THOMPSON v MULLIGAN [2009] NSWSC 399 | Case summary

2448/07 THOMPSON v MULLIGAN The Estate of the Late Matilda Maria Mulligan JUDGMENT 1 HIS HONOUR: Matilda Maria Mulligan of O'Brien Street Bondi Beach, pensioner, said to be 83 years of age, died on 28 October 2005. On 22 December 2005 this Court granted probate of her will dated 26 October 2005 to the defendant Bridgette Matilda Mulligan who is her only daughter. The testatrix was a widow; her husband died in 1966. 2 The testatrix had four children and they survived her. The defendant who is now 60 years of age is the eldest. The testatrix' sons are Ivor Thompson who was born in 1950, the plaintiff Robert Thompson was born in 1955 and Desmond Thompson who was born in 1957. 3 When she died the testatrix's significant assets were her home at O'Brien Street Bondi Junction, the value of which was estimated in the probate application at $900,000, and 4 bank accounts and term deposits which then totalled $72,877.86. The testatrix left no significant debts. 4 The testatrix made her will two days before her death while she was a patient at St Vincent's Hospital. The will was prepared by a solicitor on instructions given by the testatrix in the absence of her children. The will is handwritten but its terms show that it was prepared by a professional person. The will appointed the defendant executrix and gave her the jewellery, antiques, furniture and some other personal effects. In context these are not of significant value. 5 The testatrix gave $50,000 each to two of her grandchildren, sons of the defendant. She had other grandchildren but her will did not give them anything. She gave $100,000 each to each of her three sons and gave the residue to the defendant. There was a survival clause. 6 The defendant raised money by borrowing on the security of the house and distributed the legacies in May 2006. On 26 April 2007 and within time the plaintiff Robert Thompson and also Ivor Thompson each separately commenced proceedings claiming further provision. Ivor Thompson's proceedings were settled after mediation and he received additional provision of $60,000 including costs, under an order of this court made on 29 August 2008. Desmond Thompson did not apply for further provision and the time within which he could do so has expired. 7 The evidence of the defendant does not fully explain all her dealings with estate assets. She raised money by mortgaging the testatrix' house, first from St George Bank and loan drawings commenced on 24 April 2006, and later by two successive Commonwealth Bank loans; the highest debt principal was $600,000. Payment of $605,277.73 to Commonwealth Bank on settlement of sale of the house included repayment of $600,000 debt principal. As $400,000 was used to pay legacies, the defendant is notionally accountable to the estate for $200,000 of the loan money. After offering the house for sale at auction on 26 August 2006, when the highest bid was unsatisfactory and the property was passed in, the defendant sold the house by private treaty to one Lashmar by contract dated 10 July 2007. When the sale was settled on 24 August 2007 the amount then owing to the Commonwealth Bank was paid out of the sale proceeds. After payment of costs, expenses and outgoings adjustments and agent's commission the sale yielded $317,180.98 net proceeds. The legacies had already been paid and the defendant was accountable for $200,000 from the Bank loan. When the amount of the bank accounts at her death $72,877.86 is added these figures suggest that realisation of assets and payment of legacies yielded $590,058.84. Under the terms of the will this amount would pass to the defendant, subject to costs of probate and administration. 8 While there are no estate accounts in evidence and no clear accounts are available, I can identify from the defendant's evidence, principally her affidavit of 6 May 2009, the following expenditures: Bank interest and fees $48,732.00 Payments in solicitors statement of 13 April 2007 Annexure Q - including executorial expenses, agents fees and solicitors costs relating to proposed auction sale and other outgoings $ 46,796.34 Legal costs on estate administration $ 5,867.00 Defendant's legal costs of family provision proceedings $ 34,314.57 Additional provision payable to Ivor Thompson $ 60,000.00 Funeral expenses $ 18,132.00 Defendant's personal expenses $ 99,870.10 Total $313.712.01 9 The defendant made payments for personal expenses totalling $99,819.10. This was an anticipation of her entitlement to the residue on completion of administration. She should not be criticised for drawing these funds, as there was no reason to doubt that she would have a significant residual entitlement, and each of her three brothers received $100,000. 