Smith v Taylor

Supreme Court of NSW|2006-03-03|Before: Hamilton J, Young J

DECISION : There was a proprietary estoppel in favour of the defendants in relation to the gift of a block of land promised by the testator and his wife. Further provision made for the plaintiff out of the testator's estate.

CATCHWORDS : CONTRACTS [59] - General contractual principles - Statute of Frauds s 4 - Note or memorandum - What amounts to - Equitable estoppel - SUCCESSION [321] - Family provision and maintenance - Principles upon which relief granted - Application of children - Adult son - Poor health.

Conveyancing Act 1919 s 54A LEGISLATION CITED : Family Provision Act 1982 ss 7, 9, 12, 24, 27 & 28 Law Reform (Miscellaneous Provisions) Act 1944 s 2

Day v Perpetual Trustee Co Ltd [2001] NSWSC 394 Gorton v Parks (1989) 17 NSWLR 1 Hughes v Hughes NSWCA 6 June 1989 unreported Hughes v National Trustees Executors and Agency Co of Australasia Ltd (1979) 143 CLR 134 Hunter v Hunter (1987) 8 NSWLR 573 Lieschke v Lieschke [2003] NSWSC 743 CASES CITED : Massingham v Massingham NSWCA 27 June 1996 unreported Permanent Trustee Co Ltd v Fraser (1995) 36 NSWLR 24 Shearer v The Public Trustee NSWSC 23 March 1998 unreported Young J Singer v Berghouse (1994) 181 CLR 201 Vigolo v Bostin (2005) 221 CLR 191 Walker v Walker NSWSC 17 May 1996 unreported Young J Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 Williams, Mortimer and Sunnucks on Executors, Administrators and Probate (2000) [48-04]

Christopher John Smith (P & XD) PARTIES : Amanda Joy Taylor (1D & 1XC) Phillip Taylor (2D & 2XC)

COUNSEL : B J Sharpe (P & XD) L Ellison SC (Ds & XCs)

SOLICITORS : R A Davies (P & XD) Gells Lawyers (Ds & XCs)

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

4100/04 CHRISTOPHER JOHN SMITH v AMANDA JOY TAYLOR & ANOR

JUDGMENT 1 HIS HONOUR: Charles Victor Smith, the testator, had two children who survived him, Christopher Smith, the plaintiff, and Amanda Taylor, the first defendant. He was married to Joyce Smith who died on 22 December 2001. He made his last will on 23 June 2003. He died on 6 August 2003. Probate of his will was granted to the first defendant, the executor named in the will, on 15 April 2004. The second defendant is the first defendant's husband, Phillip Taylor. 2 In these proceedings the plaintiff claims further provision under the Family Provision Act 1982 ("the FPA"). The defendants by cross claim claim the perfection by specific performance or declaration of trust of a transaction by which they say that it was agreed between the testator and his wife on the one hand and the defendants on the other that the defendants should receive a battleaxe block out of a proposed subdivision of properties owned by the parents and by the defendants respectively. 3 The issues in the proceedings therefore are: (1) Whether that subdivision and the parents' gift of the battle axe block should be perfected. The defendants argue that there was an oral contract for the transfer of that block and that there were documents that constituted a valid note or memorandum under s 54A of the Conveyancing Act 1919 or that there were sufficient acts of part performance to permit the contract to be specifically enforced. Alternatively, they argue that they are entitled to relief by way of the declaration of a constructive trust or based on a proprietary estoppel. (2) Whether the plaintiff should receive any and, if so, what further provision out of the testator's estate. As the decision of the first issue is necessary to a determination of the size and content of the testator's estate, it is appropriate to determine it before turning to the FPA claim. FACTS RELATING TO SUBDIVISION 4 The testator owned and lived in the house at 152 Norfolk Road, Epping for 55 years up to the time of his death on 6 August 2003. His wife lived there with him until her death on 22 December 2001. The first and the second defendants from about 1987 lived at 152 Norfolk Road with the testator and his wife. In 1996 they purchased the house next door at 154 Norfolk Road. They lived in that house for about eight months, but otherwise continued to live in 152 Norfolk Road. At about the time of the purchase of 154 Norfolk Road there were conversations between the testator and his wife on the one hand and the defendants on the other concerning a proposal to subdivide the two adjacent blocks so as to create a battleaxe block at the rear. 5 The first defendant's account of those conversations in an affidavit was as follows: "21 At the time we purchased Number 154 Phil and I had a conversation with my parents which, to the best of my recollection, went as follows:

