HANSON v THE PUBLIC TRUSTEE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL MAHONEY, PRIESTLEY and CLARKE JJA 15 July 1991, 15 July 1991 [1991] NSWCA 142 FAMILY PROVISION ACT — circumstances considered — exercise of discretion to refuse relief to plaintiff in whose favour an order would have been made if size of estate permitted — size of estate such that to make an order would have unjustly deprived beneficiary of what had been left to her by testatrix in proper discharge of moral obligation. Priestley JA When she died in 1987 at the age of ninety-two, the late Mrs Hodgson, the Testatrix, left a small estate and two surviving children, a daughter, whom I will call the beneficiary, born in 1919, and a son, whom I will call the plaintiff, born in 1922. Her estate was small. By her will she gave her cottage at Woy Woy to the beneficiary, a legacy of $3,000 to a grandson, and the residue of her estate to the plaintiff and his wife. The plaintiff brought proceedings under the Family Provision Act which came before Master Windeyer, who dismissed his application. Both before the Master and in this court the case was dealt with on the footing that for practical purposes the only asset in the estate for distribution amongst those entitled under the will was the cottage at Woy Woy. According to the executor's affidavit this was valued at $60,000 when the testatrix died. When the matter was before the Master in October 1989 he recorded that the value of the cottage was then said to be $110,000 to $115,000. The Master's factual findings were not in dispute in the appeal. They are sufficiently set out in his reasons. I will only mention those of them necessary to explain my opinion. At the date of death of the testatrix and since, both the beneficiary and the plaintiff were and are in poor health. The beneficiary had lived with the testatrix since 1983. The Master, incidentally, noted that the testatrix had made her last will before the beneficiary agreed to do this. The beneficiary and her husband had dissolved their marriage some time before. At the date of the hearing before the Master the beneficiary had no car and no assets of substance. Likewise the plaintiff and his wife had no assets of substance apart from a small car in not very good condition. There appears to have been no contact between the testatrix and the plaintiff during the last years of her life but the Master did not regard the plaintiff as in any way disentitled by this. His reasons proceed upon the footing that were the estate sufficient to permit an order to be made in the plaintiff's favour in all the circumstances of the case he would have done so. The difference in the situations of the beneficiary and the plaintiff revolves around their accommodation. The beneficiary had lived with the testatrix from 1983 onwards in the cottage at Woy Woy. There, amongst other things, she attended to the needs of her aged mother. When she and her husband were divorced she had received a sum in the order of $39,000 by way of settlement. 2 UNREPORTED JUDGMENTS In her evidence, which the Master does not appear to have doubted, she said that she spent $30,000 of this sum on a number of improvements to the cottage at Woy Woy. The plaintiff and his wife are tenants in Housing Commission accommodation. They are not in a position to look for any other kind of accommodation. It seems to have been assumed at the hearing below that the accommodation which the plaintiff and his wife have is likely to be permanent not with standing the particular tenure by which they hold it. The essence of the case was summarised by the Master in two paragraphs in his reasons as follows: "The simple position with this estate is that the plaintiff and his sister both have substantial needs and there is insufficient to provide for them both. The plaintiff has the benefit if it can be described as that of Housing Commission accommodation and he has a wife for some support. He has no assets of any value and he is in bad health. He is about to be admitted to St Joseph's Hospital at Auburn for a right knee replacement. He has regular examinations to ensure that the problems with his throat are kept under control. He will almost certainly receive nothing under the terms of his mother's will. His sister, Mrs Smith, is likewise a pensioner who is not in good health. Unless she retains the Woy Woy property she will have nowhere to live. Her pension would not enable her to obtain any reasonable accommodation and live. Why the deceased changed her will it is really impossible to determine as she did that before her daughter agreed to go to Woy Woy with her but nevertheless she did. That however is really not in issue the question being whether or not the deceased was under a moral obligation to make some provision for the plaintiff under her will having regard to the fact that the only person who will take any benefit from it will be her daughter. In an estate such as this where there is clearly not sufficient to satisfy the needs of the possible claimants and the only asset is a home in which one of them is living, having moved to it at the request of the deceased and improved it, I do not think it could be said that the deceased was under any obligation to make such a provision for her son as would involve the Woy Woy house being sold. It is quite a modest place and as the beneficiary is a pensioner aged seventy it is quite unlikely that she would be able to raise any substantial sum of money on the home, let alone service that loan which means that no provision can be made for the plaintiff unless the house is sold." It was on the basis of the