Thomas v Thomas [2008] NSWSC 631 | Case summary

2943 of 2007 JANICE CLAIRE THOMAS -v- GEOFFREY MICHAEL THOMAS JUDGMENT 1 HIS HONOUR: These are proceedings under the Family Provision Act 1982. 2 By summons filed on 30 May 2007 Janice Claire Thomas claims an order for provision for her maintenance and advancement in life out of the estate of her late husband, Arthur Owen Thomas (to whom I shall refer as "the Deceased"). 3 The Deceased died on 26 July 2006, aged 85 years. He left a will dated 4 December 1998, probate whereof was on 1 March 2007 granted to the Plaintiff (who was the executor named in such will). 4 By his will the Deceased gave to the Plaintiff a right of residence, subject to the payment of outgoings, in their former matrimonial home for a period of two years from the date of his death, and provided that at the conclusion of that period such property be sold, and the net proceeds of sale be divided equally among the Plaintiff and the two sons of the Deceased. The residue of the estate was given to the Plaintiff. 5 The only significant asset in the estate was that former matrimonial home (situate at and known as 5 - 7 Mara Crescent, Mooney Mooney) to which a value of $1,050,000 was attributed in the inventory of property. The only other asset disclosed in the inventory of property was a bank account, having a credit balance of $7,365. 6 The Deceased at the time of his death held jointly with the Plaintiff an investment with Esanda Finance Limited in an amount of $13,383, which has passed by survivorship to the Plaintiff. 7 In calculating the value of the estate available for distribution the costs of present proceedings should be taken into consideration, since the Plaintiff, if successful, will normally be entitled to an order that her costs be paid out of the estate of the Deceased, whilst the Defendant (who has assumed the responsibility of upholding the terms of the will of the Deceased) will normally be entitled to an order that his costs be paid out of the estate. 8 It was estimated on behalf of the Plaintiff that her costs will total $42,000, whilst it was estimated on behalf of the Defendant that his costs will total $44,000. 9 The property at Mara Crescent consists of two adjoining lots, of each of which the Deceased was the registered proprietor. At the hearing it was agreed between the parties that the present value of what was referred to the house block, upon which the residence stands (at 5 Mara Crescent), was $687,500, whilst the present value of the adjoining block (at 7 Mara Crescent) was $475,000. 10 Accordingly, it is appropriate that the Court should proceed upon the basis that the value of the distributable estate is in the order of $1,083,000. 11 Each of the Plaintiff and the Deceased had previously been married. They met in 1993, at which time the Plaintiff was living separately from her first husband, and the Deceased's wife (Mrs. Bettine Thomas) was still alive. The Deceased had two children of his first marriage, being Geoffrey Michael, the present Defendant (who was born on 1 May 1949 and is presently aged 59), and Peter Llewellyn (who was born on 3 May 1951, and is presently aged 57). 12 When they first met in 1993, the Plaintiff (who was at that time employed as a diversional therapist) was assisting with the care of the Deceased's first wife, who was a residential patient at Leighton Lodge Nursing Home, and who was suffering from late stage Alzheimer's Disease. 13 The Deceased's first wife died in December 1994. In April 1995 the Plaintiff commenced to reside with the Deceased at his residence at Mooney Mooney, and she has continued to reside there until the present time. The Plaintiff and the Deceased married on 10 October 1998, and lived together until the Deceased's death almost eight years later. That is, the Plaintiff and the Deceased lived together for a period of more than eleven years. 14 From the time when she commenced to live with the Deceased until March 1996 the Plaintiff continued to work as a diversional therapist at Leighton Lodge Nursing Home (which was located at Hornsby), travelling by motor car between her residence at Mooney Mooney, and her place of employ. 15 In March 1996, at the request of the Deceased, the Plaintiff gave up her employment, in order to remain at home with the Deceased. At that time the Plaintiff was aged almost 60 and the Deceased was aged 76. The Plaintiff said that she was sorry to give up a job which suited her so well, and which she enjoyed, that job being rewarding both emotionally and financially. However, she was glad to be able to spend more time with the Deceased. At his suggestion, the Plaintiff applied for and was granted a Department of Veterans' Affairs spouse's pension. 