Ramsay v Schiller

Supreme Court of NSW|2012-06-01|Before: Mr J, Ms J

The Application 1HIS HONOUR: In the substantive proceedings, the Plaintiffs, Jennifer Ramsay and Lynn Maree De Fillippis, each of whom is a daughter of Jack Hicks ("the deceased"), applies for a family provision order under Chapter 3 of the Succession Act 2006 ("the Act"). The Act applies in respect of the estate of a person who died on, or after, 1 March 2009. A family provision order is an order made by the court, under Chapter 3, in relation to the estate, or notional estate, of a deceased person, to provide from that estate for the maintenance, education, or advancement in life, of an eligible person. 2The Plaintiffs commenced the proceedings by one Summons filed on 21 April 2011, that is, within the time prescribed by s 58(2) of the Act (not later than 12 months after the date of the death of the deceased). The Defendants named in the Summons, Loretta Schiller and Penny Lowe, are the executors named in, and to whom was granted Probate of, the deceased's Will. 3On 2 March 2012, the Defendants filed a notice of motion in which they sought "an order, pursuant to Uniform Civil Procedure Rules ("UCPR"), rule 28.4, that the issue, whether the property situated at and known as xxxxxxx, Yowie Bay, in the State of New South Wales, forms part of the notional estate of the deceased, be tried separately". They also sought an order that the costs of the motion be the Defendants' costs in the proceedings. (Hereafter, I shall refer to the land at Yowie Bay referred to in the notice of motion as "the Property".) 4In their written submissions dated 21 May 2012, the nature of the relief claimed by the Defendants on the notice of motion was "reformulated slightly" as follows: "3. The defendants seek an order ... for the separate determination of a question arising in the proceedings namely whether a property at Yowie Bay which the deceased transferred to the first defendant ("Ms Schiller") on 2 June 2006 is capable of forming part of the notional estate of the deceased for the purposes of the Act. As the defendants understand the position, the plaintiffs do not consent to that issue being heard and determined separately and in advance of the other issues in the proceedings." 5The Plaintiffs opposed the Defendant's then application "as presently framed". 6In their written submissions dated 28 May 2012, the Plaintiffs submitted as follows: "3.7 The wrong issue for separate determination is being sought. Were the defendants' application to be further 'reformulated' seeking an Order that the question whether the Transfer dated 2 June 2006 constituted a relevant property transaction pursuant to Division 1 of Part 3.3 of the Succession Act 2006 for separate determination, the plaintiffs would not oppose such an application." 7At the hearing of the notice of motion, the parties agreed that in the event that the court exercised its discretion, the question to be decided separately from, and in advance of, all other questions in the proceedings should be: "Whether the transfer by the deceased Jack Hicks to the first Defendant registered on 18 July 2006 in relation to the land in Folio Identifier xxxxx is a relevant property transaction within s 80(2) of the Succession Act 2006?" 8The affidavit in support of the notice of motion was one sworn on 5 April 2012 by Mr Angelo D'Agata, the solicitor with the carriage of the Probate on behalf of the Defendants. This affidavit was read, without objection, on the hearing of the notice of motion.

