Singer v Berghouse

CATCHWORDS : Succession. Family Provision. Large estate. Claim by two adult children. Financial and material circumstances of each Plaintiff. Whether each Plaintiff has been left without adequate provision for his or her proper maintenance. Appropriate form of order.

CASES CITED : Singer v Berghouse (1994) 181 CLR 201 Vigolo v Bostin (2005) 221 CLR 191

Christopher Edward Lumb (First Plaintiff) PARTIES : Judith Anne Eslick (Second Plaintiff) Diana Faye McMillan (First Defendant) William McMillan (Second Defendant)

COUNSEL : Mr R. D. Wilson (Plaintiffs) Mr S. Willmott SC (Defendants)

SOLICITORS : Hancock Alldis & Roskov (Plaintiffs) Owen Hodge (Defendants)

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

6922 of 2004 CHRISTOPHER EDMUND LUMB and ANOR -v- DIANA FAYE McMILLAN and ANOR JUDGMENT 1 HIS HONOUR: These are proceedings under the Family Provision Act 1982. 2 By summons filed on 22 December 2004 Christopher Edmund Lumb and Judith Anne Eslick claim an order for provision for their maintenance, education and advancement in life out of the estate or notional estate of their late father, Frederick Cecil Lumb (to whom I shall refer as "the Deceased"). 3 The Deceased, who died on 10 July 2003, aged 84, left a testamentary instrument dated 16 December 2002, of which (pursuant to the order of Windeyer J made on 22 April 2005) probate was on 26 April 2005 granted to Diane Faye McMillan and William McMillan, the executors named in such instrument (who are the Defendants to the present proceedings). 4 According to the inventory of property the assets of the estate had a value of about $7,850,000. At the present time the net value of the estate is about $9,163,000. The assets of the estate included a waterfront residence at Bundeena (to which a present value of $2,250,000 is ascribed), together with two adjoining undeveloped blocks of land (to each of which a value $1,100,000 is ascribed). 5 The Deceased, who was a widower at the time of his death (his wife, Mabel Lumb, having died on 3 December 2000), was survived by his three children, being the Plaintiffs, Christopher Edward Lumb and Judith Anne Eslick, and the First Defendant, Diana Faye McMillan. (The Second Defendant is the husband of the First Defendant.) 6 I shall, for convenience and without intending any disrespect, refer to each of the children of the Deceased by his or her given name. 7 The Deceased by clause 3 of the foregoing testamentary instrument dated 16 December 2002 gave all his interest in all of the property owned by him at Bundeena to the First Defendant. By clause 4 the Deceased purported to give to his three children certain shares in certain of his companies. However, as the Deceased did not identify the companies and the shares which were to pass to each of his children, that clause is of no effect (see judgment of Windeyer J, paragraph 14). By clause 5 the Deceased gave the residue of his estate to his three children and his five named grandchildren in equal shares. Three of those named grandchildren are the adult children of Judith and the other two grandchildren are the adult children of Diana. Since the value of the residue is about $4,713,000 ($9,163,000 less $4,450,000), the share to which each of those residuary beneficiaries is entitled is about $589,000. 8 However, in calculating the value of the residuary estate and thus the value of the foregoing shares therein, the costs of the present proceedings must be taken into consideration, since the Plaintiffs, if successful, will be entitled to an order that their costs be paid out of the estate of the Deceased, whilst the Defendants, irrespective of the outcome of the proceedings, will be entitled to an order that their costs be paid out of the estate. It is estimated on behalf of the Plaintiffs that their costs will total $57,750, whilst it is estimated on behalf of the Defendants that their costs will total $32,000. Accordingly, it is appropriate to proceed upon the basis that the distributable estate will total about $9,073,000, and thus that the share to which each of the residuary beneficiaries is entitled will be about $578,000. 9 Christopher is presently aged 59 years, having been born on 7 October 1947. He is unemployed and receives a NewStart allowance from Centrelink in an amount of $564.50 a fortnight. He resides in a rented home unit at Blacktown for which he pays $170 a week. He has no assets other than his furniture and personal effects (to which he now attributed a value of $1500) and a horse (which has no commercial value). His only liability is an amount of $5080, which he owes by way of horse and agistment expenses to the Hambledon Road Horse Park. Christopher gave evidence of his weekly expenses, which total a little over $251. He has little left over from his fortnightly Centrelink payments. 10 Christopher has a medical problem with his left shoulder, which remains frozen, although the likelihood is that that condition will resolve in the future. However, the prospect of his returning to the workforce is slight. He suffers from a prostate problem, and requires new spectacles. 