Sullivan v Sullivan [2007] NSWSC 343 | Case summary

The plaintiff's costs of these proceedings are estimated at $30,000. If they are ordered out of the estate, this will leave a net estate in the vicinity of $400,000. It is to be remembered that, of the payments by the Cullens from which this balance will remain, only $600,000 is to be paid against the transfer of the Cronulla property, the balance being payable in two instalments of $50,000 each at yearly intervals. 12 The plaintiff left school in 1965 and took a Bachelor of Commerce degree at the University of New South Wales at the end of 1968. He qualified as a chartered accountant in 1973. He lived at home until he married in 1977. After qualification, he worked as a chartered accountant, largely for Australian Guarantee Corporation, until he was retrenched in July 1994. He bought a business and ran it until March 1996. This was disastrous and he lost $175,000 on the resale and suffered anxiety and depression as a result of his failure in the business. He could not at first obtain employment as a chartered accountant, but did so during 1996 and was employed by Solution 6 until October 1999 and by Mander Toyota Forklift as financial controller until October 2005, when he was again made redundant as a result of restructuring resulting from a takeover. After October 2005 he applied for at least one hundred positions without success and was unemployed until June 2006, when he was appointed group financial controller with the Hastie Group. In his original appointment the duration was said to be six to eight weeks only, but he has continued in employment there since that time. His employment, however, is casual only and he is paid at a rate of $49.05 per hour including superannuation. He is paid only in respect of the days and hours which he actually works, but in general terms does work eight hours a day five days a week. He feels insecure, as he feels that his appointment may be terminated when his allotted task of straightening out head office accounting processes is completed. His health is good. 13 His wife works as a health services manager with the Aged Care and Rehabilitation Service of the Northern Sydney Central Coast Area Health Service. Her current net salary is approximately $40,500 per annum. In 2004 she underwent surgery for breast cancer and has since required the removal of further cysts in the same area. In February 2006 she was diagnosed as having arthritis in the right side of her jaw with pain radiating through her neck into her right shoulder and down her right arm. She also has arthritis in her right elbow joint. She takes medication for pain on a daily basis and on occasion has not gone to work due to pain in her face. 14 The defendant and his wife are both high school teachers, he of history and geography and she of science. They at present have salaries of $71,300 per annum gross each. From time to time they receive additional small amounts for such activities as marking examination papers. They are both in good health. 15 The plaintiff's and his wife's assets and liabilities are as follows: (a) they own a home jointly, in Epping, with a value of $750,000; the home is unencumbered; (b) they have about $105,000 in cash savings; (c) the plaintiff will receive from the estate a legacy of $50,000; (d) they have two cars with a total value of about $33,000; (e) they have superannuation (the plaintiff, $265,000; the plaintiff's wife $53,000); (f) the plaintiff has shares with a value of about $11,000; (g) their combined income at the present time exceeds their combined expenditure; (h) they have no financial dependents; (i) they have no liabilities. 16 The defendant's and his wife's assets and liabilities are as follows: (a) they own a home jointly, at Adamstown Heights, Newcastle, which is worth about $500,000; (b) they have $5,000 in cash savings; (c) under the will the defendant will receive the residue of the estate which has a value of about $430,000 (although the payment of $100,000 of this amount is deferred); (d) they have a car ($10,000); (e) the plaintiff has superannuation arrangements which will provide him with a pension of about $43,000 per annum together with a lump sum of about $42,000; his wife has superannuation of $336,000; (f) they have two adult children who live at home but are close to completing their university education; (g) they have liabilities of about $198,000, most of which are borrowings secured by a mortgage over their home. 17 The testator's family appears to have been a close and happy one for most of her life. The plaintiff and his wife and children visited the testator and the Cullens at the Cronulla property some six or seven times a year together with special occasions. There were attempts to investigate the number of times a year that visits were paid, a rather arid exercise, particularly when the number of visits was in any event averaged over something approaching 30 years. That the visits were, prior to 2004, comparatively regular and friendly seems undoubted. A very important factor in the maintenance of relations between the testator and the plaintiff's household is that, until 2004, the plaintiff's wife rang the testator regularly once a week on Friday and often rang her in between as well. I accept the evidence of the plaintiff's wife concerning those matters for the reasons adverted to below. 18 The happy situation disintegrated about 2004. Disputes arose in the household at the Cronulla property between the testator and the Cullens, both domestically and as a result of the dispute as to whether or not the testator had agreed to give the Cullens a beneficial one-half interest in the Cronulla property. The testator moved out of the Cronulla property in about November 2004. She was living at the Cardinal Freeman Hostel at Ashfield when she died on 10 March 2005. 19 There is no doubt that the frequency of contact between the testator on the one hand and the plaintiff and his wife on the other diminished during 2004. This is conceded by the plaintiff and his wife and attested to by a 2004 diary kept by the testator, which is in evidence. More will be said about the reasons for this diminution in contact under the heading "Findings and Conclusion". 