Background Facts 9The following facts are uncontroversial. 10The deceased died on 12 May 2010. He was then aged 77 years, having been born in January 1933. 11The deceased's first marriage was to Joan Margaret Smith. There were three children of their marriage, namely the two Plaintiffs, and Robert Hicks, who predeceased the deceased, having died in 1988. Each of the Plaintiffs, as a child of the deceased, is an eligible person within the meaning of that term in s 57(1)(c) of the Act. 12The deceased and Joan Margaret Smith separated in about 1969 and a divorce order, was subsequently made. Joan is, apparently, still alive and is currently aged 75 years. As a former wife of the deceased, she is an eligible person within the meaning of that term in s 57(1)(d) of the Act. She has not commenced any proceedings in respect of the estate of the deceased. 13The first Defendant, Loretta Schiller, married the deceased in January 1983. They separated in 1987 and a divorce order was subsequently made. There were no children of their marriage. As a former wife of the deceased, she, too, is an eligible person. She has not commenced any proceedings, but seeks to defend the Plaintiffs' substantive proceedings, as a beneficiary and as a person with a financial, and moral, claim upon the bounty of the deceased. 14The second Defendant, Penny Ann Lowe, is a daughter of the first Defendant by her prior marriage. There is no suggestion that the second Defendant is an eligible person within the meaning of that term in s 57 of the Act. 15The deceased left a Will that he made on 18 August 2006, Probate of which was granted by this court, on 23 February 2012. In summary, by that Will, the deceased bequeathed, to the first Defendant, his paintings, household chattels and the contents of the Property as well as his interest in a timeshare at Coolangatta; he forgave loans said to be owing by the second Plaintiff, and by his nieces, Robyn Russell, Judy Botham and Janet Hamilton; and he gave his Jeep, trailer, and the spare parts relating thereto, as well as his residuary estate to his five granddaughters, his four grandsons, his two daughters and two of his nieces. In his Will, the deceased noted that he had omitted three of his nieces from his testamentary provision 'because of past services' he had bestowed on them. 16The first Defendant disclosed in an affidavit filed in the proceedings, that the deceased's actual estate, at the date of death, had an estimated, or known, gross value of $308,195. (I have omitted any reference to cents and shall continue to do so.) 17In that affidavit, the actual estate was said by the first Defendant to consist of funds in bank, or in financial institutions, on deposit ($19,856), shares ($3,928), proceeds of superannuation as at 30 June 2010 ($236,411), shares in two private companies (unknown value but each with tax debts), a 1942 military jeep ($40,000) and another car ($8,000). (In the Inventory of Property the value of the estate was disclosed at $319,879.) 18The Defendants' solicitor stated in his affidavit in support of the notice of motion that the net value of the estate (not taking into account the costs of the proceedings) is $298,431. 19By instrument of Transfer dated 22 March 1983, registered on 12 May 1983, the deceased and the first Defendant acquired the Property, as tenants in common in equal shares. The consideration shown in the instrument of Transfer was $255,000. 20By an undated instrument of Transfer, registered on 14 June 1988, the first Defendant transferred to the deceased her one half interest as tenant in common "pursuant to s 87 Agreement dated 22nd October 1987". The reference to s 87 is a reference to that section of the Family Law Act 1975 (Cth) then in existence. 21Until July 2006, the deceased remained registered as the sole proprietor of the Property. 22In about April 2006, the deceased obtained a written valuation of the Property. The certified practising valuer, who provided the valuation, estimated that the fee simple market value, with vacant possession, as at the valuation date, was "fairly expressed" at $1,650,000. 23By instrument of Transfer dated 2 June 2006, the deceased transferred to the first Defendant "an estate in fee simple in remainder expectant upon the death of the Transferor". The consideration shown on this instrument of Transfer was $1.00, the receipt of which was acknowledged. The instrument of Transfer was stamped on 29 June 2006 (with duty of $34,622) and by dealing AC461671X was registered on 18 July 2006. 24On 18 July 2006, the Certificate of Title Folio Identifier relating to the Property was issued. A copy of that document reveals that the Property was registered in the name of the deceased "for a life estate" and in the name of the first Defendant "for an estate in remainder". 25The current value of the Property is between about $1.8 million and $2.0 million. 26At the hearing of the notice of motion, the parties agreed that: (a)the hearing of the separate question would take one half day; (b)If the court found that the Property, or part of it, could not be the subject of a notional estate order, the substantive hearing could take one day plus; (c)If the court found that the Property, or part of it, could be the subject of a notional estate order, the substantive hearing could take two to three days; (d)If the substantive proceedings were heard without any separate trial, it would be take two to three days. 27Each leading counsel submitted that the prospects of resolving the case would improve whatever the decision on the separate question was, although, of course, each could not say that the answer to the agreed question posed would conclude the substantive proceedings without a final hearing.

