Sharp v Sharp

SOLICITORS : Baker Love for plaintiff Barker & Barker for defendants

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

5399/08 ELSA SHARP v PETER ROBERT SHARP and STEPHEN JOHN SHARP - ESTATE OF THE LATE WILLIAM EDWARD SHARP

1 HIS HONOUR: This is an application under the Family Provision Act in respect of the estate of the late William Sharp who died on 5 May 2007. He was survived by the plaintiff, his second wife, and his sons and a daughter from his first marriage. The last will of the deceased 2 Both the deceased and the plaintiff made wills in corresponding terms on 24 November 2004. Under the deceased's will he appointed his two sons as executors and gave his wife, the plaintiff, the option of purchasing his half interest in the matrimonial home at Marmong Point on the Central Coast at an independent valuation. The plaintiff has not exercised that option. 3 In the events which have happened, namely the subsequent death of his daughter, the residue of his state passed:

(a) to his son Stephen as to 50%; (b) to his granddaughter Natalie Carter as to 25%; (c) to his granddaughter Jacqueline Carter as to 25%. 4 In the plaintiff's will executed the same day the residue passed to the children and some grandchildren of the plaintiff by a former marriage. The estate of the deceased 5 The estate of the deceased consists of his half share in the matrimonial home, which half share would be worth $132,500. The only other asset is cash held in the estate of $221,304.38. 6 The plaintiff's costs to date are in the sum of $58,750; and the defendants $60,000, a total of $118,750. Family History 7 The plaintiff was born in January 1924 in Germany. The deceased was born in July that year in New Zealand. The plaintiff migrated to Australia with her first husband and four children in 1954. Her husband died in 1969 and after that the home which they owned unencumbered was transferred into the plaintiff's name. 8 The deceased and his son Peter moved in 1969 to Nabiac in New South Wales and in 1970 the plaintiff also moved to the area because it was a new place where she could obtain work after the death of her husband. 9 In 1971 the deceased and his son Peter established an earth moving business known as Sharp and Son. In 1973 the plaintiff sold her property, which had been transferred to her following the death of her husband. At Billaroo in October that year she married the deceased. She moved to the farm with him at Nabiac. Later that year he sold the farm and received approximately $40,000. He and his son also sold their earth moving business, the sale of that equipment having been for farm clearing and that sale raised a sum of about $12,000. 10 Thereupon the deceased acquired a caravan and he and the plaintiff and his son Peter travelled up through northern Australia. That was interrupted and they returned and came back lower down to Queensland. Then they located a property at Monto in Queensland which the deceased and his son Peter purchased for $82,000. The deceased paid $40,000 towards the purchase and $42,000 was borrowed from the Agricultural Bank. At this stage there was also the sale of the deceased's grocery store at Mosman but that was financed by the deceased. 11 The arrangements that seemed to have been made in respect of the purchase of the property were that in effect Peter would bear a substantial part of the work on the farm and carry on the farming enterprise. There was also an arrangement that he would repay the Bank loan and in due course his father out of the income from the farm. 12 Peter first moved to the Monto property to get it ready and then the deceased and the plaintiff moved there as well. The plaintiff contributed $11,000 to floor coverings and furniture and that enabled them to move in. That amount was in due course repaid some two years later by Peter. 