10 The figures I have set out seem to show that in a notional accounting the defendant is chargeable with $590,085.84 and there were expenditures of $313,712.01, so she remains accountable for $276,346.83. She gave evidence that she incurred renovation costs and maintenance on the house before it was sold but did not offer satisfactory proof of these matters. I accept however that renovations were done, partly by the defendant and her husband but also in part by a builder and tradesmen she paid. 11 Although as I have said she is notionally accountable for a further $276,346.83, the estate assets to which she could point on 6 May 2009 were: Balance in solicitor's trust account $ 31,418.65 Funds in St George Bank $136,000.00 Total $161,418 65 12 The copies of account statements - Annexures W and X - from St George Bank which she produced do not bear out her statement that the funds in St George Bank are $136,000. 13 I am dealing with altogether imprecise material, and I make allowances for the defendant's lack of accounting skills and for her having done repairs and renovation work on the house before it was sold. Even so it appears to me although she points to money which she says totals $161,418.65 as the remaining estate assets, there ought to be about $250,000. 14 The defendant paid $16,000 for a caravan to provide Desmond Thompson with some accommodation. This payment was in addition to the legacy of $100,000 paid to him. She explains doing this in terms of a request by her late mother for her to give attention to Desmond Thompson's welfare, which he does not attend to properly himself. However this part of the $16,000 is not an estate expense. 15 Solicitors for each party made affidavits relating to the costs of these proceedings. The defendant's solicitor Mr Hayward's affidavit, accompanied by some particulars, showed that costs paid to 6 May 2009 and estimated costs of the hearing amount to $56,314.57. The plaintiff's solicitor Mr Fairbairn stated on affidavit that the plaintiff incurred $106,160.90 costs up to 6 May 2009, together with unpaid disbursements approximately $3500 and a further $3083 for counsel whose instructions had been withdrawn. Mr Fairbairn estimated the costs of the hearing of two days at $24,000. The total of costs incurred by the plaintiff, paid and unpaid, and estimated costs of the hearing are $136,740.90. 16 This has never been a family with large resources. Earning capacity has been their mainstay. No-one in the family has ever lived in ample circumstances and the house is the most significant capital asset of any family member of which evidence speaks. The testatrix' husband was a builder in England, and after migrating to Australia about 1950 worked in building maintenance. The testatrix worked as a cleaner, supervisor of cleaners and tea ladies, and in similar positions. She purchased the house about 1971, and borrowed money on mortgage to do so. As well as being her home, the house was the dwelling of her mother, and of various family members from time to time over the years. Her circumstances were difficult; she suffered injuries in accidents and bore a burden for some years of caring for her mother. When her husband died in 1966 aged 43 years the testatrix was left a widow when she was about 44 years old with four dependent children, the eldest about 18. She was energetic and earned money as a cleaner and she did paid housework and ironing at a local Laundromat until she was about 80 years old. Her house was not encumbered with a mortgage when she died in 2005. 17 The plaintiff has suffered from significant disability throughout his life as a result of contracting poliomyelitis when a small infant. He lived in the house at O'Brien Street while at high school, which he completed in December 1972. He commenced full-time employment about March 1973 when he was 17 years of age. He worked as an office clerk and later was employed by a series of insurance companies. At first he was a trainee clerk, underwriter and accounts clerk. He studied at Randwick TAFE, and completed a four-year part-time Commerce Certificate about December 1980. Later he became a member of the National Institute of Accountants. He had many employments as assistant accountant or accountant, at times in temporary positions. This brought him experience in accountancy practices in the insurance industry. His earnings were never high. About May 2000 he suffered acute myocardial infarction and underwent triple bypass surgery at St Vincent's Hospital Darlinghurst. After hospitalisation he rested, on medical advice, for about six months; during this time he lived in the house at O'Brien Street and his mother did not charge him rent; he had no earnings. He began to search for employment again about December 2000 and experienced great difficulty. He had assistance from a private agency and the Commonwealth Employment Service but the most he obtained was temporary accounting work with friends and acquaintances in short assignments. A limitation was his lack of training and experience in income-tax work. He was not prepared to undertake the burden of retraining for that work, because in his judgement that would be excessively stressful and intense. 