The Submissions in more Detail 28The Defendants submit: "10. The defendants propose that the question whether [the Property] is capable of being notional estate for the purposes of the Act be determined separately and in advance of the other issues in the proceedings. 11. It is the defendants' position that the Property is incapable of being treated as notional estate for the purposes of the Act. ... 15. The key enquiry in the present case relates to when the 2006 transfer by the deceased took effect for the purposes of the provisions of the Act which have been identified. If it took effect in 2006, then the property will not be available as notional estate for the purpose of the proceedings. On 18 July 2006 Ms Schiller became registered proprietor of a legal interest in the Yowie Bay property in remainder. The rights of the deceased as life tenant were established on that date. Ms Schiller's life estate matured into a fee simple upon the moment of the deceased's death without any transaction or act on the part of the deceased. Those rights were entrenched in 2006 at the time of the registered transfer. 16. If s. 77(1) of the Act is applicable, the transaction took effect in 2006 when Ms Schiller became registered property (sic) of the property. If that is the correct analysis then no question of notional estate arises. However, it is also necessary to consider the operation of ss. 76(2) and (3). Those are deeming provisions which treat the date of death as the relevant date of a property transaction in particular circumstances. However none of the subsections of s. 76(2) identified in s. 77(2) or (3) is applicable. S. 76(2)(a) is concerned with exercise of powers of appointment. S. 76(2)(c) is not applicable because Ms Schiller did not have a power to extinguish whatever interest was held by the deceased before his death. S. 76(2)(d) is concerned with life assurance policies and has no application. S. 77(3) is related to subparagraphs 2(b) and (e) of s. 76(2). Those provisions are concerned with different circumstances involving a joint tenancy or membership of a body corporate which clearly have no application here. 17. Accordingly, it is submitted that the operative provision is s. 77(1) which would mean that the relevant property transaction took effect in 2006 when the Yowie Bay property was registered in the name of Ms Schiller. The property was subject to a transaction which took effect outside the three year limitation period mentioned in s. 80(2)(a) of the Act. ... 20 The point is a short one and is not attended by any controversial question of fact. ... 22 Whichever party is correct as to the law which governs the position if a final hearing is necessary then that hearing will be shorter and simpler for the court and costs will be saved on all sides." 29The Plaintiffs submit: "3.2 [The submission at 20] misconceives the nature of the inquiry as to whether property should be designated as notional estate. That inquiry involves not just the question whether the deceased entered into a relevant property transaction... "3.5 ... In essence the plaintiffs submit that, while Ms. Schiller upon registration held a vested interest, such had not fallen into possession. It was not until the deceased's death that her interest fell into possession at which time she had the right, and only then, to apply to the Registrar-General pursuant to s. 101 of the Real Property Act for issue of a Certificate of Title. Since her interest in the remainder fell into possession upon, and as a consequence of the death of the deceased, this means that the Transfer was 'a transaction that took effect or is to take effect on the deceased's death' - see s 80(2). 3.6 ... the Transfer dated 2 June 2006 constituted a relevant property transaction for the purposes of the Act. Further submissions detailing this argument will be presented at the appropriate time.""

The Statutory Scheme and Applicable Principles 30UCPR rule 28.2 provides that the court may make orders for the decision of any question separately from any other question, whether before, at or after any trial or further trial in the proceedings. 31UCPR rule 28.3 provides that if any question is decided under this Part, the court must, subject to rule 28.4, either: (a)cause the decision to be recorded, or (b)give or make such judgment or order as the nature of the case requires. 32There is no definition of "question" in the UCPR. However, it is clear that the word includes any question or issue, whether of fact or law, or partly of fact and partly of law, and whether raised by pleadings, agreement of parties, or otherwise, which is necessary to determine in the proceedings. 33The power of the Court to order the separate determination of a question is discretionary and must be exercised judicially, but is otherwise not fettered. In determining whether to make an order, the Court is under an obligation to seek to give effect to the overriding purpose of the Civil Procedure Act 2005 and of rules of court to facilitate the just, quick and cheap resolution of the real issues in the proceedings: Civil Procedure Act s 56(2). 