Singer v Berghouse [2007] NSWSC 377 | Case summary

1391 of 2005 JANICE ANN CHRIS -v- MARJORIE JOAN WOOD and ORS JUDGMENT 1 HIS HONOUR: These proceedings were instituted by summons filed by Janice Ann Chris on 8 February 2005. The substantive relief sought by the Plaintiff in that summons was an order under the Family Provision Act 1982 for provision for her maintenance and advancement in life out of the estate of her late father Vasil Chris (to whom I shall refer as "the Deceased"). 2 Subsequently, on 27 September 2005, the Plaintiff filed an amended summons, by which she sought, in addition to relief of the nature claimed in the summons, alternative relief by way of an order that the Defendants be removed as trustees of the estate of the Deceased and an order that the Public Trustee be appointed as trustee of the estate in their place. By order made on 27 March 2007 Hammerschlag J, as Duty Judge in the Equity Division, ordered that the entirety of the proceedings be referred to me for hearing. 3 The Deceased died on 14 March 2000, aged 97. He left a will dated 9 December 1992, probate whereof was on 24 August 2000 granted to Marjorie Joan Wood, David Ross Wood and Michael John Wood, the executors named in such will (who are the Defendants to the present proceedings). 4 The Deceased, who was a widower at the time of his death (his wife, Mrs Lillian Chris, having died on 9 April 1980), had only one child, the Plaintiff. She was born on 2 October 1945, and is presently aged 61. 5 At the time of his death the significant assets in the estate of the Deceased consisted of a house property situate at and known as 44 Henry Street, Ashfield (which had been the family home of the Deceased and the Plaintiff and, to the time of her death in 1980, the Plaintiff's mother), to which an estimated value of $350,000 was attributed; household furniture and furnishings, to which an estimated value of $8000 was attributed; moneys in bank accounts, totalling $1835; moneys in a cash management trust, totalling $25,095. 6 By the terms of his will the Deceased gave the entirety of his estate to the Defendants, to pay his debts, funeral and testamentary expenses, and then to hold the residue on trust for the Plaintiff for her life and after her death for such of the sons of David Ross Wood and Michael John Wood (being respectively the Second Defendant and the Third Defendant) as shall then be living in equal shares as tenants in common. The will contained a power of advancement for the benefit of the Plaintiff in respect to the capital of the residue. 7 The First Defendant is the wife of the nephew of the Deceased's late wife (the First Defendant's husband, Ron Wood, being the son of Fred Wood, the brother of the late Mrs Lillian Chris). That is, the Plaintiff is the first cousin of the First Defendant's husband. The Second and Third Defendants are the two sons of the First Defendant. The persons entitled to the interest in remainder in the estate of the Deceased are the three sons of the Second Defendant (being Daniel, Nathan and Shaun Wood) and the one son of the Third Defendant (being Matthew Wood). (The Third Defendant also has two daughters.) That is, the remaindermen are four great-grandsons of the Deceased's brother-in-law. 8 In mid-2001 the house property at Henry Street, Ashfield (which, to that time, had been the home of the Plaintiff for the entirety of her life) was sold by the Defendants for $530,000. Subsequently, the Defendants purchased a home unit 3/10 -12 Tindall Avenue, Liverpool, in which the Plaintiff has been residing since July 2002. The circumstances surrounding the choice and the acquisition of that residence for the Plaintiff are in dispute between the Plaintiff and the Defendants. The purchase price of that home unit was $244,950. 9 With the balance of the proceeds of sale of the Henry Street residence the Defendants in March 2003 purchased as an investment a home unit at 3/2-6 Mereil Street, Campbelltown, for $217,000. That home unit was sold on in December 2006, the net proceeds of sale amounting to almost $225,000. 10 The assets in the estate of the Deceased presently consist of the home unit at Tindall Avenue, Liverpool (to which an estimated value of $260,000 is attributed), an old kitchen cabinet (said to be worth about $900), together with the sum $225,667 in a cash management call account (that sum representing the proceeds of sale of the Mereil Street home unit, and, ultimately, representing the balance of the proceeds of sale of the Henry Street residence after the acquisition of the Tindall Avenue home unit). 11 The current liabilities of the estate include provision for strata management fees, council rates and water rates in respect to the Tindall Avenue home unit, in an amount of $1000, together with legal fees and expenses in respect to the present proceedings (an amount of $13,000 having already accrued). 12 In estimating the value of the estate available for distribution the costs of the present proceedings must be taken into account, since the Plaintiff, if successful in her claim under the Family Provision Act, will be entitled to an order that her costs be paid out of the estate, whilst the Defendants, irrespective of the outcome of that claim, will be entitled to an order that their costs be paid out of the estate. It is estimated on behalf of the Plaintiff that her costs will total about $76,000, whilst it is estimated on behalf of the Defendants that their costs will total $58,000 (of which, as I have already recorded, an amount of $13,000 already has accrued). In regard to the costs of the Defendants, I would observe that, whilst the foregoing figure emerged from the affidavits of the Defendant's solicitor, nevertheless during the latter part of the hearing it was, at the request of Senior Counsel for the Defendants, noted that an estimation of the costs of the Defendants was in an amount $35,000. It was also at that stage of the proceedings noted, at the request of Senior Counsel for the Defendants, that the Defendants have incurred, in respect to the present proceedings, accounting fees in an amount of $3000. (I should here record that I consider that costs in the foregoing amounts of $76,000 and $58,000, especially the costs of the Plaintiff in the amount of $76,000, appear, upon their face, to be excessive.) 