My mother: 'Why don't we subdivide and you can build a nice house for yourselves out the back.' Me: 'That would be great, but at the moment I don't think we can afford it.' My father: 'Well, the offer's there if you want it.' 22 When my daughter was born, I realised I would not be able to return to full time employment. Phil and I decided we would accept the offer made to us by my two parents to subdivide the two properties and build a residence at the rear of the properties. At this time Phil and I had a conversation with my parents which, to the best of my recollection went as follows:

Me: 'We will look after the Council's fees and the surveyor and architect and all the rest, but what do we have to pay for the land for the subdivision?' My father: 'No, if you give us any money it will interfere with our pensions.'" 6 The second defendant's account of the relevant conversations was given in oral evidence as follows: "HIS HONOUR: Q Going back to the first conversation of substance, which you said was a bit after you bought [154 Norfolk Road] -- A Yeah the first conversation I can recall about subdivision, Joyce and Charles asked us to come upstairs to 152, we sat at the kitchen table and Joyce raised the topic.

Q What did she say, please, you must give us your best recollection of the words? A My best recollection - this is what Joyce said, 'We want to give you - myself and Charlie want to give you the back part of our land to - so you can subdivide and then build eventually a dwelling at the back' - along those lines, so they wanted to gift us -

HIS HONOUR: Q Was there any conversation as to the terms on which the transaction would be entered into? A We - I remember one conversation with Charlie early on, I don't know if it was the first one or subsequently, I remember I asked him did he want anything for it and Charlie said, 'Perhaps later on if our health deteriorates we could help look after them, may be house them in the new dwelling' but there was no talk about exchange of moneys." 7 Thereafter a plan of subdivision was drawn up. The defendants' case is that both father and mother during their respective lifetimes were kept in touch with and took a close interest in the progress of the subdivision proposal and plans. They signed their consent as owners of 154 Norfolk Road to the development application for the subdivision. Development consent for the subdivision was granted by the Hornsby Shire Council on 28 September 1999. Considerable work has been done to effectuate the subdivision and the defendants have spent some $84,000 in this regard. 8 About June 2003, the testator, who by then had the whole title to 152 Norfolk Road vested in him by virtue of his wife's death, executed a transfer to the defendants of the battleaxe block. The defendants executed the transfer as co-transferors, since the battleaxe block includes a portion of their property at 154 Norfolk Road. The consideration expressed in the transfer was $1. The transfer was complete except for specification of the folio identifier of the subject land. This was left blank, because it was not yet available. The linen plan had not been lodged with the Registrar General. That was all that then remained and still remains to perfect the subdivision and permit the issue of fresh titles for the three blocks. 9 By his will the testator gave 152 Norfolk Road to the first defendant. That property has been transferred to her. The evidence shows that the value of the battleaxe block when created will be about $420,000. The value of 154 Norfolk Road will be diminished by about $100,000 by the excision of part. The defendants will be about $320,000 better off by the perfection of the subdivision and transfer to them of the battleaxe block (not allowing for the $84,000 expended by them). DEFENDANTS' CLAIM BASED ON ESTOPPEL 10 I shall turn first to the defendants' claim based on proprietary estoppel. It was once thought that an estoppel could not found a cause of action: see Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 per Mason CJ and Wilson J at 400. However, at least since that decision, it is plain that in appropriate cases the doctrine of proprietary estoppel may provide an avenue for the enforcement of voluntary promises. Mason CJ and Wilson J said (at 406): "The foregoing review of the doctrine of promissory estoppel indicates that the doctrine extends to the enforcement of voluntary promises on the footing that a departure from the basic assumptions underlying the transaction between the parties must be unconscionable. As failure to fulfil a promise does not of itself amount to unconscionable conduct, mere reliance on an executory promise to do something, resulting in the promisee changing his position or suffering detriment, does not bring promissory estoppel into play. Something more would be required. Humphreys Estate [ Attorney-General (Hong Kong) v Humphreys Estate Ltd [1987] 1 AC 114] suggests that this may be found, if at all, in the creation or encouragement by the party estopped in the other party of an assumption that a contract will come into existence or a promise will be performed and that the other party relied on that assumption to his detriment to the knowledge of the first party." 11 This doctrine was recently applied by Austin J in Lieschke v Lieschke [2003] NSWSC 743, in circumstances with some similarity to the present. There his Honour stated the law as follows: "31 The species of equitable estoppel that may confer an equitable interest in land is sometimes called 'proprietary estoppel'. In Ramsden v Dyson (1866) LR 1 HL 129, Lord Kingsdown said (at 170): 'The rule of law applicable to the case appears to me to be this: If a man, under a verbal agreement with the landlord for a certain interest in land, or what amounts to the same thing, under an expectation, created or encouraged by the landlord, that he shall have a certain interest, takes possession of such land, with the consent of the landlord, and upon the face of such promise or expectation, with the knowledge of the landlord, and without objection by him, lays out money upon the land, a court of equity will compel the landlord to give effect to such promise or expectation.'