11 Judith is presently aged 64 years, having been born on 11 February 1942. She receives an age pension in the amount of $258.95 a week. She resides in rented Housing Department accommodation in a home unit at 49/13 Burrawalla Road Caringbah. She is divorced (having married in 1965 and divorced in 1985). Of her marriage were born three children, Troy, Wendell, and Kain (who are three of the eight named residuary beneficiaries under the will of the Deceased). Judith has no assets; neither does she have any debts. 12 Judith suffers from a lifelong thyroid condition, which, however, will not affect her life expectancy. 13 Diana and her husband, William McMillan, in 1978 removed to the United States of America, and still reside in that country. They have two adult daughters, Lisa Borrow and Fiona McMillan (who are two of the named residuary beneficiaries). 14 The Defendants have chosen not to place before the Court any information concerning their financial and material circumstances. Neither is there any evidence regarding the financial and material circumstances of Lisa Borrow and Fiona McMillan. 15 Evidence was presented to the Court concerning the financial and material circumstances of the other three grandchildren of the Deceased, being the three children of Judith. 16 Troy Eslick is aged 38 years. He owns a residence in Griffith, which is subject to a mortgage. He is married and has three daughters. He has worked in computer sales, and is currently considering selling his Griffith residence and removing to Queensland. 17 Wendell Eslick is aged 36 years. He lives at The Oakes (near Camden) on a 5 acre property, which he owns (subject to a mortgage). He is married, and has two children and one stepchild. Wendell is employed as a printer. 18 Kain Eslick is aged 33 years. He is unmarried, and resides in rented accommodation in Griffith, where he is employed as a general hand. 19 It is in the light of the foregoing facts and circumstances that the Court must proceed to a consideration of the claim of the Plaintiffs. 20 I have had the benefit of receiving a written outline of submissions and a chronology from Counsel for the respective parties. 21 Each of the Plaintiffs, as a child 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. As such, each Plaintiff has the standing to bring the present proceedings. 22 It will be appreciated that the First Defendant is also an eligible person within the foregoing paragraph of the definition. There is no suggestion that any of the five named grandchildren of the Deceased is an eligible person in relation to the Deceased. It is appropriate that the Court should therefore proceed upon the basis that the only eligible persons are the two Plaintiffs and the First Defendant. 23 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 adequate provision for his or her proper maintenance. 24 It will be appreciated that it is for each Plaintiff to establish his or her claim upon its own merits. The fact that the estate is a large one, and the fact that the First Defendant and her husband, the Second Defendant, and their two adult daughters have chosen not to place before the Court any information concerning their respective financial and material circumstances, cannot enhance the claim of the Plaintiffs. However, that latter fact and the size of the estate may enable the Court to conclude that any order for provision an entitlement to which either or both of the Plaintiffs might otherwise have established should not be reduced, let alone extinguished, on account of any competing claims upon the testamentary bounty of the Deceased. 25 I have already observed that the claim of each Plaintiff must be approached in the light of any competing claims of other persons who have a claim upon the testamentary bounty of the Deceased. Those other persons are the First Defendant and the five grandchildren of the Deceased. I have also observed that neither the First Defendant nor her two children have chosen to place before the Court any evidence concerning their respective financial and material circumstances. However, the Court must not overlook the fact that the First Defendant is the chief chosen object of the testamentary beneficence of the Deceased. Further, the Court must consider that the two children of the First Defendant as well as the three children of Judith are also chosen objects of the testamentary beneficence of the Deceased. 26 The ample size of the estate does not justify the Court in being profligate in disposing of the assets of the Deceased and in awarding to each Plaintiff an amount which is more than that to which that Plaintiff would be entitled. The Court should do no more than remedy the failure on the part of the Deceased to make adequate provision for the proper maintenance of each Plaintiff. 27 It will be appreciated that none of the three children of Judith live in more than what might be described as modest financial and material circumstances. Further, if each Plaintiff receives an additional amount, by way of a legacy, the share of each of the five grandchildren will be reduced by one eighth of such additional amount. That is, if Christopher and Judith each receive an additional amount of $400,000, the amount of residue available for distribution will be reduced by $800,000, and the share of each residuary beneficiary will be reduced by $100,000.

