STONE v STONE [2001] NSWSC 138 | Case summary

STONE v STONE [2001] NSWSC 138 | Case summary | Zoe

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6 This leaves a balance of $264,828.29 which takes account of all the defendant's costs. The plaintiff's costs are estimated at $24,000. 7 In order to understand the matter I will, firstly, give a brief chronology of some of the family history. 8 The deceased was born on 29 April 1929 and his wife on 1 May in that year. They were married on 5 November 1955. In approximately 1957, a block of land was purchased in the name of the deceased at 132 Derribong Street, Peak Hill. The matrimonial home was subsequently built on that block of land. 9 The first child, the defendant, was born on 14 February 1957 and Michael, the second plaintiff, was born on 30 June 1958. 10 In 1962 a property known as Wattle Flat was purchased. This was a small property of about 88 acres upon which the deceased carried on the raising of pigs. The children, particularly the defendant, helped the deceased in these endeavours in the early days. 11 By 1974 the defendant had left home and gone to Parkes to work. Her brother also took employment away from the farm in due course. 12 Somewhere between 1977 and 1978, the deceased and the first plaintiff purchased a property from the deceased's late father's estate, known as Suvla, as tenants in common in equal shares. This was a property of some 702 acres and was used for grazing and other farming purposes. A partnership was formed between the first plaintiff and the deceased in respect of those operations. 13 In 1988 another property, Wilga Flat, was purchased. The purchase was by the first plaintiff, the second plaintiff and the deceased as joint tenants. Under the partnership the deceased had a one-quarter interest, as did the first plaintiff. 14 The defendant had lived for some years not far from Peak Hill but by 1994 she had moved to Port Macquarie. She still, however, kept in touch with the deceased and it was in 1997 that the deceased was diagnosed with diabetes. 15 In July 1998 he became ill and was admitted to hospital for a suspected malignant tumour on the tongue. At this period the defendant attended to the care of the deceased at times during and after his discharge from hospital. 16 In late 1998 it was decided to sell the property Suvla and in February 1999 the defendant arranged for a holiday for the deceased and the first plaintiff at South West Rocks. This was a birthday present for them both and when they arrived, the defendant noticed that the deceased had lost a lot of weight and looked unwell. This resulted in her taking him to see doctors to have diagnosed his condition. 17 For a while, because of the difficult situation the deceased was in, which was the period February-March 1999, the defendant assisted the plaintiff and, in fact, was mainly responsible for the care of the deceased when he was home. 18 In April or May 1999 there was arranged a clearance sale of plant and equipment on a number of properties. Shortly prior to this, the relations between the second plaintiff, Michael and his father broke down. There were apprehended violence orders taken out against Michael for the benefit of both the defendant and the deceased. 19 In April 1999 there was a dissolution of the three-way partnership. 20 The clearance sale was carried out on 15 May and some $48,000 was realised from the sale. A few days later the deceased wished to leave the premises and, in fact, by arrangement with friends, he was taken to the defendant who arranged for his admission into hospital. 21 During this occasion the defendant looked again at the question of his will and made a will. He had some advice from solicitors who suggested that because of the joint tenancy in respect of Wilga Flat that his son might ultimately receive it. This led to the deceased taking steps under the provisions of the Real Property Act to sever the joint tenancy of Wilga Flat. 22 This led to, on 28 June 1999, the two plaintiffs filing a summons in relation to Wilga Flat in which the defendant and the Registrar General were defendants. That was no doubt prompted, apart from the general break-down of relations, by the fact that the notice, probably unknown to the defendant, showed the effect of the severance was to give the deceased a third share rather than a quarter share. 23 The deceased swore a affidavit in those proceedings on 4 August and three days later he died. Probate was duly granted and the proceedings were duly commenced within time. 24 Clearly there was a falling-out between the plaintiffs, on the one hand, and the deceased and his daughter on the other. I will return to this in due course. 25 In applications under the Family Provision Act the High Court has recently in Singer v Berghouse (1994) 181 CLR 201 set out the two-stage approach that a Court must take. At p 209 it said the following:- "The first question is, was the provision (if any) made for the applicant 'inadequate for (his or her) proper maintenance, education and advancement in life'? The difference between 'adequate' and 'proper' and the interrelationship which exists between 'adequate provision' and 'proper maintenance' et cetera were explained in Bosch v Perpetual Trustee Co Limited . The determination of the first stage in the two-stage process calls for an assessment of whether the provision (if any) made was inadequate or what, in all the circumstances, was the proper level of maintenance et cetera 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.

