Whalen v Byrnes

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

2152/02 LEO KEITH WHALEN v DENNIS WILLIAM BYRNES JUDGMENT 1 MASTER: These are proceedings under the Family Provision Act 1982. 2 By summons filed on 9 April 2002 the Plaintiff, Leo Keith Whalen, claims substantively an order for provision for his maintenance and advancement in life out of the estate of the late Alfonsis Clive Whalen (to whom I shall refer as "the Deceased"). 3 The Plaintiff is the younger brother of the Deceased, who died aged 72 on 7 June 2000. The Deceased left a will dated 19 July 1979, probate whereof was on 23 November 2001 granted to Dennis William Byrnes, who at the death of the Deceased was the Parish Priest of Kempsey, being the executor appointed under the will (and who is the Defendant to the present proceedings). 4 By that will the Deceased directed that after payment of his debts, funeral and testamentary expenses, his entire estate be sold and converted into cash, and he gave the proceeds therefrom to "the Carmelite Order of Catholic Nuns at Sydney". 5 The inventory of property discloses that the assets of the Deceased at the time of his death consisted of moneys in bank accounts and on deposit totalling almost $78,000, shares (having a value of almost $1,400), together with the interest of the Deceased in various parcels of land, two of which were owned by the Deceased alone, whilst the others were owned by the Deceased conjointly with the Plaintiff as tenants in common. That land was located at Austral Eden, which is situate on the Maclean River near Kempsey in northern New South Wales. (I shall refer to the totality of those parcels of land, which were acquired at various times, as "the subject land".) 6 Upon the subject land (or so much of it was owned at any one time by one or both of the Plaintiff and the Deceased) the Plaintiff and the Deceased throughout their adult lives conducted the business of dairy farmers. At the time of the death of the Deceased his interest in the subject land, as disclosed in the inventory of property, had a total value of almost $318,000. The value of the subject land has subsequently increased. At the outset of the hearing it was noted that it was agreed between the parties that the value of the various parcels of land conjointly owned by the Plaintiff and the Deceased were as set out in Annexure L to the affidavit of the executor, Dennis William Byrnes, sworn 16 May 2003. That annexure sets forth valuations totalling $1,017,800. The two lots owned by the Deceased alone have a value of $290,000, whilst the various lots owned by the Deceased conjointly with the Plaintiff have a total value of $727,800. In consequence, the present value of the interest of the Deceased in the subject land is $653,900, being the two lots owned by the Deceased alone ($290,000) together with a one-half interest in the lots owned by him conjointly with the Plaintiff ($363,900). (I observe that there is a discrepancy between the valuation of Lot 22 DP977745 as disclosed in Annexure L to the foregoing affidavit ($190,000) and the one half share therein stated in paragraph 2 of that affidavit ($85,000). I have accepted the valuation of the registered valuer, being Annexure L, that valuation being the subject of the aforesaid noted agreement between the parties.) 7 The present value of the moneys held by the Deceased in bank accounts and on deposit, together with interest accrued thereon, is $76,568. 8 In addition, the Deceased at the time of his death had a one half interest in a cheque account with the National Australia Bank ($15,817), a one-half interest in a term deposit with the National Australia Bank ($6,298), a one-half interest in livestock ($24,435) and a one-half interest in plant and machinery ($4,345). There is a further asset (not disclosed in the inventory of property) set forth in the foregoing affidavit of the executor, being $42,176, described as "Dairy Structural Adjustment Program Payment". 9 (I note that there is a slight discrepancy between the total value ascribed to the moneys in various bank accounts, the term deposits, and the NRMA shares in the inventory of property and the value of those assets set forth in the affidavit of the executor filed on 16 May 2003. The discrepancy totals less than $1400, and appears to be, largely, the consequence of the omission in the recent affidavit of the items of accrued interest which appear in the inventory of property and in the executor's affidavit of 8 August 2002.) 10 Thus the assets of the estate have a total value of $823,540 11 At the date of his death the Deceased had liabilities totalling almost $6,800. 12 In calculating the value of the estate available for distribution the costs of the present proceedings must be taken into consideration, since the Plaintiff, in the event that he be successful, will be entitled to an order that his costs be paid out of the estate, whilst the Defendant will be entitled to his costs out of the estate, irrespective of the outcome of the proceedings. The costs of the Plaintiff were estimated to total about $21,200 and those of the Defendant were estimated to total between $20,000 and $25,000. (Those estimations were based upon a one day hearing; in the event, the hearing extended into a second day, and accordingly the costs will be somewhat greater.) 13 Thus it is appropriate to proceed on the basis that the value of the distributable estate is at least $760,000. 14 The Plaintiff asserts that he is an eligible person in relation to the Deceased, being such within paragraph (d) of the definition of that phrase contained in section 6(1) of the Family Provision Act. The Plaintiff says that he comes within that paragraph of the definition since he was a member of the same household as the Deceased from the time of his birth until he removed into a separate residence on the subject property at the time of his marriage in 1967 (interrupted by a period of about four years when he was aged from about eleven to fifteen). Further, that the Plaintiff was partly dependent upon the Deceased, in that both he and the Deceased conducted the business of dairy farmers in partnership on the subject land and that each of them was in part dependent upon the other. 