28 The various needs and requirements articulated by Christopher are set forth in annexure A to the written outline of submissions prepared by his Counsel, to which I have already made reference. Those asserted needs include the acquisition of a residence for $800,000 (together with stamp duty and legal costs, totalling about $33,500); a horse ($15,000), a horse trailer ($15,000), a Rodeo motor vehicle (presumably for the transportation of the horse) ($38,000), together with saddle and tack ($5,400); home furniture ($10,000); a computer ($2900); clothes ($3000); repairs to teeth ($6000) and an overseas trip ($20,000); what is described as a contingency amount ($150,000); and a capital sum of $415,000, to provide Christopher with an income of $500 a week for 21.32 years at 3 per cent (using a multiplier of 830). The total amount claimed by Christopher $1,513,790. 29 It will be immediately apparent that the foregoing asserted needs of Christopher are essentially in the nature of a wish list. 30 Neither the size of the estate nor the absence of any competing claims could possibly justify the Court in concluding that the needs of Christopher can be appropriately fulfilled by, for example, providing him with a horse, horse trailer and appropriate motor vehicle, and equine equipment (at a total cost of $73,400). (I would also here record that it was Christopher's evidence that, on account of his health condition, he had not been able to carry out any equine activities for the past three years.) Neither can an overseas trip for $20,000 be regarded as appropriate fulfilment of Christopher's needs. 31 It is appreciated that, according to Australian Government Centrelink Guidelines, as a non-homeowner Christopher will lose the NewStart Allowance completely upon the receipt of assets of more than $451,250. It follows, therefore, that even under the terms of the will of the Deceased, Christopher, upon receipt of his one eighth share of residue in an amount of upwards of $600,000, will cease to be entitled to the foregoing social security payments. 32 It seems to me appropriate that Christopher should receive from the estate of the Deceased an amount sufficient to enable him to purchase a residence. Evidence was placed before the Court concerning the availability of various residences which Christopher considers to be appropriate. 33 Those residences essentially consist of properties of areas ranging between 5 acres and 25 acres, and at prices ranging between $790,000 and $899,000. The purpose of such properties of such areas (and prices) is to enable Christopher to indulge in his equine pursuits. He said that he would like to be in a position to purchase a suitably trained quarter horse. It will be appreciated that a horse which he presently owns can be adequately accommodated and agisted on a commercial establishment such as the Hambledon Road Horse Park. 34 I am not satisfied that Christopher has established an entitlement to acquire at the expense of the estate a residence of such an area or at such a price as he asserted as constituting part of his need. The entitlement of Christopher under the terms of his father's will, being an amount of almost $600,000, is more than sufficient to enable him to purchase a residence of his choice, albeit probably not a rural estate of the acreage which he desires in order to pursue his interest in quarter horses (which he has not even acquired).

