Thomas v Jackson

• 1 - IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

3803/1999 Aldred David Thomas v Ian Jackson (Executor of the Estate of Janice Ranson) JUDGMENT 1 Master: This is an application under the Family Provision Act in respect of the estate of the late Janice Patricia Ranson who died on 8 August 1998 aged 58. The deceased was survived by the plaintiff her former husband and also by her three daughters from her first marriage. The deceased's will. 2 The deceased made her last will on 31 October 1997. Under that will she appointed the defendant as executor and trustee and gave the whole of her estate to her three daughters Sarah, Jane and Kate. The estate of the deceased. 3 The deceased left an estate which comprised a house and investments. The house has been realised and there are at present moneys on deposit and shares held by the executor having a total value of $710,294. There is an unknown liability to the Australian Taxation Office and there is an outstanding claim which has been brought claiming contributions under a guarantee signed by the deceased. The amount claimed in the proceedings which were commenced against the executor on 6 September 1999 amount to $541,836.27. There is no information that has been placed before the court that would any way indicate what is the present status of this action and what will be its likely result. The only information that the executor gave evidence of in relation to this was that the matter was not progressing pending the determination of this claim. 4 The outstanding costs of the defendant have not yet been paid of $30,000 and the plaintiff's costs are estimated at $28,000. History of the family 5 The deceased was born on 26 July 1940. She was married to her first husband Mr Ranson on 31 January 1961. They had three children Sarah Anne Ranson born 20 Fairbury 1964, Jane Louise Ransom-Smith, born 28 September 1964 and Kate Elisabeth Ranson born 9 September 1967. The deceased's husband was for a time a merchant seaman and in due course the family lived in Queensland for some years. The deceased and her first husband were divorced in 1976 and thereafter the deceased and her children returned to live in Sydney. 6 The deceased worked in travel positions for some time before changing to study horticulture and 1985. The plaintiff was born on 4 April 1924 and they apparently met on a trip to Thailand. They were married on 29 July 1994. The deceased apparently filed an application for divorce in April 1997 and in October 1997 she was diagnosed with a brain tumour. The divorce was granted and the parties are agreed that the decree absolute was made on 11 January 1998. There was no property settlement between the deceased and the plaintiff.