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The determination of the second stage, should it arise, involves similar considerations. Indeed, in the first stage of the process, the court may need to arrive at an assessment of what is the proper level of maintenance and what is adequate provision, in which event, if it becomes necessary to embark upon the second stage of the process, that assessment will largely determine the order which should be made in favour of the applicant. In saying that, we are mindful that there may be some circumstances in which a court could refuse to make an order notwithstanding that the applicant is found to have been left without adequate provision for proper maintenance. Take, for example, a case like Ellis v Leeder where there were no assets from which an order could reasonably be made and making an order could disturb the testator's arrangements to pay creditors." 26 As directed by the High Court, I turn to the plaintiff's financial situation. This has been somewhat difficult to determine because of the unsatisfactory nature of the evidence given by her. She is a lady of 71 years of age. When cross-examined the day before yesterday, it became apparent that she had little or no recollection of past events and her financial circumstances. Her answers demonstrated either a lack of her awareness of her financial circumstances, or were such that she hoped to avoid disclosing her lack of memory. 27 It became obvious that she totally relied upon her son Michael to manage her financial affairs. She had placed a property in his name and had lent him substantial sums of money. It became apparent that it was Michael who gathered the information which was in the plaintiff's affidavits where she disclosed her financial situation. 28 The sad but not uncommon spectacle of the plaintiff's lack of memory in the witness box was substantiated by other evidence in the case. This consisted of observations of the plaintiff by the defendant who, I am satisfied, was a careful and accurate witness. There was also some evidence of a similar nature from a friend, Mrs Draper. 29 Although Michael had sworn affidavits in the proceedings, they were not read and accordingly he was not cross-examined. Therefore, the Court does not have the benefit of his explanation of the situation with regard to the first plaintiff's assets. 30 Doing the best I can, the plaintiff's present assets appear to be as follows:- 31 There is a unit at Dubbo which was purchased on 30 June 2000 for $125,000. In her affidavit of 27 October 2000, the first plaintiff says that the unit was purchased in her son Michael's name with funds provided by herself. In para 4 she gives an explanation in these terms for so purchasing the unit:- "The property was purchased in my son's name as I intended him to have the benefit of the unit on my death as he was looking after me." 32 There is in evidence the files of the solicitor who acted on behalf of Michael and perhaps the first plaintiff on the purchase. In a file note made on 3 May 2000, the solicitor, Joan Richardson, had this to say:- "On 2 May 2000 I attended Michael Stone and his mother (Patricia Stone) when it was decided that it would be best if Michael purchased the property in his name but held it in trust for his mother. Patricia Stone will be providing the whole of the purchase money and will be the real purchaser. (See page 373 of the stamp duties book.)" 33 Normally, of course, there is a presumption of advancement from a mother to a child. (See Nelson v Nelson (1995) 184 CLR 538.) However, it would seem that given that evidence of intention to hold it in trust by the second plaintiff and, in fact, beneficially hold it for the first plaintiff, the presumption of advancement would be rebutted. Therefore, she would seem to me to have this asset. 34 There were several loans which were owed by her son to the first plaintiff. Exhibit 4 records a loan of $50,000 which was subject to a $1,000 repayment every three months. The deed was made 6 June 1997. In an affidavit sworn on 8 February 2000, the plaintiff said that the loan was $40,000. 35 Although there was cross-examination of the plaintiff and she may have made admissions that there were two separate amounts, it seems to me that I can place no weight on that cross-examination or what she might have said in it. The more likely thing, given the timing difference and the provision for repayment, is that the loan probably was one for $40,000. 36 She has a balance in her cheque account of $22,353; she has an interest bearing deposit of $14,000; a Ford Falcon worth $20,000; furniture at $20,000; personal effects at $5,000 and a truck which may or may not be part of the partnership assets. 37 She also has the interest in what has been described as the three-way partnership. In other words, the partnership between herself, the deceased and her son. That was also estimated in her affidavit at some $25,000 or so but clearly it is more than that. The deceased's interest in that partnership was carefully outlined by the defendant in her affidavit and adopting the same methodology that the defendant adopted but, in fact, using the figures in the current partnership accounts, particularly in relation to capital, one would find that the likely interest is some $92,452. That takes account of a quarter share of the property which appears to be valued at something like $220,000. 