32 There is a reasonably close analogy between the case envisaged by Lord Kingsdown and the present case, if one substitutes 'landowner' for 'landlord'.

34 This is not an appropriate case for any deeper investigation into whether unification [of the various strands of estoppel] has been achieved and if so, what is the shape of the emerging principles. Counsel for both parties were content to treat the observations of Brennan J (as he then was) in Waltons Stores (Interstate) Ltd v Maher (1998) 164 CLR 387, at 428-9, as a sufficient statement of principle for present purposes. His Honour said: 'In my opinion, to establish an equitable estoppel, it is necessary for a plaintiff to prove that (1) the plaintiff assumed that a particular legal relationship then existed between the plaintiff and the defendant or expected that a particular legal relationship would exist between them and, in the latter case, that the defendant would not be free to withdraw from the expected legal relationship; (2) the defendant has induced the plaintiff to adopt that assumption or expectation; (3) the plaintiff acts or abstains from acting in reliance on the assumption or expectation; (4) the defendant knew or intended him to do so; (5) the plaintiff's action or inaction will occasion detriment if the assumption or expectation is not fulfilled; and (6) the defendant has failed to act to avoid that detriment whether by fulfilling the assumption or expectation or otherwise. For the purposes of the second element, a defendant who has not actively induced the plaintiff to adopt an assumption or expectation will nevertheless be held to have done so if the assumption or expectation can be fulfilled only by a transfer of the defendant's property, a diminution of his rights or an increase in his obligations and he, knowing that the plaintiff's reliance on the assumption or expectation may cause detriment to the plaintiff if it is not fulfilled, fails to deny to the plaintiff the correctness of the assumption or expectation on which the plaintiff is conducting his affairs.'" 12 In Lieschke a father had approached his son with a rate notice to the relevant land. He handed him the rate notice and said: "That's yours now, you pay the rates". Thereafter the son did pay the rates for some 28 years. He farmed the land for about five years for his father and thereafter for himself. He commenced almost immediately to make improvements to the land, as could have been observed by the father. However, the father did not in his lifetime transfer the land to his son. Austin J held that the requirements spelt out by Brennan J had been fulfilled and declared that the son was entitled to a declaration that he held the balance of proceeds of sale of the land for himself absolutely. Although the evidence of the representation was brief, his Honour held that it was unambiguous and clearly conveyed the idea that, as from that moment, the land belonged to the son, who should pay the rates from then on. It created an expectation that the son would become the owner of the land. 13 In my view, this is a stronger cases than Lieschke. The parents represented that, if the subdivision were carried out, they would participate in a transfer of the battleaxe block to the defendants. The representation was made in the initial conversation, brief as were its terms as given in evidence. They continued the representation in their conduct of viewing the plans as they were prepared for lodgement with the Council and signing their consent as landowners to the development application. The testator, who by that time was the sole owner of 152 Norfolk Road, further continued the representation by the execution of a transfer late in his life. The defendants acted upon the representation by spending some $84,000 towards effecting the subdivision. Failure to perfect the transfer of the land will occasion detriment to the defendants, since they will be some $300,000 better off if the subdivision is effectuated and the battleaxe block transferred to them. Without the transfer, they would have at most a charge in respect of the moneys expended by them, but even this is not clear, since it is not plain what moneys were expended on the testator's land and what on their own land next door. In my view, the requirements set out by Brennan J have all been fulfilled. 14 In opposition to these conclusions, it has been contended that I should not accept that representations were made by the parents as alleged. However, I accept the defendants as witnesses who were essentially trying to tell the truth about the events which had occurred. The fact that their accounts differ somewhat seems to me to point to truthfulness rather than the opposite. But both versions coincide as to a representation that the battleaxe block would be gifted to the defendants. Nor is there anything improbable about this account, bearing in mind the relationship and the domestic arrangements that prevailed between the parents and the defendants. I accept that such a promise was made. 15 There was at one stage some suggestion that the father may not have been entirely firm of mind at the time of execution of the transfer, which was not long before his death. However, he executed the transfer at about the same time as he made his will. No challenge to his testamentary capacity has been brought forward. Nor has any defence been pleaded to the cross claim that the transfer was procured by undue influence. There is no reason on the evidence to think that the execution of the transfer was not the father's voluntary and deliberate act. 16 On this basis, it is my view that the testator in his lifetime was estopped from denying that he was bound to participate in the transfer of the battleaxe block to the defendants. Since the testator was bound at his death to give effect to the promised transfer, the first defendant was bound as his executor to do so. The following statement is found in Williams, Mortimer and Sunnucks on Executors, Administrators and Probate (2000) [48-04]: "The general rule has been established from very early times, that personal claims founded upon any obligation, contract, debt, covenant, or other duty, on which the testator or intestate might have been sued in his lifetime, survive his death, and are enforceable against his executor or administrator."

