Spencer v Blyth & Anor [2006] NSWCA 181 | Case summary

The appellant who had been living with the deceased in her home in a de facto relationship was left a one-third interest in the house under her will. Probate was granted and the estate was fully distributed well within the 18 months period allowed by s 16(1)(b) of the Family Provision Act 1982 (the Act) for claims under the Act. Four months before the limitation period expired the daughter of the deceased and a co-owner of the house claimed that the appellant was no longer living in it and demanded its sale. She commenced proceedings under s 66G of the Conveyancing Act 1919 after the limitation period had expired. The appellant then made an application out of time for further provision under the Act. The trial Judge found that he was an eligible person because he had been living with the deceased in a de facto relationship and since there was no prejudice he granted an extension of the limitation period under s 16(2). An order could only be made in favour of the appellant if the home was designated as notional estate by an order under s 24 but where an extension of time had been necessary s 28(5)(d) provided that such an order could only be made if special circumstances were shown. The Judge held that this had not been established and dismissed the application. On appeal: HELD: (1) The appellant faced two hurdles, the limitation period in s 16(1)(b), and the need to show special circumstances in s 28(5)(d); (2) The absence of prejudice had to be established to obtain an extension of time; (3) Something more is required to pass the second hurdle and the absence of prejudice was not enough; (4) Special circumstances had not been shown; (5) The appellant had joined the executors, but not the daughter as defendants. The executors had no interest in the proceedings and were only nominal parties. Consideration should be given to amending the Rules of Court to make express provision for proceedings where the owners of the distributed estate are the real defendants. ORDERS

6 JULY 2006 ALEXANDER CHARLES SPENCER v DIANNE JUDITH BLYTH & ANOR Judgment 1 HANDLEY JA: The appellant appeals against the refusal of Associate Justice Macready to make an order in his favour under s 28(5)(d) of the Family Provision Act 1982 (the Act) designating property distributed from the estate of the late Betty Neville as notional estate out of which an order could be made for his benefit. 2 The late Betty Neville died on 18 March 2002 aged 81 leaving a will made on 18 July 2001. She owned her own home at 104A Lindsay Street, Campbelltown and had lived there with the appellant for many years. She appointed her son Ronald Neville, and her son-in-law Graham Blyth as her executors and left her house to her two children and the appellant equally. This was her only relevant asset. 3 Probate was granted on 22 July 2002 and the house was transmitted to the three beneficiaries on 27 August 2002. The appellant was living there when the deceased died and continued to do so at least for some time. 4 In May 2003 the appellant became aware that the deceased's daughter, Mrs Dianne Blyth, believed that he was no longer living in the house, and that she wanted it sold, either by agreement, or by trustees for sale appointed under s 66G of the Conveyancing Act 1919. This is recorded in a file note of 5 May of Mr Smith, a solicitor who saw the appellant and Mr Neville that day. This was confirmed by her solicitor's letter to the appellant of 27 May. 5 Mr Smith advised the appellant on 5 May that he had no legal right to remain in the house without the agreement of his co-owners, and that Mrs Blyth could take proceedings under s 66G to force a sale. Correspondence followed between the solicitors acting for Mrs Blyth and Mr Smith who continued to act for the appellant. Finally on 2 March 2004 Mrs Blyth's solicitors wrote to Mr Smith stating that they "were getting nowhere" in relation to the sale of the house and that she had instructed them to proceed under s 66G. 6 The summons filed on 1 April was served on the appellant on 12 April. He then changed his solicitors and commenced the subject proceedings under the Act on 9 June. The limitation period of 18 months from the date of the death of the deceased for applications for provision or further provision under the Act (s16(1)(b)) had expired on 18 September 2003 more than 4 months after Mrs Blyth had made it clear that she wanted the house sold. The appellant therefore needed an extension of time under s 16(2). The Judge found that he was an eligible person within para (a)(ii) of the definition in s 6(1) because he was living in a domestic relationship, as defined, with the deceased at the time of her death. 7 The Judge granted an extension of time under s 16(2) because he accepted the appellant's explanation for the delay and found that there was no relevant prejudice. There was no actual estate from which an order under the Act could be satisfied, and before his claim could be considered on its merits the appellant had to obtain an order under s 24 designating the house as notional estate of the deceased. 