34Section 62 of the Civil Procedure Act is also relevant to the determination, as that section provides the court with power to give directions as to the conduct of any hearing, including directions as to the order in which evidence is to be given and addresses made. 35Whilst the dangers of making an order for the determination of a separate question are well known (see, for example, Perre v Apand Pty Ltd [1999] HCA 36; (1999) 198 CLR 180, per Callinan J at 332 [436]; Idoport Pty ltd v National Australia Bank Ltd [2000] NSWSC 1215; Tepko Pty Ltd v Water Board [2001] HCA 19; (2001) 206 CLR 1, per Kirby and Callinan JJ at [168]-[170]; Highlands Pacific Ltd v Orogen Minerals Ltd [2002] FCA 1104, per Drummond J at [11]; Save the Ridge Inc v Commonwealth [2005] (2005) 147 FCR 97; (2005) 142 LGERA 18, per Black CJ and Moore J at [15]), since the introduction of the Civil Procedure Act, this court has sometimes considered that a more interventionist approach might be adopted. 36In Integral Home Loans Pty Ltd v Interstar Wholesale Finance Pty Ltd [2006] NSWSC 1464 Brereton J said, at [6]: "[6] While much has been said against the resolution of separate questions in Courts of high authority, nonetheless, since the (NSW) Civil Procedure Act 2005, it is my view that the Court should take a more interventionist role in identifying and separating important issues which can resolve significant parts of the litigation expeditiously." 37However, in Street v Luna Park Sydney Pty Ltd [2007] NSWSC 697, Brereton J in declining an application for the separate determination of an issue, referred to his earlier remarks and, at [5], added: "That said, the considerations referred to by Kirby and Callinan JJ [in Tepko] remain pertinent matters to be taken into account in determining whether what remains the exceptional course of deciding preliminary issues, rather than the ordinary course of deciding a case in its totality, is to be adopted." 38His Honour's view in Integral Home Loans Pty Ltd v Interstar Wholesale Finance Pty Ltd was cited, with approval, by Hoeben J (as his Honour then was) in Johnson v Trustees of the Roman Catholic Church [2009] NSWSC 309 at [20]. At [21], Hoeben J noted that Brereton J's views "have been adopted and applied in a number of other first instance decisions: Commonwealth Bank of Australia v Clune [2008] NSWSC 1125 per Johnson J; Barbara O'Sullivan v Challenger Managed Investments Ltd [2008] NSWSC 602 per Einstein J; and Vero Insurance Ltd v Tran [2008] NSWSC 166 per Hamilton J". To these may be added Owners Corporation of Strata Plan 61390 v Multiplex Corporate Agency Pty Ltd (No 2) [2012] NSWSC 322, per Pembroke J, at [3]-[4]. 39In Downey v Acting District Court Judge Boulton (No 4) [2010] NSWCA 114, Basten JA noted that: "[14] The usual basis for determining one question (or group of questions) separately from other questions arising in proceedings is that determination of the separated question (or questions) will render unnecessary determination of the remainder. That may allow for an efficient allocation of court time and prevent unnecessary expenditure by the parties, but only when the separated question has a reasonable likelihood of determining the outcome of the proceedings and where there is significant quantifiable additional expense involved in preparing for, or determining, the remaining questions. ..." 40In Spirits International BV v Federal Treasury Enterprise (FKP) Sojuzplodoimport [2011] FCAFC 69, Rares J at [42], referring to AWB Ltd v Cole (No 2) (2006) 233 ALR 453 at 460-463 [26]-[40], distilled a number of principles, which are particularly relevant to the present case, and which in my view, are presently applicable: "[42] ... (1) As a general rule the starting point is that all issues of fact and law should be determined at the one time. (2) A party seeking the determination of separate questions must satisfy the Court that it is "just and convenient" for the order to be made. The order must be made on concrete facts, either established or agreed, for the purpose of quelling a controversy between the parties so as to produce a conclusive or final judicial decision on the issue, which is of a real, not hypothetical, importance to the determination of the controversy. (3) (3) There are special problems where the separate issue involves a mixed question of fact and law, although it may still be able to be decided as a separate issue. However, care must be taken in precisely formulating the question and specifying the facts upon which it is to be decided. (4) (4) The Court must have all relevant matters before it as a precondition of it being asked to exercise its discretion if the separate question involves the grant or refusal of declaratory relief. (5) It may still be appropriate to determine a separate question even if it will not resolve all the issues, provided that there is a strong prospect that the parties will agree upon the result when the core of the dispute has been decided or if the decision will obviate unnecessary and expensive hearings of other questions. (6) (6) Generally speaking an issue will not be appropriate for separate determination if it is simply one of two or more alternative ways in which an applicant or plaintiff frames its case and its determination would leave other significant issues unresolved. (7) (7) It is relevant to consider whether: the separate questions will contribute to the saving of time and cost by substantially narrowing the issues for trial or even lead to the disposal of the proceedings; they will contribute to the settlement of the proceedings; they will give rise to significant contested factual issues both at the time of the hearing of the preliminary question and at the time of the trial; there will be any significant overlap between the evidence adduced on the hearing of the separate question and a trial; the questions will prolong, rather than shorten, the proceedings."