conclusions there stated that the Master decided that the needs of the plaintiff were not sufficient to justify him in making an order in his favour in view of the limited resources available in the estate. He also mentioned that he came to that conclusion with some regret. However, the Master felt constrained, by the very limited nature of the estate, to refuse the plaintiff's application. The basis upon which the appeal was put in this court took its starting point in the first sentence of the passage I have set out where the Master said the position with the estate was that the plaintiff and his sister both had substantial needs and there was insufficient to provide for them both. For the appellant it was submitted that this was the starting point of an erroneous application of principle by the Master. Counsel recognised that in order to make any headway in the appeal it was necessary to persuade the court that there had been a miscarriage of the Master's discretion. In seeking to support this approach the argument was that from the first sentence that I have referred to the Master proceeded to reason along the lines that there being insufficient in the URJ HANSON v THE PUBLIC TRUSTEE (Mahoney JA) 3 estate to provide for both the beneficiary and the plaintiff, the only course open to him was, as counsel said, an all or nothing approach, this approach leading him to conclude that he must dismiss the application. If the Master did reason along those lines it would indeed be arguable that he had mis-applied the discretionary jurisdiction he was considering at this point of his reasons. However, I do not think that the Master was reasoning in such a way. His reasons seem to me to amount first to a recognition of the small size of the estate, next to a recognition of the substantial needs of both the plaintiff and the beneficiary, and then a consideration of the circumstances of the two parties principally concerned, the moral obligations of the testatrix and the practical consequences of the way the testatrix discharged those obligations in comparison with the practical effect of any order that might be made in an attempt to provide some order in favour of the plaintiff. In the paragraphs I have set out his reasoning appears clearly enough, I think, to be that in the circumstances in which both the beneficiary and the plaintiff, on the evidence, were likely to live during the remainder of their lives, the difficulties that would be encountered by the beneficiary in the event of his making an order in favour of the plaintiff, the inevitable result of which would be the sale of the cottage at Woy Woy, would be of such an extent as to disturb and make smaller than it should be the provision made for the beneficiary by the testatrix, that division in the circumstances in which the testatrix found herself, being an appropriate discharge of her obligations. The question seems to me to have been a difficult one for the Master to decide. I do not see, however, that in deciding it he made any error of principle. He considered the circumstances of both parties principally concerned. The reasoning process he adopted was, with respect, a sensible one and he appears to me to have taken into account all the necessary considerations for the exercise of his discretion. Putting it shortly I do not think that in the appeal any error made by the Master has been identified or that it can be said that the result of his exercise of discretion is manifestly unjust. It is no doubt an unfortunate result so far as the plaintiff is concerned, but it is one that comes about not because of any disregard by the testatrix of her obligations or any miscarriage of the discretion which the Master had to exercise but because of the limited confines of the available assets in this estate. In my opinion the appeal should be dismissed with costs. Mahoney JA I agree. Mr Green has properly identified the essential question that arises inthe appeal and has said everything for his client that I think could be properly said. The fact that he did not repeat it is to be commended rather than otherwise. But in the event I am not satisfied that there was any appealable error in what the Master did. One may say two things about the issue here involved. One is that the problem of dividing an estate between the two person who have quite legitimate moral claims on the bounty of the deceased, as both of the parties here undoubtedly have, is a very difficult one for a court to decide. In the present case, as Mr Green properly conceded, the essential problem was that if an order was to be made for the plaintiff, Mr Hanson, then there was no alternative but to sell the home in which the beneficiary was living. The Master saw that as being an unacceptable course and after careful consideration I have come to the same conclusion. I do not think that there was any error involved in the matter. 4 UNREPORTED JUDGMENTS The second thing that may be said is that it is not a new problem. In Heywood v Fisher (Court of Appeal, 26 April 1985) a similar problem arose. Reference was made in my judgment to the difficulties with which a court deciding such a matter must cope and the approach which should, or may, be adopted. I agree with the orders which have been proposed by Priestley JA. Clarke JA I agree that the appeal should be dismissed for the reasons given by Priestley JA. The order of the court therefore is that the appeal is dismissed with costs. Counsel for Appellant: BM. GREEN Counsel for Respondent: LJ ELLISON / AJ. PATTERSON Solicitors for Appellant: WATSON, STAFFORD, WILMOT, KLIMT Solicitors for Respondent: THE PUBLIC TRUSTEE