The plaintiff's eligibility 7 There is no doubt that the plaintiff is an eligible person as he is a former spouse of the deceased. It is however necessary for him to establish factors warranting under section 9 (1) of the Act. 8 The question of factors warranting in respect of a former spouse has been dealt with in a number of cases. In Dijkhuijs (formerly Coney) v Barclay (1988) 13 NSWLR 639, a number of the Judges dealt with this matter . Kirby P had the following to say: "Fifthly, the respondent, picking up one of the themes of Mr Landa's comments, urged that s 9(1) of the Act was to be read in the light of the policy of the law to promote the finality of settlements of property disputes by orders made in the Family Court. Where such orders had been made, an order under the Act in the case of a former spouse should be exceptional. Only if this approach were adopted would the policy of the Family Law Act (Cth) be fully achieved. That policy is that parties whose marriage has been dissolved and in respect of whom orders have been made disposing of their matrimonial property, could go their separate ways . Save for the rare and exceptional cases provided under the Family Law Act (Cth), such parties should henceforth face no financial obligation from one to the other. This public policy was referred to by Young J in O'Shaughnessy (at 149). It was also stressed by his Honour in the present case. There is no doubt that in most cases, the achievement of a final property settlement in the Family Court would be seen by the parties, in current social circumstances, as terminating any moral claim of a former spouse to provision in the will of the other. Confronted by the news that he or she had been excluded from the will of the former spouse, the response would, in the overwhelming majority of cases, be: 'Our marriage was dissolved. We settled our financial affairs. We can each start a new life. That was the whole point of the Family Court proceedings.' To this extent, I agree with what Young J has written in O'Shaughnessy and in this case." 9 Mahoney JA said the following: "That which the court 'shall first determine' is whether 'there are factors which warrant the making of the application'. That phrase may be contrasted with the references otherwise made to the determination of, for example, 'what provision (if any) ought to be made in favour of an eligible person...'. On the face of s 9(1) there is a distinction between 'factors which warrant the making of the application' and factors which warrant the making of an order. That distinction accords with the principle which, in my opinion, is inherent in the legislation, viz, that, special cases apart, an order is to be made only if the deceased has made default in the performance of a duty which he owed to the particular plaintiff. I do not think that this case requires a final analysis of the basis of applications under the Act: It will be sufficient to refer to this matter in general terms. But the Act authorises the court to 'order that such provision be made out of the estate or notional estate, or both, of the deceased person as, in the opinion of the Court, ought, having regard to the circumstances at the time the order is made, to be made for the maintenance, education or advancement in life of the eligible person' (s 7). That does not mean that, if the plaintiff establishes a financial need within the section and if on taking into account the considerations referred to in s 9(2) (the discretionary considerations) there be nothing to the contrary, an order must be made. The statute assumes that the deceased, in what he has done during his life and by his will, has failed to discharge a duty which he owed to the plaintiff (the moral duty). Thus, a plaintiff may be a former spouse who, on dissolution of the marriage, received what on any view she was entitled to have and there may have been no further relationship between them so that none of the factors in s 9(3)(a) to s 9(3)(c), are of relevance. But, at the deceased's death, she may have a financial need. In such circumstances, the fact that the plaintiff has established that she was a former spouse and has a financial need would not, as such, entitle her to an order. It would be necessary for her to establish that, in some way or because of circumstances within s 9(3)(d), the deceased had a duty to her which involved that he should have provided for her financial need. This will be so a fortiori where the basis for the eligibility of the plaintiff is alleged to be within par (d) of the definition of 'eligible person'." Importantly, it can be seen that the question of need is a separate matter and factors warranting are something different from that. 10 In another case, Churton v Christian (1988) 13 NSWLR 241, his Honour Priestley JA said the following, in respect of this type of application: "Mrs Christian is a member of a class in respect of whom warranting factors may often be more difficult to find. It is common experience that divorce sometimes brings to an end all links between previously married people. In such cases, warranting factors might well be expected usually to be absent, although this need not be universally so. On the other hand, divorced persons may remain on close terms, sometimes little different from those on which they lived when married. In every case it is necessary to examine the actual relationship between the two people concerned, as far as possible without preconceptions based only on the fact of divorce." 11 In his comments he illustrated a situation which sometimes applies after there has been a divorce and a property settlement, namely, that the parties still continue to have a close association.

12 There has also been in recent times further attention to this matter in the Court of Appeal in the case of Brown v Faggoter, a decision given on 13 November 1998, which is a decision of Sheller JA, Sheppard and Fitzgerald AJA. The main judgment was given by Fitzgerald AJA, who seemed to suggest that an application might be warranted if the application has reasonable prospects of success. This seems to be a somewhat different and perhaps easier test than what was referred to in the other cases of the Court of Appeal to which I have referred. I will consider the matter on both bases, given that there may be some flux in the state of the law in this regard.

13 The plaintiff gave evidence that he did not commence property proceedings in the Family Court because of the illness which the deceased was suffering from at the time. Given the fact that there was no property settlement and that the deceased died shortly after divorce it seems to me that having regard to the marriage there are factors warranting the making of the application on the traditional basis. In case it is not appropriate I will also consider whether or not there are prospects of success of the plaintiff's claim. Consideration of the plaintiff's claim.

14 In applications under the Family Provision Act the High Court in Singer v Berghouse (1994) 181 CLR 201 has set out the two stage approach that a Court must take. At page 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' etc 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 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 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."