18 After some unpaid work assignments including unpaid part-time work as a clerical officer at Waverley Court House, the plaintiff was employed for wages in Court Houses, first at Burwood Court for three months from September 2005, then at other Court Houses for short periods. After continuing for several years to be employed on a temporary basis for periods of up to three months he has now been appointed permanently at what he says is the lowest grade for clerical employment of the Public Service. His work is sometimes referred to as Court Officer, sometimes as Court Monitor; he does general auxiliary work including clerical work, now at Sutherland Court House. As a permanent employee he has reasonable grounds for expecting, or hoping, that he will remain in this employment until he is about 65 years of age in about 11 or 12 years time. However there are no certainties, and his employment could be interrupted by adverse developments in his health or by administrative changes and retrenchment. 19 The plaintiff's earnings are modest. His PAYG payment summary for the year to 30 June 2008 showed payments after tax of $32,735. His employment earnings are subject to superannuation deductions and he receives approximately $2463 a month. 20 The plaintiff has never married and has no dependants. He does not own a dwelling. He lives in a home unit at Lakemba owned by his domestic partner of about 11 years. His domestic arrangements appear fairly stable, his occupation of the home unit seems likely to continue indefinitely, but he has no security of occupation. 21 In an affidavit he made in April 2005 the plaintiff gave a list of monthly expenditure totalling $3106. There is a monthly shortfall of about $640, which he meets by making withdrawals from a cash deposit. In cross-examination his list of monthly expenditures was examined. There are items in the list which to my mind appear rather large, in relation to the available resources. These are $720 for groceries and take-aways, $330 for storage fees for his goods, and $650 for petrol and other expenses relating to his motor vehicle. The plaintiff has a real need for a motor vehicle, to travel daily from Lakemba to his work at Sutherland. The motor vehicle expenses and also garage rental of $120 per month are very large items in relation to the total resources. There is no reason to doubt however that they are incurred. 22 His monthly outgoings also include a payment to his domestic partner of $200 per month which he makes to recognize a large obligation for financial assistance she gave him during the years from 2000 to 2005 when he had no significant income. There are no accounts and no exact reckoning for this obligation; he puts it in the order of $40,000 of which he says he has repaid approximately $20,000. $200 per month will take more or less the rest of his working life. The plaintiff's domestic relationship is long-standing and important to him. With it he has accommodation, which it would be very difficult to him to obtain if he had to pay rent. He participates in general household duties, arranging for purchase of meals, cleaning his partner's car, garage, store room, painting and gardening works and general repairs. Paying his domestic partner $200 per month in recognition of larger expenditures she made for him in the past is ordinary prudence and an aspect of the relationship which it would be unwise for him to neglect. 23 The plaintiff owns vacant land, a housing lot in Taronga Avenue San Remo near Wyong, New South Wales, containing 535.4 square metres. There are only a few remaining vacant lots in the street and most lots have been developed with housing and are occupied. The land was valued by the Valuer General as of 1 July 2008 at $121,000 which the plaintiff regards as the minimum amount for which it would be sold; although he does not wish to sell it. He incurs small expenditures from time to time to have the land mown and kept tidy by a neighbour. He has a project in mind of having a dwelling built on the land, with a view to living in the dwelling about the time when he comes to retire. I find it difficult to see however that there is any realistic prospect of his having the resources to build the house; he says that building the house that he has in mind would now cost in the order of $150,000. It is his evidence that the land was transferred to him early in 1988 under an arrangement with his mother under which he paid her $12,000 together with the outstanding rates over the course of two years. Some aspects of this transaction are unclear and curious; the registered proprietor who transferred the land to the plaintiff was the defendant who held the land under some arrangement with her mother. Whatever explanation there may be for the registered proprietorship, it is clear that the plaintiff acquired the land for modest payment to his mother in an arrangement with her. Until he received the legacy in her will, this was the only event in his lifetime which could in any way be thought of as an advancement to him. 24 There has been no significant adverse event or aspect of the plaintiff's relationship with his mother which might go against him when assessing whether any provision for him was appropriate and what provision was appropriate. In a way the testatrix recognized that provision was appropriate by leaving him $100,000. (She left the same legacies for her other two sons, for whom there were, according to evidence before me, some adverse aspects to their claims for provision; there is no need to pursue these.) A significant aspect of the plaintiff's claim for provision is that throughout his life he has faced adverse health circumstances, of moderate severity earlier in life, with increasing severity with the appearance of his heart condition. His situation is different from an adult man of full age maintaining himself by employment, because of the overall contingency affecting his situation. 