15 The Defendant conceded that the Plaintiff was an eligible person in relation to the Deceased. 16 The Deceased had been born on 5 July 1927 and was aged 72 at the time of his death. The Plaintiff was born on 7 November 1931 and is now aged 71. Their mother died in 1934, when the Plaintiff was aged only three. The Deceased and the Plaintiff were thereafter brought up by an aunt. When each of them attained the age of fifteen years he returned to live with their father on the dairy farm. That enterprise had originally been established by their great-grandfather in 1864 upon the subject land, which subsequently had, in part, been in the ownership of the Whalen family since 1918). 17 In 1946 their father purchased part of the subject land for the Plaintiff and the Deceased. Upon the death of their father the Plaintiff and the Deceased inherited a further part of the subject land. Additional adjoining properties were acquired by purchase by the Plaintiff and the Deceased in 1959 ("Galvan"), in 1965 ("West's") and in 1973 ("Ennis"). In September 1976 the Plaintiff, his wife and the Deceased entered into a written partnership agreement, and thereafter, until the death of the Deceased, the dairy business was carried on by the Plaintiff and the Deceased in accordance with that agreement. Additional properties were purchased by the Deceased alone in 1984 and in 1988. 18 The Plaintiff, who in 1967 married his wife, Mrs Margaret Whalen, has two sons, Ronald (who was born in 1969 and is presently aged about 34) and Andrew (who was born in 1971 and is presently aged about 32). Ronald, who is married and has his own establishment, is employed by the local council, but helps on the farm in his spare time. Andrew is also married, with his own establishment. 19 At the present time the assets and liabilities of the Plaintiff are as follows: one half interest in those parts of the subject land which were held in co-ownership between the Plaintiff and the Deceased - $253,900

one half share in partnership cattle account - $5,101

one half share in partnership farm account - $5,574 one half share in partnership shareholding in Dairy Farmers - $16,900 20 In addition, the Plaintiff and his wife have various bank accounts (with current credit balances totalling $2,400), what is described as a "retirement account" ($59,316), a superannuation policy ($31,476), what is described as an "income fund" ($42,821), and shares in IAG (having a total value of $5,886). Their other assets consist of a 1990 VN Commodore station-wagon ($3,000), machinery ($16,000), and home contents ($8,000). 21 The Plaintiff's wife, Mrs Margaret Whalen (who was a partner in the dairy farming business which the Plaintiff conducted conjointly with the Deceased), assists in the activities of the dairy farm, but does not receive any wages therefrom. 22 Although in his affidavit of 20 March 2003 the Plaintiff states that his income from the farm for the financial year ending 30 June 2003 was $13,318 and his wife's income for that financial year was a loss of $1,459, the Plaintiff under cross-examination referred to the income which could be derived from having 120 cows on the farm as possibly being $40,000. Apart from their income from the dairy farm the Plaintiff and his wife have no other source of income. The Plaintiff estimates that their average weekly expenses and outgoings total $359. 23 Evidence was placed before the Court by the Prioress of the Order of Carmelite Nuns concerning the circumstances of that Order and concerning the intentions and wishes of the Order in the event that they might receive the benefit given to them by the will of the Deceased. 24 It is in the light of the foregoing evidentiary material that the Court must proceed to a consideration of the claim of the Plaintiff. I have had the benefit of receiving written outlines of submissions and chronologies from Counsel for the respective parties. Those documents will be retained in the Court file. 25 I am satisfied that the Plaintiff is an eligible person within paragraph (d) of the definition of that phrase contained in section 6(1) of the Family Provision Act, in that for a significant period of his life, from 1931 until 1967 (interrupted by a break of four years) the Plaintiff and the Deceased were members of the same household, and that throughout the totality of their adult lives the Plaintiff and the Deceased were each partly dependent upon the other. (I have already recorded that the Defendant does not dispute the status of the Plaintiff as an eligible person.) Accordingly, the Plaintiff has the standing to bring the present proceedings. 26 Apart from the Plaintiff, there is no other person who is an eligible person in relation to the Deceased (who never married, was childless, and, so far as the evidence discloses, was never in a de facto relationship). 27 It will be appreciated that the proceedings were not instituted within the prescribed period of eighteen months from the date of the death of the Deceased, as required by section 16 of the Family Provision Act, but were instituted some four months after the expiry of that period. Accordingly, the Plaintiff by his summons seeks an extension of the period in which to bring the proceedings. 28 Considerable evidence was placed before the Court concerning the various communications by the solicitor who at the time was conducting the matter on behalf of the Plaintiff with the solicitors for the Defendant. Both the then solicitor for the Plaintiff and the solicitor for the Defendant gave evidence (the former both on affidavit and under cross-examination, the latter only by way of oral evidence). 