20 The plaintiff and the testator saw each other for the last time on 12 February 2005, about one month before her death. This was an unhappy occasion, of which also more will need to be said. Credit of Witnesses 21 Three witnesses gave oral evidence before me: the plaintiff, the defendant and the plaintiff's wife. Attacks were made on the credit of both male witnesses. Whilst certainly it was a fair comment that both of them could have been more meticulous in the manner in which they gave evidence about their financial circumstances, the regards in which there had been errors were not large in scope. Although, particularly as educated men, they could have been more careful, I did not form the impression that either of them was attempting to mislead or deceive the Court. I did not have any great difficulty on the evidence in accepting the facts as to their financial circumstances as set out above. The plaintiff's wife I found an impressive witness. Her recollection appeared to be generally good and she gave her evidence in a forthright manner. I found her evidence of assistance in resolving some of the comparatively few real issues of fact in the case. The Law 22 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]. 23 I shall approach 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]. 24 The proper approach to a claim by an adult child received close consideration by Bryson J, as his Honour then was, 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 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." 25 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. 26 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. Contentions 27 The plaintiff contends that the $50,000 provision made for him by the testator's will is inadequate viewed as at this time. He contends that provision of $250,000 should be made for him in lieu. 28 The features of the evidence to which the plaintiff particularly adverts in this regard are those relating to the fragility of his work situation; the comparatively small amounts of the plaintiff's capital resources (even including the $50,000 bequest) and of the superannuation entitlements of the plaintiff and his wife; and the fragility of the health of the plaintiff's wife. 29 In characterising his income earning capacity as fragile, the plaintiff emphasises the recent history which saw the plaintiff, despite his qualifications as a chartered accountant, out of work between October 2005 and June 2006, despite some one hundred job applications. Attention is also drawn to the casual nature of the plaintiff's present employment, although he has now continued with that employer for some months. Attention is also drawn to his age, in the context of the modern workplace. 30 The defendant, on the other hand, emphasises that, apart from the one period of eight months which is now in the past, the plaintiff has been in employment whenever he wanted to be during his entire working life. His present employment situation ought not be regarded as fragile, particularly in the absence of evidence from his employer of any intention to terminate his services. The assets and income position as revealed above shows a person who has been self-supporting and did not look to the testator for support during the whole of his adult life. The defendant says that, on this basis, no inadequacy of provision is established. 31 The defendant also says that, in relation to the adequacy of provision and the quantum of any further provision to be made, the plaintiff's conduct towards the testator in the last 18 months of her life should be taken into account. 32 The defendant warns that it would be erroneous for the Court to proceed on the basis that fairness requires equality between the provision for the brothers, citing from such cases as Stott v Cook (1960) 33 ALJR 447 and Blore v Lang (1960) 104 CLR 124. However, the Court has had and has no intention of proceeding on this basis. Findings and Conclusion 33 The issue in this case is a narrow one. It is whether, on the financial position of the plaintiff as established above and bearing in mind the financial situation of the defendant as the only other eligible person to be taken into consideration, the provision made for the plaintiff shall be adjudged inadequate. Those considerations should be viewed in the light of the whole of the evidence and of the other considerations specified by the High Court in Singer v Berghouse as relevant to the first stage. 34 The only factual matters disputed so as to require determination by the Court relate to the relationship between the plaintiff and the testator during the last 18 months of her life. It is contended by the defendant that it should be found that there was during this time conduct by the plaintiff that should be taken into account under s 9(3)(c) of the FPA both in assessing whether or not the plaintiff was left without adequate provision and the quantum of any provision that ought be made. 35 There is no doubt that the plaintiff and his wife were less attentive to the testator during this period than they had been previously. It appears to me on the evidence that there were two factors in this undoubted diminution of contact. The first was that there was some resentment on the testator's part of the plaintiff's continuing relationship with the Cullens and of assistance given to the Cullens' cause by the provision of evidence for use in their proceedings. The testator comments in her diary (29 September 2004) that the plaintiff and his wife alone remained friendly with the Cullens. She learnt in November/December 2004 that the plaintiff was providing instructions for an affidavit to the Cullens' solicitor and in fact swore that affidavit early in December 2004. 