16 In February 2004, the Deceased suffered a cerebral haemorrhage, and was admitted to the Gosford District Hospital, where he remained for two weeks, and was then transferred to the North Gosford Private Hospital for rehabilitation. The cerebral haemorrhage left the Deceased with impaired swallowing, and a slight imbalance. It was necessary for him to use a walking frame, and he could not be left on his own. From that time onward he suffered an increasing series of health incidents, including frequent bouts of expiration pneumonia. From February 2004 until his death in July 2006, the Deceased suffered a gradual decline in cognitive function, and communication with him became increasingly difficult. 17 During the period of the Deceased's declining health the Plaintiff nursed him attentively at home, and visited him daily while he was in hospital. 18 By the time the Plaintiff came into the Deceased's life, his two sons had long since departed the family home, and were residing independently. I will, for convenience and without intending any disrespect, refer to the Deceased's sons by their given names. Geoffrey was living at Bellingen, in northern New South Wales, whilst Peter was residing at Bloomfield River, near Cooktown in North Queensland. 19 Subsequently Geoffrey removed from Bellingen to Cairns in North Queensland in about 2001. Each of Geoffrey and Peter maintained contact with the Deceased, although, according to the Plaintiff, that contact was not particularly frequent. Evidence was given concerning financial assistance which the Deceased provided to each of his sons. In 2000 or 2001 the Deceased received an ex gratia payment of $25,000 from the Department of Veterans' Affairs, which was given to persons who, like himself, had been prisoners of war. From that payment the Deceased gave $5,000 to each of his sons. 20 The Plaintiff and her first husband, Brian George Knight, had separated in 1992, and were divorced in early 1998. At the time of her marriage to the Deceased the Plaintiff owned a half share in her former matrimonial home at 16 Hinemona Avenue, Northbridge, of which she and Mr Knight were tenants in common in equal shares. The Plaintiff retains ownership of that half share in the Normanhurst property. It was agreed between the parties during the course of the hearing that the present value of the Plaintiff's one half share in the Normanhurst property is $297,000. That property is occupied by Mr Knight (who is presently aged about 73 years). It was further agreed between the parties that the rental value of that half share is $225 a week (gross). 21 Apart from her interest in the Normanhurst property, the Plaintiff's assets consist of 1,100 shares in the National Australia Bank (the nucleus of which shareholding she inherited from the estate of her late father, and which she thereafter added to by reinvestment and purchase), having a present value of about $33,583. The Plaintiff also presently maintains three accounts with the St George Bank, the balances in those accounts totalling a little over $9,000. In addition, the Plaintiff has retained the deposit (referred to in her affidavit as debentures) in Esanda Finance Limited, which passed to her by survivorship upon the death of the Deceased. It was her evidence that that holding has a current value of about $13,383. The Plaintiff's only other assets are a Holden motor vehicle (having an estimated value of $2700) and furniture and effects (having an estimated value of $5000). 22 The Plaintiff's income consists of the widow's pension from the Department of Veterans' Affairs, together with interest on debentures and dividends upon the National Australia Bank shares. Her weekly income totals about $319. 23 The Plaintiff gave evidence of her regular expenses and outgoings, totalling $294 a week. 24 The Plaintiff (who was born on 16 August 1936 and is presently 71 years of age) is in good health. In 2005, she was diagnosed with type 2 diabetes, which is successfully controlled by medication and diet. Breast cancer which was discovered in 1993 was treated in time and has not recurred. 25 The Plaintiff gave evidence concerning the present condition of the residence at 5 Mara Crescent, Mooney Mooney. That house, which was constructed in 1967, requires renovations and repairs to the kitchen and bathroom and new flooring, as well as the connection of the sewer (for which last item the Plaintiff will incur a cost of almost $11,000). The Plaintiff stated that she was heavily reliant upon her motorcar (since Mooney Mooney is poorly served by public transport), and that her present motorcar was 15 years old and in need of replacement. She expressed a desire to remain in the Mooney Mooney property, where she has resided for the past thirteen years, for as long as she is mentally and physically able to do so. She also expressed a desire to enhance her lifestyle, and to have an opportunity to travel both in Australia and overseas. 