(iii) For the purposes of the Family Provision Act application, whether (having regard to the circumstances existing at the date of the hearing) there was, as a matter of fact, inadequate provision made for Mrs Scott's maintenance and advancement in life under the deceased's will and, if so, as a matter of discretion what (if any) should be the proper provision for Mrs Scott's maintenance and advancement in life. (There is no doubt that Mrs Scott is an eligible person within the definition in s 6 of the Family Provision Act .)
Facts
7 There is no dispute as to a number of the matters relevant by way of factual background to Mrs Scott's claims, which I summarise as follows.
8 Mrs Scott married the deceased on 29 September 1981. It was for each of them a second marriage, Mrs Scott's first husband having died in October 1980 and Mr Scott having divorced his first wife in 1981. Mr Scott had two sons from his first marriage (the elder being the executor). Mrs Scott had two children from her first marriage. During their marriage the couple also fostered a daughter whom the deceased treated as one of the family, something which Mrs Scott says caused "a good deal of animosity between the young people in the family" (T 40.19). In a "To Whom It May Concern" letter written by Mrs Scott, annexed at p 49 to the affidavit of Tamara Tunnicliff sworn 8 May 2008 (to which I will refer in more detail later) Mrs Scott apparently acknowledges that the deceased distributed funds to their foster daughter before he died.
9 The deceased and Mrs Scott were married for 16 years. With the exception of a period between July 1998 and January 2000, when they were separated for the first time, they lived together until May 2005 when Mrs Scott moved into a property acquired (with the assistance of the deceased) solely in her name ("the Nelson Bay property").
10 The first matrimonial home of the deceased and Mrs Scott was the Long Jetty property purchased in March 1982 for the sum of $63,000. The property was transferred to them as tenants in common in unequal shares, Mrs Scott having a three quarter share and the deceased having a one quarter share in the property. The whole of the purchase price was paid by Mrs Scott, using part of the proceeds received by her, after her first husband's death, from his superannuation proceeds and a life assurance policy. The house on the Long Jetty property was demolished and a new home was built on the property, in which the deceased and Mrs Scott lived until May 2000. That development of the Long Jetty property was funded by two loans, taken out jointly by the deceased and Mrs Scott (totalling $70,000). (In passing, I note that if the proportionate contribution to the development of the property is taken into account with the parties' initial contributions to the purchase price, then, on my calculations, Mrs Scott contributed just under 75% of the total funds and the deceased 25%.)
11 Various other properties were acquired and sold from time to time by the deceased and Mrs Scott over the course of their marriage. The deceased was a licensed real estate agent and held licences or interests in various real estate agency businesses over the course of their marriage, the last being a real estate agency in Port Stephens run through a company (Wanda Beach Realty Pty Limited). The evidence was that the deceased established this business at Mrs Scott's behest and Mrs Scott accepted that he had not been happy running the business ("he would have rather been at the coastal patrol than at the business I have to tell you, yes" (T 42.36) and "Christopher would have preferred me to be working for someone else and bringing in an income than using our savings to support our business, in that way he was unhappy" (T 43.7)).
12 At least in relation to the Soldiers Point property, the evidence suggests that its acquisition (at a time when the couple already owned another unit in the development) was the subject of some unhappiness between the couple or at least that this was the deceased's perception - the deceased apparently blaming financial losses (said to be of over $150,000 on the acquisition of this property and another $100,000 on his involvement in Wanda Beach Realty) on, and referring to there having been "considerable friction over", decisions made or instigated by his wife in relation thereto. The deceased ascribed the cause of friction to the fact that the moneys had to come out of the couple's superannuation fund. Mrs Scott did not accept that there was friction between them over this (T 42.24; T 43.12-17).
13 At the time of their separation in May 2005, the major assets of the deceased and Mrs Scott were the Long Jetty property (the title to which was held by them as tenants in common in the ratio three quarters/one quarter noted above); the Soldiers Point property (which they owned as joint tenants); and a joint bank account. The deceased at that stage also owned a boat ("Flawless") which was apparently registered in his name alone. Mrs Scott's description was that they were "asset rich and cash poor" (T 42.46).