13 In the following couple of years the deceased and the plaintiff travelled extensively looking for a property to purchase and looking in Queensland and in New Zealand. 14 Later in the year 1977 the deceased and the plaintiff purchased a property at Tewantin in Queensland as joint tenants for $28,000. On the document recording the completion of the sale it is shown there was a deposit of $2,800 paid and the evidence suggests that they both paid it and there was $25,210.05 borrowed from the bank. 15 I will come back to the question of other contributions by the plaintiff for that property. They moved to the Sunshine Coast and for six months the deceased still worked as a plant operator before he finally stopped that work. They developed the Tewantin land in 1981 and they subdivided that land. Also at that stage the deceased cashed in some insurance policies which he purchased prior to the marriage between he and the plaintiff. 16 Between 1981 and 1982 they erected a house on the Tewantin property and a builder charged a contract price of $27,312 80. It is believed the costs were about $40,000 and I think there is no doubt that the plaintiff contributed funds to all these endeavours. There is evidence of her having withdrawn $11,000 from her investment account at the time and no doubt that was contributed to this jointly owned property. 17 It was in January 1984 the plaintiff turned 60 years of age and at that stage she started to receive a part pension. She could not receive the full pension because the deceased still had his share of the Monto property which was being operated by Peter. 18 During the 1990s the deceased suffered from emphysema and the plaintiff had a number of illnesses. Certainly from about this time on once the plaintiff received a part pension they tended to keep their finances separate. 19 In 1999 there was an opportunity for the deceased to transfer his interests in the Monto property to his son Peter after legislation was passed by the Federal Government which enabled farmers to divest themselves of rural properties and obtain the pension. The deceased, then being aged 75 years received the aged pension. 20 Between 1999 and 2000 the deceased had a series of heart attacks and his health was not good. In 2000 the plaintiff and the deceased executed a transfer severing the joint tenancy of Lot 2 at the property at Tewantin. There is some suggestion that discussions about this had gone on for some time but no doubt the deceased's situation also expedited it so that it would happen. 21 Two-years later, as it was getting too much for him to manage, they sold the Tewantin property for $600,000 and the proceeds were divided between them equally. 22 They moved down to the Central Coast and in late 2002 purchased a unit at Marmong Point for $212,000. They each contributed half of the purchase price of the unit. They each had some moneys left over and the plaintiff purchased furniture and chattels and the deceased purchased a motor vehicle. 23 In December 2003 the plaintiff was diagnosed with senile dementia of the Alzheimer's type. It was in November of 2004 that they made the wills to which I have referred. The deceased, as I mentioned, died on 5 May 2007. Probate was granted in due course. The proceeding were commenced on 20 October 2008 in time. Eligibility 24 The plaintiff is plainly an eligible and because of her lack of capacity she appears in this matter by a tutor who is her daughter, Elise Buehler. 25 In applications under the Family Provision 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 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 or 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."