The Questions that would arise on the Hearing 41Usually, in a claim for a family provision order, the issues for determination, at a final hearing, it being accepted that an applicant is an eligible person (and that is unnecessary for factors warranting the making of the application to be established), and if there is an issue of a notional estate order, will be: (a)Whether adequate provision for the proper maintenance, education and advancement in life of the applicant has not been made by the will of the deceased, or by the operation of the intestacy rules in relation to the estate of the deceased, or both (s 59(1)(c)). (b)If the Court is satisfied of the inadequacy of provision, whether a family provision order should be made, and if so, the nature of the order, having regard to the facts known to the court at the time the order is made (s 59(2)). (That the court has a discretion means that it may refuse to make an order even though the jurisdictional question has been answered in the applicant's favour. The Court may have regard to the matters set out in s 60(2) for the purpose of determining, relevantly to this case, whether to make a family provision order and the nature of any such order). (c)If a family provision order is to be made, whether it is to be made out of the estate of the deceased, or whether it is to be made in relation to property that is not part of the estate of the deceased, if it is designated as notional estate of the deceased by an order under Part 3.3 of the Act (s 63 of the Act). (d)The last question will require court to determine whether (i) the deceased person left no estate, or (ii) the deceased person's estate is insufficient for the making of the family provision order, or any order as to costs, that the Court is of the opinion should be made, or (iii) provision should not be made wholly out of the deceased person's estate because there are other persons entitled to apply for family provision orders or because there are special circumstances (s 88). (e)Whether property may be designated as notional estate also depends on whether the Court is satisfied that the deceased entered into a "relevant property transaction" before his, or her, death (s 75 and 76 of the Act) and that the transaction is a transaction to which s 80 applies. (f)The Court must not, merely because a relevant property transaction, has been entered into, make an order unless the Court is satisfied that one or more of the matters in s 83(1) of the Act has occurred, and then, only after it has also considered the "general matters" in s 87 of the Act. The court must also have regard to the matters in s 89 of the Act. The court, then, exercises a discretion in determining whether to make a notional estate order. (g)What amount of property, if any, is necessary to be designated as notional estate must be determined, because the Court must not designate as notional estate property that exceeds what is necessary, in the Court's opinion, to allow the provision that should be made, or, if the Court makes an order that costs be paid from the notional estate under s 99, to allow costs to be paid as ordered, or both (s 89(2)). (h)Even if a notional estate order is made in respect of property, the court may, on application by a person who offers other property in substitution, vary the notional estate order by substituting the replacement property for the property designated as notional estate by the order, or make a notional estate order designating the replacement property as notional estate instead of the property proposed to be designated as notional estate by such an order, as appropriate: s 92(2) of the Act. 42In the past, a question similar to the one sought to be determined separately has been the subject of an order for a separate hearing. In Flinn v Fearne [1999] NSWSC 1041, Master McLaughlin (as his Honour then was) acceded to an application by the plaintiffs, to which the defendant consented, for the determination, pursuant to Part 31 rule 2 of the Supreme Court Rules, of a separate question before the hearing of the substantive proceedings, such separate question being as to the existence of a prescribed transaction. 43The separate question, in that case, was in the following form: "[7] ... Whether the deceased entered into a prescribed transaction in regard to the property being the assets of G & K Fearne Family Trust, such that the Court is entitled to designate any property of the G & A Fearne Family Trust notional estate of the deceased." 44Although reference is also made in the Defendants' submissions to Hill v Hill (NSWSC, 13 March 1997 (then written submissions), 19 May 1997, unreported) as an example where a separate question was ordered, in fact, in that case, Young J (as his Honour then was) said: "The present proceedings were put into the short notice list, the sheet handed to the Registrar summarizing the dispute as "Separate question to be determined (Pt 31 r 2(a):- 'Do the benefits payable under the State Authorities Superannuation Act 1987 form part of the estate or the notional estate of the late Dianne Joan Hill pursuant to the Family Provision Act 1982.'" In fact no Judge or Master had ever ordered that any such question be determined as a separate question, and indeed, I dare say no Judge would have made such an order." 45Neither of these cases assists me in the determination of what the court should do in the present case. I have noted each simply because it was referred to in the Defendants' submissions and I have read and considered them.