38 So far as her interest in the partnership between herself and the deceased, a similar exercise was undertaken in the submissions producing a similar sort of figure. However, it seems to me that that is an error because, in fact, what has happened is that the land and the Suvla property has been sold and those funds received by the defendant have already been used and have gone into the Dubbo unit. Really all that is left there is a share of the plant and equipment and some wool stock shares. Perhaps interest would be in the order of $13,000. 39 All in all, they are the assets that the plaintiff has in her own right, or in trust, in the sum of $306,805, plus her car and furniture and other incidentals. 40 Her income has been dealt with, once again from information supplied by Michael which I do not doubt that the plaintiff, for the purpose of instructions, verified with the solicitors, and that indicates an annual income from her interest in the partnership with her son of $9,600. Her interest bearing deposit is about $480 per annum. She has the ability to earn income of $17,000 from her income from the Dubbo unit. Her estimated monthly expenditure is in the order of $1,099 per month which, on an annual basis, is $13,188. She, thus, on the figures will have some surplus of income, although she has not yet let the unit to achieve this. 41 An important thing to take into account in matters of this kind is, of course, any contributions that might have been made from the estate of the deceased by the first plaintiff. In her affidavit of 8 February 2000, she sets out these and they are substantial. In particular, she received two sums of money, approximately $100,000 from the estates of her late parents and $168,000 from the estate of her late uncle, Jack Matthews. That was received in 1993. $45,000 was spent in renovating the house at Peak Hill. Bearing in mind that the house now, given country prices, is only worth $75,000, the renovations were substantial. 42 She has also provided for the purchase of other improvements. There are sheep on the farm purchased for $20,000; a farm truck for $15,500; farm tractor for $21,500; shearing overhead gear $2,000; sheep grate $1,000. She also paid $19,000 to clear the farm debts. These amounts total some $79,000. She had spent other funds, such as for the purchase of a new car and advances to her son. Obviously, of course, through the partnership and the way it was structured, particularly with the interest in the partnership, some of these funds will come back to her. The contributions from the use of those assets supplied by the plaintiff must be substantial. 43 I turn to the situation of others who have a claim on the testator's bounty. The first is the only relevant one for the purpose of this application, the daughter of the plaintiff, the defendant. She is 44, single and with no dependants. She is employed presently at Port Macquarie as a store person with a net weekly wage of $357.60. She receives from an investment the sum of $134 per week. Her total income is $491.60 and her expenses slightly less than that, which she estimates at $480. She lives in rented accommodation. 44 She has only a few assets. She has an AMP diversified share fund, some $87,375; a bank account with a few hundred dollars; and old 1979 Holden station wagon worth $500; an unregistered Torana motor vehicle; she has some superannuation of $13,334. She has about $4,000 in liabilities. 45 Her relationship with the deceased is, of course, important. As I have mentioned, it was in 1974 when she left home to go to work in Parkes. She boarded there during the week and would always come home at weekends. In 1979 she formed a relationship with a gentleman and in 1981 they purchased a home where they lived together in a de facto relationship. Although this lessened her visits to her parents, these visits continued to occur. Ultimately, that relationship finished in 1990 and the defendant moved to Port Macquarie in 1993. 46 In 1998-1999, the defendant had a substantial role in looking after the deceased. She spent time at Peak Hill caring for him and also she was instrumental in having him attended to and receiving appropriate medical care - something which was not happening for him at Peak Hill. In my view, the relationship clearly was a good one between the deceased and his daughter and she did the things that a daughter would normally do in that situation, particularly having helped him extensively when she would come to the farm. 47 The next question in this case is the relationship between the plaintiff and the deceased and there are a few fundamentals which have to be observed. Firstly, it was a relationship of 44 years duration. The deceased and the first plaintiff lived in the house in the town of Peak Hill. He worked on the property and she looked after the family at home. They could have at some stage moved out of town to the property, which the deceased wanted to, but they did not and the deceased continued to accept the arrangements for living in town. 48 In the early 1990s, the first plaintiff received substantial sums, some of which she spent on the property. She also kept funds herself and would use these for things which the deceased probably thought inappropriate. The amount of the money was quite substantial in terms of what would have been available to the first plaintiff and the deceased for many years in the earlier part of their marriage and this may well have created tension. This is referred to in the note of the deceased. 