14 There is a dispute as to the characterisation of the parties' relationship after, and the circumstances in which, Mrs Scott left the Soldiers Point property then shared by the couple in May 2005.
15 The deceased's "Notes of Explanation" to his last will and testament, annexed to a statutory declaration made by him before a solicitor on 10 August 2007 (annexed to pp 44-46 of Ms Tunnicliff's affidavit), in which he had referred to the friction between the couple noted above, stated:
Rhonda decided that she would prefer to live without me in the latter half of 2004 and announced her intention to separate on 31 December 2004.
16 Mrs Scott was not prepared to accept that the deceased had accurately reported in his Notes of Explanation that she "decided that she would prefer to live without me in the latter half of 2004", only accepting that the situation, as the deceased had described it, was correct if the words "would prefer to live without me" meant that she wanted to live under a different roof. Her evidence was that she wanted to live "not without him but under a different roof (T 40.30) … in a place where I could be separately locked" (T 40.40). (Earlier she had referred to wanting to live in a "safer" place (T 29.46) and in her affidavit sworn 24 October 2008 she swore that she had left the deceased because of his "chronic alcoholism" and that he was "becoming abusive".)
17 Mrs Scott also resisted the proposition that she had "announced" to the deceased on 31 December 2004 that she was going to leave him but nevertheless accepted that on 31 December 2004 she had informed (or announced to) her son-in-law (Mr Mark Nash) that she could no longer live with the deceased. Nevertheless, she says she asked Mr Nash to take the beneficiary home because she did not want the beneficiary to be there with "any" unhappiness (T 41.2-14)) which is consistent with Mrs Scott informing or planning to inform the deceased on or about that time of her intention to move out of their then home.
18 Mrs Scott became very upset in the witness box at various times during the course of her evidence. She was clearly reluctant to accept that there had been a separation as such from the deceased. However, Mrs Scott readily accepted that she had decided by 31 December 2004 that she could no longer live under the same roof as the deceased (although later asserting that the deceased could have lived with her at the Nelson Bay property provided that she was able to lock herself away from him). In cross-examination Mrs Scott said that she had told the deceased on or around New Year's Eve 2004 that she had to find somewhere to live other than with him, that she wanted "a place not under his roof", but she would still look after him (T 30.15).
19 Mrs Scott's somewhat contradictory evidence in this regard appeared to be motivated by a concern to emphasise that there was no final settlement (such as might preclude her present claim). The distinction between living in separate houses and living "apart" (which Mrs Scott makes in her To Whom it May Concern letter) is otherwise inexplicable. Although Mrs Scott, in more than one affidavit, said that she and the deceased had never discussed divorce, Mrs Scott did in that letter concede that "No doubt because Chris and I live in separate houses we were considered divorced", which seems to me to be an acceptance by Mrs Scott of what the family and (and community) perception could reasonably have been of the finality of the matrimonial bond (in spirit if not in name) between her and the deceased (ie that, whether or not the Family Court had so declared, their marriage was effectively over).
20 In later cross-examination, Mrs Scott was emphatic that neither she nor the deceased "considered we had separated" (T 46.37) until 27 June 2007 (a date the significance of which was not made clear to me). Nevertheless, she was adamant that, had she known the deceased was changing his will, she would have divorced the deceased (T 53). Therein, in my view, lies the nub of Mrs Scott's understanding of the situation prior to the deceased's death and her complaint at what the deceased had done.
21 It is not disputed that from early January 2005 the deceased and Mrs Scott commenced searching for a property in which Mrs Scott could live separately from her husband. In late April 2005, Mrs Scott purchased a property in Nelson Bay ("the Nelson Bay property") in her sole name for the sum of $400,000 (the purchase financed by a bridging loan guaranteed by the deceased and/or secured over the Soldiers Point property). The deceased continued to live in the Soldiers Point property until it was sold in December 2006 for the sum of $735,000, the net proceeds of which being $659,721.65.