29 It is a fair summary of that evidence to say that there was no fault on the part of the Plaintiff concerning the institution of the proceedings within the prescribed period. Essentially, the fault lay in the fact that the solicitor conducting the matter on his behalf was not aware that the proceedings could be instituted before a grant of probate or administration of the estate had been made; specifically, she was not aware of the decision of Hodgson J (as he then was) in Leue v Reynolds (1986) 4 NSWLR 590. 30 The discretion of the Court to allow proceedings to be instituted after the expiry of the prescribed period is by subsection (2) of section 16 expressly subject to the provisions of subsection (3) of that section. Subsection (3) precludes an application being made after the expiration of the prescribed period "unless sufficient cause is shown for the application not having been made within that period". 31 In the instant case the Plaintiff relies on the fact that before the expiry of the prescribed period he had given instructions for the proceedings to be instituted, but that, nevertheless, in consequence of the fact that his solicitor believed it to be an essential prerequisite to the institution of the proceedings that a grant of probate or administration had been made, the proceedings were not instituted within time. (I would here interpolate that, albeit unbeknownst to the solicitor for the Plaintiff, probate was in fact granted two weeks before the expiry of the prescribed period.) 32 There are four factors relevant to the exercise of the Court's discretion to extend time for bringing an application under the Family Provision Act. Firstly, the sufficiency of the explanation of delay in making the claim; secondly, whether there be any prejudice to beneficiaries; thirdly, whether there has been any unconscionable conduct by the Plaintiff; and fourthly, the strength of the Plaintiff's case. (See Warren v McKnight (1996) 40 NSWLR 390 at 394; see, also, Dare v Furness (1998) 44 NSWLR 493 at 500). 33 Despite the submission of the Defendant to the contrary, I am satisfied that sufficient cause has been shown for the application not having been made within the prescribed period. That failure was due in no way to any fault on the part of the Plaintiff. It was the fault of his solicitor. What, in effect, the Defendant is submitting is that the appropriate course would be for the Plaintiff to sue the solicitor in professional negligence. I do not agree that such a course is appropriate in the circumstances of the instant case. 34 There is no suggestion on the part of the Defendant that the delay of four months has occasioned or will occasion any prejudice to the beneficiary. There has been no unconscionable conduct on the part of the Plaintiff. The strength of the Plaintiff's case is a matter which I will now proceed to consider. 35 It is appropriate, therefore, that, if the Plaintiff otherwise be entitled to an order for provision, the Court in the exercise of its discretion should extend the time for the making of the application. 36 Since the Plaintiff is an eligible person only within paragraph (d) of the definition of that phrase in section 6(1) of the Family Provision Act, he must, pursuant to section 9(1) of the Act, establish that there are factors which warrant the making of the application. 37 In the instant case, those factors consist of the interdependence of the Plaintiff and the Deceased upon each other, and the fact that throughout the entirety of their working lives the Plaintiff and the Deceased conducted the dairy farm in partnership (they being the fourth generation of their family to conduct a dairy farm upon the subject land). The Plaintiff over many years had significantly contributed to the acquisition, conservation and improvement of the land which was held by himself and the Deceased in co-ownership. They had had a very close relationship, not only working together, but also residing in geographical propinquity. In all those circumstances, I am satisfied that the Plaintiff is a person who would generally be regarded as an appropriate object of the testamentary beneficence of the Deceased. Accordingly, I am satisfied that there are factors which warrant the making of the application. 38 Essentially, it was the case for the Plaintiff, that he required the entirety of the subject land for the purposes of continuing his dairy farm activities. It was his evidence, which I accept, that if any part of the subject land be no longer available for those activities, then the dairy farm would no longer be viable. 39 Although cross-examined on this topic, the Plaintiff could not offer any practical reason why he required to have the freehold of the entirety of the land, rather than a life estate therein, in order to continue the dairy farm. 40 It will be appreciated that it is the duty of the Court of interfere with the testamentary provisions of a testator only to the extent necessary in order to make adequate provision for the proper maintenance of an applicant (White v Barron (1980) 144 CLR 431 at 458 per Wilson J). To give to the Plaintiff an absolute interest in the entirety of the subject land (as distinct from that part thereof which was conjointly owned by him with the Deceased) would, having regard to the Plaintiff's present age (whilst nevertheless recognising his stated intention to continue dairy farming until the end of his life), have the consequence essentially of providing a fund to be inherited by his children. Such a result is not the purpose of the legislation. 