26 The claim of the Plaintiff must be approached in the light of the competing claims of other persons who are the objects of the testamentary beneficence of the Deceased or who otherwise have a claim upon the bounty of the Deceased. The only such other persons are the two sons of the Deceased. 27 Geoffrey has little in the way of assets, being essentially a ten year old motor vehicle (to which attributes an estimated value of no more than $3,000), and various tools, household furnishings and utensils, as well as other personal effects (having a total estimated value of about $4,600). He also owns a computer which is more than four years old, and which will need soon to be replaced. 28 Geoffrey's is currently in receipt of a reduced Jobstart employment assistance of $223 a week (apparently reduced on account of business earnings of $94 a week). That is, his weekly earnings are about $317. He pays rent of $105 a week. He has no savings or any other financial assets. Geoffrey is self-employed, conducting a renewable energy business. He considers that business to have great prospects, but, as it is completely dependent upon his own knowledge and understanding, it is not saleable. Without any start-up capital, it staggers from one financial crisis to the next. 29 Geoffrey expressed a desire to purchase the land which he is currently renting. He said that that land consists of rainforest through which flows a creek containing platypus and other endangered wildlife. The owner is prepared to sell it to him for about $300,000, upon the condition that it be made impossible to be subdivided and developed. Geoffrey is agreeable to that condition, and to creating the land as part of a wildlife corridor from Kuranda to the National Park surrounding the Barron River. 30 Peter owns an interest (being a one-fiftieth share) in a rural estate known as Wattle Hills, which is located on the Pascoe River in the north of Cape York, Queensland. According to Peter that property is residential leasehold, and his share in it is valued at $26,000. Peter's only other significant asset is a 41 foot motor sailer vessel known as Sri Ulu, to which he attributes a value of about $25,000. 31 For a period of five years until August 2007, Peter was working part time for Home and Community (HACC) as a yardman and home carer for three separate elderly people. In that employment he received $250 a fortnight, and he also received $320 a fortnight from a reduced unemployment benefit. That is, his total fortnightly income was $570. 32 From 8 August 2007, Peter was employed in a temporary capacity as a rock stacker for a construction company. In that employment he usually received about $1000 a week, working 55-60 hours. That employment was intended to be for a period of only three months. The evidence was silent as to Peter's employment at the time of the hearing of the proceedings. 33 Peter pays no rent for his accommodation, but does maintenance work in lieu thereof. He has resided in his present accommodation for the past four years. It would appear that on occasion Peter has earned income from transporting building materials as cargo on his boat. However, the boat is in need of constant maintenance, so Peter makes no profit from any income which he derives from such transportation. 34 It is in light of the foregoing facts and circumstances that the Court must proceed to a consideration of the claim of the Plaintiff. 35 I have had the benefit of receiving a written outline of submissions and a chronology from Counsel for the respective parties. Those documents will be retained in the Court file. 36 The Plaintiff as the widow of the Deceased is an eligible person within paragraph (a) of the definition of that phrase contained in section 6 (1) of the Family Provision Act. As such she has the standing to bring the present proceedings. It will be appreciated that Geoffrey and Peter are also eligible persons in relation to the Deceased, each being such within paragraph (b) of the foregoing definition. The Plaintiff, Geoffrey and Peter are the only eligible persons in relation to the Deceased. 37 In carrying out the first stage in the two-stage process identified by the High Court of Australia in Singer v Berghouse [1994] HCA 40; (1994) 181 CLR 201 at 208 - 210 (the correctness of which test was affirmed by the High Court in Vigolo v Bostin [2005] HCA 11; (2005) 221 CLR 191) the Court must determine whether in consequence of the provisions of the will of the testator the applicant has been left without adequate provision for her proper maintenance.