8 To obtain such an order the appellant had to satisfy the requirements of ss 27 and 28. In this case the critical provision was s 28(5)(d) which applied where the estate had been fully distributed, and an extension of time had been granted under s 16 to enable the application to be brought. In such a case s 28(5)(d) prevented an order being made designating the distributed estate as notional estate unless special circumstances were shown. This was the central issue on the appeal. 9 The Judge held that the appellant had not established special circumstances within s 28(5)(d) and that no order could be made under s 24 designating the house as notional estate of the deceased. This meant that the application had to be dismissed. Mrs Blyth challenged the extension of time granted by the Judge by a notice of contention but it is not necessary to consider that question. 10 There were a number of irregularities in the proceedings. The summons under the Act joined the executors as the sole defendants although they had fully distributed the estate. They had no assets in their hands from which to indemnify themselves against any costs they would incur if they took any part in the proceedings and they ran the risk that there might be no notional estate from which their costs could be paid and that they might be unable to recover them from the plaintiff. 11 Rules of Court made under the Act that were in force at the time (SCR Pt 77 Div 16, now found in SCR Sch J) dealt generally with proceedings under the Act. Rule 59 obliged the administrator (defined in the Act to include an executor) to make an affidavit which, inter alia, should identify any distributed estate, and the persons holding it. Rule 60(1) required the plaintiff to join the administrators but r 60(2)(b) provided that the summons need not join any defendant "where there is sufficient reason for not doing so". Rule 61(1) enabled the Court at any stage to direct that a person be added or substituted as a party. Both executors appeared and the deceased's son-in-law made the affidavit required by r 59. 12 The only persons who had any interest in the proceedings, apart from the plaintiff, were the son and daughter of the deceased. The son was joined as an executor, but the daughter, who alone opposed the relief sought, was not joined. There was no denial of procedural fairness because the proceedings were heard concurrently with the daughter's summons under s 66G, with evidence in the one case being evidence in the other. The Judge treated Mrs Blyth as a party to the proceedings under the Act and made an order for costs in her favour. It will be necessary for this Court to regularise the position. 13 Consideration should be given to the making of appropriate rules to apply to proceedings where the estate has been fully distributed and the only persons interested in opposing the relief sought are the beneficiaries to whom the estate has been distributed. 14 Further irregularities occurred in relation to the appeal. The Judge dismissed the claim under the Act on 1 July 2005 and the appellant filed his notice of appeal with appointment on 27 July. On 2 September the Judge made orders under s 66G appointing two other persons as trustees for the sale of the property and ordering the other co-owners to pay Mrs Blyth's costs of those proceedings. The orders have been stayed pending the appeal. There has been no appeal from the orders under s 66G and the trustees for sale in whom the property is now vested, at least in equity, have not been joined as respondents. The Court could not grant the relief sought in this appeal while the orders under s 66G stand and if the appeal had otherwise been successful it would have been necessary for the appellant to seek leave to appeal from those orders out of time. 15 At the trial counsel for the appellant identified 8 matters which she submitted individually or collectively constituted special circumstances justifying an order under s 28(5)(d). The Judge held, correctly, that 6 of those matters were not supported by evidence, or were contrary to the evidence and further consideration of these matters is not called for. 16 Although the letters of 14 and 27 May 2003 from Mrs Blyth's solicitors to the appellant and her brother referred to an agreement between the beneficiaries that the appellant could remain in the house, Mrs Blyth denied in evidence that there was such an agreement and the appellant accepted there was not (blue 223, black 33). 