25 The plaintiff's medical history, present condition and occupational ability can be assessed with the assistance of Exhibits A and C, expert reports of Dr Harvey Sutton a Consultant Occupational Physician and of Ms Judith Davidson a Consultant Occupational Therapists. His poliomyelitis affected him adversely in infancy and boyhood, but not with great severity. From about 2004 onwards he has experienced soreness, pain and other difficulties with his right arm which were diagnosed by Dr Harvey Sutton as Post Polio Syndrome. This affects the grip and aptitude of his right arm and involves pain and discomfort, at first very severe. There have been several severe episodes and he continues to have intermittent pains in the right forearm and right hand with associated pins and needles. His shoulder movement is restricted. The use of his right arm particularly when lifting, writing and fine work is limited. Slow progressive muscle weakness, fatigue and at times muscle atrophy are associated with Post Polio Syndrome and are possible outcomes for him. His cardiac and ischaemic heart disease appears to be under control, with continuing review by his cardiologist. He suffers from muscle wasting in and around the right shoulder joint, right shoulder blade, right upper arm, with some loss of reflexes and he is likely to develop further physical impairment over the coming years. Dr Harvey Sutton assessed that it is probable that he will be unable to work, partially or totally, by the age of 60 if not before. 26 Ms Davidson the Occupational Therapist assessed his disability on the Oswestry Disability Questionnaire at 40% and also assessed him at 40% on the Quebec Back Pain Disability Scale. She made a detailed review of his activity limitations. Her review shows, in my finding, that activity limitations are real, but not very severe. 27 Both experts made observations about measures and expenditures which might perhaps be appropriate in a claim for damages under Common Law, but could not be met within the resources now available. 28 The plaintiff says that the house at O'Brien Street was his principal place of residence from January 1971 until late 2000, and then from then on he lived there approximately 2 to 3 days a week until his mother's death. He remained in the house, at least at some times, after the testatrix's death for a few months until he was in effect excluded when the defendant changed the locks. This was dealt with in cross-examination of the defendant as if the event were in some way adverse to her, but I do not think it was, as even-handed estate administration required her to move toward selling the house and not to favour one beneficiary over others. 29 The plaintiff's evidence is that from about 1971 to about 1977 he did significant work towards improving the house including twice repainting the interior, regular weekly maintenance and upkeep of the gardens, footpath and lawns, general labouring and handyman duties when the testatrix required them. When the testatrix was injured in a car accident about June 1977 and was hospitalised for about six weeks he visited her every day and later drove her to rehabilitation sessions, drove and assisted her with daily tasks and attended to her day-to-day care for a period. He says, referring to later in her life, that with the development of her health problems including osteoporosis he became more involved in her care. Dealing with the period from about August 1977, when it appears she was somewhat recovered, until her death it is the plaintiff's evidence that he did a number of things which were caring acts in his mother's interests, visiting four or five times a week, and doing house maintenance, assisting with her health-care needs, driving her and her mother (his grandmother) to and from hospital as needed, attending to household laundry, vacuuming and cleaning as required; and he laid new linoleum in three rooms. 30 The plaintiff's life took a very severe adverse turn about the time he turned 45 in the year 2000 with his heart attack and bypass surgery; this transformed his circumstances, including the strength of his economic position and earning capacity. He reached middle life without dependents. After being in employment at almost all times he had no significant asset apart from the land at San Remo, and had no kind of housing asset. His evidence does not explain why he was in the state. 