The principle is confirmed by the Law Reform (Miscellaneous Provisions) Act 1944 s 2. The first defendant is now certainly entitled to participate as a transferor in the relevant transfer. 17 As the first defendant has now been registered as the proprietor of 152 Norfolk Road, there is in my view no need to do more by way of relief than to declare that she is entitled to execute, as a co-transferor, a transfer of the battleaxe block to the defendants. 18 In light of my clear view that the defendants are entitled to succeed upon their proprietary estoppel claim, there is no need for me to determine their claims based on contract or on their entitlement otherwise to the declaration of a constructive trust. FACTS RELATING TO FPA CLAIM 19 The testator, as already stated, died on 6 August 2003. He was aged 81 years. He was married once only to Joyce, who, again as already stated, died on 22 December 2001. They had three children. The plaintiff was born on 4 February 1949 and is now aged 57 years. A brother, Phillip Henry Smith, was born on 23 October 1947 and died on 13 November 2002 aged 55 years. The third child was the first defendant, who was born on 14 November 1961 and is therefore aged 44 years. Phillip was married three times and had four children from those marriages, all of whom are now adult. 20 The provisions of the testator's will were essentially that the first defendant should receive 152 Norfolk Road and that the plaintiff should receive the residue of the estate. In referring in his will to 152 Norfolk Road, the testator made no mention of the subdivision proposal. 21 For probate purposes, the value of the estate was stated as about $831,000, of which $800,000 was the then value of 152 Norfolk Road and the rest was personalty. Of the personalty, some was cash or readily convertible to cash. The rest was personal possessions, such as furniture, a caravan and a watch. There were debts of about $6,600. The cash and convertible items have been expended on debts and probate costs. The other personalty has not been realised or distributed. The market has reduced the value of 152 Norfolk Road to $650,000 and the excision of the battleaxe block will reduce it further to $550,000. 152 Norfolk Road is the only possible source of further provision for the plaintiff. 22 The plaintiff has been married twice, the first time to Penny Clark, from whom he is divorced. There were two children of that marriage, Rebeka, born on 31 March 1974, and Vanessa, born on 28 April 1975. They both suffer from mental health problems and their relationships with the plaintiff are strained. That first marriage ended when the plaintiff was about 27 and he remarried at the age of about 31 or 32 years. His second wife was Dawn Hazel. They had one son, Brendon, who was born on 22 October 1982, and who, sadly, died on 31 July 1998 as the result of a motor vehicle accident when he was aged 14. 23 The plaintiff did not do well at school and left at the age of 15. Thereafter he did his apprenticeship and became a carpenter by trade. He lived at home until he was about 22 (for the last two years with his first wife). The testator was a bricklayer by trade and both in boyhood and in his early adult life the plaintiff worked with the testator from time to time. In his words, the testator and he had a good working relationship, "my Dad was my mate". He lived with his parents between marriages, but most of his adult life he was resident in country New South Wales and subsequently in Melbourne. In the country, he lived first at Tamworth, where his father came up and worked with him for some time. Later he lived at Collarenebri in far western New South Wales for some 22 or 23 years. He did, however, keep in touch with his father during that period and on occasions he did work in Sydney. He helped his father to build a separate flat under 152 Norfolk Road. After the defendants purchased 154 Norfolk Road, he came down to Sydney and renovated that property for them for no charge, save that they provided the materials, and his parents accommodated and fed him. He continued in frequent contact with his father and mother until his mother's death. He says that his father was never angry before his mother died, but that after the death of his mother, followed by his brother's death less than 12 months later, "Dad was never the same," and relations between them were strained. However, they were not severed, as is apparent from the gift to him in his father's will, which will be mentioned below. 24 The plaintiff's family relationships have been grossly disrupted of late years. His relations with the daughters of his first marriage are strained. His son was killed. His second marriage has ended. So has another relationship into which he entered, so that he now lives alone. His mother died, then his only brother. His relationship with his father became strained, then his father died. These things all occurred in a comparatively short space of time. 25 He has been diagnosed with clinical depression and this depression has disturbed what appears to have been a steady pattern of work throughout his life. His psychiatric condition has been reported on and treated by Dr Ian Katz, a specialist psychiatrist, of Melbourne. There are in evidence two reports of Dr Katz. 26 The first is dated 17 September 2004. In that report Dr Katz expresses the following opinion: "Chris Smith is a 55 year old man who has experienced extreme, diverse and significant losses over a long period of time culminating in the last two years with the deaths of both parents, his brother and substantial disenfranchisement from his sister. The losses of his family members come on a background of a conflictual and ambivalent relationship over a long period of time with all of them. These losses have left him isolated, vulnerable and distressed at an important time in his life, that is, in his 50's when most men of his age have a reasonable support network. Notwithstanding that some aspects of his history have remained vague over the months that I have seen him, including the reasons for this apparent disaffiliation from his family, his history is nonetheless remarkable for the several losses involving bereavement, divorces, loss of contact with his children, and vocational difficulties over a fairly compact period of time. Clearly Mr Smith has fulfilled the criteria of a major Depressive episode complicated by protracted and multiple grief reactions." 27 Dr Katz' second report is dated 27 November 2005, and I set out the following conclusions from that report: "Whereas Christopher's depressive illness seems to have resolved adequately, it is these other issues namely in relation to personality issues, the ongoing impact of multifaceted grief and bereavement, and interpersonal difficulties that are likely to pose further difficulties for Chris and need to become the focus of subsequent treatment. To a certain extent his difficulties with family relationships, particularly the acrimony between himself and his sister in relation to these current legal proceedings, ongoing bereavement, and ongoing conflicts with his second wife and daughters, which are most likely to have an impact on his ability to work in the not too distant future. Certainly in terms of his psychiatric issues, the adequate resolution of his current legal situation is of paramount importance.