35 Christopher should, however, also receive from the estate an amount sufficient to generate the income of which he will be deprived by reason of the terms of the will of the Deceased. The capital sum of $415,000 is appropriate. He should also receive an amount for unexpected contingencies, (although I query whether the amount claimed, $150,000, may be somewhat excessive). 36 Christopher lives in modest circumstances at the present time. I consider it appropriate that he should also receive provision sufficient to enable him to acquire furniture, a computer, and clothes in the amounts which he seeks (totalling $15,900). He is also entitled to have necessary dental work performed ($6000). 37 The foregoing amounts to which, in my consideration, Christopher has established an entitlement total $587,000. However, it must not be overlooked that under the terms of the will he will receive upwards of $600,000. Therefore, the provision from the estate to which in my consideration Christopher has established an entitlement totals $1,170,000. 38 The various needs and requirements articulated by Judith are set forth in annexure B to the written outline of submissions prepared by her Counsel, to which I have already made reference. Those asserted needs include the acquisition of a residence at Bonnet Bay for $750,000 (together with stamp duty and legal costs, totalling about $31,240); an overseas trip ($15,000); a boat ($50,000); a motor car ($40,000); home furniture ($10,000); what is described as a contingency fund ($150,000); and a capital sum of $408,000, to provide Judith with an income of $500 a week for 21 years at 3 per cent (using a multiplier of 816). The total amount claimed by Judith is $1,454,240. 39 As in the case of Christopher, it will be immediately apparent that the foregoing asserted needs of Judith are essentially in the nature of a wish list. 40 It is unnecessary for me to repeat the observations which I have already made, in respect to the claim of Christopher, concerning the size of the estate and concerning competing claims. I do not regard the participation in an overseas trip costing $15,000, the acquisition of a boat for $50,000 or of a motor car for as much as $40,000 as constituting appropriate fulfilment of Judith's needs. 41 Again, as in the case of Christopher, according to Australian Government Centrelink Guidelines, as a non-homeowner Judith will cease to be entitled to any age pension where she is in receipt of assets in excess of $451,250. It follows, therefore, that even under the terms of the will of the Deceased, Judith, upon receipt of her one eighth share of residue in an amount of upwards of $600,000, will cease to be entitled to the foregoing age pension. 42 It seems to me appropriate that Judith should receive from the estate of the Deceased an amount sufficient to enable her to purchase a residence. Judith has lived all her life in the Sutherland Shire and has placed before the Court evidence concerning the availability of various residences which she considers in that area to be appropriate. 43 Judith said that the Housing Department unit in which she resides at Caringbah in very small, and that until she entered into occupation there in 1994, she had been residing in a house. She has two pets, and considers a home unit to be inappropriate for their accommodation. Judith expressed a desire to use whatever benefit she might receive from her father's estate in order to purchase a three bedroom house in the Sutherland Shire. She has located a four bedroom residence at 37 Buchanan Avenue, Bonnet Bay, for which a purchase price in excess of $750,000 is sought. 44 As in the case of Christopher, Judith's entitlement under the terms of the her father's will would go a considerable distance towards the acquisition of the Bonnet Bay residence (although one might query the necessity for a single lady to occupy a residence which has four bedchambers). 45 Judith gave evidence of her life interest in angling. She seeks the provision of a capital sum which would enable her to purchase a boat and a new motor car. Whilst the acquisition of a motor car for a lady living alone at Bonnet Bay may be regarded as a necessity, the expenditure of $40,000 on such a vehicle may be regarded as somewhat excessive. I do not consider the acquisition of a boat to be in any way a necessity. 46 Judith should also (as in the case of Christopher) receive from the estate an amount sufficient to generate the income of which she will be deprived by reason of the terms of the will of the Deceased. The capital sum of $408,000 is appropriate. She should also receive an amount for unexpected contingencies (although, as in the case the Christopher, I query whether the amount claimed, $150,000, may be somewhat excessive). 47 Judith lives in modest circumstances at the present time. I consider it appropriate that she should receive an amount sufficient to enable her to acquire furniture ($10,000). 48 The foregoing amounts to which, in my consideration, Judith has established an entitlement total $600,000. However, it must not be overlooked that under the terms of the will she will receive upwards of $600,000. Therefore, the provision from the estate to which in my consideration Judith has established an entitlement totals $1,180,00.

49 I am not persuaded that the additional provision from the estate of the Deceased to which, respectively, each Plaintiff has otherwise established an entitlement should be reduced, let alone extinguished, by reason of the competing claims of the other persons who have claims upon the testamentary bounty of the Deceased (being the First Defendant and the five grandchildren of the Deceased).

50 It will be appreciated that any additional benefit by way of a legacy which may be awarded to either or both of the Plaintiffs will be payable out of residue. The practical consequence will be that, if the legacy to be awarded to each Plaintiff constitutes only the difference between the foregoing amount to which I have concluded that Plaintiff should receive and the share of the Plaintiff in residue under the terms of the will, that share of residue will, in fact, be significantly reduced (since the totality of residue will be reduced by the amount of those legacies), and thus the total benefit then received by the Plaintiff from the estate will be reduced. Thus it is appropriate that any order for provision in favour of each Plaintiff should be an order for provision by way of a legacy in lieu of the benefits to which that Plaintiff is entitled under the will, rather than by way of a combination of a legacy and the interest in residue to which that Plaintiff is entitled under the will. 51 I make the following orders: 1. I order that, in lieu of the benefits given to him by the will of the late Frederick Cecil Lumb ("the Deceased"), the Plaintiff Christopher Edmund Lumb receive a legacy in the sum of $1,170,000, such legacy not to bear interest if paid on or before 23 May 2007, and if not so paid, to bear interest at the rates prescribed for unpaid legacies in the Wills, Probate and Administration Act 1898. 2. I order that, in lieu of the benefits given to her by the will of the the Deceased, the Plaintiff Judith Anne Eslick receive a legacy in the sum of $1,180,000, such legacy not to bear interest if paid on or before 23 May 2007, and if not so paid, to bear interest at the rates prescribed for unpaid legacies in the Wills, Probate and Administration Act 1898. 3. I order that the costs of the Plaintiffs on the party and party basis and the costs of the Defendants on the indemnity basis be paid out of the estate of the Deceased. 4. The exhibits may be returned.

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