision for the proper maintenance and support of his son David.

18 Much of what I have written bears upon the answer to the same question with respect to Ms Norton. She is currently employed as administrator of an Australia-wide charity, Kid's Tennis Foundation. She receives a salary package which in the year ending June 2004 yielded her $73,000 income with $50,000 after tax. She has a one-sixth share in the Webb Street home and her share of the mortgage is $16,225[2]. She has superannuation of $69,000.

19 She told me that she and the deceased each paid their own way and that she contributed to the purchase of Webb Street. This presumably is reflected in the fact that the title stands in her name as tenant in common as to a one-seventh share.

20 Ms Norton is 57 years of age with a history of poor health over the past 10 years. She has suffered from cancer in 1993 and fears, naturally enough, a recurrence notwithstanding the passage of 12 years. She has lymphoedema and periodic bouts of cellulitis which require hospitalisation and treatment.

21 The entitlement of Ms Norton under the will is to one-half of the estate. The will also provides that the home be retained for her for 12 months with the estate paying its share of outgoings. This position has continued beyond the stipulated period and still obtains. The will, further, gives to her an option to purchase the home at valuation provided that the option be exercised within the same 12 month period. She has not exercised the option.

22 On her behalf it was put that the position of the estate is such that it would be difficult for her to have the whole of the house from her share. The total value of the estate is $834,353 from which are to be deducted the costs of the litigation and administration estimated to be about $200,000. Her entitlement on this basis is to one-half of $634,353, namely $317,177. If she were to purchase the home at current valuation for $557,142 she would need a further sum of about $250,000, allowing for her share of the discharged mortgage and the costs of the purchase including stamp duty.

23 In my opinion the provision made for her in the will was not adequate. It is clear enough that the deceased wished, as far as possible, for her to continue to live in the family home. Although his wishes are not one of the matters specifically listed in s. 91(4), I consider it proper to have regard to them as reflecting the views of what is a proper provision. I, too, think that as things have turned out, including this litigation, or perhaps that brought by David, she ought properly to have received a greater provision. I therefore answer the second question in her favour.

24 I turn now to the final question as to what provision or further provision should be made.

25 In the circumstances which I have set out, I consider that Ms Norton should receive the unencumbered interest of the estate in the property at Webb Street. This will mean that she will have title to all of the property with the mortgage discharged as to six-sevenths, being the estate's share. She has had the benefit of free occupancy of the home beyond the 12 month period. This may be seen as being in anticipation of the provision I give her so that, if it be necessary, I would extend the 12 month period to 31 December 2005, so that she will continue to enjoy occupancy free of outgoings until the property is transferred to her at that time. I decline to award her a widow's nest-egg since she has her own income and superannuation sufficient to cover her future expenses, and, further, having regard to the fact that the balance of the estate and the competing interests upon it do not permit this.

26 On current reckoning, this will leave in the estate something less than $100,000. I would consider this balance should be set aside as a fund for David. For reasons which I have mentioned in the course of argument, I consider that the balance of the estate be given to him subject to a discretionary trust under which the trustee might apply capital as well as income for his maintenance and support so as to give him the possibility of reaching his full potential, to adopt the expression of the geriatric nurse, Melanie Atkins. After the death of David, any undistributed capital and income should pass to his brother and sister, Gerard and Nicole, as is presently provided under the will.

27 There was some debate as to who might be the trustee of the discretionary trust. I consider that an appropriate person is Mr Francis Costigan who is, after all, the brother of the deceased and uncle of the beneficiary and an executor named in the deceased's will. It is apparent that Mr Costigan will have the interests of his nephew at heart and will be conscious of the competing interests of the remainderman. Accordingly, he should be the trustee if he is minded to accept this office. The terms of the deed are primarily a matter for the parties. I will reserve to them liberty to apply if difficulties arise.

28 I will order accordingly and, further, that the costs of each of the plaintiffs be taxed on a solicitor and client basis and paid out of the estate. The executors should have the usual order for their costs and expenses.

29 I will hear counsel further as to the precise terms of the orders to be made to give effect to these conclusions.

[1] In referring to the State I draw no distinction between the Federal and State government, I refer simply to the public purse.

[2] I speak here in the terms which she used in evidence. I have not seen the mortgage documentation, which would probably impose upon her a liability for the whole debt.