The plaintiff's situation in life 26 The plaintiff is 85 years of age and, because of her dementia, lives with her daughter Elise. She receives an aged pension of $643.70 per fortnight and pays board to her daughter of $300 per fortnight. Her assets consist of:

1. a half share of the home $132,500 2. funds on deposit $100,000 3. bank accounts $49,007.33.

27 The house was unoccupied since shortly before the deceased death. It is now occupied by one of the plaintiff's sons. He pays half the value of rent to the estate at this stage. 28 There is no possibility that the plaintiff can return to the unit as her dementia is too advanced. She needs full time care and it will be necessary for her to go into an aged care facility. It is only a question of when she will have to go into that facility. 29 The relationship between the plaintiff and the deceased was a good one for 34 years and she made substantial contributions to the deceased's welfare as a home maker. She worked hard for some years to build up the Monto property and also to develop the Tewantin property. Their life together was fairly frugal as there were mortgages to be paid off from the farm income. 30 Monto was purchased from the deceased's funds but the plaintiff provided the funds to finish it but these amounts were repaid two years later. She must have contributed to the purchase of Tewantin but the evidence does not quantify the amount. It would have been a substantial contribution; certainly at least $11,000 if not more. 31 One matter that is clear on the evidence was that in the later years of their life together both the deceased and the plaintiff were clear that they wished their separate property to be passed to their respective children The severance of the joint tenancy and evidence of statements made during their lifetime all points to this conclusion. The terms of the wills also makes it plain but, given the plaintiffs diagnosed dementia at the time she made her will, I do not place any reliance upon it for this purpose. The other evidence is sufficient without it. 32 It is necessary to consider the situation in the life of others having a claim on the bounty of the deceased. In this case it is the residuary beneficiary. Stephen puts forward no evidence of his financial circumstances or his relationship with the deceased. In those circumstances the Court can assume that he does not wish the Court to take them into account. The situation in life of Natalie Emma Carter 33 Natalie is 27 years of age, single, with no dependants and is in good health. She works as a receptionist earning $800 per fortnight. She pays board of $200 per fortnight to help meet the costs where she lives. Her property consists of personal effects, a motor car worth $18,000, and she has $120,000 in the bank which she inherited from her mother. She would like to buy a home unit but her small income prevents her from doing this at the moment. The situation in life of Jacqueline Susan Carter 34 Jacqueline is 23 years of age and lives with her fiancée in their own home. They have no children. The home is worth $500,000 with at present a mortgage of $431,195. She earns a salary of $1,392 per fortnight net. They have two cars worth $37,000 and house hold goods worth $40,000. They have credit cards debts of some $6,693. She is in good health. Discussion 35 It is necessary to see how the plaintiff says she has been left without adequate and proper provision for her maintenance, education and advancement in life. It is plain that she needs to go into care very soon. Her health is average but she suffers from a number of problems. 36 She suffers from a bad back pain, for which she takes Panamax. She had a kidney operation 30 years ago and had one kidney removed. This limits the amount of strong medication she can take nowadays. She has had a rotator cuff injury on her left shoulder and that is under management by her treating general practitioner. She suffers from hypertension. 37 She also appears to be having increased difficulty walking and complains of being tired and short of breath after walking a very short distance. For instance, walking to the letter box leaves her out of breath and as a result she does not want to go out and mix with people. She complains of leg pain and her gait is uneven. She also suffers from sinus trouble. She has a number of medications to deal with these problems. Fortunately, her medications are subsidised for the most part but some are not. 38 On the life tables she has life expectancy of 7.1 years. Her daughter has made enquiries and found that there are two nursing home facilities in the Newcastle area that take dementia patients. One is at Waratah which, under the Commonwealth scheme, charges $441.28 per fortnight for care and would charge the plaintiff a bond of $240,000. On her death the bond would be refundable except for $16,800. 39 It was the plaintiff's submission that she should receive the deceased's half share of the matrimonial home to provide for her future needs. This claim has unfortunately generated some feeling in the matter given the very clear plans of both the deceased and the plaintiff that as this was a second marriage for both of them they had decided to leave their assets to their respective children. 