17 Two of the remaining matters relied on assert the absence of prejudice to the other beneficiaries. The Judge found that there was no such prejudice, other than the general prejudice flowing from delay, but considered that this, without more, could not constitute special circumstances. I agree. The appellant faced two hurdles, the time bar under s 16(1)(b) and the further bar under s 28(5)(d). A late application which would occasion prejudice to the beneficiaries to whom the estate had been distributed would fail at the first hurdle because the plaintiff would not obtain an extension of time. Absence of prejudice may allow the plaintiff to get to the second hurdle but, by itself, it cannot constitute special circumstances which entitle him to pass it. Proof of something more is required. 18 The appellant had the benefit of legal advice about his position from 5 May 2003 onwards but said that he was not aware of his right to seek relief under the Act until 21 May 2004 after he had changed his solicitors. This may not reflect on his previous solicitor because there was no evidence about his instructions to that solicitor either on 5 May 2003 or later. The submission that this solicitor was in a position of conflict because he had acted for the executors in connection with the estate was without substance. That business had been non-contentious, and the executors, as such, had no further interest in the estate. 19 Mrs Blyth did not seek a sale of the house until she had come to believe that the appellant was no longer living there on a full-time basis despite his denials. Her solicitor said so in the letters of 14 and 27 May 2003 to her brother and the appellant in which their consent was sought to a sale. They sent a follow up letter on 20 June demanding a prompt reply. 20 The appellant's solicitor did not claim that he was still living in the house until his letter of 30 July which included an offer to buy out Mrs Blyth's share on certain terms. That offer was rejected by her solicitors on 4 September when they again asserted that the appellant was not living in the house. Finally on 26 November the appellant's solicitor wrote saying that the appellant "has no objection to the … property being sold" and giving permission for Mrs Blyth's valuer to inspect the house. 21 On 21 December the appellant's solicitor wrote again to confirm that the house was available for inspection. On 2 March 2004 he wrote to Mrs Blyth's solicitors inquiring whether the house had been listed for sale. This crossed with a letter from her solicitors stating that the matter was going nowhere and that an application would be made under s 66G. The appellant's solicitor replied on 4 March stating that his instructions were that the appellant was prepared to have the house sold. 22 The appellant's claim that he continued to live in the house was a fundamental basis of his application under the Act, but a very shaky one. His solicitor did not reject the claim made by the solicitors for Mrs Blyth in their letter of 27 May that he had ceased to live there on a full-time basis until 30 July. His agreement to a sale of the house evidenced in his solicitor's letter of 26 November, confirmed in December and again in March was never expressly withdrawn. The s 66G summons was served on the appellant at the home of Mrs Selwood where Mrs Blyth claimed that he had been living most of the time since before May 2003. 23 In his first affidavit of 7 June 2004 the appellant said that on a number of occasions, when in ill health, he had stayed with Mrs Selwood and that on these occasions he would only spend a few days away from "his" home. In his affidavit of 20 November 2004 he admitted that he "occasionally" stayed at her house. 24 In cross-examination he initially claimed that he only stayed at Mrs Selwood's house occasionally but in further cross-examination he "supposed" he stayed for 40 or 50 nights during 2003 (black 11), and that "quite often" at other times he spent the whole day there (11-12). He said that if he was not away on holidays more likely than not he would be at Mrs Selwood's house during the day (12), and that they go shopping and socialising together (12) and have been on holidays together (13). He was her constant companion (13), and when they were away they shared the same bed and they had had a physical relationship from time to time (14). 25 The Judge made no findings on this evidence and did not have to. On the whole of the evidence, oral and documentary, this Court could not be satisfied that the appellant was living in the house on a substantially full-time basis at any time after May 2003 before the s 66G summons was served. 26 The appellant has failed to establish that the Judge fell into error in concluding that special circumstances had not been established and that the appellant's application under the Act was therefore barred by s 28(5), indeed in my judgment, his decision was correct. 27 The appellant also challenges the order that he pay the costs of the proceedings in the Equity Division. This was adverse litigation and there is no substance in the challenge. 28 The Court must however exercise its powers under SCR Pt 51 r 22 to regularise the proceedings in the Equity Division. The following orders should be made:

Spencer v Blyth & Anor

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