31 During this period the plaintiff used the house at O'Brien Street as a base or home base while spending much of his time elsewhere, including fairly long-term establishments with domestic companions. He does not deal in detail with the times or periods of occupation. I accept his evidence that he assisted his mother in the ways he stated. For an unmarried adult son with no dependants using his mother's house as a home-base, giving his mother help is not a remarkable contribution and cannot have been a severe burden. It was more than the least he could do. These events illustrate that he had a good relationship with his mother, and that he was not an undutiful son, and contribute to the conclusion that she had a moral duty at least to consider provision to him when she came to make her will. 32 The evidence of Ms Berze, a niece of the parties, supports the plaintiff's case that there was an overall good relationship between the testatrix and the plaintiff. The testatrix expressed concerns about his needs and welfare to Ms Berze. 33 In an address to two-stage process referred to in Singer v Berghouse (1994) 181 CLR 201 at 208-210, when regard is paid to the plaintiff's financial position and the totality of the relationship between the applicant and the testatrix, the plaintiff's financial position is not adequate to his needs, as he does not have any housing, his earning capacity is poor over-all because of his health condition and disability, and his earning capacity leaves him in constrained circumstances. The totality of his relationship with the testatrix was quite good, although not unusually meritorious. His need is a need for a capital sum which would resolve present needs and give him means, or assistance towards securing him in housing and in meeting whatever adverse circumstances might emerge in the future; a need for an advancement in life. He has never had a significant advancement in life; he had the testatrix's support while he went through his schooling, and he had had her assistance in acquiring the San Remo property. The family's economic situation and resources were such that an advancement large enough to contribute to income was outside practical possibility; but he had never had any real advancement and had real needs. Consideration of the first stage favours the plaintiff. 34 The plaintiff does have a capital asset, the vacant land at San Remo which I treat as worth $121,000. This is not a large enough resource to solve his housing need, but in the context of the plaintiff's affairs and resources it is a significant capital asset and his notion of holding on to it and at some time building a house in which to live in retirement is not realistic. 35 The size and nature of the testatrix's estate and her relationship with all her children, who all had moral claims on her bounty, are a real limitation to what she could or should do for any of her children in particular. Evidence before me, in litigation to which they were not parties, suggests that there was a very poor relationship between the testatrix and her son Ivor, and that putting resources into Desmond's control could not be expected to make much contribution to his welfare. However it was appropriate and moral duty required that she make some provision for them. The claims of the plaintiff on the testatrix's bounty were quite strong. 36 The defendant who is now 60 years of age is in part-time employment as a Ward Receptionist at St Vincent's Hospital. Her earnings are modest. She wishes to continue in this employment for at least another five years, but this is subject to contingencies relating to her health. After her schooling she had clerical employments. Apart from an absence overseas from November 1969 to 1970, she lived in her mother's home and participated in events when her mother purchased the house at O'Brien Street and she and other family members worked on painting. While living at home she was of assistance to her mother and her grandmother, and gave significant help in payments towards school fees for the younger brothers, and household accounts. Her mother paid off the mortgage raised to purchase the property in early 1980. The defendant maintained the household and paid the expenses for a period about 1977 when the testatrix was recovering from a motor accident. After the defendant married in December 1979 and left O'Brien Street she continued to give assistance to her mother assistance, such as driving her mother to and from work on occasions. She worked on some renovations, assisting her mother in laying a new kitchen floor and installing cupboards and stove; the heavy work was undertaken by tradesmen. She stayed in constant contact with her mother and visited her six to eight times each month. In 2002 she gave up her full-time position at St George Bank and took casual work so as to have additional time to care for her mother. She spent approximately 1 day a week with her mother, who had many adverse conditions including fractures relating to osteoporosis. The testatrix was hospitalised in 2004 with bacterial pneumonia and the defendant assisted her during this period, with frequent visits and assistance with laundry and clothing. In 2005 her mother had numerous admissions to St Vincent's Hospital with heart problems and the defendant gave her considerable assistance. In October 2005 she participated in arrangements to re-equip her mother's house on her return from hospital; however these arrangements were not carried through. 