40 The effect of any order transferring the estate's half share would in all probability mean that asset will substantially pass to her children rather than as the testator wished in his will. 41 This question in relation to a large capital provision for widows has been dealt with in White v Barron (1979-1980) 144 CLR 431 at p444 where Mason J said: "A capital provision should only be awarded to a widow when it appears that this is the fairest means of securing the proper maintenance. However, the provision of a large capital sum for a widow who is not young may, in the event of her early death, result in a substantial benefit to her relatives, contrary to the wishes of the testator, when a benefit of another kind would have had afforded an adequate safeguard to her personally, without leaving her in a position in which she could benefit her relatives from the proceedings of the legacy." 42 His honour appears to be the only member of the Court to have adverted to this aspect. 43 A change in the High Court's attitude to the provision for widows, no doubt in response to changes in community expectations, is illustrated by the fact that in this case it disapproved of observations made in Worladge v Doddridge (1957) 97 CLR 1 that as a general rule an order for provision in favour of a widow should be confined to widowhood. Stephen J, who was one of the majority in White v Barron at pp 438-440, went to some lengths to point out that the jurisdiction was one which should not be unduly confined by judge-made rules of purportedly general application. 44 In Elliott v Elliott (24 April 1986, unreported) Glass JA said in reference to the above quoted statement: "The statement there was made in an evidentiary context where the provision was made at the expense of the children of a previous marriage who had some claim on the testamentary bounty of the deceased. The residuary beneficiaries here have none and it seems to me that no fairness is owed to them." 45 McHugh JA agreed with his judgement and the President agreed substantially with the reasons given by Glass JA. He added nothing on this aspect. I do not think that it can be said that the Court of Appeal has adopted this statement of Mason J in White v Barron. All that can be said is that they distinguished the situation before them. 46 In Permanent Trustee v Fraser (1995) 36 NSWLR 24 at 47 Sheller JA had the following to say: "Once it is accepted that adequate provision for her proper maintenance and advancement in life required secure accommodation for life as well as a capital sum to meet exigencies, this need is not met by giving her only a life interest in the home unit. Commonly people in the community need to move from their own home into a unit in a retirement village and then into nursing accommodation and then into total care accommodation. See Young J in Christie v Christie. That need can be met if the respondent is given the home unit absolutely. She then has a greater flexibility as well as greater security." 47 In Salmon v Blackford [1997] NSWCA 274, the Court of Appeal was dealing with the case where the trial Judge had given a fee simple to the deceased widow. Sheller JA said: "The principal point according to Mr Gibb was that his Honour failed to take into account that by reason of the widows advanced years and the probability that her adopted son would be the natural object of her bounty, the effect of the order made was likely to be that the adopted son, whom the deceased had no intention to benefit, would be the beneficiary of half of the estate. I have great difficulty in seeing how a submission of this sort has any weight in the circumstances of this case. The matter that this Court must consider is whether the order that his Honour made was in such terms than one could only come to the conclusion that in some way his discretion must have miscarried. It is well established that proper provision is not to be measured solely by the need for maintenance. It should, in the case of this respondent and in the circumstances of this case, free her mind from any reasonable fear of any insufficiency as her age increases and her health and strength fails. I may say in this regard that her life expectancy, according to the tables, was something over the 11 years at the time of the hearing. If one comes to the conclusion that for her proper maintenance an order such as the present is appropriate, it seems to me to matter not at all that she has an adopted son of an earlier marriage and that he may be the ultimate beneficiary of her bounty." 48 No reference was made in either of these cases to the comments of Mason J in White v Barron. In Permanent Trustee v Fraser there were no competing claims by children of the first marriage. In Salmon v Blackford there were children of the first marriage but they appeared well off and the claims were thus minor. 49 Recently in Hertzberg & anor v Hertzberg [2003] NSWCA 311 McColl JA referred with approval to Golosky v Golosky (5 October 1993, unreported) and said [34] - [35]: "34….section 9 (2) of the Family Provision Act directs the Court to consider the issues of jurisdiction and the exercise of discretion at the time of the proceeding, not the time of the will, and in this case the deed, were made. In reaching his decision the Acting Master took into account community expectations. He referred to Young J's observations in Blackford v Salmon , unreported, 27 July 1994 in which his Honour said: 'It seems that for a widow of a 30 year marriage who has lived in the house for some time and who continues to wish to live there, the expectation in the community would be that a wise and just testator would have left her a house in fee simple.'