22 On 21 December 2006, the deceased purchased the Salamander Bay property in his own name for $370,000. There does not appear to be any dispute that the Salamander Bay property was acquired with part of the proceeds of sale of the Soldiers Point property.
23 On 29 December 2006, the Long Jetty property was sold for the sum of $535,000 (the net proceeds of sale being $523,104.56), almost all the proceeds of which were used to discharge the mortgage over the Nelson Bay property (or perhaps to discharge most of the mortgage, there being a small residual amount owing on the mortgage of about $17,000, although it is not clear whether this was from the original borrowing or a later addition to the mortgage).
24 In October 2006, the deceased's boat "Flawless" (bought, it was said, with joint funds) was sold for $110,000. In late 2006, the real estate business (which had been established by the deceased towards the end of 2002) (Wanda Beach Realty) ceased to trade and the company seems to have been wound up around that time.
25 Proceeds of sale of the two properties which were sold in December 2006 (the Long Jetty and Soldiers Point properties) totalled $1,239,509.71, of which Mrs Scott accepts that she received sums totalling $494,253.45 and $56,683.50 (paragraphs 2 and 4 of Mrs Scott's affidavit of 6 March 2009). Mrs Scott also received the sum of $50,000 in December 2006 (see para 6 of affidavit of 6 March 2009) from the joint bank account she still held with the deceased at the time of his death.
26 The deceased received, out of the proceeds of sale of the two properties, the sum of $377,352.11 which he applied to the purchase of the Salamander Bay property and the sum of $311,220.70 which was deposited in the bank account held in the joint names of the deceased and Mrs Scott.
27 It is not disputed that Mrs Scott continued to provide care to the deceased during their separation at least up until June 2007 - for example, she did his ironing, she took him to the doctor, she assisted him when he was admitted to hospital on a medical emergency, and (until June 2007) she attended various family functions at which the deceased was also present. Mrs Scott's evidence was that she always expected to be looking after the deceased and did so until his birthday in June 2007 (para 13, affidavit 24 October 2008).
28 In or about May 2007, an issue arose when the deceased became aware that Mrs Scott was to be accompanied to a family birthday party by a male friend ("James") whom she says she met in March 2007 (T 50.8). Mrs Scott says he is a friend who runs a book stall at the local markets and that he is "everybody's friend at the markets" (T 50.31). There is no evidence as to the precise nature of the friendship or relationship between Mrs Scott and James (other than that the deceased was not happy when Mrs Scott told him whatever it was that she in fact told him about James (T 50.14) and the deceased seems to have believed that Mrs Scott was in a sexual relationship with someone towards the end of 2007 (see email in October 2007, Annexure H to Mrs Scott's affidavit of 12 August 2008)).
29 It seems not to be in dispute that the deceased (who I would infer, from evidence produced by Mrs Scott of email communications between the deceased and various people, was himself seeking female companionship at the time) was very upset at the news that Mrs Scott was to attend a family birthday party accompanied by James in May 2007 and that he did not himself attend the function for that reason. Whether that precipitated the realization that the marriage was truly over on 27 June 2007 (to which Mrs Scott seems to have referred obliquely in her evidence that until that date the couple had not considered themselves "separated") is a matter for conjecture and, in my view, irrelevant to the issues before me; the relevant fact being that at least by the end of June 2007 both Mrs Scott and the deceased (perhaps for different reasons) appear to have considered the marriage was at an end.
30 Nevertheless, Mrs Scott placed emphasis both in her affidavit and oral evidence on the fact that they were not divorced and said that she considered herself his wife "he was my spouse until he died" (T 57.25), "I won't let anybody call me Ms. I worked very hard for my Mrs and I kept it" (T 57.35).
31 On 10 August 2007, the deceased made his final will, appointing his son Neil as executor and leaving the whole of his estate to the beneficiary or, if she predeceased him, in equal shares to his grandchildren, expressly including the children of his stepson and his foster daughter (thus evidencing that the deceased drew no distinction between his own biological children/grandchildren and those of his wife nor indeed between the couple's respective biological children and their foster daughter).