37 Generally, and remembering that the defendant was married, lived elsewhere and had family responsibilities, the defendant behaved in a dutiful way towards her mother, and gave her considerable assistance, including considerable assistance at times when the burdens were heavy. Insofar as dutiful behaviour towards a parent is significant, the defendant behaved very well and made significantly greater contribution than the plaintiff. (He did not behave badly either). 38 The defendant and her husband were energetic workers. As well as employment they operated a business selling electronic equipment, and the mainstay was selling radar detection devices; the business was successful until January 1991 when a change in the law restricted sale of such equipment. Then the business failed with significant losses, and the defendant's husband went through a crisis which he speaks of as a nervous breakdown, since which he has been less energetic. Her husband's father died in 1996 and the defendant and her husband then extended the residence then owned by her husband's mother, and borrowed money on mortgage to do so, and used funds of their own; in this way they built the home they now own. 39 It is the defendant's evidence that she and her husband have the following assets. Home unit at Anzac Parade Matraville (jointly owned) $450,000 Vacant land Marulan jointly owned $350,000 Motor vehicle $ 3,000 Furniture $ 15,000 Shares owned by defendant $ 25,600 Total: $843,600 40 The valuations of real property are her own estimates, and only give a general indication. 41 It is her evidence that they have the following liabilities. Mortgage on Matraville property $ 81,700 Mortgage on Marulan property $129,000 Defendant's credit card $ 10,800 Husband's credit cards $ 74,000 Husband's personal loans $ 51,000 Total: $295,500 42 The defendant's monthly income from working three days a week as a Ward Receptionist is $1685 after tax. The defendant gave in evidence a list of monthly outgoings at $3873. The defendant has two sons aged 24 years and 22 years who live at home and study at universities; they do not pay board or household expenses. This must be a large part of the explanation of the size of the monthly living expenses. 43 The company Creative Electronics Pty Ltd through which the electronics business was conducted was unsuccessful and made losses in the financial years 2007/2008. The defendant's husband gave up the business, which depended on his work and initiative, sold the office where it was conducted and spent the proceeds on paying off a Bank mortgage and other debts. He lives separately from the defendant, with friends at Marulan, and does electronics work from a shed at Marulan; this cannot be very productive and economically he seems to be a spent force. 44 The defendant has many adverse health conditions, high blood pressure, cholesterol, stomach reflux, a need to have a gallbladder operation; she has some adverse consequences of neck injuries from a motor vehicle accident 16 years ago and has been advised that at some future time she will need an operation to fuse vertebrae; she suffers from kidney and urinary tract infections. She had a fracture of a bone in the foot in December 2005, in a fall in a street; she suffered from deep vein thrombosis and was unable to work for 11 months. During this time she drew money from the estate to meet her needs. 45 At the present the defendant's relationship with her husband is poor and they are separated; resolution of this litigation may assist. Subject to the large difficulty of their separation, they should be preparing to meet their need to retire, perhaps in five years. They will need to resolve their affairs by selling one of their major assets and paying down debt if they are to retire. 46 While the defendant's position overall is better than the plaintiff's in that she owns housing, it is not a strong position, and her earnings are less than his, she is older, she too has health problems. She has large debts, her husband is not in a position to make a big contribution, and it was altogether appropriate that the testatrix made provision for her. The defendant's interest in the estate assets is a legal right which the Court can only alter within the confines of the power in s 7. 47 This is distressing litigation within a family. The legal costs are remarkably large, and I am unable to see why they were so large. Resources have never been ample within the family, and two lawsuits over the estate have been a catastrophe. 48 In all these circumstances, the proper advancement for the testatrix to provide for the plaintiff was in my judgment quite modest, but was greater than the $100,000 which she in fact provided. Except for the proceeds of the sale of her own dwelling the testatrix had nothing to give away which would have much impact on anybody's welfare. Resources are modest all round, and only modest provisions could be appropriate. The claims on her bounty were not so great as to leave her with no room for choice and benefaction. Addressing the second stage, which cannot be wholly separated from the first stage, in my judgment the provision which ought, in the circumstances of the present time to be made is an additional $75,000 bringing the total provision to $175,000. 49

THOMPSON v MULLIGAN

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