Given Chris's past history of depression and recent severe symptoms necessitating hospitalisation, in collaboration with ongoing psychosocial stressors, it would be my view that Chris will continue to require anti-depressant medication for an indefinite period. The information that I have is that Chris's estimation of his monthly pharmaceutical bill of being approximately $28.00 is correct.

Finally it is prudent that Chris's current complex family and social issues are seen to be more relevant than any underlying clinical depressive symptomatology in determining his current level of ongoing distress and functioning." 28 The plaintiff's financial situation is gloomy. He has, in effect, no assets bar a small amount of superannuation and his tools of trade. Dr Katz' reports document considerable periods of hospitalisation, which the plaintiff has undergone, during which, of course, he could not work. Dr Katz again certified him unfit to work for three months in January 2006. Dr Katz did not give oral evidence and there is no prognosis in evidence as to the present situation, other than that certificate. However, despite some optimism in Dr Katz' second report, a new period of incapacity is hardly surprising if one considers the contents of Dr Katz' reports. The plaintiff at present has no income bar unemployment benefits of $404 per fortnight. When he works, he earns $25 per hour before tax. At present, he says he is "scrounging" on friends, one of whom he lives with at no cost. He previously paid rent for accommodation for himself of $120 per week 29 The first defendant has followed a more steady course of life and her history can be shortly stated. She has been married once only and has one daughter. Essentially she has lived at 152 Norfolk Road all her life except for a nursing year at Liverpool Hospital in 1984 and eight months in 2001 when she lived with her husband and their daughter at 154 Norfolk Road. They returned to 152 Norfolk Road after her mother's death at the request of the testator. 30 The assets of the first defendant are essentially intermingled with those of the second defendant. Their joint assets are generally as follows: Battleaxe block $ 420,000