32 The deceased's reasons for his testamentary disposition were carefully recorded in the Notes of Explanation annexed to a statutory declaration affirmed by him on 10 August 2007 and witnessed by his solicitor, from which it is clear that the deceased considered that each of his natural children and stepchildren had been adequately provided for during his or her lifetime (and would be likely to "inherit from other sources") and that his foster child had also received financial assistance from him.
33 The Notes of Explanation also made it clear that the deceased considered that he and Mrs Scott had "divided our assets by mutual agreement" (something Mrs Scott vehemently denies).
34 The deceased's intentions and understanding of the position as it then stood between himself and Mrs Scott are also evident from his 9 August 2007 email communication with the executor, his son Neil, in which the deceased refers to the arrangements he had made "in case anything should go wrong with me" and asserts that Mrs Scott has no interest in the Salamander Bay property. (Perhaps, optimistically, the deceased expressed the belief that the explanatory notes he had made would avoid challenges, something about which he was much mistaken.)
35 Indicative, perhaps, of the deceased's perception of his relationship with Mrs Scott at that time, is that the Notes of Explanation contained his wish to have his ashes scattered at sea with the only family representatives to be the beneficiary, Mr Nash, the executor and the executor's wife.
36 The deceased died on 19 December 2007. On 20 December 2007, Mrs Scott took possession of the Salamander Bay property and she has since then refused to vacate that property. Her Nelson Bay property remains vacant. She has not sought to tenant that property.
37 The contents of the deceased's Notes of Explanation were the subject of response by Mrs Scott in the form of her "To Whom It May Concern" letter. Mrs Scott found the Notes by accessing a computer in the deceased's Salamander Bay property (which Mrs Scott said was hers (T 39.21) or linked with hers but which the deceased was obviously using for his own personal correspondence) sometime shortly after his death (T39.39), before she became aware of the contents of his will.
Principal claims by Mrs Scott
38 Leaving aside, for the moment, the Family Provision Act claim, there were a number of scenarios put forward on behalf of Mrs Scott, as to the amounts claimed to be owing to her, dependent on the court's findings as to her principal resulting trust/joint tenancy claims.
39 The first scenario assumed that the Long Jetty property was held on a resulting trust and that there was no severance of the joint tenancy in respect of the Soldiers Point property (or the joint bank account), in which case it was said that Mrs Scott was entitled to the sum of $292,660.67 (tracing the joint funds into the Salamander Bay property (notionally valued at $370,000) and the balance of the joint account at the date of the deceased's death).
40 Scenario two assumed that there was a resulting trust in respect of the Long Jetty property but that the joint tenancy was severed (in which case Mrs Scott again claimed the balance of the net proceeds of sale of the Long Jetty property but only half of the net proceeds of sale of the Soldiers Point property and the balance of the joint bank account at the date of the deceased's death (totalling $280,863.24).
41 The third scenario, which for the reasons set out below I consider to be the correct one, is on the basis that the presumption of resulting trust is rebutted (such that the beneficial ownership in the Long Jetty property equated to the legal ownership) and that there was a severance by conduct of the joint tenancy (so that Mrs Scott was not entitled by way of survivorship to the whole of the balance of proceeds of sale of the Soldiers Point property after the deceased's death). In this scenario, the claim put was for $150,087.09 plus interest (which has been calculated by Mrs Scott's legal representatives from the date of settlement of the Soldiers Point property at $36,724.05 up to a date said in the Schedule of Interest to be 06/09/2009, which I read as being 9 June 2009).
(i) Resulting Trust
42 As noted above, the Long Jetty property was acquired solely out of moneys provided by Mrs Scott. Accordingly, there is a presumption, arising from the fact that the legal title does not reflect all of her contribution to the purchase price, that the beneficial ownership of the property (unlike the legal title) is held solely by her. In Calverley v Green (1984) 155 CLR 242, it was recognised that such a resulting trust arises at the time of acquisition of the property.