35. His Honour's judgement recognized the community expectation that a testator should make provision for a widow to ensure that she can lead an independent and dignified life. That prospect is diminished when the widow does not have the benefit of the fee simple, but rather, a right of occupation of her home with a provision for expenses associated with the right being left in the hands of the executor's." 50 This also was a case where there were no competing claims. It seems to me that the comments of Mason J in White v Barron should still be given consideration when one is considering a situation of competing claims. 51 The factual situation in this case is somewhat different to that in Hertzberg & Anor v Hertzberg. In the present case the plaintiff does not desire and is not capable of living in her own home. The treatment of widows generally in Family Provision Act cases has attracted much comment in the judgements and over the years it is worth noting the following comments of Bryson JA and Ipp JA in Bladwell v Davis [2004] NSWCA 170 where Bryson JA reviewed the authorities and concluded that the adoption of any such preconceived position or formula was likely to result in error, stating at paragraph [19]: "In the application of the test in section 7, and of the exposition thereof in Singer v Berghouse by Mason CJ, Deane and McHugh JJ at 409-411 it would be an error to accord to widows generally primacy over all other applicants regardless of circumstances and regardless of performance of the stages of consideration described in Singer v Berghouse, in full and with reference to the instant facts. Defeat of the opponent's claims does not necessarily follow from a demonstration, which the claimant can make, that all or her needs with respect to income, home renovation, and provision for contingencies cannot be met if any provision is made for the opponents; indeed she could well demonstrate that even if the provisions of the will took effect without any modification, the provision for her is not adequate. That is not a demonstration that no claim by an eligible person can succeed; the claims and circumstances of the opponents also have had to be weighed, and they too have their needs and merits." 52 Ipp JA added at par [2]: "I would add, however, that where competing factors are more or less otherwise in equilibrium, the fact that one party is the elderly widow of the testator, is permanently unable to increase her income, and is never likely to be better off financially, while the other parties are materially younger and have the capacity to earn more or otherwise improve their financial position in the future, will ordinarily result in the needs of the widow being given primacy. That is simply because, in such circumstances, the widow will have no hope of improving herself economically, whereas that would not be the position of the others. In that event, the need of the widow would be greater than that of the others." 53 In this case there are no competing claims of any magnitude which should prevail over the claim of the widow, particularly as this is a small estate. One comes back to the question of whether she has been left without adequate provision in terms of the statute. After sale costs she would have total funds of $280,000 to provide for the rest of her life. After accommodation costs and miscellaneous expenses are taken care of she will have $35,000 to provide for contingencies for the next 7.1 years. 54 The evidence does not address the nature of the contingencies or the amount which should be provided for such matters. Experience tells one that often the care of aged dementia patients can occur without large capital expectations. Experience also tells one that the position in life of such a person can be immeasurably enhanced by extra professional care, the occasional outing and other comforts. I have also described the plaintiff's medical condition. There are likely to be medical events in the future that may benefit from some enhanced and prompt private medical attention which will require funds. 55 There is, of course, a world of difference when considering the plaintiff's needs at this stage rather than if one were looking at the plaintiff's needs five years ago. However, section 9 of the Act requires me to consider the matter at the time of the trial and not at an earlier stage in her life when obviously some far greater provision would have been made for the plaintiff. 56 It was the plaintiff's submission that the matter should still be looked at in a generous way because of the long and happy marriage and the plaintiff's contribution to that marriage which saw the majority of the deceased's assets go to his son Peter who, of course, does not take under the will. This has to be taken into account but it is only one of the factors the Court must consider. 57 Similarly, the very clear understanding the plaintiff and the deceased had about their testamentary intentions must also be taken into account and those intentions must also be given weight. However, the needs of the plaintiff are the major focus along with the strengths of the claims of others on the estate of the deceased and the size of this very modest estate. 58 In my view $35,000 is not sufficient to cover the contingencies which the plaintiff faces. I am satisfied that the plaintiff has been left without adequate and proper provision for her maintenance, education and advancement in life. 59 The evidence does not address the cost of higher level nursing care but, disregarding this need, I think a provision of $50,000 for the plaintiff would provide a sufficient fund for her on the evidence that is before me. 60 Given the size of the estate, I do not think a Crisp order would produce sufficient income for the plaintiff and the modest amount of the legacy will not result in a substantial windfall for those who the testator did not intend to benefit. 61 The orders that I make are as follows:

1. The plaintiff to receive a legacy out of the estate of the deceased in the sum of $50,000. 2. The plaintiff's costs on an ordinary basis and the defendant's on an indemnity basis to be paid or retained out of the estate of the deceased. 3. Interest is to run on the legacy if it is not paid within 28 days of today's date and then on and from that date at the rate provided for under the Probate and Administration Act 1898. 4. I direct the exhibits be returned. (Counsel asked that the orders be stayed for 14 days so an application could be made in relation to costs)

5. In respect of order 2, I stay operation of the order for 14 days. In the event that the defendants notify the plaintiff within a period of 14 days that they propose to make application to cap the plaintiff's costs, or further argue the question of costs, then the matter can be re-listed before me for hearing of that argument. 6. I give liberty to apply on three days notice.

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