49 It was also apparent by the end of the 1990s that the deceased had had enough of the farm and he wanted to retire. 50 The parties in evidence tended to concentrate on whether the plaintiff used bad language, rather than what really caused the falling out between the parties. To my mind, I think a lot of the problems that occurred in the last year or two were probably as a result of the deterioration in the mental process of the plaintiff. There were difficulties in her recognising the deceased's illnesses and there were difficulties with her recognising what was appropriate treatment or what was wrong with the deceased. 51 So far as language is concerned, what few witnesses the plaintiff called in her support would not have had the opportunity to see what was happening over the last three years. There were a number of witnesses on this issue who were, for good reason, not cross-examined. Because of this, the nature of the affidavits and the doubts about their ability to make relevant observations, I find that evidence unhelpful. 52 Generally, I accept the defendant and do not accept the plaintiff's denials about the use of language. I have no doubt that there was use of bad language at home. However, I do not regard that as a very important part of this case. 53 It seems to me that many of the difficulties related to the failing health of the plaintiff and her perceptions of the deceased and inability to understand his needs. 54 A factor which also greatly affected the relationship between the first plaintiff and the deceased was, in fact, the falling out between the deceased and their son. That, as well, precipitated the difficulties. Clearly enough over the last year there was a major breakdown. However, the significance of that is not substantial. 55 Widow's claims are frequently the subject of applications in this Court. The Court of Appeal in Goloski v Goloski (unreported 5 October 1993) has referred to formulations of this standard to be expected in respect of a widow in terms which refer to the decision of Powell J in Luciano v Rosenblum (1985) 2 NSW LR 65 and Elliott v Elliott, which was approved by the Court of Appeal on 24 April 1986. There his Honour said:- "Where the marriage of a deceased and his widow has been long and harmonious, where the widow has loyally supported her husband and assisted him to build up and maintain his estate, the duty which a deceased owes to his widow can be no less than to the extent to which his assets permit him to achieve that result; first to ensure that his widow be secure in her home for the rest of her life and that if either the need arises or the whim strikes her she have the capacity to change her home; secondly that she have available to her an income sufficient to enable her to live in a reasonable degree of comfort and free from any financial worry; and, third, that she have available to her a fund to which she might have resort in order to provide herself with such modest luxuries as she might choose and which would provide her with a hedge against any unforseen contingency or disaster that life might bring." 56 Here we do have a long relationship. It had an unfortunate ending in the last year or two and that, to my mind, is not of great significance. There was a substantial contribution which was made by the plaintiff, particularly towards the home and from her own funds. Clearly she needs a house and accommodation. The defendant herself conceded this at the very start of the litigation and also the hearing before me. The question that arises is what else is appropriate. 57 With the house and costs taken out of the estate, there is about $165,000 left in the estate. The partnership with her son is dissolved but there has not yet been a liquidation of its assets. It seems to provide a substantial income for the plaintiff and may well continue in a different form in the future. If that were the case, then it may continue to provide her with a reasonable income. Although she does have the unit at Dubbo, it is needed to produce her income and I have taken this into account in looking at her needs on a weekly basis or monthly basis. Basically, she has little by way of a fund for contingencies of life. 58 In general, I think there should be available for her:-

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(a) The house. (b) The deceased's interests in the partnerships. (c) A legacy of $100,000. 59 This would leave a small sum still to pass to the defendant in respect of the estate. 60 The way in which this is to be provided is a matter of some concern. This is because, firstly, of the state of confusion and memory loss of the plaintiff and the serious doubts which I entertain as to whether she is capable of managing her affairs. Merely from an observation of her in the witness box she appeared to be likely to be an incompetent person in terms of the Rules but I have no medical evidence available to me to address that issue. 61 It is also certainly quite clear that she completely trusts her son and has placed the whole of her financial affairs in his control and power. 