43 It is clear that, absent agreement between the parties, the beneficial interest arising under such a resulting trust is not changed by later contributions to the property (Shepherd v Doolan [2005] NSWSC 42; see also Buffery v Buffery & Anor [2006] NSWSC 1349). As there is no presumption of resulting trust from the making of capital contributions to the improvement of the property, the fact that the deceased had borne a proportion of the cost of the improvement of the Long Jetty would not of itself have affected a resulting trust which had earlier arisen on the payment of the purchase price.
44 There is no presumption of advancement arising from a contribution from wife to husband in these circumstances (para 12.17 Jacob's Law of Trust).
45 Therefore, the fact that Mrs Scott paid the whole of the purchase price means that her husband's interest in the Long Jetty property will have been held on resulting trust for her unless either the presumption of a resulting trust is rebutted (by evidence of an intention on Mrs Scott's part that the beneficial interest should lie in accordance with the legal title) or there was a later agreement (of which there is no evidence) to alter the equitable interest in the property so acquired. The onus of rebutting such a presumption lies on the executor. It is clear that it is Mrs Scott's intention alone which is to be ascertained (Calverley v Green).
46 As to the standard of proof in this regard, there are cases in which it has been suggested that the presumption of a resulting trust is not lightly displaced. (See Buffery v Buffery (supra), but see Prentice v Cummins (No 6) (2003) 134 FCR 449 at [61], where it was suggested that relatively slight evidence may be sufficient to displace a presumption of resulting trust where a married couple purchases in their joint names what is to be their matrimonial home having both made substantial, albeit unequal contributions to the acquisition.) Here, it is said that the evidence goes beyond what was sufficient to displace a resulting trust in Prentice (though, clearly, in relation to some matters there considered relevant by Sackville J (such as contribution to acquisition) this cannot be the case).
47 Nevertheless, in Damberg v Damberg [2001] NSWCA 87 Heydon JA (as his Honour then was) was of the view that such statements do not alter the standard of proof, that being on the balance of probabilities. There (admittedly when considering the presumption of advancement) his Honour noted that rebuttal of the presumption called for proof of a "definite intention" not, citing the words of Dixon J in Drever v Drever [1936] ALR 446 at 450, a "nebulous intention [to rely upon the … relationship as a source of control of the property]". Matters such as those discussed by Sackville J in Prentice may well be relevant to consideration of the probability that a particular intention existed, but they do not shift the substantive standard of proof. I have approached the question as to whether the presumption of resulting trust has been rebutted on this basis.
48 Mrs Scott was cross-examined as to her intention at the time of acquisition of the Long Jetty property and as to the circumstances in which title to the property came to be held in the proportions that it was.
49 Mrs Scott gave evidence that she knew, when she signed the title document for the Long Jetty property, that it was to be held as a tenancy in common three quarters to her and one quarter to the deceased (T 28.33; 49); when asked whether she was saying she did not want to agree to that, she said, somewhat confusingly, "I didn't know, the money was [mine] … And I thought it would be all my property" (T 28.27; 30). Nevertheless she knew when she signed the documents that they said, "tenants in common" (T 28.34) and said, "I knew that it was as tenants in common - three quarters to me and one quarter to Chris".
50 Mrs Scott agreed that the plan when the Long Jetty property was bought was that the whole house was to be removed and a new home built; and that the deceased was going to be spending money (with her) on the new building (T 34.15; 24; 39). Mrs Scott said she believed that that [from which I understood her to be referring to the fact that the deceased would be spending money on the land] was why the solicitor said the deceased was to be on the title and she did not argue with that (T 34.45; 50) even though she said, "At the time we bought it, it didn't seem fair because we hadn't done the development for another 12 months or whatever …" (T 35.2). Nevertheless, she says she trusted the deceased, "and I saw the reasoning why he had to be on the title, so we could borrow in joint names, both names into the property. I couldn't expect Chris to borrow money and, in something that he didn't, he wasn't protected for the bit that he put in" (T 35.35) (my emphasis).