The joint liabilities are: Borrowing on 154 Norfolk $ 375,000

The Bendigo Bank loan has been expended on the Vanuatu property and costs of these proceedings. In addition, the first defendant has superannuation worth some $67,000 and shares worth $2,250. 31 The first defendant earns $900 per week net as a nursing manager. The second defendant earns about $650 per week gross as a forklift operator and about $2,000 per annum as a scuba diving instructor. The defendants derive about $1,800 per month on average from letting to students 154 Norfolk Road and the flat under 152 Norfolk Road. Their combined income exceeds the family outgoings, but not by a huge margin. The first defendant fears that her income may be reduced by about $150 per week net if she reverts to ordinary nursing duties. She also fears that there is some future threat to her income from uncertainty in the industry and some problems with back pain and hearing; however, those threats are not immediate. LAW RELATING TO FPA CLAIM 32 A majority of the High Court (Mason CJ, Deane and McHugh JJ) said in Singer v Berghouse (1994) 181 CLR 201 (at 208 - 209) that the court in determining an application for provision under the FPA is required by ss 7 and 9 to carry out a two stage process. The first stage requires a determination "whether the applicant has been left without adequate provision for his or her proper maintenance, education and advancement in life." The second stage, which arises if that determination be made in favour of the applicant, is "to decide what provision ought to be made out of the deceased's estate for the applicant." The determination of the first stage "calls for an assessment of whether the provision (if any) made was inadequate for 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 correct view of the first stage is that the question is strictly one of fact, notwithstanding that it involves the exercise of value judgments. The second question involves an exercise of discretion in the accepted sense, although that discretion must, of course, be exercised judicially. That majority of the High Court disapproved the use in determining these questions of reference to the concepts of "moral duty" or "moral obligation", or even the use of those terms, since this might be thought to place a gloss upon the statute. Whilst there has been some debate as to whether or not that view was an obiter dictum only, the Court of Appeal has since determined, despite the eloquent dissent of Handley JA, that that expression of opinion ought be taken in this Court as the binding view of the High Court upon this subject matter: see Permanent Trustee Co Ltd v Fraser (1995) 36 NSWLR 24; Massingham v Massingham NSWCA 27 June 1996 unreported. The matter was revisited in the High Court in Vigolo v Bostin (2005) 221 CLR 191. Gleeson CJ at [25] doubted that there was any vice in references to "moral duty", provided it was regarded as a form of shorthand and not allowed to operate as a gloss upon the statute. Gummow and Hayne JJ in their joint judgment at [73] thought it "better to forgo any convenience that these shorthand expressions may offer in favour of adherence to the relevant statutory language." All three of those Judges, constituting a majority of the High Court, shared the view that Singer v Berghouse should be taken as an appropriate guide to the construction and operation of family provision legislation: see [5] and [73]. 33 I have approached the matter as prescribed in Singer v Berghouse. This being a claim of an adult child of the testator, I shall simply carry out the two stage process in relation to the plaintiff in the context of this family and this estate. The appellate Courts have negatived that there is any "special" test or approach to the process in the case of adult children, as opposed to other persons with a claim: see Hughes v National Trustees Executors and Agency Co of Australasia Ltd (1979) 143 CLR 134; Hunter v Hunter (1987) 8 NSWLR 573; Vigolo v Bostin supra at [26]. 34 The proper approach to a claim by an adult child received close consideration by Bryson J in Gorton v Parks (1989) 17 NSWLR 1. His Honour (at 10) regarded "the bare fact of paternity" as of very great importance in "morality" (using that word before the subsequent strictures of the High Court). But, as to the fact bare fact of parenthood, without detracting from what Bryson J said, it must be remembered that Meagher JA had previously said in Hughes v Hughes NSWCA 6 June 1989 unreported, that the duty to make provision arose in the circumstances of that case as follows: "Her right arises not merely from the bare fact of parenthood, which of itself does not generate a right, but from the general circumstances of the case; namely, parenthood, the performance of normal filial duties in the 10 years after she left school and in the two periods between her earlier trips and in her professed and continued willingness to be of whatever assistance to her father she could be." 35 In Walker v Walker NSWSC 17 May 1996 unreported, Young J, as his Honour then was, conducted a compendious review of the authorities relating to estranged parents and children and said: "…. I reject the approach that all an applicant under this Act has to do is to prove that he or she is an eligible person and that he or she reasonably needs more financial assistance. The cases show that there must be a full investigation into all the facts and circumstances of the matter to see whether the community would expect that a person in the plight of this testator ought to have made provision or further provision for the applicant. Although it is not much mentioned in recent decisions, the older authorities often mention the fact that the Act did not intend to affect freedom of testation except in so far as that freedom had to be abridged in order to ensure that people made proper provision for those who were dependent on them financially or morally: see for instance Scales ' case [ The Pontifical Society for the Propagation of the Faith v Scales (1962) 107 CLR 9] at 19."