13 In support of the alternative relief sought in the amended summons, essentially for the removal of the Defendants as trustees, the Plaintiff placed before the Court a considerable quantity of evidence. That evidence disclosed what might be described as personality problems existing between the Plaintiffs and the Defendants, especially the First Defendant. Many of those problems arose out of what the Plaintiff perceived as instances of unwarranted interferences by the Defendants in the Plaintiff's lifestyle and personal living arrangements. 14 Some of the incidents referred to by the Plaintiff might objectively be regarded as being insignificant or unimportant (for example, the involvement of the First Defendant in the purchase of clothes for the Plaintiff), although doubtless they were of considerable importance to the Plaintiff herself. Others of the incidents took on a more serious character. 15 According to the Plaintiff, she has received little of the income upon the estate, to the entirety of which income she as the life tenant is entitled. However, the Defendants have purchased for her various items of furnishing and equipment for her personal residence, and, at her request, have made several extremely small cash advances to her. 16 For a considerable period the Defendants denied the Plaintiff access to part of her home unit, being the garage area, and insisted on having a key to her residence. 17 The failure of the Defendants to provide the Plaintiff with full information and accounts regarding the estate of which she is the life tenant constituted a clear breach of trust on the part of the Defendants. It would also appear that the Defendants have improperly commingled trust assets with their own personal assets in dealing with the proceeds of sale of the Henry Street property and the acquisition of the Tindall Avenue home unit and the Mereil Street home unit. 18 The conduct of the Third Defendant in July 2005, after the institution of the present proceedings, in making an application to the Guardianship Tribunal for an order in respect to the Plaintiff and the threat by the Second Defendant that the Plaintiff should be placed in a nursing home might have been motivated by sheer nastiness on the part of the Defendants or might have resulted from more sinister motives. 19 Further, the Court cannot overlook the conflict of interest in the Second and Third Defendants (who are the fathers of, respectively, three and one of the remaindermen), or also in the First Defendant (who is the grandmother of all four remaindermen). I have considerable doubt as to the genuineness of the assertion by the Defendants that in all their dealings with the Plaintiff and in the entirety of their conduct as trustees of the estate of the Deceased they have been motivated by and have acted solely for the interest and the welfare of the Plaintiff. 20 Nevertheless, the Defendants now recognise that, irrespective of the outcome of the Plaintiff's claim for provision under the Family Provision Act, it is inappropriate that they should continue as trustees of the estate of Deceased. At the outset of the hearing, on 27 March 2007, I made orders in accordance with a minute of order filed in Court, which set forth certain orders agreed to by the parties. Those consent orders made provision for the Defendants to provide the Plaintiff with accounts of the estate, and for the Defendants to retire as trustees (and, if the appointment of any further trustee be necessary, for the Public Trustee or some other professional trustee to be appointed in their place). 21 The Plaintiff is a lady of very diminutive stature. She left school before completing her third year of high school. She has never been in paid employment, on account of her small stature and her poor hearing. The evidence discloses a close and loving relationship between the Plaintiff and the Deceased. 22 Attempts were made on the part of the Defendants to establish that the Plaintiff is somehow incapable of conducting her own life or of managing her own affairs. It is interesting to observe that the Third Defendant's application to the Guardianship Tribunal was not supported by the Plaintiff's own doctor, who described her as "intelligent, alert, capable of making her own decisions [and said that] she would be considered by definition a competent person capable of handling her own affairs." I have had the benefit of seeing the Plaintiff in the witness box and of hearing her responses under cross-examination. I was very favourably impressed by the Plaintiff as a witness. The views expressed by the Plaintiff's doctor accord with my own conclusions in that regard. She presented as articulate, outspoken, confident and energetic, a person who clearly understood the questions put to her. I am entirely satisfied that the Plaintiff is capable of living on her own and of managing her own affairs. (But even if she were not so capable, that fact of itself would by no means be determinative of the Plaintiff's claim for provision.) 23 It is appropriate that I should here also refer to the attempt, totally unsuccessful, made on behalf of the Defendants during the course of the hearing to establish that the Plaintiff, during the lifetime of the Deceased, had been in some way dishonest in attending to her father's banking. 