41 It was submitted on behalf of the Defendant that the partnership agreement into which the Plaintiff, his wife and the Deceased had entered on 27 September 1976 made provision that in the event of the death of the Deceased the Plaintiff should have the option to purchase the share of the Deceased at valuation; and that, in consequence, by any order for provision the Plaintiff should receive no more than a life estate in the totality of the interest of the Deceased in the subject land (being no more than a life estate in the two parcels of land owned by the Deceased alone and no more than a life estate in the land conjointly owned). It will be appreciated, however, that the partnership agreement related only to the business conducted on the subject land and not to the land itself. The Plaintiff had over many years significantly contributed to the acquisition, conservation and improvement of the land in co-ownership. I consider that he is entitled to receive the Deceased's interest therein absolutely. 42 In my conclusion the Plaintiff is entitled to receive absolutely the interest of the Deceased in those parts of the subject land which were held conjointly by the Deceased and the Plaintiff (that being land to the acquisition, conservation and improvement whereof the Plaintiff had significantly contributed), but to receive only a life estate in those parts of the subject land which were held by the Deceased in his name alone. In addition, the Plaintiff should receive absolutely the entirety of the livestock on the subject land, and the entirety of the plant and equipment thereon (that livestock and plant and equipment having been held in co-ownership between the Plaintiff and the Deceased). As I understand it, the Defendant does not dispute that, in the event that an order be made for provision for the Plaintiff, he should receive absolutely the entirety of that livestock, plant and equipment. 43 The claim of the Plaintiff must, however, be approached in the light of competing claims upon the testamentary bounty of the Deceased. It has already been observed that the Plaintiff is the only eligible person in relation to the Deceased. Nevertheless, the Court should not lightly disregard the testamentary provisions of the Deceased, and the chosen object of his testamentary beneficence. However, the evidence does not disclose any form of connection or relationship between the Deceased and the Carmelite nuns. There is no suggestion that during his lifetime the Deceased had any contact with members of that religious community, or was indeed acquainted with them or their works and activities. 44 The evidence of the Plaintiff concerning the Deceased's attitude towards religious observances was that the Deceased did not go to church in the last thirty years of his life, during which period he appears to have become somewhat reclusive - indeed eccentric - in his lifestyle, and that even before that time he went to church only occasionally. 45 The foregoing order for provision which I propose will give to the beneficiary an immediate cash amount of at least $80,000 (representing the moneys held in various bank accounts and on deposit and the Dairy Structural Adjustment Program Payment, after the payment of liabilities and the payment of the costs of both parties of the present proceedings). In addition, the beneficiary will receive an interest in remainder in the two parcels of land owned by the Deceased in his own name, the total value of those two parcels of land presently being $290,000. That latter amount, although the receipt thereof by the beneficiary will probably be for some years delayed, until the death of the Plaintiff, will, together with the immediate cash amount of about $80,000, go a considerable way to fulfilling the purposes for which the beneficiary proposes to use any benefit received under the will, as set forth in the evidence of the Prioress of the Order. 46 In my conclusion the competing claim of the beneficiary (who, of course, is not an eligible person in relation to the Deceased, and whose benefit under the terms of the will of the Deceased must be regarded as being in the nature of an unexpected piece of good fortune) is not such as would have the effect of reducing, let alone extinguishing, any order for provision to which the Plaintiff has otherwise established an entitlement. 47 The conclusions which I have just expressed establish the strength of the Plaintiff's claim in the proceedings, and are therefore relevant to the fourth factor to be considered by the Court upon the application for extension of time. In the circumstances of this case, I consider it to be appropriate that the Court should order that the time for the making of the application be extended up to and including the date of the filing of the summons, being 9 April 2002. 48 I summarise as follows my foregoing conclusions. 49 The time for the making of the application should be extended up to and including the date of the filing of the summons herein. The Plaintiff should receive an order for provision for his maintenance out of the estate of the Deceased, by which he receives absolutely the one half interest of the Deceased in the real property of which the Plaintiff and the Deceased were co-owners as tenants in common, together with the one half interest of the Deceased in the livestock and the plant and equipment of which the Plaintiff and the Deceased were co-owners. (In the light of my foregoing conclusions, it will be unnecessary for the Plaintiff to reimburse to the estate of the Deceased the one half of the earnings of the dairy farm conducted by him upon the subject land and with the use of the foregoing livestock, plant and equipment, in the period since the death of the Deceased.) The Plaintiff will be entitled to an order that his costs on the party and party basis be paid out of the estate of the Deceased, whilst the Defendant will be entitled to an order that his costs on the indemnity basis be paid out of the estate. 50 I stand the matter over to a date to be fixed by arrangement with my Associate, for the bringing in of Short Minutes of Order to reflect my foregoing conclusions.

Last Modified: 12/05/2003 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.