38 The High Court in Singer v Berghouse (at 209 - 210) said that 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. 39 It is recognised that the claim of a widow does not have primacy over the claims of children (see Bladwell v Davis [2004] NSWCA 170, 10 June 2004 per Bryson JA). Nevertheless, the need of the Plaintiff is for security and flexibility in her accommodation. The provisions of the will have the practical effect that after two years (during which period she has been obligated to pay all outgoings - which she has done) the Plaintiff will be required to find fresh accommodation, and will no longer be able to live in the residence which has been her home for the past thirteen years. If the property is then sold, the Plaintiff from the net proceeds of sale will be entitled to one third thereof, each of Geoffrey and Peter also being entitled to one third thereof. In monetary terms that means that the Plaintiff would receive from the estate no more than $359,000 (or, more realistically, somewhat less, when allowance is made for the costs associated with the sale of the property). Evidence was placed before the Court by the Defendant concerning various residences available for purchase in the locality of Hornsby on the northern outskirts of Sydney. However, those residences were apartments or interests in retirement establishments. The Plaintiff said that she did not wish to move into a flat or a retirement village, and that she wished to remain in her present house so long as her health and physical circumstances allowed her to do so. 40 The Plaintiff gave evidence concerning the nature of what might be described as the Mooney Mooney community and her involvement therein. She said that she enjoyed being part of that community, and that she participated as a volunteer in the local library. She mixes with the local people. The Plaintiff's medical adviser is a doctor who practises at Berowra, in that locality. 41 It was submitted on behalf of the Plaintiff that matters relevant to the Plaintiff's assertion that she had been left without adequate provision for her proper maintenance included the following. · The Plaintiff gave up work early in the relationship at the request of the Deceased, in order to care for him. · The Plaintiff applied $44,000, which had come to her from her mother's estate towards the relationship with the Deceased and towards the matrimonial home. · During his declining years the Deceased was looked after by the Plaintiff, almost single handedly. 42 It was submitted on behalf of the Defendant that the Plaintiff could, in effect, liquidate her interest in the Normanhurst property, thus releasing an amount of almost $300,000, and that that amount, together with the benefit of one third of the net proceeds of sale of the Mooney Mooney property, would be more than adequate to enable the Plaintiff to acquire an equivalent residence of her choice. 43 The Plaintiff under cross examination said that she had not needed to supplement her income in any way, by, for example, rental income from the Normanhurst property, saying that her income "is not a problem". She also agreed that she had not needed to supplement her capital by selling her interest in the Normanhurst property. The Plaintiff stated that she regarded the Normanhurst property as an investment for her old age. She has no desire to leave her present residence, which, although in a somewhat isolated location, apparently has wonderful views. 44 It seems to me that, in the circumstances of this case, a mere right of residence (subject to the payment of outgoings) for a period of two years from the death of the Deceased, followed by one third of the proceeds of sale of the property, did not provide for the Plaintiff adequate provision for her proper maintenance. After a marriage of eleven years, the Plaintiff should not be dispossessed of the residence which she loves, in a community of which she is a part. 45 However, the Court must not disregard the fact that the Plaintiff owns a valuable asset, being her interest in the Normanhurst property. It is entirely the Plaintiff's own personal choice that she has not liquidated that asset. Further, it was acknowledged on behalf of the Plaintiff that the competing claims of Geoffrey and Peter should not be disregarded and that each should receive a not insignificant benefit from the estate of their father. 46 In carrying out the second stage in the two-stage process recognised by the High Court in Singer v Berghouse, I consider that the appropriate provision for the Plaintiff is that she should receive a life estate (as distinct from merely a right of residence) in the house block. Such a life estate will enable the Plaintiff to remain resident in her present home for as long as she wishes. If at some stage in the future it becomes necessary (on account of, for example, health or physical limitations) for her to remove from her present residence, then she will be enabled to obtain income from the house block. She can at such stage, or earlier, resort to her interest in the Normanhurst property, either for capital, in order to acquire a new residence, or for income. 47 It will be appreciated that the Plaintiff will also share in the proceeds of sale of the adjoining block (as also will Geoffrey and Peter). If the adjoining block is sold for about $480,000, each of the Plaintiff, Geoffrey and Peter will receive about $128,000 (after the costs of the present proceedings are deducted from the net proceeds of sale). That sum will enable the Plaintiff to effect repairs and renovations to the house and, if she so desires, to enhance her present lifestyle, or if that sum be invested, to increase her income. When the Plaintiff's life interest determines, each of Geoffrey and Peter will be entitled to share the house block. That is, each will presently receive about $128,000 and upon the death of the Plaintiff will receive one half of the property presently worth $687,500. 48 From a practical point of view, if the Plaintiff can no longer remain in her present residence, then her interest in the Normanhurst property, together with her interest in residue and in the proceeds of sale of the adjoining block (totalling about $135,000), will enable her to acquire a substitutionary residence in a somewhat less remote location. 49 Accordingly, I make the following orders:

Thomas v Thomas

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Judgment (12 paragraphs)

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Cases Cited (6)