24 Apart from her interest in the estate of the Deceased the Plaintiff's financial and material circumstances are modest in the extreme. She has for many years, since the age of 18, been in receipt of a disability pension (on account of her poor hearing), presently in an amount of $517.90 a fortnight. She has minimal savings: at the commencement of the proceedings she had only $110 in her bank account. The Plaintiff's outgoings at that time (which included outgoings in respect to the home unit at Tindall Avenue) totalled $285 a fortnight. The Plaintiff owns little in the way of furniture, furnishings, household equipment, clothing or personal effects. Her only recreational activities result from her membership of two voluntary, essentially social, organisations, being Toastmasters and the Sherlock Holmes Society. However, financial constraints prevent her participating to the extent which she would wish in the activities of those organisations. She expressed a desire to travel, possibly to visit her father's kinsfolk in Macedonia. 25 There was no evidence before the Court concerning the financial and material circumstances of the remaindermen (all of whom are adults). 26 I have already observed that the present proceedings were instituted on 8 February 2005. That was after the expiry of the prescribed period of eighteen months from the death of the Deceased. However, the Court has discretion (under section 16 (3) of the Family Provision Act) to extend that prescribed period. Evidence was placed before the Court setting forth the reasons why the Plaintiff's claim for provision was not made within that prescribed period. 27 It is in the light of the foregoing facts and circumstances that the Court must proceed to a consideration of the claim by the Plaintiff for further provision out of the estate of the Deceased. 28 I have had the benefit of receiving a written outline of submissions and a chronology from Counsel for the respective parties. Those documents will be retained in the Court file. 29 The Plaintiff as a daughter of the Deceased is an eligible person within paragraph (b) of the definition of that phrase contained in section 6(1) of the Family Provision Act. She is, in fact, the only eligible person in relation to the Deceased. It should be emphasised that none of the remaindermen are eligible persons; neither are any of the Defendants. 30 In carrying out the first stage in the two-stage process identified by the High Court of Australia in Singer v Berghouse (1994) 181 CLR 201 at 208-210 (the correctness of which test was affirmed by the High Court in Vigolo v Bostin (2005) 221 CLR 191), the Court must determine whether in consequence of the provisions of the will of a testator the applicant has been left without provision for her proper maintenance. 31 In the instant case the first, and essential, need of the Plaintiff is for security and flexibility in her accommodation. The terms of the will of the Deceased, by which legal control of the Plaintiff's accommodation is given to the discretion of persons between whom and the Plaintiff there has been in recent years a considerable degree of antipathy and who may well have been motivated by malice in their conduct towards the Plaintiff and who certainly appear to have acted in breach of trust, and who are in a position of conflict between their interests as grandmother and fathers of the remaindermen and their interest as trustees of the life estate, certainly do not give to the Plaintiff that control over her accommodation which I consider to be her basic and essential need. 32 It is desirable (as the Defendants now recognise by the terms of the minute of order of 27 March 2007 to which they have consented) that all legal relationships between the Plaintiff and the Defendants should be brought to an end. In any event, I consider that, by having only a life interest in her residence, the Plaintiff has been left without adequate provision for her proper maintenance. I propose, therefore, that the Plaintiff should receive the Tindall Avenue home unit absolutely. 33 The Plaintiff should also receive from the estate of the Deceased a fund which will enable her to improve her extremely modest lifestyle (by enabling her to purchase furniture, furnishings and other requisites and to acquire additional clothing and new dentures, by participating more fully in the activities of the two social organisations to which she belongs and by going on an occasional outing or holiday), and to provide her with a fund to meet unexpected contingencies. After the deduction of a total amount of $134,000 for the costs of all parties of the proceedings there will remain in the estate funds totalling only about $92,000. (If the lesser estimation of $35,000 for the Defendant's costs be adopted, the estate funds will total about $115,000.) From the funds then remaining in the estate, it would appear that a further amount of $3000, representing accounting fees incurred by the Defendants, must then be deducted. 34 It will be appreciated that the Plaintiff is the only legitimate object of the testamentary bounty of the Deceased. The remaindermen made no contribution to the welfare of the Deceased or to the assets of his estate. They stood in no blood relationship to him. They were only tenuously related to him by marriage. Any asserted competing claim on the part of the remaindermen cannot affect the entitlement of the Plaintiff to further provision out of the estate of her father. 35 In all the circumstances, I consider it appropriate that the Plaintiff should receive the entirety of the balance of the estate.

Singer v Berghouse

At a glance

Court

Decision date

Before

Source

Judgment (11 paragraphs)

Parties

Cases Cited (2)