62 There is also the evidence that that trust has led, firstly, to there being loans made to her son and, secondly, that the unit at Dubbo has been purchased in the son's name. The explanation offered in the affidavit, I think, is somewhat extraordinary. There should be no reason why it should not continue to be held by her. There is a need, in my view, to take some steps to see that what the plaintiff receives will continue to be used for its intended purpose. 63 There have been, on a somewhat slightly different issue, comments made by Young J in Vavros v Bondy (unreported 29 August 1988) and also the decision of Powell J in Howarth v Reed. There his Honour refers to the possibility of a provision not being applied by the person for the purposes intended by the Court. At pp 43 and 44 his Honour went on to say:- "While, as will be apparent from what I have earlier written, I am deeply concerned at what I regard as the totally unrealistic approach to the management of their affairs adopted by Mr and Mrs Howarth, which approach, if persisted in, will almost inevitably lead to the benefit of any Order which might be made in Mrs Howarth's favour being dissipated in short order, it seems to me that, while that is a matter which may bear on the form of Order to be made, it is not a matter which ought, without more, to be regarded as disqualifying Mrs Howarth from receiving the benefit of any Order to which she might otherwise be entitled. Nor is this a novel view, for a similar approach is reflected in the following passage in the Judgment of Young J in Bondy v Vavros (29 August 1988 (unreported)): 'I should interpose at this point that in one sense it does not matter if I form the view that a plaintiff is a spendthrift. If a person is entitled to an order, what they do with the money that they receive is their business and it is none of my affair if I very much fear that the money may be wasted on wine, women and song in a short period of time. I have deliberately used that expression to make it clear that I am not referring at the moment to the facts of this particular case. On the other hand, when one is considering what a wise and just testator would have done, if one can see that a plaintiff is a spendthrift and that the testator has arranged his will in such a way as to limit the funds flowing to the plaintiff, then one may very well come to the conclusion that the plaintiff has failed to establish that there has been any breach of moral duty.'

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The question, then, is what is the form of Order which ought to be made?" 64 It is clear that the question of use for its intended purpose might not enter the question of making the appropriate provision but enter the question of the terms of the order. 65 As the first plaintiff is already a partner in the partnerships, there would be no point from a practical point of view in placing restrictions on her receiving those assets. 66 So far as the house is concerned, she has lived there for some 40-odd years and there is no suggestion in the evidence that she would wish to move, or that she is likely to move until forced to do so. In those circumstances, I do not think it would be appropriate to make some special order other than she receive the house. 67 The legacy for contingencies of $100,000 is, however, a sizeable fund which should have some mechanism attached to it to ensure it is managed impartially, in her interests and separate from the disputations between her children. 68 The orders I propose are:- (1) The plaintiff receive: (a) A bequest of the house at 132 Derribong Street, Peak Hill. (b) A bequest of the deceased's interests in the partnerships K.J, P.F. and M.J. Stone, and K.J. and P.F. Stone. (c) A sum of $100,000. (2) The legacy in (1)(c) is to be held by an independent trustee such as the Public Trustee for the benefit of the plaintiff during her lifetime and on her death any residue will pass in accordance with her will or her estate. There are to be full powers for advancement of capital and full powers for the purchase of residential care, accommodation, et cetera for her benefit. (3) I dismiss the claim of the second plaintiff. (4) So far as costs are concerned, the defendant should have the costs on an indemnity basis out of the estate. The first plaintiff's costs on a party and party basis to be paid out of the estate, and the second plaintiff to pay the defendant's costs in respect of that claim up to 27 October. 69 I indicate that even if the whole estate had passed to the plaintiff, there is a strong case for the defendant to still receive her costs because: (a) The second plaintiff's action was still on foot up until 27 October 2000. (b) The defendant had a duty to uphold the will of the deceased. (c) The clear support given by the deceased to the defendant, particularly in the expression of his wishes. (d) The not unreasonable stance taken by the defendant in conceding the plaintiff's entitlement to accommodation. 70 Accordingly, the parties can bring in short minutes, after they have investigated the appropriate matters to deal with, at some convenient time. 71 I will put the matter in for short minutes on 2 March 2001 at 9.45 a.m. 72 The exhibits may be returned.

STONE v STONE

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Judgment (22 paragraphs)

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