In Day v Perpetual Trustee Co Ltd [2001] NSWSC 394 at [27] Master Macready, as his Honour then was, adopted that formulation of Young J as "sufficient and appropriate" to guide him in the decision of a similar case. I do the same. 36 The time at which adequacy or inadequacy is to be judged is the time at which the Court is determining whether or not to make an order: see s 9(2). Section 12 of the FPA provides that where the Court makes an order for provision, it may specify the portions of the estate which shall bear the burden of the provision. By s 24 of the FPA, where the Court is satisfied that an order for provision ought be made and finds that property is held by a person as a result of a distribution from the estate, it may, subject to restrictions in ss 27 and 28, make an order specifying such distributed property as notional estate. DETERMINATION OF FPA CLAIM 37 The plaintiff says he needs a house, which he says would cost $350,000, plus a nest egg of $100,000. He says that, although living alone, he needs a house, as opposed to an apartment, because he needs a yard to store materials for his occupation as a builder and because he desires a shed to work in. 38 The first defendant denies that provision for the plaintiff was inadequate or improper, so as to trigger an entitlement to further provision. She says that the plaintiff's relationship with his father was distant, particularly as contrasted with her close relationship. She says that the proper conclusion on the medical evidence is that he will fully recover from his depression, particularly after the conclusion of this litigation. He will thereupon return to being a man able to earn an ordinary living. She says that, if he is entitled to any further provision, that should be assessed at no more than $50 - 60,000. She attempts to cast doubt on his account of his needs and condition by drawing attention to errors in his account of his financial position, particularly in his earliest affidavit. 39 There certainly were errors in the plaintiff's account. However, his lack of recollection may be explained in part by his condition of clinical depression. His account of his condition and present earning ability receives considerable corroboration from the evidence of Dr Katz. I also accept in general terms his account of his familial history and relationships. 40 Although I did not see Dr Katz in the witness box, his reports are well written and cogent and in my view present a convincing picture of the plaintiff's condition and prognosis. I accept Dr Katz' diagnosis that the plaintiff is at present unfit for work. I conclude from Dr Katz' evidence that his work future is uncertain, using that term in its most literal sense. On the one hand, Dr Katz believes there is a possibility of a substantial recovery, particularly after the litigation is over. On the other hand, that is not certain. There is no doubt of Dr Katz' diagnosis of clinical depression, with a prognosis that he has ongoing psychiatric problems and will require continuing anti depressant medication into the indefinite future. In my view, this man may return to full time employment in the building trade for another seven or eight years. On the other hand, he may never return to work again, particularly bearing in mind his age and the vagaries of the employment market. Perhaps a middle course is likely, with him finding some work some of the time. From half time employment (20 hours per week) he would earn about $500 per week gross. To meet this uncertain future he has virtually no resources. 41 The defendants are not rich people. However, they have far more of the world's resources than the plaintiff. Their position may be described as comfortable. They are in a much stronger position than the plaintiff to meet the exigencies of life. 42 There is no doubt that the first defendant had a much closer relationship with the testator than the plaintiff and that she (in conjunction with the second defendant) did much more for both her mother and the testator, particularly in the closing stages of their lives, when they needed assistance. To some extent, this has already been recognised in the gift of the battleaxe block, which is worth about $300,000 net to them and will put about $400,000 back into their hands. 