51 It was submitted that objectively it was unlikely that there was an intention to make such a gift at the time the parties were only just married, given that the amount paid for property was not an insignificant sum of money at the time. However, it does not seem to me implausible that, on their marriage, Mrs Scott would have intended her contribution of the whole of the purchase price to be treated as a contribution by her to the planned overall development of the property for the purposes of their marriage (something to which the deceased was also financially to contribute through the mortgage funds to be procured) and that they should hold the title to the property in shares consistent with their respective contemplated contributions to both the acquisition and development.
52 While Mrs Scott said that, as to her understanding as to what it meant for the title to be shown as a tenancy in common three quarters/one quarter, "What I thought it was because we were going to redevelop the property and that we would, then, jointly borrow moneys to build a home, and that Chris needed it on the title to do that" (T 29), I did not understand Mrs Scott's evidence to be that the deceased's name was put on the title as a formality solely in order to make it possible for there to be a borrowing in both names in respect of the property given her acceptance that the deceased should be "protected for the bit he put in".
53 Mrs Scott accepted that she and the deceased had a plan to buy the property, knock it down and rebuild so that it would be their family home (T 35) and she accepted that she signed the transfer knowing that the land would be transferred into both names in the shares specified to protect the deceased's contribution to the property. What Mrs Scott resisted was not the fact that there was a common "plan" to develop and own the property together (with the deceased to be on the title for one quarter of the property) but rather the notion that there had been an "agreement" as such (T 35.45). In this respect it would seem that what Mrs Scott was denying was that there was any formal signed written agreement ("I would have said to him I'll buy the land and I knew that when we built that we would be borrowing the money. But whether, I didn't say an agreement. I'm not understanding" (T 36.12)), rather as she later took issue with the suggestion by the deceased that there had been a settlement or division of the couple's assets seemingly by reference to, or at least with emphasis on, the fact that there had been no final settlement approved by the court.
54 Although somewhat confusing in the way she gave her evidence on this question, I conclude from the evidence that, at the time Mrs Scott and the deceased acquired the Long Jetty property, they had a mutual understanding or plan that the existing house on the property would be demolished and a new family home built on the property, in respect of the costs of which the deceased would contribute, and that while her initial contribution was of the whole of the purchase price and not matched by a contribution from the deceased, nevertheless it was anticipated that in 12 months or so when the development was carried out the deceased would have made his (admittedly lesser) monetary contribution. Significantly, in my view, Mrs Scott said she accepted that it would only be fair in those circumstances for the deceased to own a portion of the land and I note that the "bit" the deceased in fact put in, represented about a quarter of the overall acquisition/development costs.
55 Such an understanding or intention (namely that the land would be bought with moneys provided solely by Mrs Scott, but that the title would reflect proportionate shares on the part of Mrs Scott and the deceased because it was intended that the deceased would contribute to the planned improvement of the property and was therefore to have a share in the property), is sufficient (as was conceded by Mr Armfield, though he did not concede the existence of such an intention) to rebut the presumption of a resulting trust.
56 Accordingly, I find that the presumption of resulting trust has been rebutted and that the deceased's interest in the Long Jetty property up to the time it was sold was in accordance with the legal title, namely as a tenant in common as to 25%. On that basis, of the proceeds of sale of the Long Jetty property ($523,104.56) it appears that Mrs Scott in fact received more than a 75% share ($494,253.45 being applied to discharge the Nelson Bay borrowings). The deceased's share on a 75:25 division would have been $130,775.14, (which would have meant that, subject to their other property dealings, Mrs Scott was accountable to him for the sum of $101,925.03).
57 If I had found a resulting trust in respect of the one quarter share of the Long Jetty property in respect of which Mrs Scott did not hold legal title, this would mean that Mrs Scott should have had all of the net proceeds of sale (namely $523,104.56). In fact, the acquisition of the Nelson Bay property seems to have accounted for the bulk, if not all, of that amount (there being a small shortfall of about $28,000).