36 The second matter, which appears largely from the evidence of the plaintiff's wife, is that the diminished contact arose from troubles which she and the plaintiff were together going through in 2004. These included her own battle with breast cancer and the need to look after her father, who was staying with them after a hip replacement operation, the course of his recovery from which was not straightforward. Her reluctance to talk to the testator was added to by the fact that her son was overseas in situations that might be thought dangerous, which would be alarming to his grandmother. As in other regards, I accept the plaintiff's wife's evidence concerning these matters. 37 Whatever conclusion may be come to, neither party contended that there was a complete breach in the relationship between mother and son during this 18 month period: compare the situation in Dulhunty v Dewhirst [2005] NSWSC 607 and Smith v Taylor [2006] NSWSC 162. Apart from anything else, this is attested by the gift of $50,000 by the testator to the plaintiff in her will of January 2005, after the degree of contact had diminished, and after she had become aware of the plaintiff's proffering of evidence in the Cullens' case. 38 The other matter which requires some consideration is the unhappy events of 12 February 2005, the last occasion on which the plaintiff and the testator saw each other. On the evidence of the plaintiff and his wife, I find that the plaintiff did say "Hullo, mother" to the testator as she entered by one doorway and left by another across the corner of a room. I find that the testator paused but did not otherwise respond to him in her short course through the room. I should say that, on the evidence, the principal cause of the testator's unhappiness on that occasion was not connected with the plaintiff, but with the fact that her daughter Gabrielle declined to leave the Cronulla property, where these events occurred, when the testator came to collect possessions. I do not accept that the plaintiff made a remark about the testator's ignoring his daughter so as to be heard by the testator. 39 I am not prepared to find, arising out of the course of events between the plaintiff and the testator in the last 18 months of her life, that there was conduct by the plaintiff towards the testator which should be held against the plaintiff. There were difficult events in his own life which form part of the explanation for his diminished attention and the tension between them also arose in my view in part from her resentment at his continuing relationship with the Cullens. The visit to the Cronulla property of 12 February 2005 was a fraught occasion not primarily focused on the testator and the plaintiff. In any event, I have found that the plaintiff greeted his mother. There is nothing that should be taken into account against him arising from these events. 40 As I have said, the real issue in the case is a narrow one. There is a deal of force in what Mr Hallen of Senior Counsel has said on behalf of the defendant. I do not lose sight, in coming to the conclusion I do, of the importance of not intruding upon the testator's freedom of testation except so far as is necessary to meet the requirements of the FPA. This is to be borne in mind both in deciding whether or not there is inadequate provision and in assessing the amount of any additional provision which should be made. 41 I have followed the two-step process required by Singer v Berghouse. The conclusion that I have reached is that, in all the circumstances, the provision made by the testator for the plaintiff was inadequate. Despite Mr Hallen's submissions, I find that there is a shadow over the earning ability of the plaintiff during the balance of his working life up to the age of 65. Equally, I find that the evidence concerning his wife's health problems, which was not challenged, casts a shadow over the future employment of his wife. She was not cross examined concerning what she said about her health. As to my conclusion concerning the shadow over the plaintiff's earning ability, it is all very well to say that he has had employment when he wanted it all his life, except for eight months. He has been made redundant twice. His working record since he left Australian Guarantee Corporation has not been particularly steady. He did have some difficulty in finding employment in 1996. The significance of a period of unemployment of eight months between October 2005 and June 2006 with one hundred failed job applications is considerable, bearing in mind his age. Whatever attack was made on his credit, he was not challenged as to the accuracy of this evidence. His present employment was initially for a short term and is still upon a casual basis. Despite criticism, I think it is quite natural that he should not in that delicate situation have approached his present employer for evidence about its intentions in relation to his future employment. 42 I have taken into account these matters and the comparatively modest resources that the plaintiff and his wife have by way of capital reserves and superannuation. I have taken into account all the other circumstances proved in evidence. 43 I have come to the conclusion that the provision which should be made for the plaintiff, in lieu of the legacy of $50,000 given to him, is a legacy of $150,000 44 As I have said, the Court is empowered to specify the part of the estate out of which provision shall be made. As a result of the settlement of the proceedings brought by the Cullens, the estate is to receive an initial payment of $600,000 and two further payments at intervals of one year each of $50,000. In my view provision should not simply be made for the plaintiff, leaving the estate to bear any additional risks or difficulties that may arise in the collection of the delayed instalments. I therefore propose to specify that of the $150,000, $110,000 should be paid out of the first instalment received by the estate from the Cullens and $20,000 out of each of the later instalments of $50,000. 45 Short minutes may be brought in to reflect my decision. Questions of costs may be raised at that time.

Sullivan v Sullivan

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Judgment (14 paragraphs)

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Cases Cited (12)