43 An adult child does not have any just expectation to receive from a parent's estate enough money to buy a home: see per Young J in Shearer v The Public Trustee NSWSC 23 March 1998 unreported. On the other hand, the plaintiff faces a situation where he needs somewhere to live and some form of income supplementation or support. Just as the plaintiff's closeness to and care for the testator was greater than his, so is his neediness greater than hers. 44 There are two important factors relating to the plaintiff's claim. One is the tie of blood to which Bryson J referred. The other is the fact that the testator himself acknowledged the appropriateness of provision being made for the plaintiff out of his estate by his inclusion of the plaintiff in his last will. This is not a case where the relationship between parent and child was totally severed or where either had rejected the other. 45 These factors, together with the plaintiff's situation as set out above, viewed in all the circumstances of this case, lead me to the conclusion that I should determine the first stage of the two stage process by a finding that the provision for the plaintiff was inadequate for his proper maintenance and advancement in life. 46 Turning to the second stage, the available fund for the making of further provision is the $550,000 represented by 152 Norfolk Road. From this must be deducted the costs of the proceedings. The evidence shows the defendants' costs will be about $51,000 (exclusive of probate costs) and the plaintiff's costs about $41,000. The plaintiff's costs may be reduced by reference to the costs of the cross claim, which he lost. For present purposes, at a rough estimate, about $70,000 for costs may be required out of the estate, so that the available fund will be in the vicinity of $480,000. 47 I have already said that the plaintiff does not have a just expectation that he will be provided with a home. Furthermore, I am not convinced that he needs a $350,000 house to live in. In saying this, I bear in mind that he lives alone. I am not convinced that he will return to being a builder in a way that would necessitate the storage of materials by him. As I have already observed, he may not return to the building industry at all. 48 In my opinion, the appropriate provision to make is to give him a legacy of $250,000 in lieu of the provision made for him in the will. From this he may be able to provide himself with a more modest dwelling. Alternatively, he may be able to utilise it to subsidise rental and to give himself a reserve fund. It is probably not necessary to give more detailed directions as to how and when this sum should be paid to him, but any further submissions as to the form of orders and costs may be made when short minutes are brought in to give effect to my decision. …oOo… 49 Following the oral delivery of my above reasons for decision, the question of costs has been argued before me. Although in those reasons I rather anticipated that there might be some reduction of the plaintiff's entitlement to costs by reason of his loss of the cross claim, I have been reminded that in the cross claim he was joined as and played the role of the necessary contradictor on behalf of the estate, since the executor, the first defendant, had an interest contrary to that of the estate in the cross claim. Mr Ellison, of Senior Counsel for the defendants, has, quite correctly, said that, because he was appointed contradictor, he was not bound to contradict. Mr Ellison says that his insistence on doing so, in the face of a completely clear claim made by the cross claimants was unreasonable and should deprive him of the right of indemnity out of the estate, which someone acting on its behalf would usually have. 50 It is true that the result of the cross claim now seems clear enough. I am far from certain, however, that it was so clear at earlier times and I am not prepared to find that the plaintiff acted unreasonably in opposing the cross claim on behalf of the estate. 51 Normally his entitlement to costs incurred in acting for the estate would be on an indemnity basis. However, I think that any attempt to divide up the plaintiff's costs as between his FPA claim, in respect of which he is entitled to costs on the ordinary basis, and costs relating to the cross claim would be quite unprofitable, particularly bearing in mind the injunction on the Court to effect a just, quick and cheap resolution of the dispute and the fact that the gap between costs on the ordinary and the indemnity bases is not now so great as once it was. 52 In the circumstances, the order that I propose to make as to the plaintiff's costs is that the plaintiff should have his costs of the proceedings out of the estate on the ordinary basis.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.

At a glance

Court

Decision date

Before

Source

Judgment (23 paragraphs)

Parties

Cases Cited (11)

Cited By (1)