15 It is necessary to first the consider the position of the plaintiff. He is aged 76 and has been married a number of times. In August 2000 when he swore to his then current financial situation he said that he had two boys still going through school, then aged 18 and 15. He was made bankrupt in 1998 but did not mention this in his affidavit evidence. He gave evidence of his income consisting of the pension of $180 per week and commissions of $260 per week. He estimated his expenditure at that stage at $403 per week. He spoke of the cost of educating his children at $80 per week and some liabilities which were two outstanding debts in the sum of $25,400. Having regard to his bankruptcy is not clear whether these are still due. 16 It is necessary to consider the relationship between the plaintiff and the deceased. There is very little evidence given by the plaintiff other than a statement that after the marriage they continued to live at the deceased's property at Turramurra with her children from her former marriage. There is evidence from a daughter of the deceased, but unfortunately not tested in cross-examination, that the deceased and the plaintiff never officially lived in the same home during their entire relationship as the plaintiff only visited from Armidale where he also lived. That evidence indicated that the plaintiff had set up office in the deceased's house and that he would be there for a few days several times a month. There is also some hearsay evidence suggesting that during the period of the deceased's illness the plaintiff made visits to her eight times in the year before she died. 17 It is also necessary to see what contributions the plaintiff has made to the estate of the deceased. The evidence discloses that he advanced some $12,000 for legal proceedings with which the deceased was involved. He also gave evidence that he contributed $250 per week to the deceased's personal maintenance and met the rates on the home. He also said that he paid for bills and the majority of the expenses relating to the upkeep of the family. 18 The plaintiff also gave evidence of a diamond ring worth about $80,000 and an opal ring worth about $23,000 that he says he gave to the deceased. That suggestion was disputed by the executor who said that he had had them valued for the purposes of the application and that the value of the jewellery held in the estate was only $10,000. In the circumstances of the existence of a valuation I am prepared to accept the evidence of the executor. 19 The plaintiff also said that he gave the deceased a share in a company Bafamond Pty Ltd worth about $300,000 purchased in her name for taxation purposes, envisaging the use of this money in their retirement. The evidence of the defendant is that this does not represent the current position of the company and the executor does not show it as an asset in the estate. Having regard to the minimal evidence I am not satisfied that such an investment of that value exists and was provided by the plaintiff to the deceased. 20 The plaintiff also gave evidence of other contributions such as purchasing a motor vehicle each for Kate and Jane. They were not quantified. He also said he paid school fees for Kate of approximately $9,000 per year. He did not refer to the number of years but given her age that would only be one or two years. The other evidence of the plaintiff in this regard was that he contributed $10,000 towards Jane's wedding. 21 He also referred to having purchased some Norman Lindsay paintings. No evidence of his purchase was produced to the executor and according to the children they did not come from him. The executor has had them valued and they have no commercial value. 22 It is also necessary to consider the situation of others having a claim on the bounty of the deceased. 23 Kate Ranson is aged 35 and her assets consist of a car worth $20,000, jewellery of $2000 and furniture of a few thousand dollars. She has liabilities of $25,000. She has an income of $2,360 per month which she uses to cover her costs including rent. She gives no information as to her personal situation but says that she would like to have children in the future. 24 Sarah Ranson is 36 years-old, a receptionist and is single with no dependants. She has a full-time job as a receptionist earning her $1,119 per week which is used on her expenditure. She wishes to move to Brisbane because she finds Sydney too expensive. She has a car worth $13,000 and other minor items and has debts amounting to $11,834.60. 25 Jane Ranson-Smith is married with two children aged four and three years. They have an old car and little else in the way of her assets. She owes $7,000. Her family income is $1,458.60 per fortnight all of which is used on her expenses and she is struggling given her limited income. 26 It is necessary to see how the plaintiff says that he has been left without adequate and proper provision for his maintenance, education and advancement in life. In this regard I am reminded by what was said by Sheller JA in the Court of Appeal in Singer v Berghouse on 23 July 1992. There his Honour had the following to say:- "Sheller JA (Cripps JA agreeing) said: 'I must say that I find it extraordinary that the appellant presented scant or no evidence as to her present income and outgoings or as to her intentions or needs for the future or as to what lump sum provision applying appropriate discount tables would be required to meet these claims or needs, if they existed. In my opinion, in the circumstances of this case, for the court, in the absence of any such evidence, to make an order for the payment to the appellant of a lump sum is to do no more than act on speculation and, contrary to the prohibition contained in s9(2) of the Act, to alter the deceased's disposition of his property in the absence of proof that he has inadequately provided for the appellant.'"