Determination 46The real thrust of the Defendants' argument appears to be that if the separate question is ordered the result will be that the Plaintiffs' proceedings may be able to be resolved by the parties without the need for a full hearing. The Plaintiffs express a similar view. 47However, there is no suggestion that the determination of the separate question proposed, if the Defendants' submissions were to be accepted (i.e. there is no property that could be the subject of a notional estate order) will quell the whole of the controversy between the parties. There remains actual estate, with a net value of about $298,000, from which a family provision order may be made in favour of one, or both, of the Plaintiffs. I appreciate that the value of the estate may be reduced if an order for the costs of one, or all, parties to be paid out of the estate is made. But, unless the Plaintiffs each decide not to continue the proceedings (and it has not been suggested that such instructions have been given), the hearing of one, or both, of the claims for a family provision order will continue to a final hearing. This seems to be accepted by the Defendants (see, paragraph [22] of the Defendants' submissions). 48Alternatively, if the separate question posed resulted in the Defendants' submissions not being accepted (i.e. there is property that could be the subject of a notional estate order), whether such an order should be made would remain to be decided after some, or all, of the other matters for decision to which I have referred. In addition, then, depending on whether a notional estate order was made, the first Defendant may offer other property in substitution. It has not been suggested that she would do so, but the possibility exists. 49Next, the savings in estimated time and costs are relatively small. I take into account, also, that the legal representatives could have preparation time in respect of two hearings. 50Also, there is the possibility of an appeal on any of the issues determined, including on the answer to the question sought to be determined as a separate question. Needless to say, an appeal should deal with all matters at the same time and no party will be prejudiced (for example by not adducing evidence) if the answer to the separate question is given as part of reasons for judgment that follow a full hearing. (It was submitted that if the separate question were determined, some evidence would not have to be served. The problems that would be caused by a successful appeal in those circumstances are obvious.) 51Whilst it may be that the matter cannot be resolved because the parties have differing views about the value of the estate, or what is, or what may be, designated as property the subject of a notional estate order, that is not the only matter that should be taken into account on this application. The legal representatives on each side are experienced and capable practitioners and, no doubt, have considered the merits of the arguments to be advanced on the separate question and whether a notional estate order in respect of the Property can, and whether it is likely, ultimately, will be made. Their responsibilities to the parties represented, and to the court, will not permit them to advance a case that is without merit. 52It follows that the separate determination of the question posed between the parties, and its resolution will neither obviate the necessity of litigation altogether, nor, in my view, substantially narrow the field of controversy. The parties will remain the same at the hearing whatever the result of the determination of the separate question and many of the factual, and other, matters will remain to be decided. 53In all the circumstances, as a matter of discretion, I am of the view that the notice of motion should be dismissed and I so order. 54Following the delivery of these reasons, the parties agreed that the appropriate costs order that I should make is that the costs of the Defendants' notice of motion be the Plaintiffs' costs in the cause. I agree, and I so order. Also, by agreement, I direct the Defendants to serve any further affidavits upon which it is intended to rely by 4:00 p.m. on Friday 29 June 2012 and stand the proceedings into the Registrar's List at 2:00 p.m. on Tuesday 3 July 2012.

Amendments 05 June 2012 - Date incorrect Amended paragraphs: Cover page DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 05 June 2012

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