27 The affidavit evidence filed by the plaintiff gives no suggestion of the way in which he is left without adequate and proper provision. The only financial information is more than two years old. It was suggested that he should have something to help him with his maintenance and something to repay the contributions which he made to the deceased. The real problem, however, is the impact that his bankruptcy might have upon any provision made for him. In Swain v McWhirter 26 August 1996 Master McLaughlin refused to make an order where the effect would be that the amount of any order would go to the creditors rather than providing a benefit to the applicant. 28 Originally there was very little evidence given in respect of the bankruptcy of the plaintiff. That evidence has now been supplemented. The evidence is that he had been made bankrupt in 1998. There is also evidence that he is still bankrupt. In his Statement of Affairs the plaintiff showed his debts as $41,095 and his assets as $3,015. Although he has not called for proofs of debt the trustee is aware of creditors' claims totalling $98,831.24. The plaintiff disputes some of these claims. The only potential recovery which the trustee has identified was the bankrupt's recovery in this case. This was estimated on what might result from mediation. However, that mediation was not successful. There was also some evidence of a claim being brought against the plaintiff's bankrupt estate but the evidence does not quantify the likely result of that claim. 29 There are decisions of this Court which deal with the effect of orders under the Testators Family Maintenance and Guardianship of Infants Act 1916. The decisions concern the situation where the plaintiff was bankrupt at the date of death but had ceased to be a bankrupt by the time the court made the relevant orders. The cases are McLeod v Jones (1981) 1 NSWLR 347 and Hunter v Hunter, Needham J. 28 June 1989 (unreported). In both cases the court held that the effect of the order was not to give an entitlement to the bankrupt as at the date of death that would just pass to his trustee in bankruptcy but would be held for the benefit of the bankrupt. These decisions have been applied in respect of the Family Provision Act 1982 by Master McLaughlin in Nutt v Public Trustee 27 November 1996. In the circumstances it seems that I am concerned with the problem I earlier referred to, namely, that the benefit of the order may not pass to the plaintiff as the plaintiff is still bankrupt and any amount recovered will pass to his trustee in bankruptcy. 30 I am here concerned with an estate which at first glance is a reasonable size. There is, however, the substantial claim brought against the executor pursuant to the guarantee. Allowing for this claim and allowing the costs of the parties the distributable estate will be in the order of $110,458 making no allowance for taxation. The claim that has been made against the estate results from monies lent to one of the companies that the plaintiff set up during the period of his relationship with the deceased. The plaintiff could have put before the court information that might have suggested that the claim should not be valued at this amount but he has not done so. In the circumstances it seems to me that I should proceed to assess the claim on the basis that I am dealing with a small estate. 31 The marriage between the plaintiff and the deceased was a short one being only for three years and the evidence would suggest that the parties did not spend a lot of time together during the marriage. The evidence is unclear as to the time that the parties were together prior to the marriage. There are the contributions made by the deceased and these have to be taken into account considering the matter. So far as the beneficiaries are concerned they are all in need of funds and it is a stage of their life where some capital could help them. I have already referred to the fact that the plaintiff has not presented any evidence which would enable me to assess what are his ongoing needs for maintenance. Notwithstanding this it is clear that some amount should be given to him for his personal assistance and I think an appropriate amount in the circumstances of the estate, as it has been presented to me and bearing in mind the competing claims, is $50,000. However, any order for that amount will not be for the benefit of the plaintiff as it will pass to his creditors the amount of whose claims are likely to exceed the amount of any appropriate award. In such circumstances no legacy should be given to the plaintiff. 32 The orders I make are:- 1. I dismiss the summons. 2. I order the plaintiff to pay the defendant's costs. 3. The defendant's costs on an indemnity basis, to the extent not recovered from the plaintiff, are to be paid or retained out of the estate of the deceased. **********

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